Market outlook
No Big Bang here!
For the majority, the past is regret, the future an experiment – Mark Twain
Looks like we could someday unravel the secret behind the way our planet earth was born following some success of the Large Hadron Collider. Some may have regrets for failing to perform in line with the indices, but, as far as markets are concerned, it's not the time to experiment. In short, no 'Big Bang' movements are in the offing today going by the subdued mood in global markets.
We expect a flat to slightly positive opening. On the whole, the trend will remain lackluster till the first batch of earnings start kicking in. Though the small-cap and mid-cap counters may remain abuzz one should resist the temptation of buying into illiquid, fundamentally weak stocks. Thursday heralds a new fiscal year. Having completed "year-end" commitments, it will be time to do proper due diligence of your portfolio.
A cooling was due for some time now. Once the key indices touched new 52-week highs it was only a matter of time. Interestingly, the market breadth, which had been negative for a few sessions, turned in favour of the bulls.
Trading ideas (Time period: 1-3 days)
Tata Motors (BUY, CMP Rs756, Target Rs785): The 100-day DMA has proved to be a decisive support line for the stock since July 2009. The stock has seen an entrenched downtrend from a peak of Rs830 to a low of Rs714, taking support at the above mentioned moving average last week. Several times in last two months, the 100-day DMA has provided good support to the stock. If the market holds up from the current levels, the stock can post some decent gains. A break above Rs760, could lead to a fresh directional move in the same direction. The daily RSI has entered into a strong buy mode. Keeping in mind the above-mentioned evidences, we recommend high risk traders to buy the stock between the range of Rs750-760 with a stop loss of Rs740 for a target of Rs780 and Rs785.
Tech Mahindra (SELL, CMP Rs883, Target Rs855): On the daily chart, the stock has broken below the small consolidation pattern. It presents great opportunity for the traders to jump in on the downtrend. An occurrence of this event indicates further selling and continuation of the downtrend. The stock has been moving back and forth within the range of Rs887-920 from the third week of March 2010. Moreover, the stock has given a close below its 200-day DMA, suggesting weakness in the near term. We recommend traders to sell the stock between the levels of Rs887-881 for a target of Rs855. It is advisable to maintain a stop loss of Rs897 on all short positions.
Derivative strategies (Time period: Till expiry)
± Short Wipro April Future @ Rs705 for the target price of Rs670 and stop loss placed at Rs715
Lot size: 600
Remarks: Net maximum profit of Rs21,000 and net maximum loss Rs6,000.
± Long Noida Toll Bridge April Future @ Rs34.50 for the target price of Rs36 and stop loss placed at Rs33.50
Lot size: 8,200.
Remarks: Net maximum profit of Rs12,300 and net maximum loss Rs8,200.
Mutual funds
| Fund focus | |||||||
| Reliance Growth Fund | Invest | ||||||
| Fund manager | Sunil Singhania |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs438.9 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs442/201 |
| Exit load | 1% <1 yr | |||
| Latest AUM | Rs6,733cr |
| Latest dividend (under dividend option) | 25% (Mar 30, 2010) | |||
| Type | Open-ended |
| Benchmark | BSE 100 | |||
| Class | Equity – diversified |
| Asset allocation | Equity (90%), Debt (0%), Cash (10%) | |||
| Options | Growth & dividend |
| Expense ratio | 1.8% | |||
Technical View: Nifty @ 5300…running out of steam?
On Tuesday, the Nifty failed to continue its momentum and closed below Monday's top, declining by 40 points to close at 5,262. On the upside, the zone of 5,390-5,400 is likely to act as a short-term hurdle. Weak indications from the momentum oscillators suggest that a correction is imminent from higher levels. In case of a possible reversal in the ongoing intermediate uptrend, the correction should find support around 5,170.
Sector Update: Oil refining – "On a recovery mode"
± Strong recovery in GRMs
± Refinery shutdowns offsetting increase in capacities last year
± Faster global economic recovery; key for sustenance of GRMs
± CPCL continues to be our top pick
Corporate Snippets
± Bharti Airtel closes deal to acquire most of African assets of Kuwait's Zain Telecom. (ET)
± Government intends to review the allocation of gas produced from Reliance Industries' KG-D6 field. (BL)
± NMDC plans to increase iron ore prices by 70% for both domestic and export markets. (BS)
± Hero Honda declared an interim dividend of Rs80 per share. (ET)
± Hero Honda is looking to set up a Rs20bn manufacturing plant in Himachal Pradesh. (BS)
± ITC has tied up with La Aurora to sell a mint based cigar in India. (ET)
± Tata Motors sells 20% stake in Telcon to its JV partner Hitachi for a sum of Rs11.6bn. (ET)
± Tata Motors reduced its debt by Rs15bn as a large section of its bond holders opted for conversion of bonds into share before maturity. (ET)
± M&M is merging its two tractor JVs in China into a single entity. (BL)
± GAIL has commenced supply of 0.33mmscmd of gas to Maruti's Manesar plant. (BL)
± Bank of Baroda raised US$350mn by way of 5.5 years senior unsecured bonds. (ET)
± Crompton Greaves acquired a UK based company Power Technology Solutions for Rs2.04bn. (BS)
± Jet Airways deposited Rs1.37bn in the Bombay High Court in relation with Sahara case. (ET)
± Omaxe Ltd to raise Rs8bn through QIP. (BS)
± JSL raised Rs2.5bn via sale of shares to qualified institutional buyers. (ET)
± Pyramids Saimira to sell all businesses and investments to pay up Rs5.8bn high cost debt. (FE)
± Bridgestone a Japanese Tyre major to invest Rs26bn at Chakan in Maharashtra. (BS)
Economic snippets
± Retail investors could be offer up to 10% discount on the issue price for future government disinvestments. (BS)
± Rupee touched a 19-month high to 44.97 against the dollar. (BS)
± Service tax on railway freight deferred by 3 months to July 1, 2010. (BS)
± The telecom ministry has cleared all nine telecom companies to participate in 3G auction scheduled to commence on April 9. (ET)
± Implementation of number portability has been postponed by three months to June 30. (ET)
± RBI has released guidelines on how banks must classify capital in their balance sheets to ensure uniformity in reporting. (ET)
± Cement prices are likely to increase by Rs7 from tomorrow. (ET)
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