From: Tilak <tilak.wankhedkar@indiainfoline.com>
Date: Tue, Sep 8, 2009 at 9:32 AM
Subject: Market Mantra: Technicals - Punj Lloyd (Buy), Praj Industries (Buy); F&O - Wipro (Long), India Cement (Long); Report - KPIT Cummins
To: Tilak <tilak.wankhedkar@indiainfoline.com>
Regards,
Tilak
4060 9102
9322 562 700
Market Mantra
Market outlook
Troubles and victory!
A mind troubled by doubt cannot focus on the course to victory.
Troubled minds may have found some calm as strong buying from FIIs helped propel the key indices to a 15-month high. The rally came on higher volume and turnover with positive breadth. Firm global markets got a boost from heightened M&A action. Encouraging remarks from G20 leaders over the weekend added support. We won't blame you for thinking that a rise was anticipated as Oil India IPO opens. The worry would be how long can it last?
We expect a cautious opening with no cues from Wall Street and a mixed Asian markets. The bulls may just manage to push indices a little further if FIIs and global markets help. Stocks have doubled in six months. Given the mismatch between valuations and fundamentals, further gains will be difficult to come by. Economic reports and earnings have raised optimism that the worst is over. There could yet be another crisis if the real issues that need to be tackled are overlooked especially the one relating to global imbalances.
Back home, we need to overcome a deficient monsoon, high fiscal deficit, possible spike in inflation and hardening of interest rates.
Trading ideas (Time period: 1-3 days)
Punj Lloyd (BUY, CMP Rs268, Target Rs282): On Monday, the stock advanced sharply on decent volumes above its critical resistance levels of Rs263-264. It now faces a resistance at Rs279-282 levels and should have a minimum upside till that level. Our argument is further validated after the stock gave an upside breakout in yesterday's session as the price broke through the top of a trading range. Moreover, the stock has given a close above its short-term moving averages. We recommend traders with high risk appetite to buy the stock in the range of Rs265-270 with a strict stop loss of Rs260 for a target of Rs282.
Praj Industries (BUY, CMP Rs107, Target Rs116): The stock has seen a sharp rally from the support zone of around Rs93-94 and has managed to cross the critical resistance levels of Rs106-107 with impressive volumes. It has formed a medium term 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 in the range of Rs105-108 for a target of Rs116. A stop loss of Rs101 should be maintained on all long positions.
Derivative strategies (Time period: Till expiry)
± Long Wipro Sept Future @ Rs557 for the target price of Rs570 and stop loss placed at Rs549.
Lot size:600
Remarks: Net maximum profit of Rs24,480 and net maximum loss Rs10,200.
± Long India Cement Sept Future @ Rs131 for the target price of Rs140 and stop loss placed at Rs128.
Lot size: 1,450.
Remarks: Net maximum profit of Rs23,400 and net maximum loss Rs13,000.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Oct | Buy | Around 15710 | 15750, 15790 | 15680 |
| Silver - Dec | Buy | Above 26390 | 26550, 26690 | 26260 |
| Copper - Nov | H. Buy | 308-309 | 311.5, 314 | 307 |
| Zinc - Sept | H. Buy | Around 93 | 94.5, 96 | 91.8 |
| Lead - Sept | Buy | 113.3-113.5 | 114.75, 116 | 112.4 |
| Aluminum - Sept | H. Sell | At 90.4 | 89.2, 88 | 91.15 |
| Nickel - Sept | Sell | Around 878 | 863, 847 | 886.7 |
| Crude Oil - Sept | Sell | Around 3350 | 3320, 3300 | 3370 |
| Natural Gas - Sept | Trade as per calls given in trading session | |||
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Oct | Sell | Below 14600 | 14450, 14320 | 14730 |
| Jeera - Oct | Sell | 11000-11050 | 10880, 10750 | 11120 |
| Turmeric -Oct | Buy | Above 7450 | 7485, 7520 | 7419 |
| CPO - Oct | sell | 328-329 | 325.5, 322 | 331.3 |
| COCUDCAKL - Sep | Sell | 592-593 | 588, 586 | 595.8 |
| Chana -Oct | Sell | Around 2450 | 2420, 2390 | 2470 |
| Guar seed - Oct | Buy | Above 2165 | 2194, 2220 | 2145 |
| Soya bean - Oct | Sell | Around 2070 | 2035, 2000 | 2085 |
| Soya oil -Oct | Buy | Above 440 | 443, 446 | 437.4 |
| Mustard seed - Oct | Buy | 527-528 | 533, 538 | 524.3 |
**Strict Stop-Loss *Book Partial Profits
Mutual funds
| Fund focus | ||||||
| Birla Sun Life Tax Relief `96 Fund | Invest | |||||
| Fund manager | Ajay Garg |
| Min investment | Rs500 | ||
| Latest NAV | Rs76.0 |
| Entry load | Nil | ||
| NAV 52 high/low | Rs79/37 |
| Exit load | Nil | ||
| Latest AUM | Rs896cr |
| Latest dividend (under dividend option) | 40% (Aug 31, 2009) | ||
| Type | Open-ended |
| Benchmark | BSE200 | ||
| Class | Equity – Tax saving |
| Asset allocation Equity(99%), Debt(0%), Cash(1%), No of stock 47 | |||
| Options | Growth & dividend |
| Expense ratio | 2..3% | ||
Annual Report Analysis: KPIT Cummins Infosystems Ltd – Not Rated
CMP Rs79
KPIT Cummins Infosystems displayed robust operational execution in FY09 with constant currency US$ revenue growth of 22.3% yoy and almost 2x improvement in operating margin. However, company's aggressive hedging strategy (covering majority future inflows) backfired with sudden sharp appreciation of the dollar against other business currencies during the year. Resultantly, realized forex losses restricted profit growth while provision for potential losses reduced networth significantly.
Corporate Snippets
± Tech Mahindra has bagged a 10-year contract worth ~Rs20bn from Etisalat DB, formerly known as Swan Telecom for managing its entire IT operations. (FE)
± Maruti plans to expand its Manesar factory capacity by 40% in the next two years. (BS)
± Oil India plans to bid for blocks in Iraq jointly with IOC. (ET)
± ONGC plans to ramp up Imperial Energy's crude oil production and consolidate operations. (FE)
± IFCI plans to raise around Rs10bn from the market through a bond issue. (BS)
± Maruti plans to shift production from its Plant I in Gurgaon to its Manesar plant in a phased manner. (FE)
± The government to infuse Rs20bn of equity by December as the first phase of financial restructuring to bail out ailing Air India. (BS)
± The Chennai Petroleum plans to set up a Rs35bn high conversion 'resid upgradation unit' to increase the distillate yield. (FE)
± Cipla plans to foray into the production of biotechnology medicines. (BS)
± Videocon Industries and Bharat PetroResources (BPRL) have bought a 12.5% stake each in Anadarko Indonesia Nunukan Company. (BS)
± IOC is exploring the possibility of setting up a wind mill in Paradeep (Orissa). (BS)
± Tata Power has opened its first rural BPO facility at Khopoli in Raigad district. (FE)
± Indiabulls Power has decided to cancel the Rs4bn placement made ahead of its IPO. (ET)
± Dell and MTNL to offer 3G wireless mobility solutions on Dell's select range of laptops and netbooks. (BL)
± Aurobindo Pharma has received USFDA approval for its Risperidone oral solution. (ET)
± Suven Life Sciences will receive the first milestone payment from Eli Lilly for identifying a lead compound in their drug discovery collaboration. (ET)
± M&M is expected to sell about 0.15mn tractors in FY10, which will make it the world's number one tractor company by volumes. (ET)
± Tata Steel registered a 25% yoy increase in steel sales at 0.49mn tons during August 2009. (FE)
± Bharat Forge plans to seek shareholder's approval to raise US$150mn by issue of warrants or bonds. (FE)
± BASF India plans to consider merger of Ciba India Ltd, Diamond Dye-Chem Ltd and Ciba Research (India) Pvt Ltd with the company on September 11. (FE).
± L&T Finance among suitors for DBS Cholamandalam AMC. (BS)
± KNR Constructions has bagged a Rs2.3bn order from the NHAI for completion of balance work on NH-5. (BL)
± McNally Bharat has decided on fresh issue of shares on rights basis in the ratio of one new share for every 10 held at Rs140 a share of Rs10 each. (BL)
± BK Modi acquires 51% stake in forex and money transfer firm, Wall Street Finance. (ET)
± UK-based Cadbury rejects Kraft Foods' hostile takeover offer of US$16.7bn. (ET)
Economic snippets
± Oil regulator PNGRB has levied a turnover tax of Rs20mn per annum on companies retailing CNG and natural gas, for turnover of up to Rs200bn. (ET)
± The Foreign Investment Promotion Board (FIPB) has advised 300-odd companies to pay RBI a penalty for breaching sectoral limits on FDI. (BS)
± Nine power projects with a total generation capacity of 39,567mw are likely to receive final environmental clearance this month. (FE)
± The Government is considering a proposal to raise the tax exemption limit on monthly transport allowance to Rs3,200 per month from current Rs800. (ET)
± The Government has imposed an anti-dumping duty on import of a chemical used in foam mattresses from China and Korea. (ET)
± The Bengal Government has announced the scrapping of the proposed IT township project. (BL)
± India will form a joint working group with Indonesia to explore opportunities for acquiring coal properties abroad. (ET)
± NSE has reduced transaction charges by ~10% in the cash and futures segment for its market intermediaries. (ET)
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