Friday, October 7, 2011

TECHOUTLOOK : Support for the Nifty is at 4730 and resistance at 4960.

Market Outlook: Indian markets are expected to open with a gap-up trend on the back of constructive sentiments seen on the global markets. Domestic momentum is now driven by upcoming IIP data due on Oct 12th. We expect growth number to remain subdued as a dozen interest rate hikes and a wobbly world meant purchase orders were tapering off.

On the global space: The US markets finished at session highs logging a three-day rally led by financials, after the ECB announced new liquidity measures to support banks in the euro zone. The Dow soared 1.68%, to close above the psychologically-important 11,000 mark. European markets close higher; Dax up 3.15%. Asian markets are trading higher; Hang Seng gains 3.8%

Back to Indian Markets are following global cues, so we continue to hold a cautious outlook with support 4730 and resistance at 4960.

Global events to watch for today:

Þ Monster Employment Index

Þ Employment Situation

Þ Wholesale Trade

Þ Consumer Credit

Global indices Update @ 8:

Dow Jones : 11123 (+183.3)

NASDAQ : 2506 (+46.31)

Nikkei 225 : 8618 (+96.94)

Hang seng : 17662 (+490.2)

SGX CNX Nifty : 4920 (+56.50)

Gold (USD/t oz.) : 1658 (+05.50)

Nymex Crude (F) : 82.47 (- 0012)

INR / 1 USD : 49.19

TECHOUTLOOK : Support for the Nifty is at 4730 and resistance at 4960.

Call for the day:

SELL Idea Cellular Stoploss 96.40 Target 92/89.70.

BUY India Infoline Stoploss 65 Target 75/77/85.

BUY Steel Strips Wheels 225 as resistance which if sustains the stock will perform well with a target of 252.

Stocks in action for the day: M&M(-), UltraTech(+), Karuturi Global(-), UTV(+).

IDEA Additional Solicitor General Gives DoT go ahead to issue notices to Idea Cellular and Spice Showcause Notice To Idea For Canceling Punjab License Additional Fine Proposed To Be Levied On Idea For Punjab Showcause To Idea On Violating Rollout Obligations Grounds Additional Liquidated Damages To Be Levied On Both Cos Rs 50 Cr Liquidated Damages To Be Levied On Idea Cellular

M&M Says Production at Rudrapur unit stalled due to curfew Production at Rudrapur unit stalled for past 3 days

UltraTech September Cement Output At 2.77 mt

Carlyle Group ups stake in India Infoline to 9% Buys stake In India Infoline via secondary market purchase Carlyle group to be offered board seat Promoters Not Looking To Dilute Stake In Co We Have No Plans To Offload Stake In Other Businesses Carlyle Will Help Us With Our Intl, Institutional Plans Not In Talks With Other PE Players Carlyle Is Free To Pick Up More From The Secondary Mkt Carlyle Has Not Disclosed The Deal Size No Plans To Split Business At This Point

Dewan Housing Finance Corp in stake sale talks with PE’s to raise Rs 500 cr (ET)

Walt Disney acquires all of UTV’s IndiaGames for around Rs 390-400 cr
: The Walt Disney Company has acquired all the equity in UTV’s Indiagames for an estimated $80-100 million (Rs 390-490 crore), said industry sources. Indiagames is a leading developer and publisher of mobile and online games. Walt Disney had announced the acquisition of UTV Software Communications for Rs 2,000 crore. However, UTV had only 58 per cent stake in Indiagames. Another 42 per cent was held by its founder and promoter, Vishal Gondal, and investors such as Cisco Systems, Adobe and others.

NMDC lines up Rs 2450 cr capex for various mining projects (BS)

Shipping Ministry halt’s SCI expansion plans to expand fleet, diversify into ship building & operate ports (FE)

Karuturi Global’s 30,000 acre corn crop in Ethopia destroyed due to floods (DNA)

F&O ban: ABG Shipyard, Gitanjali gems

How to trade in SBI, Punj Lloyd & SSWL now?

In an interview with, Prashanth Tapse, AVP Research, Mehta Equities gave views on three stocks which were buzzing on Wednesday. The same is as follows:

State Bank of India (SBI): Country`s top lender, SBI took a beating on the bourses for the second consecutive session losing more than 3% after Moody`s downgraded its rating of the bank`s financial strength. Global credit ratings firm Moody`s on Tuesday downgraded its guidance on SBI`s financial strength by one notch to `D+` on account of the lender`s low Tier-I capital ratio and deteriorating asset quality. As per Moody`s, a `D` rating suggest ``modest intrinsic financial strength, potentially requiring some outside support at times``, while a `C` rating denotes ``adequate intrinsic financial strength. We compared with other leading bank the standalone rating for SBI`s private sector peers, like ICICI Bank, HDFC Bank and Axis Bank, stands at `C-`

On overall basis with the above rationale we are negative for short term prospective hence we expect concerns on greater margin compression, lower loan growth and sharp rise in long bond yields and pressure on the government to infuse capital in the country`s largest lender as soon as possible. Technically the stock can test 1,650, which could be an ideal level to ``Accumulate`` the stock.

Punj Lloyd: The stock is been in frontline from last couple of days on the back of winning EPC contract from Qatar Solar Technologies for the first polysilicon plant of Qatar and is scheduled to be commissioned by mid-2013. The contract is a part of Qatar Solar`s plans to set up a plant worth around USD 1 billion in Qatar, to manufacture 8,000 MTPY of high-purity solar grade polysilicon. The scope of work includes design, engineering, procurement, supply, manufacturing, fabrication, route survey wherever required for over dimensional consignments, installation, construction, testing, pre-commissioning and commissioning. Technically we advice investors to Buy on every dip as we see the stock is in extremely oversold position and one can expect bounce back a target of 60. On overall basis we are positive on the business scenario.

Steel Strips Wheels (SSWL): Automotive steel wheels maker SSWL was in action on the back of reports stating that it has bagged a long term contract with one of Europe`s leading Trailer manufacturer. This contract has a potential to reach 60000 wheels per year with an approximate value of 220 million per year. Supplies will start from Oct 2011 from the Company`s Jamshedpur plant. The Company is also in discussions with other OEMs in the same industry for similar volumes which will also start flowing in the current quarter. While last month we have seen sales have fallen 14.43% in September to 7.53 lakh vs 8.80 lakh rims as the domestic car sales has gone down.. We believe that the rise in petrol price and the interest rate hike by Reserve Bank of India (RBI) has drastically affected the domestic cars which in turn affected the steel strips rim sales. Steel strips have achieved a growth of 262% in sale of truck wheels and 50% growth in sales of tractor wheel rims but reported a decline of over 20% in the sales of car wheel rims for September.

Technically the stock is been one of the weaker stocks on charts and hence we avoid to take a call on this counter. We believe 190-200 level would be a strong support and 225 as resistance which if sustains the stock will perform well with a target of 252. Overall the stock is under pressure discounting the above news.


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