Market Mantra
Market outlook
RIL to hog the headlines!
Pursue your goals even in the face of difficulties, and convert adversities into opportunities. – Dhirubhai Ambani
The Ambani brothers have taken their father's advice and have hopefully left behind their adversities. How well they turn them into opportunities, will be visible somewhat today as RIL holds its much-anticipated AGM in Mumbai.
We expect a rather subdued start to the day but Reliance group companies could hog more limelight as we wrap up another good week. Emotions may run high in the wake of the rapprochements between the two estranged Ambani siblings. Reports point to a few big-bang announcements by Mukesh Ambani. A word of caution here. Reliance and ADAG group shares have rallied in recent past. It won't be a bad idea to adopt the 'sell on news' strategy and lock in some gains in these counters.
Asian markets are listless despite the overnight recovery in US and Europe. Things could turn better later on as investors focus on improving fiscal situation in the euro-zone. The market can advance little further in the coming weeks, provided the global news flow -particularly from Europe remains positive. If bulls get dizzy at heights, be prepared to see sudden tumble.
Trading ideas (Time period: 1-3 days)
United Phosphorous (BUY, CMP Rs190, Target Rs204): On the weekly chart, the stock had been trading in a range between Rs142-185 from August 2009. On Thursday, the stock gave a breakout past its 11-month resistance line with heavy volumes. In the same period, the stock made four attempts to break the resistance but failed. On Thursday, it finally broke the crucial level with highest volumes since May 2010. Even if it declines from the current levels the short-term moving averages should act as a strong support for the stock placed at Rs184. Even on the daily chart, the stock has given a breakout from a flag pattern, suggesting that previous advance has resumed. Based on above technical observations, we recommend traders to buy the stock in the range of Rs188-192 with stop loss of Rs183 for target of Rs204.
Triveni Engineering (BUY, CMP Rs98, Target Rs105): After formation of a hammer pattern on weekly chart last week, the stock has closed above the levels of Rs96, which is likely to halt the downward trend in the short term. A golden cross based on short tem moving averages at levels of Rs94 to act as an important support from hereon. The breakout above Rs96 is likely to ignite a rally in the stock and it may test its long term resistance at Rs107 which is its 200-DMA.We advice buying the stock in range of Rs97-98 with stop loss of Rs94.50 for target of Rs105.
Derivative strategies (Time period: Till expiry)
± Long India Cements June Future in range of Rs113-114 for the target price of Rs120 with a stop loss placed at 119.90.
Lot size: 1450
Remarks: Net maximum profit of 8,700 and net maximum loss Rs4,350.
± Long McLeod Russel June Future in range of Rs187-188 for the target price of Rs194 and stop loss placed at 182.95
Lot size: 900
Remarks: Net maximum profit of Rs5,400 and net maximum loss Rs2,700.
Mutual funds
| Fund focus | |||||||
| ICICI Prudential Dynamic Fund | Invest | ||||||
| Fund manager | S Naren |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs98.8 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs99/66 |
| 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
± Bharti Airtel, Idea Cellular and Vodafone Essar have all refused to participate in the telecom regulator's latest consultation process to set a price for second-generation (2G) spectrum, citing lack of transparency by Trai. (ET)
± RIL in talks for acquiring 26% stake in Papavav Shipyard. (ET)
± GlaxoSmithKline Consumer Healthcare plans to enter the premium cookies market. (ET)
± JSPL has got three years extension to begin constructing its US$2.1 billion steel plant in Bolivia as against the original deadline of 2010. (ET)
± Ranbaxy may close down one of its biggest global bulk drug production units at Mohali and is sourcing few products made at the facility. (ET)
± Infosys Technologies has approached the Tamil Nadu government for 200 acres of land near Chennai for setting up a development centre. (BS)
± Mahindra Satyam is likely to announce a pay hike for all its employees on July 1. (BS)
± Reliance Power has started generation from the second unit of the Rosa Power Project in Uttar Pradesh. (BL)
± Reliance Communications plans to hive off its direct-to-home (DTH) and internet protocol TV (IPTV) businesses into a separate company Reliance Digital Works. (BS)
± Tata Motors has piped Maruti Suzuki India as sole supplier of close to 2,000 cars, jeeps and trucks for the Commonwealth Games in Delhi in October for movement of VIPs, international delegates and athletes' families. (BS)
± Tata Motors is charting a strategy for a 25% carbon dioxide reduction in its Jaguar and Land Rover models. (BL)
± Tata Motors today launched a new offering in the Winger range, the Tata Winger Platinum, in Chandigarh. (BS)
± Mahindra & Mahindra, Arabia Holdings and Ras Al-Khaimah Transport Investments have joined hands for a joint venture in Emirates of Ras Al Khaimah in the UAE for vehicle armouring. (BL)
± Punjab National Bank would pick up 64% stake in JSC Dana Bank in Kazakhstan. (BS)
± Punjab National Bank to raise US$100mn fund for overseas expansion. (FE)
± Bajaj Hindusthan's board approved the company's merger with its unit Bajaj Hindusthan Sugar. (ET)
± Foreign companies line up for a share of India's US$3.5bn solar business pie. (ET)
± Religare to buy boutique AMC's in US. (FE)
± Jet Airways has entered into a code-share agreement with United Airlines, giving its customers access to wider network connectivity between the United States and India. (BL)
± Brigade Enterprises has announced that it will raise up to Rs7.5bn by the issue of equity-based securities to various investors by means of public or private offering or qualified institutional placement or through preferential share allotment. (BS)
± Hitachi Data Systems Corporation, a wholly owned subsidiary of Hitachi, has entered into a technology collaboration with Wipro, to offer co-branded products and services on Hitachi technology. (BL)
± MindTree, which has bagged the application development and maintenance services contract of the Unique Identification project 'Aadhaar', is eyeing a greater share of the UID pie, with more processes coming up for bidding. (BL)
± Duncans Industries has roped in Delhi-based Jaypee Group for the revival and rehabilitation of its fertiliser division. (BL)
Economic snippets
± Food price inflation for week ended June 5 was at 16.12% compared to 16.74% in the previous week. (ET)
± According to deputy governor K C Chakrabarty, RBI favours giving banks the freedom to decide interest rates on their savings deposits. (BS)
± RBIhas asked all banks to go back to their boards and re-work their plans on financial inclusion. (BS)
± The government is likely to postpone the launch of the mobile number portability (MNP) scheme to early next year. (BS)
± India plans to embark on a programme to tap the shale oil reserves in the country after the directorate general of hydrocarbons (DGH) found substantial reserves of the gas in Assam and Arunachal Pradesh. (BS)
± CERC has notified its regulations on 'Sharing of Inter State Transmission Charges and Losses'. These regulations would implement the point of connection method of sharing the cost of inter-state transmission services in India. (BS)
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