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MOSt Market OutlookDate: Tuesday, March 12, 2013
World Markets Market Outlook Positive
Hangseng
SGX Nifty 5968.5 18.5 Expect market to open on a positive note on account of global cues. US Dow climbed 0.3%, closing at
a record high for the fifth consecutive trading day. S&P 500 gained 0.3% and is less than 10 points
away from its all-time closing high. Stocks have been supported by better-than-expected economic
data. Asian markets are trading up by half percent. IIP and CPI number will be key data announced
today. RBI credit policy will be announced on 19th March. Both CPI and WPI (14th march) data will be
important factors to drive the RBI rate decision.
Dow 14447.29 50.22
Nasdaq 3252.874 8.507
FTSE 6503.63 20.05
Nikkei 12391.84 42.79
23193.75 102.93
London Metal Exchange(LME) Rates
B.Crude$ 110.21$ -0.01
Copper 1,909.25$ -14.00
14.75
Zinc 1,937.50$ -17.50
Aluminium 7,725.25$
Research Updates:
We expect L&T to continue momentum on account of attractive valuation, strong Q3 result and order
book. L&T is our top pick among the capital goods space.
Govt. has failed in its second attempt of spectrum sale, due to high reserve price and limited spectrum
put up for sale. None Of the operators had applied for participation in 1800MHz and 900MHz band
spectrum auction. Idea and Bharti our top pick among the telecom space.
INDIA ECONOMICS: Feb-13 trade deficit at 8-month low on falling non-oil imports; real INR
Nifty Trend
Trend Reversal
Short Term Intermediate Term
10 DMA* 20 DMA*
5802 5850
INDIA ECONOMICS: Feb-13 trade deficit at 8-month low on falling non-oil imports; real INR
appreciates; provides policy space to RBI to cut rates - - During Feb-13, exports grew at a higher rate
than imports after a gap of seven months. The value of exports at USD26b was the highest in any
month of FY13 so far; this level of exports was first achieved as far back as in Dec-10 and was much
less than the highest exports of USD30b in Mar-11. Feb-13 trade deficit at USD15b was at eight
month low and fell significantly from the second highest level of USD20b just a month back.
HAVELLS India: Proposed special resolution to hike FII limit / enter into new business segments- -
HAVL has proposed the following resolutions for the shareholders approval: i) Increase in FII limit
from 24% to 40%, with the cap of single FII at 10% ii) Entry into several new segments like
UP UP
from 24% to 40%, with the cap of single FII at 10% ii) Entry into several new segments like
kitchenware, stabilizers, UPS, inverters, batteries, dispensers, water purifiers, utensils, consumer
durables, FMCG products, lifestyle products, etc. - Management had increased the dividend payout to
25% in FY12 from ~12% in FY11 and we believe that given the robust free cash generation, payout
ratios can further increase. Maintain Buy
Buy
MOSt Velocity (Reiterate Buy) (Medium Term with few months horizon)
Tech Mahindra Company description
Tech Mahindra (TECHM) is part of the USD12.5b Mahindra Group. It is one of India’s largest software
exporters and serves telecom service providers, equipment manufacturers, software vendors and
systems integrators. It has offices in over 13 countries, employs over 50,000 people, and its key
clients include British Telecom (BT) and AT&T.
Key investment arguments
Current Market Price 1,108
Maximum Buy Price 1,110
Portfolio Allocation 5.0%
Tech Mahindra
is part of the USD12.5b Mahindra Group. It is
one of India’s largest software
exporters and serves telecom service
providers, equipment manufacturers, software
Key investment arguments
Deal pipeline is healthier than that in the past couple of quarters and the environment has steadied in
comparison to the gloomy outlook in the recent past. Deal activity is strong in verticals like healthcare,
while manufacturing is steady. BFSI is seeing deals around risk, governance and compliance.
Satyam's acquisition will help Tech Mahindra to diversify its client base and industry focus. Large deals
like those of Bharti and a gradual revival in the telecom vertical will help volume growth. Deals have
kept growth coming (outside the BT account) despite challenged IT budgets in the telecom vertical.
Valuation and view
Motilal Oswal Securities Ltd., Motilal Oswal Tower, Level 6, Sayani Road, Prabhadevi, Mumbai 400 025
providers, equipment manufacturers, software
vendors and
systems integrators.
Valuation and view
We value TECHM at a 25% discount to our target multiple for HCLT due to: [1] relatively
smallerscale, [2] skew of revenues towards telecom vertical and [3] increasing proportion of BPO
revenues. Our target price for TECHM is INR1,225, which discounts FY15E EPS by 10.5x
Motilal Oswal Securities Ltd., Motilal Oswal Tower, Level 6, Sayani Road, Prabhadevi, Mumbai 400 025
MOSt Market OutlookDate: Tuesday, March 12, 2013
Nifty Technical View
:
:
:
Nifty Technical View
Nifty The Nifty’s uptrend remains in fine fettle. The next headwind should emerge at
5970 followed by 6000. Over the immediate term, a consolidation could be in the
offing due to the sharp run up observed in the last few days from the level of
5650. Support on the downside should emerge at 5850 followed by 5800.Support 1 5850
Support 2 5800
Resistance 1 5970:
:
:
Resistance 2 6000
Reversal Level 6000
Resistance 1 5970
:
:
: 12250
Support 1 12050
Support 2 11750
BANK NIFTY
Resistance 1
Bank Nifty has also seen a smart rally from the level of 11400 indicating that the
current advance could have more steam left. The next resistance for the index
should emerge at 12500. Support on the downside should come at 12000
followed by 11400. :
:
: 12500
12250
Resistance 2 12500
Reversal Level
Resistance 1 followed by 11400.
Motilal Oswal Securities Ltd., Motilal Oswal Tower, Level 6, Sayani Road, Prabhadevi, Mumbai 400 025Motilal Oswal Securities Ltd., Motilal Oswal Tower, Level 6, Sayani Road, Prabhadevi, Mumbai 400 025
MOSt Market Outlook
Date:
Stock Name Value Chg
Current Level 5945 +82 pts
Premum/Disc. 9 -14 pts
NSE OI (# Shrs) 18.9mn +0.2mn
SGX OI (# Shrs) 24.9mn -
Tuesday, March 12, 2013
Nifty Future Internals
Nifty Options OI Ch. ( # Shrs in Lacs)
FII Trades in F&O (Rs Bn.)
OIPCR (Extremes) India VIX (Extremes)
Nifty Option Internals
Sector OI
Nifty
No Change in futures OI, neither on NSE nor on SGX despite of the movement, which is surprising.
In options Puts saw relatively larger additions than Calls. While on Calls we saw Credit spreads with
writing on 6000 Call & Longs in 6100 CE, on the put side there were bear spreads observed with
5900 Put being bought and 5700 being sold into.
Stocks
Fresh Longs were seen in Realty and Private Banks but with lower intensity, Transportation saw
fresh shorts.
Among specific stocks fresh longs were seen in IGL, Union Bank, HDFC, while Asian Paints & DLF
saw continuing longs. Adani Ports & Apollo Tyre saw shorts.
On the unwinding front HDIL saw notable unwinding of longs, while Andhra Bank and OBC witnessed
short covering.
Bias
Uptick in the implied volatility from lower extremes and soaring OIPCR advocates caution especially
near the congestion zone of 6000, which is perceived to be a big hurdle.
Heaviest Call (OI) Heaviest Put (OI)
1.17 ( Up 1.13; Dn 0.72) 14.3 (Up 17.8; Dn 12.5) 6000 (9.2mn Shrs) 5700 (12.9mn Shrs)
Long
20.0
25.0
30.0
-5.0
0.0
5.0
10.0
15.0
20.0
55
00
56
00
57
00
58
00
59
00
60
00
61
00
62
00
63
00
64
00
65
00
Call OI Ch Put Oi Ch.
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Short
Long
Long
Long
Unwin
ding
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
IDX Fut IDX Opt STK Fut Stk Opt
-5.0
0.0
5.0
10.0
15.0
20.0
55
00
56
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57
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58
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59
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60
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61
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62
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63
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64
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65
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Call OI Ch Put Oi Ch.