Market Mantra
Market outlook
Soft start, selling could set it!
Everything in the world may be endured except continual prosperity.
Bourses are unlikely to see fireworks of the kind Brabourne Stadium witnessed on Thursday where
In short, we are in a volatile consolidation phase after the astounding rally from the troughs of March. This trend is likely to prevail at least this month, with the sentiment driven mainly by global cues. The market will continue to move in a range of 4800-5200.
Today, we expect a soft opening as global equities are mixed. A close above the year’s high (around 5182) for a few days is needed for a further advance. Till then, the key indices will remain sideways and mostly subdued. Support may kick in at 5030-50. Further selling is not ruled out at higher levels but the same is unlikely to be too savage.
Trading ideas (Time period: 1-3 days)
Sesa Goa (BUY, CMP Rs380, Target Rs400): The stock has been consolidating in a range between the levels of Rs380-360 from last two weeks. On Thursday, the stock attempted to break-out from the upper-end of this trading range. Moreover, on the daily chart, the stock has formed a Bullish Candlestick suggesting upside from the current levels. The daily RSI is already in strong buy mode. The stock has closed above all its key daily moving averages. A move past the levels of Rs385 could take the stock towards the levels of Rs400 in the short-term. Keeping in mind the above-mentioned evidences, we recommend high risk traders to buy the stock between the range of Rs376-385 with a stop loss of Rs370 for a target of Rs400.
Tata Chemical (BUY, CMP Rs315, Target Rs335): The stock has done pretty much nothing in last three weeks, besides moving in a trading band between Rs295-270. This week, after a long time, the stock made a move above the upper end of the trading range. The rangebound trading appears to be broken and the stock is all ready to surge higher. Our view is further validated after the stock gave a close above the cluster of moving averages placed around Rs299-300 levels. If the stock holds up above the levels of Rs325-326 today, it can post huge upside in the coming trading sessions. We recommend high risk traders to buy the stock in the range of Rs311-318 for target of Rs335. Maintain a strict stop loss of Rs303.
Derivative strategies (Time period: Till expiry)
± Long REC Ltd DEC Future @ Rs264 for the target price of Rs270 and stop loss placed at Rs261
Remarks: Net maximum profit of Rs11,700 and net maximum loss Rs5,850.
± Short United Spirits Dec Future between Rs1,410-1400 for the target price of Rs1,340 and stop loss placed at Rs1,425.
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 18160 | 18100, 18050 | 18190 |
| Silver - Mar | Sell | Below 29220 | 29070, 28900 | 28330 |
| Copper - Feb | Buy | 328-329 | 332, 335 | 327 |
| Zinc - Dec | H. Buy | 110.1-110.4 | 111.7, 113 | 109.4 |
| Lead - Dec | Sell | 111.6-112 | 110.3, 109 | 112.8 |
| Aluminum - Dec | Sell | Below 97 | 96, 95.4 | 97.8 |
| Nickel - Dec | H. Sell | Below 758 | 743, 727 | 769.8 |
| Crude Oil - Dec | Sell | At 3560 | 3525, 3490 | 3585 |
| Natural Gas - Dec | H. Sell | Below 209 | 205.7, 202.5 | 211.8 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Dec | Sell | 15620-15660 | 15450, 15300 | 15779 |
| Jeera - Dec | Sell | Below 15200 | 15070, 14940 | 15290 |
| Turmeric - Dec | Sell | Below 9450 | 9390, 9330 | 9480 |
| COCUDCAKL - Dec | Sell | 606-607 | 602, 598 | 609.8 |
| Chana - Dec | Sell | Below 2570 | 2540, 2520 | 2593 |
| Guar seed - Dec | Sell | Below 2740 | 2705, 2670 | 2765 |
| Soya bean - Dec | Sell | Around 2430 | 2405, 2380 | 2451 |
| Soya oil - Dec | Buy | Around 490 | 493.5, 497 | 488.5 |
| Mustard seed - Dec | Buy | Above 627 | 630, 633 | 624.3 |
| Mentha oil - Dec | Buy | 606-607 | 611, 615 | 603.7 |
**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 | Rs132.1 | | 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% | ||
| | | | | | | |
Sector Update: Hotels - ‘Expensive: Stay Away’
Major business destinations have shown marked improvement in occupancies in Q2 FY10 which has continued in the first two months of H2. Although, as expected, room rates have not picked up in the busy H2 and are unlikely to improve materially on qoq basis in Q4. Moreover, companies we spoke to maintain that any hike in ARRs would be absorbed only if occupancy sustains at current levels. A robust domestic economy has contributed to increased room demand but, in our view, unless foreign arrivals improve, ARR growth would be difficult to come by. We tweak EPS estimates and raise target price on the back of improved occupancies and flat ARR assumption in FY11. The three coverage companies are trading above their respective 5-yr average EV/EBIDTA, which is unjustified in our view. SELL.
Corporate Snippets
± Walmart has selected three IT vendors, Infosys, Cognizant and UST Global, for multi-year contracts worth over US$600mn. (BS)
± ICICI Bank plans to raise US$270mn through bond sale. (BL)
± HDFC plans to raise Rs5bn via bond issue. (BL)
± IOC’s Paradip refinery likely to be completed by July 2012. (BL)
± Infosys to hire 1,000 people in the
± Cairn
± ONGC Videsh to invest US$5.5bn in Farsi block in
± Piramal Healthcare approves raising of funds up to Rs10bn through the issue of securities. (ET)
± Unitech to invest Rs40bn in construction of up to 30mn sq ft of residential and commercial spaces to be launched by next year. (ET)
± Enforcement Directorate raided the offices of Emaar MGF in and around
±
± SBI has signed a MoU with Honda Siel to provide retail financing to prospective customers. (BL)
± Bharti Airtel urges Trai to look into the business models of some rival telcos that offer rock-bottom tariffs. (ET)
± Tata Group may use a large tract of land in suburban Mumbai as a sales and marketing hub for the conglomerates manufacturing operations. (ET)
± Rolta ties up with Infoterra France, a leading provider of geoinformation products and services. (ET)
± Essar Steel has asked the government to denotify a sector specific SEZ developed by it in
± JSW Steel’s crude steel production more than doubled in the month of November to 4.8 lakh tones. (BL)
± Central Bank raises Rs10bn via 6-month COD at 4.75%. (BL)
± Godrej Properties, the real estate arm promoted by Godrej Industries and Godrej & Boyce Manufacturing Company, to launch IPO on December 9. (BS)
± Emami may join race to acquire Simple, one of the largest skin-care brands in
± Turner International is close to acquiring a controlling stake in NDTV Imagine, which runs three entertainment channels. (BS)
± Bharat Forge has formed a JV with Alstom to manufacture power equipments. (BS)
± Jindal Stainless and many other developers have approached Government for granting additional time to execute their SEZs. (BS)
± Eicher Motors has bought-out 3.18% stake from Mitsubishi Motor Corporation. (BS)
± OBC retains loan growth target at 22% for the current fiscal. (BS)
± Hexaware’s back-office arm to set-up a centre in
Economic snippets
± Food inflation surged to 17.47% for the week-ended November 21st. (BS)
± Net capital inflows into
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± Government may do away with fin instruments rating. (ET)
± The Indian pharmaceutical industry has become the third-largest in the world in terms of volume, valued at over US$20bn. (ET)
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