Market Mantra
Market outlook
Missing the excitement!
May I never miss a sunset or a rainbow because I am looking down. - Sara June Parker
After showing promise of scaling past resistance zones, the key indices have faltered in the face of weaker than estimated IIP data and less than forecast Infosys' numbers.
Though inflation came in lower than consensus estimates, it still is above 10%. In addition, the Government has been revising upwards the previous month's figure.
What's worse, the full impact of the fuel price increases is yet to reflect on the inflation numbers. Perhaps, the RBI could go in for another 25 bps hike in key rates on July 27 '08.
The outlook for the day is not too exciting. At the same time it is not too grim either. Asian markets are pretty mixed after a flat finish on Wall Street. European shares too declined. A slew of data points from China to US are out and they seem to confirm a growing view that the global recovery may be faltering a bit.
Back home, the results so far have not been great, though we still have lot of numbers to ponder over.
Trading ideas (Time period: 1-3 days)
BEML (BUY, above Rs1,020, Target Rs1,080): The stock has seen a rally from the support zone of around Rs980-983 and has managed to cross the critical resistance levels of Rs1,005—1,010 with impressive volumes. It has formed a immediate bottom around the above mentioned levels. Volumes accompanying the breakout are encouraging, thereby adding confirmation to the bullish outlook. MACD is in positive zone and has given a bullish crossover. The weekly RSI is exhibiting positive divergence. Based on the above-mentioned technical evidences, we recommend traders with high risk appetite to buy the stock above 1,020 for a target of Rs1,080. A stop loss of Rs995 should be maintained on all long positions.
GT Offshore (BUY, above Rs445, Target Rs470): GT Offshore has been trading sideways in range of Rs424-464 since May 10 depicting a triangle pattern in intermediate term. Several times, the stock attempted to sustain above its long term averages of 200-DMA but soon turned out to be a whipsaw as volumes failed to ignite a momentum. Wednesday's closing above Rs440 with volumes greater than 10-DMA indicate strength in the counter with breakout confirmation on line chart accompanied by prices sustaining above 50-DMA. We advise buying the stock above Rs445 with stop loss of Rs433 for target of Rs470.
Derivative strategies (Time period: Till expiry)
± Short SBI July Future in range of Rs2454 -2458 for the target price of Rs2404 with a stop loss placed at Rs2479.
Lot size: 125
Remarks: Net maximum profit of Rs6,250 and net maximum loss Rs3,125.
± Long GVKPIL July Future in range of Rs45.80-46.25 for the target price of Rs48.80 and stop loss placed at Rs44.30.
Lot size: 8000
Remarks: Net maximum profit of Rs24,000 and net maximum loss Rs12,000.
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 | Rs197/135 |
| 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
± L&T bags Rs121.3bn Hyderabad metro project. (BS)
± RIL has approached the Competition Commission against the government-controlled OMCs with a complaint of cartelisation and undercutting on prices for ATF in a tender floated by Nacil. (ET)
± Bajaj Auto may issue bonus shares. (BS)
± Tata Steel plans to raise about Rs16bn via a preferential allotment of shares and warrants to Tata Sons. (BS)
± ONGC plans to invest US$4.05bn in producing natural gas from its ultra deepsea UD-1 discovery. (BS)
± Bharti Airtel to partner with existing players in Africa to share infrastructure to reduce operational costs for Zain. (BL)
± HDFC to not hike interest rates even if the central bank signals an upward movement in the upcoming monetary policy. (BS)
± SBI inks pact with Oman for US$100mn joint investment fund. (BL)
± ICICI-KKR talks on Firstsource stake hit a hurdle. (BS)
± M&M has announced the launch of the Maxximo, the 0.85-tonne capacity mini-truck in the Kerala market. (BL)
± L&T has secured an offshore rig refurbishment contract from ONGC valued at Rs3.8bn. (BL)
± Piramal Healthcare sells its diagnostics business to Super Religare Laboratories Ltd (SRL) for Rs6bn. (BL)
± Piramal Healthcare is gearing up for major acquisitions in the contract manufacturing segment. (BS)
± Religare buys part of Citi's home loan business for Rs5bn. (ET)
± Adani Enterprises in talks to buy coal mines in Australia. (ET)
± Exide Industries plans to spend upwards of Rs4bn on capacity augmentation this fiscal to meet spiralling demand from the domestic market. (BS)
± Tulip Telecom has been granted licence by the Federal Communications Commission (FCC), which will enable the company to sell data services in the US. (BL)
± Hindustan Motors plans to make new models of Mitsubishi Motors at its Chennai plant and rationalise its workforce. (BS)
± Tata Capital to raise US$1bn by next year to invest across four themes. (ET)
Economic snippets
± WPI inflation inched higher to 10.55% in the month of June owing to the pass-through effect of the increase in prices of petroleum products on June 25. (BS)
± The Union ministry of chemicals and fertilisers has initiated a move to bring all essential medicines sold in the country under a price cap. (BS)
± Government-controlled oil marketing companies (OMCs) today decided to review retail prices of petrol on a monthly basis. (BS)
± A report by a senior official in the Planning Commission has said the National Highways Authority of India (NHAI) is heading towards bankruptcy, as its debt is set to increase five times in the next three years. (BS)
± Petroleum and Natural Gas Regulatory Board will now get powers to authorise gas pipelines and the city gas distribution networks. (BS)
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