Tuesday, 30 September 2008

Analyst and Brokerage Views - 01/10/2008

Bank of Rajasthan can touch Rs 70-72: E Mathew

E Mathew told CNBC-TV18, "The chart of Bank of Rajasthan is not looking as encouraging as that of Axis Bank but yes, there is still headroom here. In fact Bank of Rajasthan when you look at it it’s a low-priced scrip, there is headroom upto Rs 70-72 which percentagewise works out to a very decent return."

Intact Uptrend in Axis Bank, says E Mathew

Technical Analyst, E Mathew is of the view that uptrend in Axis Bank is very much intact. As soon as the dust settles down in the market, this is certainly going to be an outperformer, he added.

Above Rs 110, Moser Baer has target of Rs 137: Mathew

Technical Analyst, E Mathew is of the view that above Rs 110, Moser Baer has target of Rs 137. It is also good for trading bet or even a very short-term investment call, he further said.

Buy ICICI Bank at Rs 500: Vijay

Vijay told CNBC-TV18, "I will buy ICICI Bank at Rs 500. I think its been driven by humongous set of room among us for last 20 days; first, insider selling and then questioning the provisions made and repeatedly the management has been saying, this is rubbish. I respect the ICICI Bank management, I think they do not tell lies, they are professionally run bank and if I believe what they said I think at Rs 500 it’s a screaming buy.”

Add ICICI Bank, target of Rs 650: Kotak Institution

Kotak Institution has maintained its add rating on ICICI Bank with a target price of Rs 650, reports CNBC-TV18.

Accumulate HCL Tech, target of Rs 258: P Lilladher

Buy ratng on HCL Technologies with a 12-month target of Rs 258 in its September 29, 2008 research report.

Buy Lupin, target of Rs 933: Motilal Oswal

We believe that the stock has the potential of getting rerated given the differentiated business model of the company. If the current INR v/s the USD rate sustains (@ Rs 46/USD), we expect an upside to our estimates. We reiterate Buy with a price target of Rs 933 (28% upside).

IT Companies worst hit

“The crisis is turning out to be worse than expected and I guess that some 600-800 small and medium banks in the US will go out of business as the credit flow dries up,” said Mr Phaneesh Murthy, CEO of iGATE Corp.

“As a result of this credit squeeze and consolidation, I think there will be a 15-20 per cent cut in IT budgets of financial services sector for 2009,” Mr Murthy added.

Celent estimates indicate that IT spending by financial institutions has already slowed down in past two years. IT spending stood at $342.1 billion in 2007, a year-on-year increase of 5.9 per cent, but lower than 8.7 per cent growth achieved in 2006.

“I guess there would be a moderate cut of 10-15 per cent because of consolidation and reduction in scale” Mr S.Sabyasachi, research director at neoIT, an offshore advisory firm.

Transformational and business process reengineering projects could take a back-seat as financial institutions look to efficiency to cut their costs, Mr Sabyasachi added

“As of today, 20 per cent of the IT budgets for 2009 will be cut,” said Mr Sudin Apte, analyst and head of for Forrester Inc’s India operations. Consolidation and disappearance of some large entities from the financial services arena would lead to budget cuts.

“There will be immediate scrutiny of new discretionary projects and compliance will become a key as government plans a bail-out package. As a result, there will be more spending on compliance,” Mr Apte said.

Recently Forrester said 40 per cent of the large businesses in North America and Europe have reduced their overall IT budgets for 2008 in reaction to a slowing economy.

About half of the financial services clients surveyed by Forrester have slashed their IT budgets for 2008.

Baseless and malicious - Kamath

In a statement, Mr K.V. Kamath, Managing Director and CEO, said, “ICICI Bank is aware that rumours are being repeatedly circulated in certain centres regarding the financial strength of the bank. The bank states that these rumours are baseless and malicious.”

The bank said the absorption of the impact of current market conditions on investment portfolio valuation will not pose any challenge to the bank’s capital position.

It has a capital adequacy ratio of 13.4 per cent as on June 30, 2008, which reflects the healthy capital position and comfortable level of leverage.

The stock on Tuesday, which had suffered heavy pressure on Monday, gained 8.42 per cent on the Bombay Stock Exchange and closed at Rs 534.85 against the previous close of Rs 493.30. On Monday, the share was down 12.11 per cent.

Sell Adani: CMP Rs 467

We recommend a sell in Adani Enterprises from a short-term perspective. It is evident from the charts that the stock has been in a long-term downtrend from its January high of Rs 1,335.

On September 29, the stock tumbled more then 9 per cent and found support around Rs 500 level, which is also the March trough. However, this halt proved to be temporary. The stock conclusively broke through this support level by declining 6 per cent with high volume on September 30, reinforcing the bearishness.

The counter is trading well below its 21 and 50-day moving averages. The daily and weekly relative strength indices are featuring in the bearish zone. Moreover, the daily and weekly moving average convergence and divergence are featuring in the negative territory. The long-term down trend line is intact and is still in place.

Our short-term forecast for the stock is negative. We expect the stock’s downtrend to prolong until it hits our price target of Rs 420 in the upcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 490.

Day Trading Guide - 01/10/2008


Initiate fresh long-position if the stock moves above Rs 550 with tight stop-loss.


In the last trading session, the stock found support at Rs 1,300 and recovered. Buy the stock in dips with tight stop-loss at Rs 1300.


On Tuesday, the counter gained 4 per cent with good volume and formed piercing line candlestick pattern, which signals bullishness. We recommend a buy in this counter.


Desist trading in this counter for the session, as the outlook is cautious.

Reliance Capital

The stock has formed piercing line candlestick pattern that signals bullishness. We recommend a buy.

Reliance Communications

Fresh long position can be initiated if the stock crosses Rs 342 level, with stiff stop-loss.

Reliance Industries

The outlook remains positive as long as the stock trades above Rs 1,900 level. Buy the stock in declines.

Satyam Computer

The stock has formed a spinning top candlestick pattern, indicating indecisiveness in the previous trading session. Avoid trading in this stock.


The stock rallied shaping a bullish engulfing candlestick pattern on Tuesday. We notice above average volume. We recommend a buy.


We retain our buy recommendation in this counter.

DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.