Market Mantra
Market outlook
Watch the volatility
Never does nature say one thing and wisdom another. Juvenal, Satires.
As far as the market is concerned, the wise thing to do right now is to stay guarded amid heightened volatility and uncertainty. Talking of nature, reports suggest that monsoon this year is going to be "near normal" due to receding El Nino conditions. The first official forecast from IMD will be out later today. A significant improvement in rains from last year's near disaster will go a long way in addressing some concerns on inflation. A healthy farm sector growth will also lift the overall economic growth. As of now, one can only keep one's fingers crossed.
Coming to today's outlook, the start will be a little weak as Asian markets are mostly in the red. US stocks finished nearly unchanged while the lingering worries over Greece's financial state dragged down European indices. The US dollar rose for a fifth consecutive session as Greek bond yields jumped to new record high, weighing on the euro. We continue to advocate caution as the market will remain rangebound and sideways. Valuations too are not all that compelling barring few exceptions and fund flows have been easing of late.
Trading ideas (Time period: 1-3 days)
Maruti (BUY, CMP Rs1,377 Target Rs1,425): The stock has seen a severe correction from a high of Rs1,520 in March 2010 to a low of Rs1,324 this week. This was a panic bottom and the stock rallied up to the current levels without a retest of this low. On the daily charts, the price movements appear to have formed a higher bottom formation. On Wednesday, the stock broke out from downward sloping trendline. Traders can buy the stock between the levels of Rs1,370-1,383 with a stop loss of Rs1,355 for a short-term target of Rs1,425 in the coming trading sessions.
HDIL (SELL, CMP Rs296, Target Rs282): Last week, the stock surged smartly on higher volumes. However, on Wednesday, it appears to have run into strong resistance area of Rs299-298, suggesting that a downside is likely from the current levels on the daily chart. Deeper decline is still possible to the levels of Rs280 and below. The candlestick patterns formed in the recent past support the bears. Based on the above view, we recommend traders to sell the stock at current levels and on rallies up to Rs299. It is advisable to maintain a stop loss of Rs282 on all short positions.
Derivative strategies (Time period: Till expiry)
± Long GSPL April Future @ Rs93 for the target price of Rs96 and stop loss placed at Rs91.5
Lot size: 6,100
Remarks: Net maximum profit of Rs18,300 and net maximum loss Rs9,150.
± Long ACC April Future @ Rs933 for the target price of Rs953 and stop loss placed at Rs923
Lot size: 376.
Remarks: Net maximum profit of Rs7,520 and net maximum loss Rs3,760.
Mutual funds
| Fund focus | |||||||
| Reliance Growth Fund | Invest | ||||||
| Fund manager | Sunil Singhania |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs453.6 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs454/201 |
| 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: Hindustan Zinc (Q4 FY10) – BUY
CMP Rs1,232, Target Rs1,437, Upside 16.6%
± Revenue of Rs25.4bn was higher than our estimate of Rs24.2bn on account of higher concentrate sales
± Metal production growth remained flat at 1.8% qoq; whereas sales of concentrate jumped 134% qoq
± OPM declined 23bps qoq on account of increase in mining expenditure
± Cash and cash equivalents stood at Rs119bn (Rs282 per share)
± Maintain BUY with a revised target price of Rs1,437
Result Update: HCL Technologies (Q3 F6/10) – Market Performer
CMP Rs374, Target Rs390, Upside 4.0%
± Robust volume growth in core software and IMS services; BPO revenues decline as expected
± Strong growth in the US, non-focus verticals and engineering and infrastructure services
± OPM contracts by 140bps qoq to 19.7%; net profit jumps 16% qoq on lower forex loss and depreciation
± Significant laterals addition in Core Software indicate continuation of growth momentum
± Retain Market Performer rating on HCL Tech but upgrade target price to Rs390
Result Update: United Spirits (Q4 FY10) – Market Performer
CMP Rs1,265, Target Rs1,384, Downside 9.4%
± UNSP Q4 standalone volume up 16% yoy; supported a 23% jump in revenues on a like to like basis
± OPM declines 193bps on higher RM, advt expenses
± Q4 profit impacted by 81% surge in interest cost
± W&M FY10 revenues remained flat at GBP177mn while PBT dropped 8.5% due to restructuring cost
± Margin improvement, healthy volumes key positives but valuations no longer appear cheap at ~14x FY12 EV/E; downgrade to MP but maintain TP of Rs1,384
Result Update: Infotech Enterprises (Q4 FY10) – Market Performer
CMP Rs397, Target Rs385, Downside 3.1%
± 3.5% qoq dollar revenue growth came lower than expectations; organic growth disappoints
± OPM remains stable at 21.6% contrary to our expectation of 120bps qoq decline
± Higher other income and lower tax outflow drive a 36% qoq PAT growth
± Lower revenue estimates but upgrade margin and earnings estimates; maintain Market Performer on Infotech
Result Update: TVS Motors (Q4 FY10) – BUY
CMP Rs88, Target Rs97, Upside 10.7%
± Total volumes of TVS motors rise 29.5% yoy for Q4 FY10
± Realizations increased by 5.3% compared to Q4 FY10 on account of substantial jump in three wheeler sales
± OPM stood at 7.8%, up 434bps on yoy basis driven by lower raw material costs
± Net profit jumped by 38% yoy to Rs203mn
± Valuations cheap at 9.9x FY12E EPS of Rs8.8, Maintain BUY with a price target of Rs97
Corporate Snippets
± TCS has announced a global engineering service partnership with Rolls-Royce. (ET)
± L&T Power, a subsidiary of L&T, to ramp up boiler, turbines, generators and balance of plant business from 4,000mw to 6,000mw by 2012. (BL)
± Unitech to list demerged infra division by December 2010. (BS)
± Videocon Industries may sell its 26% stake in the telecom ventures to foreign investors. (ET)
± Glenmark has won a favorable legal verdict in US over a cholesterol drug case with Merck. (ET)
± Goldman Sachs fraud case not to hit business says TCS. (ET)
± Unitech Infra the demerged arm of Unitech will bid for infrastructure projects in road, power and airports. (ET)
± Orient Green Power a subsidiary of Shriram EPC files DRHP for an IPO. (ET)
± Zee Entertainment board approves acquisition of INX media's general entertainment channel 9X. (BS)
± Sundaram Finance Group to buy BNP Paribas's 49.9% stake in their mutual fund JV. (ET)
± Aditya Birla Financial Services to launch real estate fund to raise Rs10bn. (ET)
Economic snippets
± India is expected to grow at 8.75% in CY2010 and 8.5% in CY2011 says IMF. (ET)
± RBI may give some banks more time to meet the 70% provision coverage ratio. (ET)
± RBI has asked private banks to take its approval for all QIPs and preferential issues. (ET)
± RBI tightens loan securitization rules for banks. (ET)
± Airport Authority of India plans to levy development fee at non-metro airports. (ET)
± Centre wheat purchases are up 13.6% up to April 20th 2010. (ET)
± 3G spectrum bids are up 90% to Rs663bn on the 10th day of auction. (ET)
± Telecom panel to decide on BSNL listing says Telecom minister. (ET)
± RBI will relax the 25% ceiling on classifying bonds in the held-to-maturity category if the investment is in infrastructure bonds. (BS)
± Bank credits grow by 8.26bn during the fortnight ended April 9th, a 17% yoy growth. (BS)
± 2010 south-west monsoon is expected to be near normal says the India Meteorological Department. (BL)
± NPAs of public sector banks grew by 23% between March-December 2009. (BL)
Results table
|
| Revenue | yoy (%) | PAT | yoy (%) |
| United Spirits | 12,663 | 37.2 | 569 | 2.3 |
| HCL Tech | 30,757 | 1.4 | 3,215 | 17.3 |
| Infotech Ent | 2,441 | 3.9 | 513 | 176.8 |
| TVS Motors | 11,924 | 33.7 | 203 | 38.8 |
| Polaris | 3,510 | 4.1 | 457 | 42.5 |
| Hindustan Zinc | 24,985 | 97.9 | 12,390 | 124.7 |
| Jindal Saw | 11,396 | (23.6) | 1,803 | 84.2 |
Confidentiality & Disclaimer: This message contains confidential information and is intended only for the individual named. If you are not the named addressee you should not disseminate, distribute or copy this e-mail. Please notify the sender immediately by e-mail if you have received this e-mail by mistake and delete this e-mail from your system. E-mails are notencrypted and cannot be guaranteed to be secured or error-free as information could be intercepted, corrupted, lost, destroyed arrive late or incomplete, or contain viruses. The sender, which includes India Infoline Limited and its group companies, will not be liable for any errors or ommissions in the contents of this message which arise as a result of e-mail transmission. If verification is required please request a hard-copy version. This message is provided for informational purposes and should not be construed as a solicitation or offer to buy or sell any securities or related financial instruments.
No comments:
Post a Comment