Sunday, 5 October 2008

20 Microns fully priced at issue price

Here is a verbatim transcript of Udayan's comments on CNBC TV18. Also see the accompanying video.

The 20 Microns is too small company. It has just about Rs 100 market cap. It is not a bad company in the minerals and minerals processing space, which supplies to the paints industry primarily. The only interesting subscription figure was that QIB, which has hardly bought it but retail was done 10 times. So, maybe this is small ticket items which will see lot of action on the first day.

It is possible that 20 Microns sees some kind of excitement because of the retail participation but it trades at about 12-time odd current years’ earnings and one could buy TCS at that price. So I don’t think valuations leave a whole lot on the table as such.

It is a decent company and in a decent space but almost fully priced out. And after initial excitement people will just forget about it. Smallcaps don’t have too much center of our mind space in this market right now.

Source: MoneyControl

DLF touches 52-week low

DLF has touched a 52-week low of Rs 308. At 10:23 am, the share was quoting at Rs 309.70, down Rs 26.7, or 7.94%.

It was trading with volumes of 357,089 shares. On Friday the share closed down 2.56% or Rs 8.85 at Rs 336.40.

BSE Realty Index tumbles and is trading down close to 7%. Drop in volumes have made the analysts cautious on real estate sector. There are concerns of credit crunch in realty sector. Experts say that property prices have already dropped by 10-15% & are slated to drop further post festive season. Also, with rate hikes home loan rates have gone further, which will eventually lead to drop in sales. Slowdown is seen in the real estate sector.

Currently the shares is trading 74.72% below the 52-week high of 1,225.00

Source: MoneyControl

Jaiprakash Associates loses further ground

At 11:07 am, Jaiprakash Associates was quoting at Rs 103.80, down Rs 12.3, or 10.59%. It has touched an intraday high of Rs 114.80 and an intraday low of Rs 103.60.

It was trading with volumes of 1,511,365 shares. On Friday the share closed down 2.35% or Rs 2.80 at Rs 116.10.

Source: MoneyControl

Brokers bullish on Cairn India, Indiabulls Real

Merrill Lynch has initiated coverage on Jindal Steel & Power with underperform rating, with a target of Rs 1044

Karvy has kept buy rating on Cairn India, with a target of Rs 287

Kotak Institution has initiated coverage on Indiabulls Real Estate with buy recommendation, with a target of Rs 275

Emkay has kept buy rating on Aban Offshore, with a target of Rs 3868

Credit Suisse has maintained underperform rating on HCL Tech, with a target of Rs 190

Macquarie has maintained outperform rating on JSW steel, with a target of Rs 1460

Source: MoneyControl

20 Microns looks weak: Tulsian

Investment Advisor SP Tulsian is of the view that 20 Microns is looking weak.

Tulsian told CNBC-TV18, "20 Microns is very weak stock because if you see they have 4-5 very small plants, the turnover is now less than Rs 100 crore, even if I include their trading turnover though the management has been saying that it is an outsource turnover. But even the utilization of the fixed assets turnover ratio is less than 1; the company is quite heavily leveraged with a debt equity ratio of 1.5 to 1. If you see the fate of the other mining or mineral companies whether it is Ashapura Mines, Sesa Goa; they are all ruling at a PE multiple of anywhere between 3, 4 and 5. I do not think any meaning of giving any higher multiple for this company because this definitely falls into the smallcap category, may be once we will see this speculative momentum for sometime may be a week or so, ultimately the stock has to get settled anywhere between Rs 25-30."

Source: MoneyControl

N-deal windfall: L&T eyes Rs 3,000 cr/yr orders over 15 yrs

AM Naik, Chairman, Larsen & Toubro (L&T), feels the nuke deal stands to benefit Indian power companies. “The opportunity to the Indian industry is the order of magnitude of about Rs 2.5-3 lakh crore. When you divide that by 12-15 years, we are basically talking about Rs 15,000-20,000 crore per year. Of that, L&T is targeting roughly 25-30% of it per year. Let us say, Rs 3,000 crore roughly per year and more,” he says.

Source: MoneyControl

Punj Lloyd best in infra space: Sukhani

Technical Analyst, Sudarshan Sukhani is of the view that Punj Lloyd is probably the best chart in the infrastructure space.

Sukhani told CNBC-TV18, "Punj Lloyds is probably the best chart in the infrastructure space. It is doing a correction in an ongoing bull market. In fact that is surprising. So that is the first stock I would pay attention to whenever there is a sense that stability is coming in the market."

He further added, "There is nothing for JP Associates. I must remind you that this stock moved up from Rs 5 to Rs 500 so even Rs 100 may be high. It is very difficult to make a call. The charts are not telling us that there is a buying opportunity. It is falling, let it fall and find its level first."

Source: MoneyControl

Expect lot of pain in IT space: Bandyopadhyay

Sudip Bandyopadhyay, Director and CEO of Reliance Money is of the view that there is going to be a lot of pain for the IT sector at least for another couple of quarters.

Bandyopadhyay told CNBC-TV18, "The IT companies will not be the right place to look for the market because they have a big problem coming because the US market still gives them about 50% or 60% of their total revenue, they are dependent on BFSI and they will be in trouble for some time, they have to really work hard to compensate the loss of businesses, which definitely they are going to see. Some of the high-end businesses and some of the spaces where there is a distinct cost advantage, they may attract a little more business but they will suffer definitely because they will loose many of their clients. As far as the rupee is concerned, they are expected to benefit but I think most of the companies would have hedged their positions and the rupee depreciation benefit will not be apparently clear in their financial results as far as this quarter is concerned. But going forward and there is going to be a lot of pain for the IT sector at least for another couple of quarters."

Source: MoneyControl

Lakshmi Mittal loses 16.6 bn pounds in global meltdown

NRI steel tycoon Lakshmi Mittal has lost 16.6 billion pounds in the global credit crunch owing to plummeting stock markets in the last four months, media reports said here on Sunday.

The 58-year-old Mittal heads a list of ten super-rich losers who together have seen their share portfolios shrink by about 23 billion pounds from their peaks, The Sunday Times claimed.

Another NRI entrepreneur Anil Agarwal, who built up his metals empire, has seen his stock plummet by 2.7 billion pounds.

The height of Mittal's losses dwarfs those of others in the list of top 10 losers, which include Mike Ashley, the beleaguered owner of Newcastle United football club and the retailer Sports Direct.

Mittal has seen his family's stake in ArcelorMittal, the steel conglomerate, fall from 33.24 billion pounds on June 4 this year to 16.63 billion pounds at the close of Friday's markets. The loss is equivalent to 137 million pounds a day or nearly 6 million pounds an hour.

The credit crunch losses were established by comparing the value of shareholdings around the world held by them at their peak with the value at the close of markets last Friday.

Tim Bouquet, author of a book on Lakshmi Mittal, said the tycoon's lifestyle was well suited to less ostentatious times.

"He's very careful with money, he knows where most of the pennies go," Bouquet said. "He likes to joke that on his plane he serves pizza rather than champagne. Mittal's idea of a good time is to order Chinese takeaway from Zen Central in Mayfair in London."

Mittal is also joint owner of Queens Park Rangers with Bernie Ecclestone, head of Formula One, and Flavio Briatore, managing director of the Renault Formula One team. They sparked protests from their fan base last weekend after raising prices for some games to 50 pound, the most expensive tickets in the Championship so far.

Source: EconomicTimes

Why India stands largely insulated from global financial crisis

The collapse of the mighty global financial system has triggered a series of chain reactions in India, but the impact is not going to be as widespread as earlier imagined.

The collapse of the mighty global financial system has triggered a series of chain reactions in India, but the impact is not going to be as widespread as earlier imagined. The reasons are numerous.

First, the subsidiaries of collapsed investment banks like Lehman are being bailed out by entities like Nomura of Japan. This includes the 2,500-strong back office operations in Mumbai, apart from the smaller securities set up. Similarly, American Insurance Group (AIG) in India has a tie-up with the ever reliable Tatas who have given thumbs up to all consumers who were worried about their insurance carried out through this vehicle.

Second, and even more significant, is the fact that the conservative approach to reforms in the financial services sector has ensured that the tremors of earthquakes in the US are being felt minimally in India.

A meeting a few days ago of the regulators for the pension, insurance and other similar sectors concluded with a sigh of relief and pronouncement that slow and steady opening up of the economy has helped in the long run. This is not to say that capital account convertibility - or making the rupee freely tradable - will not take place. But probably as the regulators have pointed out, this can happen when the economy is at a more mature stage.

Ultimately, therefore, the big losers in the global financial crisis in this country are likely to be the iconic software firms like Infosys, Wipro and Tata Consultancy Services (TCS). Much of their business comes from the erstwhile giant investment banks and that could affect their profitability in the short term. In the medium-to-long term, however, these companies are likely to have greater resilience given their innovative approach in the past to hunting out new markets and customers.

The other area where worries still remain is the pullout of funds by foreign institutional investors from the country's equities and debt markets. The bourses have been showing considerable volatility ever since the news came in about the failure of Lehman and the domino-like effect on other investment banks.

While the Indian stock markets became volatile, they have not crashed as might have been expected initially. They now seem to be stabilizing as safety nets are being created for collapsed banks, like converting Goldman Sachs and JP Morgan into commercial banks while other banks are picking up some entities cheap like the takeover of Wachovia by Wells Fargo.

As far as the US and even Europe are concerned, the ramifications appear to be unending as the scenario is unfolding into the biggest banking crisis in 100 years. Financial institutions considered to have a rock-like stability including Merrill Lynch, Morgan Stanley and the Lehman Brothers collapsed within days of each.

Some were rescued through various manoeuvres and only Lehman actually declared bankruptcy. Reports reaching here also indicate that many smaller banks are declaring insolvency in the US - a development not being taken note of by the international media which is focusing on the big fish. Thus average people in the US are facing severe hardship. No wonder then the battle is being described as one of Main Street vs Wall Street.

Source: EconomicTimes

Tata Motors drops to 52-week low on Nano pullout

Tata Motors shares hit a 52-week low after the automaker decided to move the location of its low-cost Nano car making factory out of Singur f
ollowing violent protests by farmers.

Announcing the pull-out of the two-year long troubled project in Singur, Tata Motors Chairman Ratan Tata said his company was looking at alternate sites in some states for rolling out Nano car by the promised deadline of December this year. Uttarakhand, Gujarat, Karnataka and Maharashtra are in the race for the project.

At 11:30 am, the company's shares recovered its losses and were trading 0.82 per cent higher at Rs 333.40 in a weak market after falling to a low of Rs 320.25.

Source: EconomicTimes

Sensex plunges by 472 points on weak global cues

The Bombay Stock Exchange bellwether Sensex on Monday plunged by over 472 points at 1115 hrs following weak global cues.

Asian indices were down by nearly three per cent during early trade today due to continued global uncertainty even after the passage of the revised multi-billion rescue package for the troubled US financial markets, traders said.

The 30-share BSE barometer was quoted at 12,053.39 at 1115 hrs, sharply down by 472.93 points or 3.78 per cent from its previous close after stocks of metal and realty sectors bore the brunt. Declining rupee also led to the downward movement of stocks.

The 30-share index fell to a low of 12,120.19, immediately after resumption of trading.

Similarly, the 50-share Nifty of the National Stock Exchange dipped below the 3,700 level and lost 146.70 points or 3.78 per cent to 3,671.60 at 1115 hrs from its last close.

Global investors were of the view that USD 700-billion financial market rescue package may not help prevent any likely recession in the global economy.

Source: EconomicTimes

Free Intraday Stock Trading Tips for 6th Oct. 2008

Moser Baer, Sell at Rs. 108, Target- Rs. 100, Stop Loss- Rs. 114
BPCL, Buy at Rs. 372, Target- Rs. 386, Stop Loss- Rs. 365

Source: bsestocktips

Buy Hero Honda, says Vijay

Portfolio Manager, PN Vijay is of the view that one can buy Hero Honda.

Vijay told CNBC-TV18, "I will buy Hero Honda because they are in that segment, which is going to improve rural demand. Within the two wheeler segment they seem to be holding their own and most importantly if one took the view that next six months credit should ease; Hero Honda will be a great beneficiary. So it has been holding on in this bad market and it will still continue to outperform."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Source: MoneyControl

Pick Infosys in IT space, says Vijay

Portfolio Manager, PN Vijay is of the opinion that in the IT space one can enter Infosys Technologies.

Vijay told CNBC-TV18, "Getting very mixed signals on IT. Satyam owners saying that they are strong about their guidance and the markets reacting wrongly to business prospect for the company. Satyam has been the most beaten down of all the IT majors. So on one side people are scared that business is going to be dented because of the meltdown in the Wall Street but on the other hand rupee has depreciated so much. So it’s difficult to say but if one were to enter IT obviously one would enter Infosys."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Source: MoneyControl

Buy Reliance Industries: Vijay

Portfolio Manager, PN Vijay is of the view that one can buy Reliance Industries.

Vijay told CNBC-TV18, "I do not look at share prices and buy stocks generally. One needs to look at valuations; Reliance Industries is a good buy at the current levels. But today the markets being takeover by traders, so investors are running away; the gas production coming in, the refinery coming in, the resolution of the gas pricing; Reliance is a fantastic long-term buy. The refining margins are under pressure for the refinery things including Reliance. But I would still say at this type of pricing it’s a steal."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Source: MoneyControl

Buy Bharti Airtel: Vijay

Portfolio Manager, PN Vijay is of the view that one can buy Bharti Airtel.

Vijay told CNBC-TV18, "I would buy a Bharti. I would not buy Idea because the losses are still there. We do not know enough information about Reliance Communications, what it is really doing. Bharti is a very clean and sweet play, EBITDA margin is still holding out and growth is there for everyone to see and the new 3G spectrum etc will increase the value added services and unfortunately in the general fall Bharti has got beaten out of shape. I think Bharti around Rs 700-720-730 levels is a very good long-term buy, it should give you 30% in the next one year."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Source: MoneyControl

What I learnt from Rakesh Jhunjhunwala

INDIA'S answer to Warren Buffet. The stock market’s ‘big bull’. The pin up boy of the markets: Rakesh Jhunjhunwala.

He made a fortune by investing in the stock market. From an initial amount of Rs 5,000, as it is rumoured, he has made Rs 5,000 crore in just over two decades!

Jhunjhunwala once said humorously, "Markets are like women; always commanding, mysterious, unpredictable and volatile." And yet he lorded them. There is a lot I learnt from his investing quotes, and there's something in it for you too.

-- Invest in a business and not a company.
Jhunjhunwala identified and invested in Pantaloons much before the market discovered it. Today, he is gaining from that investment. That's because he invested in the potential of the underlying business (of organized retail in this case) and it's first mover advantage.

-- Maximise profits and minimise losses.
Cut losses and move on with life. At the same time, hold on to winning stocks till their business has achieved its full potential.

-- Always have an independent opinion. Observe and read relevant information with an open mind.
Jhunjhunwala believes in doing his own research before investing. A good example: he was lapping up the ignored Indian Public Sector (PSU) stocks when the herd was after the IT stocks during the late nineties. He made a fortune investing in PSU stocks, while many lost their shirts during the dot com led market crash in 2000.

Source: MoneyControl

Sterlite Ind top loser on the Sensex

Sterlite Industries is the top loser on the Sensex. It has touched a 52-week low of Rs 354.40. At 10:39 am. the share was quoting at Rs 354.40, down Rs 41.35, or 10.45%.

It was trading with volumes of 322,826 shares. On Friday the share closed down 7.84% or Rs 33.65 at Rs 395.75.

Currently the stock is 68.91% below its 52-week high of Rs 1,140.

Source: MoneyControl

Reliance may lead last bit of fall

Here is a verbatim transcript of Udayan's comments on CNBC TV18. Also see the accompanying video.

Reliance has been quite an expensive commodity stock and therefore I think it is coming under quite a bit of pressure. The stock had collapsed to Rs 1,750 kind of levels. Even now it is trading at about 16-times current years’ earnings that is very expensive as a commodity stock. Of course there is sum of parts etc and next year gas may come, so may be it is not as expensive as it looks optically.

Even if you look at EV/EBITDA, it is trading at 10-11 times. You won’t find too many commodity stocks in the world even in the energy space, which are trading at higher PE multiple or EV/EBITDA multiple as Reliance is trading right now.

The thing is that Reliance means something else to the Indian market. It’s our biggest stock and therefore there is certain revered quality about it. But for most FIIs who are on sell mode now, it is just another emerging market commodity stock, which they own a lot of. That perhaps is the problem with Reliance that it is very well over owned by lot of global institutions who are trying to raise capital from markets like India. Reliance is probably a most liquid and easiest stock to sell down now to raise cash.

So I think the twin problems of very heavy ownership which is now unwinding, pulse added with the kind of valuation that Reliance still trades at, makes it a difficult one. Today because of the warrant conversion news it might pop up but we have seen in the past Reliance keeps jumping upto Rs 2,200 kind of levels or Rs 2,100 more recently and then slips once again. So may be the downside is not quite done with this stock and it may still lead in one sense the last bit of the fall in the market.

Source: MoneyControl

Sudarshan Sukhani advices to sell on rallies

Sudarshan Sukhani of Technical Trends feels that the market may not bounce back today. If the 3800-4650 levels break then there is a target of 3000. Moreover, he feels the global enviornment is not good, so any recovery or a rebound seems difficult. "The trading would be to wait patiently and sell on rally for today."

Here is a verbatim transcript of the exclusive interview with Sudarshan Sukhani on CNBC-TV18. Also watch the accompanying video.

Q: We started the day once again well under 3,800, do you think we will bounce back again like the last four times? How would you trade?

A: I do not think we are going to bounce back today. Once we break down from 3,800, the technical picture changes dramatically. We have that very large trading range between 3,800 and 4,650, which has lasted for almost four months. Now that range is in imminent danger of being broken down into. That gives us a target, which is roughly more than 3,000. It may or may not happen but the trend is visible, it is down. We are breaking down from a significant pattern, so broadly the bear market is alive and kicking. For today, the environment outside India is so bad that the idea of a recovery or a rebound is difficult. The trading would be-wait patiently and sell on rally for today.

Q: Do you have any levels in mind for trading?At what point you cut your shorts if the market gaps down and at what point you initiate fresh shorts again if there is a pullback for a trader?

A: I am assuming that the market will gap down and anything close to 3,800 then, will be an excellent level at which you can initiate a short position.

It's a difficult call on where to cut shorts because if the market closes at the lows of the day then I would probably carry forward these short positions for tomorrow. So on the downside; we have a range, which is around 3,600 where some support comes in.

Certainly if the market closes or comes near 3,600, then close your shorts and get out of the market.


It is safe to assume that my clients & I may have an investment interest in the stocks/sectors discussed.

Source: MoneyControl

India least affected by US crisis: PN Vijay

Portfolio Manager PN Vijay feels it’s difficult to say if there is more bad news today. “We have been dancing to global cues for the previous one month. Hopefully, these cues will play themselves out soon,” he says.

“Domestically, things look much better now with inflation lower than previous levels and interest rates likely to come down in about two months,” Vijay said.

“The package got passed on Friday and that is also good news. Economically, India is the least affected by the developments in the US but flows are badly affected," Vijay said.

Source: MoneyControl

20 Microns lists at Rs 50, discount of 7.45%

20 Microns Ltd shares on Monday listed at Rs 50 on BSE, flat to Rs 50.90 or 7.45 per cent to the issue price of Rs 55 per share.

On NSE, the stock was trading at Rs 53.85, down 1.15 per cent to the issue price.

The company initial public offering was subscribed 4.29 times, receiving 18,663,800 bids against the 4,350,632 equity shares on offer. The price band was Rs 50-Rs 55.

The IPO was for 1,675,000 million equity shares of Rs 10 each and an offer for sale of 2,675,632 equity shares by Gujarat Venture Capital Fund. The issue was open between Sep 8 and Sep 11.

The company will utilise the IPO proceeds for the ongoing capacity enhancementa at various locations, invest in the sub-micron particle sizes required by end-market.

Source: EconomicTimes

Rupee falls to lowest since early April 2003

The rupee fell to its lowest since April 2003 early on Monday in anticipation of more capital outflows with Asian shares falling, but dollar
sales by state-run banks probably on behalf of central bank curbed a further drop.

At 9:19 a.m. (0349 GMT), the partially convertible rupee was at 47.30/32 per dollar, compared with Friday's close of 47.0750/0850. In early trade, it hit 47.45, its lowest since April 2003.

Source: EconomicTimes

Stocks open sharply lower; Sensex down 285 points

Stocks tumbled at open on Monday tracking the weakness across other Asian markets. National Stock Exchange’s benchmark Nifty slid 50 points t
o 3767.90. Bombay Stock Exchange’s 30-share Sensex shed 285 points to 12240 from Friday’s close.

Even as the US House of Representatives approved the $700-billion Wall Street bailout Friday, a steep drop in US jobs data suggested the world's largest economy may be in a recession, threatening global growth. The market sentiment weakened as traders focussed on the tough economic road ahead and on how the bill will be implemented.

Wall Street ended its worst week in seven years with another tumble on Friday. The Dow Jones Industrial Average fell 157.15 points, or 1.50 per cent, to 10,325.70, while the Standard & Poor's 500 Index slid 15.04 points, or 1.35 per cent, to 1,099.24 and the Nasdaq Composite Index was down 29.33 points, or 1.48 per cent, at 1,947.39.

Asian markets also declined on fears that the financial crisis is hitting the wider economy prompting investors to dump shares. At the time Indian markets opened for trade, the Nikkei dropped 3.6 per cent, Hang Seng lost 2.56 per cent and Straits Times shed 2.39 per cent.

Back home, the Securities & Exchange Board of India is likely to discuss a proposal to ease some of the restrictions imposed on foreign institutional investors at its board meeting on Monday, in an effort to bolster capital inflows. This could help lift market sentiment.

“The market hopes that Sebi may lift some of the constraints on issuance of PNs that were put in place in October last year. This move, if it comes, could help the markets, but there does not seem to be any money right now. However, the markets are unlikely to take note of it in advance. Expect the markets to tumble and test the earlier bottoms of 12153 in the Sensex and the 3715 level in the Nifty,” said Anagram Stock Broking.

Source: EconomicTimes

Reliance Ind can slip to Rs 1725-1740: Bose

Technical Analyst, Rajat K Bose is of the view that Reliance Industries can touch Rs 1725-1740, but unless and until it is not breaking Rs 1,700 levels, it still retains the potential for a bounce back.

Bose told CNBC-TV18, "Reliance Industries is trading even below Rs 1,820, it is actually quite weak. If it falls below Rs 1,780 then you can see it going down much further to something like Rs 1,740 or even Rs 1,725 but unless and until you see Reliance breaking Rs 1,700 levels, it still retains the potential for a bounce back. What I have noticed these days is that Reliance is hardly participating on rallies and this is perhaps one of the reasons why we do not see any sustained movement, sustained upswing in the market because unless Reliance moves you won’t see any major sustainable uptrend in the Nifty."

Source: MoneyControl

Exit Ranbaxy Lab says Bose

Technical Analyst, Rajat K Bose is of the view that one should exit Ranbaxy Laboratories.

Bose told CNBC-TV18, "If one get an opportunity to gets out of Ranbaxy better get out. I for one would not be buying into a stock, which looks like an Enron on the charts."

Source: MoneyControl

Buy Cairn India at lower levels: Bose

Technical Analyst, Rajat K Bose is of the view that one can buy Cairn India at lower levels. Unless Rs 185 is broken at lower levels, one will see some buying interest coming back as it has lot of support there, he added.

Bose told CNBC-TV18, "Cairn India has got a lot of support between Rs 196-185 kind of level unless Rs 185 is broken at lower levels, you will see some buying interest coming back. On the other hand, unless it actually moves above Rs 220 decisively, you won’t see much of a rise here as well. So at lower levels, you may think of buying it again. Since you have on the one hand, the oil-marketing companies on the other hand, Cairn India now I would say if you have to go long focus on oil-marketing companies rather than Cairn India because I feel until November 4, oil would not be showing much of a strength."

Source: MoneyControl

Stay invested in Axis Bank, HDFC Bank: Bose

Technical Analyst, Rajat K Bose is of the view that one should remain invested in Axis Bank and HDFC Bank with long-term horizon.

Bose told CNBC-TV18, "To disclose the fact that I am actually a portfolio investor in HDFC Bank and I have recommended Axis Bank with a long-term perspectives so these are the two banking counters that you have just mentioned. Definitely, they warrant buying and if one has a long-term horizon, these days you actually advice people to stay invested for about a year they say it’s too long a horizon, but I would say that if you can actually have patience then maybe at lower levels or at current levels, you can take a positive perspective on these two banks and you can remain invested but of course, knowing fully well that there could be more pain going forward."

Source: MoneyControl

Nifty has support at 3790-3500: Reliance Money

According to Reliance Money's Morning Notes, Nifty has support at 3790-3500 levels.

Reliance Money's Morning Notes:

It was much of a ranged action between mentioned levels of 3790-4000 on NIFTY as sell off continues. BEARS however were seen in complete control on last trading session with many of heavy weights losing more then 5% in single trading session. Inflation finally slipped below 12% after remaining above 12% for past thirteen week. For the week ended 20th September, 2008 inflation came at 11.99% as against 12.14% a week ago. As mentioned earlier, current scenario by and large remains in favor of BEARS unless NIFTY does not close above 4640 levels. Start of Q2 season late next week may see some positive momentum; however direction of capital flow from/to Equity will hold key to further direction.

On daily closing basis resistance around levels of 4000 and then at 4240 will be crucial in case of an up move while any close below levels of 3790 will be negative and further sell off towards 3500 highly probable. Nifty has support at 3790-3500 levels.

Source: MoneyControl

Mkts may be close to bottoming out: O(x)us Inv

Surjit Bhalla, Chairman, O(x)us Investments, said it is difficult to say where the market will bottom, but we may be close to it. "A lot of things are going wrong. The market is struggling with uncertainties. Investors are concerned about the extent of downside from here."

According to Bhalla, the fear of a global economic slowdown is justified. "There will be an overhang. Also, there is fear of hedge fund redemptions due to losses in asset classes. Hedge funds are selling equities to make up for losses in other assets."

Sudarshan Sukhani of Technical Trends said it's a matter of time before 3,800 breaks. "Once this happens, there are no support levels. That doesn't mean the market will fall. It just means that we will identify technical levels when they emerge. This is a bear market, so expects more downside."

Source: MoneyControl

Reliance Ind can slip to Rs 1725-1740: Bose

Technical Analyst, Rajat K Bose is of the view that Reliance Industries can touch Rs 1725-1740, but unless and until it is not breaking Rs 1,700 levels, it still retains the potential for a bounce back.

Bose told CNBC-TV18, "Reliance Industries is trading even below Rs 1,820, it is actually quite weak. If it falls below Rs 1,780 then you can see it going down much further to something like Rs 1,740 or even Rs 1,725 but unless and until you see Reliance breaking Rs 1,700 levels, it still retains the potential for a bounce back. What I have noticed these days is that Reliance is hardly participating on rallies and this is perhaps one of the reasons why we do not see any sustained movement, sustained upswing in the market because unless Reliance moves you won’t see any major sustainable uptrend in the Nifty."

Source: MoneyControl

Bull's Eye: Views on stocks




CMP: Rs 1,481

Motilal Oswal maintains ‘buy’ rating on State Bank of India (SBI). The bank’s rural and agri-business unit comprises: (1) all the business done at its rural and semi-urban branches; and (2) agriculture business done at any branch. SBI has 7,100 branches in rural and semi-urban areas which account for ~70% of its total branch network strength.

About 50% of its employees work in the agri-rural business (ARB) division. The bank’s ARB loan book is currently more than Rs 1 trillion; this accounts for ~23% of SBI’s total loan book and ~28% of its domestic loan book. About 45% of these are farm loans. ARB deposits stand at ~Rs 1.7 trillion and account for ~30% of SBI’s deposits.

SBI’s ARB loan and deposits account for 21-22 % of the industry, while its ARB branch network accounts for 13% of the industry. SBI is consistently gaining market share in this segment. Motilal expects the bank to report consolidated earnings per share (EPS) of Rs 155 in FY09E and Rs 187 in FY10E.

Consolidated book value (BV) will be Rs 1,110 in FY09E and Rs 1,282 in FY10E. Return on assets (RoA) and return on equity (RoE) are expected to be ~1% and 15-16 %, respectively , over the next two years. Adjusted for value of SBI Life at Rs 205/share, the stock trades at 1x FY10E consolidated BV.




CMP: Rs 179

UBS Investment has upgraded its rating on Lanco Infratech to ‘buy’ , but has reduced the target price by 28% to Rs 250. It has also cut its EPS estimates by 10%/20%/19% to Rs 19/22.4/33.3 for FY09/10/11E to reflect a slowdown in project execution.

It has factored in a 10% discount to power, EPC (engineering, procurement & construction) and infrastructure valuations. The contributions to value are from power (44%), EPC (40%) and real estate (15%).

The stock is trading at 9.5x FY09E EPS, which is a good buying opportunity. The key risks are fuel availability , execution and a further slowdown in the real estate sector.




CMP: Rs 1,078

JP Morgan maintains ‘overweight’ rating on Titan Industries with a March ’09 target price of Rs 1,475 based on a forward price-to-earnings (P/E) multiple of 23x. The company has seen a revival in demand for its watches and jewellery, post-June ’08.

It continues to maintain its previous guidance of 33% growth in revenue to Rs 4,000 crore and similar profit growth for FY09. Specialty and lifestyle retailing will remain the company’s core focus as there are many organic growth opportunities in a nascent market like India.

Titan aims to add 750 stores over the next five years, but it has no immediate plans to expand its international business . Several initiatives in the jewellery and watch businesses should help to sustain good growth over the next 1-2 years. Goldplus, Golden Harvest Scheme and innovative collections such as ‘Jodhaa Akbar’ should support double-digit volume growth in the jewellery business.

The company has planned exciting new launches in the watch segment, such as a new children’s brand and automatic watches, over the next 6-9 months.

Prospects of the eyewear business look encouraging and the company plans to add 60 stores in the next one year and 200 stores over the next three years. It is targeting sales growth of 50% through its own brands to improve margins. JP Morgan feels Titan is the best proxy for attractive growth opportunities in the specialty retail space.




CMP: Rs 405

Citigroup has downgraded Hindustan Zinc’s (HZL) rating to ‘sell’ by reducing the target price to Rs 430 on the back of an earnings cut of 22% for FY09 and 27% for FY10.

Citigroup’s new estimates incorporate changed zinc and lead forecasts, updated trends in rupee-dollar exchange rates and small changes in volumes based on management feedback .

Zinc prices are expected to fall 41% year-on-year (y-o-y ) in FY09, further fall 10% y-o-y to reach a bottom in FY10, and recover thereafter in FY11. HZL enhanced its zinc capacity by 88,000 tonnes per annum (tpa) to 669,000 tpa in April ’08 (total zinc-lead capacity to 755,000 tpa).

In addition, HZL has announced further capital expenditure (capex) to enhance zinc capacity by 210,000 tpa and lead capacity by 100,000 tpa — taking the total to 1.07 million tpa by ’10, together with additional mining and captive power capacities.

Citigroup sees a fall in earnings and EBITDA margins despite positive factors for HZL, such as its status as one of the lowest-cost producers globally, strong zinc volume growth (20% in FY09E and 40% in FY10E), high realisations for by-products like sulphuric acid, and savings from commissioning of captive power.




CMP: Rs 1,650

Edelweiss initiates coverage on Nestle with an ‘accumulate’ recommendation . Nestle is expanding into tier-II and III cities by introducing stock-keeping units (SKUs) below Rs 10.

Also, its turnover from innovations /renovations, positioned on the health and wellness platform (priced at a substantial premium to existing products) has increased fivefold over the past few years. The turnover is expected to remain at high levels, going forward, on the back of the company’s strong product pipeline.

At the current market price, the stock is trading at P/Es of 28.9x and 23.5x to CY08E and CY09E earnings, respectively. Nestlé is trading near the upper end of its recent band of 23-27 x forward earnings. Edelweiss believes these levels are sustainable, given Nestlé’s strong growth and defensive nature of its business.

Amidst volatile capital market conditions , the stock looks attractive over the long term. Edelweiss has valued Nestle at 26x CY09E earnings, which results in a target price of Rs 1,830. It expects Nestlé’s earnings to witness a compounded annual growth rate (CAGR) of 25.5% over CY07-09 E.




CMP: Rs 116

Merrill Lynch has maintained a ‘buy’ rating on Jaiprakash Associates (JPA), but has reduced the target price to Rs 335 from 395. This is because it has reduced the value of Yamuna Expressway due to indefinite delay in the proposed Greater Noida International Airport, higher expressway cost and lower real estate realisations till FY11E.

This can impact development of realty at three (3,750 acres) of the five land parcels (6,250 acres) of JPA’s Yamuna Expressway located in and around Noida airport. Hence, Merrill Lynch has removed these parcels from the valuations till visibility emerges.

It has also factored in a higher cost of the expressway at Rs 7,400 crore on higher land/construction costs and lower realisation assumptions on the Noida land bank till FY11E on continued weakness in the realty market in National Capital Region (NCR).

Key triggers are: a) Improved macro situation — lower inflation/rates; b) Execution of power/infrastructure projects on time; and c) Monetisation of realty land bank.

Source: Economic Times

Hindalco's rights issue: A good investment opportunity

HINDALCO INDUSTRIES , the leading aluminium and copper producer in the country, has come out with a rights issue. The net proceeds from the Rs 4,926-
crore issue will be utilised to refinance the bridge loan taken for the Novelis acquisition. Hindalco’s stock price has almost halved since the beginning of the current year to around Rs 98 right now.

Alternatively, investors can buy the share directly from the market at its current price. Obviously , the difference between the two options — buying directly from the market and subscribing to the rights issue — may not be much if the market price is close to Rs 96.

We believe the company’s fundamentals are strong and if investors don’t get a chance to buy the stock from the open market at a price well below Rs 96, they should opt for the rights issue. It’s important to participate in a rights issue, as investors can directly contribute cash to the company, which will be utilised to retire its existing debt.

Any such action will reduce Hindalco’s leverage ratio and provide more scope for the company to finance its ambitious expansion plans through debt at a lower cost. If such debt is not retired, the cost of debt for coming quarters will increase due to a lower credit rating and the turmoil in the global credit market. This, in turn, will lower the earnings of existing shareholders.

The consolidated EPS for FY08 was Rs 19.5. With the current issue of 525.8 million shares, savings in interest payment and assuming a 10% growth in bottomline, EPS for FY09 will fall to Rs 16.5. At the issue price of Rs 96, this translates into a P/E of close to 6. This is well below 7.7, the average P/E for ’08. Also, Hindalco’s share price was trading at around Rs 125 just before the collapse of Lehman Brothers, which sent equity markets in a downward spiral.

The current rights issue of Rs 96 per share offers a good investment opportunity for investors. But if the share price falls well below Rs 96, then investors are advised to purchase it from the open market, rather than opting for the rights issue.

Offer Price: Rs 96 per share

Rights Offer: 3 shares for every 7 held

No Of Shares Offered: 525.8 million

Gross Proceeds Of Issue: Rs 5,047 cr

Current Market Price: Rs 98

Source: Economic Times

Amara Raja Batteries: Buy

Bulk of the growth in the industrial batteries division is expected from telecom and UPS battery segments.

The stock of Amara Raja Batteries (ARB) has shown resilience during market turbulences in the past. The stock managed to rally despite the steep correction in January this year to reach its 52-week high of Rs 275 in February. However, a 16 per cent decline in net profits(despite a strong growth in sales) due to foreign exchange losses in the first quarter coupled with broader market volatility has seen the stock dip to new lows recently.

The current market price of Rs 101 is an attractive entry point for investors with a long-term perspective. At this price, the stock trades at a P/E of about 10 times its annualised per share earnings of FY-09 (annualised June quarter earnings). The company’s growing market share, capacity expansions, successful entry into the two-wheeler batteries segment and plans to cater to demand for battery powered cars buttress our buy recommendation.

Lead accounts for 70 per cent of the raw material used by ARB. Rising lead prices during a major part of FY 2008 had taken a toll on the margins. Lead prices appear to have stabilised currently but declining inventories and lower exports from China may again keep prices on the higher side. Like Exide, the market leader, ARB has been able to pass on the increase to its customers periodically. But Exide may score over ARB in shielding itself from volatilities in lead prices as it has acquired two smelting companies from where it would partly source lead over the next three years to save on raw material costs.

Source: Hindu Business Line

Tulip Telecom: Buy

IP VPN segment, the growth driver

e-governance deals promise volumes

Pricing pressure from competition, a threat

A healthy revenue mix, technical advantages and continuing engagements with high-value clientele give Tulip an edge in the domestic market.

Investments with a one-two year horizon can be considered in the stock of Tulip Telecom, a strong player in the domestic data connectivity and network integration space.

At Rs 855, the share trades at 11 times its likely 2008-09 earnings. Though Tulip has strictly no comparable peers, it faces competition in some of its segments of operation from hardware and system integration players. With margins expanding, owing to a healthy revenue mix, the company appears well-poised to tap potential opportunities. Tulip’s revenues over the past three years have grown at a compounded annual rate of 53.5 per cent to Rs 1,239.4 crore while net profits have grown at 137.9 per cent to Rs 187.2 crore.

The company broadly has two sets of operations — network integration and corporate network and data services. The latter includes the fast growing IP VPN (internet protocol virtual private network) service that connects branches of companies, banks and many other data transfer-intensive organisations. This enables secure transmission of data, voice and video for companies, enabling Tulip to add several blue-chip companies across several industries to its client base. Strong technical advantages in its segment of operations, continuing engagements with high-value clientele with big technology spends and bright prospects for new business segments give Tulip an edge in the domestic market.

Attempts by fully integrated telecom players such as Bharti Airtel or Reliance Communications to increase their presence in the enterprise VPN space and to possibly offer wireless last mile connectivity may pose competition to Tulip. In hardware-intensive deals, the company faces competition from players such as CMC, HCL Infosystems and Wipro Infotech, creating pricing pressures on deals.

Source: Hindu Business Line

Three funds to accumulate

With stock selection likely to become more challenging in the year ahead and liquidity likely to remain tight, investors should stick with exposure to funds with a proven track record over both a bull and bear market.

The stock market is down substantially from its January high, with the BSE Sensex now trading 40 per cent below its peak value of 21000. The price-earnings multiple for the Sensex over this period has corrected from 28 to 15 based on trailing earnings, which is well below the 10-year average of 18.

If you are planning to make stock market investments with a five-year perspective, this makes it a good time to initiate investments in diversified equity funds. Investors who already have equity funds in their portfolio should view this as a good time to overhaul their portfolio.

We suggest weeding out laggards (check out the three-year returns to do so) and replacing mid-cap oriented funds with those that have a large-cap orientation. With stock selection likely to become more challenging in the year ahead and liquidity likely to remain tight, we think investors should stick with exposure to funds with a proven track record over both a bull and bear market.

These may hold greater potential to participate in a market recovery, as and when it materialises. Here are three funds that investors can accumulate for the long term.

DSP ML Top 100 Fund: This Rs 1000-crore fund’s mandate is to invest in stocks drawn from India’s top 100 companies by market capitalisation. It features a well diversified portfolio, with low concentration, exposures to even top stocks are capped at 6 per cent. The fund sports a five-year return (compounded annualised) of 31 per cent, 3-year return of 21 per cent and has seen its NAV declined by 19 per cent in the last one year, against a 26 per cent decline in the CNX Nifty. Hindustan Unilever, Infosys, Bharti Airtel, Reliance Industries and Crompton Greaves marked the top stock choices in the August portfolio.

Frontline software, pharma and banks were the top sector preferences, with the fund also using Nifty futures quite actively to trade a range-bound market and contain downside.

Kotak 30: Kotak 30 is a mid-sized fund (Rs 650 crore assets), which favours a compact 30-40 stock portfolio drawn mainly from the index and to some extent, the large-cap basket. The fund tends to take fairly concentrated exposures to the top sectors and stocks, using derivatives as well to obtain exposures. Reliance Industries, ONGC, Bharti Airtel, Infosys, and Larsen & Toubro make up the top stock choices as of August.

Energy, banks and software make up the fund’s top sector preferences. Annualised returns stand at 32 per cent, 17 per cent and a negative 22 per cent for five, three and one-year periods.

Sundaram BNP Select Focus: A large-sized fund with a Rs 974 crore corpus, Select Focus has consistently maintained high cash/equivalents in its portfolio to manage downside risk. True to its name, exposures to the top sectors are fairly concentrated, but risk is reduced through very low stock-specific exposures. Oil, frontline software and telecom were the top sector choices in August, while the top holdings were Reliance, ONGC, ICICI Bank, Reliance Communications and Infosys. The fund sports five-year returns of 30 per cent, three-year returns of 21 per cent, and a negative one-year return of 23 per cent.

Investors need not own all three of the above funds as their portfolios do carry a substantial overlap. Lump sum investments in the above equity funds can be considered given relatively low market levels.

However, given the extremely uncertain near term outlook for the market, lumpsum investments should be made in a phased manner. Investors can, for instance, begin investing now and put in additional sums at every 500 point decline in the Sensex.

Source: Hindu Business Line

Pfizer (Rs 578.65): Buy

We recommend a buy in Pfizer from a short-term perspective. It is clearly evident from the charts of Pfizer that it was on a long-term downtrend from its 52-week high of Rs 850 (recorded on December 31, 2007) to late September low of Rs 513. However, the stock found support around Rs 525 and it reversed direction. This stock’s reversal has been supported by a positive divergence in the daily relative strength index. The stock gained six per cent accompanied by high v olume on September 30, forming a bullish engulfing candlestick pattern.

Subsequently, on October 1, the stock breached the long-term down trendline as well as its 50-day moving average, with above average volume. The daily relative strength index is on the brink of entering in to the bullish zone from the neutral region.

The moving average convergence and divergence is signalling a buy. We are bullish on the counter from a short-term perspective. We expect the stock to move up until it hits our price target of Rs 637 in the approaching trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 548.

Source: Hindu Business Line

Day Trading Guide - 6th October 08

Source: Hindu Business Line

Market outlook and intraday tips for 6th Oct

US markets opened positive and then went in negative zone.
Asia may open flat to negative.
If we open negative our markets will start recovering.
More over crude is bellow 94$.
Inflation came at 11.99% After 13 weeks inflation is below 12% mark.
We will surely start recovering from days low.

Intraday Tips.
Punj Llyod.
Buy Above 272 for targets of 282 , 287 , 291
Sell Below 268 for targets of 263, 261 ,258
Buy above 69.40 for targets of 71.30 , 72.90 & 74.90
Sell Below 66.10 for targets of 65.40 , 64.10 , 62.85
Buy above 329 for targets of 335 , 339 , 345
Sell Below 319 for targets of 316 , 310 ,307

Source: indianmoneyplus

Rupee falls 17% in six months

The rupee, which has depreciated by more than 17 per cent in the last six months, may continue to be under pressure against the US dollar as no major improvement in foreign fund flow is expected in the near future, say bankers and analysts.

On Friday the rupee closed at the five-year low of 47.08 a dollar as there has been heavy demand for the US currency in the local forex market.

If the current demand-supply mismatch continues, dealers said, the rupee could soon touch the 48 level. Dollar supply is unlikely to improve in the near future, given the dimension of current global financial crisis. The forward dollar premium came down to below one per cent last week, they said.

Since April, the Indian currency has weakened by Rs 7 against the dollar.

Foreign institutional investors continue to be net sellers in the Indian equity market. They have sold equities worth more than $6 billion in the last six months. India's forex reserves have declined by around $4 billion in the last one month.

The sustained rupee depreciation was also accompanied by increased volatility in the forex market. The rupee's intra-day movement has been in the range 20-50 paise, on an average, said dealers.

There has been a considerable decrease in offshore dollar supplies since April. Since the sub-prime crisis there has been huge flight of capital from India. The domestic currency is expected to remain under pressure for some more time. It could touch 48.50 by next month against the greenback before strengthening again to stabilise around the 45-mark, said Mr Moses Harding, Executive Vice-President, Head-Global Markets Group, IndusInd Bank.

Dealers say the strong dollar demand from oil companies and importers will continue to put pressure on the rupee.

Source: HinduBusinessLine

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.