From: Tilak <tilak.wankhedkar@indiainfoline.com>
Date: Thu, Sep 10, 2009 at 9:32 AM
Subject: Market Mantra: Technicals - JP Associates (Buy), Bank of India (Buy); F&O - LIC Housing Finance (Long), Hindustan Construction Co (Long); Reports - Idea Cellular (MP)
To: Tilak <tilak.wankhedkar@indiainfoline.com>
Regards,
Tilak
4060 9102
9322 562 700
Market Mantra
Market outlook
Ringing in denials!
Optimism is denial, so face the facts and move on
The rising market may seem to be in denial mode for some time. Meanwhile, telecom companies are ringing in denials with the much anticipated mega merger of Bharti Airtel and MTN expected to take further time to materialise. BSNL and MTNL have also denied being part of the takeover consortium for Kuwait's Zain.
Today, we expect a cautious to slightly higher start and another day of intra-day gyrations. Though liquidity could drive the market higher, one cannot overlook the headwinds such as sluggish loan growth, subdued tax receipts, drought, rising inflation and interest rates.
Coming to the markets, looks like the momentum is favouring the bulls yet again. The Nifty is within striking distance of the 5000 mark. Some technical chartists see the Nifty touching 5200-5300 levels.
But, we would like to urge caution, as the advance is bound to face bumps along the way. Large-scale fresh buying should be avoided. We wouldn't tell you to sell off as overall the prospects appear bright but then some profit booking is always healthy for your portfolio.
Trading ideas (Time period: 1-3 days)
JP Associates (BUY, CMP Rs238, Target Rs250): JP Associates has been consolidating in range between the levels of Rs231-204 for one month. On Wednesday, the stock broke out from the higher-end of this trading range. In addition, the gain in the stock price from a low of Rs220 in the current week has been on back of increasing volumes, indicating strong buying at the support levels. The daily RSI is already in strong buy mode. The stock has closed above all its key daily moving averages. A move past the levels of Rs240 could take the stock towards the levels of Rs250 and Rs255 in the short-term. Keeping in mind the above-mentioned evidences, we recommend high risk traders to buy the stock between the range of Rs236-240 with a stop loss of Rs230 for target of Rs250.
Bank of India (BUY, CMP Rs343, Target Rs365): On the daily chart, the stock has broken out from an inverted Head and Shoulders formation with the neckline placed at Rs342. We believe a bullish consolidation above this level could lead to a strong rally in the counter. The stock has staged a smart rebound from its August low of Rs303. In our view, the stock has formed a medium term bottom around the levels of Rs320-325 and we expect a move past Rs345 to take the stock around the levels of Rs360. The daily RSI is exhibiting positive divergences. Based on the above-mentioned technical evidences, we recommend traders with high risk appetite to buy the stock in the range between Rs340-345 for a target of Rs365. A stop loss of Rs334 is recommended on all long positions.
Derivative strategies (Time period: Till expiry)
± Long LIC Housing Finance Sept Future @ Rs675 for the target price of Rs705 and stop loss placed at Rs665.
Lot size:425
Remarks: Net maximum profit of Rs12,750 and net maximum loss Rs4,250.
± Long Hindustan Construction Co Sept Future @ Rs112.50 for the target price of Rs120 and stop loss placed at Rs110.
Lot size: 2,100.
Remarks: Net maximum profit of Rs15,750 and net maximum loss Rs5,250.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Oct | Sell | Below 15625 | 15575, 15540 | 15655 |
| Silver - Dec | Sell | Below 26350 | 26215, 26070 | 26473 |
| Copper - Nov | Buy | 310-311 | 313.5, 315.5 | 309.4 |
| Zinc - Sept | Buy | 94.6-94.9 | 96, 97 | 93.8 |
| Lead - Sept | H. Buy | 115.6-115.9 | 116.25, 117.5 | 114.6 |
| Aluminum - Sept | Sell | Below 89.8 | 88.55, 87.6 | 90.65 |
| Nickel - Sept | Sell | Below 868 | 854, 842.5 | 880.5 |
| Crude Oil - Sept | H. Buy | Above 3485 | 3520, 3550 | 3455 |
| Natural Gas - Sept | Buy | Above 141 | 144.3, 146.5 | 138.7 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Oct | Sell | Below 14500 | 14360, 14225 | 14630 |
| Jeera - Oct | Sell | 10960-10990 | 10850, 10730 | 11087 |
| Turmeric -Oct | Sell | Below 7280 | 7236, 7200 | 7313 |
| CPO - Oct | Sell | Below 328 | 325, 322 | 330.8 |
| COCUDCAKL - Sep | H. Buy | Above 598 | 602, 605 | 594.7 |
| Chana -Oct | Sell | Around 2390 | 2355, 2320 | 2420 |
| Guar seed - Oct | Sell | Below 2135 | 2108, 2080 | 2155 |
| Soya bean - Oct | Trade as per calls given during trading session. | |||
| Soya oil -Oct | Sell | Below 438 | 435, 432 | 440.7 |
| Mustard seed - Oct | Sell | 540-541 | 537, 533.7 | 543.8 |
**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 | Rs77.0 |
| Entry load | Nil |
| NAV 52 high/low | Rs79/37 |
| Exit load | Nil |
| Latest AUM | Rs980cr |
| 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: Idea Cellular- MP
CMP Rs80 Target Price Rs75 Downside 5.7%
The upcoming 3G auctions would see Idea Cellular pitted against larger, deep pocketed incumbents such as Bharti, Rcom and Vodafone. Except for Maharashtra where it is the biggest player by subscribers, Idea does not feature amongst the top two operators in any of the metros or 'A' circles. Moreover, we reckon, assuming a pan-India 3G bid of US$1bn, Idea gross FY10 D/E is likely to deteriorate by ~30% to 0.8x, as compared to less than 15% impact for Rcom.
Another key trigger, Indus Towers is likely to add Rs22/share to Idea but we refrain from including it in our target price until external tenants materialize or Indus is listed on bourses. Albeit, a ~15x FY11E PER and lower operating margin vis-a-vis peers underpins our cautious view on the stock; retain Market Performer with a revised TP of Rs75.
Corporate Snippets
± Bharti Airtel denied reaching a preliminary agreement with South Africa's MTN on their planned alliance. (ET)
± GMR Infrastructure plans to sell shares of various businesses independently to raise Rs75bn. (ET)
± BSNL, MTNL deny buy Kuwait telecom firm Zain (ET)
± Videocon Industries, GAIL, HPCL & BPCL plan to exit from exploration of block in Oman in absence of any hydrocarbon discovery. (BS)
± Essar Oil's coal bed-methane block at Ranigaj in West Bengal has revised its gas estimates by 45% to 60.77billion cubic metre (BS)
± The impasse between Jet Airways and its pilots entered the second day, forcing the airline to cancel 174 domestic and 32 international flights. (ET)
± US-based hedge funds DE Shaw and Citadel Investment Group have filed a winding up petition against Venus Remedies, after the company defaulted on a FCCB issue. (ET)
± BPCL is expecting to receive oil bonds worth Rs25bn from the finance ministry. (ET)
± RNRL tells SC that the supply of gas from the KG basin by RIL to RNRL is an integral part of demerger pact. (ET)
± Pantaloon Retail plans to invest more than Rs5bn to expand its seamless mall Central and the value fashion format Brand Factory over the next two years. (ET)
± SC asks I-T department and HCL Tech to settle dispute via alternative resolution panel. (FE)
± Supreme Infra bags order worth Rs970mn. (FE)
± Unity Infra wins two orders worth Rs6.2bn. (FE)
± Kingfisher Airlines to commence daily non-stop flights from Mumbai to Hong Kong from September 15. (FE)
± Indian Overseas Bank seeks to government for a capital infusion of Rs10bn to maintain its Capital adequacy ratio at 12%
± ING Vysya Bank has raised Rs4.15bn by way of QIP and preferential allotment to its promoters. (BS)
± Reliance General Insurance has bagged a mandate for providing insurance to Air India for $24.3m. (BS)
± NTPC proposes to acquire a coal mine in Indonesia and have appointed Macquaire Group for the due diligence. (BS)
Economic snippets
± RBI has made it easier for banks to lend to special economic zones. (ET)
± The government is planning to spend about Rs20bn to set up 15 new textile parks by 2012. (ET)
± According to steel ministry, steel consumption rose to 4.59mn tonnes last month against 4.41mn tonnes in August, 2008. (ET)
± Standalone 3G players may have to 3% spectrum fee. (ET)
± RBI has clarified that loans against rent receivables shall be treated as commercial realty. (BS)
± SEBI committee to discuss on issues related to shortening the period between the closure and listing of an issue and also ensuring that institutional investors make full payment soon after they are allotted (BS)
± Bank credit for the fortnight ended 28th August 2009, drops 14.1%yoy, deposits grow at 20.5%yoy (BS)
± Cement despactes are up 17%yoy for the month of August, 2009. (BS)
± Mutual Fund industry assets are up 4.8% for the month of August,2009 (BS)
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