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1. BUY ITC

2. BUY GMR INFRA

3. BUY SAIL

4. BUY NMDC

5. BUY RELCAPITAL

MARKET OUTLOOK- 10TH APRIL, 2015

Dear Customer,

 

Markets always tend to be interesting with something or the other happening all the time. Our Morning Mantra is released before the opening bell and it includes the market commentary along with Corporate & Global news for the day.

 

• U.S. stocks closed higher on Thursday, with energy shares leading the advance as crude oil rebounded off a sharp decline, while investors bet that companies would top lowered expectations this earnings season.

Dow Jones	17958.7	+56.2	+0.31%
Dow Futures	17887.0	+58.0	+0.33%
Hangseng	26952.6	+8.2	+0.03%
Nikkie	19920.9	-16.9	-0.08%
SGX Nifty	8806.5	-2.5	-0.03%

 

• Asian stocks pared their second weekly advance as Japanese shares fluctuated around a 15-year high and investors considered the outlook for Hong Kong equities amid this week’s surge. Australia’s dollar gained with oil.
• Market is expected to open on flattish note but may see some profit booking during the day.
• Warburg Pincus sells 27% stake in Metropolis back to Shah family. Financial details of the deal were not yet disclosed.
• The telecom regulator slashed ceiling rates by 23% on calls and 75% on texts while roaming from May 1.
• IndiGo & Jet Airways have revised ticket cancellation penalties on passengers Raising prices in some cases by 50%-100%
• Fitch Affirms India At BBB-, Outlook Stable Raises FY16 Real GDP Growth To 8% & 8.3% For FY17
• Sarla Performance Bulk deal - Dinero Wealth Advisors Private Limited buy 58549 shares at Rs 410. Own Leasing Private Limited buy 70000 at Rs.410. Tata Trustee Company limited sell 150000 Rs.410.18
• 3 banks refuse to fund Adani Project of Adani Enterprises
• Biocon says insulin Glargine gets nod from Mexican Health Authority
• Sun Pharma Advanced Research Co (SPARC) will replace ING Vysya Bank in the S&P BSE 200 index from April 16.Balkrishna Industries will replace ING Vysya Bank in the BSE S&P 500 index.
• Apollo PE to sell 3% stake in Dish TV via block deal, price range is Rs 81-85/sh. Moneycontrol
• VRL Logistics – IPO Note: VRL logistic IPO looks good. They are in sub truck load B2B logistic. Not like Gati which is in express cargo B2C logistic. Company fundamentals are strong with consistent high operating cash flow and ROE of over 20%. In good time company revenue has grown at 25% in FY11 and FY12 it slowed down in FY14 and FY15 to around 14%. In FY16 we have considered 15% growth. We expect company to do Rs.14.3 EPS in FY16 and on diluted Equity share is offered at 14.4 times which looks very attractive. If the share trade at 18 PE than share price can be Rs.258. Considering the valuation of other logistic companies like snowman Gati etc it may even get higher multiple.Subscribe
• Information Technology – Sector Preview – Institution Desk: With the global information technology (IT) services industry growing in low single-digits in recent times and Indian IT services industry in low teens, there is a shift in market share currently in favour of India heritage players. Large West-based players (except for Accenture and to some extent CapGemini) have steadily lost share even in renewal contracts. Until a few years ago, in a contract renewal situation, the win rate (anecdotally) of an incumbent was possibly as high as 80%-90%. However, things seem to have changed quite dramatically over the past few years as some India heritage players, or even players like Accenture have started taking the share away from the West-based incumbents. The win rate of the disruptors has apparently gone up to as much as 30%-40% in case of contract renewals. We believe the competitive landscape has expanded significantly over the past five-seven years, with some weak West-based players getting marginalised while some strong India-based players have stepped up to the plate. With the convergence of capabilities, strategies and delivery models, we believe the larger set of vendors ensures a significantly better bargaining power for the customers, especially in a contract renewal situation.  We believe India-based players, who have become the disruptors in the contract renewal space, will be the incumbents of tomorrow and therefore need to continuously provide productivity improvement for their customers. This means sustained investments in solutions, automation, etc and a cap on pricing. Structurally speaking, not a happy situation for margins.

 

• Results Announced

Bajaj Corp	Result ahead of expectation. Sales came at 235.4cr vs exp 229cr EBITDA came at 74.1cr vs exp 68.5cr PAT came at 54.4 cr vs exp 53cr Share is trading at 29.5 PE FY16 earning
CMC	Result is ok Company is merging with TCS

 

• Result to be Announced (PAT Rs cr)

Companies	Mar’14	Dec’14	Mar’15 Exp
11th April
Indag Rubber Ltd	6.34	7.43	na

 

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MORNING MANTRA NIFTY OUTLOOK- 10TH APRIL, 2015

Nifty (8778.30, +63.90, +0.73%)
The Nifty posts the fifth successive higher close in the wake of a very wildly gyrating trading session! Bulls continue in their domination, and today they are ably assisted by the bank stocks. After three trading sessions, the bank bulls were strongly back in action when poor fellows like us—analysts—were lamenting about the lack of participation from them. The Nifty closed at the strong resistance zone’s upper quartile. It needs to take out the 8800-mark decisively to move further up while everybody now seems to be gung ho about reaching the 9000-mark or posting a new high we need to digest things one at a time: let us first see conclusively that the Nifty takes out the 8800-mark; once that is done then we would like it to get past 8849 – 8892, the next strong supply zone. However, once the latter zone is taken out then there would be high probability of the index attempting to post a new all-time high.

There had been large scale short covering in 8000 through 8600-strike April Nifty calls in that the call option writers have bought back quite a sizable chunk of their erstwhile short sold positions here. The only exception had been the 8700-strike call where they added nearly 2 lakh units in Open Interest (OI). Interestingly, they also added over 7 lakh units in OI for the strikes 8900 through 9000. Thus, selling at higher levels in the Nifty call option market continues to happen. The Nifty put option writers did not, however, show much enthusiasm today to create fresh positions compared to the quantities they were adding in the past few days…Interesting development; in all likelihood, the last and final battle between the bulls and the bears is going to be fought in today’s session—a trading day that could really turn out to be the most significant day for this upswing.

• Most critical levels for the day: 8789 - 8800 (upside) & 8724 - 8681 (downside)


• Strong resistance: 8782 - 8810


• Strong support: 8724 - 8681


• Major support: 8632 - 8613


• Major resistance: 8849 - 8892

Bank Nifty (18416.60, -52.70, -0.29%)

After a pause on the first three days of the week, the Bank bulls are back in action with full gusto. Banks had been the weakest among all the sectors in the recent past if you leave aside the metals. Today, they started showing strength almost right from the word go. The bank index has managed to take out the resistance around 18781 quite ably backed by a lot of volume activity and fresh long position build-up as seen through good quantity April series put writing and major covering in the calls already sold earlier. Today, from a technical point of view, this index looks better placed compared to the Nifty, which did not show as much long addition as the Bank Nifty in proportion to their recent activity; of course, it is but quite natural.

If the Bank Nifty were to get past the 19000-mark and stay above 19050 through 19150 range then we could see this index doing its almost routine job of pushing the Nifty higher and higher. However, any failure to get past the 19000-mark after showing so much of a recovery in the last session would mean weakness may resurface at any point in time. It is imperative for the Bank Nifty to stay above the 18785-mark, where its 50-dEMA is located. For the Bank Nifty to remain bullish, this is the bare minimum requirement now.

• Most critical levels for the day: 18785


• Strong support: 18664 - 18550


• Strong resistance: 18990 - 19150


• Major support: 18449 - 18341


• Major resistance: 19313 - 19595

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