Market Mantra
Market outlook
Step out and hope!
Hope is the power that gives us the power to step out and try.
With US markets in the dumps, and Asian markets barely in the green, the Indian indices are staring at a flat start this morning. While the psychological support remains at 5000 for the Nifty, the near-term support is seen around the 4940 levels.
A lot of action is being seen in MNC counters following expectations of disinvestment after the latest directive asking for a 25% public float for listing. The maximum impact is expected on PSUs, as each of the top 10 PSUs (by market cap) has GoI shareholding above 75%.
The main US indices came crashing especially towards the end with the Dow shedding 115.48 points, or 1.2%, to end at 9,816.49. This is below its May 6 low of 9,869. The S&P 500 index fell 14.41 points to 1,050.47 while the Nasdaq fell 45.27 points to 2,173.90.
The Asian markets didn't mimic the US markets following Federal Reserve chairman Ben Bernanke's view that he didn't think that the U.S. economy would slip back in to recession. He said consumer spending and business investment seem strong enough to keep the economy growing
Trading ideas (Time period: 1-3 days)
Lupin (Buy, CMP Rs1,858, Target Rs1,920): Lupin has been holding its rising support line for quiet some time now and any correction in stock should be used as buying opportunity for immediate target of Rs1,920. Momentum oscillator the RSI is also sustaining above its 9 DMA indicating that short term momentum so far is positive. Bullish counter attack line appearing on yesterdays daily chart suggests prices were unable to sustain below Rs1,800 and bounce back thereof has helped prices to close near its intraday high. We advice traders to buy the stock for a target of Rs1,920 and a stop loss of Rs1,830.
Asian Paint (Buy, CMP Rs2,185, Target Rs2,300) : Stock continues to remain in steady uptrend on medium term forming higher tops and higher bottom. In last couple of weeks, the stock consolidated in narrow band of 2020-2160 with volume activity contracting during minor price declines. Yesterday after closing above 2160 levels, this counter has witnessed breakout from the consolidation zone and is likely to ignite buying momentum in coming days. Prices have crossed above the upper Bollinger band also corroborates beginning of fresh uptrend. Volumes also have spurted up after yesterdays breakout. Buy stock in range of 2160-2175 for target of Rs 2300 and stop loss Rs 2130
Derivative strategies (Time period: Till expiry)
± Long Tata Steel June Future in range of Rs465-466 for the target price of Rs476 with a stop loss placed at 459.90.
Lot size: 764
Remarks: Net maximum profit of 7,640 and net maximum loss Rs3,820.
± Long Reliance June Future in range of Rs1113-1115 for the target price of Rs1135 and stop loss placed at 1103.
Lot size: 300
Remarks: Net maximum profit of Rs6,000 and net maximum loss Rs3,000.
Mutual funds
| Fund focus | |||||||
| UTI Opportunities Fund | Invest | ||||||
| Fund manager | Harsha Upadhyaya |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs23.7 |
| 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
± Cairn India to commission its 590km heated crude oil pipeline, from its Barmer field near the Gujarat coast in early next month. (BS)
± Tata Steel has bought an additional stake in Canadian mining firm New Millennium Capital for around Rs892mn raising its stake to 27.4%. (ET)
± NTPC has readied a war chest of around Rs1,600bn for the next five years even as it closes in on a coal mine in Western Australia to source fuel for its power projects. (BL)
± SpiceJet has applied afresh for permission to operate in the growing route of Colombo. (BS)
± GSPC through its subsidiary GSPC Gas Company Limited has reached to around 1,50,000 PNG domestic customers as well as daily gas sale of 3 mmscmd in the Gujarat. (BL)
± Andhra Bank is likely to buy back its shares from the open market soon. (BL)
± Maytas Infra has won a contract worth Rs1.85 billion to build part of a metro rail network in Gurgaon. (FE)
± Reliance MediaWorks along with two other ADAG firms has acquired a further 0.25% stake in Fame India, thereby increasing their combined holding in the multiplex chain to 15.3%.(ET)
± Sequent Scientific to invest Rs1.5bn in expansion plans, which include foraying into new therapeutic segment and setting up of greenfield facilities. (ET)
± NTPC to make changes in its bidding process for sourcing equipment that will cut down overall project cycle and prevent delays in completion of projects. (ET)
Economic snippets
± Banks raised nearly Rs620bn on a net basis on Monday through the two liquidity-adjustment facility (LAF) operations conducted by the RBI to tide over the liquidity crunch. (BS)
± The Board of Approval for Special Economic Zones will consider 41 proposals on Tuesday for withdrawal or extension of formal approval and for full or partial de-notification as firms drop SEZ plans on slowdown, tax worries. (BL)
± The Empowered Group of Ministers on petroleum pricing postponed the politically sensitive decision of freeing auto fuel prices from government control. (BL)
± The government has set up a Technical Advisory Group for Unique Projects for creating an effective tax administration and financial governance system, through reliable secure and efficient IT projects, laying the ground for major structural reforms. (ET)
± The government's revenue from the sale of spectrum for 3G and broadband wireless access is set to cross Rs1000bn with a pan-India bid for BWA touching Rs106bn on the 12th day of the auction. At this bid amount, the government will earn ~Rs320bn from the sale of BWA spectrum alone. (ET)
± The government will invest US$376mn to develop environment-friendly urban transport in the country. (ET)
± The RBI is considering a proposal put forward by profit-oriented microfinance institutions to allow them to be business correspondents of banks for financial inclusion. (ET)
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