Market Mantra
Market outlook
Worth the risk!
Take calculated risks. That is quite different from being rash.
Optimism among global investors has returned to the pre-financial crisis levels, says a recent fund manager survey adding that investors are taking on above-average risk for the first time since 2006.
We expect a positive start, thanks to the overnight rally on Wall Street. Things may turn sideways and lackluster as the day wears on. Taking a broad call on the market as of now is not warranted given the murky outlook and the fact that we are still in the middle of the earnings season.
Derivatives indicators are pointing to some weakness though a big crash is not on the cards. The near-term range for the Nifty could prevail at 5200-5300. However, there is no guarantee that 5180 will not be broken. A big positive move out of the current range will be possible, provided the global cues remain healthy and the RBI doesn’t spring a negative surprise.
Wipro Q3 consolidated revenue is Rs69.66bn while net profit at Rs12.17bn is much above our estimates. TVS topline is likely to rise 25% YoY. Yes Bank NII is likely to grow 48% YoY while PAT will rise 15% YoY.
Trading ideas (Time period: 1-3 days)
Titan Industries (BUY, CMP Rs1,534, Target Rs1,610): The stock continues to be in an uptrend after breaking out from consolidation between range of Rs1,277-1,485 from last week of December 2009. The momentum indicator RSI is exhibiting positive movement suggesting further upside in the near term. Moreover, volumes have also picked up substantially as the stock breached the upper end of the consolidation range mentioned above. Keeping in mind the above mentioned technical parameters, we recommend traders to buy the stock in the range of Rs1,520-1,545 with a stop loss of Rs1,500 for a target of Rs1,610.
Andhra Bank (BUY, CMP Rs, Target Rs112, Target Rs120): On Tuesday, the stock broke past the top-end of the consolidation phase. The move was supported by strong volumes and against a weak trend in the broader indices. This bullish breakout signals the end of the consolidation phase. A sustained rally past the levels of Rs113 could see the stock attempting the levels of Rs120 and higher. We recommend buying the stock at current levels and on any declines to Rs110 for short term target of Rs119 and Rs120. Traders should maintain a stop loss of Rs107 on all long positions.
Derivative strategies (Time period: Till expiry)
± Long Opto Circuits Jan Future @ Rs236 for the target price of Rs245 and stop loss placed at Rs232.
Remarks: Net maximum profit of Rs18,360 and net maximum loss Rs10,200.
± Long Voltas Jan Future @ Rs187 for the target price of Rs199 and stop loss placed at Rs182.
Remarks: Net maximum profit of Rs32,400 and net maximum loss Rs13,500.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Feb | Buy | 16880-16885 | 16940, 16980 | 16845 |
| Silver - Mar | Buy | Around 28600 | 28750, 28900 | 28470 |
| Copper - Feb | Buy | 345-345.5 | 349, 352 | 342.5 |
| Zinc - Jan | Buy | 113.7-114 | 115.2, 116.5 | 112.8 |
| Lead - Jan | Buy | At 111.5 | 112.5, 113.5 | 110.8 |
| Aluminum - Jan | Trade as per calls given during trading session. | |||
| Nickel - Jan | Buy | 873-876 | 890, 900 | 863.7 |
| Crude Oil - Jan | Sell | At 3580 | 3550, 3530 | 3596 |
| Natural Gas - Jan | Sell | Below 259 | 255.5, 252 | 260.8 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Feb | H. Sell* | Around 13300 | 13130, 12950 | 13427 |
| Jeera - Feb | Sell | Below 12240 | 12115, 12000 | 12335 |
| Turmeric - Apr | Sell | Below 6730 | 6680, 6640 | 6760 |
| COCUDAKL - Feb | Sell | Below 1178 | 1165, 1153 | 1187.5 |
| Chana - Feb | Sell | Below 2350 | 2320, 2300 | 2370 |
| Guar seed - Feb | Sell | Below 2460 | 2430, 2400 | 2485 |
| Soya bean - Feb | Sell | Around 2240 | 2220, 2200 | 2255 |
| Soya oil - Feb | Sell | Below 459.5 | 456, 453 | 462.5 |
| Mustard seed - Jan | Buy | Above 595.5 | 599, 602 | 592.7 |
| Mentha oil - Jan | Sell | Below 587 | 583.5, 580 | 589.8 |
**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 | Rs93.4 | | Entry load | Nil | |||
| NAV 52 high/low | Rs93/44 | | Exit load | 1% <1 year | |||
| Latest AUM | Rs1,822cr | | Latest dividend (under dividend option) | 12% (21-Aug-09) | |||
| Type | Open-ended | | Benchmark | S&P Nifty | |||
| Class | Equity-diversified | | Asset allocation | Equity (78%), Debt (0%), Cash (22%) | |||
| Options | Growth & dividend | | Expense ratio | 1.9% | |||
| | | | | | | | |
Result Update: Tata Power (Q3 FY10) – BUY
CMP Rs1,420, Target
± Unplanned outage at Unit 5 and Unit 8 translates into flat generation despite higher capacity
± Lower fuel cost lead to 12% dip in average realizations, 240MU sold on merchant basis at Rs5.5-6/unit
± Higher capacity translates into increased depreciation and interest
± Higher operating profit, aided by merchant sales, and other income result into 62% yoy jump in
± Merchant sales and higher earnings from Mumbai License Area provide growth opportunity, upgrade target price to 1,566
Corporate Snippets
± The underrecovery of ONGC from sale of gas at the government-fixed price is likely to exceed total revenues from its nominated fields in 2009-10. (BS)
± BHEL is exploring opportunities for an acquisition or a joint venture partnership with companies from the
± Ranbaxy has acquired Biovel Lifesciences, a Bangalore-based biotech company making typhoid and influenza vaccines, for an undisclosed sum. (BS)
± Zee Entertainment has acquired an additional 45% in Taj TV, Mauritius, the owner of Ten Sports channel through its overseas subsidiary, Zee Sports International Ltd, Mauritius. (BS)
± ONGC-Mittal consortium surrendered its offshore exploration block in the Caspian Sea in
± The board of Cadbury Plc accepted the final takeover offer of Kraft Foods Inc at £11.9bn (US$19.7bn). (BS)
± The government plans to raise upto Rs103bn by selling 5% stake in NTPC. The FPO may be priced between Rs245-Rs250. (ET)
± NTPC is planning to invest Rs 80bn to set up another power plant at a site adjacent to the Dabhol unit. (ET)
± Unitech has withdrawn its proposal to raise US$700m through FCCB. (ET)
± Israeli drugmaker Teva Pharma has filed a patent infringement suit in the
± Usha Martin is in the process of raising Rs4.68bn through a qualified institutional placement (QIP). (ET)
± Indian Oil (IOC) said it has raised US$500mn through issuance of bonds to meet its capital requirements. (ET)
Economic snippets
± Sebi allowed exchanges to introduce currency futures in three more currencies — euro, yen and pound. (BS)
± The Maharashtra government has decided to increase floor space index (FSI) to 3 from the current 2.5 for buildings which have come up between 1940 and 1960. (BS)
± The Government will prepare a new subsidy sharing mechanism for fuels that would help the public sector oil marketing companies (OMCs) and upstream companies such as ONGC, Oil India and GAIL (India). The mechanism is expected to be in place by the end of this fiscal. (BL)
Results Table
| Rs mn | Sales | yoy% | PAT | yoy% |
| JK Lakshmi Cement | 3,533 | 19.0 | 454 | (19.0) |
| Zee Entertainment | 5,309 | (3.0) | 1,464 | 74.0 |
| Religare Enterprises | 3,763 | (1.0) | 217 | (51.0) |
| Jindal Saw | 13,735 | (11.0) | 1,678 | 99.0 |
| Tata Elxsi | 1,003 | (6.0) | 164 | 33.0 |
| Tata Power | 15,665 | (12.0) | 1,419 | 40.0 |
| BASF | 2,920 | 41.0 | 113 | - |
| NRB Bearings | 923 | 44.0 | 66 | - |
| | 3,577 | 2.0 | 331 | 7.0 |
| MRPL | 93,187 | 24.0 | 2,595 | 191.0 |
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