Market Mantra
Market outlook
Advantage bears!
When a man is in love or in debt, someone else has the advantage -Bill Balance
The bears seem to be at an advantage with the European debt crisis continuing to cast a shadow over global economic recovery. News of the Bank of Spain bailing out savings bank CajaSur is a stark reminder that not all is well with European banks.
The euro erased some of last week's gains to slip over 1.5% against the dollar. US stocks too closed in the red after a choppy session. Asian markets are down sharply, led by the Nikkei in Japan. Stocks in China have turned lower after Monday's big rally.
We expect our market to start lower amid weak global cues. Lesser the risk, lesser the loss seems to be the mantra for now as major world markets are trading below key technical support levels.
The whole of Europe is on an austerity overdrive. The UK too has unveiled spending cuts to rein in budget deficit. This will further delay a return to pre-Lehman era. Overall trend remains down but some pull-back is bound to come at lower levels. The key is not to get carried away by any short-covering led bounce.
Trading ideas (Time period: 1-3 days)
Canara Bank (SELL, CMP Rs408, Target Rs399):
The stock had seen a steady rise from the levels of Rs325 during the second week of April 2010. However, the stock hit an intermediate top around the levels of Rs440 and has formed a double top pattern. The neckline of the double top pattern is placed at Rs386 (our medium term target on the stock). However, we expect the stock to fall to Rs398-399 level in today's trade. This being expiry week, volatility would be at its peak, thereby we advise traders to keep booking profit or trail SL. The momentum indicator is exhibiting negative divergence. Based on above technical evidence, we recommend traders to sell the stock at Rs408. It is advisable to maintain a SL of Rs412 for an intraday day target of Rs399-398.
Vijaya Bank (SELL, CMP Rs55, Target Rs52):
The stock had seen a consolidation within the range of Rs55-57 for the past two weeks. On Monday, the stock closed at its lowest point with momentum indicators turning negative (RSI). This being expiry week, volatility would be at its peak. We advise traders to keep booking profits or trail SL. Based on above technical evidence, we recommend traders to sell the stock at Rs55. It is advisable to maintain a SL of Rs56 for an intraday day target of Rs52-51.
Derivative strategies (Time period: Till expiry)
± Short L&T May Future in range of Rs1615-1620 for the target price of Rs1585 and stop loss placed at Rs1630
Lot size: 200
Remarks: Net maximum profit of Rs6,000 and net maximum loss Rs3,000.
± Short Jindal Steel Future in range of Rs643-645 for the target price of Rs627 and stop loss placed at Rs651
Lot size: 960
Remarks: Net maximum profit of Rs15,360 and net maximum loss Rs7,680.
Mutual funds
| Fund focus | |||||||
| UTI Opportunities Fund | Invest | ||||||
| Fund manager | Harsha Upadhyaya |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs22.9 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs25/12 |
| Exit load | 1% <1 yr | |||
| Latest AUM | Rs1,701cr |
| Latest dividend (under dividend option) | 15% (Jan 22, 2010) | |||
| Type | Open-ended |
| Benchmark | BSE 100 | |||
| Class | Equity – diversified |
| Asset allocation | Equity (95%), Debt (2%), Cash (3%) | |||
| Options | Growth & dividend |
| Expense ratio | 2.3% | |||
Result Update: Tata Power (Q4 FY10) – BUY
CMP Rs1,243, Target Rs1,536, Upside 23.6%
± Generation grows by 6.3% yoy to 3.8BU during Q4 FY10 against 3.6BU last year, average realizations jump 13.7% yoy
± Revenues in Q4 FY10 for the (consolidated entity) coal and power divisions increased by 27.2% and 9.7% yoy respectively
± Coal division's EBIT margin doubles to 22% from 11% last year
± Better operational efficiency and higher merchant sale translate into 93.7% yoy growth in adjusted PAT during the quarter
± Reduce target price to Rs1,536 on account of marginally lower than expected FY10 earnings, maintain BUY
Result Update: Hotel Leelaventure (Q4 FY10) – Market Performer
CMP Rs49, Target Rs52, Upside 6.1%
± Revenue rise of 26% yoy in line with our estimate of Rs1.3bn, driven by improved occupancies
± Higher revenue per available room (RevPar) lead to improved margin
± Lower effective tax rate, rise in EBIDTA % helps company post a pre-exceptional profit in Q4 vs. loss a year ago
± Reduce FY12 EPS estimate on lower OPM assumption but retain Market Performer with a TP of Rs52
Corporate Snippets
± Hindalco Industries plans to raise about Rs75bn of debt under the project finance route to achieve financial closure for Mahan Aluminium, its new factory project. (BS)
± Standard Chartered Plc has raised around Rs3.7bn by roping in six anchor investors for its Indian Depository Receipt (IDR) issue. (BS)
± Bharti Airtel raised Rs88bn from a six-year syndicated loan to pay for third-generation (3G) spectrum. (BS)
± Bajaj Auto will continue to pursue its broad plans with the Austrian bike manufacturer KTM Power Sports AG, including a gradual increase of its stake in the performance bike making company. (BS)
± BHEL has signed a memorandum of understanding with National Oil Well Varco, a US-based oil and gas drilling equipment firm, to build 35 AC (alternating current) deep land drilling rigs in phases. (BS)
± Novo Nordisk has sued Lupin to prevent it from launching the low priced version of its patented diabetes medicine sold under the brand Prandimet in US. (ET)
± Essar Shipping Ports & Logistics Ltd's 30mtpa bulk terminal at Hazira commenced commercial operations with the berthing of the first supramax vessel - M.V. Malavika having a capacity of 53,000 dead weight tonnage (DWT). (BS)
± HCL Infosystems is understood to have pipped TCS to clinch an e-governance contract from the Madhya Pradesh government. (BS)
± TCS may be hit by UK's £6.25bn cost-cut for 2010-11, a possible £2bn cuts in IT, suppliers and property. (BS)
± Biocon has announced a long-term supply agreement of fidaxomicin, an active pharmaceutical ingredient (API), for US-based biopharma company Optimer Pharmaceuticals. (ET)
± Tata Chemicals Ltd plans to raise Rs4bn through a preferential allotment of shares to Tata Sons to part finance the capacity expansion of its fertiliser plant in Babrala in Uttar Pradesh. (BL)
± Madras Cements Ltd plans to invest Rs6.3bn to expand its cement production capacity. (BL)
± BOC India plans to invest Rs15bn to set up separation plants across India by 2012. (ET)
± Reliance MediaWorks along with two other ADAG group firms, acquired 0.33% stake in Fame India, taking their combined holding in the multiplex chain to 14.84%. (FE)
Economic snippets
± Companies setting up industrial parks will be able to avail of the tax benefits available to the scheme for another year as the finance ministry has extended the 10-year tax holiday by an year. (ET)
± The Union petroleum minister have said that a final decision on price hike would be taken by the empowered group of ministers at its meeting to be held in Delhi on June 7. (ET)
± The auction for broadband wireless access (BWA) spectrum on the first day itself saw bids up by 34% over the base price. (BS)
± Fresh trouble between the defence ministry and the Department of Telecommunications (DoT) over spectrum could delay the launch of third generation (3G) telephony services in the country by March next year. (BS)
± India's three leading GSM operators challenged the recommendations of the telecom regulator on second generation (2G) pricing before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT). (BS)
± The commerce and industry ministry is likely to propose 100% foreign direct investment (FDI) in multi-brand retail. (ET)
Results Table
|
| Revenue | % yoy | PAT | % yoy |
| Bombay Dyeing | 5,276 | 13.7 | 468 | 201.9 |
| TV Today | 789 | 46.9 | (101) | (224.1) |
| Opto Circuit | 1,356 | 13.1 | 439 | 9.0 |
| Future Capital | 161 | (58.3) | 32 | (63.6) |
| Tata Power | 73,798 | (6.2) | 9,477 | (2.1) |
| Madras Cement | 28,213 | 10.8 | 3,536 | (2.7) |
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