Market Mantra
Market outlook
Tired Thursday on the Street!
It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.
Looks like the market can't make up its mind on where to go. After a strong start, the market appears to have slipped back into consolidation zone yet again. Most players are awaiting India Inc. to kick off the earnings season. The bright news on this front has been mostly discounted. What company head honchos say (and do) about the medium term outlook will be crucial.
A lot of hopes are pinned on the Budget (which may be on a Saturday) and corporates and investors will hope the budget is not just another annual ritual this time. Any government announcement on its ‘exit’ from the fiscal stimulus would be a key element. By the end of this month, we are most likely to hear from the RBI on its plan to reverse the easy monetary policy.
Today we expect a flat opening and another choppy day. With lack of triggers - positive or negative - some shuffling of portfolios could take place. A softening before the results could give more confidence for investors to re-enter.
Trading ideas (Time period: 1-3 days)
Sintex Industries (BUY, CMP Rs289, Target Rs307): From the past week, the stock has surged smartly from the support of its 13-DMA. The momentum oscillators like the daily RSI has given a positive divergence, indicating that price would start moving up. Moreover, on Wednesday, the stock broke out from the horizontal trendline, which had been preventing the price from heading higher with impressive volumes. Keeping in mind, the above mentioned evidences, we expect the uptrend to continue in the near term. We recommend traders to buy the stock between the levels of Rs286-292 with a stop loss of Rs280 for a target of Rs307 and Rs312.
Kotak Bank (BUY, CMP Rs841, Target Rs885): On the daily 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 seven weeks, the stock was consolidating between the range of Rs725-833. 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 Rs835-850 for an initial target of Rs885. It is advisable to maintain a stop loss of Rs816.
Derivative strategies (Time period: Till expiry)
± Long HDIL Jan Future @ Rs372 for the target price of Rs395 and stop loss placed at Rs361.
Remarks: Net maximum profit of Rs17,804 and net maximum loss Rs8,514.
± Long GTL Infrastructure Jan Future @ Rs38.50 for the target price of Rs41 and stop loss placed at Rs37.
Remarks: Net maximum profit of Rs12,125 and net maximum loss Rs7,275.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Feb | Buy | Above 16910 | 16965, 17010 | 16870 |
| Silver - Mar | H. Buy | Above 27720 | 27900, 28050 | 27590 |
| Copper - Feb | Buy | Around 350 | 353, 356 | 347.4 |
| Zinc - | Buy | 120.5-120.8 | 122, 123.2 | 119.4 |
| Lead - | Buy | Above 121 | 122.5, 124 | 119.8 |
| Aluminum - | Buy | At 107 | 109.2, 111 | 105.9 |
| Nickel - | H. Sell* | 882-886 | 870, 860 | 893.6 |
| Crude Oil - | Buy | Above 3800 | 3830, 3850 | 3775 |
| Natural Gas - | Buy | Above 275.5 | 279, 282 | 273.2 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - | Buy | 13800-13830 | 13980, 14125 | 13690 |
| Jeera - | H. Sell | Below 14200 | 14085, 13960 | 14290 |
| Turmeric - Apr | Sell | Below 7350 | 7300, 7260 | 7380 |
| COCUDAKL - | H. Sell* | 1197-1200 | 1189, 1180 | 1206.5 |
| Chana - | H. Sell* | 2420-2425 | 2390, 2360 | 2447 |
| Guar seed - | Sell | Around 2670 | 2630, 2600 | 2695 |
| Soya bean - | Trade as per calls given during trading session. | |||
| Soya oil - | Sell | Below 489 | 486, 483 | 491.7 |
| Mustard seed - | Sell | Below 609.5 | 606, 603 | 612.3 |
| Mentha oil - | Buy | 618-619 | 623, 626 | 615.7 |
**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 | Rs93.2 | | 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% | |||
| | | | | | | | |
CMP Rs2,422, Target
With the ordering for the XI plan expected to commence soon we believe BHEL is best placed to take advantage of this opportunity. BHEL’s industrial division will also aid growth as it benefits from improving industrial capex scenario. BHEL’s dominance in the sector is seen from the Rs350bn robust order inflow during the first nine months of this fiscal. Expanded capacity will improve its execution cycle for the company, thus translate into 25% revenue CAGR over FY09-12. This coupled with better margins will aid 30% earnings CAGR. An improving margin environment will improve BHEL’s cash position, thus remain a net debt free company. We factor in FY12 earnings and upgrade our estimates to reflect robust order inflow and execution. Upgrade to BUY with a target price of Rs2,803/share.
Corporate Snippets
± RIL is looking to raise more funds by selling more stock to institutional investor in the next two weeks. (BS)
± RIL will drill 6 new wells in KG-D6 block during the current year. (BS)
± L&T has bagged Rs23.25bn worth of order during Q3 FY10 for construction of residential towers, hospital, exhibition centre, IT Park and factory building. (BS)
± ICICI Bank has cut car loan rates to 9.75-10.5%. (ET)
± ONGC has been forced to exit from a gas block in
± Government can nod to offload 10% in BSNL. (BS)
± Reliance Infrastructure, L&T, IVRCL and KMC Constructions have been identified as `preferred bidders' for Rs82bn highway projects, which are to be awarded on negative grant from the private players soon. (FE)
± BHEL has bagged Rs420mn contract from Karnataka Power Corporation Ltd. (BS)
± Ashok
± IVRCL Infra has secured orders worth Rs9.6bn. (BL)
± ABG Shipyard, through unit, has acquired 5.7mn shares or 15.2% of Great Offshore via open offer. (BS)
± Ansal API, is all set to launch a major affordable housing project in
± Ranbaxy Lab has started discussions to buy a privately-held Bangalore-based vaccine company, deal size could be around Rs500mn. (ET)
± Pfizer is planning to source 40 off patient cancer drugs from Strides Arcolab. (BS)
± Wockhardt has received a tentative approval from USFDA for sale of its generic memantine HCL, which is used to treat Alzheimer's and dementia. (FE)
± United Spirits mulls bond issue to refinance Rs30bn debt. (BS)
± PSL has bagged an order worth Rs4.25bn for water supply projects. (BL)
± Pradeep Jain, chairman of Parsvnath Developers has pledged 83.66% of the stake he owns in the company with lenders. (BS)
± Ruchi Soya Industries has acquired over 50% stake in Andhra Pradesh-based Gemini Edible and Fat for Rs450mn in order to consolidate its presence in the southern markets. (ET)
± UCO Bank has recorded 22.1% growth in advances and 19.8% growth in deposits for Q3 FY10. (BS)
Economic snippets
± SEBI has extended the tenure of contracts in securities lending and borrowing to 12 months from current 1 month. (BS)
± Government to announce stimulus package for select exporters soon. (BS)
± Finance secretary hinted that the government may be looking at an exit from the stimulus. (ET)
± Government to scan Register of Companies data for writing corporate policy. (ET)
± Maharashtra Government is planning to invest Rs80bn to set-up 2000Kms of gas infrastructure and transportation grid. (BS)
± Petroleum Ministry is seeking Rs310bn either in cash or bonds to compensate oil marketing companies in the current fiscal for there losses on cooking fuels. (BL)
± EGoM headed by finance minister Pranab Mukherjee will meet to take a final call on the payment timeline for the 3G spectrum auctions. (ET)
± Fertilizers ministry has urged the finance ministry to urgently resolve the liquidity problems faced by the country’s fertilizer industry following no payment of subsidy dues by the government since October 2009. (ET)
± State-owned oil companies will present a health report to Prime Minister Manmohan Singh. (ET)
± Government plans to slap new entry route restrictions on FDI beyond 49% in eight specified "sensitive" sectors, including airports, seaports, pharma, petroleum refining and gas pipelines. (FE)
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