Tuesday, May 31, 2011

Stocks in Action for the day: Camlin, Rcom, Hexaware Tech, M&M.

Market Outlook: Indian markets are expected to open in positive terrain and trade in ranged manner. On the global space Greek debt fears weigh on euro, curb world stocks. Asian markets trading firm; Nikkei, Seoul Composite up. Overall outlook for the markets today is that of cautious optimism with 5420 levels as a major support and key resistance near 5500.

Global events to watch:

Þ Challenger Job-Cut Report.

Þ ADP Employment Report.

Þ ISM Mfg Index.

Þ Construction Spending.

Þ John Williams Speaks.

Global indices Update @ 8:

Dow Jones : 12441 (+38.82)

NASDAQ : 2796 (+13.94)

Nikkei 225 : 9615 (+110.5)

Hang seng : 23406 (+222.3)

SGX CNX Nifty : 5484 (+17.50)

Gold (USD/t oz.) : 1510 (+02.80)

Nymex Crude (F) : 101.3 (+00.75)

INR / 1 USD : 45.10

TECHNICAL OUTLOOK: Trend still uncertain...

We had a rather uneventful day yesterday. There were expectations that the market would do better, especially as some of the stocks and the Bank sector was looking ready to move. But those expectations were belied- to some extent. Not that the market traded badly- only, it did not do what was required. We have to be satisfied with minor signals of positivity. There was yet another upside gap (but this got filled during the day, though), so trend bias is still up. The Friday gap still remains unfilled. The index managed to jump up a tad from the daily pivot levels- so buyers are still in there, batting. Bank Nifty also showed a second gap (with similar happenings as the Nifty). Therefore nothing much has changed yet. We continue to remain in the same state of expectations as we were yesterday.

Stocks wise, it seems to have been a day for pharma - most of them staged gains. From these, Divis appears worthwhile yet. Cipla is staging one of its usual runs. Biocon is into recovery and may last a session or so more. Ranbaxy has run away a bit too far and presents risk for fresh entry. Those with pending longs, revise stop to around 525. Sun looks good for more. Auro is rallying but its trend is resolutely down so use rallies to short. Auto seems to be taking a hit. All of them, bar Hero Honda, are on a short term downtrend. Use rallies to sell. They are down right now so one would have to wait for the rally.

Option action was a bit limited. Notable was the addition to the 5500 C. Put additions appeared to be normal trading action and nothing specific that suggests directional plays. It is early yet so this space needs to be watched and not really acted on. A legged, short strangle could be contemplated. That is, sell the 5200 put now (around 30) and then wait to short the 5600C later (around 60-70). This way you could get a wider band for an expected range for June.

Pivot for the day rises to 5470 levels and that is the immediate resistance that has to be overcome. Watch for that and if it happens, then one can get slightly bolder on fresh longs. Weekly pivot at 5400 continues to remain the main stop for fresh longs or for dip buys. In Bank Nifty 10500 would be a dip-buy area. If rise occurs, this index has potential to reach 10900 this week.

STRATEGY FOR THE DAY: Bias is slightly bullish but the call is a bit guarded yet as the index is not showing the necessary strength. Also, sector and leader participations are quite limited. Markets cannot run when gainers are only stocks recovering from previous downmoves. It needs fresh buying to take it higher. This is absent yet but is what we are looking for to emerge. Mid and Small cap indices fared better than Sensex yesterday so that is a slight hint that some risks are being taken by players.

Stocks to buy if market is strong:

GMDC: Prices spurted sharply last session on aggressive buying and was seen trading positive all thru the day. Retaining all its gains they closed near the days high. Prices recorded new swing highs and helped boost the momentum readings as well. Consider going long here.




Buy above 145

1.5 points

148 / 149

or Dips near 143.5

1.5 points

146 / 147

BRITANNIA INDS Last three weeks have seen a steady rally in this counter. On the daily chart we find that prices last session managed to successfully breakout from a strong valuation resistance around 399-400 and closed above it. The rise was accompanied by high volumes and RSI has bounced up from 60 as well. Buy.




Buy above 410

3.5 points

415 / 418-19

Or dips to 404

3.5 points

409 / 411-12

Stocks to sell if market is weak:

EID PARRY: Prices have been on a steady decline the whole of this month, forming a series of lower tops and bottoms. Last week they broke the support of 200-EMA and yesterday we have seen further confirmation.




Sell below 207

1.5 points

204 / 202.5

Or Rally near 210

1.5 points

207.5 / 206.5


Buy Nifty above 5470 stop 5445 for rise to 5520.

Sell Nifty below 5440 stop 20 pts for a drop to 5405.


Buy Opto Circ above 290 stop 287 target 297

Sell Cairn below 340 stop 343 target 332

Stocks in Action for the day: Camlin, Rcom, Hexaware Tech, M&M.

Brokerage reactions

M&M -Macquarie cuts estimates by 5%, target cut to Rs 820 from Rs 860.

DB maintains Buy, target Rs 780.

Morgan Stanley says will revise numbers after meeting management.

UBS maintains Buy, cuts target to Rs 880 from Rs 910.

RBS says marginal risk to FY12 EPS, maintains Buy.

Citi cuts target to Rs 757 from Rs 771, maintains Buy.

Reliance Capital -Macquarie maintains Outperform, target Rs 600 -BoA ML cuts target to Rs 650 from Rs 700

Reliance Communications -Morgan Stanley maintains Overweight -BoA ML cuts target to Rs 95 from Rs 115, -Citi maintains Buy, target Rs 127 -UBS maintains Buy with target of Rs 195

Japan's Kokuyo to buy controlling stake in Camlin: Camlin, maker of stationery materials, said on Monday Japan's Kokuyo Co would buy up to a 50.3% stake in the company and form a joint venture in India to expand and modernise Camlin's present business. Under the terms of the agreement, Kokuyo would buy 10% in Camlin via a preferential allotment at Rs 85 a share. The Japanese firm would further buy 20.3% of Camlin from founders on fully diluted basis at Rs 110 a share and later would make an open offer for another 20% at the same price. We believe that Kokuyo and Camlin have complementary product portfolios and this joint venture will facilitate faster rollout of portfolio of products by Camlin. The joint venture would introduce Kokuyo's products, primarily paper and office stationery, in India and would open export opportunities for Camlin products. Kokuyo has an annual turnover of about USD 3.2 billion. Camlin generates annual revenue of USD 80 million.

Indian Oil Corporation may raise petrol prices by Rs 1.35/litre: Indian Oil Corp (IOC), country's biggest refiner, may raise petrol rates again by Rs 1.35 per litre as the fuel is still being sold below market rates, chairman RS Butola said after announcing that the company's net profit in the last fiscal year fell 27% because of low state-set fuel prices.

Reliance Communications to live with high debt, interest costs for a few quarters more: Reliance Communications' fourth quarter earnings, announced after market hours on Monday, will fail to offer solace to investors who have seen the stock beaten down on the bourses over the past two years amid intensifying tariff war and high debt. Its debt stood at more than Rs 32,000 crore at the end of March. What offers some comfort to investors is the Rs 8,700-crore loan facility that R-Comm signed with China Development Bank. The company completed drawing down of Rs 6,000 crore towards refinancing of 3G spectrum fees on Friday.

Indian Oil Corporation reported standalone net profit of Rs 7445.48 cr for the year ended March 2011 against Rs 10220.55 crore a year ago. Net sales increased to Rs 302954.37 cr from Rs 250894.44 cr.

Simplex Infrastructure reported net profit of Rs 36.98 crore for the quarter ended March 2011 against Rs 45.93 crore in the corresponding quarter a year ago. Net sales were at Rs 1365.38 crore as compared to Rs 1250.98 crore.

Mahindra & Mahindra posted net profit of Rs 606.54 crore for the quarter ended March 31, 2011 as compared to Rs 570.26 crore in the same quarter a year ago. Total Income increased to Rs 6825.57 crore from Rs 5322.75 crore.

JK Cement reported net profit of Rs 53.55 crore for quarter ended March 2011 as compared to Rs 43.90 crore in the same period a year ago. Total income was at Rs 679.70 crore as against Rs 543.28 crore.

Sarda Energy & Minerals has received consent from Chhattisgarh Environment Conservation Board to operate coal washery plant of 0.96 million tonne per Annum at Raigarh.

Areva T&D India has approved scheme for demerger of its distribution business to its wholly owned subsidiary Smartgrid Automation Distribution and switchgear.

NMDC reported net profit of Rs 20.98 crore for the quarter ended March 2011 as against Rs 10.65 crore in the corresponding quarter a year ago. Net sales were at Rs 37.69 crore as compared to Rs 19.83 Cr.

The Central Bureau of Investigation is probing Idea Cellular and the Tatas for alleged violations of licence conditions in 2005-2006. CBI officials say their investigation has been spurred by the similarity of these lapses to those allegedly committed by Swan and Reliance Telecom, whose executives have been arrested. The officials said they are also examining what an official described as the telecom department's "failure" to act against Idea and the Tatas.

Sun Pharmaceuticals posted a consolidated net profit of Rs 442.75 crore for the quarter ended March 31, 2011, driven by strong sales of its Israeli unit Taro. Net profit for the same period previous fiscal was Rs 394.47 crore. Net sales for the quarter stood at Rs 1,463.28 crore against Rs 1,080.10 crore in the same period a year ago.

Unitech’s net profit for year ended 2011 fell to Rs 567.66 crore, down 16 per cent from Rs 675.05 crore a year ago. Total income was at Rs 3187.09 crore for the 2011 period as compared to Rs 2956.84 crore a year ago.

Hexaware Technologies has signed a 3-year contract worth $ 25 million for providing remote infrastructure management services (Remote IMS) to an existing client.

IL&FS Investment Managers is selling its stake in a special economic zone in Gurgaon promoted by Ansal Properties, with a 20 per cent return in four years. IL&FS will also exit from the first phase of Ansal’s Esencia township project in Gurgaon after the mandatory lock-in of three years ends in August 2011.

IndianOil net profit plummets 30%.

M&M misses estimates, net up 6% at Rs 606 cr.

Vedanta may renegotiate price offer if Cairn accepts govt condition.

Panasonic aims to generate $2-bn revenue from India.

Nalco profit rises 31% on higher margins.


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