Market Mantra
Market outlook
Less choice for action!
Hope doesn't come from calculating whether the good news is winning out over the bad. It's simply a choice to take action. - Anna Lappe
With weak global cues undermining strong local fundamentals, there is less action likely from bulls. The NSE Nifty breaching 5500 will remain a hope for a little longer now. Support is likely to kick in at 5300 and 5200 in case of a minor correction.
Stock-centric action will hold sway as we are in the midst of the results season. Be careful while dealing in small-cap and mid-cap stocks. These counters time and again have been known for easy entry and virtually no exit. Inflation is seen as a big risk and will take time to subside. Another mild hike in rates is on the cards next week by the RBI.
Bad economic data spooked Wall Street and European markets on Friday. Asian markets are down this morning. Volatility in global markets is here to stay given the precarious economic situation.
Key housing reports are due this week in the US. Also keep an eye on earnings from Wall Street. In Europe, the big event will be the release of the regional banks' stress test results on Thursday.
Trading ideas (Time period: 1-3 days)
Tata Power (BUY above Rs1350, Target Rs1410) Tata power has signaled a breakout on closing basis last week as prices managed to hold above the resistance levels of Rs1325 for two consecutive trading session. Although prices closed in marginal negative terrain on Friday after testing levels of Rs1348, the oscillators continue to indicate strength with MACD trading above the reference line and RSI holding above the 50 mark. We expect positive trend to reignite momentum once the stock manages to surpass Friday's peak of Rs1348. Hence, we advise buying stock above Rs1350 with stoploss of Rs1325 for target of Rs1410.
Sun TV (BUY above Rs453, Target Rs480) Last week Sun TV Network broke out from flag consolidation in which prices hovered in the narrow band of Rs412-440 for nine trading session. Prices reiterated back from resistance levels of Rs440 but in process managed to form higher lows, indicating strength in the counter. We expect earlier uptrend to continue from hereon with immediate target seen at Rs480 after it successfully surpassed levels of Rs453. Oscillators like RSI are already trading in overbought zone but yet to signal any reversal divergence as of now. Hence we expect prevailing uptrend to sustain in coming days and advise buying stock above Rs453 with stop loss of Rs440 for target of Rs480.
Derivative strategies (Time period: Till expiry)
± Short Yes Bank July Future in range of Rs301 -302 for the target price of Rs290 with a stop loss placed at Rs305.50.
Lot size: 1000
Remarks: Net maximum profit of Rs11,000 and net maximum loss Rs4,500.
± Long REC July Future in range of Rs304-305 for the target price of Rs315 and stop loss placed at Rs299
Lot size: 1000
Remarks: Net maximum profit of Rs11,000 and net maximum loss Rs5,000.
Mutual funds
| Fund focus | |||||||
| HDFC Top 200 Fund | Invest | ||||||
| Fund manager | Prashant Jain |
| Min investment | Rs5,000 | |||
| Latest NAV | Rs198.4 |
| 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 Infrastructure has signed a pact with NHAI for developing the Rs30bn Delhi-Agra highway project. (BS)
± Infosys closed down its BPO centre in Bangkok due to inability to scale up operations. (ET)
± Reliance Industries is said to be in talks with Quicksilver Resources, a Texas-based exploration and production company that's into development of shale gas, coal-bed methane and tight-sands gas in North America. (DNA)
± Tata Steel sells entire 27.03% stake in Malaysia's Southern Steel Berhad for US$72mn as part of a reorganisation process. (BS)
± SAIL is likely to sign an agreement with Posco by October to jointly set up plants in the country at an investment of Rs150bn. (FE)
± ITC Ltd pares its holding in Agro Tech Foods by close to 3% from 16.77% to 13.87% in June 2010. (BS)
± Cairn India, which recently reached 0.1mn barrels of oil per day production from its Rajasthan fields, is supplying 70,000 barrels to Reliance Industries. (BL)
± Singapore-based resorts chain Banyan Tree is in advanced stages of talks to buy a controlling stake in DLF owned Aman Resorts for around US$350mn. (FE)
± ONGC Videsh has turned down an offer to buy Lakshmi N Mittal's stake in a Kazakhstan oil company after its request for data on the project did not elicit any response. (ET)
± Escorts plans to raise the prices of its tractors by 2-4 % in August-September owing to rising raw material costs. (BL)
± Nikhil Gandhi of SKIL Infrastructure is in talks to acquire a significant stake in Everonn Education. (BS)
± Nagarjuna Fertilizers plans to set up a urea manufacturing facility with an initial capacity of 1mn tons in Nigeria. (BL)
± Essar mulls IPO of Vodafone Essar in which it holds 33% stake. (BS)
± Canara Bank is looking to raise Rs5-6bn during the second quarter of the present fiscal to augment its capital adequacy ratio. (BS)
± Polaris Software plans to continue making acquisitions to complement its portfolio of services and products. (BS)
± Renuka Sugars, after receiving government approvals to set up a cogeneration power unit on a build-own-operate-transfer basis with the Pune-based Sant Tukaram sugar cooperative, has backed out. (ET)
KS Oils plans to invest Rs2.2bn this fiscal to expand its business in both domestic and overseas markets. (ET)
± Titagarh Wagons is looking at expanding its operations into the West Asian market after having acquired the assets and business of Arbel Fauvet Rail (AFR), France. (BS)
± Godrej Properties plans to convert its IT SEZ project in Hyderabad into a residential one. (BS)
± Allcargo Global is planning to enter the shipping segment and offshore oilfield services within next two to three months. (BS)
± GVK Power is looking to increase its holding in BAIL by acquiring other stakes held by shareholders. (BS)
± Cera Sanitaryware plans to acquire a company or a brand in Europe and intends to infuse Rs600mn for capacity expansion. (BS)
± CCCL Infrastructure Ltd, part of Consolidated Construction signed a MoU with the Tamil Nadu government to set up a SEZ for food processing industry at Tuticorin in southern Tamil Nadu. The project is likely to attract an investment of Rs25bn. (BS)
± Prithvi Information is in the process of acquiring another US company worth about US$5mn. (BS)
± MAX India promoter plans to consolidate holding in the insurance and healthcare firm by buying up to 5% this year through the creeping acquisition route. (ET)
Economic snippets
± Core inflation rose sharply to 8.6 % in June, more than double from 3.5 % in December 2009. (BS)
± Foreign exchange reserves rose by US$1.2bn to US$279bn for the week ending July 9. (BL)
± GSM telecom operators added over 12mn new users in June, higher than 11mn added in May. (ET)
± The insurance regulator IRDA is likely to meet on July 20, 2010 the heads of insurance companies to discuss issues related to the proposed IPO guidelines. (BS)
± The Reserve Bank of India has extended the second daily liquidity adjustment facility for commercial banks by two weeks and it didn't extend the facility under which banks could borrow against 0.5 % of their holdings of statutory liquidity ratio bonds. (BS)
± The country's installed passenger vehicle manufacturing capacity that includes SUVs and MPVs has crossed a significant milestone of the 3mn mark. (BL)
± Takeovers are set to get costlier with a SEBI panel favouring making it mandatory for the acquirer to make an offer for up to 100% stake in any listed company. (BS)
± The Supreme Court has ruled that the electricity regulatory commissions are vested with the powers to fix tariffs for electricity. (ET)
Results table
| Companies | Revenue | % yoy | PAT | % yoy |
| Rallis India | 1,960 | 20.0 | 148 | 57.5 |
| Zydus Wellness | 873 | - | 77 | - |
| Canara Bank | 17,278 | 33.8 | 10,134 | 82.5 |
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