Market Mantra
Market outlook
Steady start in the offing
Life is much like Christmas - you are more apt to get what you expect than what you want.
Christmas is upon us, and the countdown to 2010 has begun. After a stellar year for equities (following a disastrous 2008), some fatigue has set in. So, a wait-and-watch mode is the order for now. The market will continue to consolidate in the remaining sessions, and perhaps even beyond that. Since there will be two extended weekends, volume could dip and volatility might rise. Overall, the market will be insipid.
For the day, the outlook is a flat to tad higher opening. Asian markets are mixed.
The near-term trigger will be how the policymakers execute their ‘exit’ strategies. In
Dollar’s movement and Fed’s action will be crucial for world markets. Liquidity is not an issue for
Trading ideas (Time period: 1-3 days)
Indowind Energy (BUY, CMP Rs56, Target Rs64): The stock has seen impressive volume last week and surged over 9%. We believe the rally could extend upto Rs64-65 levels in the near term. The bullish formation is confirmed after the stock gave a close around its 52 week high and above its short-term moving averages with positive divergences in momentum oscillators. Volumes accompanying the breakout are encouraging, thereby adding confirmation to the bullish outlook. We recommend traders with high risk appetite to buy the stock in the range of Rs55-57 for a short term target of Rs64. A stop loss of Rs52 should be maintained on all long positions.
Mphasis: (BUY, CMP Rs726, Target Rs760): On the daily chart, the stock has given an Upside Breakout after closing at its 1 month high. The stock has rallied sharply over the past few days bouncing back from its 13-day moving average. The upmove was despite the weak sentiment across the bourses. On Friday, we saw Mphasis gaining fresh upside momentum after crossing over its stiff technical resistance levels of Rs710-715. The move was accompanied by higher volumes. The technical oscillators RSI and Stochastic are exhibiting positive divergence. Based on above observations, we recommend high risk traders to buy the stock in the range of Rs722-730 for target of Rs760. It is advisable to maintain a stop loss of Rs706 on all long positions.
Derivative strategies (Time period: Till expiry)
± Long Essar Oil Dec Future @ Rs142 for the target price of Rs152 and stop loss placed at Rs139.
Remarks: Net maximum profit of Rs14,120 and net maximum loss Rs4,236.
± Long PTC India Dec Future @ Rs108 for the target price of Rs115 and stop loss placed at Rs105.
Remarks: Net maximum profit of Rs18,550 and net maximum loss Rs7,950.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Feb | Buy | Above 16990 | 17035, 17080 | 16960 |
| Silver - Mar | Buy | Above 27350 | 27480, 27600 | 27240 |
| Copper - Feb | Buy | 322-323 | 326, 328 | 320.4 |
| Zinc - Dec | Buy | 111.2-111.5 | 112.8, 114 | 110.7 |
| Lead - Dec | Sell | Around 109 | 107.8, 106.5 | 109.8 |
| Aluminum - Dec | Buy | At 103.5 | 104.8, 106.3 | 102.7 |
| Nickel - Dec | Sell | Below 800 | 785, 770 | 811.6 |
| Crude Oil - Jan | Buy | 3475-3480 | 3510, 3540 | 3457 |
| Natural Gas - Dec | Buy | 269-270 | 273.5, 277 | 267.8 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Jan | Buy | 14300-14330 | 14477, 14600 | 14190 |
| Jeera - Jan | Buy | Above 14980 | 15090, 15200 | 14885 |
| Turmeric - Apr | Buy | |||
| COCUDAKL - Jan | Sell | Around 1210 | 1198, 1185 | 1219 |
| Chana - Jan | Sell | Below 2540 | 2510, 2480 | 2563 |
| Guar seed - Jan | Sell | Around 2720 | 2680, 2650 | 2740 |
| Soya bean - Jan | Sell | Below 2390 | 2360, 2335 | 2410 |
| Soya oil - Jan | Sell | Below 477.5 | 474.5, 471.7 | 479.8 |
| Mustard seed - Jan | Sell | Below 605 | 601.5, 598 | 607.8 |
| Mentha oil - Dec | Sell | Below 586 | 582, 578.5 | 589.3 |
**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 | Rs130.4 | | 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: Maruti Suzuki
CMP Rs1,552, Target
± Volume growth to remain strong
± Higher raw material costs to be offset by lower power costs
± Suzuki-Volkswagen deal to benefit MSIL eventually
± Upgrade to Buy with a revised price target of Rs1,750
Weekly Update: Debt Market - week ended December 18, 2009
± On a weekly basis, Indian federal bond yields ended flat. Benchmark 10-year G-Sec yield was steady at 7.56%. However, short tenure yield witnessed some volatility, it moved up by 29bps on a weekly basis.
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± As on Dec 1 ‘09, SIDBI had disbursed Rs15bn to 10 banks for lending to micro and unorganised enterprises.
± WPI Inflation surged to 4.78% in Nov’09 on account of high food prices. Food inflation reached a ten-year high at 19.95% for the week ended Dec 5 ’09.
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Corporate Snippets
± Sun Pharma has written to Taro Pharmaceutical's shareholders urging them to vote against the election of Taro's proposed board of directors at the latter's annual meet. (BL)
± Suzlon Energy reduces its borrowings by 15% by paying back US$780mn used to acquire Hansen Transmissions International NV. (BS)
± ONGC says it had made two gas discoveries in
± Infosys Technologies sees revenues from new engagement models to be around US$500mn going forward. (ET)
± NTPC proposes power project in
± DLF plans to bring all of its rental properties under a single umbrella, as part of business restructuring. (BS)
± L&T says its order-book stands at Rs750bn and may touch Rs1tn by the end of this financial year. (FE)
± Wipro Technologies signs a MoU with the UK Trade & Investment for low carbon tech development. (BS)
± Axis bank's overseas bond issue put on hold, to wait for spreads to narrow. (BS)
± Reliance Communications ties up with UniverCell, a telecom services retail company. (BS)
± Dr Reddy’s Laboratories is working on a new line of cardiovascular drugs. (TOI)
± USL Wines, division of United Spirits is looking to export its non-premium brands, named Four Seasons and Zinzi in the US, Britain, Germany, Hong Kong and Singapore. (BS)
± Torrent Power seeks 15% to 16% hike in tariff rates. (BS)
± NIIT has deferred its plan to raise Rs2.3bn through QIP in the current financial year. (ET)
± Dr Reddy's plans to launch Lipitor's generic version in US. (BS)
± SEBI asks the government to consider appropriate action against Reliance Industries for allegedly routing funds to dummy companies for buying large quantity of its shares in the year 2000. (BS)
± Bharati Shipyard is considering another open offer to acquire management control of Great Offshore. (ET)
± ADAG asks ICAI to penalise Reliance Communication’s auditor. (BS)
± Fortis Healthcare completes the acquisition of 10 Wockhardt Hospitals in metro cities of Mumbai,
± Adani Group is looking at increasing the area of its multi-product SEZ at Mundra in
± The board of directors of Hindustan Copper has recommended dilution of 20% stake in the company. (BL)
± Welspun group to merge three promoter-owned investment companies that hold majority stakes in three listed units into Welspun Investments, to unlock value and help raise funds. (Mint)
± SCI plans to buy a total of 37 vessels of which 31 would be new ones over the next couple of years. (DNA)
± Essar Oil has bagged three more CBM acreages and Arrow Energy two such concessions after a panel of secretaries rejected bids by a Deep Industries-led consortium. (TOI)
± UCO Bank plans to open 100 branches across the country by the end of this financial year. (BS)
± CEAT is planning to increase its stake in Sri Lanka-based tyre manufacturing joint venture, Ceat Kelani International Tyres to 50% in the current fiscal. (ET)
± EIH will add 750 hotel rooms to its existing inventory of over 1,800 rooms under the Trident brand in the next two-and-a-half years. (BL)
± Asian Hotels receives shareholders’ approval to demerge the company into three independent entities. (ET)
± Aditya Birla Group plans to revive its back office business Aditya Birla Minacs by infusing fresh capital. (ET)
± Bank of
± Mumbai-based DB Hospitality, part of the DB Group, will invest Rs55bn in the construction of hotels by 2014. (FE)
Economic snippets
± Foreign exchange reserves fall by US$1.6bn to US$286bn, for the week ended December 11. (BL)
± GDP is likely to be in the upper bound of the 6.25-7.75% range predicted by the Economic Survey 2008- 09 in July this year or may exceed it, says mid-year review. (BL)
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± Prime Minister’s Economic Advisory Committee has preferred a single slab for GST, unlike the proposal mooted by the states. (TOI)
± On the back of a decent performance in iron and coal cargo traffic, Indian ports saw a 13% increase in volumes in Nov’ 09 to 48.2mn tonnes compared to 42.5mn tonnes in Nov’ 08. (TOI)
± Government is making it mandatory for all SEZs to power at least a quarter of their lighting needs with solar energy. (TOI)
± Petroleum ministry asks finance ministry to give infrastructure label to E&P of hydrocarbons as well as to extend the subsidy on domestic LPG and kerosene beyond Mar’ 10. (FE)
± Government indicated that it preferred RBI to refrain from hiking key policy rates at this juncture, despite rising inflation. (FE)
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