From: India Infoline Research <research@indiainfoline.com>
Date: Thu, Mar 25, 2010 at 8:39 AM
Subject: Market Mantra: Technicals - Indiabulls Real Estate (Sell), Divis Labs (Buy); F&O - Indian Hotels (Long), Opto Circuits (Long); Report - Cairn India, Insurance Update
To:
Market outlook
Problematic start on F&O day
It is so much easier to suggest solutions when you don't know too much about the problem – Malcolm Forbes.
As if the Greece issue wasn't enough, the markets now have to worry about deteriorating fiscal health of other places of historical interest. Fitch has lowered Portugal's sovereign credit rating, citing its growing budget deficit and debt load. The euro fell to new record low versus Swiss franc and fresh 10-month trough against the US dollar.
Increasing worries about the European sovereign debt situation curbed risk appetite even as suspense continues on Greece getting aid from the EU. The commodity complex was down due to a stronger dollar. Markets in Europe came off session highs to end mostly flat while US stocks finished lower. In Asia, markets in Japan and Korea are slightly in the green while the rest are in the red.
We expect a shaky start given the weak global cues. Trading will be volatile and rangebound owing to the F&O expiry and near-term uncertainties, especially on the external front. The Nifty will trade between 5200 and 5300. Bharti will be in focus as Zain board has cleared the multi-billion dollar deal.
Trading ideas (Time period: 1-3 days)
Indiabulls Real Estate (SELL, CMP Rs145, Target Rs134): The stock had corrected to a low of Rs151 in February 2010 and has since then rallied back to a high of Rs179 levels in early March 2010. In the current week, the stock has dropped by ~9%, declining to its lowest levels in the past three weeks. The long-term charts are suggesting weakness after it broke below multiple support trendlines on the daily charts. The daily oscillators like RSI and MACD are moving in line with the price. Aggressive traders can sell at current levels and on rallies to Rs149 with a stop loss of Rs153 for a target of Rs134.
Divis Labs (BUY, CMP Rs660, Target Rs690): The stock has seen a severe correction from a high of Rs664 in early March 2010 to a low of Rs615. This was a panic bottom and the stock rallied up to the current levels without a retest of this low. On the daily charts, the price movements appear to have formed a higher bottom formation. The stock has witnessed a steady rise from its newly formed support of Rs615. On Tuesday, the stock attempted to break out from a three-week high of Rs664. The bullish formation is confirmed after the stock gave a close above its short-term moving averages. Traders can buy the stock at current levels and on dips up to the levels of Rs655 with a stop loss of Rs645 for a short-term target of Rs690 in the coming trading sessions.
Derivative strategies (Time period: Till expiry)
± Long Indian Hotels April Future @ Rs103 for the target price of Rs109 and stop loss placed at Rs101
Lot size: 3,798
Remarks: Net maximum profit of Rs22,788 and net maximum loss Rs7,596.
± Long Opto Circuits April Future @ Rs224 for the target price of Rs235 and stop loss placed at Rs220
Lot size: 2,040.
Remarks: Net maximum profit of Rs22,440 and net maximum loss Rs8,160.
Mutual funds
| Fund focus | |||||||
| UTI Opportunities Fund | Invest | ||||||
| Fund manager | Harsha Upadhyaya |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs23.7 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs25/12 |
| Exit load | 1% <1 yr | |||
| Latest AUM | Rs1,293cr |
| Latest dividend (under dividend option) | 15% (Jan 22, 2010) | |||
| Type | Open-ended |
| Benchmark | BSE 100 | |||
| Class | Equity – diversified |
| Asset allocation | Equity (88%), Debt (3%), Cash (9%) | |||
| Options | Growth & dividend |
| Expense ratio | 2.3% | |||
Company Update: Cairn India Ltd – BUY
CMP Rs293, Target Rs327, Upside (%):11.8
± Increases resource estimates of Rajasthan block to 6.5bn boe
± Peak production estimates raised to 240kbpd
± Existing production schedule on course
± Raise target price and upgrade recommendation to BUY
Insurance Monthly Update – February 2010
After witnessing a submissive growth of 3% yoy in January '10, Indian Life Insurance Industry bounced back with a robust growth of 27.7% yoy in total Annual Premium Equivalent (APE)# in February '10. LIC registered an impressive growth of 41.4% yoy in February '10 against a fall of 7.4% yoy in January '10. The growth was partially on account of new NAV-guaranteed scheme, 'LIC Wealth Plus' (so far ~Rs30bn). Private players' held their growth momentum for the fifth consecutive month; reporting an APE growth of 18% yoy. The growth was prominent among the top-5 private players, except ICICI Prudential Life (APE down by 6.8% yoy). On a mom basis, the industry saw a growth of 6.1%. LIC, leading the industry, reported an APE growth of 7.5% mom. Underperforming the industry and LIC, private players cumulatively reported a growth of 4.9% mom in February '10.
Corporate Snippets
± Board of Kuwait's Zain Telecom has approved the sale of most African assets to Bharti Airtel. (ET)
± Power Ministry rules out possibility of allowing NTPC to sell power in the open market. (BS)
± ONGC loses Uganda oil property to Chinese oil company CNOOC. (ET)
± IOC and Oil India are not planning to hike their bid for Gulfsands. (BS)
± SBI plans to raise Rs150bn via right issues in Q3 FY11. (ET)
± Bharti Airtel and Vodafone to launch iphone 3GS from March 26, 2010. (BS)
± Axis Bank is in talks to buy a 5% stake in Max New York Life Insurance for around Rs2bn. (BS)
± The Enforcement Directorate (ED) has registered a case against Unitech in connection with the award of 2G licenses. (ET)
± AT&T acquired 8.07% stake in Tech Mahindra for Rs1.6bn by exercising a 2005 option agreement to buy a stake in the company. (BS)
± Tata Motors has offered to convert bonds worth US$431mn into shares about a year before they mature. (BS)
± Maruti Suzuki India to invest Rs12.5bn to double capacity at its K-series petrol engine unit in Gurgaon to 500,000 by 2012. (BS)
± Cairn India announced an increase in the estimates of potential crude oil peak output from its Rajasthan oilfields by 37%, to 240,000 barrels per day. (BS)
± L&T has bagged orders worth Rs15bn from various vendors for construction of hospitals, residential towers and factories. (FE)
± German drug maker Bayer files patent infringement case against Cipla in connection with its cancer drug Nexavar. (ET)
± Delhi High Court has shot down a plea by Bristol Myers Squibb to ban Ranbaxy from launching a generic version of its hepatitis-B drug Baraclude. (ET)
± Bank of India is raising US$500mn via a 5 ½ year loan at around 200bps above Libor. (ET)
± Tata Steel's Rs210bn plant in Orissa is likely to start construction work next month. (ET)
± The USFDA recommended doctors to temporarily stop using GlaxoSmithKline's Rotarix vaccine for rotavirus immunisation in the US. (BS)
± Unitech Wireless, a joint venture between Norwegian firm Telenor and real estate company Unitech, to roll out mobile services in six more circles, including Mumbai and Kolkata, over the next two quarters. (ET)
± Wipro Infotech is among the seven short-listed bidders for a key Rs20bn government project which will help security agencies keep track of criminal activities across the country. (BL)
± IVRCL achieved financial closure for converting two-lane to four-lane road project coming up on the Gujarat-Madhya Pradesh border. (BL)
± National Aviation Company Ltd (Nacil), which runs national carrier Air India, may opt for an Initial Public Offering (IPO) to finance its modernisation and recovery plans. (BS)
± Maruti Suzuki would invest around Rs25bn for supplementing engine and plant capacities and setting up an R&D centre at Rohtak in Haryana. (ET)
± Reliance Mediaworks plans to raise US$55mn via issue of shares to its existing investors. (ET)
± Cipla sold its emergency contraceptive brand, i-pill, to Piramal Healthcare in a deal worth Rs950mn. (BS)
± PowerGrid plans a FPO in September 2010 to raise Rs40bn. (ET)
± MSRDC concludes a buyback agreement with Reliance Infra-Hyundai consortium for the Worli-Haji Ali sea link project. (ET)
± Bosch management reaches an amicable settlement with its employee's union at its Bangalore plant. (BS)
± Shree Cement to start power trading as an independent business through its subsidiary – Shree Power Trading. (ET)
± Alok Industries raises Rs4.6bn via QIP. (BS)
± Natco Pharma to re-launch its breast cancer drug Albupax, in the domestic as well as global markets soon. (BL)
± Times group to buy a small stake in Nimbus communication and its arm Neo Sports Broadcast. (ET)
± Prakash Industries plans to invest Rs33bn in expanding its steel and power generation capacities in Chhattisgarh over the next 4-5 years. (ET)
± Suven Life Sciences has received US patent for a compound used in the treatment of neurological diseases like Alzheimer's and Parkinson's. (ET)
± Hyundai Motors is lining up a new release for India to be launched in the second half of 2011, likely to be priced not much higher than that of Maruti's cheapest variant, the Maruti 800. (BS)
± Bajaj Holding ups stake in Force Motors to over 19%.(BS)
± Headset manufacturer GN Netcom, has entered into a marketing and distribution agreement with Redington India for expanding its presence in the country. (ET)
± Subhash Projects & Marketing Ltd bagged a contract from the Public Works Department of the Rajasthan Government, for development of two-lane highway from Jaipur to Bhilwara on design, build, finance, operate and transfer basis. (BL)
Economic snippets
± RBI to continue its exit from the ultra loose monetary policy to check high inflation says Governor D. Subbarao. (ET)
± Finance Ministry may give more compensation to oil companies this year, provided auto fuel prices are de-regulated next year. (ET)
± Petrol and diesel price may go up marginally in 13 cities from April 1, 2010 due to the introduction of Euro IV (Bharat Stage 4) emission norms. (ET)
± Auto exports rise 16% between the period of April'09- Feb' 10. (ET)
± Agriculture sector is likely to grow by an average 3% rate in the 11th five year plan. (BS)
± The government chief economic advisor Kaushik Basu sees 8.5% GDP growth in Q4 FY10. (ET)
± Cars to cost 1-3% more from April 1st 2010 due to new emission norms and rise in input cost. (BS)
± The Finance Minister said that infrastructure bonds issued by both the public as well as private sector entities will qualify for the additional tax deduction of Rs20,000 proposed in Budget 2010-11. (BL)
± Private sector banks and non-banking finance companies appear set to join a list of select state owned firms which will be allowed to offer tax-free bonds to investors. (ET)
± The government looks all set to examine refinancing of domestic borrowings-funded infrastructure projects through overseas loans. (ET)
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