Market outlook
Bear any how!
He who has a why to live for can bear almost any how
The bulls seem to be able to bear any apprehensions for now. It's not as if risk appetite is increasing, but who wants to miss a joyride! The indices have been on a firm footing as the health of the Indian economy appears to be getting better by the day. The Auto and cement numbers have given some reason to cheer. For those who rejoice in numbers of any kind, the total market cap of all the listed firms on the BSE has surged to Rs60,742bn, adding Rs2,410bn in three trading sessions since Budget Day.
With Finance Minister making it clear that fuel price rise is here to stay, keeping inflation under control will remain a challenge.
A flat start is in the offing; a reversal of recent fortunes could well take place during the day depending on how the global events pan out. Expectations though are that the Nifty may breach the 5100 mark before any worthwhile correction. The Asian markets are indecisive for now. US indices wiped out gains following worries about the job and manufacturing reports expected in the coming days.
Trading ideas (Time period: 1-3 days)
IDBI (BUY, CMP Rs125, Target Rs132): On the daily charts, the stock gave an upside breakout in Wednesday's trading session. It suggests that the sideways range is about to end and may reverse into an uptrend. On Wednesday, the stock rallied by ~3% confirming the bullish set up. We continue to remain positive on the stock from technical perspective as the stock has managed to hold on to its short-term support trendline in ongoing market volatility. The stock attempted to cross its 100-DMA in yesterday's session. A successful move above Rs126 could see the stock attempting Rs132 in the near term. It is advisable to maintain a stop loss of Rs122 on all long positions.
Rolta (BUY, CMP Rs180, Target Rs192): On the daily chart, the stock has been moving in a range of Rs186-172 from the first week of February 2010. On number of occasions, the stock has bounced back from the lower band of this trading range. In fact, daily candlestick chart suggests formation of multiple bottoms around the levels of Rs140-150. On Wednesday, the stock attempted to breakout past the 100-DMA, which is acting as a strong resistance since past three weeks with impressive volumes. We expect the stock to continue its recent uptrend and attempt the levels of Rs192-194. The daily momentum indicators like RSI and MACD are exhibiting positive divergences. We recommend traders to buy the stock at current levels and on declines up to the levels of Rs178 with a stop loss of Rs174 for an initial target of Rs192.
Derivative strategies (Time period: Till expiry)
± Long NTPC March Future @ Rs206 for the target price of Rs220 and stop loss placed at Rs202.
Lot size: 1,625
Remarks: Net maximum profit of Rs22,750 and net maximum loss Rs6,500.
± Long Everest Kanto Cylinder Ltd (EKC) March Future @ Rs120 for the target price of Rs130 and stop loss placed at Rs115.
Lot size: 2,000.
Remarks: Net maximum profit of Rs20,000 and net maximum loss Rs10,000.
Mutual funds
| Fund focus | |||||||
| HDFC Taxsaver Fund | Invest | ||||||
| Fund manager | Vinay Kulkarni |
| Min investment | Rs500 | |||
| Latest NAV | Rs198.5 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs204/84 |
| Exit load | Nil | |||
| Latest AUM | Rs2,125cr |
| Latest dividend (under dividend option) | 60% (4-Mar-10) | |||
| Type | Open-ended |
| Benchmark | S&P CNX 500 | |||
| Class | Equity-tax saving |
| Asset allocation | Equity (97%), Debt (0%), Cash (3%) | |||
| Options | Growth & dividend |
| Expense ratio | 1.9% | |||
Visit Note: Visa Steel Ltd – Not Rated
CMP Rs42
We visited the Kalinganagar plant of Visa Steel Ltd, which is all set to transform itself into an integrated special steel manufacturer from a mere metallics player. The company currently has 0.22mtpa of pig iron, 0.3mtpa of sponge iron, 0.4mtpa of coke-making facility and 0.05mtpa of ferro chrome unit. Visa Steel is in its last phase of Rs20bn capex plan and expects the 0.5mtpa stainless steel unit to be operational by December '10. It is also setting up a 25MW coal-based power plant to meet its future power requirement from the rolling mill. Except the second DRI kiln, all the units are currently operating at ~90% capacity. The company has managed to expand its OPM from 12.1% in Q1 FY10 to 19.9% in Q3 FY10 by increasing its utilization rates and stabilizing product realisations. However, we are concerned about the high debt level (FY09 net D/E stood at 3x), which is expected to increase further over the next two years.
Corporate Snippets
± Infosys plans salary hike across board in April 2010. (ET)
± NTPC and L&T keen to partner IOC for the LNG project. (BL)
± BHEL set to bag orders for steam turbine generators.(BL)
± Hindalco has suspended operation at its Nagpur unit due to labour problems. (BL)
± SBI plans to scale up the intake of the clerical staff to 25,000 from initial estimate of 11,000. (BS)
± SAIL and Tata Steel hike prices by up to Rs2,000/ton. (BS)
± Ashok Leyland February sales up 142% yoy to 7,869 units. (BS)
± Mines Ministry not to dilute government stake in NALCO. (ET)
± US citizen files case against Ranbaxy, claiming the company marketing some products with false patent claims. (BS)
± Titan Industries anticipates ~21% growth in its turnover in FY10, plans to enter new foreign market. (BL)
± Tata Tele Services to compensate its subscribers if the services were not upto the mark. (ET)
± Inox Leisure likely to increase its open offer price for Fame India to attract minority shareholders and stave off bid by Reliance Mediaworks. (ET)
± SpiceJet plans US$75mn preferential issue by September 2010. (ET)
± Era Infra has bagged orders worth Rs5.08bn. (BL)
± Aditya Birla Retail plans to invest Rs18bn over the next eight years to scale up its hyper markets 'More' across the country. (ET)
± Panacea Biotech has entered into an advanced marketing commitment with Ministry of health and family welfare for supplying swine flu vaccine 'Pandyflu'. (ET)
± IT Department raided Bhushan Steel premises in Ghaziabad, and Delhi to investigate suspected tax evasion by the company. (BS)
± A committee headed by Sam Pitroda has suggested government a 15-point formula to turn around BSNL. (BL)
Economic snippets
± Credit rating agencies may come under the ambit of IRDA and RBI. (ET)
± Shipping lines have hiked container freight rates by 30-40% in the Indian-Europe-US sector. (BL)
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