Market Mantra
Market outlook
Can Infosys surprise?
However beautiful the strategy, you should occasionally look at the results - Sir Winston Churchill
The occasion is here; its Infosys results after all. Will the market celebrate? We'll know in a few minutes. The market never fails to surprise; just when one thought the NSE Nifty could surpass 5400 with some ease, it changed direction and headed south. Today it could even fall below 5300.
Markets in the US and Europe finished flat. Asian markets are mostly in the red. Eurozone's emergency loan package for Greece failed to inspire the bulls. What's worse, the SEBI-IRDA standoff over ULIPs clouded the sentiment. The good news is that status quo has been maintained on ULIPs. The two regulators will now seek a legal verdict.
We expect a flat to lower opening. The key indices are likely to remain sideways and rangebound. Infosys numbers should be out before the market starts. So, there is a possibility that the mood might change once the IT bellwether's results and guidance are out. Infosys is expected to post 1-2% QoQ growth in Q4 PAT and Revenues. It's the outlook that everyone is keenly awaiting. Broadly, the undertone will be cautiously optimistic.
Trading ideas (Time period: 1-3 days)
Amara Raja Batteries (BUY, CMP Rs181, Target Rs194): On the daily chart, the stock gave an upside breakout in Monday's trading session. It suggests that the sideways range is about to end and may reverse into an uptrend. On Monday, 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. Moreover, the stock has given a close above its 13-DMA. The other supportive technical oscillators are positive and the up move may extend to the levels of Rs190 and above. It is advisable to maintain a stop loss of Rs175 on all long positions.
Nagarjuna Constructions (BUY, CMP Rs180, Target Rs195): On the weekly chart, the stock has been moving in a range of Rs181-146 from October 2009. On number of occasions, the stock has bounced back from the lower band of this trading range. In fact, weekly candlestick chart suggests formation of multiple bottoms around the levels of Rs140-150. Last week, the stock witnessed a strong up move coupled with impressive volumes. We expect the stock to continue its recent uptrend and attempt the levels of Rs200. The weekly 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 Rs172 for an initial target of Rs195.
Derivative strategies (Time period: Till expiry)
± Long Idea Cellular April Future @ Rs67.75 for the target price of Rs71 and stop loss placed at Rs66
Lot size: 2,700
Remarks: Net maximum profit of Rs8,775 and net maximum loss Rs4,725.
± Long Mercator Lines Limited April Future @ Rs61.15 for the target price of Rs63 and stop loss placed at Rs60.50
Lot size: 1,800.
Remarks: Net maximum profit of Rs3,330 and net maximum loss Rs1,170.
Mutual funds
| Fund focus | |||||||
| Reliance Growth Fund | Invest | ||||||
| Fund manager | Sunil Singhania |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs452.0 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs453/201 |
| 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% | |||
Economy Update: IIP – February 2010
± IIP growth for Feb 2010 at 15.1% v/s 16.7% in Jan 2010
± Growth continued across all use based categories
± IIP growth for January unchanged at 16.7%
Company Update: TVS Motors Ltd – BUY
CMP Rs85, Target Rs97, Upside 14.6%
± Recent launches will fuel domestic growth
± Three wheeler segment gains traction
± Exports – Recovery mode
± Attractive valuations – Upgrade to BUY
Management Mantra: Rishabh Sethi, Chief Operating Manager, SPML
Mr. Rishabh Sethi, Chief Operating Manager, Subhash Projects and Marketing Ltd. (SPML). He leads the corporate functions and environment business of SPML. He has been leading the innovation drive within the Group adding value to all SPML initiatives. Mr. Sethi has got a B.Sc. degree in Industrial Engineering & Economics from the Northwestern University, USA. Prior to joining SPML, he served as a Management Consultant in AT Kearney Inc., handling clients such as Daimler Chrysler, Procter & Gamble and Gillette.
Corporate Snippets
± Gail India is in talks with Interoil Corp for a possible stake in the Canadian oil firm's proposed liquefied natural gas project in Papua New Guinea. (ET)
± NTPC may soon get to allocate up to 50% of the output from its new plants to the home state, allowing it to compete with private developers. (ET)
± Glenmark Pharmaceuticals has entered into an out of court settlement with GlaxoSmithKline over patent actions on doses of atovaquone and proguanil hydrochloride, the generic version of GSK's Malarone malaria treatment tablets. (ET)
± Essar Steel Holdings (ESHL), the parent company of Essar Steel, plans to raise US$500mn this month through sale of foreign bonds. (BS)
± HCC has received an order worth Rs6.08bn from Director General Naval Project, Mumbai, for reconstruction and completion of Dry Dock and Associated North and South Wharves at Naval Dockyard, Mumbai. (ET)
± Renault is learnt to give M&M the licensing rights to produce the Logan as part of the restructuring proposal for the joint venture. (BL)
± GAIL to invest Rs150bn over the next two-three years in expanding its pipeline network to connect consumption centres. (BS)
± Tata Sasol, a joint venture between Tata Steel and Sasol of South Africa, has been allocated coal blocks in Angul region of Orissa to meet the requirement of coal for its proposed coal-to-oil project. (BL)
± RBI has given the Aga Khan Fund for Economic Development (Akfed) time till March 2014 to lower its stake in co-operative-turned-commercial lender Development Credit Bank. (BS)
± Hydropower generator SJVN plans to invest Rs150-160bn over the next five years to take its total capacity to 6,500MW from the current 1,500MW. (BS)
± Emerging as the single largest export zone in the country, RIL Jamnagar SEZ has seen its export nearly touch Rs800bn till March 2010. (BS)
± Heavy Engineering Corp., plans to take up manufacturing of electric locomotives as part of its diversification initiative. (BL)
± IVRCL Assets & Holdings Limited, formerly IVR Prime Urban Developers, is targeting to have assets worth Rs200bn in three years from the current asset base of Rs75bn. (BS)
Economic snippets
± The country's industrial production was up 15.1% in February on the back of expansion in mining, manufacturing and electricity generation. (BS)
± The Government has brokered a truce between the two warring financial sector regulators—SEBI and IRDA — over the supervision of ULIPs, signalling a return to normal business for the insurance industry. (ET)
± The third day of spectrum auction for 3G telephony saw the all-India licence bid touching Rs43.2bn at the end of 16 rounds, ensuring that the government would get a minimum of Rs176bn. (FE)
± The proposed free trade agreement (FTA) between India and Israel would boost trade and economic ties. Post FTA, the trade volume is expected to triple to US$12bn. (ET)
± The RBI fixed the limit for issuing bonds under the Market Stabilisation Scheme (MSS) to Rs500bn for 2010-11. (BS)
± The mutual fund industry witnessed a net inflow of Rs830bn as against a net outflow of Rs283bn in FY09. (BS)
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