Market Mantra
Market outlook
Bulls set to take off!
Careers, like rockets, don't always take off on time. The trick is to always keep the engine running - Gary Sinise
Be it careers, market or rockets, the trick remains the same. The first Indian rocket to be powered by a totally indigenous cryogenic engine will blast off today. Hopefully, it will be mark another major milestone for ISRO and India. Talking of milestones, the S&P 500 and Nasdaq crossed 1200 and 2500, respectively. US shares had their best performance in nearly six weeks after Intel and JP Morgan outperformed.
The domestic market engine is set to chug along well powered by global cues. The positive undertone on Wall Street also rubbed off on Europe. Asian markets are mostly up. Markets in Shanghai are flat despite China clocking a better-than-anticipated 11.9% GDP growth in Q1. May be, investors fear a fresh monetary tightening response from the Chinese central bank!
Another hike in CRR and short-term rates is also on the cards by the RBI later this month. Inflation for March will be out today and is most likely to have crossed 10%. This may lead to a temporary blip in sentiment but on the whole things should be fine.
Trading ideas (Time period: 1-3 days)
Crompton Greaves (BUY, CMP Rs277, Target Rs300): The stock has rallied smartly from the recent low of Rs224 in to the present levels. On the daily charts, it has formed a pattern of a higher bottom. It is considered as the initial sign of a bottoming out process in the short term. The daily RSI is already in strong buy mode, indicating that the prices are set to rally from the current levels. Any move past the levels of Rs280, could see the stock attempting the levels of Rs300 in the short-term. We recommend a buy at current levels with a stop loss of Rs268.
Jindal Steel & Power (BUY, CMP Rs724, Target Rs755): On the daily chart, the stock has been moving in a range of Rs725-690 from the first week of March 2010. On number of occasions, the stock has bounced back from the lower band of this trading range. In fact, daily candlestick chart suggests formation of multiple bottoms around the levels of Rs690-695. On Tuesday, the stock attempted to breakout past the top of this trading range. We expect the stock to continue its recent uptrend and attempt the levels of Rs750-755. The daily 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 Rs720 with a stop loss of Rs708 for an initial target of Rs755.
Derivative strategies (Time period: Till expiry)
± Long Patel Engineering April Future @ Rs479 for the target price of Rs495 and stop loss placed at Rs470
Lot size: 1,000
Remarks: Net maximum profit of Rs16,000 and net maximum loss Rs9,000.
± Long SBI April Future @ Rs2,099 for the target price of Rs2,140 and stop loss placed at Rs2,080
Lot size: 132.
Remarks: Net maximum profit of Rs5,412 and net maximum loss Rs2,508.
Mutual funds
| Fund focus | |||||||
| Reliance Growth Fund | Invest | ||||||
| Fund manager | Sunil Singhania |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs451.5 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs453/201 |
| Exit load | 1% <1 yr | |||
| Latest AUM | Rs7,111cr |
| 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% | |||
Result Update: Infosys Technologies (Q4 FY10) – BUY
CMP Rs2,782, Target Rs3,100, Upside 14.4%
± 4.5% qoq constant currency revenue growth was slightly above expectations; volume growth continue to surprise on upside
± Multiple signals of an accelerating full-fledged recovery; robust growth in the so-called weak spots
± OPM contracts sharply by 150bps qoq; pre-exceptional profit growth below estimate
± Stepping the peddle with a significant second wage hike in six months to contain rising attrition
± Q1 FY11 and FY11 dollar revenue growth guidance above expectations, full-year EPS outlook in-line with our estimate
± Reiterate, 'Its time to think beyond quarters'; retain BUY on Infosys and upgrade target price to Rs3,100
Corporate Snippets
± Infosys will offer up to 17% salary hikes for over 100,000 employees this year, as the company seeks to retain staff and also attract new recruits in the year. (ET)
± Tata Steel asked a member of British Parliament not to be "over-critical" about the company's strategy in dealing with problems in Corus. (BS)
± ONGC to challenge the government's decision to withdraw the seven year tax holiday on production of natural gas. (ET)
± Infosys has bagged an order worth US$150mn order from Microsoft. (BS)
± Tata Sons is taking a book building to sell its Tata Motors DVR shares. (ET)
± Cairn Mangala field to hit peak output in 2010. (BS)
± Ranbaxy to recall two consignments of one of its antibiotics from the US market. (ET)
± The province of Moselle in France said Tata Motors should explore setting up a manufacturing unit for Nano in the region as it could facilitate the company's plans to launch the world's cheapest car in Europe by 2011. (BS)
± Bajaj Auto, which is planning launch four-wheelers in both passenger and commercial vehicle segment in 2012, will use the Renault platform for their production. (ET)
± Bajaj Auto's four-wheeler project, a JV with Nissan and Renault, at Chakan in Pune seems to have hit a roadblock, as the company has not been able to acquire enough land. (BS)
± ACC said prices of the building material need to rise by at least 20%, if the company has to complete its expansion plans for the next two years. (ET)
± Four out of the five subsidiaries of ACC incurred losses in operations in 2009. (BS)
± M&M group may foray into banking through its NBFC arm Mahindra Finance. (FE)
± HDFC plans to raise up to Rs250bn through non-convertible debentures in the current financial year through private placements. (BS)
± DLF group has bagged carbon credits worth Rs400mn for reducing emission of greenhouse gasses. (ET)
± RBI may relax exposure norms for state-run power sector lenders such as REC and PFC to ensure healthy flow of funds to cash-starved projects. (ET)
± ABB bags an order worth Rs630bn from Haryana Vidyut Prasaran Nigam Limited. (BS)
± Strides Arcolab gets USFDA approval for anti-nausea drug. (BS)
± HCC bagged a contract worth Rs6.1bn from the Director General of Naval Projects to develop a dry dock and associated north and south wharves at the Naval Dockyard in Mumbai. (BL)
± Punjab National Bank ruled out any increase in interest rates in the near future saying there is enough liquidity in the system. (ET)
± The Environment Minister indicated to Adani Power that it would not approve the company's proposal for drawing water from the Pench Tiger reserve for its project in Madhya Pradesh. (BS)
± United Spirits is looking at various options to continue its bulk supply of scotch from the stables of Whyte & Mackay, which USL acquired during mid-2007 in a US$1.7bn deal. (BS)
± Dewan Housing Finance plans to raise up to Rs500bn in the current fiscal to support its expansion plans besides meeting the capital adequacy needs. (ET)
± Dewan Housing Finance plans to launch a finance JV focused on low-income housing in partnership with International Finance Corporation. (BS)
± Elder Pharma to hire 1,000 sales and marketing professional for rural sales. (BS)
± Godrej Consumer may introduce some of its international brands in India. (BS)
± Shree Ganesh Jewellery secured contracts worth Rs5.1bn for gold jewellery from overseas buyer. (ET)
± Subhash Projects won two orders worth Rs632mn from PGCIL. (FE)
± State-owned Gujarat State Petroleum Corporation, which has lined up its Rs30.7bn IPO, says development of its Deen Dayal West field may be delayed by a year. (BS)
± Andrew Yule may defer its Tide Water Oil stake sale plan. (ET)
Economic snippets
± Both the US and the EU are discussing additional taxes on carbon-emitting products from advanced developing countries, such as India and China, which could render products from the region uncompetitive. (ET)
± SEBI asks 14 firms to register before launching new plans; Irda rejects proposal. (BS)
± After failing to convince states to keep petroleum products within the ambit of the proposed GST, the Centre has finally agreed to keep petroleum products like crude, motor spirit, ATF and high-speed diesel out of GST. (BS)
± Actual FDI by the Indian business declined by 34.1% in April-December 2009 to US$8.4bn from US$12.7bn a year ago. (BS)
± After coking coal and iron ore, thermal coal supply contracts have now been signed at about 40% higher than last year. (BS)
± The government imposed an export duty of Rs2,500/ton on raw cotton and 3% of the FOB value of cotton waste with effect from April 9. (BL)
± Life insurance companies that have completed five years of operations can apply for permission to go public, according to the norms for IPO finalized by the IRDA. (BL)
± The telecom operators may get free 2G airwaves. (ET)
± Oil marketing companies to get rest of dues next month. (ET)
± Petroleum and Natural Gas Regulatory Board feels the need to take a re-look at the gas transmission tariff. (BL)
Results Table
| Companies | Revenue | YoY growth | PAT | YoY growth |
| Infosys | 59,440 | 3.5 | 16,170 | 2.2 |
| Essar Oil | 119,420 | 48.7 | 1800 | (72.7) |
| Rolta | 3,946 | 18.8 | 671 | (49.6) |
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