Market Mantra
Market outlook
Time to justify!
There's a company behind every stock, and that's the only real reason why stocks go up. -Peter Lynch.
The bulls will hope the earnings season gives them more reasons to hold on to quality companies and dump the inferior ones. Infosys and Bajaj Auto are the big companies declaring their results today. We expect Infosys to report 0.4% QoQ growth in revenues and 6.3% sequential decline in PAT. For Bajaj Auto, we expect 65% YoY jump in revenues and 189.6% YoY jump in PAT.
IIP data for November is due around noon today, and monthly inflation data is scheduled to be released on Thursday. Industrial output is seen rising by 10% in November from a year earlier after expanding by 10.3% in October. Marketmen will watch these crucial data points for cues on what action, if any, the RBI will take on Jan. 29.
The current phase of consolidation may extend for a few more days till there is further clarity on the health of the economy and India Inc. The NSE Nifty is likely to trade in a broad range of 5182 to 5310. Beware of the unusual spurt in some non-index stocks.
Trading ideas (Time period: 1-3 days)
Amtek Auto (BUY, CMP Rs187, Target Rs200): In our view, the stock has completed its downfall and has created a medium term support around the levels of Rs175-177. From the current level, the stock can only move towards one direction, i.e. upwards. The daily RSI has also given a positive divergence, indicating that price would start moving up. On the daily chart, formation of higher bottom is also seen. Moreover, it has broken past the downward sloping trendline since third week of November 2009. We expect the stock to attempt the levels of Rs200 and higher in the near term. Based on the above evidences, we recommend traders to buy the stock at current levels and on declines to the levels of Rs184 with a support of Rs179 for a target of Rs200.
IRB Infra (BUY, CMP Rs266, Target Rs285): On the weekly chart, the stock has given a bullish breakout and in the process has also made an intermediate top, suggesting that its short-term trend has turned up. Over the last two weeks, the stock was consolidated between the range of Rs233-271. The upmove was well supported by healthy volumes, which suggest accumulation. Further supportive technical oscillators are also positive. We recommend traders to buy the stock between the range of Rs262-270 for an initial target of Rs285. It is advisable to maintain a stop loss of Rs258.
Derivative strategies (Time period: Till expiry)
± Long ABB Jan Future @ Rs820 for the target price of Rs845-850 and stop loss placed at Rs810.
Remarks: Net maximum profit of Rs15,000 and net maximum loss Rs5,000.
± Long Everest Kanto Cylinder (EKC) Jan Future @ Rs158 for the target price of Rs165-170 and stop loss placed at Rs154.
Remarks: Net maximum profit of Rs24,000 and net maximum loss Rs8,000.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Feb | Buy | At 16970 | 17020, 17065 | 16935 |
| Silver - Mar | Buy | 28330-28360 | 28500, 28640 | 28230 |
| Copper - Feb | Buy | 342-343 | 346, 349 | 341 |
| Zinc - Jan | Sell | Below 115.3 | 114, 112.8 | 116.3 |
| Lead - Jan | Sell | Around 116.2 | 114.8, 113.5 | 117.1 |
| Aluminum - Jan | Buy | At 104.7 | 105.6, 106.9 | 103.9 |
| Nickel - Jan | H. Sell* | 840-844 | 826, 810 | 852.5 |
| Crude Oil - Jan | Sell | Below 3735 | 3703, 3675 | 3757 |
| Natural Gas - Jan | Sell | Below 245 | 242, 239 | 247.6 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - | H. Sell | Below 13730 | 13580, 13450 | 13857 |
| Jeera - Feb | Sell | Below 13490 | 13370, 13250 | 13610 |
| Turmeric - Apr | Sell | Below 7490 | 7455, 7420 | 7520 |
| COCUDAKL - Feb | Sell | Around 1206 | 1293, 1280 | 1214 |
| Chana - Feb | Sell | At 2450 | 2420, 2400 | 2465 |
| Guar seed - Feb | Sell | Below 2593 | 2567, 2540 | 2615 |
| Soya bean - Feb | Sell | Around 2300 | 2270, 2250 | 2320 |
| Soya oil - | H. Sell | Below 480 | 476, 473 | 482.8 |
| Mustard seed - Feb | Sell | 600-601 | 596, 592.5 | 604.3 |
| Mentha oil - | Buy | Above 610 | 614, 617.5 | 607 |
**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 | Rs92.9 | | Entry load | Nil | |||
| NAV 52 high/low | Rs93/44 | | 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% | |||
| | | | | | | | |
Company Update: Reliance Industries – Market Performer
CMP Rs1,082, Target
± Another round of treasury stock sale raising Rs34.6bn
± RIL building a war chest to fund LyondellBasell acquisition
± Global petchem footprint for RIL, if acquisition goes through
± Maintain our target price and Market Performer rating
Result Update: Exide Industries (Q3 FY10) – Not Rated
CMP Rs122
± Revenues increase by 16% yoy on back of strong volume growth in the automobile and industrial segments
± Higher prices of lead have also translated into improved realizations
± OPM jumps 934bps yoy and NPM more than doubles on yoy basis owing to sharp fall in raw material cost which was on back of higher consumption of recycled lead
± However, on sequential basis company registered a fall of 200bps in NPM and OPM
± With rapid recovery in industrial production, robust automobile volumes and higher prices of lead, we expect revenue growth to remain strong in the near term
Corporate Snippets
± Larsen & Toubro plans to invest Rs50bn in setting up seven new factories in
± Unitech sold over 13mn sq ft of property at Rs55.5bn during April-December 2009. (BS)
± Bharti Airtel has clinched a deal to buy 70% stake in
± RIL has raised Rs34.7bn through sale of its own shares from the vault, taking total funds raised in past four months to US$2bn. (ET)
± Reliance Industries is wooing the LyondellBasell management, especially Russian promoter Leonid Blavatnik, to become co-promoter in the bankrupt Dutch chemical company. (BS)
± Sterlite Industries is planning to invest around Rs6.5bn to set up a power plant at Tuticorin in Tamil Nadu. (BS)
± REPOWER, a unit of Suzlon Energy, has signed an agreement with its parent company, to promote product sales in markets where Suzlon has a stronger presence. (ET)
± Tata Motors announced that Nano trial production has started at Sanand. (BL)
± Great Eastern Shipping plans to acquire ships, after selling no less than 15 ships, as well as cancelling orders for three new ships in the last 18 months. (BS)
± SBI chairman said that the banking sector will witness pressure on profitability and interest margins, and rising non-performing assets, especially in the SME segment. (BL)
± JK Tyres & Industries to set up a
± NDTV to launch a 24-hour news and current affairs channel in
± ONGC has asked for restoration of seven-year income tax holiday on production of natural gas, and inclusion of the environment-friendly fuel in the proposed GST regime. (ET)
±
Economic snippets
± The Department of Telecommunications will auction three slots of third generation (3G) spectrum for all 22 telecom circles. (BS)
± Exports from
± The Department of Telecommunication in its draft notice for inviting applications for the spectrum sale said that the process will be limited to three private GSM operators. For CDMA operators, the draft (NIA) states that the auctions will be limited to only one player per circle. (ET)
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