Saturday, 11 October 2008

Appropriate measures in place over financial crisis: Mukherjee

India on Saturday said it was too early to figure out what would be the "adverse impact" of the US financial turmoil on its economy, but
insisted that it had already put in place "appropriate measures" addressing the crisis.

"We are fully aware of the developments that have taken place and presently the Cabinet in its meeting has addressed the issue. As the global economics are closely linked, it might have impact on every economy," External Affairs Minister Pranab Mukherjee told a press conference here.

Keeping in view these developments, "appropriate measures" have already been taken by the Reserve Bank of India and SEBI, he said, adding that even Finance Minister P Chidambaram issued a statement outlining measures which have been taken.

Asked about the lessons of the financial crisis to India, he said "this is an event for which we have to respond in an appropriate manner."

"If you have noticed, the economic policies of India have undergone changes with the changing world situation and keeping pace with it. It is not static and it has an inherent dynamism in it," said Mukherjee, who was here to ink the historic 123 Agreement to operationalise Indo-US nuclear deal.

Noting that India-US economic relations were expanding very fast, the minister said that America "as an individual country is the single largest trading partner... we have the largest number of technical collaboration with US companies.

"Keeping that in view we have to make a hard assessment of what adverse impact, if at all, would have of this development," he said, adding "it is too early to make any comment on it

Source: EconomicTimes

Religare assigns buy to ITC for Rs 220 target

Religare Capital Markets has valued the ITC stock on a SOTP basis and has a 'buy' rating with a target price of Rs 220.

ITC has reported losses of Rs 120 crore in other FMCG business in Q1FY09. In the hotels business, ITC expects growth in the mid-teens. This growth will come form higher ARRs since occupancy levels are expected to remain stagnant at 65 per cent. Margins for paper and paperboards will improve. ITC current trading at a P/E of 18 times and 15.2 times and an EV/EBITDA of 12.1 times and 10.1 times its FY09E and FY10E earnings respectively. The stock is currently trading at Rs 174.

The ban on smoking in public places has been in place in India since November 2001, when it was enforced by the Supreme Court. The new enforced from October 2, 2008 merely extends coverage of the ban to private offices, hotels, pubs and airports. About 70 per cent of the cigarettes sold in India are loose and used in non-public places. The volume of cigarettes smoked in hotels and private offices is miniscule and thus, the new smoking ban is unlikely to have a material impact on ITC's cigarette volumes.

ITC hiked cigarette prices by 5-15 per cent in August 2008. The hike covered 60 per cent of its total portfolio with a weighted average price increase of 6 per cent.

The brokerage expects a 3 per cent volume de-growth in Q2FY09 in line with that in Q1FY09.

Source: EconomicTimes

Merrill Lynch puts 'buy' on Reliance Inds

Reliance Inds
cmp: Rs 1,649.60
target price: Rs 2,910

Merrill Lynch has retained its “buy” rating on the stock, saying it expects the 2-year earnings per share (EPS) CAGR in FY08-FY10E to be 40%. “RIL has one of the strongest earnings growth in our global universe.

KG D6 oil and gas and RPL refinery will be main earnings drivers. RIL’s valuation is compelling now at 8.5 times on FY10E EPS and PEG of 0.21 times,” said Merrill Lynch in a note to its clients.

According to Merrill Lynch, positive news flow on exploration and production (E&P) in terms of discoveries and reserves accretion is likely to continue for the company. “RIL is scheduled to drill in at least three highly prospective blocks (KG D6, KG D9 and Mahanadi D4) in the next 12 months,” said the Merrill note.

Source: EconomicTimes

LKP Research puts 'buy' on Plastiblends

cmp: Rs 122.05
target price: rs 220

LKP Research has initiated a coverage on the stock with a “buy” rating, saying it expects a 25% compound annual growth rate(CAGR) growth in net profits over the next three years for the company, driven by a 27% growth in revenues over the same period.

According to the brokerage, despite being a small-cap company with a market capitalisation of only Rs 900 million, Plastiblends has not tapped the capital market since its IPO in the early nineties and given its strong balance sheet and robust cash flows.

It does not expect any equity dilution by the company, going forward, as it would be able to fund its expansion plans comfortably through internal accruals.

“Given the scalability of the business and the return on investments(RoI), we believe that PIL is well placed to achieve critical mass in master batches during the next three years and the stock trading at three times FY11E (estimated) with a dividend yield of 5% is an exciting small-cap pick,” said LKP in its note to its clients.

Source: EconomicTimes

Goldman Sachs puts 'sell' on Reliance Power

Reliance Power
cmp: Rs 137.55
target price: Rs 115

Goldman Sachs Global Investment Research has initiated coverage on the stock with a “sell” rating, saying the current market price does not fully reflect the risks entailed in the timely execution and profitability of the company’s 28.2GW capacity addition plan.

“Back-ended capacity addition entails high risks on account of execution, fuel security, funding and realised tariffs — all of which can significantly alter forecast profitability and cash flows,” said Goldman Sacs in a note to its clients. According to the firm, the company’s projects aggregating 2,900 MW capacity (excluding hydro) has not achieved a single milestone.

Therefore, the stock has a 25% potential downside from its current market price. However, the firm believes, as projects achieve various milestones, the target price for the stock would rise. “When commissioned, the company’s target capacity addition (including hydro) would have a healthy fuel mix and geographic spread to meet both base-load and peak-load power requirements across regions.

Source: EconomicTimes

Economic meltdown will hit realty sector hard

The deadly global financial slowdown will have a very deep impact on the realty sector in India, which is already fighting a desperate battle.

Realty sector watchers are of the view that the slowdown will carry a double edge impact to it. One, as big-ticket banks, financial institutions and companies are pruning their staff, the market will lose some of the possible buyers of new houses.

And, secondly, the affluent NRI community will have second thoughts about property purchases here in India.

According to an official of Assocham, it is most unlikely that companies in India will start hiring people in a big way in the next one year or so. It goes without saying that it will impact the realty sector and it won’t find many buyers for high-end apartments.

P K Jain, vice president of PNB Housing Finance Limited, feels that the ripple effect of the US financial crisis is going to hit the Indian market as well. “We were expecting good times for it during this season between Diwali and New Year. Now we are not so sure about that,” he says.

Source: EconomicTimes

Good time to slowly start buying

On Friday, while the ticker tape blinkered in red, certified financial planner Gaurav Mashruwala was working the phone all day, reassuring his clients.

His advice : If there is no change in your fund requirements in the immediate future, then just sit tight.

However, if you are in one of two situations, you should get out of the falling markets, says Mashruwala.

First, if you have an outstanding loan. You don’t need to be losing money while simultaneously paying high interest rates.

The second, if you have speculated in penny stocks, it is time to cut your losses and jump if your’e lucky.

Satyam banned from offshoring work with World Bank: Report

Software major Satyam Computer Services has reportedly been banned from doing any off-shore work with the World Bank after forensic experts and bank investigators discovered that spy software was covertly installed on workstations inside the bank's Washington headquarters, allegedly by one or more contractors from Satyam Computer Services.

According to a FOX News report, apart from Satyam, two IP intrusions have been reported from China, and there have been six intrusions in all.

Investigators say that the software, which operates through a method known as keystroke logging, enabled every character typed on a keyboard to be transmitted to a still-unknown location via the Internet.

Upon its discovery, bank officials shut off the data link between Washington and Chennai, where Satyam has long operated the bank's sole offshore computer center responsible for all of the bank's financial and human resources information.

"I want them off the premises now," World Bank President Robert Zoellick reportedly told his deputies. But at the urging of CIO De Poerck, Satyam employees remained at the bank as recently as October 1 while it engaged in "knowledge transfer" with two new India-based contractors.

Source: EconomicTimes

Investors should stay in cash, not sell in panic - Udyan's Comments

was not one of the worst weeks – it was the worst week ever. The market down 15% is as bad as it gets. It is completely unprecedented and unexpected. One does not expect to see largecap names lose 25-30% of their market cap in just one trading session flat. That’s exactly what has happened today and there are lots of reasons and lots of things which have happened in the market from Infosys, to the cash reserve ratio (CRR) cut, to the Index of Industrial Production (IIP) number, to the Finance Minister and the SEBI statements – it has been very eventful as a day.

But at the end to look at stocks like Reliance Communication down 23%, ICICI Bank down 20%, Reliance Infra down 20% - stocks in the index giving up 1/5th or 1/4th of their market value in a single session, tells you what path sentiment has come at, at this point in time. So global panic, bad local macro numbers and nobody wants to buy – there are only sellers in the market – this is classic capitulation and a bear market in full flow.

It was debilitating week for sentiment and while it has been looking oversold technically for the last couple of days, but that’s not making any difference as one can see on the screen.

On ICICI Bank:

The market has such conviction in hammering a stock down so continuously despite all sorts of clarifications coming in. Look at the sequence of events. The management has clarified not once, not twice, but thrice. The RBI has clarified; the Finance Ministry has clarified that ICICI Bank does not face any kind of problems, and yet the stock falls at the rate of 20-25% a day, which tells you that the market probably knows something that we do not.

The market is a very clever beast. When clarifications are given and the market takes it on board, then there is no reason to fall like this. You can see that ICICI Bank probably does have a fairly reasonable liquidity position if not an utterly comfortable one. It doesn’t seem to be in any kind of problem that western banks seem to be in. Yet the stock price is falling.

I doubt whether this is any kind of concerted bear hammering or anything like that. My fear is that the market knows something that we are not aware of today, which might unfold over a period of time. I hope that the market has got it wrong. For the moment, we take the management’s clarification at face value, and it doesn’t appear that ICICI Bank has any kind of liquidity problem or is about to go belly-up or anything like that – far from it. But the screen makes you worry quite a bit about how things are progressing.

On markets this week and the week ahead:

Enough damage has happened this week in four trading days to lose 15%, which is something that one doesn’t expect. I have been saying throughout this week that the market seems a bit overdone on the way down, and at least a technical pullback is likely and plausible. That has not come this week. That expectation has been belied. I hope it fructifies next week.

So, I don’t know whether next week again if there is more global turmoil tonight, the Sensex and the Nifty fall further and maybe the Sensex falls to sub-10,000 levels, and from there maybe there is more regulatory action, and the market moves back. But essentially for the moment, it appears that between 3,000 and 3,800 Nifty, and between 9,000-9,500 on the Sensex on the way down, and I suppose 11,000-12,000 on the way up, the market is probably rangebound. There could be more downsides. But on a day-to-day basis it is very difficult to predict.

For investors probably it is too late to sell. We are less than half of the index level of January. I think if you haven’t sold already you can hardly sell stocks that are down 80% from their peak values. So, it is tough to sell at these prices. Is it easy to buy? Not quite yet. So, I think investors should probably sit on cash, and not sell in a panic. They should probably not do anything and just watch the situation unfold over the next few days.

Source: Moneycontrol

Accumulate frontline stocks: Khandwala

According to Khandwala Securities' Market Preview report, once can accumulate frontline stocks and wait patiently for fears to recede and risk appetite to return.

The bear is running amock when the bull is in deep slumber. The informal oil standard is now a nightmare for equity bulls. Stocks continue to fall on falling oil prices on realisation the economy is slowing down. Earlier, stocks fell with rising oil prices, disproving popular market fad that oil and equity prices were inversely related.
It’s yet getting gloomy and darkest before the dawn. Traders are looking at the regulators and law-makers to stem the rout global equity markets are facing.
On one-year anniversary of all-time high in Dow Jones, the US Prez is likely to make statement to assure nation on the economy and his plans to fix it before demitting presidency.
On Wednesday, the benchmark Sensex and many pivotals made 'shooting' star formation on charts indicating major trend reversal.
We accumulate frontline stocks and wait patiently for fears to recede and risk appetite to return.
Asian markets are in the red. Nikkei (-10.6%), Hang Seng (-7.5%), Kospi (-7.3%), Straits Times (-6.6%), Shanghai (-4.8%) and Taiwan (-1.5%).

Source: Moneycontrol

Sell Union Bank below Rs 144.50: has recommended to sell Union Bank of India below Rs 144.50 with a stoploss of Rs 145 and targets of Rs 143/138/lower.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Global sell-off impacting Indias asset valuations:KRChoksey

According to KRChoksey Research, Global Markets are facing the write offs and as consequently rest of the markets of the world are in a sell-off mode. We have always believed that India is relatively strong due to its internal consumption led demand boom. However, now it is on a potential threat of losing this advantage as global sell-off is impacting its asset valuations.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy C & C Constructions, target of Rs 170: PINC Research

PINC Research has maintained its buy rating on C and C Constuctions with a target of Rs 170 in its October 8, 2008 research report. "At the CMP of Rs 120, C&C trades at a P/E of 3.1x and EV/EBIDT of 3.2x its FY10E earnings. We value C&C’s core business operations at Rs 130 (3.3x FY10E EPS of Rs 38.6) and its 49% stake in Kurali Kiratpur BOT at Rs 40 per share. Thus, on a SOTP basis we arrive at Rs 170 per share as the fair value of the stock. Hence, we maintain our ‘BUY’ recommendation on the stock with a revised 12-month price target of Rs 170," says PINC's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Axis Bank, target of Rs 1000: Karvy

Karvy Stock Broking has recommended a buy rating on Axis Bank with a target of Rs 1000 in its October 10, 2008 research report. "In Q2FY09, we expect the bank would report 47.6% (Y-o-Y) growth in net interest income (NII) to Rs 8.3 billion mainly due to strong growth of 49% (Y-o-Y) in credit offtake; we assume around 48% (Y-o-Y) growth in deposits. At current price, the stock quotes at 2.2x FY2010 adjusted book value; we determine the bank's intrinsic worth at Rs 1000 at 3.3x ABV FY2010; we rate the stock as a BUY with a price target of Rs 1,000," says Karvy Stock Broking's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Bharti Airtel, target of Rs 1154: HDFC Sec

HDFC Securities has maintained its buy rating on Bharti Airtel with a target of Rs 1154 in its October 10, 2008 research report. "We expect the sales to grow at a CAGR of 26% and net profit at 26% in the period between FY 08 to FY 10. At the CMP of Rs 733, the stock trades at 9.54 times and 7.72 times its FY 09 and FY 10 EBITDA, which looks cheaply valued. Hence, we reiterate our BUY rating maintaining our target price of Rs 1,154, which translates into an upside of 57% from current levels," says HDFC Securities' research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Support for Sensex seen at 10436 and 9392: Networth

Networth Stock Broking believes that the Sensex is likely to see strong Support between 50% and 55% levels from its peak which is around 10436 and 9392.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Worst weekly performance of Sensex,Nifty ever: Anagram

Anagram Research Daily Market Review:

Mayhem in the world equity market continued as almost all of them witnessed sharp cuts in today’s trading session. Sensex plunged by 800 points and closed at 10527 while Nifty shed 234 points to close at 3279. On weekly basis, Nifty is down 14.1%, which is the highest ever fall, while Sensex is down 16%, second highest fall ever. Rupee touched an all time low of 49.17 against the dollar and closed at 48.47. Tech bellwether Infosys announced its Q2 results today, which were in line with market expectation. However, company cut it’s full year revenue and EPS guidance by 5% in dollar terms.

In a dramatic move RBI announced a further 100 bps cut in CRR along with a 50 bps cut announced recently. IIP data released today showed a dismal growth of 1.3% as against 7.1% for the previous month and expectation of 6%. Inflation for the week ended Sep. 27 came at 11.80% against the expectation of 12% and 11.99% seen in the previous week. Crude oil touched a 12 month low of USD 81.1 in today’s trade.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Infosys may slip to Rs 960-1000: Gujral

Technical Analyst, Ashwani Gujral feels that if Infosys Technologies does not hold up Rs 1,150 then one could see levels back towards about Rs 960 to about an Rs 1,000.

Gujral told CNBC-TV18, "Infosys has broken down below Rs 1,200 other than this intra-day bounce back, if it does not hold up Rs 1,150 you could see levels back towards about Rs 960 to about an Rs 1,000. So I don’t think after this sort of news you should be playing any sort of bounce back."

He further added, "TCS broke down around Rs 700; that is now headed towards about Rs 460 to Rs 480. Satyam broke down a while back and that could go up to Rs 220-230 sorts of levels. Wipro is looking particularly weak, it held up initially but that is now headed to about Rs 220-225, so technology is quite weak."

Source: Moneycontrol

Ignore ICICI Bank: R Shah

Rajen Shah, CIO, Angel Broking is of the view that one can avoid ICICI Bank.

Shah told CNBC-TV18, "We have been ignoring banks for a very long time and in fact even at this juncture the only financial institution, which we like, is IDFC. Except for that we have been ignoring ICICI Bank and leading private sector banks for a while."

Source: Moneycontrol

Liquidity adequate, global exposure small: ICICI Bk

Chanda Kochhar, Joint MD and CFO, ICICI Bank, said the bank has adequate rupee and global liquidity of Rs 12,000 crore. "We have no international investments, only loans on our balance sheet. We do not use rupee liquidity to fund global activities."

Kochhar said the bank has not seen a scale-down in deposit growths. "The focus this year is on current and savings accounts."

According to her, the bank has not seen an increase in NPAs, or Non Performing Assets, as the corporate sector is holding up. "About 90% of total loans are India related."

She feels the current investment pipeline is strong enough to ensure a 7.5% GDP growth.

Commenting on the banks' UK operations, Kochhar said exposures in the market there are very small given our size and profitability. "NPAs at 0% in UK subsidiary. Over 90% of investment in UK market are to companies with atleast 'A' rating."

She said there is a cash collateral of USD 45 million from the Bumi Group. "The net loan stands at USD 100 million for which there is adequate cover."

Source: Moneycontrol

Mkts close to bottom; to stay consolidated: Raamdeo Agrawal

Raamdeo Agrawal, Director and Co-Founder of Motilal Oswal cautioned investors to maintain a rational approach and to be calm in these times. He believes the markets are close to the bottom and said they would remain consolidated around these levels for some time.

Agrawal feels liquidity is the most welcome step and that the liquidity infusion steps are positive. However, he feels the need for more measures. He is concerned about the integrity of the IIP numbers.

Agrawal said that the FY09 and FY10 estimates would be revisited and sees plenty of downward revision in earnings expectations. He expects consolidation to take place at the top end of the brokerage business.

Source: Moneycontrol

RBI cuts CRR by 150 bps

In an anticipated move, the Reserve Bank of India, or RBI, has cut the cash reserve ratio, or CRR, by 150 basis points to 7.5% with effect from tomorrow in a bid to infuse liquidity into the markets.

On October 6, the RBI had cut the CRR by 50 bps to 8.5%. Today's 150-bps cut includes October 11's cut. The cut will inject liquidity into the system to the tune of Rs 60,000 crore.

Nilesh Shah of Envision Capital said, “The CRR cut is definitely a positive move, which is going to soothe some liquidity fears. The stock market also needs liquidity and this (the rate cut) will help to some extent. Whether this is going to help us beyond a day or beyond an intra-day basis is something that remains to be seen.”

Source: Moneycontrol

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.