Technicals - Educomp (Sell), HCL Tech (Buy); F&O - Bajaj Auto (Long), Praj Ind (Long); Report - Bank of Baroda (Buy)

 

Market outlook

Slightly positive at start!

 

If you wanna make the world a better place, take a look at yourself, then make that change.

 

The world and its problems will continue. While you need to keep a close watch on the developments, you need to look even more closely at your portfolio.

 

Today, we expect a positive start, but overall trading will be choppy. The Nifty will continue to face resistance at 5180-5200. Stock-specific movements will hog the limelight. Mahindra Satyam could spurt after it has agreed to pay US$70mn to Upaid for an out of court settlement.

 

The bulls will hope that all the talk of a double dip recession remains just a talk though not all is hunky dory. There are a few fresh dark clouds gathering over the horizon; like the credit problems in Dubai and Greece. If that was not enough, S&P has cut its outlook on Spain to negative. UK and Japan are not doing particularly well. There are some concerns on asset bubbles in China. Inflation of course will remain a big bother for India. High unemployment and subdued consumers are hindering growth in the US. 

 

Given this backdrop, one should remain guarded. Avoid impulsive buying.

 

Trading ideas (Time period: 1-3 days)

Educomp (SELL, CMP Rs739, Target Rs705): The stock had corrected from a peak of Rs859 to the current levels. In the current week, the stock has dropped by ~2%, declining to its lowest weekly close in the past two weeks. The long-term charts are suggesting weakness after it broke below ascending triangle formation. The daily Oscillators like RSI and MACD are moving in line with the prices. A break below Rs1,350 levels will see the stock entering a fresh intermediate downtrend for target of Rs700 levels. Aggressive traders can sell the stock at current levels and on rallies to Rs745 with a stop loss of Rs755 for a target of Rs705.

 

HCL Tech (BUY, CMP Rs355, Target Rs375): Despite extreme volatility in the broader market, the stock has managed to hold on the support of its short-term moving averages. On Wednesday, the stock closed above stiff resistance zone around Rs350-354. Moreover, volumes have also picked up substantially as the stock breached the crucial resistance levels. The MACD and RSI (momentum indicators) are above neutral levels and are exhibiting the positive trend to continue. It presents an opportunity for the traders to capitalize on the uptrend. We recommend traders to buy the stock between the levels of Rs352-357 for target of Rs375 with a stop loss of Rs345.

 

Derivative strategies (Time period: Till expiry)

±       Long Bajaj Auto Ltd DEC Future @ Rs1,674 for the target price of Rs1,654 and stop loss placed at Rs1,710

Lot size: 200.

Remarks: Net maximum profit of Rs7,200 and net maximum loss Rs4,000.

 

±       Long Praj Ind Dec Future between Rs96 for the target price of Rs101 and stop loss placed at Rs94.

Lot size: 2200

Remarks: Net maximum profit of Rs11,000 and net maximum loss Rs4,400.

 

Commodities – Metals (Time period: Intra-day)

Trade recommendation

Commodity	Strategy	Levels	Target	Stop-Loss
Gold - Feb	Buy	Above 17050	17110, 17160	17020
Silver - Mar	Buy	Above 27400	27550, 27690	27280
Copper - Feb	Sell	Below 321	318, 315	323.7
Zinc - Dec	Sell	Below 106	104.7, 103.5	107.1
Lead - Dec	Sell	Below 105	103.7, 102.5	106.1
Aluminum - Dec	Buy	Around 100	101, 102	99.3
Nickel - Dec	Buy	760-763	776, 790	749.2
Crude Oil - Dec	Sell	Below 3305	3275, 3250	3328
Natural Gas - Dec	Sell	Below 232	228, 225	234.8

 

Commodities – Agro (Time period: Intra-day)

Trade recommendation

Commodity	Strategy	Levels	Target	Stop-Loss
Pepper - Jan	Sell	Below 14550	14400, 14260	14680
Jeera - Jan	Sell	Below 14500	14350, 14200	14619
Turmeric - Dec	Buy	Above 9830	9880, 9920	9795
COCUDCAKL - Jan	Buy	Above 1227	1242, 1255	1215.3
Chana - Jan	Sell	2610-2615	2580, 2550	2635
Guar seed - Jan	Sell	Around 2760	2720, 2680	2785
Soya bean - Jan	Sell	Below 2410	2380, 2350	2430
Soya oil - Jan	Sell	490-491	487, 483.5	493.5
Mustard seed - Jan	Sell	Below 630	626.5, 623	632.2
Mentha oil -  Dec	Buy	Above 589	592.5, 596	586.3

 **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	Rs132.0		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: Bank of Baroda – BUY

CMP Rs509, Target Price Rs637, Upside 25.2%

 

BoB has underperformed Sensex and peers significantly since the news of Dubai’s financial crisis. With marginal exposure to Dubai (2.7% of total loans) and Dubai World at 0.6% of total loans as at end H1 FY10, we think the concerns have been overdone. Assuming a worst case scenario whereby the Dubai world loans turns into NPL’s, gross NPL would increase to 2.1% by FY11 while its net profit would decline by 6% from earlier estimate. We remain confident about the bank’s sturdy loan growth, comfortable asset quality and capital adequacy. The recent underperformance provides a great opportunity to buy the stock. BOB remains one of our preferred bets in the sector.  

 

Corporate Snippets

±       Lyondellbasell has said that it has not yet received a final bid from RIL. (ET)

±       Hardy Oil and Gas and RIL may drill 7 wells at two gas fields in India. (BS)

±       ONGC along with OIL India and Turkish Petroleum is likely to bid for Iraq’s giant Halfaya oil field. (ET)

±       ONGC Videsh has entered into a MoU with Sistema to jointly acquire and develop oil and gas fields in Russia and other CIS countries. (BS)

±       Infosys says it will make 13,000 campus offers for 2010-11. (BS)

±       Tata Motors looks to enter Swaraz Mazda by acquiring a 53% stake of Sumitomo. (ET)

±       American Tower Corporation to buy Essar Telecom Tower arm for US$400mn. (ET)

±       Hindalco to raise Rs45bn as debt to achieve financial closure for Utkal Alumina Refinery. (BS)

±       Suzlon Energy has received a Rs1.9bn order from Rajasthan State Mines and Minerals Ltd. (BL)

±       BHEL has developed a high temperature super conducting transformer of 1MVA, three phases, 33/6.6KV capacity. (BL)

±       M&M’s US arm to open a new assembly and distribution centre by end of this months. (ET)

±       Bajaj Auto has launched a 135-cc Pulsar, which will be manufactured from Chakan plant having a manufacturing capacity of 35,000 bikes. (ET)

±       Bajaj Auto to exit scooters business. (BS)

±       Fortis Healthcare is in talks to buy Lanka Hospitals chain. (BS)

±       Pfizer sues Dr Reddy’s over the sale of generic version of its best anti-cholesterol medicine Lipitor. (ET)

±       SEBI restricts Barclays to issue fresh P-Notes. (ET)

±       Mahindra Satyam has agreed to pay US$70mn to Upaid for out of court settlement. (ET)

±       PNB offloads 26% in its housing finance arm. (ET)

±       Government may sell Rs140bn worth of shares in NMDC. (BS)

±       TCS has entered into a 15-year agreement with Cardiff Council on a project aimed at making it easier for resident of the Welsh Town to access council services. (BS)

±       Elecon Engineering has bagged an order worth Rs290mn from Tecpro Systems. (BL)

 

 

Economic snippets

±       SEBI restricts Barclays to issue fresh P-Notes. (ET)

±       RBI brings back price ceiling on overseas borrowing or the maximum rate at which Indian corporates can raise foreign funds. (ET)

±       Centre to sell 3mn tons of wheat and rice in the open market. (ET)

±       Government to rethink of excise duty SOPs for manufacturing unit in Himmachal Pradesh and Uttarakhand. (ET)

±       Exports to grow 15%, says Commerce and Industry Minister. (ET)

±       RBI tells banks to cover all villages by 2011. (ET)

±       Property tax to be raised by 5% in Delhi. (BL)

±       Government to consider uniform power tariff in Mumbai. (BL)

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