From: Tilak <tilak.wankhedkar@indiainfoline.com>
Date: Fri, Sep 11, 2009 at 9:31 AM
Subject: Market Mantra: Technicals - Amtek Auto (Buy), Apollo Tyres (Buy); F&O - Divi's lab (Long), GTL Ltd (Short); Reports - WPI (-0.12%), SAIL (MP)
To: Tilak <tilak.wankhedkar@indiainfoline.com>
Regards,
Tilak
4060 9102
9322 562 700
Market Mantra
Market outlook
9/11…OIL's well!
It is better to look ahead and prepare than to look back and regret.
We've come a long way forward in every sense. Funds flush with cash are offering psychological support at the moment. The fear of being left out is compelling many to step in even at higher levels, lest they under-perform. Since the advance in early March, the markets haven't had a meaningful correction. Though the overall mood is upbeat, there is some skepticism about the sustainability of the rally. OIL India's IPO has got subscribed 31 times.
We expect a flat to slightly positive start. IIP data will be out today. According to the Commerce Minister, it grew by 7%. This is respectable given the circumstances. Exports too are showing signs of bottoming out. FDI inflows in July were pretty good. Rains in the last phase have been better. The big worry is on the inflation front, and its fallout on interest rates.
US stocks have risen for the past four sessions. A key European index has gained for six straight days. Most markets around the world are trading at a year's high amid persistent optimism about the prospects for the global economy.
Trading ideas (Time period: 1-3 days)
Amtek Auto (BUY, CMP Rs195, Target Rs210): The stock has rallied smartly from a low of Rs91 in early July 2009 to the present levels. On the weekly charts, it has formed a pattern of a higher bottom. It is considered as the initial sign of a bottoming out process in the short term. 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 Rs197, could see the stock attempting the levels of Rs205-210 in the short-term. We recommend a buy in the range of Rs193-197 with stop loss of Rs189.
Apollo Tyres (BUY, CMP Rs42.90, Target Rs47): On the daily chart, the stock gave an upside breakout in yesterday's trading session. It suggests that the range bound movement is about to end. On Thursday, the stock rallied by over 4% confirming the bullish set up. We continue to remain positive on the stock from technical perspective as the stock has managed to hold on to its short-term support trendline in ongoing market volatility. The daily momentum oscillators i.e. RSI and MACD are suggesting strength in the upmove. A move above Rs43, could take the stock above Rs47 in the near term. Keeping in mind the above-mentioned observations, we suggest traders to buy the stock in the range of Rs42-43.50 with a stop loss placed at Rs41 for target of Rs47.
Derivative strategies (Time period: Till expiry)
± Long Divi's lab Sept Future @ Rs522 for the target price of Rs550 and stop loss placed at Rs515.
Lot size:620
Remarks: Net maximum profit of Rs17,360 and net maximum loss Rs4,340.
± Short GTL Ltd Sept Future @ Rs297 for the target price of Rs279 and stop loss placed at Rs305.
Lot size: 750.
Remarks: Net maximum profit of Rs13,500 and net maximum loss Rs6,000.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Oct | Buy | Above 15730 | 15780, 15820 | 15690 |
| Silver - Dec | Buy | Above 26760 | 26900, 27050 | 26640 |
| Copper - Nov | Buy | 305-306 | 309, 312 | 303.7 |
| Zinc - Sept | Sell | Below 91.5 | 90.3, 89 | 92.6 |
| Lead - Sept | Sell | Below 101.5 | 99.8, 98 | 102.8 |
| Aluminum - Sept | Sell | Around 90 | 88.7, 87.5 | 91.1 |
| Nickel - Sept | Sell | 860-863 | 845, 830 | 873.8 |
| Crude Oil - Sept | Buy | Around 3465 | 3500, 3530 | 3440 |
| Natural Gas - Sept | Buy | Above 150 | 154, 158 | 147.4 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Oct | H. Sell | Below 14500 | 14360, 14225 | 14630 |
| Jeera - Oct | Sell | 10870-10900 | 10780, 10650 | 10967 |
| Turmeric -Oct | Sell | Below 7040 | 7003, 6965 | 7075 |
| CPO - Oct | Sell | 334.7-335 | 331.5, 329 | 337.3 |
| COCUDCAKL - Sep | Buy | Above 608 | 612, 615 | 604.6 |
| Chana -Oct | Buy | Around 2360 | 2395, 2430 | 2334 |
| Guar seed - Oct | Buy | Around 2137 | 2160, 2185 | 2119 |
| Soya bean - Oct | Trade as per calls given during trading session. | |||
| Soya oil -Oct | H. Sell | Below 438 | 435, 432 | 440.7 |
| Mustard seed - Oct | Sell | 535-536 | 532, 529 | 538.8 |
**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 | Rs77.4 |
| 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% | ||
Economy Update: Inflation – August 29, 2009
± WPI increases further from -0.21% to -0.12%
± Higher prices of primary goods leading the rise in WPI
± Prices of manufactured products continue to rise
± Fuel index down 8.8% yoy
Annual Report Analysis: Steel Authority of India – Market Performer
CMP Rs168 Target Price Rs158 Downside 6.0%
Steel Authority of India (SAIL)'s annual report for FY09 exhibits the resilience shown by the company in one of the toughest global economic crisis. With soaring input prices, fluctuating market and the world economy in doldrums, SAIL remained undeterred, increasing its cash levels by Rs46bn even after incurring a capex of Rs64bn during the year. The company managed to save Rs8.3bn on account of the enhancement in operational efficiency by improving techno- economic parameters. The company has been constantly trying to increase the share of value added products (VAP) in overall sales. The company in FY09, achieved its best ever coke rate, specific energy consumption and labour productivity. SAIL's operating margin was negatively impacted by a surge in raw material costs (RM cost/ton of steel increased 46% yoy). Slippage in its mega expansion plan continued. The plants are now expected to be operational from FY12 onwards from earlier estimate of FY11.
Corporate Snippets
± NTPC to save Rs320bn by procuring gas at US$2.34/mmbtu from Reliance Industries. (ET)
± Reliance Industries seeks further allocation of KG-D6 gas. (BL)
± Infosys targets US$1bn revenue from India in the next 3-4 years. (ET)
± Government may shed 5% stake in NTPC before March. (ET)
± Bharati Airtel may pay higher rate of interest for MTN loans. (ET)
± L&T bags Rs4bn order from Nuclear Power Corporation. (BL)
± L&T aims Rs40-60bn business from Nuclear Power equipments. (BS)
± Oil India IPO was over subscribed 31 times. (ET)
± Jet Airways and its pilots have reached a pact to break the deadlock. (ET)
± M&M has launched two new 125cc power scooters The Rodeo and The Duro. (ET)
± Jindal Power to invest Rs134bn for enhancing its power generation capacity to 3,400 MW by 2013. (ET)
± JSW Energy plans to pre pay debt worth Rs4.75bn. (BL)
± BHEL gets Rs9.9bn order from Indian Railways. (ET)
± BPCL to spend around Rs30bn in the current fiscal to fund drilling operations in some exploration blocks, upgrade refineries and build a product pipeline. (FE)
± IVRCL Infra has bagged order worth Rs5bn from Maharashtra Government, among others. (BL)
± Ranbaxy asks USFDA to re-inspect Dewas facilities. (ET)
± IT department raids 12 HDIL premises. (ET)
± United Spirits plans to raise US$300mn to prune debt. (BL)
± Axis Bank gets nod for GDR issue. (BS)
± Ansal Properties may consider converting 3 out of 4 SEZ plots into a residential project. (BS)
± IDFC PE to buy out wind power assets of BP for Rs6.5bn in India. (ET)
± Murugappah to exit Chola DBS. (ET)
Economic snippets
± Inflation for the week ended August 29, inched up to -0.12%. (ET)
± DGCA has asked airlines to drop fares to September 6 levels. (ET)
± Petroleum ministry has recommended a 44% hike in APM gas prices. (FE)
± Foreign exchange reserves for the week ended 28 August rose by US$4.4bn to US$276.4bn. (FE)
± India's exports contracted for 11th month in a row. August exports fell 19.7% to US$14.3bn, the lowest contraction since January. (ET)
± GSM user base grows by 9.3mn in August. (ET)
± SEBI panel has recommended limiting the period for participation by QIBs to 2-3 days in subscription process of an IPO. (ET)
± FDI inflows up 55% in July to US$3.5bn. (ET)
± Centre to import 5mn tons of raw sugar. (ET)
± Power sector faces Rs5tn funding gap says Power Minister. (BL)
± SEBI may ask institutional investors to cough up more than 10% of a public issue subscription upfront. (FE)
± Tyre manufacturers are likely to raise tyre prices within a month. (BL)
± ULIPs to have five year lock in period from October. (BS)
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