Friday, 4 September 2009

Sensex to touch 50,000 in 7 yrs: Morgan Stanley

Morgan Stanley on Thursday said that sensex could touch 50,000 mark in seven years from current levels , if the assumptions made are optimistic.

"One way of looking at market valuations is to find out the number of years it could take the market to reach a certain level. In our base case, using our residual income model, the BSE sensex (used as a market proxy) could take about nine years to breach 50,000 from its current level.

If the assumptions are made optimistic, the period to 50K shrinks to seven years," analysts Ridham Desai and Sheela Rathi said on Thursday .

Source: EconomicTimes

Average returns of Sensex are highest on Fridays

Last October, investors witnessed two of the biggest falls in the history of sensex — both on Fridays. But a Friday isn't all about fall. Did you know the index's best 'average daily gains' actually come on the last day of the trading week?

Data shows that average daily returns for sensex is not only the highest on Fridays but nearly two to four times more than on days such as Tuesday, Thursday or even Monday. This is based on an analysis of daily gains (in percentage terms) since September 1, 2003 when sensex was first calculated on freefloat market capitalisation method. In fact, when it comes to the top 30 daily gains for the 30-share benchmark in the last five years, Friday features the highest number of times (7), that is nearly 1 out of 4 occurrences.

So, what drives this Friday effect? "(This) data is driven by levels of market activity rather than anything else i.e. trading volumes tend to be higher in the second half of the week (Wed-Fri ) and that results in more deals being closed on such days. Brokerages like to close trades before the week ends because if they wait for the following week the trade sometimes gets away," said Saurabh Mukherjea, India head of Noble Group, a British investment bank.

Experienced market participants have had memorable Fridays. Sensex gained over 1,100 points on January 25, 2008, another 750 points on October 31, 2008 and a half a dozen of occurrences when sensex rose 400-puls points in the last four years. Average daily returns for sensex on Friday are the highest at 0.20%, followed by Wednesday (0.12%), Tuesday (0.11%), Monday (0.06%) and Thursday comes last returning a mere (0.05%), data shows.

Thursday's performance has not surprised market experts . In last 4 years, investors have seen sensex lose between 400-800 points on at least 10 occasions on a Thursday. "One of the reasons that can be attributed to lower returns on Thursday can be impact of F&O Expiry which is normally on the last Thursday on the month," said Chetan Majithia, head (Equities) at Crisil.

Source: EconomicTimes

Gold surges to near $1,000; touches new record in India

Gold prices surged to near 1,000 dollar level in global markets on Friday on investment buying while touching an all-time high in India on festive demand.

Gold in the US futures market reached 999.50 dollar last night, the highest price since Feb 23 helped by lower equities as sluggish stock markets diverted funds to the bullion as a safe haven. The MSCI World Index of shares is down 2.4 per cent this week, heading for its first decline in eight weeks.

The metal also gained as investors sought a haven on concern that a global recovery might be slower than expected. The US jobless rate in August jumped to 9.7 per cent, the highest since 1983.

A firming trend in the US markets, which normally set price trend in Asian region including India, drove the gold prices in India to its record high levels amid brisk buying by stockists and jewellery makers for the ensuing marriage and festival season.

The bullion in the national capital today shot up to an all-time high of nearly Rs 16,000 per 10 gram on last minute heavy purchases by traders to build up stocks before the start of the inauspicious 'Sharad' tomorrow.

The surge in the gold rates was led by heavy demand from jewellers and stockists before Shradh, a inauspicious fortnight for making any fresh purchases, marketmen said.

"We have plenty of orders for jewellery in hand and have to purchase it before the fortnight of Sharads begin," said Delhi-based jeweller Rakesh Anand.

Further the uncertainty in the stocks, which remained more volatile in last one-week, left little option for the investors but to invest in bullion as a safe haven.

In the last one week the Bombay Stock Exchange index Sensex fell for four consecutive days, but gained 290.79 points today at 15,689.12, the last trading day of the week.

Silver ready surged by Rs 700 to Rs 25,300 per kg and weekly-based delivery by Rs 560 to Rs 25,700 per kg.

Standard gold and ornaments shot up by Rs 200 each to Rs 15,900 and Rs 15,750 per 10 gram respectively. Sovereign also rose to all-time high by gaining Rs 100 to Rs 12,800 per piece of eight gram.

Source: EconomicTimes

IFCI has a short-term target of Rs 71: Thacker

Thacker told CNBC-TV18, "They have been buzzing around well. Not only the financials, but the public sector undertaking (PSU) banks especially the smaller ones also seem to have joined the rally. I like IFCI a lot in the sense that we have seen since the start of the rally in the month of March the stock has made a high at Rs 57 in the month of June and few days back it recorded a high of around Rs 57."

He further added, "Today, it is trading above the psychological mark since it’s a weekend closing, weekly closing for the stock and its closing at new highs for the upmove. So momentum should be good for the stock, we have seen intraday excellent addition in the open interest; Rs 70 is the short-term target we are looking for the stock."

Source: Moneycontrol

Subscribe to Oil India IPO: Brokerages' unanimous view

Oil India, the second largest oil and gas company in India, will come out with an initial public offering (IPO) of 26,449,982 equity shares of face value Rs 10 each. Its issue price has been fixed at Rs 950-1050 per equity share and it will raise around Rs 2,512.75-2,777.25 crore.

The issue comprises a net issue to the public of 24,045,438 equity shares and a reservation of 2,404,544 equity shares for subscription by eligible employees, at the issue price. The issue shall constitute 11% of the fully diluted post-issue capital of the company.

Research and broking firms have recommended investors to subscribe to the issue.

Source: Moneycontrol

Bajaj Auto Finance (Rs 224.5): Buy

We recommend a buy in Bajaj Auto Finance from a short-term horizon. It is evident from the charts that the stock has been on an intermediate-term uptrend, forming higher peaks and troughs since March low of Rs 43. In mid-July, the stock took support around Rs 140 and resumed its uptrend. It is trading well above 21- and 50-day moving averages. On September 1, the stock jumped 8 per cent accompanied with good volume, penetrating the short-term resistance at Rs 215. This break through has reinforced the stock’s bullish momentum. Both the daily as well as weekly relative strength indices are featuring in the bullish zone. The daily moving average convergence and divergence is signalling a buy. Our short-term outlook is bullish on the stock. We anticipate the uptrend to continue until it hits our price target of Rs 247. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 212.

Source: thehindubusinessline

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.