Market Outlook: Indian markets are expected to open flat on negative note mainly on the back of global unconstructive sentiments. We expect some sort of recovery in the second half of the markets. On the global space US stocks slip on worries over euro zone debt crises while Asia trading mixed; Hang Seng flat, Straits Times up. Overall outlook for the markets today is that of cautious optimism with 5325 levels as a major support and key resistance near 5450.
Results Today: Tata Global Beverages, DLF. Praj Ind, REC, Bharat Forge, Power Grid, Orbit Corp, Bombay Dyeing, Chennai Petro, Apollo Hospitals, Man Ind, TTK Healthcare, Titagarh Wagons, Mafatlal Finance, IPCA Lab, JK Tyres, Dhampur Sugar Mills, Blue Star, Technofab Engineering, Elecon Engineering, D-Link India, Entegra ltd, Goenka Diamond Dharani Sugars & Chemicals, Mandhana Ind, Uttam Sugar Ratnamani Metals & Tubes, Micro Technologies, Orient Green Power.
Global events to watch:
Þ New Home Sales.
Global indices Update @ 8:
Dow Jones : 12381 (-130.7)
NASDAQ : 2758 (-44.42)
Nikkei 225 : 9452 (-08.10)
Hang seng : 22691 (-19.78)
SGX CNX Nifty : 5376 (-06.00)
Gold (USD/t oz.) : 1516.1 (+00.70)
Nymex Crude (F) : 97.83 (+00.13)
INR / 1 USD : 45.28
TECHNICAL OUTLOOK: Market continues to tread on thin ice....
Market gave no chance to those that went away bullish on Friday. Opening with a down gap, it never could recover from that blow and continued to push lower. Even 5400 broke, no rally emerged so it became obvious that this time no defender was stepping forward. As a result we continued down to hit 5365, a target area that had been mentioned several times in our letters as the possible target zone. Pushing the market down yesterday was metals and cap goods as well as Banks. On Friday itself, the Banks had indicated a total unwillingness to rally and that hinted at trouble. Yesterday in fact the Bank Nifty has broken fresh supports and that is not good news. Bhel got pulverized after results showing that market is in a mood to punish any offenders. It is not exactly rewarding those that come out with good news. So the sentiment is still clearly biased to the downside.
Call writing in near the money strikes was brisk and the IVs jumped up even in June and July series (it is normal for IV to move in May during expiry week). PCR has sunk to 0,87 and continues to warn of bearish posture. Nifty roll is only around 26% and it is interesting to find that the cost of long roll has come down from around 14 levels to around 2.50 by yesterday. Long holders are clearly staying away for now and we could even see the roll spread get into a negative- i.e. June series may start trading at a discount to May series. So readers wanting to roll long could take a chance to wait. But do keep a track of this spread as we move ahead this week. Those who trade spread window in expiry week could attempt to short roll now and then wind that down in the next month or if the roll spread narrows to a discount ahead in this month.
Featured chart today is NF daily with modified Gann angle lines. Note that the price is at a make or break point. It is at the support trendline that has shored up the previous two dips into this line. Will it do so again? Yesterday was a TCD and hence we have a price and time match. But some times when the trend is strong, prices actually speed up from TCDs. So be on alert today. A rise past the first 15 minutes without much breaking yesterday lows would be the first signals that things may be on a mend. However, if prices were to start trading below 5350 then move aside or short for a decline to the next target around 5280. Daily pivot appears far at 5400 and hence look for that as a resistance for the day first and only if that is overcome then can we think bullish. Note Bank nifty status below as an added indicator.
One of the more hopeful signals for the day is that the Bank Nifty has reached the support Gann angle line on the daily charts yesterday. Now if it can sustain above yesterday's low of 10330 or recover quickly above it, then we could hope for some redemption. So more than the Nifty, we suggest readers should watch out for the Bank Nifty today as it may well hold the key to the near term trends. Its daily pivot is at 10460 and look for this to be exceeded as a confirmation of revival.
STRATEGY FOR THE DAY: Weak overseas market coupled with bearish undercurrent continue to keep the market under pressure. Capital Goods, Power and Banking took the brunt witnessing some sharp declines before expiry. However with market finding some feet near our current levels one can expect some revival. As Nifty and Bank Nifty have reached their short term support a revival from these two major trend setters could see some buying emerge. Stock action may continue to be focused on the large caps names so concentrate there for tradable.
Stocks to buy if market is strong:
ECLERX SERVICES Current week has started on a bright note for this particular counter with prices outperforming the market and rising all thru the day. The closing also has been on a strong note and prices have just about breached a crucial valuation resistance around 770 and closed just above it. Look to buy.
| Entry | Stop | Target |
| Buy above 772 | 7 points | 783 / 790 / 795 |
| or Dips near 764-62 | 7 points | 774 / 781 |
GLODYNE TECH Prices plunged last session on heavy sell off, moving to new swing lows and closing there as well. In doing so they have staged a breakout from a strong valuation support formed by last few bottoms around 350-49 levels and closed below it. RSI has seeped further south into oversold levels. Sentiment looking quite weak here, go short.
| Entry | Stop | Target |
| Sell below 341 | 5 points | 333 / 329-28 |
| Or rally to 347-48 | 5 points | 340 / 337 |
Stocks to sell if market is weak:
ALSTOM PROJECTS This counter has been on a continuous descent this month with prices failing to produce any follow thru to rally attempts and fizzling out each time. Last session too a similar move was seen with prices turning lower and giving a fresh sell signal. RSI has turned below 40 once again. Sell.
| Entry | Stop | Target |
| Sell below 546 | 5 points | 538 / 534-33 |
| Rally near 551-52 | 5 points | 544 / 540-39 |
NIFTY RECOMMENDATIONS FOR THE DAY:
Buy Nifty if high of first 15 minutes is crossed OR buy if gap down and then begins to trade above 15 min high. Stop 25 points and target 60 points.
STOCK FUTURES RECOMMENDATIONS FOR THE DAY:
Buy Titan above 4201 stop 4175 target 4265-4285
Sell Aban below 558 stop 563 tgt 551
Stocks in Action for the day: ONGC, DLF, Hotel Leela, Vascon Engineers
Sesa Goa: Not In Possession Of SFIO Report Yet Have Given Statements, Documents Required By SFIO Aware SFIO Has Approached Other Regulators Unable To Comment Until Co In Possession Of SFIO Report SFIO Probe Pertains To 2001 Onwards Bulk Of Docs Pertain To Period Before Vedanta Bought Co 90% Of Investigation Related To Period Prior To 2007 'Was Interrogated By SFIO' Have Not Received Any Demand Tax Notice From I-T Dept Have Been Very Transparent; Fully Cooperating With Probe Haven't Gone To MCA On SFIO Report Being Leaked To Media Registrar Of Cos Asked For Information In July 2009 Submitted Part Of Documents, Info Asked By Registrar Of Cos Will Deal With Matters After Seeing SFIO Report
SAIL of deferring FPO Only Rescheduled Pre-marketing Road Shows At Few Places Board Has Cleared RHP For FPO Exact Time Line Of FPO After Assessing Market Conditions Will Decide On FPO Timeline & Then Start Road Shows Never Said SAIL FPO On June 14 Market Conditions Are Erratic Right Now Not In Tearing Hurry To Launch FPO No Problem With SAIL FPO; Need To Launch FPO At Right Time
Divestment Secy Says SAIL FPO May Be Slightly Delayed Have Put Off Only 1st Leg Of SAIL FPO Roadshow ONGC FPO On Track To Hit Markets In Early July National Building Corp IPO, BHEL FPO To Follow ONGC Issue
J&J to acquire JB Chem’s OTC brands for $260 mn Cilag GmbH to acquire OTC brands of JB Chem & Pharma for $260 million in cash (Rs 1170 cr in cash results in Rs 138 cash per share) Brands included are RINZA, DOKTOR MOM and other brands J&J LLC to market these products Russia is the world’s 8th largest OTC market Transaction expected to close by mid 2011
IOC Chairman Under-recoveries On Diesel This Fortnight At `16.49/L Under-recovery On Diesel For Q4 At `6,900 IOC's Share Almost Half In Q4 Petrol Price Hike A Function Of International Prices
Decision On Price Hike Should Be Taken By Govt 'Should Be Fully Compensated If Prices Not Hiked' Capex Plan For The Year At `12,000-13,000 Cr
Fin Min sources Say ONGC FPO likely in 1st week of July Clarity on subsidy sharing before FPO Fin Min, Oil Min working on subsidy sharing formula
Steel Secy says SAIL FPO likely to hit market on June 14 Road shows to resume in 1st week of June Final decision on SAIL FPO by Wednesday
Divestment secy says ONGC FPO to be followed by NBCC IPO NBCC IPO to come up for cabinet approval shortly: Divestment secy NBCC to be followed by BHEL, MMTC: Divestment secy RINL IPO likely towards end of FY11: Divestment secy Working on some more PSUs for IPOs: Divestment secy Indian Oil FPO unlikely in CY 2011: Divestment secy
JFE Steel, Marubeni In Advanced Talks For 20% Stake Each In Minda Grp Co
BHEL Says Bagged Total Orders Of `64,076 Cr In FY11 Out Of Total Orders `46,393 Cr Orders Came From Power Sector Industry Segment Booked Orders Totalling 11,374 Cr In FY11 Co Order Book As On March 31 At `1.64 Lakh Cr
Tata Chem Says Demand Outlook In India, China & Latin America Is Robust General Chemicals Saw A Good Performance
GAIL Says Borrowing plan of Rs 3225 cr for FY12 Paid OMC's subsidy of Rs 902 cr in Q4 Paid highest subsidy so far in Q4FY11 If not for subsidy would have shown profitability of appx Rs 900 cr Board has approved $ 150 million ECB from BK of Tokyo Will borrow additional $ 300 million from overseas markets, combination of ECB & bonds
Hotel Leela Okays Raising Up To Rs 1,000 Cr Via QIP, FCCBs
Sasken Communication buys back 21.62 lakh shares for Rs 34.43 cr
Himalya International India & J R Simplot Company, USA sign MOU to form Joint Venture in India
Vascon Engineers has bagged new projects worth Rs 1186 cr
F&O Ban: Deccan Chronicle, Orchid Chemicals, Power Finance Corp, Punj Lloyd
I&B Ministry gives a nod with a hike in the FDI capital to home TV, internet protocol from 49% to 74% but ministry rejects TRAI recommendation to reduce FDI ceiling from 49% to 26% for the local cable cos (ET)
Core Projects & Technologies set to acquire UK based education consulting services firm ITN mark for about $ 25 million
RBI paved way for the holding company structure for financial entities & the apex bank has to be the sole regulator of financial holding companies
Mawana Sugars looks to sell off its chemical business helping the co to reduce its debt in the sugar business from Rs 470 cr to under Rs 200 cr (BS)
Gammon Infra is planning to sell stake in two infrastructure projects for raising around Rs 300 cr to meet the expansion plans (BS)
GoM gives a go ahead for the construction of power projects in Orissa with a combined capacity of about 10,000 mw also helping NTPC to start off with its held up projects (FE)
Jayanti Prime Software Advisory Pvt ltd has made an Open Offer to acquire 8.6 lakh shares in Indian Infotech & Software ltd at Rs 18.5/sh
Promoters of Hindusthan National Glass look to sell around 7.5% of the cos shares & may raise around Rs 135 cr & invest in an unrelated business (Mint)
NALCO is planning to hive off its power subsidiary into a separate co in the next two years (DNA)
Smartlink Network System: Declared Special Interim Dividend of Rs. 30/- sh The special dividend is after selling Diglink biz to Schneider Elect.
Kingfisher Airlines Q4 (Derived) QoQ Rev at Rs.1679cr vs 1676cr ( exp 1655cr ) Net loss of Rs. 350cr vs net loss of 254cr ( exp net loss of 426cr ) Interest cost lower QoQ at 289cr vs 339cr due to conversionof debt Depreciation cost QoQ at 62.1cr vs 61cr Post conversion, Kingfisher debt has reduced by Rs1495 cr (Gross debt at Rs 7920cr at end of Y10) with lending banks now owning 23.4% stake in KAIR FY11- Reported its first ever annual positive EBITDA Rev up 25% at Rs. 6359cr vs Rs. 5089cr EBITDAR at 1124cr vs 404cr ( earnings before lease rentals ) EBITDA at 140cr vs loss of 690cr OPM at 2.2% vs -13.2% Net loss lower at Rs. 1027cr vs net loss of 1647cr Fuel expenses up 26% at Rs. 2274cr vs Rs. 1803cr Aircraft lease rentals down 10% at 984cr vs 1094 cr
Karnataka Bank Q4 FY11 NII: Rs 205 Cr Vs Rs 120 Cr (Up 71%) PAT:Rs 90 Cr Vs Rs 74 Cr (Up 22%) CAR: 13.33% Vs 12.37% Other income: Rs 82 Cr Vs Rs 73 Cr (Up 12%) Employee Cost: Rs 137 Cr Vs Rs 47 Cr (Up 191%) Gross NPA: 3.97% Vs 3.73% Net NPA: 1.62% VS 1.31% PCR: 60% FY11 NII: Rs 612 Vs Rs 270 Cr (Up 127%) PAT: Rs 204 Cr Vs Rs 167 Cr (Up 22%) Other income: Rs 291 Cr Vs Rs 378 Cr (down 23%) Rs 190 Cr: Total pension & gratuity liability Rs 57 Cr debited to P&L account Balance amount of Rs 94 Cr to be amortized over next 4 years
Everonn Education Q4 FY11 YoY Rev +38% to Rs 134 cr vs Rs 105 cr EBITDA +62% to Rs 52 cr vs Rs 32 cr OPM 38% vs 31% PAT +59% to Rs 26 cr vs Rs 16.4 cr FY11 YoY Rev Rs 425 cr vs Rs 294 cr EBITDA Rs 155 cr vs Rs 101 cr OPM 36% vs 34% PAT Rs 67 cr vs Rs 45 cr
Hotel Leela Q4 FY 11 Net Sales up 17% at Rs 526 Cr vs Rs 449 Cr PAT dn 7% at Rs 38 Cr vs Rs 41 Cr - due to higher interest burden of 57cr Total Exp dn 12% at Rs 439 Cr vs Rs 393 Cr EBITDA up 25% at Rs 155 Cr vs Rs 124 Cr EBITDA Margin at 29.5% vs 27.6%
Rane Brake Lining Q4 FY 11 Revenue up 29% at Rs 84 Cr vs Rs 65 Cr PAT doubled at Rs 4 Cr s Rs 2 Cr Total Exp up 25% at Rs 78 Cr vs Rs 62 Cr EBITDA up 67% at Rs 10 Cr vs Rs 6 Cr EBITDA Margin at 11.9% vs 9.2%
Birla Cotsyn Q4 FY 11 Revenue up 39% at Rs 142 Cr vs Rs 102 Cr PAT at Rs 4.7 Cr vs Rs 30 Lakhs Total Exp up 37% at Rs 133 Cr vs Rs 97 Cr EBITDA up 57% at Rs 11 Cr vs Rs 7 Cr EBITDA Margin at 7.7% vs 6.9%
Andhra Petrochem Q4 FY 11 Net Sales at Rs 157 Cr vs Rs 1.6 Cr Net Profit at Rs 14 Cr vs Net Loss at Rs 4.4 Cr Total Exp at Rs 134 Cr vs Rs 8 Cr
Balaji Telefilms Q4 FY 11 Revenue dn 0.4% at Rs 44.5 Cr vs Rs 44.7 Cr Net Loss at Rs 1.1 Cr vs Net Profit at Rs 3.4 Cr Total Exp up 27.3% at Rs 47.5 Cr vs Rs 37.3 Cr
Bannari Amman Spinning FY 11 Net Sales up 55% at Rs 549 Cr vs Rs 355 Cr PAT up 1.6 Times at Rs 39 Cr vs Rs 15 Cr Total Exp up 45.7% at Rs 456 Cr vs Rs 313 Cr EBITDA up 77% at Rs 120 Cr vs Rs 68 Cr EBITDA Margin at 21.9% vs 19.2%
Bannari Amman Sugar FY 11 Revenue dn 6.4% at Rs 827 Cr vs Rs 884 Cr PAT dn 63% at Rs 53 Cr vs Rs 144 Cr TOtal Exp up 10.4% at Rs 753 Cr vs Rs 682 Cr EBITDA dn 40% at Rs 145 Cr vs Rs 240 Cr EBITDA Margin at 17.5% vs 27.1%
Smartlink Network System FY 11 Revenue up 13% at Rs 195 Cr vs Rs 173 Cr PAT dn 5.6% at Rs 24 Cr vs Rs 33 Cr Total Exp up 18% at Rs 179 Cr vs Rs 152 Cr EBITDA dn 27% at Rs 24 Cr vs Rs 33 Cr EBITDA Margin at 12.3% vs 19.1%
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