From: Tilak <tilak.wankhedkar@indiainfoline.com>
Date: Wed, Sep 9, 2009 at 9:49 AM
Subject: Market Mantra: Technicals - Sesa Goa (Buy), Tanla Solutions (Buy); F&O - Biocon (Long), Kingfisher Airlines (Long); Reports - Colgate (Buy), Mgmt Mantra - Bajaj Electricals
To: Tilak <tilak.wankhedkar@indiainfoline.com>
Regards,
Tilak
4060 9102
9322 562 700
Regards,
Tilak
4060 9102
9322 562 700
Market Mantra
Market outlook
Enthusiasm could fizzle!
Mediocre idea that generates enthusiasm will go further than a great idea that inspires no one.
Bulls seem to get inspired by even mediocre ideas these days. After three days of healthy gains, the enthusiasm could be met with some resistance. We expect a circumspect start and a volatile day ahead. Firstly, global trend is not all that supportive. US stocks could not extend the global momentum. Asian markets are mixed. Most gains in global markets lately have come on the back of strength in commodity-related shares. The broader markets look exhausted after a six-month advance.
Same holds true for India too. The Sensex and the Nifty have doubled since early March and valuations are not fundamentally compelling. Yes, the slump in economic activity has been arrested. Q1 results turned out to be better than anticipated. Risk appetite is on the way up. Fund flows have improved. But the much-awaited rebound continues to be elusive.
Green shoots have been restricted to a few pockets. To add to the woes, rain Gods have not been too kind. Inflation remains a concern. Government's balance sheet is highly leveraged. Exports continue to bleed. Tax collections and credit growth remain subdued.
Trading ideas (Time period: 1-3 days)
Sesa Goa (BUY, CMP Rs224, Target Rs240): A detailed study of Sesa Goa, shows a pattern of rounded bottom on the daily chart, signaling temporary bottom. The overall base-like pattern carved out by Sesa Goa during the past 2 weeks appears to be maturing now. In fact, the last couple of sessions it represents a high level bullish congestion area between Rs220-225. We believe that the current bullish consolidation lead to a potential upside up to the levels of Rs238 and above. We recommend traders to buy the stock for a short-term target of Rs240 and Rs242. It is advisable to maintain a stop loss of Rs216.
Tanla Solutions (BUY, CMP Rs70, Target Rs76): The stock has rallied smartly from a low of Rs49 in second week of August 2008 to the present levels. On the daily charts, it has formed a pattern of a higher bottom after breaking out from critical resistance levels of Rs69-70 with impressive volumes. The daily RSI is already in strong buy mode, indicating that the prices are set to rally from the current levels. Any move past the levels of Rs72, could see the stock attempting the levels of Rs76-77 in the short-term. We recommend a buy in the range of Rs69-71 with a stop loss of Rs66.
Derivative strategies (Time period: Till expiry)
± Long Biocon Sept Future @ Rs242 for the target price of Rs260 and stop loss placed at Rs235.
Lot size:1,800
Remarks: Net maximum profit of Rs32,400 and net maximum loss Rs12,600.
± Long Kingfisher Airlines (KFA) Sept Future @ Rs47.60 for the target price of Rs51 and stop loss placed at Rs46.
Lot size: 4,250.
Remarks: Net maximum profit of Rs14,450 and net maximum loss Rs6,800.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Oct | Buy | Above 15730 | 15780, 15830 | 15690 |
| Silver - Dec | Buy | 26400-26450 | 26630, 26800 | 26280 |
| Copper - Nov | Sell | 318-319 | 314, 310 | 320.3 |
| Zinc - Sept | Buy | 93.7-94 | 95.5, 97 | 92.7 |
| Lead - Sept | Buy | 115.6-115.9 | 116.25, 117.5 | 114.6 |
| Aluminum - Sept | Buy | At 90.4 | 91.2, 92 | 89.8 |
| Nickel - Sept | Sell | Below 868 | 854, 842.5 | 880.5 |
| Crude Oil - Sept | Buy | Above 3485 | 3520, 3550 | 3455 |
| Natural Gas - Sept | Buy | Above 137 | 140.5, 143 | 134.4 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Oct | Buy | Above 14950 | 15095, 15230 | 14825 |
| Jeera - Oct | Sell | Below 11040 | 10880, 10750 | 11120 |
| Turmeric -Oct | Buy | Above 7450 | 7485, 7520 | 7419 |
| CPO - Oct | Buy | 334.5-335 | 338, 341.5 | 332.4 |
| COCUDCAKL - Sep | Buy | Above 598 | 602, 605 | 594.7 |
| Chana -Oct | H. Sell* | Around 2450 | 2420, 2390 | 2470 |
| Guar seed - Oct | H. Buy | Above 2165 | 2194, 2220 | 2145 |
| Soya bean - Oct | Buy | Above 2080 | 2110, 2130 | 2057 |
| Soya oil -Oct | Buy | Above 453 | 456.2, 459 | 450.3 |
| Mustard seed - Oct | Buy | Above 542.2 | 545.7, 548.5 | 539.7 |
**Strict Stop-Loss *Book Partial Profits
Mutual funds
| Birla Sun Life Tax Relief `96 Fund | Invest | |||
| Fund manager | Ajay Garg |
| Min investment | Rs500 |
| Latest NAV | Rs76.7 |
| 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% |
Company Update: Colgate-Palmolive (India) Ltd – BUY
CMP Rs618 Target Price Rs692 Upside 12.0%
Our recent interaction with the management of Colgate-Palmolive (India) Ltd (Colgate) re-affirms our long-term positive view on the company. Colgate continues to dominate the oral care industry with a strong 46%+ market share. The company has not witnessed any significant impact of poor monsoons. Also, despite economic slowdown no major down-trading was witnessed in any of its segments. Significant revival in monsoon in the second half of August augurs well for the company. Colgate, currently, derives more than 35% of its revenues from the rural markets. This contribution is set to increase further with the rising oral hygiene awareness. Colgate has introduced low price-point products of its brands for driving volume growth. Low penetration levels across segments are expected to fuel further growth. Colgate offers a 2.4% dividend yield and has one of the best capital efficiencies in the sector. We expect Colgate to witness revenue and earnings CAGR of 14.1% and 15.9% respectively over FY09-11. Maintain BUY.
Management Mantra: Shekhar Bajaj, CMD, Bajaj Electricals
Mr. Shekhar Bajaj is the Chairman and Managing Director of BEL. He has been the past President of ASSOCHAM, IMC and other associations. He is on the board of Bajaj Auto Ltd. and a number of other companies. Mr. Bajaj has a BSc (Hons) degree in Mathematics from Pune University (1968), followed by an M.B.A. degree from New York University (1974). He became the Managing Director of BEL in 1984 and became the Chairman & MD in 1990.
Corporate Snippets
± GAIL India may pick up a stake in US$2bn gas pipeline that China is building for ferrying natural gas found off the Myanmar coast. (ET)
± BHEL is believed to have finalized France's Alstom as the technology partner for its proposed JV with NPCIL to undertake nuclear power projects. (FE)
± TCS has entered into an alliance with Microsoft India to launch a virtualization center of excellence in Chennai. (ET)
± Board of Approval for SEZ's will take up the issue of granting a third extension to the clearance given to four zones including Reliance Industries multi product SEZ in Gurgaon and Suzlon Infrastructures high tech SEZ in Karnataka. (ET)
± Cairn India will pay only Central Sales Tax on crude sold in Rajasthan. (ET)
± DLF is considering selling DT Cinemas to PVR Cinemas and is also discussing various options including retaining minority stake incase of merging its multiplex business with the latter. (FE)
± PNB is looking to acquire a bank in Kazakhstan for an estimated US$33mn by March next year and also unveiled its expansion plans in UK too. (FE)
± Ashok Leyland signed a MoU with Magma Fincorp to provide financing to end customers of commercial vehicles. (FE)
± Axis Private Equity, PE firm sponsored by Axis Bank, plans to triple its corpus size to Rs18bn. (FE)
± CREC's move to impose ceiling on tariff for sale and purchase of power has been opposed by PTC India, Indian Energy Exchange, Power Exchange of India and GMR Trading. (FE)
± Wal-Mart, through Bharti Retail has introduced eight private labels in its 'easyday' supermarket chain. (ET)
± MERC has ordered an investigation into the business affairs of Reliance Infra, the distribution arm of Reliance Power. (ET)
± Tata Teleservices GSM launched its one paise per-character pricing plan for SMS. (FE)
± Mahindra Satyam has decided to restore variable pay for 28,000 employees across all levels. (ET)
± Reliance Capital plans Rs1bn worth stock options to its senior employees. (ET)
± Almost 760 pilots belonging to Jet Airways took mass sick leave in protest against the sacking of two pilots. (FE)
± Avesthagen plans an IPO raising Rs6-7bn from domestic and international market in 2010. (FE)
± Kuwait's largest telecom operator, Zain, has approached BSNL urging it to pick up a significant stake in the company. (ET)
± American Tower Company has restarted negotiations to buy majority stake in Essar Telecom Infrastructure. (ET)
± Talks between consumer durables retail chains – Tata Croma, Videocon's Next and Planet M – and private equity firms for possible stake sales have hit a wall due to differences over valuations. (ET)
Economic snippets
± SEBI has set up a special committee to review its key provisions of the takeover code. (ET)
± Government keen to raise FDI limit in Insurance sector from 26% to 49%. (BL)
± A ministerial panel decided that new telecom companies providing 3G services will have to share 3% of their revenues with the government as spectrum usage fee while incumbent operators entering the 3G space will have to share an additional 1% of their revenues for using these airwaves. (ET)
± Finance Minister says the stimulus needs to be continued but there will be no fresh tax cuts. (ET)
± Despite an 11% fall in hydro electricity this fiscal, the overall electricity generation was up 6.3% (till Aug) due to higher thermal and nuclear generation. (BL)
± NASSCOM has approached the European Union for a single work visa for IT workers to enable employees of Indian companies to move freely across the 27 member regional grouping. (ET)
± PSU oil companies may lose Rs25,000cr on under recovery (BS)
± Total direct tax collected from April-September has matched last years growth with total collections standing at Rs900bn. (ET)
± Indirect tax collections fell to Rs636bn for April to July period from Rs884bn last year.(FE)
± Heavy commercial vehicle sales see first upturn in 14 months (BS)
± Government's refusal to issue visas to Chinese technicians over security concerns has hit the progress of several power projects that use Chinese equipments. (ET)
± Government has invited foreign players to participate in the bidding process for its oil blocks under the NELP-VIII and CBM-IV. (ET)
± Government has approved nine FDI proposals involving an investment of Rs750mn. (ET)
± High capital base needed for banks with PE arm – RBI (BS)
± Over 300 new items would be introduced in the new WPI. (ET)
± Uttar Pradesh sugar sector disinvestment process is postponed yet again. (FE)
± Imports of sensitive items rise 40.6% in April-June. (FE)
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