Tuesday, April 5, 2011

Stocks in Action for the day: Henkel India, BHEL, Idea, Gravita India, GVK, L&T, Suzlon, Indo Asian

Market Outlook: Indian markets are expected to open on the positive note and trade range 5860-5950 while On the global space Wall Street ends mixed; brent crude at $120 per barrel and Asian markets trade higher; Hang Seng, Shanghai up 1%. Overall outlook for the markets today is that of cautious optimism with 5820 levels as a major support.

Global events to watch

Þ ISM Non-Mfg Index.

Global indices Update @ 8:

Dow Jones : 12400 (+23.31)

NASDAQ : 2789 (- 00.41)

Nikkei 225 : 9606 (-112.1)

Hang seng : 24150 (+348.6)

SGX CNX Nifty : 5950 (+02.50)

Gold (USD/t oz.) : 1438 (+05.00)

Nymex Crude (F) : 108.2 (-00.23)

INR / 1 USD : 44.65

Technical Outlook: Options indicate upward bias...

Rational mindset demanded that there should be a reaction after a 9 day run. But when was the market ever famous for rationality?? It appears that traders were approaching the market from a rational mindset and shorting the NF. As a result the index kept rotating upwards after a pause every now and then. So, on a TCD (4th) the index recorded a high. Will it now reverse? We should consider that having happened only if the prices are able to move beneath the daily pivot- which is placed at 5900 levels for today. So, until then don’t get on to the short side. Should one then play long? Answer to that remains yes- as the target zone for this move is still a bit away around 5885-95. Not too much room, we agree, but it is open all the same. Will it reach? See the chart of today. The prices are past the first weekly resistance (marked RA) and it is usually found that when this level is exceeded early in the week and held, then chances are for a continuation higher. So bet with the trend and not against it.

Most notable of yesterday is the substantial addition to Put OIs. This has sent the PCR soaring once again and the signal is bullish. Overhead calls have been pushed higher towards the 6000 levels so market is clearly making room for more gains.

IT was to the fore and looks like it may continue to be in action today also. Mid and small cap indices were in good form yesterday and that is in line with the expectations mentioned in yesterday letter. Time for momentum investing is at hand and that is where readers should also concentrate now. This would also be visible in the futures space in the form of smaller stocks moving more than the larger ones. So be alert for some action there too.

STRATEGY FOR THE DAY: As discussed the bias is upward and hence we look to buy above yesterday high or if the high of the first 15 minutes is exceeded. Keep an eye out for mid cap futures that are likely to run up and trade in them for the day. Shorts are on if the daily pivot is broken and not otherwise. Check option OI addition in puts and if seen then continue to play bullish on the market. Check out candidates for momentum investing.

Stocks to buy if market is strong


Prices yesterday rocketed to new swing highs on sustained buying action. The sharp rise was followed by high volumes and managed to push prices above strong double resistances, 38.2% retrenchment of the last falling leg from Nov 10 top and also descending Gann line. Looking good, go long.




Buy above 265

4 points

272 / 276 / 279

Or dips to 260-59

4 points

266 / 269 / 271


]This banking counter witnessed a blast off rise last session, as prices opened up with a gap and was seen trading positive all thru the day. Ending near the highs they managed to breakout smartly from a strong valuation resistance near the 47 region. This has triggered a fresh buying opportunity here. Buy.




Buy above 49

1.5 points


Or dips to 48

1.5 points


Stocks to sell if market is weak


This stock has been unable to breach its short term resistance line of 100 DMA from many months and downward momentum still continues. Bears took control over the counter last two sessions. Even volumes were more than average during the downside. RSI also moved down afresh. Overall sentiment continues to remain weak. Sell.




Sell below 440

3 points

436 / 433

Rallies near 443

3 points

438 / 435


Buy Nifty if prices are above 5950. Stop 5915 tgt 5995

Sell Nifty below 5895 stop 5915 for drop to 5810.

Stocks in Action for the day: Henkel India, BHEL, Idea, Gravita India, GVK, L&T, Suzlon, Indo Asian

Dabur, Emami opt out of race to acquire Henkel India: Homegrown FMCG companies Dabur and Emami have opted out of the race to acquire controlling stake in the Indian subsidiary of German household goods maker Henkel. Jyothy Laboratories is now the likely frontrunner for Henkel India, Jyothy Laboratories acquired a 14.9% stake in Henkel from Tamil Nadu Petro Products for 60.7 crore last month.

BHEL FY11 provisional net up 40%, but order flows slow: Bharat Heavy Electricals Monday reported a provisional 40% year-on-year growth in its net profit for 2010-11 (April-March) at Rs 6,021 crore, setting a strong benchmark for other capital goods companies, which have been under pressure due to slowdown in orders.The state-owned power equipment maker reported a provisional turnover of Rs 43,451 crore, up 27.2% from a year ago.

Aditya Birla Group denies plans to sell off 'Idea': The head of metals-to-insurance major Aditya Birla Group denied on Monday it planned to sell Idea Cellular , India's third-largest mobilephone operator. Earlier, news agency Bloomberg, quoting three people with knowledge of the matter, said Idea Cellular's controlling shareholder was considering selling its stake and had held talks with potential buyers, including South Africa's MTN Group . Birla had told ET a few months ago that Idea was ideally positioned to be the most attractive acquisition target, but would be a buyer in the Indian telecom sector rather than a seller.

Suzlon CMP Rs 50, 52-week high at Rs 76.2 and low at Rs 42.8 (gained 12.5% in last 5 days) -Board approves issuance of FCCBS due 2016 with floor price of Rs 46.05 (cmp 49.65) -Market talk that Suzlon will raise $150 m via FCCBs Alert: board had approved raising upto Rs 5000 cr. Suzlon Says Have initiated 'Squeeze out proceedings' of REpower ((means it has to buy out remaining stake under German laws as it hold 95.16% stake)) Started squeeze out proceeding so that REpower becomes wholly-owned subsidiary Suzlon held 95.16% stake in REpower, to acquire remaining under German laws ((Under German law, the owner of 95% stake in a co is entitled to a squeeze-out procedure where minority shareholders' stake can be acquired on a compulsory basis))

Indo Asian Fusegear (up 12% yesterday Board to evaluate the re-alignment of the business into two segments from 3 segments, cash to be used for growth, expansion and diversification ((NO WORD ON PAYING BACK SHAREHOLDERS)) ((Indo Asian Fusegear sold switchgear business to Legrand for Rs 600 cr (including 70 cr to promoters) (present m-cap 143 cr)

Oil Secy Says Hope Cabinet Will Take Cairn- Vedanta Decision Soon Cairn May Need 'No Objection' From ONGC For Vedanta Deal Will Approach Fin Min For Additional Subsidy For FY11 Oil Cos Incurred Revenue Loss Of `78,000 Cr Last Fiscal Centre So Far Has Agreed To Compensate With `21,000 Cr Will Approach Fin Min In 3-4 Weeks For Addl Compensation International Global Crude Prices Very Grave OMCs Mulling How To Deal With High Crude Prices w.r.t Petrol Govt's Decision To Deregulate Petrol Prices Stands Still In Talks With Iran To Finalise Payment Mechanism

L&T Achieves financial closure for Rs 12,132 cr Hyd Metrorail Project; To get funding from consortium of banks; To make official statement about on 5th April in Hyd; L&T signed MoU with AP govt for project on Sept 4, 2010; As per MoU L&T should achieve fin closure in 6 months; L&T paid Rs 360 cr performance guarentee to govt in Feb, 2011; L&T asked for lowest viability gap funding from govt; L&T asked Rs 1,458 cr viability gap funding;

Ashok Leyland: March Total Sales (GU)21% At 12,168 Units (YoY) March Exports (GU)12% At 856 Units (YoY)

Govt Srcs: Com min keen on 51% fdi cap in multi brand retail Com min keen on limited roll out of fdi funded retail stores Com min wants fdi funded retail stores in 36 cities only Com min wants a min of $100m investment per foreign investor Com min wants min threshold amount to be invested in 3 yrs
Com min wants 50% fdi for back end infra development Process on allowing retail FDI only after political nod Draft cabinet nod to be prepared only after political nod

CESC mulls acquisitions in Nigeria to bid for stake in generation & distribution companies getting privatized (DNA)

Oil companies to lose Rs 174,126 cr on fuel sales in 2011-12 will be the highest ever even more than 2008-09 (ET)

Gravita India: acquired 60% stake in K. M. Udyog, to improve top and bottom line by around 65 Cr and Rs 3Cr respectively during the FY12

Atul Auto recorded total sales of 5927 vehicles in Q3

Electrosteel Castings enters into Joint Venture Agreement (JV) with Dart Energy Ltd

Blanket ban on plastic bags in Delhi – pti

Ashok Leyland plans a 2.5% hike in vehicle prices from April (HT)

GVK Group set to buy Australia based Hancock coal for $ 8 billion (BS)

Central Bank of India rights issue of 24 cr shares at Rs 103/sh opens on April 7 (cmp 146)


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