Market Mantra
Market outlook
Pressure around the world!
Act quickly, think slowly.
When the world was down,
The gains are less likely to be maintained given the weakness all around. However, bulls will strive for a recovery later in the day. In the
U.K and
Trading ideas (Time period: 1-3 days)
Maruti (SELL, CMP Rs1,568, Target Rs1,520): On the daily chart, the stock seems to have appeared on an interesting juncture. After trading in a range of Rs300-340 points for last two months, it has struggled to cross the upper trendline. Inability for the stock to close above the upper trendline last week has seriously dampened any hopes of a legitimate recovery. The daily MACD has generated a crossover sell signal, suggesting build-up of momentum on the downside. Further the weekly RSI is showing a downtrend. We recommend traders to sell the stock in the range of Rs1,575-1,560 with a stop loss of Rs1,590 for a target of Rs1,520.
DLF (BUY, CMP Rs383, Target Rs410): On the daily chart, the stock has formed a bullish piercing candlestick in yesterday’s session. It is considered a bullish reversal pattern. In the above formation, in the first day a long black day is formed. The next day opens at a new low, which closes above the midpoint of the body of the first day. Other supportive indicators such as moving averages and RSI are also suggesting an uptrend from the current levels. We recommend high risk traders to buy the stock in the range of Rs377-387 for a target of Rs410. It is advised to maintain a stop loss of Rs370.
Derivative strategies (Time period: Till expiry)
± Long HCC DEC Future @ Rs139 for the target price of Rs146 and stop loss placed at Rs136
Remarks: Net maximum profit of Rs14,700 and net maximum loss Rs6,300.
± Short Aurobindo Pharma Dec Future between Rs885 for the target price of Rs863 and stop loss placed at Rs892.
Remarks: Net maximum profit of Rs15,000 and net maximum loss Rs6,250.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Feb | Sell | Below 17430 | 17370, 17300 | 17470 |
| Silver - Mar | Sell | Below 28000 | 28850, 28700 | 28127 |
| Copper - Feb | Sell | Below 326 | 323, 320 | 328.7 |
| Zinc - Dec | H. Sell | Around 108.7 | 107.5, 106.6 | 109.6 |
| Lead - Dec | Sell | 107.2-107.5 | 106, 105 | 108.2 |
| Aluminum - Dec | Sell | Below 99.5 | 98, 96.5 | 100.3 |
| Nickel - Dec | H. sell | 757-760 | 745, 730 | 768.9 |
| Crude Oil - Dec | Sell | Around 3460 | 3420, 3380 | 3485 |
| Natural Gas - Dec | Buy | Above 239 | 242, 245 | 236.7 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Jan | Sell | Below 14650 | 14500, 14360 | 14767 |
| Jeera - Jan | Sell | Below 14600 | 14470, 14330 | 14710 |
| Turmeric - Dec | Buy | Above 9450 | 9490, 9530 | 9420 |
| COCUDCAKL - Jan | H. Sell | Below 1228 | 1215, 1203 | 1237.8 |
| Chana - Jan | Sell | Around 2650 | 2620, 2590 | 2670 |
| Guar seed - Jan | Sell | Below 2669 | 2635, 2610 | 2695 |
| Soya bean - Jan | Sell | Below 2470 | 2440, 2410 | 2495 |
| Soya oil - Jan | H. Sell* | Below 497 | 493, 489 | 500.3 |
| Mustard seed - Jan | Buy | Above 637 | 640, 643 | 634.3 |
| Mentha oil - Dec | Sell | Below 586.5 | 583, 580 | 589.2 |
**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 | Rs132.4 | | 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: CESC – Market Performer
CMP Rs398, Target Price Rs383, Downside 3.8%
Spencer’s Retail, the retail arm of CESC, has been reporting losses since FY07. We believe it will continue to report losses till FY12. However, the company will benefit from improved economic conditions thus enabling it to improve its average realizations and gross margin. As a result the company will breakeven by FY13. Inorder to achieve this, the company strategy plans to set up more of hyper (30-35k sq ft each) and super (12-15k sq ft each) format stores. It also plans to enhance the share of high margin products like apparels and private labels in its revenue mix. It has entered into strategic tie ups with some of the international brands and plans to open standalone outlets for some of them. The company plans to focus more on its Top 20 stores which account for 40% of footfalls and 50% of sales. This will aid in improving its average realizations to ~Rs900/sq ft/month by FY12 from ~Rs800/sq ft/month today. It also plans to expand its area under operations and plans to set up 15-20 hyper and super formats each year. In addition it also plans to open standalone stores for Fish & Meat and some of its apparel brands. The company has been successful in reducing its monthly loss to Rs160mn from Rs200mn earlier. We reduce our negative per share value ascribed to Spencer’s to -Rs2/share from –Rs9/share earlier and upgrade CESC’s target price to Rs383/share. Re-iterate Market Performer.
Corporate Snippets
± Reliance Industries is expected to buy out a fifth of LyondellBasell’s US$27bn gross debt and seek a rollover of the balance after acquisition, as a step towards gaining confidence of creditors in its plans to acquire the world’s third largest petrochemical company. (BS)
± ONGC Videsh has pulled out from the exploration block 5B in
± L&T secured a contract valued at Rs8.4bn from NPCIL for construction of the main plant civil works of reactor 3 and 4 at Kakrapar Atomic Power Project near
± L&T has accepted all demands in its implementation agreement with the Uttarakhand government on the 99MW Singoli-Bhatwari hydel project in the hilly Rudraprayag district. (BS)
± GSM operators such as Bharti Airtel,
± Symantec Corporation and Wipro inked a new partnership under which Wipro Infotech will offer data loss prevention & back-up and recovery infrastructure consultancy services based on Symantech Technology. (FE)
± JSW Group is planning to set up minor ports in states where it has a major presence through its steel and power plants. (FE)
± ICICI bank and Kotak Mahindra Bank have launched home loan schemes which combine fixed and floating interest rates. (FE)
± Comviva (formerly Bharti Telesoft) is in talks with several telecom service providers, including group company Bharti Airtel, to launch a SIM card that allows up to 10 users to share the same mobile phone with their own specific numbers. (BS)
± Tata Tea, which acquired several global beverage brands in the last three years, will focus on bringing them together and making it a seamless international brand. (BL)
± Mahindra Aerospace, the aerospace arm of Mahindra & Mahindra, is readying the prototype of a small private aircraft built in collaboration with state-owned National Aerospace Laboratories. (BS)
± RBI has found and taken action against 17 cases of irregularities by companies that raised FCCBs since April 2005 – including US$25mn raised by Country Club, US$100mn by Hotel Leela Venture, US$105mn by Educomp Solutions, US$180mn by 3i Infotech and Rs51.4bn by Reliance Communications. (BS)
± Ranbaxy said it will sell its 50% stake in its Japanese joint venture Nihon Pharmaceutical Industry (NPI) to partner Nippon Chemiphar. (ET)
± Nestle
± HCL Technologies bagged a multi-million pound, five-year infrastructure management and transformation order from News International - a UK subsidiary of News Corporation. (BL)
± Videocon Group promoted Next Retail is open to offloading a minority stake ranging from 15-20% to private equity players to garner funds for expansion. (BL)
± Essar Group has entered into the Rs800bn consumer durables and IT products business through the acquisition of X-Cite. (ET)
± Standard Chartered Bank has extended a US$1bn line of credit to Essar Oil to part finance its acquisitions of Royal Dutch Shell’s refinery assets in
± Textile major Alok Industries has decided to withdraw from the realty segment by 2012. (BS)
± Autoline Industries has drawn up Rs2.5bn brownfield expansion plan which will be funded through internal accruals and term loans. (BL)
± Mahindra Systech, the auto components arm of the Mahindra group, plans to consolidate its business by merging Mahindra Ugine Steel, Mahindra Composites, Mahindra Forgings as well as unlisted entities such as Mahindra Gears, Mahindra Castings and Engines Engineering. (BL)
± Gujarat NRE Minerals Ltd, the Australian subsidiary of Gujarat NRE Coke, is raising AUS$50mn through placement of shares to several unidentified international institutional investors. (BL)
± Godrej Properties' IPO was subscribed by anchor investors JF India Fund, JF Eastern Smaller Companies Fund, Ward Ferry Management Ltd and The Royal Bank of Scotland for Rs 899mn at Rs530/share. (BL)
± NDTV sold most of its indirect stake in NDTV imagine to Time Warner in a deal worth US$117mn .(ET)
± Sakthi Sugars has allotted 1.8mn equity shares to three institutional investors by conversion of FCCBs worth US$8.1mn held by them. (ET)
± DB Corp will launch its initial public offering to raise about US$83mn on Friday. (ET)
± JSW Energy's Rs27bn public offer got over-subscribed 1.48 times on Tuesday. (FE)
Economic snippets
± Ministry of New and Renewable Energy minister said that about 1,300MW of solar power would be added over the next three years. (BS)
±
± The Department of Telecommunications says it is being forced to curtail its 3G auction plans from four slots to three. (BS)
± The government sought Parliament’s approval for additional spending of Rs257bn on fertiliser subsidies, food and for equity infusion in Air
± The EGoM on the Dhabol power project reviewed the non-payment of Rs4.7bn by state insurance companies to Ratnagiri Gas and Power Pvt Ltd, increasing gas supply and timely commissioning of Phase III. (BS)
± The Ministry of Finance is in favour of scrapping the practice of issuing oil bonds to government-owned oil marketing companies and not only wants the Ministry of Petroleum and Natural Gas to rework the underrecovery figure for the current year but has also decided to look at the issue of oil subsidies only in February 2010. (BS)
± The Department of Telecommunications (DoT) has told Bharti Airtel to provide all required information to the auditor by December 14 who had sought information through two questionnaires on August 12 and September 12. (BS)
± The Tamil Nadu government on Tuesday said it was expecting five merchant power plants to come up in the state with a total installed capacity of 10,000 Mw by 2012. (BS)
± The government expects credit offtake to pick up in the coming months on the back of policy steps taken by the RBI to boost credit growth. (BS)
± The Andhra Pradesh government has drawn up an ambitious plan to develop 13 minor ports over the next decade and targets 200mn tons by 2019-20. (BL)
± The Market Stabilisation Scheme is likely to comeback as the RBI moves to remove excess liquidity from the banking system. (BL)
± Successful bidders of 3G spectrum in the upcoming auctions may have to pay only 25% of the bid amount initially and can pay the remaining in the next financial year when they receive airwaves. (ET)
± RBI is likely to ask banks to impose a ceiling on their investments in mutual funds and also prescribe norms for such investments. (ET)
± States are expected to raise a record Rs700bn leading up to the end of the fiscal. (ET)
± The Centre refuted reports that there is 30-40% siphoning off of allotted funds under the NREGS. (ET)
±
± The government targets to allot 17 port development projects to private players under its ambitious National Maritime Development Programme. (FE)
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