Market Mantra
Market outlook
Uneasy feeling!
The general remedy for those who are uneasy without knowing the cause is change of place
The bulls seem to be looking for some change and appear to have gone on an early Christmas holiday. Global stocks have struggled lately in making much headway amid some concerns about pricey valuations and the strength of the economic recovery. The markets are a bit nervous as economic rebound could spring a surprise, leading to an early exit from easy money policy. What is also making the markets jittery is a possible reversal in the trend in fund flows. For lack of other triggers, all eyes are fixed on how the dollar behaves and what happens to US interest rates.
Friday’s strong jobs data has set the cats among the pigeons. It remains to be seen how upcoming data unfolds, both in the
We expect a cautious to positive start and another sideways trading session. There might be a bounce back if the global trend improves. That in turn could force the bears to cover their shorts. Overall, the market will remain rangebound amid uncertainty over the near-term outlook.
Trading ideas (Time period: 1-3 days)
Hind Oil Exploration (BUY, CMP Rs283, Target Rs305): In our view, the stock has completed its downfall and has created a medium term support around the levels of Rs245. 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. On the daily chart, formation of higher bottom is also seen. After creating a base around Rs245-255, the stock has moved up steadily. Moreover, it has broken a downward-sloping trend line since October 2009. We expect the stock to attempt the levels of Rs300 and higher in the near term. Based on the above evidences, we recommend traders to buy the stock at current levels and on declines up to the levels of Rs277 with the support of Rs270 for a target of Rs305.
NDTV (BUY, CMP Rs160, Target Rs173): A detailed study of daily chart suggests that NDTV has closed above crucial resistance zone of Rs158-160 after making several attempts to break above its October 2009 high of Rs152. Continued positive divergence with the RSI oscillator points to the likelihood for an upward swing in the stock price. We believe that the stock has formed a bottom at Rs145-150 levels. Technical charts are appearing interesting from a long term view as well. We recommend traders to buy the stock in the range of Rs157-163 with a stop loss of Rs152 for target of Rs173.
Derivative strategies (Time period: Till expiry)
± Long Cummins DEC Future @ Rs404 for the target price of Rs420 and stop loss placed at Rs398
Remarks: Net maximum profit of Rs15,200 and net maximum loss Rs5,700.
± Long Petronet LNG Dec Future @ Rs71.20 for the target price of Rs74 and stop loss placed at Rs69.50.
Remarks: Net maximum profit of Rs16,720 and net maximum loss Rs7,480.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Feb | Buy | Above 17560 | 17600, 17640 | 17530 |
| Silver - Mar | Sell | Below 28440 | 28300, 28160 | 28573 |
| Copper - Feb | Buy | Above 330.2 | 333, 335 | 328.6 |
| Zinc - Dec | Sell | Around 108.7 | 107.5, 106.6 | 109.6 |
| Lead - Dec | Sell | Around 108.5 | 107.2, 105.8 | 109.6 |
| Aluminum - Dec | H. Buy | Above 99.5 | 100.7, 102 | 98.4 |
| Nickel - Dec | H. sell | 757-760 | 745, 730 | 768.9 |
| Crude Oil - Dec | Sell | 3505-3510 | 3470, 3430 | 3540 |
| Natural Gas - Dec | Buy | Above 233.5 | 237, 240 | 231.2 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Jan | Sell | Below 15050 | 14900, 14750 | 14178 |
| Jeera - Jan | Sell | 14760-14790 | 17630, 14500 | 14880 |
| Turmeric - Dec | Buy | Above 9100 | 9150, 9200 | 9070 |
| COCUDCAKL - Jan | Sell | Below 1228 | 1215, 1203 | 1237.8 |
| Chana - Jan | H. Sell | Below 2645 | 2615, 2590 | 2668 |
| Guar seed - Jan | Sell | Below 2760 | 2730, 2700 | 2785 |
| Soya bean - Jan | Sell | Below 2470 | 2440, 2410 | 2495 |
| Soya oil - Jan | H. Sell | Below 497 | 493, 489 | 500.3 |
| Mustard seed - Jan | Buy | 634-635 | 638.5, 642 | 632.7 |
| Mentha oil - Dec | Sell | Below 608 | 604.5, 602 | 611.3 |
**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 | Rs130.6 | | Entry load | Nil | |||
| NAV 52 high/low | Rs132/49 | | 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: Marico Ltd – BUY
CMP Rs107, Target Price Rs121, Upside 13.1%
Marico continues to dominate the ~Rs15bn branded coconut oil market, with its flagship brand Parachute and the refined safflower oil market with - Saffola and Sweekar. Supported by a strong brand portfolio, Marico has witnessed a healthy double-digit revenue growth for sixteen consecutive quarters. The Kaya venture is expected to breakeven by the end of the year and clock ~Rs3bn revenues by FY12. Management expects the robust growth in domestic as well as international business to drive consolidated revenues by ~16% in FY10. We expect Marico to witness 15.4% CAGR in revenues and 18.9% in profit over FY09-12. Maintain BUY rating with a revised price target of Rs121.
Corporate Snippets
± United Breweries Ltd (UBL) and Heineken NV ended an almost two-year-long dispute over partnership and agreed to permit UBL to brew and market the Heineken brand in
± Private equity firms Apax Partners, Carlyle and KKR have shown interest in buying ICICI’s 27% stake in 3i Infotech. (ET)
± OVL and Mittal may set up refinery in Nigeria as Indian companies look at sourcing liquefied natural gas (LNG) from African nations. (BS)
± ONGC is interested in acquiring a stake in
± M&M plans to raise around Rs20bn long-term debt for its Chakan commercial vehicle project. (BL)
± ABB Ltd has bagged an order worth Rs5bn from Bangalore Metro Rail Corporation Ltd for power related works. (FE)
± RIL is in talks with banks for a US$8-10bn war chest for the acquisition of Lyondell Basell, the world’s third-largest petrochemical company. (ET)
± Tata Steel standalone sales during November 2009 grew 35%yoy to 0.4mn tones. (FE)
± Reliance Mediaworks has partnered with US-based In-Three for converting 2D films and videos into the 3D format. (ET)
± Wockhardt has received permission to sell its nutrition division to US-based Abbott for nearly Rs6.5bn. (ET)
± Suzlon Energy subsidiary REpower Systems,
± Mahindra to roll out heavy truck in January 2010. (BS)
± Opto Circuits is looking at a capex of around Rs2bn in the next one and half years for setting up manufacturing units in Vizag and
± Essar Group is close to acquiring X-cite, a retail chain of consumer durables. (ET)
± Cipla has received Income tax notices demanding around Rs201m, for allegedly over-pricing two drugs. (ET)
± JSW Energy is expected to commission its 240MW Kutehr hydropower project in Himachal Pradesh by December 2015. (BS)
± IOC expects revenue loss of Rs270-280bn for selling fuels below cost price by the end of their current financial year, in March 2010. (BS)
± EdServ Softsystems is planning to raise US$25mn either through a GDR or an FCCB issue by the first quarter of FY10. (BS)
Economic snippets
± The government plans to expand the country’s National List of Essential Medicines (NLEM), which was last revised in 2003. (BS)
± FDI investments for the month of October grew 56% yoy to US$2.3bn (FE)
± Food price index was up 17.47% in the 12 months period ended November, 21. (FE)
± The government has cleared 17 FDI proposals worth Rs45.5bn (FE)
± The government will seek US$2bn of additional funds from the World Bank for highway development, road transport & highways (ET)
± Petroleum ministry has sought oil bonds worth over Rs200bn for state-run oil marketing companies. (ET)
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