Market Mantra
Market outlook
Hesitation on the street!
He who hesitates is not only lost, but miles from the next exit. – Anonymous
Living in resistance zone may be a tad comfortable than simply searching for support levels. The usual indicators are throwing up confusing signals which make any rise less convincing.
For the day the market is expected to open flat and perhaps move in a narrow range in the initial hours. Global cues later could determine the overall movement though individual heavyweights like HUL and ONGC could see some positive movement.
Most Asian markets are lower. The fall is being led by mining companies following warnings of lower copper demand as China's plans to curb its economy. The US markets saw some gains with the Dow adding a few points and the Nasdaq rising almost a percent. Investors were closely watching the weakening of the euro and the spiking of crude oil.
On the domestic front, the RBI could well resort to a rate hike before its policy review on July 27 should the European crisis turn worse. With the sentiment changing faster than the weather, it is advisable to remain light and relax for the weekend.
Trading ideas (Time period: 1-3 days)
Tata Power (SELL, CMP Rs1,245, Target Rs1,195): The stock has corrected sharply from the 2010 peak of Rs1,518 in January 2010 to the present levels. In last week of May 2010, the stock broke below from triangle pattern. Since then, every attempt of a pullback has faced resistance at its lower trendline of the triangle. On Thursday, the stock closed below its 13-day DMA, suggesting medium term bearish outlook. The daily MACD is already in sell mode suggesting build-up of momentum on the downside. Based on above events, we recommend traders to sell the stock on rallies to levels of Rs1,255 for a target of Rs1,195. A stop loss of Rs1,270 is recommended on all short positions.
APIL (BUY, CMP Rs605, Target Rs630): On Thursday, the stock surged sharply on impressive volumes above its downward sloping trendline (Rs585). The trendline was acting as a stiff resistance for the stock since April 2010. It now faces a resistance at Rs625-630 levels and should have a minimum upside till that level. Our argument is further validated after the daily RSI gave a positive crossover along with the movement of the stock price. Moreover, the stock has given a close above its short-term moving averages. We recommend traders with high risk appetite to buy the stock in the range of Rs600-608 with a strict stop loss of Rs593 for an initial target of Rs630.
Derivative strategies (Time period: Till expiry)
± Short Tata Motors June Future in range of Rs764-766 for the target price of Rs748 with a stop loss placed at 772.10.
Lot size: 850
Remarks: Net maximum profit of 13,600 and net maximum loss Rs6,800.
± Short SBI June Future in range of Rs2270-2275 for the target price of Rs2220 and stop loss placed at 2295
Lot size: 132
Remarks: Net maximum profit of Rs6,600 and net maximum loss Rs3,300.
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% | |||
Management Mantra: Hemendrakumar C. Shah, CFO, Elecon Engineering Company Ltd
Hemendrakumar C. Shah is the chief financial officer (CFO) of Elecon Engineering Co. Ltd. since November 2005. He currently looks after Finance, Accounts, Banking, Import-Export, Excise and Administration functions of the Company. Mr. Shah has over 30 years of experience. He has also worked as Company Secretary & Costing Manager at Elecon Engineering for about 11 years and Cost Accountant at Calico Mills Ltd. Ahmedabad for about 7 years. Mr. Shah has worked as Company Secretary at ONGC Ltd. for about 2.5 years. He has also worked as DGM (A/C) at Adani Exports Ltd., Ahmedabad for about 7.5 years. Mr. Shah has done M.Com. and LL.B. from the Gujarat University at Ahmedabad; AICWA from the Institute of Cost & Works Accountants of India, Kolkatta; ACS from the Institute of Company Secretaries of India, New Delhi and CAIIB from the Indian Institute of Bankers, Mumbai. He has received an award for Excellence in Corporate Governance from the Institute of Company Secretaries of India, New Delhi in December 2003.
Corporate Snippets
± SBI is preparing a billion dollar war chest for Africa. (ET)
± Infosys is looking for smaller, back office and consulting firm in Germany and France. (ET)
± ONGC and Oil India get freedom to price natural gas. (BS)
± Reliance Power plans to set-up a 4,000mw gas based power plant in Maharashtra with an investment of Rs150bn. (BS)
± Daimler, Maruti Suzuki and M&M are set to lead an estimated US$30bn investment in the next four years. (ET)
± MTN group has denied talks with RCom for a merger. (BS)
± Hindustan Unilever to consider buy-back proposal. (BS)
± Aurobindo Pharma gets US FDA nod for Ceftazidime injections. (BS)
± United Phosphorus buys global fungicide business of US based Du-Pont. (BL)
± SpiceJet international plans are delayed by three months. (BS)
± Moser Baer plans to add 30-40mw of photovoltaic capacity by March 2011. (BS)
± GMR Energy to raise Rs4.65bn for its energy expansion plans. (BS)
± Godrej Consumer Products is planning a QIP issue to raise Rs6-7bn to fund proposed acquisitions. (BS)
± NMDC plans Rs92bn steel plant in Karnataka. (BL)
± BEML to set-up Rs3.16bn facility in Bangalore for its aerospace related business. (BL)
± Renuka Sugar to re-negotiate Equipav deal. (BL)
± Adani Power to invest Rs5bn in solar project. (BL)
Economic snippets
± The government plans to update the draft legislation on mining to unequivocally establish it as the owner of all the natural resources. (ET)
± Petrol, diesel price may rise Rs3.5/litre. (BS)
± Monsoon rains were 11% below normal in the week to June 2nd says IMD. (BS)
± Food inflation rose to 16.55% for the week ended May 22' 2010. (BS)
± DoT to waive off spectrum charges for Defence Ministry. (ET)
± Finance Ministry is seeking veto power in proposed council of finance ministers on the goods and service tax. (ET)
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