Market Mantra
Market outlook
Another slippery start
All progress is precarious, and the solution of one problem brings us face to face with another problem. Martin Luther King Jr.
World equity markets managed good bit of progress thanks largely to a sudden turnaround in the battered Chinese market. Risk tolerance improved with the dollar falling and the euro climbing. Crude oil is hovering near $72 a barrel mark while gold continued to slip.
However, the feel-good may just prove to be short-lived as most Asian markets are in the red this morning. Also, US stocks retreated from session highs, with the Dow losing over 100 points in intra-day trade. A drop in a key US non-manufacturing gauge seems to have spooked the sentiment on Wall Street.
Japan's Nikkei Average ended morning session down 0.9%. China's stocks are mostly flat while the Hang Seng is down. We expect another flat to slightly lower start for our markets. The overall mood will remain at the mercy of global cues. The Sensex and the Nifty may remain rangebound as investors await the first batch of quarterly results.
The Nifty is expected to remain in the range of 5210-5340 till there is a conclusive breakout on either side.
Trading ideas (Time period: 1-3 days)
Mahindra & Mahindra (BUY, CMP Rs627, Target Rs651): Since mid of June, the stock is consolidating in the narrow range Rs600-Rs644 forming a Flag pattern without decelerating the intermediate uptrend and has held above earlier breakout levels of Rs600. Applying the change of Polarity principle, we expect earlier resistance of Rs600 to turn out as solid base for price to bounce back. After yesterday's close above Rs624, the bounce back succeeded in penetrating upper boundaries of Flag pattern with good volumes. This price action is likely to provide price up move of atleast 3-5% in the coming days. We advise buying stock at current levels with stop loss of Rs615 for target of Rs651.
LIC Housing Finance (BUY, above Rs995, Target Rs1,035): The stock is pointing to continued strength in the weeks to come as it has broken a downward-sloping trend line since June 2010. A detailed study of the daily chart shows that the stock has corrected from the high of Rs1,048 to touch a low of Rs965 on Moinday. The stock bounced back from the lower end of the trading range to close above downward-sloping trend line. The upmove was well supported by healthy volumes, which suggest accumulation. Further, supportive technical oscillators such as MACD and RSI are also positive. We recommend traders to buy the stock above Rs995 for a target of Rs1,035. It is advisable to maintain a stop loss of Rs978.
Derivative strategies (Time period: Till expiry)
± Long JP Associate July Future in range of Rs126-127 for the target price of Rs134 with a stop loss placed at Rs122.
Lot size: 2000
Remarks: Net maximum profit of Rs16,000 and net maximum loss Rs8,000.
± Long PNB July Future in range of Rs1047-1049 for the target price of Rs1077 and stop loss placed at Rs1032
Lot size: 250
Remarks: Net maximum profit of Rs7,500 and net maximum loss Rs3,750.
Mutual funds
| Fund focus | |||||||
| HDFC Top 200 Fund | Invest | ||||||
| Fund manager | Prashant Jain |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs194.1 |
| Entry load | Nil | |||
| NAV 52 high/low | Rs194/135 |
| Exit load | 1% <1 yr | |||
| Latest AUM | Rs7,490cr |
| 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
± Tata Power said a consortium led by the company has been awarded three coal bed methane blocks for exploration in Satpura, Madhya Pradesh. (ET)
± Dubai's Istithmar sold its 6.9% stake in SpiceJet for US$25.3mn. (ET)
± Tata Motors will invest around Rs100bn in the next 2-3 years on product development, facility modernisation and other capex purposes. (ET)
± LIC has hiked its stake in Bharti Airtel to 5%. (FE)
± IOC has started buying crude oil from Cairn India's Rajasthan oil fields, which have now crossed the 1,00,000 barrels per day mark in production. (FE)
± IOC plans to set up solar power panels and power plants at its over 18,100 retail outlets across the country at a cost of Rs5bn. (BS)
± Reliance Industries has told the government that it will not sign contracts to supply gas from its KG-D6 fields beyond 60 million units a day, as it may not be able to sustain higher production. (FE)
± NTPC has suspended the plan to explore the river route to transport coal to its starved plants. (FE)
± NTPC has signed production sharing contracts with the Government for four oil and gas exploration blocks awarded in the eighth round of bidding under NELP-VIII. (BL)
± Tata Power, in consortium with Arrow Energy has been awarded the Satpura CBM block in Madhya Pradesh. (BL)
± Indiabulls Financial Services has raised Rs12.6bn by issuing 3-year, zero coupon NCDs to private and public sector banks, provident funds and mutual funds. (ET)
± Indiabulls Financial Services is looking to grow its home loans business by 40-45% this fiscal and increase its market share from the current 4-4.5% to 7-8% by 2014. (BL)
± Opto Circuits set to enhance capacity in Mysore, Malaysia with an investment of Rs2-2.5bn. (BL)
± NMDC proposes to build a Rs30bn pipeline between its mines at Bailadila and Vizag to evacuate and supply 12mn tons of iron ore slurry a year to its domestic customers such as Rashtriya Ispat Nigam Ltd and Essar Steel over the next two years. (BL)
± NMDC is in talks with Japanese steel makers to source technology for its proposed integrated steel plant in Karnataka and iron ore nugget plant in Andhra Pradesh. (BL)
± NMDC profit jumps 80%, sales 90% in Q1 FY11. (BS)
± Bajaj Auto has said its low-cost car project with Renault and Nissan is on track, but may not form a joint venture (JV) to manufacture and market the car. (BS)
± Bombay Dyeing, may sell its polyester and DMT business located in Pune. (BS)
± Indiabulls Realtech, a subsidiary of Indiabulls Power, is setting up a 1,350 mw coal-based thermal power plant at Sinnar, near Nashik, which will commence operations by January 2013. (BS)
± Quippo-WTTIL, a joint venture between India's Tata Tele and Quippo Telecom, is looking to sell 2-5% stake to raise funds for growth. (ET)
± Polaris Software Labs said that its group firm Laser Soft has bagged a project from Andhra Pradesh State Co-operative Bank to implement core banking solutions at 22 district central co-operative banks in the state. (ET)
± The Supreme Court on Tuesday remanded the income tax department's plea back to the Bombay High Court that had allowed Essar Shipping to claim depreciation on foreign exchange loans taken for ship purchase. (FE)
± EdServ Softsystems, has fixed its QIP issue at Rs 205 a share. (FE)
± Nimbus Communications plans to raise up to Rs7.5bn in an IPO. (ET)
Economic snippets
± Central power regulator has made it mandatory for all power utilities to purchase 6% green power. (ET)
± The Bedabahal (Orissa) ultramega power project (UMPP) may hit a road block as the captive coal mines linked with the 4,000-mw project now figures in the list of areas prohibited for mining activities by the environment ministry. (ET)
± The interest rates on education loans by banks may be capped at 2% above their respective base rates. (ET)
± The government will have to incur a subsidy of about Rs10bn to supply sugar through ration shops due to an increase of about Rs4/kg in the price that it pays to mills for buying the sweetener. (ET)
± The Centre's direct tax mop-up increased by over 15% to Rs686bn during the first quarter of this financial year. (FE)
± Government has released a discussion paper on FDI in retail. (BS)
± Monsoon covers entire India nine days ahead of schedule. (BS)
± India's iron ore exports declined 15% in the Q1 FY11 on slow offtake by Chinese steel mills. (BS)
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