Market Mantra
Market outlook
Early gains may not sustain
People choose the paths that grant them the greatest rewards for the least amount of effort. - David Shore.
After two highly insipid sessions, a mildly positive start is in the offing. But it will take a lot of effort for the Nifty to surpass 5500 before the F&O expiry next week. A strong worldwide rally is among the only triggers to get to that mark. As investors digest a spate of earnings (both local and global), things might not change as fast as the bulls would want them to. Right now all the focus is on earnings. After that, the attention will once again turn to the economic fundamentals.
US stocks staged a smart comeback overnight. Rumours that the Fed is considering additional steps to bolster bank lending is said to be one of the triggers. Fed chief Ben Bernanke is testifying before Congress later today. Stocks in Europe closed down.
Asian markets are trading mostly higher though Chinese stocks are subdued. Early gains may not sustain unless world markets advance further. Avoid taking undue risks and keep a closer watch on result-oriented stocks.
Trading ideas (Time period: 1-3 days)
Adani Enterprises (BUY, above Rs546, Target Rs570): The stock has been moving sideways and in a narrow range of Rs530-Rs548 with the support of its 100-DMA for almost six weeks after rallying sharply from Rs446 to Rs600. RSI and oscillators has signaled a positive crossover. This confirmation is likely to trigger positive momentum in coming days. Recent trading activity denotes a steady accumulation phase where prices have almost traded flat but buying volumes have been up sharply. Based on above observations, we recommend high risk traders to buy the stock above Rs546 with stop loss of Rs538 for target of Rs570.
Bhushan Steel (BUY, above Rs1,537, Target Rs1,600): The stock has rallied smartly from a low of Rs1,260 in June 2010 to the present levels. Despite the ongoing volatility in the market, the stock has managed to hold on to the support of its short-term trendline. On the daily charts, it has formed a pattern of a higher bottom. It is considered as the initial sign of a bottoming out process in the short term. The daily RSI is already in strong buy mode, indicating that the prices are set to rally from the current levels. The stock is trading above its 200-DMA. A sustained move past the Rs1,537 levels will see the stock heading towards the levels of Rs1,590 in the short term. We recommend traders to buy the stock above Rs1,537 for an initial target of Rs1,600 with a stop loss of Rs1,510.
Derivative strategies (Time period: Till expiry)
± Long United Phosphorus July Future in range of Rs177-178 for the target price of Rs187 with a stop loss placed at Rs172.
Lot size: 2000
Remarks: Net maximum profit of Rs20,000 and net maximum loss Rs10,000.
± Long CESC July Future in range of Rs410-411 for the target price of Rs424 and stop loss placed at Rs.403.
Lot size: 1000
Remarks: Net maximum profit of Rs14,000 and net maximum loss Rs7,000.
Mutual funds
| Fund focus | |||||||
| HDFC Top 200 Fund | Invest | ||||||
| Fund manager | Prashant Jain |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs197.5 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs198/135 |
| Exit load | 1% <1 yr | |||
| Latest AUM | Rs8,020cr |
| 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
± Reliance Industries has said it cannot give natural gas to new customers by cutting supplies to power and fertiliser plants. (BS)
± BHEL has won a Rs26.65bn contract for setting up a 1,200 MW coal-based thermal power plant in Chhattisgarh. (BL)
± Tata Motors is expanding capacity of its Ace pickup to 275,000 units from 225,000 units at its Pantnagar facility. (BL)
± The Supreme Court on Monday sought a response from Mahindra & Mahindra on the excise department's plea alleging that the automobile manufacturer had undervalued its vehicles to evade excise duty. (FE)
± The Mahindra group has drawn up a 10-year plan for its two-wheeler business that will focus on forging new alliances and going global. (BL)
± IOC plans to set up another 14-15mn tons refinery with an investment of Rs150-200bn on the western coast. (BS)
± Apollo Tyres has despatched its first original equipment shipment manufactured from its Chennai plant. (BS)
± BEML has asked for a majority 52% stake in the joint venture company that is set to acquire the closed facility of the Durgapur-based Mining and Allied Machinery Corporation. (BL)
± IDBI Bank plans to raise Rs31.19bn through preferential issue of equity shares to the Government. (BL)
± Alstom Holdings and Schneider Electric Group today postponed their open offer to buy a 20% stake in Areva T&D India till further notice. (BS)
± A deal between SKIL Infrastructure and Everonn Education faced uncertainty on Tuesday because of differences over the rights to be enjoyed by the acquirer. (ET)
± Fortis Healthcare promoters have pledged an additional 33mn shares with lenders to raise money to part fund the acquisition of Singapore's Parkway Holdings. (ET)
± Reliance MediaWorks said it, along with two other group firms, has purchased another 0.11% in Fame India, hiking their combined stake in the multiplex chain to 15.88%. (ET)
± Deepak Fertilisers & Petrochemicals said that it will raise around Rs500mn through the issuance of non-convertible debentures to LIC. (ET)
± Patni Computer Systems, announced the appointment of Apoorva Singh as its SVP and global head of infrastructure management services (IMS). (ET)
± MMTC will split its Rs 10 share into 10 scrips of Re 1 each and issue a 1:1 bonus. (FE)
± Tata Sons has moved to Delhi High Court against environmental NGO Greenpeace India and Greenpeace International following a game that makes direct references to the company which are "disparaging" and "libelous" in nature. (FE)
± IDBI Bank said its board will meet on Wednesday to consider government fund infusion of Rs31bn. (FE)
± Dhanlaxmi Bank is looking for a financial partner to kick off its mutual fund business in a tripartite way. (FE)
± MRPL has achieved 46% progress in phase-III expansion-cum-upgradation project till the end of May. (BL)
Economic snippets
± Retail price inflation for items consumed by agricultural and rural labourers declined to 13.02% in June from 13.68% in the previous month. (ET)
± Assocham called for the levy of 40% super profit tax on mining activities in a bid to curb exports of iron ore. (ET)
± The Centre looks set to bring the direct taxes code bill and the constitutional amendments required to roll out the GST in the forthcoming Monsoon session of the Parliament beginning next week. (ET)
± Erratic monsoons have caused a sudden spike in spot electricity rates. (BS)
± The Tamil Nadu Government has announced a State Advised Price of Rs 1,900 a tonne for sugarcane linked to a sugar recovery of 9.5% for 2010-11. (BL)
Results table
| Rs mn | Sales | yoy% | PAT | yoy% |
| Jindal Saw Ltd | 73,146 | 32.3 | 6,790 | 108.1 |
| Sesa Goa | 26,926 | 132.3 | 13,018 | 208.3 |
| United Spirits | 14,706 | 17.8 | 1,211 | (31.8) |
| Zylog systems | 2,192 | 22.4 | 345 | 73.4 |
| Parabolic Drugs | 1,402 | 24.3 | 105 | 36.2 |
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