Market Mantra
Market outlook
Standing at the threshold!
For many men that stumble at the threshold are well foretold that danger lurks within.- William Shakespeare
The market may be at the threshold of yet another technical breakout, but given the murky global outlook, the bulls may just remain standing.
A flat start and a possible listless session for the overall market is what we have in store.
The US market has been struggling lately amid a few downbeat economic reports and a subdued Fed outlook. Though any fresh bad news from Europe has not hit the headlines, the situation there remains fragile. Japan too is not doing particularly well and China is battling its own demons.
One can safely assume that India is perhaps among the best bets if not the best. There is no denying the fact that India has to grapple with its own set of issues. Double-digit inflation is set to only increase following the fuel price hike. Monsoon has been erratic as usual. Still, India is poised for at least 8% growth in FY11. Earnings have held up quite well and can only get better.
Trading ideas (Time period: 1-3 days)
Tata Coffee (BUY, CMP Rs443, Target Rs462): On the daily charts, the stock gave an upside breakout in Monday's trading session. It suggests that the sideways range is about to end. Yesterday, the stock rallied by over 6% to close at a 52-week high, confirming the bullish set up. We continue to remain positive on the stock from technical perspective as the stock has hold on to its critical support line in ongoing market volatility. The daily momentum oscillators i.e. RSI and MACD are suggesting strength in the upmove. Keeping in mind the above-mentioned observations, we suggest traders to buy the stock in the range of Rs440-445 with a stop loss placed at Rs434 levels for an initial target of Rs462.
Raymond (BUY, CMP Rs227, Target Rs240): On Monday, the stock bounced sharply on impressive volumes from its support levels of Rs223-224. It now faces a resistance at Rs242-243 levels and should have a minimum upside till that level. If it breaks above the levels of Rs228, it could rise till Rs240 in the short term. Traders are advised to maintain a stop loss of Rs221 and go long. Our argument is further validated after the stock broke out from an inverted Head & Shoulders pattern. Moreover, the stock has given a close above its 100-day moving average.
Derivative strategies (Time period: Till expiry)
± Short Reliance Communications July Future in range of Rs203-204 for the target price of Rs193 with a stop loss placed at Rs208.
Lot size: 2000
Remarks: Net maximum profit of 20,000 and net maximum loss Rs10,000.
± Long Infosys July Future in range of Rs2,806-2,810 for the target price of Rs2,866 and stop loss placed at Rs2,776
Lot size: 125
Remarks: Net maximum profit of Rs7,500 and net maximum loss Rs3,750
Mutual funds
| Fund focus | |||||||
| HDFC Top 200 Fund | Invest | ||||||
| Fund manager | Prashant Jain |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs194.7 |
| 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
± RIL announced its seventh discovery in the 635 square-kilometre block, CB-ONN-2003/1 (CB 10 A&B), in the Cambay Basin, about 130 kilometres from Ahmedabad. (BS)
± SBI to announce its base rate today; hints at fixing it at 8%. (ET)
± Tata Motors plans to raise Rs47bn through a combination of instruments to meet capital requirements and cut debt. (BS)
± ITC is setting up another unit at its existing paper mill in Bhadrachalam at a cost of Rs10bn to add a paper plant of 0.2mtpa capacity. (BS)
± PowerGrid Corp would invest Rs580bn for setting up network to facilitate evacuation of electricity from power surplus states to others. (FE)
± ITC plans to extend its Vivel personal care range to deodarants and talcs. (BS)
± NTPC plans to raise a syndicated loan of US$300mn to finance its ongoing capacity addition initiatives. (BS)
± Plethico Pharmaceuticals has joined hands with US retailing giant Wal-Mart for supplying its nutritional products to US consumers. (ET)
± IDFC has received the shareholders' approval to raise Rs35bn and also to double its borrowings to Rs800bn. (BS)
± Reliance Infrastructure to borrow around Rs26bn for the Bandra-Worli-Haji Ali Sea Link project in Mumbai. (ET)
± Essar Steel has acquired the UK based steel processor Servosteel for an undisclosed amount. (ET)
± IndusInd Bank to raise upto Rs10bn through share sale. (ET)
± NTPC has rejected a proposal for pooling of gas prices for the power sector. (BS)
± Pantaloon Retail to receive Rs4bn in lieu of convertible warrants issued to promoters. (ET)
± Crompton Greaves through its subsidiary CG Power Systems USA Inc opens its transformer unit in US. (BL)
± M&M may set up aircraft financing arm in Australia. (BS)
± Tube Investments shifts China plant to Chennai. (BL)
± CCCL has bagged contracts totaling Rs1.8bn for constructing 10 elevated stations for Chennai Metro Rail project. (BL)
± Strides Arcolab plans to raise up to US$100mn through various financial instruments, also plans to hike the borrowing limit to Rs25bn. (ET)
Economic snippets
± IRDA has ordered life insurers to offer customers a guaranteed return of 4.5% per annum on pension and annuity plans as part of its new, tighter norms. (ET)
± Finance Minister has hinted that the RBI may not increase key policy rates before its next monetary policy review due on July 27. (BS)
± Growth in six key infrastructure sectors decelerated for a consecutive month to 5% in May, as output in coal, cement and finished steel slowed. (BS)
± Mobile phone firms in India added 16.3mn new users in May taking the total wireless user base to 617.5mn. (ET)
± The government is believed to be in the final stages of formulating a gas allocation policy, which is likely to give preference to new power plants over expansion projects. (ET)
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