Wednesday, 15 October 2008

United Spirits (Rs 767.75): Sell

We recommend a sell in United Spirits from a short-term perspective. From the charts of United Spirits, we observe that after recording a life high of Rs 2,188 in October 2007, the stock has been on a long-term downtrend. Since then, the stock has been shaping lower peaks and lower bottoms. The downtrend accelerated in the early part of October and it plummeted sharply. The stock has recently penetrated the support level of Rs 1,000, accompanied with heavy volume. Moreover, on October 15, the stock tumbled 6 per cent, reinforcing the selling pressure. The stock is trading well below its 21- and 50-day moving averages. The daily and weekly relative strength indices are featuring in the bearish zone. The daily moving average convergence and divergence is also hovering over the negative territory. Our short-term forecast for the stock is bearish. We expect the stock’s decline to prolong further until it hits our price target of Rs 690 in the approaching trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 805.

Source: HinduBusinessLine

Day Trading Guide - October 16, 2008


Buy the stock in dips with tight stop-loss at Rs 390 level.


The outlook remains positive as long as the stock trades above the support level of Rs 1,300. We re-affirm our buy recommendation in this counter.


In the last trading session, the stock plummeted 11 per cent, with heavy volume. Initiate fresh short-position only if the stock declines below Rs 850 level, with tight stop-loss.


On Wednesday, the stock was very volatile and formed a spinning top candlestick pattern indicating indecisiveness. Desist trading in this counter for the session.

Reliance Capital

In the last trading session, the stock fell 11 per cent or Rs 89 with above average volume, reinforcing the selling pressure. We recommend a sell in this stock.

Reliance Communications

The stock is currently testing a key support level of Rs 230. We recommend a buy with stiff stop-loss at Rs 230.

Reliance Industries

Fresh short-position can be initiated only if the stock breaches Rs 1,480 level, with tight stop-loss.

Satyam Computer

We retain our buy recommendation.


Buy the stock in dips while maintaining tight stop at Rs 1,450 level.


Avoid trading in this counter for the session.

Source: HinduBusinessLine

Bajaj Auto an outperformer: IDFC-SSKI

IDFC-SSKI has upgraded its rating on Bajaj Auto to outperformer with a price target of Rs 600, reports CNBC-TV18.

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 Sterlite Inds, target of Rs 637: Emkay Global

Emkay Global Financial Services has maintained its buy rating on Sterlite Industries (India) with a target of Rs 637 in its October 14, 2008 research report. "For the 2QFY09, the company reported aluminum production of 106,000 tonne (yoy up 17.8%, qoq up 19.1%), copper cathodes production of 81,000 tonne (yoy down 11%, qoq up 19.1%) and refined zinc production of 122,000 tonne (yoy up 29.8%, qoq down 4.7%). On EV/EBITDA basis the stock is trading at 4x FY09E EV/EBITDA and at 3.8x FY10E EV/EBITDA. The company offers good growth potential considering the expected volume growth. We maintain BUY on the stock with a target price of Rs 637," says Emkay Global Financial Services' 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

Accumulate Satyam; target Rs 483: Emkay Global

Emkay Global Financial Services has recommended an accumulate rating on Satyam Computer Services, with price target of Rs 483, in its report dated October 13, 2008.

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

Accumulate HCL Tech; target Rs 297: Emkay Global

Emkay Global Financial Services has recommended an accumulate rating on HCL Technologies, with price target of Rs 297, in its report dated October 13, 2008.

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 Mphasis; target Rs 315: Emkay Global

Emkay Global Financial Services has recommended a buy rating on Mphasis, with price target of Rs 315, in its report dated October 13, 2008.

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 Procter and Gamble, target of Rs 1114: SBICAP Sec

SBICAP Securities has recommended a buy rating on Procter and Gamble Hygiene and Health Care (P&GHH) with a target of Rs 1114 in its October 13, 2008 research report. "P&GHH continues to be one of our top picks in the FMCG sector due to a robust outlook for its products, leadership position, strong balance sheet and healthy return on capital. Its products due to their characteristics remain relatively immune from the current inflationary situation perceived to slow down demand for consumer goods."

"Also, in the current volatile markets, P&GHH appears to be the best defensive bet and the current decline in market price of the scrip offers good entry point to the investors. The scrip trades at attractive valuation of 12.4x FY2010 EPS of Rs 54.7. Recommend Buy with a target price of Rs 1,114," says SBICAP 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

Buy Tech Mahindra; target Rs 990: Emkay Global

Emkay Global Financial Services has recommended a buy rating on Tech Mahindra, with price target of Rs 990, in its report dated October 13, 2008.

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 Indo Tech Transformers, target of Rs 280: PINC

PINC Research has recommended a buy rating on Indo Tech Transformers with a target of Rs 280 in its October 14, 2008 research report. "Indo Tech Transformers Ltd�s (Indo Tech) Q2FY09 results were above expectations. Net sales rose by 27% YoY to Rs 654 million and net profits by 39% to Rs 14 million."

"The CMP of Rs 220 discounts FY09E EPS of Rs 41.7 by 5.3x. The stock trades at an EV/Sales of 0.7x and EV/EBIDTA of 2.9x FY09 estimates. While industrial and export orders are helping boost margins, we expect the same to contract as competitive pressures increase in both SEB and industrial segments. Despite the above, margins should remain healthy and a higher share of industrial orders should help improve turnaround of orders. We recommend a �BUY� with a 12-month price target of Rs 280," 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

L&T has resistance at Rs 1080-1150: Mathew

Technical Analyst, E Mathew is of the view that Larsen has resistance at Rs 1080-1150.

Mathew told CNBC-TV18, "Though Larsen is an extremely strong counter but technically unfortunately this stock is still in a downtrend along with the rest of the market. It has very strong support at Rs 850, maybe if there is further weakness and considering the negative mode of the market if you could get it anywhere around Rs 850 to Rs 900-905, is the support zone, maybe that would be a better ploy for averaging. But technically at least I would not advice stray because technically I would get bullish on the stock if and only if it�s able to sustain above Rs 1080 and more important if it sustains above Rs 1150. The region between Rs 1080 and 1150 is a strong resistance zone and I would like to see L&T sustain above that from a trading angle."

Source: Moneycontrol

Buy Larsen, says Tulsian

Investment Advisor SP Tulsian is of the view that one can buy Larsen at Rs 920-930 level.

Tulsian told CNBC-TV18, "The management of Larsen has indicated a couple of months back for FY09-FY10 that they have a visibility of a bout 35% growth on topline and bottom line and as we have discussed just now they have a 2.3 times order book based on the current turnover and current performance of the company and 70% of the orders have the cost plus contract entered into with the principle. So I do not think that you have a lot much concern in the performance of the company. Maybe the growth could taper off maybe from 35% to 30%, profitability will continue to remain there; growth will continue to remain there because they are very prudent for any investor."

He further added, "In the process of results announcement maybe if it gets corrected to an Rs 920 or Rs 930, probably that�s the best entry point. So if one has a horizon of about 1.5 years, my advice to go ahead even at the current levels of Rs 950 to Rs 960, don�t look for maybe a loss of Rs 20 or Rs 30 post your buying, so this is the best stock to remain invested. In fact in such times only you get these kinds of stock at such low valuations."

Source: Moneycontrol

Buy Larsen, says Bhambwani

Technical Analyst, Vijay Bhambwani is of the view that one can buy Larsen and Toubro, L&T with a long term perspective.

Bhambwani told CNBC-TV, "I would give L&T Rs 800 to Rs 820 levels before I start buying again. Long term investors are seeing that the weekly charts are getting into oversold zone, so if one is looking at a 6 quarter�s time frame then he/she should buy now, but if you are a trader then wait and watch even at these levels."

Disclosure: It is safe to assume that analyst & his clients may have an investment Interest in the stocks/sectors discussed.

Source: Moneycontrol

Sensex could dip below 10K levels: Shankar Sharma

Shankar Sharma of First Global said poor IIP numbers and a sell-off in metals is the beginning of a sharp correction. "Newsflows are still poor. The markets have still not bottomed out. We don't see the Sensex rising beyond 12,500 in the current move and expect a further downside in October. The Sensex could head back to 10,000 levels, and may even dip below that."

According to Sharma, markets won't re-conquer fresh highs in the next three years. "The environment in equities is likely to be tough over the next few years. The situation in the US is getting worse. The S&P 500 could dip to 600 levels. We see a 40% downside in emerging market equities."

On the rupee, he said the rupee is also not secure at current levels, and may test new lows. "Even if emerging markets stabilize, currency problems will worsen the impact."

He feels RBI's last few CRR hikes may have been excessive. On liquidity, Sharma said India had a lot of liquidity but it was sucked out by RBI. "The central bank may be slightly behind the curve in freeing liquidity. Sentiment in market has soured, so fresh liquidity may not work. The Monetary Policy may not change the course of downward trend."

Source: Moneycontrol

RBI cuts CRR by 100 bps to 6.5%

The Reserve Bank of India, or RBI, has cut the CRR by 100 bps to 6.5% with effect October 11, reports CNBC-TV18. CRR is the amount that banks park with the central bank. The move will inject Rs 40,000 crore into the system.

The banks may borrow up to 50% of free Tier-I from foreign branches. The 0.5% NDTL Leeway on SLR will be in addition to 1% given since September 16. The additional leeway on SLR is purely a temporary measure to meet mutual funds� cash needs. The central bank said it has been continuously monitoring the liquidity situation. The banks can borrow 0.5% more of NDTL at the special repo to lend to mutual funds. The rate ceiling on 1-3 year NRE(E)RA deposit will be Libor plus 100 bps. The higher FCNR(B), NR(E)RA deposit rates are effective immediately.

On October 10, RBI had cut the cash reserve ratio, or CRR, by 150 basis points to 7.5% to infuse liquidity into the system. This included a 50 bps CRR cut on October 6.The cut injected liquidity to the tune of Rs 60,000 crore into the system.

Earlier today, Finance Minister P Chidambaram said RBI will provide Rs 25,000 crrore to lending institutions immediately, reports CNBC-TV18. "It will give Rs 7,500 crore to commercial banks and Rs 17,500 crore to Nabard, or National Bank for Agriculture and Rural Development."

RBI�s measures have infused considerable additional liquidity into the market, he said. "The central bank will enable smooth flow of credit for term loans and working capital."

Source: Moneycontrol

Stocks to watch: L&T, RIL, Tata Motors, REC

MUMBAI: The market is likely to open lower Wednesday in the light of weak global cues on worries about the slowdown in the global economy.

Global recession fears returned to centre stage after trillions of dollars pledged by governments around the world for bank bailouts eased the threat of imminent financial meltdown.

Indian rupee opened sharply lower and weakened to 48.44/46 per dollar from previous close of 48.04/06 as global markets declined raising concerns of capital outflow.

The Reserve Bank of India on Wednesday said it will conduct the special fixed rate 14-day repo facility everyday, as the auction at 9 per cent per for a notified amount of Rs 20,000 crore held Tuesday evoked a poor response. Only Rs 3,500 crore of this facility were utilised by the banks. The repo is aimed at enabling banks to meet the liquidity requirements of mutual funds.

Larsen & Toubro is expected to announce its earnings for the July-September quarter Wednesday. Broking houses expect Larsen & Toubro Ltd to report a 27-28 per cent year-on-year growth in topline to Rs 7,000 crore for the September 2008 quarter. Operating profit is expected to a rise at similar percentage to Rs 800 crore.

GR Gopinath, vice-chairman of Kingfisher Airlines, is believed to be considering an offer to buy back Air Deccan as he is reportedly unhappy over the alliance Kingfisher has struck with Jet Airways. He might even offer to buy Kingfisher itself at a meeting of the airline board on Wednesday. Some overseas investors are reportedly backing him in this effort.

Nusli Wadia Group is set to acquire Groupe Danone’s stake in biscuit major Britannia Industries with a committed $200-million funding from ICICI Bank. Wadias will buy Danone’s 50 per cent equity in the UK incorporated holding company, Associated Biscuits International Holding, backed by a five-year loan.

Tata Motors has acquired 50.3 per cent holding in Norway-based electric vehicle major Miljo Grenland/Innovasjon for Kroner 12 million (Rs 9.4 crore). Its UK subsidiary, Tata Motors European Technical Centre, is the investment vehicle for the acquisition. The existing shareholders will retain the remaining stake in the company.

Tata Teleservices’ Virgin Mobile has slashed STD and local call rates on pre-paid services to 50 paise per minute. TTSL-Virgin customers can now call any number, mobile or landline across networks at only 50 paise per minute after the initial three minutes of the day.

The global liquidity crisis has forced Rural Electrification Corporation to put its $700-million external borrowings plan on hold. REC had recently received RBI clearance to raise $500 million through external commercial borrowings and $200 million by way of external commercial assistance. But with interest rates rising following the liquidity crunch, REC has decided to shelve borrowing plans at least for the next 3-6 months.

Reliance Industries has chalked out an elaborate plan to venture into the power business. The plan includes an integrated project comprising coal mining, a coal-to liquid plant, a 1,000-mw power plant based on coal rejects and a fly-ash utilisation unit. The company has entered into a pact with US energy majors ExxonMobil and Headwaters, and German engineering firm Uhde GmbH. The 1,000-mw plant in Orissa is proposed to be put up in partnership with Torrent Power.

Dabur India is in talks to acquire FMCG and pharma company Fem Care Pharma, famous for its Fem bleach, for about Rs 270-300 crore.

Bank of India has invested Rs 150 crore in Lavasa Corporation, a subsidiary of Hindustan Construction Company in the form of convertible debentures. Based on the above investment, the equity valuation of LAVASA gets reconfirmed at Rs 10,000 crore. (Axis Bank Ltd had invested Rs 250 Crore at the same valuation).

Source: EconomicTimes

Jet-Kingfisher to rationalise 15 domestic routes next month to increase fare

The country's two leading private carriers Jet Airways and Kingfisher Airlines have decided to scrap more than 15 routes including overseas in next few weeks. Together, they would reduce capacity by 12%, which means grounding of five to six aircraft.

Jet Airways, the country's largest private airline, is likely to cut 10 domestic routes while Kingfisher is considering reduction of five non-profitable domestic routes from next month.

To add perspective to this numbers, it may be mentioned that these two companies enjoy almost 60% share of the domestic aviation market with more than 100 routes and a fleet size of 189 aircraft.

The reduction in routes follows the joint announcement on Monday by these two companies that they would share infrastructure to prune the mounting operational losses in the wake of the spiralling aviation turbine fuel prices. Jet on Tuesday said it would lay off 800 staff.

Jet CEO Saroj Dutta said the company would lay off another 1100 staff. This will take the total number to 1900. Mr Dutta said the company would cut 15% domestic routes and will also withdraw London-Amritsar flight.

The airlines would reduce services in the metros as well as in tier II cities. During the last three months, almost all the players started new routes originating from Cochin, Chennai, Jaipur, Bangalore, Ahmedabad, Nagpur, New Delhi, Kolkata and Mumbai.

A Jet Airways executive said non-profitable routes-- those having load factors of below 40%-- will be scrapped soon. However, those routes will be served by Jet-Kingfisher together. It means, they will be serviced by one of them. The executive declined to share the revenue sharing formula between Jet and Kingfisher.

Confirming that the decision to be implemented in next few weeks, the Jet official spokesperson told ET, "There would be route rationalisation in domestic and international operations." He, however, declined to divulge further details. The Kingfisher spokesperson was not available.

An analyst with a domestic brokerage said airlines have to rationalise capacity in order to offset rising jet fuel prices. High price of fuel is the key risk to earnings, while inadequate airport infrastructure and employee retention pose additional challenges, he added.

The industry is struggling for survival. " I am not sure how many of them would be in business next year," the analyst added.

Source: EconomicTimes

US stocks plunge on recession fears, weak US data

US stocks tumbled on Wednesday amid weak US economic data, with the Dow industrials dipping below 9,000 points amid increasign recession fears.

The blue-chip Dow Jones Industrial Average fell as low as 8,978.78 before a slight comeback. At 1425 GMT, the index was down 317.95 points (3.41 percent) at 8,993.04.

The Nasdaq lost 40.24 points (2.26 percent) to 1,738.77 and the broad Standard & Poor's 500 index retreated 37.53 points (3.76 percent) to 960.48.

Market action came on news that US retail sales slumped 1.2 percent in September, a sign of deeper troubles for an economy ailing from a financial market firestorm and tight credit.

The drop in sales was the steepest since August 2005 and weaker than market expectations for a 0.7 percent decline.

Investors also digested third-quarter earnings from two banks caught up in the mortgage mess. JPMorgan Chase & Co. reported an 84 percent decline in its third-quarter profit, offering further evidence of how the financial crisis is slamming the economy.

JPMorgan, which bought the assets of failed bank Washington Mutual Inc. late last month as a result of the mortgage bust, said the profit drop reflected losses on bad mortgage investments, leveraged loans and home loans. Still, the results beat expectations.

Also Wednesday, Wells Fargo & Co. reported that its third-quarter profits fell 23 percent after it took hits on investments in troubled finance companies and increased its credit reserves. The gain topped expectations.

Source: EconomicTimes

Edelweiss reiterates 'strong buy' on ICICI Bank

Cmp: Rs 447.10
Target price: 779

Broking house Edelweiss Securities has reiterated a ‘strong buy’ on the stock saying it has corrected 26% vs 18% for Bankex and the general market correction of 16%. “Current prices seem to be completely ignoring value of subsidiary and moreover implying wild assumptions about asset quality (which appears highly improbable),” said Edelweiss in a note to its clients.

“Even if we make a worse case assumption on all the various possible parameters (none of which is probable), the stock offers substantial value at these levels,” the note said. The broking house asserts that book value (BV) of Rs 417 does not take into account any valuations for the subsidiaries. “If we add subsidiary valuations (of Rs 220 per share in FY09E) to the adjusted BV, the fair value will be 50-75% higher than the current price.

This represents a strong return to investors in the short-term itself,” the Edelweiss note said. The broking outfit expects the bank to post 15%+ CAGR in assets with a buoyant corporate investment pipeline and robust retail asset growth. However, says Edelweiss, main risks for ICICI is NPA (non-performing asset) risk due to its low cumulative provisions. “With 65% of retail asset book, it is vulnerable to system-wide deterioration in the quality of retail assets,” said the note.

Source: EconomicTimes

Morgan Stanley gives 'overweight' raiting to GAIL(India)

GAIL (India)
Cmp: Rs 255.40
Target price: Rs 347

Morgan Stanley has given an ‘overweight’ rating to the stock saying it is trading at 9.8 times F2009E (estimated) EPS (earnings per share) and 8.8 times F2010E EPS, which is a 30-35% discount to global peers. “We rate Gail a must-own stock in today’s environment — it has high quality assets, which are not easily replicable giving it a virtual monopoly.

It is net cash positive equal to 35% of its asset base; and its earnings are reasonably defensive, especially from its transmission business,” said Morgan Stanley in a note to its clients. According to Morgan Stanley, the company is best positioned to take advantage of higher supply of natural gas, which is expected to increase by 150% over the next four years. “We believe Gail is best positioned to take advantage of higher supply.

It plans to invest close to Rs 180 billion in the next three-four years to build 5,000 km of new pipelines,” the note said. The firm has raised F2009-2010E EBITDA by 16% and 8%, respectively, and has increased the price target to Rs 347 from Rs 343, after adjusting for a 1:2 bonus issue. “We increase our net profit estimates by 11% for F2009 and 5% for F2010, based on the upside in petrochemical and higher gas transmission tariffs, factoring in lower gas transmission volumes. We now estimate F2008-2012 net profit CAGR of 12% pa (per annum),” the note added.

Source: EconomicTimes

Massachusetts announces $1 bn in spending cuts

Massachusetts Gov. Deval Patrick announced on Wednesday more than $1 billion in cuts and spending controls to rein in a budget shortfall t
hat threatens to balloon to $1.4 billion in fiscal 2009.

"With the economy slowing and state revenue declining, we have to act," Patrick said in a statement that did not include details on a plan by Patrick reported in The Boston Globe newspaper to eliminate 1,000 state jobs.

Source: EconomicTimes

US confronts possibility of long, deep recession

The US has not endured a deep and prolonged recession in more than a quarter century — enough time for many Americans to forget what one feels like.

But unlike the last two relatively short recessions, this one could be much longer and more severe, potentially bringing with it anxiety and job losses not seen in many years.

"In thinking about recessions, people will naturally think back to the last couple" in the early 1990s and in 2001, said Paul Ashworth, senior U.S. economist at Capital Economics in Toronto. "What they should be looking back at is further."

That requires dredging up memories of the economic slides in the 1970s, when an Arab oil embargo starved the nation of energy, and the early 1980s, when unemployment and inflation soared.

The last recession — coinciding with the collapse of the tech stock bubble and the terrorist attacks of 2001 — lasted just eight months. It was known more for the slow "jobless" recovery that followed than for the depth of the downturn.

Many economists agree that the nation won't be so fortunate this time.

"I don't think we can escape damage to the real economy," former Federal Reserve Chairman Paul Volcker said this week in Singapore. "I think we almost inevitably face a considerable recession."

The Fed's current chairman, Ben Bernanke, delivered a more measured, but similarly grave assessment to economists, saying the recent financial turmoil "may well lengthen the period of weak economic performance and further increase the risks to growth."

The signs of stress are starting to show: The U.S. has lost 760,000 jobs since late last year, and retail sales in September plunged 1.2 percent, the largest drop in three years.

Every recession is driven by its own dynamic and psychology. The current slump started with the collapse in the housing market and got worse with sharp restrictions on credit that pressured consumer spending and businesses.

That is a different environment from 1973, when an oil crisis was the culprit, squeezing U.S. businesses and consumers. In the early 1980s, raging inflation and high interest rates took their toll.

Both periods saw millions of Americans out of work. In 1975, the unemployment rate peaked at 9 percent. In 1982, it jumped to 10.8 percent.

Most economists forecast a sharp increase in the number of people who lose their jobs. But they do not see it leading to unemployment on the scale of either the 1970s or 1980s.

The jobless rate is currently at 6.1 percent, and many economists expect it to rise to about 7 percent early next year — a level the country has not seen since 1993. Some analysts believe the unemployment rate could eventually climb close to 8 percent, which hasn't happened since 1984.

But this recession could begin to feel like those of the past not just because of lost jobs, but because of fear about the future.

Source: EconomicTimes

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.