Market Mantra
Market outlook
Subdued start, improvement later!
There is not any memory with less satisfaction than the memory of some temptation we resisted - JB Cabell
The recovery may sure tempt you to believe things are settling down. We managed to bounce back after another rough start, as European markets were relatively stable. US stocks too rebounded from session lows to end in the green. Asian markets are mixed this morning with Chinese market in the red yet again. Given the murky global outlook, we expect a subdued start to the proceedings.
Sentiment may improve a little, provided there no further tremors on the external front. But, on the whole we expect a volatile yet rangebound session.
Technically, the levels to watch are 4950 on the downside and 5100-5200 on the way up. A close below 4900 could lead to some panic. A decisive breakout may continue to elude us till the Nifty sustains above 5300. For the time being, the broader market may hold more promise as the large caps appear to be fully priced. In terms of events, the latest GDP data will be out on May 31. Monsoon's progress will also have some bearing on market mood in the near term.
Trading ideas (Time period: 1-3 days)
Tata Tea (BUY, CMP Rs1,105, Target Rs1,170)
On Monday, the stock gave a breakout after consolidating between the levels of Rs1,035-1,075 for the last two weeks. Yesterday's close is above its key resistance levels of Rs1,100 with higher than average volumes. In fact, the breakout has occurred after four months of consolidation, representing a high level bullish congestion, suggesting a potential upside to the levels of Rs1,170 and above. The daily RSI is already in strong Buy mode. Keeping in mind the above-mentioned evidences, we recommend high risk traders to buy the stock between the range of Rs1,100-1,110 with a stop loss of Rs1,075 for target of Rs1,170 and Rs1,240.
Sun Pharma (BUY, CMP Rs1,580, Target Rs1,620)
The stock has corrected significantly from its highs of Rs1,853 witnessed during the month of April. We believe the correction in the stock is over and the stock is set to bounce from the current levels. Further, with the market witnessing huge intraday gyrations, FMCG and Pharma stocks being defensive in nature provide better risk- reward ratio. The stock RSI has turned into a Buy mode. We recommend traders and investors to buy this stock at Rs1,580 with a stop loss of Rs1,557 for target of Rs1,620 and Rs1,640.
Derivative strategies (Time period: Till expiry)
± Long GAIL May Future near Rs433 for the target price of Rs442 and stop loss placed at Rs429
Lot size: 1125
Remarks: Net maximum profit of Rs10,125 and net maximum loss Rs4,500.
± Short Axis Bank May Future @ Rs1,260 for the target price of Rs1230 and stop loss placed at Rs1,275
Lot size: 450
Remarks: Net maximum profit of Rs13,500 and net maximum loss Rs6,750.
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: NTPC (Q4 FY10) – Market Performer
CMP Rs204, Target Rs220, Upside 7.8%
± Higher commercial capacity and improved gas supply translates into 2.9% yoy and 7.7% qoq growth in generation to 58BU during Q4 FY10
± We believe average realizations improved by 5.7% yoy to Rs2.25/unit, resulting into 7.9% yoy growth in revenues to Rs123bn
± Reported PAT de-grows by 4.5% yoy to Rs20.2bn, full year PAT grows 6.4% yoy
± Only 990MW of 3,300MW commissioned during FY10
± Re-iterate Market Performer with a target price of Rs220/share
Result Update: GAIL (Q4 FY10) – BUY
CMP Rs433, Target Rs534, Upside 23.4%
± Net sales rise 5% yoy as higher transmission volumes and petrochemical realizations are offset by lower natural gas trading revenues
± OPM jumps 340bps yoy on account of improved EBIT margins for key segments of natural gas transmission, petrochemicals and LPG and liquid hydrocarbons
± Increased gas supplies in the country lends strong revenue and earnings visibility
± Maintain our BUY rating and target price of Rs534
Corporate Snippets
± ABB has made an offer to increase stake in its Indian subsidiary by 22.89% at a cost of nearly US$1bn. ABB said it will buy 48.59mn shares at Rs900 per share, a 34% premium to last Friday's closing price of ABB India shares. (ET)
± Credit rating agency Fitch removed Bharti Airtel from its negative watch list in anticipation of an US$2bn equity infusion during the current fiscal, as well as hopes of better overall performance. (ET)
± DLF confirmed it had decided to sell its stake in Aman Resorts, but a sale would exclude Aman's New Delhi property. (ET)
± Tata Steel is keen on forming a JV with Steel Authority of India (SAIL) to set up a steel plant. (ET)
± Thermax has signed a five-year technology transfer agreement with Germany based Lambion Energy Solutions in the areas of energy generation from waste. (ET)
± Zain Group received preliminary approval to transfer its licences in Uganda to Bharti Airtel. (ET)
± Shree Renuka Sugars is renegotiating the price of its proposed Rs15.3bn acquisition of Brazilian sugar and ethanol maker Equipav amidst differences over the amount of debt on the company's books. (ET)
± Tata Motors-owned Jaguar Land Rover (JLR) is set to wrap up the £600mn (US$850mn) three-year Chinese deal it had bagged in February 2009, one year ahead of schedule. (BS)
± Input costs prompt 12% increase in Hindalco's capex in six months. (BS)
± Essar Energy plc said its indirect subsidiary, Essar Power Gujarat Ltd (EPGL), has signed a power purchase agreement (PPA) with Gujarat Urja Vikas Nigam Ltd (GUVNL). (FE)
± Shriram Transport Finance Company plans to infuse around Rs6bn capital in its proposed subsidiary, for conducting equipment finance business, which is expected to float in a month. (BS)
± Maruti Suzuki India has appointed Japanese firm Nippo as its consultant for developing a test track at Rohtak, in Haryana, where its research and development centre is being set up at an investment of Rs15bn. (FE)
± Lupin has lost the battle on antibiotic Levofloxacin against US-based Ortho Mcneil Pharma and Japanese drug maker Daiichi Sankyo with the US Court of Appeals for Federal Circuit upholding the patent term extension granted to the innovator company on the drug. (FE)
± Alstom Projects said it has bagged Rs1.2bn contract to supply electro mechanical equipment to the 96 mw Jorethang loop hydroelectric project in Sikkim. (FE)
± Bank of India on Monday slashed interest rates on deposits by 25-75 basis points in short-term category. (FE)
± KSK Energy Ventures has commenced operations at the first of its four 135MW units that constitute the 540MW Wardha Warora coal-fired project in Maharashtra. (BS)
± Godrej Properties promoters are open to their stake in their real-estate company to fuel future growth. (BL)
± Essar Energy plc through its indirect subsidiary, Essar Power Gujarat Ltd (EPGL), has signed a PPA with Gujarat Urja Vikas Nigam Ltd (GUVNL) for 800MW of contracted capacity from the 1,320MW coal-fired Salaya II power project to be located in Jamnagar district. (BL)
± Prudential may sell Tata AIG stake to Tatas. (BS)
Economic snippets
± The government's provisional revenue from the sale of 3G airwaves Monday crossed the Rs650bn mark and nationwide license price reached over Rs160bn at the end of 176 rounds of an auction. (ET)
± DoT is likely to reject the telecom regulator's proposal to charge operators holding excess spectrum at a rate determined on the basis of the ongoing 3G bids. (BS)
± The Centre plans to do both an audit as well as security checks of all China-made telecom gear installed on the existing networks of all service providers before allowing any fresh imports from that country. (ET)
± The Planning Commission of India to closely monitor the progress in infrastructure development in the country. The commission, which has till date set annual projections over a five-year period, has set infrastructure targets for various sectors on a quarterly basis and will gauge the performance of ministries responsible for infrastructure development. (BS)
± India looks all set to open its doors further to FDI in the sensitive defence production. The commerce and industry ministry has put out a discussion paper that suggests an increase in FDI in defence to 74% from 26% to encourage greater local manufacturing and technology transfer. (ET)
± India has settled a dispute over taxing profits of captive IT services units and research arms of US firms, bolstering New Delhi's position as a preferred destination of such investments. (ET)
± Indian corporate borrowed US$4.3bn overseas in March 2010, taking the overall external commercial borrowing for the fiscal 2009-10 to US$17.6bn. (ET)
± India and Japan are going to re-open discussions on liberalisation of movement of professionals, an issue that has long stalled any significant progress in the conclusion of the free trade agreement (FTA) between the two countries. (FE)
Results table
|
| Revenue | % yoy | PAT | % yoy |
| L&T | 135,851 | 28.1 | 14,381 | 44.0 |
| NTPC | 127,315 | 4.2 | 20,177 | (4.5) |
| Gail India | 65,690 | 5.4 | 9,108 | 44.6 |
| Lloyd Electric | 1,861 | (68.3) | 111 | (45.3) |
| Godrej Properties | 1,502 | 153.1 | 575 | 218.0 |
| Karnataka Bank | 1,305 | 59.6 | 741 | (10.9) |
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