Market outlook
Blink on the Street!
There can be as much value in the blink of an eye as in months of rational analysis - Malcolm Gladwell
It's one of those days when you can't get too much into rational analysis. After showing remarkable resilience in the wake of the RBI rate hike, the bulls gave up their fight post noon. The fall came on lower volume, which usually is the case on a Monday.
As for today we expect a slightly higher start and yet another choppy session. With the stock market shut on Wednesday and the F&O expiry on Thursday, we might see heightened volatility today. On the whole, the Nifty will remain rangebound between 5100 and 5300. Given that we will have results soon one should be cautious and wait for a clear trend to emerge.
US stocks resumed their advance following Friday's fall. European benchmarks too recovered some of the lost ground despite the scare of Greece not securing funding this week from the EU. One needs to keep a watch on Europe in the next few days amid lack of cohesive European support for Greece. Asian markets are mixed. The Nikkei in Japan is down marginally, while the Hang Seng and others are up.
Trading ideas (Time period: 1-3 days)
Voltas (BUY, CMP Rs177, Target Rs187): On the daily chart, the stock has given a bullish breakout and in the process has also made an intermediate top, suggesting that its sort-term may has turned up. Over the last two weeks, the stock was consolidating in the narrow range between Rs163-174, around its 100-day DMA, before finally breaking out on Monday. The upmove was well supported by healthy volumes, which suggest accumulation. Further supportive technical oscillators are also positive. We recommend traders to buy the stock at current levels and upto the levels of Rs175 for an initial target of Rs187. It is advisable to maintain a stop loss of Rs171.
Dr Reddy's Labs (BUY, CMP Rs1,268, Target Rs1,315): The stock had been facing stiff resistance around the levels of Rs1,245-1,257 levels from three months. On Monday, the stock overcame the crucial resistance levels and closed above it. The upmove was accompanied with impressive volumes. Moreover, on the weekly chart, the price movement has formed a higher bottom formation. The stock has closed around its 52-week high of Rs1,275. We expect the stock to rally in the medium term. Traders can buy the stock in the range of Rs1,260-1,275 for a target of Rs1,315. It is advisable to maintain a stop loss of Rs1,250.
Derivative strategies (Time period: Till expiry)
± Long Areva T&D India Limited April Future @ Rs279 for the target price of Rs295 and stop loss placed at Rs272
Lot size: 750
Remarks: Net maximum profit of Rs12,000 and net maximum loss Rs5,250.
± Short Aban Offshore Ltd April Future @ Rs1186 for the target price of Rs1130 and stop loss placed at Rs1200
Lot size: 400.
Remarks: Net maximum profit of Rs22,400 and net maximum loss Rs5,600.
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% | |||
Sector Update: Steel
Chinese HRC export prices at 15-month high
Steel prices over the last two weeks have surged in most global markets led by a jump in raw material costs and limited availability. Chinese HRC export prices last week rose above the US$600/ton mark, up by US$50/ton in the month of March. In most global markets, steel prices on an average have increased by US$50/ton. The hike in steel prices announced globally has been due to a surge in input costs. Spot iron ore prices are trading at US$140-150/ton, 100% premium over 2009 contract prices and coking coal contracts for Q1 FY11 have been settled at 55% premium over FY10 contracts. Also, steel producers have maintained production discipline before the price hikes, leading to limited availability in the market. We believe that HRC export prices from China would increase further by US$40-50/ton, as the impact of higher coking coal prices comes into play. We do not expect global steel producers to completely pass on the increase in input costs in FY11. We estimate HRC export prices in FY11 to be US$625/ton, up from US$525/ton in FY10.
Corporate Snippets
± ONGC is in talks with three Russian companies for acquiring oil properties in Russia and CIS region. (ET)
± The US Healthcare Bill, which proposes to create Electronic Health Records for all Americans by 2014, is expected to open up a US$20bn market opportunity for Indian IT services firms like Infosys, Wipro, TCS, Firstsource and MindTree. (BS)
± GAIL is in talks with Canadian oil company Interoil Corp for a possible stake in its proposed LNG project in Papua New Guinea. (BS)
± The Monetary Authority of Singapore granted ICICI Bank a qualified full banking status and allowed it to offer retail banking services. (ET)
± Tata Motors signed an agreement with the Myanmarese government for setting up a heavy truck plant in the South-East Asian nation with an installed capacity of up to 5,000 units annually. (BS)
± Having already launched two of its 'World Truck' variants, Tata Motors plans to launch 20 new variants in coming two years. (BS)
± Tata Motors is investigating the latest incident in Mumbai of a new Nano catching fire, less than an hour after it was driven out of the showroom. (BL)
± Bharat PetroResources, a wholly-owned subsidiary of BPCL, along with its partner Anadarko Petroleum Corporation of the US, has encountered more than 145 net meters of natural gas in reservoir sands with a gross column of more than 365 meters. (BS)
± Zain board will meet on Wednesday to consider Bharti Airtel's offer to buy out its African assets. (ET)
± DLF has decided to resolve what appeared to be a conflict of business interest between itself and its erstwhile group company, DLF Assets, by merging the latter with a fully owned subsidiary. (BL)
± NTPC plans to produce 500MW from renewable energy projects and proposes to set up a 1,000MW coal-based thermal power station at Khambhat, Gujarat. (BL)
± Concerned over inordinate delay in implementation of NTPC projects, the CAG will look into contractual agreements entered into by the company with various suppliers and contractors to find out the reasons for delays. (ET)
± L&T won Rs9.8bn contract from the Ministry of Defence for design and construction of 36 high-speed interceptor boats for the Indian Coast Guard. (BS)
± Cipla is in talks with Piramal Healthcare to sell its emergency contraceptive drug brand, i-pill. (ET)
± JSPL will sign a MoU with the Orissa government for setting up a Coal to Liquid project in Orissa. (BS)
± MRPL plans to expand its presence in the petroleum retail business as soon as the government allows linking petrol and diesel sales to market prices. (BS)
± Tata Chemicals is considering an entry into the staples segment. (BL)
± Syngene International, the custom research subsidiary of Bangalore-based biopharmaceutical company Biocon, has entered into a discovery and development collaboration with Endo Pharmaceuticals of the United States to develop biological therapeutic molecules against cancer. (BS)
± Exide Industries launched eco-friendly batteries for UPS applications that come with a three-year warranty. (BL)
± Shree Renuka Sugars has completed the acquisition of Vale Do Ivai S/A Acucar E Alcool (VDI) a Brazilian sugar and ethanol production company and VDI has become a wholly owned subsidiary. (BL)
± Crompton Greaves, in partnership with ZTR of Ukraine, bagged Rs6bn contract for the supply and commissioning of 765kV shunt reactors for PGCIL's various projects across the country. (BL)
± Offshore lenders to Wockhardt's Swiss subsidiary may move court to lay claim to some of the parent's assets in India, complicating matters for the debt-laden drug maker and its creditors. (ET)
± Nagarjuna Construction expects Paschal Form Work (India) Pvt Ltd, its new JV with Paschal Werk G Maier GmbH, to post a turnover of Rs1bn in the first year of its operations. (BS)
± Neyveli Lignite plans to generate 1,700MW under green technologies of the company's total installed capacity of 10,000MW by the end of the 12th Five-Year Plan in 2017. (BS)
± Great Eastern Shipping said it had taken board approval to bring an initial public offer for its subsidiary, Great Ship. (BS)
± United Breweries Group is exiting its holding in Aventis Pharma by selling a 10.3% stake in the company, in a deal worth Rs4.1bn. (BS)
± Jay Shree Tea is in the process of acquiring 100% stake in M. P. Chini Industries Ltd. (BL)
± Dhanlaxmi Bank said it would raise Rs2bn in the last week of March from bonds to funds its business growth. (ET)
Economic snippets
± Petrol and diesel prices in 13 major cities are set to go up, the second hike in less than two months, with the petroleum ministry considering a higher price for Euro-IV complaint fuels. (BS)
± The Planning Commission is likely to scale down the average growth rate for the eleventh plan period to 8% from the earlier 9%. (BS)
± The Deputy Chairman, Planning Commission said, investment in the infrastructure sector during the XIth Plan will be close to the target of US$500bn, largely due to the telecom sector. (BL)
± Indian Railways may have to rework sections of the route alignment of its Rs508bn dedicated freight corridor project to avoid acquiring land from those who are not ready to part with it. (BL)
± The Minister for Petroleum and Natural Gas said that the domestic capacity to handle imported LNG is likely to rise by about 7mtpa to reach 20mtpa by 2011-12. (BL)
± The government has directed public and private telecom players to get security clearance for procuring telecom equipment/software from foreign vendors. (ET)
± The direct tax receipts are seen growing around 10% yoy and touch Rs3.6trn. (ET)
± The government approved Rs6.5bn for a scheme that aims at improving compilation of statistical data for socio economic parameters for helping states better formulate their plans. (ET)
± The final draft for GST could be out by May this year, after the empowered committee of state finance ministers meet next month. (FE)
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