Market Mantra
Market outlook
That lazy feeling!
Laziness is nothing more than the habit of resting before you get tired. - Jules Renard
The bulls may have managed to hold the Nifty above the crucial 5300 mark on F&O expiry day but the index is set to retreat in opening trades. Global cues are not great to start with. If the European debt worries were not bad enough investors have been hit by a few disappointing US economic reports lately. The Fed too has scaled down its outlook, which has accentuated the uncertainty over the global economy.
The cost to protect against a Greek default rose to a new record on Thursday, while Spain's credit default swaps have been hovering near a record high. Gold has regained some more luster following a sudden spike in risk aversion. The revised US GDP numbers, anxiety over the Wall Street Reform bill and the G20 summit are the events to watch out for in the immediate future.
If Murli Deora has his way, we will finally have an EGoM meet later today on fuel prices. IT stocks might be in focus after Oracle and Accenture announced their impressive earnings. Laziness may help in avoiding unnecessary purchases.
Trading ideas (Time period: 1-3 days)
Tata Elxsi (BUY above Rs290, Target Rs307): On the daily chart, the stock has given a bullish breakout and in the process has also made an intermediate top, suggesting that its short-term trend has also turned up. Over the last four weeks, the stock was consolidating in the range of Rs256-287, before finally breaking out on Thursday. The upmove was well supported by healthy volumes, which suggest accumulation. Other technical oscillators are also positive. We recommend traders to buy the stock above Rs290 for target of Rs307. It is advisable to maintain a stop loss of Rs282.
Ranbaxy Laboratories (BUY above Rs458, Target Rs480): After confirming a breakout from falling resistance above Rs447 on 22nd June 2010, the stock has consolidated for a couple of days in a narrow range of Rs450-460. Such consolidation after price run exhibits strength and a possibility of a sizeable up move in the counter. Appearance of small black candles with comparatively lower volumes indicates an accumulation phase. Positive crossover of short term moving averages above the long term moving averages to provide momentum for the stock to rally in the near term. Hence we advise buying stock above Rs458 with a stop loss of Rs448 for a target of Rs480.
Derivative strategies (Time period: Till expiry)
± Short Infosys July Future in range of Rs2822-2826 for the target price of Rs2762 with a stop loss placed at 2852.
Lot size: 200
Remarks: Net maximum profit of 12,000 and net maximum loss Rs6,000.
± Long India Cements July Future in range of Rs110-111 for the target price of Rs116 and stop loss placed at 107.5
Lot size: 1450
Remarks: Net maximum profit of Rs8,700 and net maximum loss Rs4,350.
Mutual funds
| Fund focus | |||||||
| ICICI Prudential Dynamic Fund | Invest | ||||||
| Fund manager | S Naren |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs99.4 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs100/66 |
| Exit load | 1% <1 yr | |||
| Latest AUM | Rs2,160cr |
| Latest dividend (under dividend option) | 12% (Feb 15, 2010) | |||
| Type | Open-ended |
| Benchmark | S&P CNX Nifty | |||
| Class | Equity – diversified |
| Asset allocation | Equity (83%), Debt (0%), Cash (17%) | |||
| Options | Growth & dividend |
| Expense ratio | 2% | |||
Corporate Snippets
± RIL to make a US$1.3bn acquisition of 45% interest in the Eagle Ford shale acreage of Pioneer Natural Resources. (BS)
± L&T plans to restructure JV with Mitsubishi. (BS)
± HCL Corp sells 2.5% stake in HCL Tech for Rs5.8bn. (BS)
± Alstom enters into JV with BHEL and NPCIL to tap Indian nuclear power market. (BS)
± ING sells 3.1% stake in Kotak Bank for Rs8bn. (BS)
± Jet and Godrej to ink Mumbai land deal soon. (BS)
± Tata Tele plans Rs10bn capex this year. (BS)
± Powergrid's new bidding norms to hit Chinese vendors. (BS)
± The GMR-Malaysia Airports combine has won the contract for airport at Male in Maldives worth US$360mn. (BS)
± Mahindra Satyam BPO eyes acquisition. (BL)
± Patni Computers is shifting focus to tap the nascent outsourcing market in Japan. (BL)
± Hindustan Zinc has raised prices of lead by Rs3,000/ton while has kept zinc prices unchanged. (BL)
± Petronet mulls rights issue to fund the proposed power project. (BL)
± Vodafone Essar to enter enterprise services market as voice business takes a hit. (ET)
± BEML-led consortium set to bid for Hyderabad metro. (FE)
± MTNL invites bids from telcos for 3G roaming in its network. (ET)
± Future Capital Holdings to focus on retail and wholesale credit business. (ET)
± Essar Oil bags 4 CBM blocks under the fourth round of CBM. (BL)
Economic snippets
± Food inflation rises 16.9% in the week ended June 12. (BS)
± Domestic and international air fares would rise by Rs100 and Rs500 respectively from July 1 with the government issuing a notification to bring air travel into the service tax ambit. (ET)
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