Market Mantra: The Money Daily – September 30, 2015

Market Mantra


Rajan rocks! Market may roll ahead


The Indian stock market bucked the negative trend globally rallying into positive zone as the RBI gladdened the street with a 50 bps cut in Repo rates. Sharp fall in inflation to a 9-month low, contained food inflation due to reasonably good supply management policies of the Government, low commodity prices and possibility of prolonged weak outlook for commodity prices, room for non-inflationary demand pick-up and the need to revive corporate investments prompted the RBI move. The RBI will now wait to see movement in inflation, growth, government policy direction and action from US Fed before any further step. The focus of the RBI and the Government will now be on removing impediments to ensure maximum rate transmission by the banking system. Government has already announced a relook at small savings rates. Following the RBI’s policy, SBI has announced a cut of 40 bps in its base rate.


The outlook is a positive start. Asian markets are in the green while US markets ended mixed. The rupee is seen moving higher today as dollar sales are likely to continue by foreign banks.



Trading ideas (Time period: 1-3 days)


Muthoot Finance (BUY, above Rs162, Target Rs172, SL Rs157): It has confirmed a base building exercise, build a flat base after a period of sharp correction since early July 2015. Since last two weeks, the stock is moving in a trading range. Eventually this consolidation broke on the upside in yesterday’s trade. It is suggesting that the decline is over and the first step towards a new rally is beginning. Also, it has formed a Piercing Line pattern, which is considered a bullish candlestick reversal pattern. This formation appears during a downtrend. (Duration 5 days)



Derivative strategies (Time period: Till expiry)


²  Buy NIFTY Fut Oct above 7850 with SL of 7800 for target of 7920/7950

Lot size: 25

Remarks: Net maximum profit of Rs2,500 and net maximum loss of Rs1,250.



Corporate Snippets


²  Corporate snippets


²  Power Grid Corporation of India completed the construction and started power supply in its first ‘Power Transmission Express Highway’ or the longest HVDC power transmission corridor connecting northern states with north eastern region. The corridor would facilitate to and fro power supply as per seasonal demand and supply position. (BS)

²  NMDC Limited is planning to set up a small gold refinery in Tanzania next year. (BL)

²  The much-awaited soft launch of Reliance Jio’s next generation mobile services has been delayed by another month. Reliance Jio was on course to launch its own brand of handsets and run trial runs of its telecom service across the country by seeding handsets in September, but this has been deferred as the company is still ironing out last minute issues.

²  Shree Renuka Sugars said its Brazilian subsidiary has filed for bankruptcy protection as its operations were hit by a crash in sugar prices in the last two years. (BS)

²  Zee Entertainment Enterprises Limited (ZEEL) will launch a new television channel, Zee Magic, for French audiences in Africa. (BS)

²  Hero MotoCorp unveiled two scooter models, developed on its own, as it aims to consolidate its position in the fast growing segment. Maestro Edge, which is priced between Rs 49,500 and Rs 50,700 (ex-showroom Delhi) will go on sale from October 13. The roll out of the second model Duet would follow thereafter. (BS)

²  Suzlon Energy said it has completed the commissioning of 100.8 Mw wind power turnkey project for CLP India. The project is located at Tejuva, Jaisalmer in Rajasthan. (BS)

²  India’s largest lender, State Bank of India has cut base rate by 40 basis points to 9.3%, making it lowest in the country.

²  Videocon Industries Ltd has bolstered its product line with a new range of energy efficient air-conditioners, refrigerators and washing machines, while upgrading its television line-up with liquid luminous range. (BL)

²  SRS Group, which is foraying into the pharmacy segment, plans to open around 300 drug stores over the next three to five years in the country. (ET)

²  Nestle India has ended its contract with the lone third party producer of its Maggi instant noodles, SAJ Food Products, which means the Swiss food giant will no longer outsource production of the popular snack brand that was recently recalled on safety concerns. (ET)

²  Debt-ridden infrastructure firm Lanco Infratech has temporarily shelved asset disposal plans but would sell at least 3,000MW of power assets in FY18 fetching an enterprise valuation of Rs250bn to help retire a debt of around Rs 180bn. (ET)


Economy snippets


²  Reserve Bank of India cut the repurchase, or repo, rate by a higher-than-expected 50 basis points to 6.75%, the lowest the key interest rate has been in four years. (BS)

²  The Reserve Bank lowered its inflation projection to 5.8% for January 2016 and said it will aim to bring it down further to 5% by the end of next financial year. RBI had earlier projected inflation at 6% by January. (ET)

²  The government is likely to give incentives to sugar mills to pay cane growers, government and trade sources said, as part of efforts to help sugar companies saddled with large stocks and lower prices. Sugar mills owe Rs120bn to cane growers, as sugar prices have fallen more than 20%. (ET)

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