Market Mantra
Market outlook
Focus on RBI and results!
The ability to focus attention on impt things is a defining characteristic of intelligence.
Given the global cues, we may be in for a positive start. But the market is likely to pay more attention to what the RBI has to say. For containing the inflation persistence and anchoring inflation expectations, anti-inflationary monetary policy actions become a necessity," the RBI mentioned. We expect the central bank to continue its gradual normalization of monetary policy by hiking both the repo and reverse repo rates by 25bps today.
On Monday, the Nifty failed to cross the psychological barrier of 5500. While selling pressure was witnessed across the board, especially in auto stocks, the volumes were lower overall.
The focus today will later shift to the heavy flow of results ranging from Reliance to HUL. The global markets have shown some green. Asian stocks are higher for the third straight day following better- than-estimated new home sales in the US.
The Dow Jones added 100 points while the Nasdaq gained 27 points, taking the indices into positive zone for the year.
Trading ideas (Time period: 1-3 days)
KS Oils (BUY, above Rs52.50, Target Rs57): In our view, the stock has completed its downfall and has created a immediate support around the levels of Rs50-51. From the current level, the stock can only move towards one direction, i.e. upwards. The daily RSI has also given a positive divergence, indicating that price would start moving up. On the daily chart, pattern of Double Bottom is also seen. It is a major reversal pattern that is formed after an extended downtrend. Yesterday's recovery was accompanied by higher than average volumes. We expect the stock to attempt the 50-DMA, currently placed at Rs57. Based on the above evidences, we recommend traders to buy the stock above Rs52.50 with stop loss of Rs50.50 for a target of Rs57.
HCL Technologies (BUY, above Rs377, Target Rs393): HCL Technologies is consolidating in triangle pattern in the intermediate term where prices are currently trading near the slanting resistance line. Despite weak markets in Monday's trading session, stock held above its 50 and 100-DMA with ease, which corroborates strength in the counter. We expect stock to breakout in coming days from its intermediate triangle consolidation and head higher towards the levels of Rs400. As long term trend is well poised with positive bias with prices sustaining well above its 200-DMA, we advise buying stock above Rs377 with stop loss of Rs369 for target of Rs393.
Derivative strategies (Time period: Till expiry)
± Long Chennai Petroleum Aug Future in range of Rs250-251 for the target price of Rs260 with a stop loss placed at Rs245.
Lot size: 1000
Remarks: Net maximum profit of Rs10,000 and net maximum loss of Rs5,000.
± Long PTC Aug Future in range of Rs114-115 for the target price of Rs122 and stop loss placed at Rs.110.
Lot size: 2000
Remarks: Net maximum profit of Rs16,000 and net maximum loss of Rs8,000.
Mutual funds
| Fund focus | |||||||
| HDFC Top 200 Fund | Invest | ||||||
| Fund manager | Prashant Jain |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs199.1 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs200/135 |
| 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% | |||
Result Update: Sterlite Industries (Q1 FY11) – BUY
CMP Rs174, Target Rs214, Upside 22.6%
± Q1 FY11 revenue of Rs59.7bn was quite lower than our expectations, led by lower contribution from copper and zinc business
± Copper business performance was impacted by maintenance shutdown at its smelter and lower metal premiums
± BALCO's aluminium business EBIT declined 67% qoq to Rs0.5bn, quite lower than our estimate of Rs1.4bn, due to higher alumina and power costs
± Zinc division numbers were lower than expected on account of no concentrate sales and a jump in power and staff costs
± Power business performance was inline with our estimate, as lower than expected realisation was offset by higher unit sales
± Boiler light-up for the 1st 600MW plant was done in June and is expected to commence commercial production in September '10. The remaining 3 units are expected to be operational by Q1 FY12
± We lower our target price to Rs214 led by revision in zinc and power division estimates
Corporate Snippets
± OIL & Natural Gas Corporation plans to spend US$5bn to develop gas fields to boost output by almost 60% in six years. (ET)
± NMDC is contemplating buying coking coal mines in Russia from Kolmar for US$400mn. (BS)
± Fortis Healthcare reaps Rs3.8bn as it pulls out of Parkway bid. (BS)
± Dabur India Ltd has acquired a Hobi Kozmetik Group, a Turkish personal care products company, for Rs3.2bn. (BS)
± Tech Mahindra is likely to merge with Mahindra Satyam before the end of 2011 calendar year. (BS)
± HPCL believes its Bhatinda refinery, scheduled to begin production in April '11, could be an important gateway to Pakistan for supply of products. (BL)
± Lenders to Vishal Retail (VRL) are likely to support a debt restructuring proposal from Kishore Biyani's Future Group, disregarding a rival offer from private equity firm TPG. (ET)
± NHPC commissioned all the three units of the 120MW (40MW x 3) Sewa-II hydroelectric project in Jammu and Kashmir. (ET)
± SAIL will invest 1bn to revive its Uttar Pradesh unit. (ET)
± Coal India (CIL) is likely to file a draft prospectus next week for its initial public offering. (ET)
Economic snippets
± The group of ministers (GoM) on ethanol maintained status quo on its earlier decision by upholding a price of Rs27 a litre for a mandatory 5% blending with petrol in spite of the stiff opposition from the Ministry of Chemicals and Fertilizers. (BS)
± The Empowered Group of Ministers (EGoM) on the Krishna-Godavari (K-G) basin is likely to cancel allocation of 0.406 mscmd for ONGC's LPG plants and 0.93mscmd of gas to Pragati Power. (BS)
± The Chief Statistician of India has said that a new series of consumer price index (CPI) will be rolled out in January next year. (BL)
± According to a recent verdict by the Authority for Advance Ruling, Minimum alternate tax is not payable by foreign companies not having a permanent establishment in India. (ET)
Results table
| Rs m | Revenue | % yoy | PAT | % yoy |
| Dena Bank | 3605 | 43.9 | 1388 | 20.7 |
| Peninsula Land | 1483 | 28.5 | 500 | 52.1 |
| NTPC | 129445 | 7.8 | 18419 | (16.0) |
| Tech M | 10936 | 3.1 | 1283 | (4.7) |
| TV Today | 650 | (8.5) | 10 | (93.9) |
| Sterlite Inds | 59703 | 30.4 | 10135 | 50.7 |
| Dabur India | 7485 | 22.8 | 895 | 10.8 |
| Blue Star | 6598 | 22.5 | 372 | (9.8) |
| United Phosphorus | 6613 | 0.3 | 73 | (86.0) |
| Glaxosmithkline Pharma | 4979 | 8.9 | 1290 | 3.7 |
| Bharat Forge | 6085 | 73.1 | 594 | - |
| Union Bank | 13480 | 68.2 | 6014 | 36.0 |
| Hindustan Zinc | 19508 | 29.0 | 8909 | 23.9 |
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