Thursday, 30 October 2008

Day Trading Guide - October 31, 2008

The analysis and opinion expressed in these columns are based on the technical analysis of the past price behaviour. The stop-loss level provided with the recommendation is important. The original view would stand negated if the stop-loss level is breached. There is a risk of loss in trading.

Source: TheHinduBusinessLine

Sesa Goa (Rs 79.40): Buy

We recommend a buy in Sesa Goa from a short-term perspective. It is evident from the charts of Sesa Goa that it has been on an intermediate-term downtrend from its early May high of Rs 220. Since then, the stock has been forming lower troughs and lower peaks. While trending down, the stock penetrated key support levels at Rs 132 and Rs 100 one after another. However, the stock recently found support in the support band between Rs 60-65, recording a 52 week low of Rs 63.60 and bounced up sharply. The stock has almost gained 20 per cent from this low, reinforcing the bullish momentum. The daily relative strength index (RSI) which is hovering in the bearish zone, is displaying positive divergence and the weekly RSI is recovering from the oversold area. Furthermore, the moving average convergence and divergence is also displaying positive divergence. We are bullish on the stock from a short-term horizon. We expect the stock to move up further until it hits our price target of Rs 90 in the upcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining stop-loss at Rs 75.

Source: TheHinduBusinessLine

Do retail investors indulge in cherry picking?

October Data

Retail investors bought equities for Rs 1,843.69 cr

FIIs have sold equities for Rs 16,890 crore

Though the highly volatile markets scare the retail investors away, they do seem to be picking up shares at low levels.

Retail investors have been net buyers of equity for Rs 1,843.69 crore so far this month, according to the data from the BSE. In Tuesday’s Muhurat trading too, they were net buyers by Rs 8.25 crore.


Despite the markets tanking on Friday and Monday, retail investors have been buying. On Monday, they were net buyers for Rs 55.29 crore and on Friday by Rs 330.77 crore.

In Muhurat trading, considered an auspicious time to buy, individual investors made a token purchase. But this cannot be construed as a trend, said an analyst.

For those who can afford to stay invested for two to three years, sources said, some shares are now trading at attractive level.

‘Buy large-cap’

A senior equity advisor with a stock broking firm said that he is advising clients to invest in select large caps rather than putting it in mid- and small-cap stocks. When the markets start their upward journey, the large caps will gain more than the mid- and small-cap stocks. Large-caps are far more liquid than the smaller stocks.

The domestic institutions have also been net buyers so far this month for Rs 10,912.43 crore. In the last three trading sessions, they bought equities worth Rs 1,455.22 crore.

Speaking to Business Line, Mr C.J. George, Managing Director of Geojit Financial Services, said retail investors are seen buying in small quantities. Unlike in the past market meltdowns, retail investors are not that panicky.

FII dumping continues

They realise that the market fell as foreign institutional investors started dumping stocks to meet their needs back home.

FIIs, who have been in a savage selling spree for quite sometime now, sold a net Rs 69 crore even in the one-hour Muhurat trading on Tuesday.

So far this month, FIIs have been net sellers for Rs 16,890 crore, bringing their total net sales to $12.65 billion this year.

Source: TheHinduBusinessLine

Hindustan Unilever a market performer: India Infoline

India Infoline has recommended a market performer rating on Hindustan Unilever (HUL) with target of Rs 238 in its October 27, 2008 research report. "HUL recorded 19.7% yoy growth in revenues at Rs 40.3 billion during Q3 F12/08. HUL recorded 6.9% yoy increase in net profit at Rs 4.4 billion mainly led by higher other income of Rs 830 million and lower interest outgo. HUL has recorded a strong double-digit revenue growth in the domestic FMCG division driven by strong growth in core HPC segment (led by smart 26% and 18% increase in soaps & detergents and personal care segments respectively). HUL has started focusing on new growth categories like high-end personal care (skin, hair care), foods and water."

"HUL has invested heavily in its water purifier business and expects to complete national roll out by F12/08. Higher adspend due to increasing competition in the core categories from emerging players like ITC and firm raw material prices could put pressure on margins going forward. We expect HUL to register revenue and profit CAGR of 15.6% and 18.1% respectively over the next two years. We recommend Market Performer rating on this stock, with a price target of Rs 238 an upside of 4.9%," says India Infoline'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 Colgate, target of Rs 432: India Infoline

India Infoline has maintained its buy rating on Colgate Palmolive (India) with a target of Rs 432 in its October 27, 2008 research report. "Colgate recorded 13.4% yoy growth in revenues at Rs 4.13 billion during Q2 FY09, marginally below our expectations of Rs 4.2 billion led by overall volume growth of 11.1% yoy. Aided by higher income (Rs 270 million against Rs 199 millionn during Q2 FY08) and sharp decline in the effective tax rate (11.9% against 22.4% in same quarter last year), net profit rose by 16% yoy to Rs 635 million (below our expectations of Rs 698 million)."

"Colgate dominates the oral care industry with a strong 50% market share. After a healthy 10% growth in FY08, we expect Colgate to continue industry outperformance in FY09 (Industry growth expected 10%). With successful new launches and re-launches coupled with the fiscal benefits from the Baddi plant, we expect Colgate to witness revenue and profit CAGR of 11.9% and 17.5% respectively over the next two years. At the current market price of Rs 382, the stock is trading at 16.2x FY10E EPS of Rs 23.6. We maintain Buy with a price target of Rs 432, an upside of 13.3%," says India Infoline'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 Hindustan Zinc, target of Rs 400: PINC

PINC Research has maintained its buy rating on Hindustan Zinc with a revised 12-month price target of Rs 400 in its October 24, 2008 research report. "Hindustan Zinc Ltd’s (HZL) results in Q2FY09 were a pleasant surprise considering the fall witnessed in LME Zinc prices. The net sales declined only 12% despite a 45% YoY fall in Zinc prices."

"With no debt in its books, a cash surplus of Rs 92 billion and an OPM of over 50%, we believe it is one of the most strong company fundamentally, even in these adverse times. Hence, we maintain our ‘BUY’ recommendation with a revised 12-month price target of Rs 400," 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

Hold Grasim, target of Rs 1012: Emkay Global

Emkay Global Financial Services has recommended a hold rating on Grasim Industries with target of Rs 1012 in its OCtober 27, 2008 research report. "Standalone revenue for the quarter stood at Rs 27 billion up 9%, driven by a strong 17.2% growth in cement revenues (Rs 15.91 billion) and a 44.7% growth in sponge iron revenues (Rs 3.04 billion). The pre-exceptional net profit of Grasim declined by 15.3% yoy to Rs 4.23 billion while the reported net profit (adjusted for Rs 37 million depreciation on revised estimated useful life of assets) increased by 16.1%."

"The management has shared a grim outlook for company as well as the industry as whole sighting expected deceleration of demand growth from 9-10% to 7-8% and expected oversupply of cement on account of capacity addition. We are downgrading our earnings estimates for FY2009E and FY2010E by 10% and 23% respectively. At the current levels, the stock is trading at 4.3x FY2009E earnings and 2.3x FY09E EBITDA. We are changing our rating on the stock from BUY to HOLD with a revised price target of Rs 1012," 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 Thermax, target of Rs 316: Emkay Global

Emkay Global Financial Services has downgraded its rating on Thermax from buy to accumulate with a target of Rs 316 in its October 29, 2008 research report ."Thermax reported disappointing results for Q2FY09 – standalone revenues grew by meagre 4% yoy to Rs 8.0 billion owing to 9% yoy decline in revenues of Energy Segment to Rs 5.8 billion. Net profit declined 18% yoy to Rs 570 million, below estimates attributed to FX Loss of Rs 374 million."

"Consequently, earnings estimates are revised downwards by 14% and 13% for FY09E and FY10E due to (1) Lack-lustre performance of Energy Segment in H1FY09 and (2) Rising risks in external environment with an ability to affect future order inflows. We downgrade our rating to ACCUMULATE with revised price target of Rs 316 – valuing Thermax at 10X FY10E," 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

Buy growth stocks, exit defensives: Dipan Mehta

Dipan Mehta, Member, BSE and NSE feels the current levels are attractive to get into the market or to reshuffle portfolios. “These are perfect times to buy into growth rather than sitting with defensive stocks at this point in time.”

Mehta believes it is better to park one’s money in fixed deposits rather that funds. “With the kind of interest rates that one gets on fixed deposits, it’s better off to park money in cash.”

Mehta is overweight on the pharmaceutical sector. “I think pharmaceutical is quite an interesting area to be in uncertain times like these. “Indian pharmaceutical companies benefit because they derive a lot of revenues from exports. So, the rupee benefits them.”

Source: Moneycontrol

Buy banking, infra, telecom frontliners: Angel Broking

P Phani Sekhar, Fund Manager, Angel Broking, advises investors to invest in frontliners from banking, infrastructure, and telecom space. “At this point in time, we are asking our investors to look at Nifty stocks and avoid metals. We advise selective exposure to equities. Although, a great amount of value has emerged in equities, we still advise our investors not to go all out and start investing at this point in time. We are urging them to start putting in 10-15% of what they want to invest in a very systematic way because we do not have a handle on where the near-term will take us.

According to Sekhar, the markets may bounce more than 7-9% from hereon. “Under normal circumstances, we would have expected 15-20% of bounce. But looking at the kind of incessant selling and the momentum, we would be hesitant to give anything more than 7-9% from hereon.”

Source: Moneycontrol

Sharekhan Investor’s Eye : State Bank of India

State Bank of India
Cluster: Apple Green
Recommendation: Buy
Price target: Rs1,801
Current market price: Rs1,057

Q2FY2009 results: First-cut analysis

Result highlights

The Q2FY2009 bottom line of State Bank of India (SBI) is above our estimate. SBI has reported a net profit of Rs2,259.7 crore for the quarter, indicating a growth of 40.2% year on year (yoy).

The net interest income (NII) for the quarter has come in at Rs5,455.4 crore, up 45% yoy. This growth can be ascribed to a robust 37.5% growth in the net advances coupled with a 15-basis-point expansion in the net interest margin (NIM).

The non-interest income for the quarter has come in at Rs2,343.1 crore (up 14.8% yoy) compared with Rs2,041.9 crore in Q2FY2008. Importantly, the ‘commissions, exchange and brokerage’ saw a significant growth (41% yoy) during the quarter. However, the weaker treasury gains (down 63.5% yoy) and muted growth in foreign exchange (forex) income (up 11% yoy) suppressed the overall growth in the non-interest income.

The provisions and contingencies for Q2FY2009 registered a seven-fold increase and stood at Rs610.6 crore, driven by higher provisions on the non-performing assets (NPAs) and standard assets and partly due to the lower base of Q2FY2008. Notably, the bank wrote back marked-to-market provisions of Rs480.3 crore during the quarter.

In Q2FY2009, SBI’s advances grew by a robust 37.5% yoy to Rs493,413 crore on the back of a strong growth in the advances to large corporates (up 48.5%) and small and medium enterprises (SME; up 47.2%). The deposits grew at a relatively lower rate (28% yoy), implying a 550-basis-point expansion in the deployment rate. Further, the current account and savings account (CASA) ratio improved by 260 basis points yoy to 39.7%; the same is down 220 basis points sequentially though.

SBI’s asset quality deteriorated on absolute basis during the quarter. The NPA increased by 12.1% yoy to Rs12,552.3 crore at the gross level and to Rs6,617.9 crore (a growth of 13.5%) at the net level. However, on relative basis, the bank has reported an improvement of 56 basis points and 29 basis points at gross and net levels to 2.51% and 1.34% respectively.

Its associate banks’ net profit has come in at Rs692.5 crore for Q2FY2009 as compared with Rs452.5 crore for the corresponding quarter of the last year. Among its non-banking subsidiaries, SBI Cards continued to make loss (Rs27.9 crore in Q2FY2009) due to high NPA write-offs while the insurance and mutual fund subsidiaries maintained a healthy growth during the quarter.

SBI’s capital adequacy ratio has dipped below the 12% mark and stands at 11.5% as in September 2008, with the Tier-I capital ratio at 8.22%.

At the current market price of Rs1,057, the stock trades at 9.7x 2009E earnings per share, 4.7x 2009E pre-provisioning profit, 1.2x 2009E stand-alone book value and 1.0x 2009E consolidated book value. We shall follow up this note with a detailed analysis soon.

Source : The Sharekhan Research Team

A Few stock market abbreviations you need to know.

Tuesday, October 28, 2008
A Few stock market abbreviations you need to know.
by Chirag 0 comments Delicious 0

Tag Learning Section.

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Design Float

BSE - Bombay Stock Exchange. (Index - Sensex)
NSE - National Stock Exchange (Index - Nifty)
MF - Mutual Funds
SIP - Systematic Investment Plan
MCX - Multi Commodity Exchange
S&P - Standard & Poor
HNI - High net worth Individual
FII - Foreign Institutional Investor
DII - Domestic
EPS - Earning Per Share
PAT - Profit After Tax
PBT - Profit Before Tax
IPO - Initial Public Offerings
NAV - Net Asset Value
CAGR - Compounded Annual Growth Rate
P/E Ratio - Price Earning Ratio


Stock Scanner - MAX India.

Max India promoter Analjit Singh has bought 36,500 shares in his diversified company, taking his holding up to 1.88 per cent. Liquid Investment, a promoter group company, also bought 70,000 shares, increasing its holding to 9.69 per cent. Max, originally in the specialty plastics business, is also into life insurance, healthcare and clinical research. The company recently concluded an agreement with New York Life, increasing its stake in their life insurance iv from 50 per cent to 71.4 per cent. Max New York Life Insurance is the first Indian insurer to have declared its enterprise value which was up 96 per cent to Rs 1,320 crore in FY08. This is attributed to a Rs 300 crore capital infusion, profit from new business (discounted value of future profits arising from new business written during the year) of Rs 267 crore, and minimal negative variances. The company is ramping up distribution, and it plans to open 250 offices annually and increase its agency force to 300,000 by FYi 2. The healthcare business is also performing well, having reported revenues of Rs 99.5 crore in the first quarter of FY09.

Key Negative - Q2 Net is down 31%.


3 favorite counters where bulls thrive.

Praj Industries:
The stock of the biofuel technology company has declined more than 60 per cent in the past year and it is now quoting close to its 52-week low of Rs 73. Rakesh Jhunjhunwala had increased his stake from 5.39 per cent to 6.26 per cent in the September 2008 quarter. Currently, the market value of his holding in Praj is close to Rs 95 crore, whereas the stock price has declined more than 33 per cent from Rs 125 on September 30. Praj industries, which is set to benefit from its operational presence in all major ethanol producing countries, is trading at a price-earnings ratio of 9.39x and 7.50x of its FY09 and FY10 earnings, respectively.

Nagarjuna Construction:
The stock of the diversified infrastructure company, in which Jhunjhunwala holds close to 12.5 lakh shares, has declined more than 81 per cent in the past year and has come off more than 53 per cent in the past one month. Jhunjhunwala’s stake in the company is now worth close to Rs 7.5 crore. A promoter group company, AVSR Holdings, has acquired 7.82 shares from September29 to October 3, aggregating 0.34 per cent of paid-up capital. Following the purchase, the promoter holding in the company has increased to 23.63 per cent.

Punj Lloyd:
The stock of this engineering and construction major, which has declined more than 34 per cent from October 1,2008, is currently trading close to its 52-week low price of Rs 183. As on June 30,2008, Jhunjhunwala was holding close to 1.66 per cent stake, which is valued at Rs 108 crore at current prices. The company recently bagged a construction contract from Qatar Petroleum worth $800 million, while the order backlog for the group stands at Rs 24,063 crore. The stock is trading at a price-earnings ratio of 1 3.95x and 1 0.4x of its FY09 and FY10 earnings, respectively.


Religare fixes rights issue price at Rs 355 per share

Domestic brokerage firm Religare Enterprises on Thursday said that it has fixed the rights issue price at Rs 355 a share to raise about Rs 1
,802 crore.

The board of directors have approved a rights issue of shares in 2:3 ratio, wherein two equity share would be issued for every three shares held, Religare said in a filing to the Bombay Stock Exchange.

"The promoters have given their commitment to subscribe for the unsubscribed portion, if any, of the said issue," it added.

Earlier this week, wind power major Suzlon Energy had suspended its rights issue and Tata Motors issue also could not enthuse investors.

The company would utilise the rights issue proceeds for general corporate purposes.

Religare proposes to file draft letter of offer for the said issue around December. The networth of REL is expected to go up to about Rs 2,400 crore following the rights issue.

Besides, the company said it would increase the borrowing limit to Rs 3,000 crore from the existing Rs 500 crore.

The company would also increase its authorised share capital to Rs 250 crore from the existing Rs 160 crore.

In November last year the financial services arm of Ranbaxy Group listed it self on the bourses. As on October 24 REL's market capitalisation stood at Rs 2416 crore.

Religare is a holding company of 11 subsidiaries engaged in offering financial services targeted at retail, high net worth individuals besides corporate and institutional clients.

Shares of REL closed at Rs 328, up 0.25 per cent on the BSE on Wednesday.

Source: EconomicTimes

Russian government to buy stocks to ease credit crunch

Russia's state-controlled bank Vnesheconombank (VEB) will invest up to five billion rubles ($184.5 million) daily to buy stocks in the Russi
an bourses to ease the effects of the ongoing global financial crisis, its chief Vladimir Dmitriyev said Thursday.

The global credit crunch, sparked by the subprime mortgage crisis in the US, quickly spread to Asia and Europe leading to record losses on global financial markets and a worldwide liquidity shortage.

The Russian government has allocated 175 billion rubles ($6.5 billion) from the National Prosperity Fund to national development bank VEB to buy the stocks of leading Russian companies with strong credit ratings to shore up the liquidity of domestic businesses.

"We have spent around 20 billion rubles [$740 million] on shares and around five billion rubles [$185 million] on bonds of highly reliable Russian issuers. Our plans are about the same - to use resources from the National Prosperity Fund to diversify it and support the Russian financial market. The volume of investment will depend on the behavior of our bourses and share prices," Dmitriyev said.

VEB managers say they coordinate stock market investment with the finance ministry in terms of the expediency of the operations, their volume, and the list of eligible companies and investment instruments.

Source: EconomicTimes

White House says economy faces serious challenges

The US economy is facing "serious challenges" but is positioned to bounce back, White House spokeswoman Dana Perino said on Thursday aft
er a new report showed the economy shrank in the third quarter.

"Today's GDP report is weak, but it is not unexpected," Perino said in a statement. "A number of things contributed to the slowing economy in the third quarter - record high energy prices, housing and credit concerns, two major hurricanes, and a prolonged Boeing strike."

The Commerce Department said the third-quarter contraction, 0.3 per cent, in gross domestic product was the steepest since the corresponding quarter in 2001 though it was slightly less than the 0.5 per cent rate of reduction that Wall Street economists surveyed by Reuters had forecast.

Perino said the Bush administration is taking action aimed at restoring economic growth and job creation "by early next year." "While we continue to face serious challenges, the United States remains the best place to do business, and we're positioned to bounce back," she said.

Source: EconomicTimes

Indian call centre worker takes 'revenge' on British customer

A customer of a British bank has alleged that a worker of the bank's call centre in India meddled with his account and changed his identity with that of an Ugandan divorcee 10 years his senior, for giving him a low performance rating.

George Bates of Bristol told the Daily Mail that he had called the call centre to clarify a doubt and that the man at the other end was 'unhelpful'.

In the end, Bates decided to answer an automated response survey. He said the worker wanted him to give the maximum marks for the question on customer satisfaction. Instead Bates gave the least possible marks for that question.

He said the operator had a strong Asian accent and had been 'really unhelpful, rude, arrogant and very pushy and then he had the cheek to pester me to give him a good rating'.

The next day, Bates could not access his account while an ATM machine swallowed his debit card. When he went to Abbey Bank's branch, he was shocked to know his identity had been changed to that of an Ugandan divorcee 10 years his senior.

Over the next few days Bates found his overdraft and six direct debits had been cancelled - landing him with 60 pounds in charges.

He said: 'When I heard my details had been changed I was terrified my account had been emptied and I'd never get my money back. This phone operator has obviously seen that I've given him bad feedback and decided to change all my details in revenge.'

The Abbey Bank has offered him 200 pounds as compensation. A bank spokesperson said: 'We have since returned his account to the correct position and refunded any charges relating to this error. In relation to Mr Bates's other claims, we can confirm that we have fully investigated these complaints but we do not comment on individual employees.'

The bank refused to identify the call centre employee.

But Bates is still unhappy: 'Even though they did eventually sort everything out I'm still unhappy and I'll be switching back to a bank with call centres in Britain. I'm also scared that the man could still access my account.'

Source: EconomicTimes

Emerging markets become a trap for US banks

Citigroup Inc, Goldman Sachs and other US banks had hoped emerging markets would take some of the sting out of the credit crisis, but instead they seem to be worsening the pain.

Emerging markets have been battered along with other financial markets, leaving the main index of emerging markets stocks down about 59 percent so far this year while sovereign debt has weakened to 2002 levels.

That means banks that touted their emerging markets strength in the second quarter will likely be writing down loans and recording credit losses in the fourth.

"The data shows that exposures ... are big enough to bring further pain to these big U.S. banks and brokers," Fox-Pitt analysts wrote in a research note last week.

Citigroup, which gets one third of its revenue from emerging regions, has been setting aside hundreds of millions of dollars to cover spiking credit losses in Brazil and Mexico.

Its revenue from Latin America dropped 23 percent in the third quarter.

oldman Sachs bought a stake in Industrial and Commercial Bank of China (ICBC) in 2006 that was valued at $7.1 billion at the end of August. ICBC's shares in local currency terms have fallen by about 40 percent since then.

For about a year, it looked as if the financial crisis would mainly slam the United States and parts of Europe while emerging markets enjoyed a steady flow of dollars from record-high commodities prices led by oil, gold and copper.

But even with windfalls from commodities, the strength in markets like Brazil, Russia, India and China seemed unusual given that when developed markets weaken, emerging markets generally become weaker still.

Many investors and banks, however, thought emerging markets had come far enough along to be able to "decouple" from the United States, so banks rushed to increase business in emerging markets and bragged about their growing exposure.

"We're long the world, and heavily overweight in emerging markets as a company," Citigroup Chief Executive Vikram Pandit said at an investor presentation in May.

In June, Merrill Lynch Chief Executive John Thain said: "Our ability to grow our business over the next few years is going to be particularly focused on the emerging markets in the growing parts of the world," noting that Brazil, Russia, India, and China offered real opportunities.

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.