Market outlook
Fright-day on the Street!
Steady plodding brings prosperity; hasty speculation brings poverty - Proverb.
Speculation has been rife about a possible disintegration of the euro-zone and erosion in its common currency despite several measures to stem the debt contagion. This has sent markets into a tailspin as risk appetite has taken a severe beating owing to concerns that the European debt disaster could derail the worldwide recovery. As a result, the bulls have their backs against the wall and may remain on the defensive if the European crisis doesn't subside.
Brace yourselves for another gap-down opening. Should the global picture change for the better, we may see the key indices do a bungee-jump, but then at the end of it you may still be left hanging. Betting on a major rally from here on would be like catching a falling knife. Fear is running very high amid significant external uncertainties.
The bravehearts among you could look at snapping up good bargains at lower levels, but then again, provided you are a braveheart!.
Trading ideas (Time period: 1-3 days)
DLF (SELL, CMP Rs271, Target Rs245): Re-iterate Sell: We retain our sell call on DLF as it is most likely to breach the support zone of Rs270 in early morning trades. We expect the stock to take support at Rs259, in case if this is violated the next support zone for the stock is below Rs240. The momentum indicator is exhibiting negative divergence. Based on above technical evidence, we recommend traders to sell the stock up to Rs270-265. It is advisable to maintain a SL of Rs283 for a one-week target of Rs245-240.
Maruti (Sell, CMP Rs1208, Target Rs1130): The stock has corrected significantly from its highs of Rs1,752 witnessed during the month of October. Since then, the stock has been in a downtrend but managed to bounce back from Rs1,225 levels on multiple occasions. On Thursday, the stock closed below this level for the first time in the last 6 months. We recommend traders and investor to Sell this stock at Rs1,208-1,190 with a Stop loss of Rs1228 for target of Rs1,140 and Rs1,130
Derivative strategies (Time period: Till expiry)
The expected gap down opening given the global situation prevents us from giving any call before the start of the market for today.
Mutual funds
| New Fund Offer | |||||
| DSP BlackRock Focus 25 Fund | Subscribe | ||||
| Fund manager | Apoorva Shah |
| Min investment - Retail | Rs5,000 | |
| NFO dates | April 23 – May 21, 2010 |
| Entry load | Nil | |
| NAV | Rs10 |
| Exit load | 1% <1yr<Rs5cr | |
| Type | Equity – diversified |
| Registrar | CAMS | |
| Class | Open – ended |
| Asset allocation: |
| |
| Options | Growth & dividend |
| Equity & Equity related securities | 65-100% | |
| Benchmark | BSE Sensex |
| Debt and money securities | 0- 35% | |
Result Update: REC (Q4 FY10) – BUY
CMP Rs267, Target Rs303, Upside 13.4%
± Loan assets were up 30% yoy; exposure towards private sector entities has increased to 6.5%.
± Sanctions grew at a modest 11% yoy rate; disbursements, however, remained healthy at 23% yoy.
± Margins improved on account of lower cost of funds. Higher pricing power and increasing private sector exposure would enable maintain margins at current levels.
± Net interest income was up 48% yoy, net profit too reported a sturdy 45% yoy growth.
± Infra-financing nomenclature to enable increase exposure limits. Maintain BUY.
Result Update: Grasim Industries (Q4 FY10) – Not Rated
CMP Rs2,514
± Strong VSF performance drives 16.9% yoy revenue growth; beats expectations
± OPM surges 360bps yoy despite weak operational performance by the cement division
± PAT grows by 56.7% backed by higher margins and lower tax outgo
Sector Update: Information Technology – 'Margin headwinds'
± Exemplary margin performance over the past two years despite multiple headwinds
± Offshoring, fixed priced project shift and utilization improvement were the key operational levers
± Margins have peaked-off for the Top 3; adverse currency and wage inflation are key headwinds
± Continue to prefer Infosys amongst the large players
Corporate Snippets
± Bharti Retail plans to roll out stores in South India soon, as part of its plans to become a national retailer. (BS)
± SBI has decided to scale down its branch expansion plan and is now expected to open around 500 branches during the current financial year, as against nearly 1,000 proposed earlier. (BS)
± Jindal Steel & Power is buying Oman-based Shadeed Iron & Steel for US$464mn (Rs20.9bn) to expand its reach to West Asia. (BS)
± After a delay of nearly a year, auto major Mahindra & Mahindra is now all set to begin its US expedition in its new compact diesel pick-up truck by end of December 2010. (BL)
± Reliance Infrastructure has won its tenth road project worth Rs9.25bn, from the National Highways Authority of India. (BL)
± A Group of ministers may decide on out-of-court settlement of the five year old dispute on NTPC-RIL over gas supply and price. (ET)
± Sparc, the demerged drug research and development arm of Sun Pharmaceutical, plans to license out some of its new chemical entities and novel drug delivery systems under development at advanced stages of development to multinational companies. (BS)
± Chennai Petroleum Corporation has lined up around Rs100bn for various projects over the next five years. (BS)
± Indraprastha Gas may have to increase CNG prices by a record 20%, or close to Rs 4.40 per kg following increase in APM gas price. (BS)
± Reliance MediaWorks along with Reliance Capital and Reliance Capital Partners has acquired 189,425 shares of Fame Cinemas at an average price of Rs78.33 a share, by taking its stake up by 0.54%. (BL)
± Omnitech Infosolutions plans to extend its realm of services to the education sector within the next six months. (BL)
± HC restrains Vishal Retail from selling assets till further orders. (ET)
± Munjal family is consolidating its shareholding in Hero Honda, by reducing the number of holding entities and transferring their ownership under a single umbrella. (ET)
± NMDC plans to seek price increases of at least 90% in ore prices. (ET)
± IFC set to inject US$25mn into Max Healthcare. (FE)
Economic snippets
± The annual food price inflation, based on the Wholesale Price Index, rose 16.49% for the week ended May 8 compared with the previous week's annual rise of 16.44%. (BL)
± 2G licence renewal may cost telecom firms Rs 1trillion. (BS)
± Expansion of cement production capacities in the southern states is likely to be slower than expected due to shortage in coal supplies. (BS)
± The government's fertiliser subsidy bill for the year is expected to expand by an additional Rs26bn, following an increase in the administered prices of natural gas. (BS)
± On account of a sharp increase in the price of natural gas, the cost of power generated by gas-based plants is set to go up by Rs 1.20 a unit. (BS)
Results table
| Rs mn | Revenues | % yoy | PAT | % yoy |
| Blue Star | 8,747 | 22.6 | 785 | 17.7 |
| Jet Airways | 27,779 | 12.7 | 586 | 10.5 |
| Grasim | 54,750 | 10.8 | 6,545 | 15.1 |
| Welspun India | 4,688 | 40.9 | 193 | (25.5) |
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