Market Mantra
Market outlook
Crossing hurdles, looking to pole vault
Life's problems wouldn't be called 'hurdles' if there wasn't a way to get over them. – Anonymous
What a difference a day makes. US stocks surged on Thursday, a day after Fed chairman Ben Bernanke's cautious remarks rattled Wall Street. A slew of influential companies came out with forecast-beating results, shoring up confidence in the US economy. Investors chose to overlook a weak report on weekly jobless claims, and instead welcomed a smaller drop in sales of existing homes. A trio of encouraging reports from Europe set the tone for the world markets.
In fact, the Indian market, which was pretty lackluster, suddenly got a lift from a rebound in the European stocks. This morning, we expect a solid start for India as well. After crossing the 5400 hurdle, the bulls would look to pole vault the NSE Nifty above 5500 and may succeed. Beyond a point it is likely to struggle unless the upsurge in world markets continues. Results from the stress tests of European banks are due after European markets close.
So the question now is, It's high time, but to do what? Rejig your portfolio and lighten positions for a relaxed weekend.
Trading ideas (Time period: 1-3 days)
Redington Ltd (BUY, above Rs385, Target Rs405): Redington crossed above its 10DMA and 20DMA short term moving averages and closed above resistance levels of Rs378 in yesterdays trading session after five consecutive black candles. On line chart closing above Rs377 corroborates a breakout from falling resistance which acted as steady supply zone in the range of Rs370-Rs375. Such a breakout along with Buy signal in MACD to provide trigger for sharp upside in the counter ranging from 7-8%. We advise buying stock above Rs385 with stoploss of Rs377 for target of Rs405
Indian Bank (BUY, CMP Rs248, Target Rs254): Indian Bank broke out of flag pattern in yesterdays trading session after prices usefully managed to close above the resistance levels of Rs245. As Flag pattern is characterized as a continuation pattern, the breakout from consolidation is likely to pave way for smart upmove ranging from 5-6%.Also based on candlestick, yesterdays white candle engulfed black hammer pattern which appeared on Wednesdays trading session with increase in volumes. Such a confirmation indicates strength of bulls to close prices consecutively two days near high. Hence we advise buying stock above Rs248 with stop loss of Rs243.5 for Target of Rs254
Derivative strategies (Time period: Till expiry)
± Long ITC July Future in range of Rs298.50-299.50 for the target price of Rs308.50 with a stop loss placed at Rs293.50.
Lot size: 1000
Remarks: Net maximum profit of Rs10,000 and net maximum loss of Rs5,000.
± Long KS Oils July Future in range of Rs52.50-53 for the target price of Rs55.50 and stop loss placed at Rs51.
Lot size: 4000
Remarks: Net maximum profit of Rs12,000 and net maximum loss of Rs6,000.
Mutual funds
| Fund focus | |||||||
| HDFC Top 200 Fund | Invest | ||||||
| Fund manager | Prashant Jain |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs200.0 |
| 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: Punjab National Bank (Q1 FY11) – BUY
CMP Rs1,056, Target Rs1,246, Upside 17.9%
± Healthy growth in Advances; C/D ratio at multi-quarter high
± Impressive NIM management continues; YoF improvement came-in as a positive surprise
± Modest growth in fee income; C/I ratio spikes due to higher operating expenses
± Asset quality deteriorates, but not a cause for concern
± RoA and RoE decline but stay strong; bank remains adequately capitalized for growth
± Raise book value estimates; Retain BUY with TP Rs1,246
Result Update: ACC (Q2 CY10) – Market Performer
CMP Rs816, Target Rs864, Upside 5.9%
± Revenue declines by 3%, in-line with our estimates as volume de-grow
± Surge in employee, freight and other overheads pulls down OPM by 764bps yoy
± PAT declines by 26.1% to Rs3.59bn; in-line with our expectation
± Trades below replacement cost; Maintain Market Performer
Result Update: Ambuja Cements (Q2 CY10) – Market Performer
CMP Rs115, Target Rs111, Downside 3.1%
± Revenue grows by 10.6%, in-line with our estimates
± OPM expands by ~320bps as lower clinker purchases lead to material saving in RM cost.
± Strong topline growth along with robust operating performance leads to an increase in Pre-exceptional PAT by 20.5% yoy; marginally lower than our estimate of 22%.
± Trades close to fair value; Upgrade to market performer.
Result Update: Idea Cellular (Q1 FY11) – Market Performer
CMP Rs65, Target Rs69, Upside 5.5%
± Revenue growth of 9.1% better than our estimate of 3.2%; topline grew ~5.4% after normalization for the full quarter impact of Spice amalgamation
± MOUs grow at highest pace in past 9 quarters to 415mins while ARPU decline at slowest pace since Q3 FY09
± OPM contracts 327bps but excluding one-off reversals in Q4 FY10, margin drop mostly due to provision of higher spectrum charges and Spice merger
± PAT declines by ~25% qoq to Rs2bn vs. our estimate of Rs2.3bn on lower than expected margin
± H2 likely to see stability in tariffs but recent rally in stock leaves little valuation headroom; retain MP with 9-month TP of Rs69
Corporate Snippets
± Bharti-Walmart, the JV between Bharti Enterprises and Wal-Mart Stores, is planning to open 140 retail stores by the end of this year. (BL)
± Bharti Airtel has shortlisted IBM, HP, Accenture, Wipro & Tech Mahindra for its billion-dollar-plus IT outsourcing contract in Africa. (ET)
± Infosys Rs25bn SEZ in Sarjapur to get operational by March 2011. (ET)
± ONGC is interested in buying BP's stake in the Vietnam project where BP has 35% participating interest in the block.(FE)
± Bajaj Auto's new car project will roll out from its Waluj plant in Aurangabad, not from the one at Chakan, near Pune. (BS)
± JSW Steel is likely to announce a stake sale to Japan's second-largest steel maker, JFE, after about eight months of discussion. (BS)
± Arvind Ltd will invest Rs3bn over the next three years to expand its retail footprint. (BS)
± In a move that will help Power Grid Corporation fund its expansion plans, the Centre approved a follow-on public offer (FPO), constituting 20 per cent of its existing paid-up capital. (BS)
± IL&FS and five large public sector banks — BOB, BOI, PNB, UBI and Canara Bank — have decided to enter into an agreement for undertaking syndication business for large infrastructure and core sector projects. (BL)
± PFC looking into the possibility of converting into a bank, acquiring a bank, or picking up stake in an existing bank. (BL)
± IDBI Bank to merge home finance arm with itself. (BS)
± UBI launched bill payment and mobile recharge facilities for BSNL mobile subscribers through the bank's ATMs and UMobile service. (BL)
± Promoters of United Spirits have pledged 86.55% of their holdings with various banks and financial institutions to raise resources. (FE)
± Glenmark Pharma said it has received health regulators nod to market and distribute generic contraceptive pills, Norethindrone Acetate, in the US market. (ET)
± SKIL Infrastructure along with SKIL Knowledge Cities Ltd has made an open offer at a price of Rs536 a share to the shareholders of Everonn Education. (BL)
± Karnataka Bank is aiming to collect more than Rs1bn of life insurance premiums during the current fiscal. (BL)
Economic snippets
± RBI permits take-out financing via ECB for new infra projects. (BS)
± Food Inflation rose 12.5% on an annual basis in the week-ended July 10 against 12.8% surge in the previous week. (BL)
± The Centre and the States have agreed to leave out alcohol, petroleum products and electricity duty out of the proposed Goods and Services Tax (GST) system. (BL)
± The government has decided to rope in the private sector for building rail lines and connectivity projects to create additional rail transport capacity in the country. (ET)
± Monsoon rains have been 14% less than normal this season with almost the entire central India receiving deficient rains. (FE)
Results table
| Company (Rs mn) | Revenues | % yoy | PAT | % yoy |
| PNB | 68,633 | 11.1 | 10,682 | 28.4 |
| ITC | 48,473 | 17.3 | 10,703 | 21.8 |
| IDBI Bank | 47,551 | 37.3 | 2,509 | 46.0 |
| Bajaj Auto | 38,900 | 66.4 | 5,902 | 101.1 |
| Idea Ltd | 36,296 | 28.8 | 2,016 | (34.8) |
| Ambuja Cements | 20,883 | 10.6 | 3,912 | 20.5 |
| ACC | 20,621 | (2.7) | 3,589 | (26.1) |
| Vijaya Bank | 15,202 | 4.6 | 1,734 | 21.0 |
| Shriram Transport | 12,869 | 24.4 | 2,889 | 75.7 |
| Thermax | 7,897 | 46.9 | 661 | 42.2 |
| Dish TV | 3,043 | 23.3 | (631) | (8.8) |
Confidentiality & Disclaimer: This message contains confidential information and is intended only for the individual named. If you are not the named addressee you should not disseminate, distribute or copy this e-mail. Please notify the sender immediately by e-mail if you have received this e-mail by mistake and delete this e-mail from your system. E-mails are notencrypted and cannot be guaranteed to be secured or error-free as information could be intercepted, corrupted, lost, destroyed arrive late or incomplete, or contain viruses. The sender, which includes India Infoline Limited and its group companies, will not be liable for any errors or ommissions in the contents of this message which arise as a result of e-mail transmission. If verification is required please request a hard-copy version. This message is provided for informational purposes and should not be construed as a solicitation or offer to buy or sell any securities or related financial instruments.
No comments:
Post a Comment