Market Mantra
Market outlook
Worldly worries
Better be despised for too anxious apprehensions, than ruined by too confident security. -Edmund Burke
Confidence goes for a toss when the world comes tumbling down. Despite less leverage, fear may overtake temptation while attempting to pick stocks as the sentiment swings wilder by the day. Interestingly, the Japanese market has escaped the global carnage as it has been shut for 3-4 days. May be it will react when it resumes trading. South Korea's market is also closed today.
No such luck for India, as the market is all set to witness deeper cuts. All round selling dragged the NSE Nifty below 50day DMA which it had managed to hang on to for over a month. Most technical and derivative indicators are showing further weakness and the Nifty is set to test 5050. The best tactic in such turbulent times is to stay away and wait for stability to return.
US stocks suffered their steepest drop in three months, as risk tolerance collapsed amid mounting concerns over the European debt crisis. The S&P 500 has dropped to its fourth test of support at the March peak of 1,180. A close below this would likely signal a near-term downtrend.
Trading ideas (Time period: 1-3 days)
Sesa Goa (SELL, CMP Rs386 Target Rs365): The stock has been on a downtrend since its peak of Rs495witnessed during the second week of April 2010. The stock on repeated occasion finds support at its 100-day DMA since January 2010. On Tuesday, we saw the stock breaking below its multiple support levels. The recent decline was accompanied by higher volumes. Furthermore, on the weekly chart, it has broken down from a small consolidation pattern, confirming the negative trend. We recommend traders to initiate short positions in the range of Rs388-382 for target of Rs365. A stop loss of Rs394 is recommended on all short positions.
L&T (SELL, CMP Rs1,549 Target Rs1,500): On the daily charts, L&T has given a close well below its critical support levels of its 200-day DMA placed at Rs1,578. We expect the weakness to continue in the near term with daily RSI also showing a downward trend. Movement of the momentum indicators denote that the stock could trudge lower over the near term. Any fall from these levels could drag the stock lower towards Rs1,500 and below. We recommend a high-risk sell on the stock between the levels of Rs1,555-1540 with stop loss of Rs1,570 for an initial target of Rs1,500.
Derivative strategies (Time period: Till expiry)
± Long Punjab National Bank May Future @ Rs1,036 for the target price of Rs1,066 and stop loss placed at Rs1,017
Lot size: 300
Remarks: Net maximum profit of Rs9,000 and net maximum loss Rs.5,700.
± Short Adani Enterprises ltd May Future @ Rs556 for the target price of Rs526 and stop loss placed at Rs566
Lot size: 400.
Remarks: Net maximum profit of Rs12,000 and net maximum loss Rs4,000.
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% | |
Result Update: Jindal Steel & Power (Q4 FY10) – Market Performer
CMP Rs718, Target Rs660, Downside 8.1%
± Q4 FY10 standalone revenue of Rs23.9bn was quite higher than our estimate of Rs20.5bn
± The outperformance in topline was due to both higher than expected sales volume and realisations
± OPM remained flat qoq as the positive impact of higher realisations was negated by a jump in raw material costs
± Average power realisations under JPL declined from Rs4.9/unit in Q3 FY10 to Rs4.4/unit
± JPL registered a 10.5% qoq decline in PAT to Rs5.2bn, accounting for 55% of consolidated PAT
± Maintain Market Performer rating with a revised target price of Rs660
Sector Update: Commodity Monthly Update – April 2010
± Dollar index extends gains for the fourth consecutive month
± Base metals slide on European concerns
± Chinese HRC export prices at 15-month high
Corporate Snippets
± The government has asked Reliance Industries to cut gas output from its eastern offshore KGD6 fields so that imported fuel stocks can be cleared. (ET)
± The government said it is in the process of granting the Maharatna status to four state-run firms — ONGC, SAIL, NTPC and IOC. (ET)
± L&T and UK-based Howden Global have signed a JV to design, engineer, manufacture and supply axial fans and air pre-heaters to Indian thermal power plants ranging between 100 MW and 1,200 MW. (BL)
± HCL Technologies has signed a US$500mn strategic pact with pharmaceutical major MSD (also known as Merck & Co) for a period of five years. (BS)
± Oil India and Indian Oil Corp has pulled out of the race to acquire Gulfsands Petroleum after the UK-listed firm refused the Indian firms' request for due diligence before making a firm offer. (ET)
± NMDC and MMTC are likely to finalise the iron ore export contracts with Japan and Korea by this month-end or early next month. (BL)
± NMDC is keen to enter into coal mining with Coal India Ltd as a partner. (FE)
± Ashok Leyland has reported sales of 6,500 vehicles for the month of April, compared with 1,750 in the same month last year. (BL)
± Apollo Tyres will hike prices of its finished rubber products by 4.5%–5% across segments in June. (FE)
± Videocon Industries has moved a petition to the World Bank seeking to revoke a three-year ban for misrepresenting information in a tender document in 2003. (ET)
± Welspun-Gujarat Stahl Rohren will acquire majority stake in Saudi Arab-based pipe facility and a pipe coating facility. (BS)
± Jet Airways is understood to have asked the MMRDA for six more months to pay for the 1.47-acre Bandra-Kurla Complex plot it bought for Rs8.3bn in 2008. (FE)
± Glenmark Pharmaceuticals issued exclusive marketing rights for cholesterol control ezetimibe to another generic company Par Pharmaceutical Companies in an effort to strengthen its patent challenge case against Merck. (ET)
± Sterlite Technologies will set up an LCD factory in Maharashtra at an investment of Rs96bn. (BS)
± NDTV has terminated its agreement with Scripps Networks Interactive Inc, which it had entered into, to introduce lifestyle channels in India. (BS)
± Adani Enterprises said it plans to raise up to Rs40bn through the issue of securities in global or domestic markets. (ET)
± McNally Bharat said that it had bagged orders worth Rs1.1bn from Vedanta Group firm to provide engineering related works in Zambia. (FE)
Economic snippets
± The bid price for 3G spectrum continues to rise as it touched Rs107.5bn for pan-India operations on the 21st day of auction, assuring the government of Rs433.7bn in terms of revenue. (ET)
± India is trying to mobilise opinion against the proposed international standard on corporate social responsibility that could give legal sanction to developed countries to reject exports from developing countries like India. (ET)
± Parliament passed the budget 2010-11 with the finance minister remaining firm and turning down all pleas for a rollback of increase in duties on fuel. (ET)
± The department of disinvestment (DoD) will move a proposal this week for divesting a 10% stake in Coal India through an IPO to cash in on the positive sentiment created by the recently closed issue of Satluj Jal Vidyut Nigam. (ET)
± The finance ministry has rejected the petroleum ministry's demand for giving a seven-year income tax holiday to those who win sedimentary blocks for natural gas and coal bed methane (CBM) exploration in the next round of auctions later this year. (FE)
± The corporate India Inc has raised US$4.32bn in March 2010 up by 300% over US$ 1.1bn mobilized in March 2009. (FE)
± Government mulls sugar decontrol as the move has received a strong push from the Commission for Agricultural Costs and Price. (BS)
± The government extended the deadline for implementing cleaner emission norms for two-wheelers across the country till July 1, 2010. (BS)
± SEBI has widened the scope of index-based options by allowing exchanges to offer option contracts based on Sensex and Nifty with a tenure of up to five years. (BS)
± Under margin pressure due to the rising prices of natural rubber, the end-user industries have asked the Government for duty-free import of two lakh tonnes of rubber through a Government agency, besides a ban on exports. (BL)
Results table
|
| Revenue | % yoy | PAT | % yoy |
| JSPL | 31,756 | 10.8 | 9,634 | 7.3 |
| KEC International | 13,451 | 18.5 | 544 | 13.3 |
| Syndicate Bank | 8,597 | 53.0 | 1,682 | (18.6) |
| Dhampur Sugar | 3,015 | 172.2 | 124 | (29.3) |
| ING Vysya Bank | 2,471 | 52.2 | 679 | 38.2 |
| Taj GVK Hotels | 633 | 5.7 | 122 | 54.0 |
| MIC Electronics | 577 | 7.8 | 162 | 37.4 |
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