Market Mantra
Market outlook
Friday fright on the street
Be aware that a halo has to fall only a few inches to be a noose.
Brace for a gap-down opening as world markets are in a tizzy amid escalating concerns over the mounting debt problems in a few European nations. Whether the market manages to rebound remains to be seen as FIIs don’t seem to be in a mood to reverse their selling binge, at least for now.
Yesterday only we had warned against getting carried away with Wednesday’s rally. For those who heeded our advice though might have done better than most. Risk aversion has risen of late amid a spate of fresh worries from
For
The big event for
Trading ideas (Time period: 1-3 days)
Reliance Industries (SELL, CMP Rs1,020, Target Rs950): The stock has broken down below its 200-DMA in Thursday’s trading session. Twice in last one month, the 200-DMA acted as a crucial support zone for the stock. The above pattern is bearish in nature and suggests more downside. Moreover, stock has closed in the lower half of the intra-day band and on negative internals. Towards the end of session, the selling pressure became so intense that prices moved below the previous day’s open. The resulting candlestick has engulfed the previous day's body and has created a potential short-term reversal. Based on above technical evidence, we recommend traders to sell the stock up to Rs1,030. It is advisable to maintain a SL of Rs1,050 for an initial target of Rs950.
Bajaj Hindusthan (SELL, CMP Rs189, Target Rs179): The stock continued to show weakness and fell below the crucial support of Rs197-196 levels. It has also broken down from a small consolidation pattern on the weekly chart. The above pattern is bearish in nature and suggests more downside in the coming trading sessions. The daily oscillators are also indicating building up of the momentum on the downside. We recommend traders to sell the stock at current levels and on rallies to the levels of Rs192 for an initial target of Rs179. It is advisable to maintain a stop loss of Rs196 on all the short positions.
Derivative strategies (Time period: Till expiry)
± Short ONGC Feb Future @ Rs1141 for the target price of Rs1107 and stop loss placed at Rs1152.
Remarks: Net maximum profit of Rs7,650 and net maximum loss Rs2,475.
± Short Dr Reddy Feb Future @ Rs1,156 for the target price of Rs1,127 and stop loss placed at Rs1,166.
Remarks: Net maximum profit of Rs11,600 and net maximum loss Rs4,000.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Apr | Sell | Below 16150 | 16110, 16070 | 16180 |
| Silver - Mar | Sell | Below 24450 | 24300, 24150 | 24580 |
| Copper - Feb | Sell | 299-300 | 295, 291 | 302.8 |
| Zinc - Feb | Sell | 95.9-96.2 | 94.6, 93.3 | 96.8 |
| Lead - Feb | H. Sell | Below 92.8 | 91.5, 90.2 | 93.7 |
| Aluminum - Feb | H. Sell | Below 95.2 | 94, 93 | 96.1 |
| Nickel - Feb | Sell | 842-845 | 826, 810 | 855.7 |
| Crude Oil - Feb | Sell | Below 3385 | 3355, 3330 | 3415 |
| Natural Gas - Feb | Buy | Above 248 | 252, 256 | 245.3 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Feb | Range bound 13450-13800 | |||
| Jeera - Feb | Sell | Below 11850 | 11730, 11600 | 11940 |
| Turmeric - Apr | Buy | Above 7030 | 7065, 7100 | 6997 |
| COCUDAKL - Feb | H. Sell* | Below 1154 | 1140, 1126 | 1165.5 |
| Chana - Feb | H. Buy | Above 2210 | 2240, 2265 | 2195 |
| Guar seed - Feb | H. Sell | Below 2395 | 2360, 2330 | 2420 |
| Soya bean - Feb | Sell | Below 2100 | 2072, 2050 | 2120 |
| Soya oil - Feb | Sell | Below 453.5 | 450.2, 447 | 456.2 |
| Mustard seed - Apr | Sell | Below 482 | 478, 475 | 485.2 |
| Mentha oil - Feb | Buy | Above 574 | 577.5, 580 | 571.3 |
**Strict Stop-Loss *Book Partial Profits
Mutual funds
| Fund focus | |||||||
| HDFC Top 200 Fund | Invest | ||||||
| Fund manager | Prashant Jain | | Min investment | Rs5,000 | |||
| Latest NAV | Rs172.2 | | Entry load | Nil | |||
| NAV 52 high/low | Rs183/78 | | Exit load | 1% <1 year | |||
| Latest AUM | Rs6,066cr | | Latest dividend (under dividend option) | 30% (5-Mar-09) | |||
| Type | Open-ended | | Benchmark | BSE200 | |||
| Class | Equity-diversified | | Asset allocation | Equity (98%), Debt (0%), Cash (2%) | |||
| Options | Growth & dividend | | Expense ratio | 1.8% | |||
| | | | | | | | |
Result Update: Ambuja Cements (Q4 CY09) - SELL
CMP Rs101, Target Price Rs88, Downside 12.6%
± Revenues grow by 8.9% yoy; marginally above our estimates due to better average realizations
± Margin expands 40bps, above our expectations primarily due to sharp fall in power and fuel costs
± Higher tax outgo drags bottom-line lower
± Clinkerisation units at Bhatapara and Rauri commence operation
± Valuation remains expensive; Maintain SELL
Result Update: ACC Ltd (Q4 CY09) – MP
CMP Rs857, Target Price Rs881, Upside 2.8%
± Revenue declines 1.0% YoY due to lower realisations; marginally higher than our estimates
± OPM contracts by 150bps to 24.9% on account of surge in other overheads
± Higher depreciation coupled with increase in interest outflow drags PAT lower; below our estimates
± Thondebhavi and Kudithini grinding units commence trial run
± Maintain Market Perform with a price target of Rs881
Corporate Snippets
± Israeli SC orders status quo in Sun-Taro battle, Sun Pharma asked not to buy additional Taro shares. (BS)
± L&T, EADS in talks to revive defence joint venture. (ET)
± M&M initiates talks with UK-based Triumph Motorcycles and
± GTL plans to raise Rs14bn through non-convertible debentures to invest in green energy products and solutions for telecom infrastructure. (ET)
± Reliance Capital Partners buys 3.4% stake in Fame
± ACC net up 42% at Rs15.64bn as against Rs11bn in the year-ago period. (ET)
± Ambuja Cements records a 12% fall in yearly consolidated net profit at Rs12.16bn as against Rs13.89bn. (ET)
± Essar Oil plans to increase its number of petrol pumps to 2,000 in the next few months from 1,450 currently. (ET)
± Dalmia Cement hikes its stake in OCL India from 21.7% to 45.4%. (BS)
± Vishal Retail promoters and lenders to meet next week to sort out the differences over management changes and other modalities of the corporate debt restructuring (CDR) process. (BS)
± Kiri Dyes plans to shift product manufacturing base of DyStar to
± Advanta
± Aurobindo Pharma gets USFDA nod for Cetirizine Hydrochloride Solution used for treating allergies. (DNA)
± Dr Reddy’s Labs will be debt free in three years. (DNA)
± Hindustan Zinc cut zinc prices by Rs9,600 a tonne. (DNA)
± ACC is aggressively looking at expansion and acquisitions. (DNA)
± Era Infra to tie up funds for 2 projects by April. (DNA)
± Essar Group says talks progressing on Shell units buy. (DNA)
± Dalmia Cement posts 20.9% increase in sales for the month of January at 3.05 lakh tons as against 2.52 lakh tons in the same month last year. (BS)
± L&T Finance to tap NCDs to raise Rs5bn. (BS)
± The US drugs regulator has asked Ranbaxy to immediately assess the manufacturing practices at its plants. (ET)
± BSNL lost the bid for managing telecom networks of the Ethiopian Telecommunications Corp, in the African nation. (ET)
Economic snippets
± Nasscom has predicted a gloomy 5.5% growth in
± Trai plans telecom tower policy by June, aims to curb mushrooming of cellsites in residential areas. (ET)
± The government has raised the onetime entry fee for internet service providers licence by up to Rs1mn while extending the validity by five years. (ET)
± Overseas borrowings dip to 4-year low at US$16.7bn in 2009. (ET)
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