Market Mantra
Market outlook
Put on your armor!
The best armor is to keep out of range - Italian Proverb
Wild swings are here to stay though the outlook for the day appears slightly brighter. Risk aversion is still high with investors across the globe flocking to the safety of gold and the dollar. At the same time, stocks and commodities are showing some signs of staging a comeback. British shares rose as David Cameron took charge of the first coalition government in London since World War II. Spain's announcement of a new austerity plan also helped boost confidence in equities.
Stocks in Europe as well as in the US posted smart gains. Asian markets are up this morning, led by Japan and South Korea though Shanghai continues to struggle amid tightening concerns.
We expect a higher opening on Indian bourses. The NSE Nifty may take a shot at 5200 but will find it tough to get past 5300. Fund flows from overseas investors have tapered off lately and valuations remain quite rich. We are going through a volatile consolidation phase. It's better to stay at a safe range and invest lesser than your means.
Trading ideas (Time period: 1-3 days)
Jubilant Organosys (BUY, CMP Rs364, Target Rs385): The stock has done pretty much nothing in last one month, besides moving in a tight trading band between Rs320-325. On Wednesday, after a long time, the stock made a move above the upper end of the trading range. The range bound trading appears to be broken and the stock is all ready to surge higher. Our view is further validated after the stock gave a close above the cluster of moving averages placed around Rs340-345 levels. If the stock holds up above the levels of Rs370 today, it can post huge upside in the coming trading sessions. We recommend high risk traders to buy the stock in the range of Rs360-367 for a target of Rs385. Maintain a strict stop loss of Rs355.
Kotak Bank (BUY, CMP Rs768, Target Rs800): The stock has seen impressive volume expansion in last few trading sessions and appears to have taken support between Rs723-725 range. Above Rs771, it could bounce till somewhere between Rs795-800 levels in the near term. Our argument is further validated after the stock recovered from the low of Rs747 in yesterday's session with strong volumes. Traders are advised to maintain a stop loss of Rs754 and go long. Book partial profit around Rs795 and exit around the levels of Rs800.
Derivative strategies (Time period: Till expiry)
± Long Bank Nifty May Future @ Rs9706-9715 for the target price of Rs9,850 and stop loss placed at Rs9,655
Lot size: 25
Remarks: Net maximum profit of Rs3,600 and net maximum loss Rs1,275.
± Long CESC May Future @ Rs399 for the target price of Rs420 and stop loss placed at Rs389
Lot size: 1100
Remarks: Net maximum profit of Rs23,200 and net maximum loss Rs11,000.
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% | |
Economy Update: IIP – March 2010
± IIP growth for March 2010 at 13.5% v/s 15.1% in Feb 2010
± Growth continued across all use based categories
± IIP growth for FY10 at 10.4%
Result Update: Bajaj Auto (Q4 FY10) – Market Performer
CMP Rs2,146, Target Rs2,238, Upside 4.3%
± Total volumes for Q4 FY10 jumped by 83.7% yoy, led by 106% yoy surge in domestic volumes
± Realizations decline by 1.8% yoy driven by higher proportion of sales from lower priced Discover platform and decline in contribution of 3- wheelers to total volume
± Highest ever quarterly OPM at 22.9%, increase of 768bps yoy. On a sequential basis OPM grew marginally by 90bps
± Net Profit jumped 308.7% yoy to Rs5,322mn. NPM for Q4 FY10 expanded by 874bps yoy
± Board has recommended dividend of Rs40 per share
± Upgrade FY11-12 estimates to factor in higher margins, Downgrade to MP with a revised price target of 2,238 (16x FY12E EPS)
Corporate Snippets
± Ranbaxy plans to divest its investments made by the previous promoter in the group companies. (ET)
± Reliance Power may build gas-fired plant in Andhra Pradesh instead of Dadri after the Supreme Court verdict. (ET)
± M&M to consolidate presence in utility vehicles segment. (BL)
± Tata Steel wants prices for automobiles sector to be negotiated every quarter. (BL)
± Godrej Consumer to buy out Sara Lee stake in their JV for a consideration of US$234mn. (ET)
± Glodyne Technoserve has acquired DecisionOne, a US based IT firm for US$104mn. (ET)
± HCC spins off IT unit into a fully-owned subsidiary. (ET)
± Radico Khaitan is all set to launch "After dark" a 100% grain-based whisky manufactured at its Rampur distillery. (ET)
± Strides Arcolab gets US FDA approval for its anti-infective injection Bacitracin used to treat pneumonia and empyema. (BL)
± GVK Power is mulling the possibility of separate holding companies for its assets in various divisions. (BS)
± Reliance Infrastructure slams Tata Power for continuing to sell 100MW outside Mumbai, defying the recent Maharashtra government decision, to make a profit of Rs3bn annually. (BS)
± Zydus Cadila receives an approval from the Drug Controller General of India to market H1N1 vaccines in the country. (BS)
± Shriram Transport Finance plans to tap the debt market to raise up to Rs5bn through a public issue of non-convertible debentures. (BS)
± MSCI has included Rural Electrification, Piramal Healthcare and Adani Enterprises in the MSCI India Index. (BS)
± Elecon Engineering bags orders worth Rs2.08bn from various vendors, including GMR Infrastructure and SAIL for construction-related works. (BS)
± Titan Industries plans to expand its reach by adding 300 outlets in big and small cities shortly. (BS)
Economic snippets
± The revenue from 3G spectrum sale has touched Rs584bn on the 28th day of the auction. (ET)
± India's factory output grew by 13.5%, registering sixth straight month of double-digit expansion. (BS)
Results Table
| Company | Revenues | % YoY | PAT | % YoY |
| Bajaj Auto | 33,995 | 80.5 | 5,322 | 308.8 |
| Thermax | 12,193 | 28.6 | (157) | - |
| MRPL | 97,225 | 27.4 | 2,531 | (58.4) |
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