Cairn India: Merger With VEDL May Face FIPB Hurdle---Broad Range 170-240 ?

Technically for Cairn (CMP:182), immediate support is around 178-175 & sustain below that it could fall to 170-164 area. Only consecutive closing below 164, it could further fall up to 140-100 in the near term under worst bear case scenario.

On the upside, sustaining above 185, immediate target may be near 190 zone & consecutive closing above that 195-197 might be the target in short term. In the mid term, sustaining above 197, it could target 205-210-215-221 & in the long term, only consecutive closing above 221, Cairn could scale 240-260 area under bullish market conditions (FY:16).

Bottom Line:Technical Trading Levels (Positional)

	SL</>2	FROM SLR
		Cairn	CMP	182
			T1	T2	T3	T4	T5	T6	T7	SLR
Strong >	170		175-178	183-185	190*	195-197	205-210	215-221	240-260	<165
Weak <	165		158-155	150	145	140*	126	115	100	>170

As par reports, apart from possible objection from its minority shareholder LIC & Cairn Plc against merger & subsequent deleverage of huge cash reserve in Cairn for debt ridden Vedanta (VEDL), Indian FIPB may raise tough questions for VEDL shareholding pattern in Cairn (Same promoter group).

Any merger negative news flow might be positive for Cairn India & negative for VEDL in the near term. 

As par BG metrics, current median valuation of Cairn India may be around 225 and projected fair valuations might be around 275-295-315 (FY:16-18 on consolidated basis) in the current market parameters.

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	LONG TERM	SHORT TERM	MEDIAN VALUE	200-DEMA	10-DEMA
CAIRN	23.89	306.19	10.57	241.49	208.59	225.04	230.94	172.31

CAIRN

35.7

349.05

10.57

295.20

254.99

275.10

230.94

172.31

CAIRN

40.35

399.65

10.57

313.84

271.09

292.47

230.94

CAIRN

46.45

458.5

10.57

336.73

290.86

313.79

230.94