Market Mantra
Market outlook
No jingle on the street!
Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.
If only we knew the unexpected, Christmas season would have brought some cheer. With only five trading sessions to go in 2009, don’t get too perturbed by the market movement. Overall trend has been extremely lackluster and is unlikely to change dramatically anytime soon. Volume has also dipped as traders and investors alike take a pause after a stellar rally.
Today, we expect the market to open lower as global cues are pretty inconclusive. The Nifty will continue to trade in a range of 4900-5100. Some short covering is not ruled out in the run up to the F&O expiry. Support is expected to kick in at around 4900. Protecting the gains made so far in the year should be the aim instead of loading up more.
In the New Year, the market will have plenty to consider like fund flows, quarterly earnings, impending rate hike, reversal of fiscal stimulus, budget and global developments. Stay on the sidelines till then.
Trading ideas (Time period: 1-3 days)
GMDC (BUY, CMP Rs144, Target Rs155): On the daily chart, GMDC has broken out from a consolidation pattern. After a three week of consolidation period the stock has now turned bullish. On Tuesday, the stock did manage to close above its near term moving averages for a second day indicting strength in the stock. The upswing was also accompanied by healthy volumes. We therefore expect the stock to rally to the levels of Rs155-157. The daily RSI is already in strong buy mode. Keeping in mind the above-mentioned evidences, we recommend high risk traders to buy the stock between the range of Rs142-147 with a stop loss of Rs138 for a target of Rs155.
Power Finance Corp (BUY, CMP Rs249, Target Rs265): In our view, the stock has completed its downfall and has created a medium term support around the levels of Rs240 i.e. 50-DMA. From the current level, the stock can only move towards one direction, i.e. upwards. The daily RSI has also given a positive divergence, indicating that price would start moving up. After hitting the lows of Rs205 in November 2009 the stock has seen the formation of higher bottom. Based on the above evidences, we recommend traders to buy the stock at current levels and on declines up to the levels of Rs246 with the support of Rs240 for an initial target of Rs265.
Derivative strategies (Time period: Till expiry)
± Long Rural Electrification Corporation Dec Future @ Rs235 for the target price of Rs250 and stop loss placed at Rs229.
Remarks: Net maximum profit of Rs29,250 and net maximum loss Rs11,700.
± Long Mercator Lines Dec Future @ Rs54.90 for the target price of Rs57-58 and stop loss placed at Rs53.
Remarks: Net maximum profit of Rs10,290 and net maximum loss Rs9,310.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Feb | Sell | Around 16670 | 16600, 16530 | 16715 |
| Silver - Mar | Buy | Above 27100 | 27250, 27400 | 26970 |
| Copper - Feb | Buy | 322-323 | 326, 328 | 320.6 |
| Zinc - Dec | Buy | Above 113.5 | 114.8, 116 | 112.4 |
| Lead - Dec | Sell | Below 106.5 | 105.1, 103.8 | 107.6 |
| Aluminum - Dec | H. Buy | At 103.5 | 104.8, 106.3 | 102.7 |
| Nickel - Dec | H. Buy | 825-830 | 844, 858.5 | 814.6 |
| Crude Oil - Jan | Sell | Below 3490 | 3450, 3420 | 3515 |
| Natural Gas - Dec | Sell | 267-268 | 264, 261 | 270.3 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Jan | Sell | Below 13750 | 13600, 13450 | 13873 |
| Jeera - Jan | Sell | Below 14700 | 14570, 14450 | 14790 |
| Turmeric - Apr | Buy | Around 6955 | 6985, 7020 | 6925 |
| COCUDAKL - Jan | H. Sell* | Around 1210 | 1198, 1185 | 1219 |
| Chana - Jan | Sell | Below 2485 | 2450, 2430 | 2508 |
| Guar seed - Jan | Sell | Below 2615 | 2585, 2560 | 2638 |
| Soya bean - Jan | Sell | Below 2315 | 2285, 2260 | 2337 |
| Soya oil - Jan | Sell | At 475 | 471.5, 468 | 477.6 |
| Mustard seed - Jan | Sell | Below 588.5 | 584.5, 581 | 590.8 |
| Mentha oil - Dec | Sell | Below 584 | 580.5, 578 | 587.2 |
**Strict Stop-Loss *Book Partial Profits
Mutual funds
| Fund focus | |||||||
| Sundaram BNP Paribas Select Midcap Fund | Invest | ||||||
| Fund manager | S. Ramanathan | | Min investment | Rs5,000 | |||
| Latest NAV | Rs129.8 | | Entry load | Nil | |||
| NAV 52 high/low | Rs133/49 | | Exit load | 1% <1 year | |||
| Latest AUM | Rs1,769cr | | Latest dividend (under dividend option) | 15% (20-Nov-09) | |||
| Type | Open-ended | | Benchmark | BSE Midcap | |||
| Class | Equity-diversified | | Asset allocation | Equity (89%), Debt (0%), Cash (12%) | |||
| Options | Growth & dividend | | Expense ratio | 2% | |||
| | | | | | | | |
Company Update: Reliance Industries – Market Performer
CMP Rs1,019, Target
± Another discovery in KG Basin
± E&P segment would continue to be value driver
± Refining and petrochemical cycle close to bottom
± Raise target price but maintain MP rating
Management Mantra: Sunil Khandelwal, CFO, Alok Industries
Sunil O. Khandelwal is the Chief Financial Officer of Alok Industries Ltd. Mr. Khandelwal is a qualified Chartered Accountant, and is working with Alok Industries for 19 years. As a CFO of the company, he is responsible for overall Corporate Finance, Accounts and Tax, Internal controls, Investments, Risk Management and Strategic Planning. During his tenure with Alok, he has gained wide experience in raising funds for project financing, working capital, acquisition funding from international and national lenders, equity fund raising in domestic and international markets, private equity, financial planning and budgeting, treasury, corporate accounts and taxation.
Corporate Snippets
± Reliance Industries announced its third successive gas discovery in a deepwater exploration block in the Krishna-Godavari basin, which the company had bagged in the fifth round of NELP. (BS)
± The MCA has asked SEBI for details of its investigation pertaining to a complaint that Reliance Industries had allegedly routed funds to dummy companies to buy its own shares nine years ago. (BS)
± ONGC has replaced Reliance Industries with Repsol YPF SA,
± ONGC has said it is ready to accept a special oil tax on any super-normal profits from high crude oil prices, if the subsidy-sharing regime is rationalized. (FE)
± Phase-II construction of the Bengaluru International Airport Ltd, a consortium of Siemens, GVK Group, Unique Zurich Airport, Karnataka State Industrial Investment & Development Corporation and Airports Authority of India, is expected to begin by the second half of 2010. (BS)
± CCEA may take up Jet Airways proposal to raise Rs20bn through sale of shares to institutional investors. (ET)
± Tata Motors plans to increase its market share by 2-3% in the utility segment with the launch of utility vehicle Grande MK II, an upgraded version of its premium Sumo Grande. (BS)
± Reliance Power is likely to invest over Rs 60bn over the next four to five years to produce 6.6bn tons of coal per annum. (FE)
± Sun Pharmaceutical is getting greater support, to acquire Israeli drug major Taro Pharmaceutical, from independent advisory firms like Glass, Lewis & Co. who has recommended a vote against the proposals of the Taro board at the AGM. (BS)
± Tata Teleservices and Novatium Solutions Ltd. have joined hands to launch ‘Nova Navigator', which is claimed to be the country's first cloud computing on wireless broadband service. (BL)
± Sun TV is restructuring its distribution business into two new divisions - 1) to handle South India operations and international business and 2) to focus on expanding the Sun TV bouquet into the northern, western and eastern markets of
± Aban Offshore has repaid bonds worth Rs8bn along with accrued interest. (ET)
± Nalco increased prices of aluminium by Rs3,500/ton. (ET)
± Sistema Shyam TeleServices, which recently launched MTS mobile service network, is looking to raise around US$2bn to ramp up infrastructure. (ET)
± Meghalaya government has finally decided to hand over two 450Mw each hydel power projects - Kynshi stage I and Kynshi Stage II, to Athena Power and Jaypee Group respectively. (BS)
± Jindal Saw received orders worth Rs11bn for the supply of large diameter welded pipes and ductile iron pipes. (BL)
± Bharati Shipyard received 10.2mn shares in the open offer made for acquiring an additional stake of 20% in Great Offshore at Rs590/share. (BS)
± Lupin settled all its ongoing patent litigation with US-based Forest Laboratories on the Alzheimer’s disease treatment drug, Namenda. (BS)
± The promoters of Hotel Leelaventure are increasing their stake to 55% from the current 52.5% through creeping acquisition. (BL)
± Gati will hold an extraordinary general meeting on January 11 to seek shareholders’ approval for raising Rs789mn through the issue of warrants to promoters and the Infrastructure Fund of India. (ET)
± JK
± Tata Realty & Infrastructure, a 100% subsidiary of Tata Sons, has unveiled its plans to develop “Ramanujan IT city” at Taramani in Chennai at an estimated to cost Rs35bn. (ET)
Economic snippets
± The Centre has indicated that it would consider giving direct cash subsidy to state-owned oil marketing companies this year, instead of bonds, to compensate them for selling cooking fuel at lower than market price. (BS)
± The Centre has stopped allocating coal blocks to state governments till the Mines and Mineral (Development & Regulation) Act is implemented with the amendments. (BS)
± The country’s multiplex industry is likely to invest Rs4bn in setting up new properties, new genre movies and at least two big-budget bollywood releases every month over the next one year. (BS)
± The Petroleum and Natural Gas Regulatory Board said that 19 out of the total 330 city gas distribution networks identified in the country for supply of natural gas to domestic users are located in Andhra Pradesh. (BS)
± Inorder to arrest aggregate technical and commercial losses of power, all the three state power distribution companies of Madhya Pradesh are now allowed to invite franchisee partners for power distribution. (BS)
± The power ministry has floated a Cabinet note to resolve a contentious issue in implementing open access that allows large users - typically consuming 1 Mw and above - to choose their electricity supplier. (BS)
± The Planning Commission indicated that the Ministry of Road Transport and Highways was in a position to bid out contracts for the construction of 8,000 km of roads within the current financial year. (BS)
± As the Government decides to allocate spectrum for 3G only by August next year, some of the Indian operators are reviewing their strategy and looking at the possibility of leapfrogging to the 4G technology. (BL)
± India and Bhutan signed MoUs on initiating DPR work on the Amochu Reservoir (620 MW), Kuri-Gongri (1800 MW), Kholongchu (486 MW) and Chamkharchu-I (670 MW) projects in Bhutan and for initiating consultancy services aimed at the preparation of a transmission grid master plan. (BL)
± The Union Food and Agriculture Minister has asked sugar mills not to default on their ethanol supply commitments to oil marketing companies. (BL)
± The high-power committee, constituted by the Union Ministry of Shipping, to look into the issues of sinking of vessels carrying iron ore cargo along the Indian coast, plans to recommend the ban on ships more than 25 years old from loading iron ore cargo. (BL)
± Lenders have asked the RBI to allow them to decide interest rates on loans below Rs0.2mn to enable them reach out to unbanked sections which are presently serviced by microfinance institutions and money lenders at high rates. (ET)
±
± The proposed civil nuclear deal between
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