Market Mantra
Market outlook
Think global, act local!
Let bravery be thy choice, but not bravado. – Menander
The global cues this morning suggest more green on your screen. With the US market rallying and Asian markets on a firm footing, the good times should last at least for the day. Wild intra-day gyrations are a given; we do not rule out a trend reversal if there is fresh bad news from overseas markets. Stay light and nimble so that you are ready to respond to any change in sentiment.
To say that we live in volatile and uncertain times would be an understatement. And, this applies to most asset classes, except may be for gold, dollar and bonds. After a freak fall on Tuesday, we managed to bounce back, thanks to a late bull charge. The NSE Nifty ended above 200 DMA and also surpassed the 5000 mark.
For the long-term India bulls, any fall is a good chance to buy in limited quantity. Fundamentals remain healthy. Fund flows though erratic may well improve. In the near-term, monsoon may have some bearing though GDP grew pretty well despite bad rains last year. Overall trend will be guided more by external developments.
Trading ideas (Time period: 1-3 days)
L&T (BUY, CMP Rs1,634, Target Rs1,684): LT has given breakout from flag consolidation after yesterdays prices closed above 1625 levels. Volume activity is generally seen on lower side during the flag consolidation and once prices breaks above falling resistance, volumes explode with sharp jump in prices. Stock also has been holding above its 200 DMA since last six trading session and we expect price to attempt its intermediate peak of 1684. We advice traders to keep a stop loss of Rs1615 on every long position.
Praj Industries (BUY, CMP Rs77.9, Target Rs82): The stock already has corrected almost 23% from intermediate peak and declined in structure of five impulse waves down. Recent price activity suggests that stock is able to hold its short term low of Rs75 for quiet some time now. We expect a short term bounce back in the form of 38.2% retracement to Rs84 levels. Classical Tweezer bottom pattern is visible on daily chart with volume activity shrinking in second bottom .Stock is also placed at support range of Bollinger which also provides better risk reward ratio with conservative target placed at 82. We advice traders to keep a stop loss of Rs75 on every long position.
Derivative strategies (Time period: Till expiry)
± Long Hindalco June Future in range of Rs144-145 for the target price of Rs152 with a stop loss placed at 139.90.
Lot size: 3518
Remarks: Net maximum profit of 28,144 and net maximum loss Rs14,072.
± Long Tata Steel June Future in range of Rs485-487 for the target price of Rs498 and stop loss placed at 478.5
Lot size: 764
Remarks: Net maximum profit of Rs9,932 and net maximum loss Rs4,966.
Mutual funds
| Fund focus | |||||||
| UTI Opportunities Fund | Invest | ||||||
| Fund manager | Harsha Upadhyaya |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs23.4 |
| 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
± RCOM to give up strategic stake to fund 3G foray. (ET)
± NTPC is set to acquire controlling interest in a 720mn tone coal field in Australia in a deal valued at US$1-1.5bn, which will enable it to fire about 3,500MW of power capacity. (ET)
± RIL revives plan to build a multi-billion-dollar chemical plant. (ET)
± Sun Pharma rejects Guggenheim Partners' US$215mn offer for Taro stake. (ET)
± SASOL, the largest producer of motor fuel made from coal, plans to spend US$10bn in India in partnership with Tata Group on a block awarded last year. (ET)
± RIL's hunt for more hydrocarbons on India's East coast could slow as the company's drilling programme in the region is facing delays due to 'unresolved mechanical' issue in the rig hired from Transocean. (BL)
± Tata Motors inaugurated its Nano manufacturing plant at Sanand in Gujarat. (BS)
± Ranbaxy is recalling all unused stock of one batch of its drug Gabapentin from the UK. (ET)
± THE oil & gas sector regulator has asked Gail Gas to refrain from setting-up gas filling stations at places it has not yet approved. (ET)
± MMTC, National Fertilisers and RCF are the latest companies to join the Government divestment list. (ET)
± GMR Energy has raised Rs3.5bn from IDFC Group for a minority stake. (ET)
± The Hinduja Group plans to raise nearly US$1bn by an IPO of its lubricant arm Petromin in Saudi Arabia this year. (ET)
± JSW Steel to raise about Rs21bn through an issue of warrants to promoters on a preferential basis to help cut debt. (ET)
± Aditya Birla Minacs, the BPO arm of the Aditya Birla Group, has acquired the US-based Bureau of Collections Recovery. (ET)
± FMCG major Godrej Consumer Products has acquired Argentinian hair care company Argencos. (ET)
± CERC has approved PowerGrid Corporation's plan to set up nine High Capacity Power Transmission Corridors costing Rs581bn. (BS)
± GTL is believed to be in talks with Reliance Infratel, the telecom tower arm of RCom, for a strategic partnership. (BS)
± Ashok Leyland and Nissan, who have joined hands for manufacturing light commercial vehicles (LCV), are planning to roll out their first product by mid-2011. (BS)
± Punjab Tractors is increasing production capacity of its 'Swaraj' brand of tractors by 30% this fiscal. (BL)
± Shree Renuka Sugars is negotiating a 25-28% reduction in the acquisition price for its proposed Equipav buyout. (ET)
± Infotech Enterprises has signed a long-term master service agreement with Norway's drilling and well services company Seawell AS to provide engineering support services. (BS)
Economic snippets
± The pan-India bid for Broadband Wireless Access (BWA) spectrum touched Rs 86bn on Wednesday translating into revenues of Rs258bn for Government from the sale of three slots. (ET)
± The Union Finance Ministry plans to define any equity placement prior to an IPO as promoter shareholding for the purpose of calculating minimum public float. (BS)
± According to chief Statistician Pronab Sen, India's economy might accelerate to 9% in Q1 on strong consumer demand. (BS)
± According to data released by the RBI, bank credit went up by Rs24bn to Rs 32,302bn at the end of May 14, a yoy increase of 18%. (BS)
± India's food processing sector, which was growing at about 6% four years ago, is now expanding at nearly 15% annually, as per the Union Minister of State for food processing industries. (ET)
± India's fifth ultra mega power plant will be set up at Chhattisgarh. (ET)
± Technology research firm Forrester has raised the growth forecast for Global IT Spend to an extremely healthy 9.3%. (BS)
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