Market Mantra
Market outlook
Bears freak out!
A man who has committed a mistake and doesn't correct it, is committing another mistake.-Confucius
As if the world and its worries were not enough, a freak trade in Reliance Industries took place which saw the index heavyweight plunge to Rs840.55 during the day. Later, there was a freak rumor too on a business channel with the name India Infoline, which unlike the trade got corrected immediately.
The bulls may find some relief this morning as the market gets off to a flat start. India's exports increased by 36.2% to US$16.8bn in April, the sixth consecutive month of growth. Auto numbers have been very encouraging in May.
Better-than-expected readings on the US economy failed to cheer the main US indices. The weakness was attributed to slower manufacturing growth in China besides reports that Israel's aircraft were targeted by Lebanese anti-aircraft guns. BP shares fell 15% as it battles with the worst oil spill in US history.
The euro, which has been at the receiving end flirted with fresh four-year lows of US$1.21. The yen weakened after Japanese Prime Minister Yukio Hatoyama said he would resign in eight months.
Trading ideas (Time period: 1-3 days)
Aptech (BUY, CMP Rs133, Target Rs143): In our view, the stock has completed its downfall and has created a short term bottom around the levels of Rs115. We expect the stock to stage a pullback towards Rs143 levels, which corresponds to 50% retracement from its intermediate peak of Rs170 to Rs115. Yesterday, the stock staged a smart rally from a low of Rs127, which coincides with its 13-DMA. An attempt to test its 26-DMA is not ruled out in the coming trading sessions. We recommend buy on the stock from the above mentioned technical observations. Traders are advised to buy in the range of Rs132-134 with a stop loss of Rs126 for a target of Rs143.
Nagarjuna Fertilizers (BUY, CMP Rs29.90, Target Rs32): The stock has formed doji pattern on daily candlestick chart yesterday after it tested its 20-DMA and short term resistance line at Rs30.35. Analysing price activity from last five trading sessions, higher tops and higher bottoms suggest buying momentum in the counter and any move above
Rs30.35 levels is likely to trigger sharp upside ranging from 5-7%. Expansion in volumes also depicts strength in counter with levels of Rs29 acting as key support on closing basis. The 200-DMA is placed at Rs32, and stock is likely to test levels after successful attempt above Rs30.35 (20-DMA). We recommend a buy for a target of Rs32.
Derivative strategies (Time period: Till expiry)
± Long Reliance June Future in range of Rs1010-1015 for the target price of Rs1035 with a stop loss placed at 999.
Lot size: 300
Remarks: Net maximum profit of 6,000 and net maximum loss Rs3,000.
± Long SBI June Future in range of Rs2185-2190 for the target price of Rs2230 and stop loss placed at 2165
Lot size: 132
Remarks: Net maximum profit of Rs5,280 and net maximum loss Rs2,640.
Mutual funds
| Fund focus | |||||||
| UTI Opportunities Fund | Invest | ||||||
| Fund manager | Harsha Upadhyaya |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs23.2 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs25/12 |
| Exit load | 1% <1 yr | |||
| Latest AUM | Rs1,392cr |
| Latest dividend (under dividend option) | 15% (Jan 22, 2010) | |||
| Type | Open-ended |
| Benchmark | BSE 100 | |||
| Class | Equity – diversified |
| Asset allocation | Equity (95%), Debt (2%), Cash (3%) | |||
| Options | Growth & dividend |
| Expense ratio | 2.3% | |||
Corporate Snippets
± Reliance Industries, freed from its non-compete agreement with the ADAG that barred it from investing in high-growth sectors, is likely to make its first big-ticket investment in coal-fired power plants. (ET)
± After 19 months of announcing a relocation of the Nano plant from Singur in West Bengal to Sanand in Gujarat, Tata Motors is set to roll out the world's cheapest car from its new abode. (BL)
± Japanese auto major Nissan Motor Company today said it may partner with Hinduja Group flagship firm Ashok Leyland for launching a global compact car in India. (ET)
± Macquarie-SBI was in advanced negotiations with GMR Infra to invest US$100mn in the latter's airports division. (BS)
± NTPC's Kaniha power plant is presently reeling under a super critical condition, with coal stock of about 0.2mt which would last for only three days. (BS)
± Singareni Collieries Company Limited, which is setting up a 600MW in Jaipur mandal of Adilabad district, would place orders for the power plant equipment from BHEL in July. (BS)
± Axis Bank has cut the interest rate on fixed deposits of two years to 30 months by 25 bps to 7.0% and on 30 months to three years maturity by 50 bps to 7.0%. (BS)
± Bank of Ireland has shortlisted HCL Technologies and IBM for an outsourcing contract potentially worth over US$600mn, replacing incumbent vendor HP, which had signed a seven-year deal with the bank in 2004. (ET)
± Reliance Infrastructure won Rs29.6bn project from the NHAI for the six-laning of the 180-km Delhi-Agra road. (ET)
± Reliance Power plans to invest close to Rs100bn to ramp up the capacity of its 220-MW Samalkot project in East Godavari district of Andhra Pradesh to 2,400 MW. (BL)
± Suzlon Energy plans to repay its debt by raising funds through rights issue of 2 equity shares for every 15 shares held at Rs63/share. (ET)
± Unitech has ended its joint venture with its Mumbai partner Omkar Group for slum rehabilitation projects. (FE)
± Etisalat DB, the joint venture between UAE's Etisalat Group and Indian real estate firm DB Group, announced the soft launch of its mobile services in 15 circles. (BL)
Economic snippets
± India's exports increased by 36.2% to US$16.8bn in April, the sixth consecutive month of growth. (ET)
± As the government cut duties and stepped up public expenditure, its fiscal deficit rose by 24.9% to Rs4.1trn in 2009-10 compared to the year ago period. (ET)
± The government has agreed to allow import of Chinese-made telecom gear, certified by international security audit firms such as Canadas Electronic Warfare Associates, US-based Infoguard and Israels ALTAL Security Consulting, till a dedicated certification centre and test lab is in place. (ET)
± On the lines of the 3G spectrum auction, competition for BWA is hotting up, with the bid for pan-India licence touching Rs79.4bn on the seventh day of the auction. (ET)
± The Delhi High Court has asked telecom companies to submit their account books to the Comptroller and Auditor General of India. (ET)
± The power ministry plans to allow 15-year KG gas pact for new power plants. (ET)
± The government is considering to provide greater autonomy to 12 top state-owned ports by converting them into corporates to help them compete better with international players. (FE)
± With more SEZs becoming operational, the Centre will consider on June 8 framing rules that would allow migration of units from one SEZ to the other. (FE)
± The government is considering to price domestic coal on par with global rates, a move which may increase the cost of the raw material and fuel rise in power tariff. (FE)
Auto Monthly Numbers
| Company | May '10 | May '09 | % yoy |
| Maruti | 90,041 | 70,785 | 27.2 |
| Hyundai | 27,151 | 23,503 | 15.5 |
| Tata | 21,326 | 15,388 | 38.6 |
| Mahindra | 18,940 | 12,620 | 50.1 |
| GM | 8,225 | 5,109 | 61.0 |
| Toyota | 6,050 | 3,924 | 54.2 |
| Honda | 4,067 | 4,073 | (0.1) |
| Mercedes | 410 | 193 | 112.4 |
| Hero Honda | 435,933 | 382,678 | 13.9 |
| Bajaj | 269,488 | 165,049 | 63.3 |
| TVS | 136,621 | 107,439 | 27.2 |
| Yamaha | 25,033 | 21,388 | 17.0 |
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