Market outlook
Settle down
The minute you settle for less than you deserve, you get even less than you settled for - Maureen Dowd.
It is time to settle down a bit after a day of unexpected weakness. Bulls may bounce back, tracking the overnight advance in the US. Wall Street managed to escape the Greek-related global selloff, as investors welcomed better than anticipated retail sales. Markets across Asia are stable with a few managing to hold in the green territory. We expect a higher start for the Indian market but things could turn choppy later on.
In case of a fresh fall, the NSE Nifty is likely to find support at 5200-5230. On the higher side, resistance may kick in at around 5400. Worries over European sovereign debt issues might continue to linger for a while. One also has to closely follow events in the US and elsewhere. Attention will soon shift to earnings, both here and abroad.
Crude oil is hovering around $85 per barrel and will pose serious threat if it rises further. The Rupee may appreciate further amid reports that China could soon allow more variation in the yuan. That could weigh on IT and other export-linked stocks.
Trading ideas (Time period: 1-3 days)
Bank of India (SELL, CMP Rs359, Target Rs340): The stock has seen a sharp rally from the lows of Rs310 in March-end 2010. However, the recent rally was backed by lower volumes. This, we believe is one of the indicators that the stock will find it difficult to close above the critical resistance zone of Rs375-373. The RSI and MACD also showing negative divergence following a decline in price in yesterday's session. The candlestick pattern also suggests that the stock may re-test its March lows. We recommend traders to sell the stock between Rs361-355 with a stop loss of Rs367 for a target of Rs340.
Hindalco (SELL, CMP Rs177, Target Rs166): 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 had been moving in the range of Rs178-187 since last one week. A break below Rs172 could see the stock testing levels of Rs160 and below. The daily RSI has also shown a reversal from a neutral position along with the price movement. We recommend traders to sell the stock for a target of Rs166. It is advisable to maintain a stop loss of Rs183 on all short positions.
Derivative strategies (Time period: Till expiry)
± Long Lanco Infratech Ltd April Future @ Rs57.30 for the target price of Rs61 and stop loss placed at Rs56
Lot size: 6,380
Remarks: Net maximum profit of Rs23,606 and net maximum loss Rs8,294.
± Long Videocon Industries Limited April Future @ Rs264 for the target price of Rs275 and stop loss placed at Rs260
Lot size: 850.
Remarks: Net maximum profit of Rs9,350 and net maximum loss Rs3,400.
Mutual funds
| Fund focus | |||||||
| Reliance Growth Fund | Invest | ||||||
| Fund manager | Sunil Singhania |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs449.0 |
| 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% | |||
Company Update: Maruti Suzuki India – BUY
CMP Rs1,383, Target Rs1,639, Upside 18.5%
± Intensifying competition not a major threat in near term
± Domestic growth to remain strong, exports to flatten out
± Impact of higher raw material costs to be cushioned
± Competition concerns overdone, Maintain BUY
Company Update: Aban Offshore Ltd – BUY
CMP Rs1,247, Target Rs1,430, Upside 14.7%
± Long term contract signed for Deep-Driller VIII
± Improves revenue visibility over next couple of years
± Debt repayment happening on schedule
± Steep discount to global peers not justified, maintain BUY
Corporate Snippets
± The Government has approved a follow on offer by SAIL to raise Rs160bn. (ET)
± Tata Motors reported that the Land Rover sales in UK rose 67% to 11,300 units in March in UK. (ET)
± Grasim Cement is planning to setp up a cement manufacturing facility in Tamil Nadu with an investment of Rs8bn. (BS)
± ACC plans to ramp up its production capacity to 30mtpa from 26mtpa by the end of this year. (BS)
± IOC has raised Rs13.5bn from sale of oil bonds in secondary markets. (FE)
± Essar Energy aims to raise US$2.5bn through a share sale in London. (ET)
± GVK Power and Infrastructure is likely to take management control of Bangalore International airport today. (ET)
± Aban Offshore has bagged a contract to worth US$159mn from Brunel Shell Petroleum Sendirian Berhad for deployment of one of its rig. (ET)
± Cipla has launched a copycat version of Bayers cancer medicine Nexavar at one tenth of price. (ET)
± A subsidiary of Sun Pharmaceuticals has received a approval from USFDA to market bupropion hydrochloride anti depressant tablets. (ET)
± Aurobindo Pharma has received a approval from USFDA to market venlafaxina hydrochloride anti depressant tablets. (ET)
± Emaar MGF may raise Rs35bn through an IPO within 90days. (ET)
± Jagran Prakashan is in talks with Midday Multi Media for a strategical alliance which may include a possible stake buy. (BS)
± The city civil court in Banglore has directed Britannia to pay pensioners within two months. (BS).
± Piramal Healthcare has received a fresh show cause notice from the National Pharmaceutical Pricing Authority for increasing prices of drugs over the allowed 10%. (BS)
± IVR Prime Urban Developers has raised Rs630mn from selling land near Pune and Chennai. (BL)
± Mr. Ananda Mukerji will step down as MD and CEO of FirstSource Solutions on July 27. (BL)
± MphasiS is likely to acquire US based Fortify Infrastructure Services for US$15.5mn. (FE)
Economic snippets
± The Indian Government is likely to raise more then Rs450bn through sale of 3G and broadband wireless spectrum. (ET)
± Government bans FDI in cigarette manufacturing. (BS)
± Wholesale food inflation rises to 17.7% for the week ended March 27, 2010. (BS)
± India's Food subsidy bill has crossed Rs720bn in FY10, a 65% jump over previous year. (BS)
± Government may allow truck and bus makers to freely import radial tyres. (BL)
± Finance Ministry is likely to hand out another cash compensation package to public sector refiners. (BL)
± The government has cleared high way construction work of a total cost of more then Rs43.5bn. (FS)
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