Market Mantra
Market outlook
Mumbai derailed, markets back on track
It comes from saying no to 1,000 things to make sure we don't get on the wrong track or try to do too much. - Steve Jobs.
The motormen' strike may have thrown Mumbai out of gear but the bulls are set to chug ahead. The engine of course is strong global cues. US stocks rallied on the back of positive economic reports. Multi-billion-dollar M&As are back, which can be taken as a good tiding as well. Europe too recovered from the Greek woes. Asian markets are mostly up, though Chinese markets are down following last week's monetary tightening.
Volume may be hit due to the railway motormen's strike. Suddenly, thousands of opportunities may appear to come your way but make sure you don't get carried away. Tuesdays are often infamous to start one way and end the other way. Despite the positive outlook for the day, the overall prospects appear to be rather murky in the near term.
The key indices have been choppy and rangebound for several weeks and that trend may not change for some time to come. Jindal Steel and Syndicate Bank will announce their results today.
Trading ideas (Time period: 1-3 days)
Titan Inds (BUY, CMP Rs2,189, Target Rs2,270): The stock has rallied smartly from a low of Rs1,861 in April 2010 to the present levels. Despite the ongoing volatility in the market, the stock has managed to hold on to the support of its short-term trendline. On the daily charts, it has formed a pattern of a higher bottom. It is considered as the initial sign of a bottoming out process in the short term. The daily RSI is already in strong buy mode, indicating that the prices are set to rally from the current levels. A sustained move past the Rs2,195 levels will see the stock heading towards the levels of Rs2,250-2,270 in the medium term. We recommend high risk traders to buy the stock between Rs2,180-2,195 levels for an initial target of Rs2,270 with a stop loss of Rs2,165.
Educomp (BUY, CMP Rs693, Target Rs725): The stock has seen a sharp correction from a high of Rs784 in April 2010 to a low of Rs666 in last week. The low has proved to be a panic bottom and the stock has rallied without a retest of this low. On the daily chart, the price movements appear to have formed a higher bottom formation. After taking support at the lower-bend of the trading channel, the stock made an upmove yesterday. Traders can buy the stock between the levels of Rs690-696 with a stop loss of Rs678 for a short-term target of Rs725 in the coming trading sessions.
Derivative strategies (Time period: Till expiry)
± Long Noida Toll Bridge May Future @ Rs33.65 for the target price of Rs35 and stop loss placed at Rs33
Lot size: 8,200
Remarks: Net maximum profit of Rs11,070 and net maximum loss Rs.5,330.
± Long Rural Electrification Corporation May Future @ Rs260 for the target price of Rs275 and stop loss placed at Rs250
Lot size: 1,950.
Remarks: Net maximum profit of Rs29,250 and net maximum loss Rs19,500.
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: JSW Steel (Q4 FY10) – BUY
CMP Rs1,221, Target Rs1,388, Upside 13.5%
± Q4 FY10 revenue growth 12.8% qoq to Rs52.1bn was slightly higher than our estimate
± JSW managed to register a 4% qoq growth in realisations on account of lower sale of semis and higher sales of rolled products
± Sales volume increased 6.6% qoq to 1.52mn tons, slightly lower than our estimate of 1.53mn tons
± EBIDTA/ton increased to Rs8,419 in Q4 FY10, as jump oin realisations was higher than the jump in raw material costs
± JSW has given a guidance of 7mn tons of production and 6.75mn tons of sales in FY11
± JSW has acquired a coking coal mine in US with a resource base of 123mn tons and target 3mtpa by its 3rd year of operations
± US pipe and plate mill subsidiary managed a turnaround at the operating level
± Maintain BUY with a revised target price of Rs1,388
Result Update: Idea Cellular (Q4 FY10) – Market Performer
CMP Rs63, Target Rs69, Upside 9.5%
± Q4 revenues up 6.3% qoq, ahead of our estimate of Rs31.6bn; CY09 revenue market share rose 130bps to 12.7%
± MOU growth of 2.3% qoq less than that for Bharti; ARPU falls 7.5% on ~8% drop in rev/min
± OPM expands 174bps driven by EBIDTA % improvement in Idea ex Spice, Indus; new circle EBIDTA losses widen qoq to Rs1.4bn
± Reported PAT gets boost from one-off income of Rs520mn due to conversion of finance lease into operating lease in erstwhile Spice circles; pre-exceptional PAT above estimates on improved OPM
± Expect voice pricing pressure to subside in H2 FY11; raise TP to RS69 but maintain MP
Sector Update: Oil Monthly Update – April 2010
± Crude oil prices rise on a mom basis
± Refining margins fall sequentially
± Under recoveries jump for all four products on yoy basis
± Reliance, ONGC and CPCL underperform during April
Corporate Snippets
± Infosys Technologies is investing up to US$100mn during the next few quarters to strengthen its overseas operations, especially in Europe. (BL)
± BHEL has set a target to supply 12,000MW of power equipment, 3x of what it supplied in the previous fiscal, to power companies such as NTPC in 2010-11. (BL)
± NTPC plans to borrow Rs128bn during the current fiscal for its capacity addition program. (BL)
± IOC along with the Tamil Nadu government will invest Rs100bn to set up a gas storage terminal in the state. (ET)
± The promoters of DLF will list their real estate investment trust firm, DLF Assets Ltd, in Singapore in September to raise about US$1.2bn. (FE)
± Bajaj Auto said it will produce a car that will cost US$2,500 in collaboration with the Renault-Nissan alliance. (ET)
± Reliance Communications has entered into talks with handset makers, including Samsung, LG and Motorola, for procuring smartphones based on Android operating systems. (FE)
± The personal care segment in India is about to witness a flurry of activity with ITC and Dabur India chalking out strategies to take on competition, increase market share and expand distribution networks. (FE)
± Vedanta-controlled Bharat Aluminium Company will get legal possession of 600 acres of land that it had allegedly encroached upon in Korba district of Chhattisgarh. (BS)
± Torrent Power has decided to reduce fuel price and power purchase adjustment charges by 6 paise per unit at 78 paise per unit with effect from April 1, 2010. (BS)
± SAIL proposes to set up a port in Orissa. (ET)
± Axis Bank and private insurer Max New York Life Insurance forged a 10-year strategic relationship for distribution of insurance products through the banks branches. (ET)
± Along with plans for Canada, PNB is acquiring a controlling stake in a Kazakhstan bank, JSC Dana, as an entry point to Russia, and setting up its first beachhead in Dubai this year. (ET)
± US-based Pfizer and its subsidiary Wyeth have sued Ranbaxy Laboratories in a US court claiming that the Daiichi Sankyo-owned drug maker infringed on Wyeth's patent coverage of the drug, Rapamune. (FE)
± Glenmark Pharmaceuticals licensed its chronic pain molecule to Sanofi Aventis for an upfront payment of US$20mn, in a cumulative deal of US$325mn. (ET)
± Kirloskar Brothers acquired 90% stake in South Africa's Braybar Pumps for Rs110mn. (ET)
± Financial Technologies said it will launch three new international exchanges, including Bahrain Financial Exchange and Singapore Mercantile Exchange, this year. (ET)
± S Kumars Nationwide has formed a joint venture with Donna Karan International to design, produce and distribute the entire range of DKNY menswear apparel across the world except Japan for 10 years. (ET)
± Trent Ltd concluded acquiring all the equity shares of Optim Estates Private Ltd on April 30, 2010, thereby making it a wholly owned subsidiary. (FE)
± Wipro Consumer Care and Lighting, the FCMG and lighting products arm of Wipro, plans to make an investment of around Rs0.8bn in FY11 to augment its production capacity. (BS)
± Paramount Airways and IndiGo have been given "in-principle" approval by the Government to import 168 aircraft between them. (BL)
± Hindustan Motors plans to report itself to the BIFR, as its net worth had eroded by more than 50% during the past four financial years. (BS)
± State-owned hydro-electric utility firm SJVNL's IPO was subscribed over six times, with the retail portion being subscribed nearly two times. (ET)
± Temasek Holdings bought out NYSE Euronexts 5% stake in the National Stock Exchange for around US150mn. (ET)
Economic snippets
± An EGoM on fuel pricing is likely to meet after the current Parliament session to discuss freeing petrol, diesel and cooking fuel prices from the government control. (BS)
± At the end of the 20th day of the auction, which began on April 9, the provisional winning price for a pan-India license stood at Rs103.5bn, up 195.6% from the Rs35bn reserve price fixed by the government. (ET)
± The government has started legal proceedings against 10 iron ore mining firms, which are part of larger companies, for providing inaccurate production and pricing figures. (ET)
± The finance ministry plans to exempt large unlisted companies from the proposed 25% minimum public holding norm to ensure that it does not discourage them from going public. (ET)
± Companies can now close their public issues on different days for QIBs and retail investors, with capital market regulator SEBI having amended the guidelines relating to share issues. (ET)
± RBI survey pegged inflation at an average of 6-6.9% in the current fiscal. (ET)
± RBI on Monday took exception to some NBFC's for investing in overseas ventures without permission, and asked them to seek its approval before pumping in money abroad. (ET)
± The chemicals industry has written to the prime minister protesting the suggestion of an EGoM that the industry should consider importing ethanol for its needs and seek a reduction of import duty from 7.5% to 0% if the landed cost of imported ethanol was more than Rs27/litre. (ET)
± The government may hold top executives responsible if state-run power sector companies fail to meet performance targets and punish them with fines and transfers. (ET)
± Sugar output up by 15% in Maharashtra in FY11. (BS)
Results table
| (Rs mn) | Revenues | % yoy | PAT | % yoy |
| Century Enka | 3,062 | 22.5 | 152 | 30.2 |
| Maharashtra Seamless | 3,881 | (29.3) | 751 | 16.2 |
| Idea Cellular | 33,477 | 6.3 | 2,666 | 56.7 |
| JSW Steel | 54,807 | 51.3 | 6,110 | - |
| HDFC | 28,993 | (8.1) | 9,264 | 26.3 |
| Central Bank | 37,240 | 18.2 | 1,711 | 173.7 |
| Amtek India | 2,676 | 43.7 | 193 | 77.9 |
| Tube Investments | 8,488 | 26.7 | 368 | 140.1 |
| Moser Baer | 5,926 | 16.2 | 63 | (85.3) |
| Edserve Softsystems | 208 | 654.5 | 62 | 282.3 |
| Banswara Syntex | 1,824 | 21.8 | 95 | (16.1) |
| Lakshmi Energy | 2,525 | 66.1 | 231 | 26.6 |
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