Market News, Views and Recommendations - 10/03/2014

Stocks in news:

Hotel Leela: Leela to raise Rs 2, 000 cr from KKR by pledging its properties in Chennai and Delhi to be used to pay off existing bank loans. Loan will be for a term of two years at 17% interest rate.

Sanghvi Brands: American Asset Management firm Tano Capital has bought minority stake in Sanghvi Brands for 62 crore.

Reliance Industries Ltd: In a damning indictment, the CAG has said Oil Ministry and its technical arm DGH approved notification of now flagging gas discoveries in Reliance Industries' KG-D6 block despite the company not doing enough appraisal.

JSPL, Tata Steel Ltd: The government has decided to give firms, including JSPL and Tata Steel, more time to seek clearances from Environment Ministry and furnish proof on the same to Coal Ministry by December 1, failing which their mines would be deallocated.

Financial Technologies, MCX: Jignesh Shah-promoted Financial Technologies (India) Ltd (FTIL) said it has appointed JM Financial Institutional Securities Ltd as the financial adviser for divestment of stake in its group company Multi Commodity Exchange of India Ltd (MCX).

Engineers India Ltd: EIL has won its largest ever overseas consultancy contract for a 20 million tonne oil refinery in Nigeria as it looks at markets abroad to more than double its revenue to $1 billion in the next 3-4 years.

Ranbaxy Laboratories Ltd: The drug major has recalled more than 64,000 bottles of the generic versions of its cholesterol-lowering drug in the United States due to reports of a dose mix-up, US regulators said.

State Bank of India: The country's largest lender, said on Saturday it has seen a little easing of stress on power sector loans on the back of fuel linkages, but is not looking for any fresh exposure to this sector
immediately.

Dishman Pharma: Dishman Pharmaceuticals and Chemicals Ltd is in talks to sell its 175 hectares of land in Gujarat to Nirma for about Rs 650 crore to cut its debt, said media reports.

Genmark Pharmaceuticals Ltd: The pharma major received fair trade watchdog Competition Commission of India (CCI) approval for the proposed merger of two subsidiaries with itself.

Reliance MediaWorks: The promoters of Reliance MediaWorks have offered to buy back shares worth at least Rs 251 crore from public shareholders as part of plans to delist the company.

NTPC: India's largest power producer has challenged the electricity regulator's order on tariff norms in the Delhi High Court. The regulations issued by Central Electricity Regulatory Commission (CERC) raised concerns about the company's earnings and triggered a steep fall in NTPC's shares, prompting the state-run firm to file a writ petition.

Market Update:

Indian markets are expected to trade in a range on Monday following muted trend seen in other Asian markets. The key support for the index is around 6,399 levels. "The Nifty is expected to trend up till 6600. In this period the key support will be at 6399 and resistance will be at 6600," said Somil Mehta, Senior Tech Analyst (Equity) at Sharekhan. 

"The Nifty has been forming higher tops and higher bottoms; it has also closed above the previous swing's high which is a positive sign for the market," he added. 

Mehta is of the view that the short-term bias for the market remains positive for a target of 6600 with reversal at 6150. The medium-term outlook remains positive as the index has started forming higher tops 

and higher bottoms on the weekly chart. 

Pre-market: Nifty likely to open flat; may retest 6,500 levels 

(Source: Economic Times)

The 50-share Nifty index is expected to open flat on Monday following muted trend seen in other Asian markets. Tracking the momentum, the index is expected to retest its crucial psychological level of 6500 in 

trade today.

At 07:30 a.m., Nifty India stock futures in Singapore were trading 36 points lower at 6519.50, indicating a flat-to-negative opening on the domestic market. 

Indian markets settled with sharp gains for third straight week led by recovery in rupee and also due to gains in sectors like realty, banks, capital goods and metals. 

The Sensex shut shop gaining 3.79 per cent while the Nifty rose 3.98 per cent for the week ended March 07, 2014. 

"Euphoria continues on Dalal Street for the fourth successive session with noticeable buying across the board. After closing at life time high in previous session, benchmarks opened on a firm note tracking positive global cues and maintained that bias till the end," said Jayant Manglik, President-retail distribution, Religare Securities Ltd. 

"We firmly believe that this positivity would prevail ahead as we have been noticing exceptional volume in cash segment with rise in price, which reflects buying interest at current levels," he added. 

Technically, Nifty has registered a breakout from the crucial trading range and closed at its all-time high. The averages have been surpassed while the "Broadening" pattern resistance has been taken out. 

"Going forward, Nifty has immediate resistance at 6550 levels followed by 6600 / 6690 levels," said Mitesh Thacker of miteshthacker.com. 

"So if Nifty fails to sustain above these levels, then it should be used to book profit on long positions. On the downside the critical support comes in at 6415 and a break below 6380 (on closing basis), would clearly accelerate declines," he added 

Thacker believes that this is an extremely important week for the markets that would tell us whether the move on Friday was a one-off case or a genuine case of outperformance. 

On Friday, U.S. stocks finished mostly higher with the S&P 500 closing at a record after more jobs than expected were created in February and January's figure was revised higher. 

The Labor Department report showed that U.S. employers added 175,000 jobs to their payrolls in February. Economists had expected a gain of 149,000 jobs, according to a Reuters poll. 

"But the overall sentiment was cautious and trading was volatile throughout the session as investors adjusted their positions ahead of the weekend and kept a close eye on the simmering crisis in Ukraine," added the Reuters report. 

The Dow Jones industrial average rose 30.83 points or 0.19 percent, to end at 16,452.72. The S&P 500 gained 1.01 points or 0.05 percent, to finish at 1,878.04. But the Nasdaq Composite dropped 15.903 points or 0.37 percent, to close at 4,336.223. 

Asian markets were trading lower lead by China which plunged as weak trade data signalled slowdown in the world's second-largest economy. 

"Chinese import and export figures released on Saturday showed an unexpected trade deficit of $US22.98 billion ($A25.37 billion), vastly different to a $US11.9 billion surplus economists had forecast," said media reports. 

Apart from weak China macro data, uncertainty over the crisis in Ukraine kept risk appetite in check. 

"Diplomatic efforts to cool the crisis in Ukraine calmed markets toward the end of last week, but rising tensions over Russia's intervention in Crimea have kept investors on edge," added the Reuters report. 

U.S. stock futures fell 0.2 percent from their record closing high on Friday. 

Japan's Nikkei 225 index was trading 1.02 per cent lower at 15,113.50 and Hong Kong's Hang Seng index was trading 1.44 per cent lower at 22,330.12. 

South Korea's Kospi index was trading 0.81 per cent lower at 1,957. 

China's Shanghai index was trading 1.3 per cent lower at 2,030. 

Nifty may be on its way to 6800 

(Source: Economic Times)

By Ashwani Gujral

Nifty breaks out of 6,415, and now looks set for a further move to 6,800. Bank Nifty, which broke out from 11,000, is showing enough momentum to touch even 12,000. This entire rally is happening as the market discounts a Narendra Modi-led NDA government after elections. 

It's clear that as flows increase into stock markets from foreigners, the rupee appreciates. India has dealt with current and fiscal deficits very well, and hence is outperforming emerging markets. It's important to understand that exporters could underperform and domestic policy and rate sensitives are likely to attract most of the buying. 

Weekly levels for the Nifty, Bank Nifty and CNXIT are 6,425, 11,481 and 10,139, respectively.

Adani Enterprise: It can be bought with a stop of Rs 250, as Gujarat stocks are likely to outperform till the elections. All Adani Group stocks are coming out of a massive bear market. The group is likely to benefit from a friendly regime. 

SRF: This stock has again broken out of a long accumulation as investors look beyond large and F&O stocks. It can be bought with a stop ofRs 240 and a target of Rs 365 is possible in this rally. 

Crompton Greaves: This stock can be bought with a stop of Rs 125 and a target of Rs 210 can be expected over the next few months. Capex is likely to pick up post correction and hence, capital goods industry is looking up. 

Escorts: This has gone through a strong correction from 150 down to 115, and is now picking up. agriculture and related stocks are showing uptrends, hence this can be bought with a stop of Rs 100 and the target is Rs 175. 

Market likely to touch fresh highs 

(Source: Economic Times)

Indian markets are likely to extend last week's gains, and the benchmark index NSE Nifty may touch the 6700-6800 levels, even as investors are expected to book some profits in the days ahead, say market experts. 

Strong flow of foreign funds into the Indian equity markets, along with easing of inflation numbers and recovery in industrial output data, which are likely to be released this week, can prop benchmark indices to fresh highs. "The spurt in market volumes indicates that Nifty can rally up to the 6700-6800 levels," said Amar Ambani, head of research at IIFL. 

"However, warnings of an imminent correction are getting louder, as market has moved to overbought levels. But any major correction should be used as an opportunity to enter the market," he added. 

The BSE Sensex surged 799 points, or 3.79%, to 21,919, for the week ended Friday, while the NSE Nifty gained 249 points, or 3.98%, to 6,526, during the same period. 

On the macroeconomic front, the government will release consumer inflation data for February on Wednesday, and wholesale inflation data on Friday. The consumer inflation in January had eased to a 24-month low of 8.79%, while wholesale inflation was at 5.05% in January. 

Analysts believe that a drop in inflation numbers can trigger a rally in rate-sensitive sectors such as banking and capital goods on expectations of interest rate cut in the coming months. "The rupee has hit a three-month high of 61.09 after current account deficit (CAD) narrowed to 0.9% in Q3FY14. Improving macro-economic environment has given foreign investors the much needed confidence about the stability of the country's external situation and its financing," said Deven Choksey,managing director at KR Choksey Securities, a domestic brokerage house. 

"Nifty may further extend gains in the market if the index holds above the 6420 levels. FIIs have been creating long positions in index futures and stock futures as they have bought over 1,800 crore in each of the segments," said Amit Gupta, head of derivatives at ICICI Securities.