News Views & Events 13th May 2013

News:

Ø  Tata Motors is considering producing another car, possibly a new compact car, alongside the small car at the Sanand plant.

Ø  Mahindra & Mahindra plans to modify some of its vehicles to help them avoid a 3% additional excise duty on sports utility vehicles as its sales have come under pressure.

Ø  DLF has sold 32 acre of land in Hyderabad for about Rs.650 Cr to Suvarnabhoomi Developers as part of its strategy to exit from the non-core assets and reduce debt.

Ø  New US Visa Rules to Hit Cognizant & TCS Most.

Ø  Lupin expects to launch 20-25 products in the American market every year in the next couple of years.

Ø  Germany's DVB Bank is in advanced talks with private equity fund India Star to purchase a 29% stake in Global offshore (formerly Garware Offshore) for around Rs. 100 Cr.

Ø  Oberoi Realty to Tie Up with Ritz-Carlton for City Hotel.

Ø  Shriram City Union Finance may raise around Rs. 325 Cr capital through either an institutional placement of shares.

Ø  Reliance Industries has sold off its holdings in four banks, HDFC Bank, Axis Bank, Canara Bank and PNB, but has tanked up its holdings in two others - SBI and ICICI Bank. 

Ø  Canara Bank plans to raise up to $1 billion through bonds this month from the overseas market to fund global business expansion. 

Ø  L&T in race for Rs 2,000-cr howitzer tender.

Ø  Bharti Airtel breaks up with Servion, ties up with Genesys.

Ø  Ashok Leyland has gone in for an organisational revamp by which it will create three different divisions: truck, bus and power solutions.

Ø  In Elder Pharma Ratnakar Bank has sold 1.4 lakh shares on Saturday at Rs.320/share. Promoter pledge at 80%. The stock hit 20% lower circuit on post the deal.

Ø  Ashoka Buildcon  board approves bonus issue in ratio of 1:2

Ø  Blackstone is in talks Life Insurance Corporation (LIC) to buy its stake in Stock Holding Corporation of India (SHCIL). IDBI set to lose battle for SCHIL. (IFCI with 34% stake likely to oppose the merger).

Key events for the day:

Ø  Board Meeting for Q4 Results:  Bank of India, BoB, Rel Power, Eicher Motors, Nestle, Tata Coffee, TTML, Amara Raja, 3i Infotech, Amtek Auto, Aptech, Blue Star, ABC Bearings, Amtek India, HMVL, Mawana Sugars, Network 18, TV18 Broadcast, Praj Inds, Rain Commodities, RCF, Thomas Cook, Titagarh Wagon, Zydus Wellness, Sterling Tools.

Ø  Release of USD Retail Sales m/m.

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Weekly Derivatives Strategist 13th May 2013

Weekly Data Feeler

 

Ø  Open Interest of Nifty future increased by 22.40% with a rise in price by 2.69% from the previous week, indicating built up of long position as market continued its positive momentum towards 6100 levels.

Ø  Bank Nifty also witnessed built up of long position as OI increased by 16.19% with the rise in price by 3.14% from the previous week.

Ø  Put Call Ratio based on Open Interest of Nifty moved up from 1.12 to 1.23 levels with the support of Put writing at all lower strikes. Now if Put Call Ratio sustains above 1.20 levels then momentum may continue in the market otherwise a consolidation or profit booking dip may be seen in coming sessions.

Ø  HV (Historical Volatility) of Nifty moved down from 18.53 to 17.72 levels.

Ø  Implied Volatility of Nifty moved up from 14.74 to 16.44 levels.

 

On the Option front, maximum Put OI is at 5800 followed by 5700 strike, whereas maximum Call OI is at 6200 followed 6100 strike. Fresh Put writing seen at 6000 strike which indicates that participants are expecting market to hold above 6000 levels. Fresh Call writing at 6200 strike may put pressure on the market on rise.

 

Nifty future moved well by more than 11% from 5480 to 6130 levels with the support of rising Put Call Ratio and also making higher high top - higher bottoms from last five consecutive weeks. Market has moved well and a small profit booking dip cannot be ruled out, but overall trend is positive and till it doesn't breach below 6080 levels positive momentum is likely to continue in the market.

 

Now if Nifty future sustains above 6080 levels then momentum may continue towards 6200 levels, longs can trail their position with the stop loss of 6080 levels. On downside if it sustains below 6080 levels then a profit booking dip may be seen towards 6020-5980 levels. Bank Nifty future is finding hurdle at around 12750 levels, if it sustains 12750 then it may head towards 13000-13300 levels. Bank Index has strong support at around 12500 levels.

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Weekly Wrap 13th May 2013

STOCK OF THE WEEK  - MAHINDRA & MAHINDRA

 

COMPANY BACKGROUND

 

o   Founded in 1945 as a steel trading company, M&M entered automotive manufacturing in 1947 to bring the iconic Willys Jeep onto Indian roads.  Over the years, they've diversified into many new businesses in order to   

o   better meet the needs of our customers.

 

o   M&M follows a unique business model of creating empowered companies that enjoy the best of entrepreneurial independence and Group-wide synergies.

 

o   This principle has led their growth into a US $15.9 billion multinational group with more than 155,000 employees in over 100 countries across the globe.

 

RATIONALE

 

 

o   M&M increased prices by around 3% over its UV portfolio after the govt announced an additional SUV tax in the FY14 Budget. With only the Quanto and the Verito outside the ambit of the SUV definition, the PV segment demand deteriorated in April. Mgmt has noted in press (Source: Economic Times) that the additional 3% tax burden will be significantly detrimental to the SUV segment. Mgmt's outlook is that of cautious optimism, with hopes of a positive impact from a possible interest rate cut by the RBI.

 

o   Mgmt has noted that the company could look into launching new variants / models that do not attract the additional tax i.e. lower than 1.5 liter engines, smaller than 4m in length and reducing the ground clearance to below 170mm.

 

o   Festival timing helps tractor volumes rise around38% YoY - With major festivals of Gudi Parwa and Navratras falling in April this year vs in March last year, April volumes for the tractor segment were robust. We think there could be a build-up of inventory on expectations of a strong monsoon and we should have more clarity over end May /early June.

 

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Fwd: First Morning Technical Call 13th May 2013

MARKET OUTLOOK

NIFTY (6107): CNX Nifty made a high above 6111.80, by marking its new  high for the CY2013 at 6114.55 which is also the highest level touched by the index in as many as 28months, and closed highest in 131 weeks too. Nifty  is in its lifetime high territory on Weekly closing basis ,where it has closed above 6100 for 6^th time which gives more reasons for 6357 all time high to be crossed and taken apart. For the day Nifty holding 6080 is important to target 6165 & 6200, while Nifty below 6080  could have chances of correcting below 6040 and can take support around 6020. DRREDDY R s.2091, has gapped-up(2029-2042) and made all time high Rs.2108 ahead of results on 14/May stock looks very good for 5-8% returns on higher side. YESBANK Rs.512 has closed highest in 59trading days and now all time high Rs.545 could be potential target in days to come. Market is on verge of major bull rally with political uncertainty being the only risk, so if fluid political conditions don't disturb the markets then Nifty crossing its all time high levels at 6357 in next few months could be possible once we see close above 6130.

SENSEX (20122): Sensex has closed highest in 123 weeks and 20203-20260 are important levels to be crossed with 19850 becoming very important support in short term. Today Sensex holding 20045 and crossing 20150 could possibly give an up move till 20203 & 20325 are possible levels on higher side while the index drifting below 19995 could open up gap levels on the down side and 19694 can be retested.

TECHNICAL CALLS

BUY ICICIBANK Rs.1168: ICICI BANK has made a pole and flag formation on daily charts, and within the flag the stock has formed an inverted head and shoulder pattern which suggests that there is more upside to be seen in the stock in the days to come, the stock's double top is at around Rs.1188 ,which if crossed could take the stock to its next levels on the upside at  Rs.1230 & Rs.1280 which could be potential targets for the stock. ICICI BANK is trading above 200DMA Rs.1067, 100DMA Rs.1119 and 50DMA Rs.1083.

BUY BAYERCROP Rs.1213: BAYERCROP after making all time high of Rs.1340 has corrected to low of Rs.1040 and has almost consolidated for 22weeks and now given triangle break-out and closed highest in 16weeks and all to cross all time high. The stock is trading above all major moving averages with the 200DMA at Rs.1108, 100DMA at Rs.1165 and 50DMA at Rs.1129.

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