Market Mantra
Market outlook
Worried start in the offing!
That's the secret to life... replace one worry with another - Charles M. Schulz
Earlier the worry was whether the government would decontrol fuel prices. Now the worry is whether such a step will flare up inflation and invite an intra-cycle rate hike from the RBI. Whether the central bank will oblige or not only time will tell. The RBI is scheduled to meet on July 27 for the first quarter review.
Whatever the worries, the market has enough reasons to open cautious and more or less remain that way for the day. Shares of oil companies could extend Friday's rally after the Government freed petrol prices and promised to deregulate diesel prices too. With opposition parties raising a hue and cry, one has to see if there is any rollback in fuel prices.
The market will consolidate in a sideways fashion given the near-term uncertainties - over both local as well as global. FIIs turned net sellers on Friday. Fund flows will have a bearing in determining the market's mood. Progress in monsoon and quarterly earnings will also play a role in shaping the overall sentiment.
Trading ideas (Time period: 1-3 days)
Finolex Cables (BUY, CMP Rs50, Target Rs53): Recent price behavior of Finolex Cables from the month of May 2010 till date has been oscillating in narrow channel having a positive slope. Prices have violated the resistance line, which coincides with 200-EMA in Friday's trade. Previously, the stock had made several attempts in last three weeks to close above its 200-EMA. Thus this breakout should be viewed as positive move accompanied by higher than average volumes. We advise buying the stock at current levels with stop loss of Rs48.5 for target of Rs53.
Sasken Communications (BUY, above Rs197, Target Rs208): On Friday, the stock attempted a breakout from a downward sloping trendline after consolidating for almost a month between the range of Rs180-200. Volumes activity expanded as the price moved near towards the downward sloping trendline. Any move above Rs197 would result in violation of resistance line from a falling channel, which is likely to take stock towards Rs220. Positive crossover in RSI and other momentum oscillators validates our positive argument for the stock at current levels. Based on the above observations, we recommend traders to buy the stock above Rs197 with a stop loss of Rs191 for a target of Rs208.
Derivative strategies (Time period: Till expiry)
± Short ONGC July Future in range of Rs1273-1275 for the target price of Rs1248 with a stop loss placed at Rs1285.
Lot size: 250
Remarks: Net maximum profit of Rs6,250 and net maximum loss Rs3,125.
± Short Reliance Capital July Future in range of Rs775-777 for the target price of Rs755 and stop loss placed at Rs785.25
Lot size: 500
Remarks: Net maximum profit of Rs10,000 and net maximum loss Rs5,000.
Mutual funds
| Fund focus | |||||||
| HDFC Top 200 Fund | Invest | ||||||
| Fund manager | Prashant Jain |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs192.2 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs193/135 |
| Exit load | 1% <1 yr | |||
| Latest AUM | Rs7,490cr |
| Latest dividend (under dividend option) | 40% (Mar 12, 2010) | |||
| Type | Open-ended |
| Benchmark | BSE200 | |||
| Class | Equity – diversified |
| Asset allocation | Equity (97%), Debt (0%), Cash (3%) | |||
| Options | Growth & dividend |
| Expense ratio | 1.8% | |||
Corporate Snippets
± RNRL signed a revised gas sale master agreement with Reliance Industries for supply to the former's proposed power plant at Dadri in Uttar Pradesh, close to Delhi. (BS)
± Reliance Communications says it has agreed to sell its telecom business to GTL Infrastructure. (BL)
± Reliance Industries and Pemex, Mexico may soon forge a partnership to develop a large-capacity greenfield refinery in Mexico. (ET)
± Tata Motors will set up a new manufacturing plant for the Ace and for other similar products. (BS)
± The Singapore government's investment fund, GIC Special Investments Pte Ltd, has deferred its plan to invest about Rs3.8bn to pick up a minority stake in Fortis Healthcare. (BS)
± Piramal Healthcare is planning a string of acquisitions in the biotech space in the US, Europe and Canada in the next two to three years. (BS)
± Cipla has started talks with the government to share knowledge on making cancer drugs. (ET)
± MTNL plans to repay most of the Rs75bn debt which was taken for buying 3G and broadband spectrum within six months to a year and then go for long-term debt management. (BS)
± M&M plans to invest Rs2.5bn into aerospace business. (BS)
± L&T plans to restructure its joint venture with Japan's Mitsubishi Heavy Industries, as it prepares to re-bid for the NTPC contract for bulk supply of supercritical boilers worth about Rs90-110bn. (BS)
± The GMR-Malaysia Airports combine has won the contract for building and expanding the airport at Male in the Maldives for about US$300mn. (BS)
± Jet Airways and Godrej Properties are in the process of signing a deal for developing Jet's land in the Bandra Kurla Complex area of Mumbai together. (BS)
± HCL Corporation has sold 16.75mn shares in HCL Technologies, constituting 2.5% stake in the information technology company, for an estimated Rs5.8bn. (BS)
± Blackstone may announce the purchase of 12% of Monnet Power for Rs3bn as early as this week. (ET)
± Hindustan Copper has expressed interest in bidding for the development of mines in Afghanistan, which is estimated to have mineral wealth worth US$1trillion. (ET)
± Core Projects has signed a five-year contract worth US$24 mn with the Los Angeles government to design and implement a diagnostic testing programme for 375 schools. (ET)
± ING Bank NV sold its entire stake of 3.07% in Kotak Mahindra Bank valued at about Rs8.01bn. (BS)
± The government's stake in IDBI is expected to touch 65% by the end of the second quarter, following a Rs31.1bn capital infusion into the bank. (ET)
± Jay Shree Tea has decided to expand its business footprint via overseas and domestic acquisitions. (ET)
± Arvind to form JV with Safal Group for residential projects. (BS)
± MTN Group is in talks with Loop Telecom to purchase a stake in the company. (BS)
Economic snippets
± Government raises petrol price by Rs3.5/l and diesel by Rs2/l at Delhi, with corresponding increase in other parts of the country. (BL)
± Government also increased the price of domestic LPG by Rs35/cylinder and kerosene sold under PDS by Rs3/l. (BL)
± The Baltic Dry Index fell 40% to 2,501 against 4,209 a month earlier. (BS)
± The government plans investment of Rs4.4-6.6bn for boosting research and development (R&D) activities in the petrochemicals sector. (BS)
± Reserve Bank of India will announce the first quarter review of the monetary policy for 2010-11 on Tuesday, July 27. (ET)
± Foreign exchange reserves rose US$3.2bn during the week ended June 18 to US$276bn. (ET)
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