Market Mantra
Market outlook
Wall of worries
The best thinking has been done in solitude. The worst has been done in turmoil.Thomas A. Edison.
Don't try to act too smart and curb your bravado as the mayhem triggered by the European debt turmoil shows no signs of abating. Prepare for another shakeout today, at least in the morning trades as risk aversion continues to reign supreme amid growing fears that the ongoing debt problems in Europe will upset the global economic recovery. The key Indian indices are likely to nose-dive at opening bell and the NSE Nifty is expected to test 4950, which is seen as a major support. Hopefully, there will be some recovery as the day wears on and the Nifty will end above the psychological 5000 mark.
Reliance Industries and RNRL will be in focus today as Supreme Court is likely to deliver the long-pending verdict in the gas dispute. Nobody has a clue what the final decision will be. But, since Reliance is an index bellwether any sharp movement in it definitely has a bearing on the sentiment. Overall, the trend looks weak unless global markets rebound. Don't take any aggressive bets and just stay put as the global situation is not conducive right now, though for India there aren't too many worries.
Trading ideas (Time period: 1-3 days)
Suzlon (BUY at declines, CMP Rs71, Target Rs77): The stock had been on a strong downtrend for the past few months. Infact, the stock has seen a sharp decline from the levels of Rs83 levels in March 2010 to a low of Rs66 in the current week. The Daily RSI is exhibiting strong positive divergences, which indicates that the worst is over and that the trend should reverse from the current levels. We expect the stock to witness smart pullback from the current levels. Volumes have shown a smart increase in yesterday's session, which suggests accumulation at lower levels. A bullish candlestick on Thursday further validates our argument of a short-term bounce in the stock. Traders can on declines to the levels of 68 for target of Rs77. It is advisable to maintain a stop loss of Rs66.
Oil India (BUY at declines, CMP Rs1,142, Target Rs1,200): The stock has seen impressive volume expansion in yesterday's trading session and appears to have taken support between Rs1,120-1,130 range. It could bounce till somewhere between Rs1,200-1,220 levels in the near term. The bullish formation is confirmed after the stock gave a close above its short-term moving averages. Any move above Rs1,150 could take the stock towards Rs1,200 and higher. Traders are advised to buy the stock on declines to Rs1,125 for a target of Rs1,200. Maintain a SL of Rs1,110.
Derivative strategies (Time period: Till expiry)
± Long Maruti May Future @ Rs1,240-1260 for the target price of Rs1,320 and stop loss placed at Rs1,220
Lot size: 200
Remarks: Net maximum profit of Rs12,000 and net maximum loss Rs8,000.
± Long Sun Pharma May Future @ Rs1570 for the target price of Rs1680 and stop loss placed at Rs1515
Lot size: 225
Remarks: Net maximum profit of Rs24,750 and net maximum loss Rs12,375.
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 : Punjab National Bank (Q4 FY10) – BUY
CMP Rs1,044, Target Rs1,191, Upside 14.1%
± Business growth ahead of expectations; advances and deposits grow by 9.5% and 6.6% qoq respectively
± NIM outperformance continues with 20bps qoq expansion; NII grow by strong 7% qoq as a result
± Other income rises by 17% qoq; C/I ratio substantially improves to 32.8%
± Gross NPLs were stable; significant increase in provisioning restrict net profit growth to 4% qoq
± Maintain BUY on PNB with an upgraded target price of Rs1,191
Result Update : Union Bank (Q4 FY10) – MP
CMP Rs297, Target Rs319, Upside 7.3(%)
± Net interest income was up 51%yoy, net profit, too reported a healthy 28%yoy growth.
± Non-interest income reported a modest 6%qoq growth; fee income continues to be a key driver
± Loan book was up 23%yoy; deposit book, too reported above system growth rate. LDR remains comfortable at 71% levels
± Concerns over asset quality linger, provision coverage ratio remains adequate.
± Capital remains comfortable, valuations appear rightly priced, maintain MP.
Corporate Snippets
± The proposed joint venture between SAIL and POSCO is likely to be finalised by the month-end. (BL)
± The Supreme Court to give its verdict on the gas supply and pricing dispute between Reliance Industries and RNRL today. (BL)
± Maharashtra government to ask Tata Power to supply electricity to Reliance Infra till July 1. (ET)
± Wipro is looking increase the authorized share capital of the company by creating additional equity shares. (BS)
± ONGC Videsh and its partners will next week sign contracts for developing a giant oilfield in Venezuela. (BS)
± HCC completed the acquisition of a 66% stake in Swiss construction firm Karl Steiner AG. (ET)
± Tata Communications enters into partnership with Infinity Africa, expanding its services in Tanzania. (BS)
± Glenmark's US unit enters into an exclusive license and supply agreement for a branded product with the US arm of Taro Pharmaceuticals. (BL)
± Lanco Solar, the SPV of Lanco Infratech plans for a polysilicon and solar wafer manufacturing base in Ramdaspur village, near Cuttack District. (BL)
± Moser Baer to raise Rs4bn debt for expanding solar power. (BS)
± Aurobindo Pharma received approval for its abbreviated new drug Cyclobenzaprine tablets from the Canadian regulator, Health Canada. (BL)
± Coal India expects to seal deals worth US$1.7bn with foreign firms this month for mining coal abroad.
± EIH Ltd plans to buy out its joint venture partner for the global businesses for US$45mn. (BL)
± Nagarjuna Agrichem plans to invest Rs3.5bn to set up an 8,000 ton greenfield manufacturing facility at the Visakhapatnam SEZ. (BL)
± Ingersoll Rand plans to invest about US$100mn by 2013 to expand research activity and manufacturing capacity in India. (ET)
± Ajmera Realty would acquire 36% stake in company Ultra Tech Property Developers Pvt Ltd. (BS)
± ICI India plans to set up a new production facility "either in Tamil Nadu or Karnataka" to manufacture 70mn litres of decorative paints a year. (FE)
Economic snippets
± FY10 exports slip 4.7% to US$176.5bn. (BS)
± Food inflation moderated further to 16.04% for the week ended April 24, (BS)
Results Table
| Company | Revenues | % yoy | PAT (Rs mn) | % yoy |
| Dr Reddy's Labs | 11,524 | 10.2 | 2,532 | 62.1 |
| PNB | 64,608 | 6.8 | 11,350 | 31.1 |
| Union Bank | 13,961 | 50.7 | 5,935 | 27.6 |
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