Market Mantra: Technicals - Tata Chemical (Buy), Shiv-Vani Oil (Sell); F&O - Divi's Laboratories (Long), Hotel Leela (Long); Report - Utilities - 'Fuel Check'; Mgmt Mantra - Opto Circuits India

 

 

 

Market Mantra

 

Market outlook

Have a nice time!

 

All that really belongs to us is time; even he who has nothing else has that.

 

The time has come for a spectacular year to draw to a close. Timing the start of the market has been the latest debate and time in the market is going to get longer after today. We hope 2010 brings in even better gains though that may seem asking for too much. World equities have had a phenomenal rally in 2009. Much will depend on how the economic recovery progresses. Among the events to watch out for will be the Fed’s policy actions and its fallout on the dollar and other markets. RBI moves should come as no surprise whenever it happens.

 

Though the Nifty has made a new high for 2009, the market has been pretty much in a holiday mood. We expect a dull start amid subdued global markets. Volatility will prevail due to the F&O expiry. The Nifty is likely to face resistance at 5180-5200. A decisive close above 5200 could see the Nifty shooting to 5300-5650. Support is placed at 5100 and below that at 5000. Take all the rest you can during this long weekend.

 

Trading ideas (Time period: 1-3 days)

Tata Chemical (BUY, CMP Rs333, Target Rs353): Daily chart suggests formation of higher bottom. The stock has been moving along with the support of its 20-DMA since first week of December 2009. On Wednesday, the stock broke out from its previous peak. The bullish formation will be confirmed above the levels of Rs334. Traders can buy the stock in the range of Rs330-335 with a stop loss of Rs325 for a short-term target of Rs353 in the coming trading sessions.

 

Shiv-Vani Oil (BUY, CMP Rs352, Target Rs375): On the daily chart, the stock has given an upside breakout. The above mentioned pattern has taken place after a consolidation between the range of Rs322-347 since December 2009. From the current levels, the stock is expected to move northwards. The momentum oscillators like the daily RSI has given a positive divergence, indicating that price would start moving up. On Wednesday, the stock gave a close above its key resistance levels of Rs345-347. We recommend traders to buy the stock between the levels of Rs348-354 with a stop loss of Rs338 for a target of Rs375 and Rs380.

 

Derivative strategies (Time period: Till expiry)

±       Long Divi's Laboratories Ltd Jan Future @ Rs677 for the target price of Rs695 and stop loss placed at Rs670.

Lot size: 620

Remarks: Net maximum profit of Rs11,160 and net maximum loss Rs4,340.

 

±       Long Hotel Leela Ventures Jan Future @ Rs48.70 for the target price of Rs52 and stop loss placed at Rs47.50.

Lot size: 7,500.

Remarks: Net maximum profit of Rs24,750 and net maximum loss Rs9,000.

 

Commodities – Metals (Time period: Intra-day)

Trade recommendation

Commodity	Strategy	Levels	Target	Stop-Loss
Gold - Feb	Sell	Around 16700	16660, 16620	16740
Silver - Mar	Sell	Below 26600	26450, 26300	26730
Copper - Feb	Buy	At 345	347.8, 350	342.7
Zinc - Dec	Buy	At 119	120.3, 121.5	118.1
Lead - Dec	Buy	Around 111	112.5, 114	110.1
Aluminum - Dec	Buy	103-103.3	105	102.4
Nickel - Dec	H. Buy	890-893	905, 917.8	882.5
Crude Oil - Jan	Buy	Around 3700	3735, 3770	3677
Natural Gas - Jan	Sell	Below 269	266, 263	271.6

 

Commodities – Agro (Time period: Intra-day)

Trade recommendation

Commodity	Strategy	Levels	Target	Stop-Loss
Pepper - Jan	Sell	Below 14100	13900, 13750	14175
Jeera - Jan	Buy	Above 14690	14825, 14950	14590
Turmeric - Apr	Buy	Above 7500	7545, 7580	7470
COCUDAKL - Jan	H. Sell	1225-1228	1205, 1190	1242
Chana - Jan	H. Sell*	Below 2495	2465, 2430	2515
Guar seed - Jan	Sell	2805-2810	2780, 2750	2825
Soya bean - Jan	Sell	Below 2372	2345, 2320	2390
Soya oil - Jan	Sell	485-486	481, 477	488.3
Mustard seed - Jan	Sell	Below 599	595, 592	602
Mentha oil -  Jan	Buy	Above 600	504, 607	597

 **Strict Stop-Loss  *Book Partial Profits               

 

Mutual funds

Fund focus
ICICI Prudential Dynamic Plan					Invest
Fund manager	Sankaran Naren		Min investment				Rs5,000
Latest NAV	Rs91.7		Entry load				Nil
NAV 52 high/low	Rs92/44		Exit load				1% <1 year
Latest AUM	Rs1,753cr		Latest dividend (under dividend option)				12% (21-Aug-09)
Type	Open-ended		Benchmark				S&P Nifty
Class	Equity-diversified		Asset allocation	Equity (84%), Debt (0%), Cash (16%)
Options	Growth & dividend		Expense ratio			1.9%

 

 

Sector Update: Utilities – ‘Fuel Check’

During the XI plan the country targets to add 78GW of fresh generation capacity, of which thermal accounts for 76%. Of this 52.8GW will be coal based and 6.8GW gas based. Inorder to fuel this huge capacity addition program, India will require ~488mn tons of coal and 127mmscmd of gas by FY12. In addition to this imported coal based plants will require ~19mn tons by FY12. CEA anticipates indigenous coal availability to be at ~414mn by FY12, a shortfall of 74mn tons. Factoring in higher calorific value of imported coal, the country will need to import ~49mn tons to meet this shortage. As a result India will have to import ~68mn tons (19+49) by FY12. Moreover CEA anticipates the coal shortfall to increase to 150mn tons after all units stabilize in FY13. As for gas, the government will allocate ~65% of the KG-D6 gas to the power sector - 31mmscmd will be supplied to the existing projects, 12mmscmd on fall back basis and 10mmscmd to captive plants on fall back basis. This will allow the gas plants to operate at 70% PLF. As per CEA, 24GW of the existing coal capacity faces critical coal stock levels, i.e. seven days or less. This was due to either lesser receipt of coal, non-receipt of imported coal, evacuation and unloading constraints. Hence non-availability of desired quantity of fuel - coal and gas - will be detrimental for the sector.

 

Management Mantra: Vinod Ramnani, CMD, Opto Circuits India

Vinod Ramnani is the Chairman & Managing Director of Opto Circuits India Ltd. He is a Mechanical Engineer by profession. Mr Ramnani is the driving force behind Opto Circuits. Having worked with organizations in India and abroad, he had a wealth of experience to back him, when in 1990, he along with Thomas Dietiker (the American co-promoter of Opto Circuits) and others decided to establish Elekon Industries Pte. Ltd. in Singapore. Thereafter, Mr. Ramnani initiated a move to shift the manufacturing facilities to Bangalore and Opto Circuits was formed in 1992 with him as the Managing Director. He is very passionate and wants to see Opto Circuits scale new heights.

 

Corporate Snippets

±      NTPC is set to get nod from government to sell 10% of its power capacity at market determined prices. (ET)

±             Infosys to invest Rs3bn in Orissa project. (BL)

±      TCS to step up hiring as info-tech spending takes off. (BL)

±      DLF is taking up a major restructuring exercise that can see the company splitting into five verticals. (FE)

±      M&M to launch 1 ton LCV Maximo on January 5. (BS)

±      JSPL may raise offer for Australia’s Rocklands Richfield. (BS)

±      Bharti Airtel to enter wi-fi space by rolling ‘hotspots’ at several locations across the country. (ET)

±      The National Housing Bank is likely to give HDFC two more years to comply with capital market exposure norms. (BS)

±      HCL Infosystems has bagged Rs1bn radio network contract in partnership with Motorola from Delhi Government. (ET)

±      LIC has raised its equity holding in Canara Bank to 7.08%. (ET)

±      JSL plans to expand its stainless steel capacity to 2.5mtpa by 2014. (ET)

±      BSNL puts mega tender plan for 93mn lines on hold. (ET)

±      Nalco has decided to locate its proposed 0.5mn ton Indonesian aluminum smelter project in east Kalimantan province. (BL)

±             Godrej Consumer Products is aggressively looking at acquisition including the house-hold insecticide business of Sara Lee Corp. (BS)

±      HCC has bagged an order worth Rs3.75bn for construction related works in Karnataka. (BS)

±      Panacea Biotech plans a buyback up to Rs1.05bn. (BS)

±      Cox & Kings acquires Australian travel firm MyPlanet Australia Pty Ltd and Bentors International Pty Ltd. (ET)

±      Hotel Leelaventures has bought back FCCBs worth US$25mn. (BS)

±      Diageo-Radico JV has received government approval for increasing foreign equity participation to 100%. (FE)

±      State Bank of Mysore to raise Rs6bn from rights issue. (BL)

±      United Bank of India has filed a DRHP for an IPO to raise Rs500mn. (BS)

±      Zylog to usher in low cost computing and has partnered with IBM and Canonical Ubuntu. (BL)

±       Foursoft has bagged a contract from a Canadian based Sheritt International Corporation for a logistic management system. (BS)

 

Economic snippets

±      Credit growth back in double digits, growing at 10.8% yoy for the fortnight ended November 23, 2009. (BS)

±      Kelkar led commission proposes hike in state’s share of tax revenues. (ET)

±      Banks reject RBI’s move to dump BPLR based norms. (ET)

±      Life Insurance Companies business grew 22% in first eight months of the current fiscal. (ET)

±      Bank lending in December has jumped nearly five-folds over the previous month. (ET)

±      Iron ore exports to slide by 6mn tons on duty hike. (ET)

±      Time not right to exit stimulus measures, says FM. (ET)

±      RBI has sought details from banks about their investments in mutual funds. (ET)

±      The government has cleared 9 FDI proposals worth Rs5.2bn. (BS)

±      Ban on sugar futures trade extended till September 2010. (BS)

±      3G spectrum auction likely from February 13. (BL)

±       Banks want CRR and SLR exemption for infrastructure bonds. (BL)

 

 

 

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