We recommend a buy in Infrastructure Development Finance Company (IDFC) from a short-term trading perspective. It is clearly visible from the charts of IDFC that it has been on a long-term downtrend from its January high of Rs 235 (52-week high) forming lower lows and lower highs. However, the stock recently found support at around Rs 45, a long-term support level (July 2006 bottom) and witnessed sharp rise. We notice that the stock has formed a weekly bullish engulfing candlestick pattern, indicating short-term reversal. Subsequently, on November 3, the stock jumped up 12 per cent with an upward gap penetrating the intermediate-term down trendline (which was in place from May peak) and the 21-day moving average. The daily relative strength index is rising in the neutral region. The moving average convergence and divergence has displayed a positive divergence and signals a buy. Our short-term forecast for the stock is bullish. We anticipate IDFC to move up further until it hits our price target of Rs 74 in the upcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 60.
Source: TheHinduBusinessLine
Monday, 3 November 2008
IDFC (Rs 65.10): Buy
Day Trading Guide - November 4, 2008
ICICI Bank
The stock is facing key resistance at Rs 450. Initiate fresh short-position only if the stock reverses from the resistance level of Rs 450, with tight stop-loss.
Infosys
On Monday, the stock lost its entire intra-day gains, experiencing selling pressure at higher levels. Fresh short-position can be initiated if the stock declines below Rs 1,350, with stiff stop-loss.
L&T
The near-term outlook remains positive as long as the stock trades above Rs 850. Buy the stock in dips with stop-loss at Rs 850.
ONGC
We recommend a buy in this counter.
Reliance Capital
The near-term stance is bullish for the counter. We recommend a buy.
Reliance Communications
Utilize rallies to sell the stock with tight stop-loss at Rs 253.
Reliance Industries
The stock is facing significant resistance at Rs 1,465. Fresh long-position can be initiated if the stock exceeds Rs 1,465 with tight stop-loss.
Satyam Computer
The stock is consolidating sideways. Desist trading in this counter for the session.
SBI
In the last trading session, the stock gained almost 12 per cent, experiencing buying pressure. We recommend a buy with stiff stop-loss at Rs 1,200.
TCS
Avoid trading in this stock as the outlook is cautious.
Source: TheHinduBusinessLine
US stocks fluctuate on weak manufacturing reading
Wall Street started November on a cautious note on Monday, with stocks fluctuating in a narrow range following a weak reading on the manuf
acturing sector.
Stocks pared early gains after the Institute for Supply Management reported that its measure of U.S. manufacturing activity fell last month to its lowest level in 26 years as credit conditions tightened and as disruptions remained from Hurricane Ike. The trade group reported that its index of manufacturing activity fell to 38.9 in October from 43.5 in September. It was the weakest reading since September 1982 and well below the 41.5 economists predicted, according to Thomson/IFR.
A separate report showed construction spending has fallen by a smaller-than-expected amount in September as a rebound in nonresidential activity helped offset further weakness in home building. The Commerce Department said construction spending fell by 0.3 percent in September, less than the 0.8 percent decline many economists expected.
Analysts are also anticipating weak vehicle sales figures from the auto industry for October — even more anemic than in September, when automakers said fewer than 1 million vehicles were sold for the first time in 15 years.
The data, particularly on manufacturing, support the growing belief that the economy is in recession, hurt by a drop in lending and slower overall spending. But with the Dow Jones industrial average having tumbled more than 14 percent in October — its worst month in 21 years — the market priced in a significant falloff in economic activity. Wall Street must now determine whether the selloff in stocks is adequate, not enough or overdone.
Stephen Massocca, co-chief executive of Pacific Growth Equities, said the economic readings weren't a big surprise given the hits the economy has taken from the evaporation of lending since September. He said the market's tepid reaction also reflects the market's process of forming a bottom after its selloff and investors waiting to make big bets until results of the election, particularly the results in the Senate, are known.
"What we've seen was a rally last week taking a dire depression off the table and I think now what we have a severe recession," he said. "By and large the economy is bad but it's not as bad as many people think it is. There are still people going to work every day."
"With the election tomorrow obviously people probably want to wait and see what happens there. I think that's probably holding people back," Massocca said.
In late morning trading, the Dow Jones industrial average rose 6.37, or 0.07 percent, to 9,331.38 after rising 86 and falling 41.
Broader stock indicators were mixed. The Standard & Poor's 500 index fell 0.88, or 0.09 percent, to 967.87, and the Nasdaq composite index rose 7.81, or 0.45 percent, to 1,728.76.
The Russell 2000 index of smaller companies rose 4.28, or 0.80 percent, to 541.80.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 329.6 million shares.
Trading is expected to remain light Monday, with many investors sitting on the sidelines ahead of Tuesday's presidential election. Many analysts have said that in general, neither candidate is more favored than the other on Wall Street, but investors are eager to put the uncertainty behind them.
Given how far the stock market has already tumbled, analysts believe the market is showing signs of bottoming out. Last month, for all its problems, did end with a positive tone, thanks in large part to weeks of gradual improvement in the tight credit markets, but also because mutual funds were finished with selling at the end of their fiscal year. The Dow added 11.3 percent last week, its best weekly performance in 34 years, while the S&P 500 index climbed 10.5 percent.
On Monday, a key bank-to-bank lending rate known as Libor fell to 2.86 percent for three-month dollar loans — that's down from 3.03 percent Friday, and the lowest level since Sept. 17. A fall in the London Interbank Offered Rate indicates that banks are more willing to lend to one another.
Investors' demand for short-term government debt remained high, however, a sign that they remain cautious. The yield on the three-month Treasury bill, seen as one of the safest assets around, rose only slightly to 0.46 percent from 0.43 percent Friday. A low yield indicates high demand.
The yield on the benchmark 10-year Treasury note fell to 3.95 percent from 3.96 percent late Friday.
On Monday, the dollar was lower against most other major currencies, while gold prices rose.
Light, sweet crude fell $2.64 to $65.17 a barrel on the New York Mercantile Exchange.
Overseas, Britain's FTSE 100 rose 0.54 percent, Germany's DAX index rose 0.55 percent, and France's CAC-40 advanced 1.11 percent. Hong Kong's Hang Seng Index climbed 2.7 percent. Japan's stock market was closed for a holiday.
Source: EconomicTimes
Ipca Labs gains 7% on share buyback plans
Shares of Ipca Laboratories climbed 7 per cent after it said its board would consider a share buyback.
The firm, which plans to use a portion of its Rs 600 crore cash reserve to fund the repurchase, will decide the price for the buy-back and the size of its investment at a board meeting on November 11.
At noon, the company's shares were up 6.9 per cent at Rs 410. The stock had fallen 42 per cent to a low of Rs 331 this year.
Source: EconomicTimes
ICICI Bank surges 11%; becomes second most valued bank
The much battered stock of ICICI Bank on Monday gained as much as 11 per cent on the bourses, a day after the bank said it has retired about Rs 24,000 crore expensive deposits to reduce cost and improve bottomline.
The scrip of ICICI Bank surged up to 10.62 per cent on the Bombay Stock Exchange and touched an intra-day high of Rs 441.80, while on the National Stock Exchange it witnessed an intra-day high of Rs 442, a jump of 10.84 per cent.
The scrip, which has been on an uptrend since October 24 has gained as much as Rs 120.95 or 39 per cent so far.
After being hammered regularly on rumours casting doubts over its financial health in the last few weeks, ICICI Bank last Friday surged 15.50 per cent, its biggest gain in three weeks. Today also the scrip surged nearly 11 per cent and witnessed an intra-day high of Rs 441.80.
On the volume front, good movement was witnessed as over 34.12 lakh shares exchanged hands on BSE and 1.19 crore shares got traded on NSE.
At the end of today's trading session ICICI Bank was quoted at Rs 430.85 on BSE and at Rs 430.70 on NSE.
Marketmen said, "The scrip of ICICI Bank witnessed a rally after the management assured about the financial condition of the bank. Besides, the surge in the domestic bourses also gave a push to investor sentiment."
ICICI Bank's Joint Managing Director, Chanda Kochhar, has said, "We have retired wholesale deposits of Rs 24,000 crore in the last six months. At the same time, we have increased the current account and savings account by Rs 3,000 crore in this period."
Source: EconomicTimes
Residential property prices in cities down by upto 5%: C&M
With the ongoing slowdown in real estate industry and correction in secondary markets, some of the country's major cities have witnessed up to 5 per cent fall in capital values in residential properties, a Cushman & Wakefield (C&W) report said.
According to the global realty consultant C&W, the high -end residential market of Pune has seen a decrease of 5 per cent in capital values during July-September period, while it fell by 1 per cent in the mid-range category.
Other prominent markets, like Mumbai and Bangalore, witnessed a fall of 4 and 3 per cent respectively in the mid-range housing sector, it added.
However, few locations in Chennai witnessed appreciation in capital values up to 8 per cent.
"Most markets are predicted to continue to have stable capital values with a softening bias in the last quarter of 2008, with the exception of Chennai which may see some further strengthening in key micro markets. A lacklustre festive season, along with sharp drop in the stock markets have further aggravated the situation for the developers, who are also battling conditions such as high rates of servicing debt and liquidity issues," C&W India Director (Residential Services) Aditi Vijayakar said.
Such conditions have led many developers to re-align their strategies and several developers may be now looking at targeting the middle-income groups, where the demand is high and mostly driven by end-users, she said.
"Correction in value in the secondary sales market has impacted the overall values of residential properties in certain micro-markets and is expected to further affect the capital values in the next quarter," the report stated.
Source: EconomicTimes
Bank deposits safe, says Prime Minister
Prime Minister Manmohan Singh today assured that the government is behind the banking system and no one should fear about safety of the bank deposits, and said more steps would be taken to protect growth.
"We have successfully conveyed to our people that our banking system, both in public and private sector is safe and the government stands behind it and that no one should fear for the safety of banking deposits", Singh told industry leaders here.
Admitting that the present global crisis is bound to affect the Indian economy and has done so, Singh said the situation is being watched on day-to-day basis and more steps would be taken if required.
"Government will take all necessary monetary and fiscal policy measures on the domestic front to protect our growth rates," he said, adding that India would seek reform of the international financial institutions for improved regulation and supervision to prevent recurrence of such a crisis.
He asked the industry to act in a "true spirit of partnership" with the government to meet the challenges that lie ahead.
Singh further said the inflationary process is showing signs of "definite abatement."
Source: EconomicTimes
India's trade deficit likely to widen by 39% to $111.6 bn: Citigroup
India's trade deficit is likely to widen by 39 per cent to $111.6 billion during current fiscal, mostly due to lower crude oil prices, financial services major Citigroup said today.
"The trade deficit in 2008-09 will be $111.6 billion against $80.3 billion in the last fiscal," it added.
Trade deficit for April-September was $59.77 billion dollar against $39.09 billion dollar in the corresponding period last year, as per the official data released today.
Meanwhile, banking behemoth Goldman Sachs also said Indian exports are likely to slow further as external demand continues to deteriorate.
Exports in September stood at $13.74 billion, which was 10.4 per cent higher than $12.45 billion during the same month last year. In August country's outward shipments had soared by 26.9 per cent.
"Although the impact of falling exports on the rupee is likely to be offset somewhat by falling imports, pressure on the rupee to weaken in the near term remains, not only due to portfolio outflows, but mainly due to corporates and banks swapping rupee for dollar," it said.
Unless these pressure ease, further weakness of the Indian rupee is likely to continue in the near term, Goldman Sachs said.
Source: EconomicTimes
ATF prices cut again, but fall in air fares uncertain
Cash-strapped airlines on Monday got another breather when state-run oil firms further cut jet fuel prices but they remained non-committal on slashing fares.
State-run oil firms cut jet fuel prices on Monday by up to Rs 2,100 per kilolitre on top of the 17 per cent reduction announced last week.
Jet fuel, or aviation turbine fuel, at Delhi will cost Rs 44,965.70 per kl with effect from midnight tonight, a four per cent cut over the present Rs 47,017.93 per kl, an industry official said.
The reduction, which comes on top of 17 per cent cut of November 1, followed Government exempting the fuel from payment of 5 per cent customs or import duty.
Airlines, however, did not immediately say if the overall 20 per cent reduction (Rs 11,482.10 per kl) in jet fuel prices in three days will result in lowering of fares. Some of the airlines said they were "studying" the impact.
They had reacted the same when Indian Oil, Bharat Petroleum and Hindustan Petroleum had from November 1 cut ATF price in Delhi by Rs 9,429.87 per kl to Rs 47,017.93 per kl, in line with fall in international oil prices.
The decision to scrap customs duty in order to reduce base price of ATF was one of the demands leading private players Jet Airways and Kingfisher Airline had put foward to overcome their financial woes. High fuel cost and economic slowdown had cut deeply into their profitability, leading to even defaults in payment of ATF bills.
Jet fuel in Mumbai, home to the nation's busiest airport, will cost Rs 46,518.85 per kl as against Rs 48,656.59 per kl presently, the official said.
The price cuts this month follow similar reductions on September 1 and October 1. Cumulatively, prices are down close to 40 per cent from the peak reached in August.
Source: ndtvprofit
Rupee gains 82 paise at 48.64 a dollar
Responding to RBI's decision to inject more liquidity, the rupee on Monday gained a whopping 82 paise to end at a three-week high of 48.64/65 against the American currency.
Dealers in foreign exchange said rupee was aided by slackness in demand for dollar. Strong equity markets also bolstered the domestic unit, they added.
The Indian currency reversed its losing-spree of the past many weeks during which it had hit an all-time intra-day low of 50.15 a dollar (on October 24). Rupee started gaining continuously as the equity markets sustained their rally with the benchmark Sensex gaining 1,828 points since October 28.
The Interbank Foreign (forex) market on Monday witnessed fairly good activity during the day with the domestic currency moving in a range of 48.64 and 49.07.
It opened the day firm at 49.04/05 a dollar from its previous close of 49.46/47 a dollar.
Dealers said foreign banks in the afternoon trade heavily sold dollars which were partly absorbed by importers.
On November 1, the Reserve Bank of India slashed the Cash Reserve Ratio (CRR) by one per cent and the repo rate by 0.5 per cent. The apex bank also reduced the Statutory Liquidity Ratio (SLR) by one percentage point to 24 per cent. All these measure would inject an estimated Rs 85,000 crore into the system.
Meanwhile, the Indian benchmark Sensex soared by another 550 points, or 5.62 per cent, raising hopes that Foreign Institutional Investors (FIIs) may return to equity markets.
Asian indices too were up by about 2.0 to 5.0 per cent. The RBI, however, fixed the reference rate for dollar at Rs 48.96 and for the single European currency at Rs 63.08.
The rupee premiums on forward dollar ended lower due to sustained receivings by exporters.
The benchmark six-month forward dollar premium payable in April ended at 46-49 paise, lower from 52-1/2 - 54-1/2 paise on Friday and far-forward maturing in October also closed down at 70-73 paise from 74-76 paise previously.
In cross-currency trades, the rupee also appreciated sharply against the pound sterling, the euro and the Japanese yen.
The domestic currency spurted against the pound sterling to end the day at Rs 78.71/73 per pound from last weekend's close of Rs 80.22/24 per pound and also firmed up against the single European currency to Rs 62.47/49 per euro from its previous close of Rs 63.06/08 per euro.
The rupee ended stronger against the Japanese yen at Rs 49.10/12 per 100 yen from its last close of Rs 50.56/58 per 100 yen.
Source: ndtvprofit
PM’s message to India inc: No layoffs
Amid the ongoing global financial crisis, Prime Minister Manmohan Singh on Monday appealed to top Indian industrialists not to go for large scale lay-offs which may lead to a ‘negative spiral’.
With worries about the Indian stock markets, and the impact of the liquidity crunch on Indian industry, the prime minister has set up a special cell to deal with the industry's grievances, take their suggestions and implement them.
The panel will have the finance minister, commerce minister and Planning Commission Deputy Chairman Montek Singh Ahluwalia.
He met Mukesh Ambani, Anand Mahindra, K V Kamath, Sunil Bharti Mittal, Deepak Parikh, Shashi Ruia, K P Singh and Rajkumar Dhoot to discuss the state of economy.
The prime minister asked business leaders to remain confident and keep its social obligations in mind and assured them the government will do all it can to protect the growth rate and said top priority currently for his government is to safeguard the Indian financial system.
“We hope that the Indian corporate sector will not let the global crisis shake its confidence. While every effort needs to be made to cut costs and raise productivity," he said.
Besides, CII's Kamath, FICCI President Rajeev Chandrasekhar and Assocham chief Sajjan Jindal represented their chambers and urged the Prime Minister to give direction for enhancing liquidity in the system and restore confidence by lowering the interest rates.
Finance Minister P Chidambaram, Deputy Chairman of Planning Commission Montek Singh Ahluwalia and RBI Governor D Subbarao were on the sides of the Prime Minister for the interaction with the industry to explore options for pushing the economic growth in difficult times.
Senior government officials, including Chairman of Prime Minister's Economic Advisory Council Suresh Tendulkar and Economic Affairs Secretary Ashok Chawla were among those who attended the meeting.
Source: ndtvprofit
Brokers bullish on M&M, Cairn India, Tata Motors, Bharti
Motilal Oswal Securities kept buy rating on M&M with a price target of Rs 826.
Motilal Oswal Securities kept buy rating on Jindal Steel & Power with a price target of Rs 1339.
Emkay kept buy rating on M&M with a price target of Rs 410.
Religare kept buy rating on Cairn India with a price target of Rs 170.
Sharekhan upgraded ICICI Bank rating to buy with a price target of Rs 728.
India Infoline kept buy rating on Bharti Airtel with a price target of Rs 877.
Karvy kept buy rating on JSW Steel with a price target of Rs 586.
HSBC kept underweight rating on TVS Motors with a price target of Rs 29.15.
HSBC kept Neutral rating on Idea Cellular with a price target of Rs 44.
I-Sec kept buy rating on Cairn India with a price target of Rs 163.
Deutsche Bank kept buy rating on Tata Motors with a price target of Rs 250.
Source: Moneycontrol
Hold Indian Hotels Company: PINC Research
PINC Research has downgraded its rating on Indian Hotels Company to hold in its October 31, 2008 research report. "Indian Hotels Co. Ltd. (IHCL) reported an 8% growth in revenues to Rs 3.7 billion in Q2FY09, driven by buoyant room revenues and stable F&B income growth. The company launched a new format of hotels i.e. ‘Gateway’, aimed at young business travellers. 16 existing properties in the company’s fold have been re-branded and repositioned in the new format, with rooms priced between Rs 3k-6k/night."
"While IHCL’s ambitious expansion plans, with a focus on the ‘Asset-Light’ model, are underway, we believe that the marked deterioration in the global economy will erode the company’s pricing power in the immediate term. Additionally, the extended gestation cycle of new projects, especially management contracts, will postpone improvement in IHCL’s operating and financial metrics. Hence, we downgrade our ‘recommendation to ‘HOLD’ and will revisit the same in the subsequent quarters," says PINC's research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy HCC, target of Rs 75: PINC Research
PINC Research has maintained its buy rating on Hindustan Construction Company (HCC) with a target of Rs 75 in its October 31, 2008 research report. "Hindustan Construction Company Ltd’s (HCC) sales grew 18% YoY to Rs 6.5 billion in Q2FY09, on back of a strong order book and increasing contribution from its power division. OPM expanded by 185bps to 12.9% while a change in accounting policy for forex fluctuations relating to FCCBs led to a net profit growth of 72% to Rs 199 million."
"We have valued HCC using SOTP method at Rs 76 per share, where the core construction business is valued at 6x FY10E EPS of Rs 4.8. While we expect slowdown in fresh orders in hydro power segment, irrigation works can sustain growth momentum in the orderbook. Also, Lavasa has received a good response during its recent soft launch. We maintain a ‘BUY’ recommendation with a 12-month price target of Rs 75," says PINC's research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Hold JSW Steel: PINC Research
PINC Research has maintained its hold rating on JSW Steel in its October 31, 2008 research report. "JSW reported net sales of Rs 42.7 billion in Q2FY09, a YoY rise of 65%. Forex losses, higher capital charges and lower other income resulted in a 41% decline in net profit to Rs 3.2 billion."
"JSW has the highest volume growth in the next two years, which has the potential to drive the revenues of the company. We expect it to report net sales of Rs 151.5 billion and Rs 184.71 billion in FY09 and FY10 respectively which should translate into net profits of Rs 11.4 billion and Rs 14.4 billion. We continue to maintain our ‘HOLD’ recommendation on the stock," says PINC's research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Avoid HPCL: India Infoline
India Infoline has maintained its view of avoiding investments in the Hindustan Petroleum Corporation (HPCL) in its November 3, 2008 research report. "Subsidy sharing mechanism has been changed on a qoq basis, which clouds future earnings of the company. Although crude oil prices have seen a sharp correction, but these gains have been partly offset on account of depreciation in rupee. With the stock currently trading below book value, the valuations look attractive but uncertainty with respect to future earnings we maintain our view of avoiding investments in the stock," says India Infoline's research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy Dabur India, target of Rs 91: India Infoline
India Infoline has recommended a buy raing on Dabur India with a target of Rs 91 in its November 3, 2008 research report. "Consolidated revenues grew by 17% yoy to Rs 13 billion led by price hikes and strong volume growth. Net profit increased by 12% yoy; excluding retail operations growth was higher at 18%. Dabur plans to scale up its presence in the shampoo and skin care categories, and build up its OTC portfolio, which is currently very small. The company is also looking at aggressively expanding its homecare portfolio, while the retail venture (under the 'new-u' brand) is expected to provide additional growth triggers going forward. The contribution of international business division has also increased to 19% of the total revenues."
"We expect the operating margins to remain flat due to rising input cost pressures and adspend. The retail venture is expected to record a loss of Rs 175 million in FY09 and is likely to break even by FY10-11. At the current market price of Rs 80, the stock is trading at 15.2x FY10E consolidated EPS of Rs 5.3. We recommend Buy rating on the stock, with a one-year price target of Rs 91 - an upside of 13.2%," says India Infoline's research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy RIL, target of Rs 1914: Indiabulls Securities
Indiabulls Securities Research has maintained its buy rating on Reliance Industries with a target price of Rs 1914 in its October 31, 2008 research report. "During Q2’09, net sales increased 39.8% yoy to Rs 447.8 billion on the back of a robust performance across all the segments, led by higher prices and improved volumes. We have revised our estimates to consider the recent fall in crude oil prices and its subsequent effect on feedstock prices. At the current price of Rs 1,371, the stock trades at a forward P/E of 11.1x and 8.9x for FY09E and FY10E, respectively. Based on our SOTP valuation, we have arrived at a target price of Rs 1,914. Hence, we maintain our Buy rating on the stock," says Indiabulls Securities' research.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
HDFC Bk,PNB,BoB,Union Bk,& Indian Bk top picks of M Oswal
According to Motilal Oswal's report, its top picks are HDFC Bank, Punjab National Bank (PNB), Bank Of Baroda (BoB), Union Bank, and Indian Bank.
Motilal Oswal's Report:
RBI has cut the Cash Reserve Ratio (CRR) by 100bp to 5.5% from its current level of 6.5%. In view of the ebbing of upside inflation risks coupled with concerns of slower growth, RBI has further reduced the repo rate by 50bp to 7.5% from November 3. We expect banks to reduce both lending and deposit rates. Wholesale deposit rates to also reduce. In the last few months, banks have been borrowing at 12-13% and Incremental lending was happening at 14-16%. While the step is positive for all banks, our preference will continue to be on banks having a strong liability franchisee and having low delinquency risks. Our top picks are HDFC Bank, PNB, BoB, Union Bank, and Indian Bank. We also like State Bank of India (SBI) and Axis Bank for their strong liability franchisee; however, asset quality risks are higher.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy Merck, target of Rs 400: LKP Shares
LKP Shares has recommended a buy rating on Merck with an one-year target of Rs 400 in its November 3, 2008 research report. "Merck the 51% subsidiary of the German drug company derives 80% of its annual revenues from ethical formulations like vitamins and cardiologicals, consumer care products like ORS, Nasal drops and Health Supplements. Bulk Actives like Vitamin E, Oxynex and Guaiazulene account for 20% of its revenues. With the company increasing capacities of Oxynex by seven times the next fiscal should see significant export volumes. Merck trading at book value has a dividend yield of more than 7% and at 7xCY’08E earnings can be accumulated by investors with a one-year price target of Rs 400. BUY," says LKP Shares' research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy ICICI Bank, target of Rs 563: Indiabulls Securities
Indiabulls Securities Research has recommended a buy rating on ICICI Bank with a target price of Rs 563 in its October 31, 2008 research report. "ICICI Bank’s Q2’09 results showed the impact of the economic slowdown and high interest rates. Advances rose modestly by 7.2% yoy, while the net profit remained virtually flat yoy at Rs 10.1 billion. For ICICI Bank, our target price of Rs 563 for FY09E is based on the sum-of-the-parts valuation methodology. We have arrived at a per-share value of Rs 380 for the standalone business, based on the three-stage discounted equity cash flow method. We have assumed a 16.51% cost of equity and a terminal growth rate of 6.42% for the same."
"ICICI Prudential Life has been valued at a target NBP multiple of 13x. This gives the life insurance business a valuation of Rs 95. The AMC has been valued at 7% of its AUM, leading to a valuation of Rs 23. We have valued ICICI Securities at Rs 24, based on a target P/E multiple of 7x. Other businesses, taken together, have been valued at Rs 41. Buy," says Indiabulls Securities' research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy Bharti Airtel, target of Rs 1020: Motilal Oswal
Motilal Oswal has maintained its buy rating on Bharti Airtel with a target of Rs 1020 in its November 1, 2008 research report. "Bharti’s 2QFY09 earnings grew 27% YoY and 1% QoQ to Rs 20.5 billion. Revenues grew 42% YoY and 6.3% QoQ to Rs 90.2 billion. We are reducing our estimates to reflect MTM derivative loss and lower EBITDA margins for 2QFY09. We revise downward our FY09 and FY10 revenue estimates by 1%, EBITDA estimates by 1.5-2% and earnings by 4%. We now expect an EPS of Rs 45.7 in FY09 and Rs 55 in FY10. The stock is trading at an EV/EBITDA of 8.3x FY09 & 6.5x FY10 and P/E of 14.2x FY09 and 11.8x FY10. Maintain Buy and our target of Rs 1,020," says Motilal Oswal's research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy Reliance Comm, target of Rs 350: Motilal Oswal
Motilal Oswal has maintained its buy rating on Reliance Communications with a target of Rs 350 in its November 1, 2008 research report. Revenue increased 23.3% YoY and 6.1% QoQ to Rs 56.5 billion. We downgrade our revenue estimates by 1-1.5% and EBITDA estimates by 4-6% for FY09 and FY10. We are downgrading our FY10 PAT estimate by 6% but maintain our FY09 PAT estimate on higher net finance income and lower tax rate. The stock trades at an EV/EBITDA of 6.7x FY09E and P/E of 7.8x FY09E."
"We cut our target price to Rs 350 (Rs 520 earlier), which now reflects 30% discount to DCF for core business and 50% discount to DCF for tower company (implied target EV/EBITDA of 6.7x FY10E). Maintain Buy on upside to KPIs and market share post GSM scale-up. Key risks stem from margin pressure due to aggressive expansion, and upward risk to finance costs," says Motilal Oswal's research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy Kotak Mahindra Bk, target of Rs 555: Motilal Oswal
Motilal Oswal has maintained its buy rating on Kotak Mahindra Bank with a target of Rs 555 in its October 31, 2008 research report. "Kotak Mahindra Bank’s consolidated PAT declined 40% in 2QFY09 to Rs 1.5 billion (pre-insurance business). We have cut our earnings estimates for Kotak Mahindra Bank (standalone) by 22% for FY09 and 28% for FY10 considering the lower business growth, muted fees, lower recoveries and cost pressures."
"We are cutting earnings estimates for Kotak group by 13% for FY09 and 17% for FY10. Adjusted for Kotak Life’s value at Rs 101/share on FY09 basis and Rs 121/share on FY10 basis, the stock trades at 10x FY09E EPS and 7x FY10E EPS. We are lowering valuation multiples for each of the businesses in our SOTP valuation. Our revised target price on SOTP basis stands reduced to Rs 555/share - an upside of 65%. Maintain Buy," says Motilal Oswal's research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy Bharti Airtel, target of Rs 990: Angel
Angel Broking has maintained its buy rating on Bharti Airtel with a target of Rs 990 in its October 31, 2008 research report. "Bharti Airtel recorded an impressive 42.3% yoy growth in Top-line in 2QFY2009 (6.3% qoq). Bharti launched its much-anticipated Direct to Home (DTH) services on October 7, 2008, marking its entry into the Media and Entertainment space and for which it plans to leverage the parent company’s 80 million subscriber base and brand name."
"Going ahead, we expect Bharti to record CAGR of 34.0% in Top-line while Bottom-line is estimated to grow at a CAGR of 27.9% over FY2008-10E. At the CMP, the stock is trading at 11.2x FY2010E EPS, 5.8x FY2010E EV/EBITDA and at an EV/subscriber of USD 162.6 on our FY2010E subscriber base. We maintain a Buy on the stock, with a revised Target Price of Rs 990 (Rs 1,105), including Rs 809 as the value of the core business (14x P/E multiple) and Rs 181 as the towerco valuation," says Angel Broking's research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy Reliance Comm, target of Rs 451: Angel
Angel Broking has maintained its buy rating on Reliance Communications with a target of Rs 451 in its October 31, 2008 research report. "Reliance Communications (RCOM) recorded a disappointing 21.6% yoy growth in Top-line in 2QFY2009. Sequentially, Top-line growth came in at 5.9%. Owing to higher Net Interest Income (up 109% yoy) and Tax credits, RCOM’s Bottom-line grew by 17.3% yoy in spite of the Margin contraction. On a qoq basis, Bottom-line grew by just 1.2%. RCOM this quarter in August launched its Direct to Home (DTH) services under the BIG TV banner with an aim to tap the Home Entertainment space, which has a market size of 120 million Indian households."
"Going forward, we expect RCOM to record a 24.3% CAGR in Top-line over FY2008-10E, while Bottom-line is expected to grow at a CAGR of 15.8% in the mentioned period. At the CMP, the stock is trading at a P/E of 6.6x FY2010E EPS, EV/EBITDA of 5.9x FY2010E EBITDA and at an EV/subscriber of USD 130 on our FY2010 subscriber estimates. We maintain a Buy on the stock, with a revised Target Price of Rs 451 (Rs 595), including Rs 335 as the value of the core business (10x P/E multiple) and Rs 116 as the towerco value," says Angel Broking's research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy IDFC says Pillai
Neppolian Pillai of Modern Shares & Stock Brokers is of the view that in the banking space, Infrastructure Development Finance Company, IDFC looks good and one can buy it at lower levels for the target of Rs 69-77.
Pillai told CNBC-TV18, "When we came in the month of July and where arguing for a rally to emerge from the bottom of 12,500, at that time the capital goods and the banking sector was two pillars, we were basing the theory on and it worked out fine, but after that the capital goods have already collapsed the charts are both comparative and the price charts."
He further added, "In the banking, the comparative charts that is, the Bankex, the Sensex that still is holding above the uptrend line but the price chart, the pure Bankex chart has gone below its 5-year uptrend and it has closed below last month. That means the momentum upside on the banking stocks will eventually fizzle out at some point of time and that will be the last sector standing up which will collapse in the next downtrend in the market. So obviously in this rally, I wouldn’t touch banking side on the buy side but maybe if I am already long, I will gradually reduce position as and when this interest rate cuts come and because of that these stocks rally."
"I would surely like to sell into banking stocks maybe from a stock pick kind of a view, again with the caveat that whatever stock I am going to mention today will be purely for trading not for investment. IDFC within the sector looks good maybe if one can buy in the region of about Rs 58 to about Rs 45, then one should get a target of Rs 69-77 trade that for a 20% kind of a thing and leave the stock at a higher level."
Source: Moneycontrol
Metal stocks can rally 10-15%: Bose
Technical Analyst, Rajat K Bose is of the view that metal stocks can rally 10-15% from current levels and Nifty has major resistance around 3,150-3,200 and so he suggests booking profits on those levels and not banking on any further.
Bose told CNBC-TV18, "I would say that these days taking a view of more than 48 hours is risky. Today one will see a gap up opening in all of these stocks. So maybe Sterlite Industries will open something like Rs 295 and it can move up to say Rs 305-310 and Rs 320 would be a major resistance area."
He further added, "Similarly for HIndalco, JSW Steel, Tata Steel they might move up but all these stocks would be executing some sort of relief rallies and so if you are taking a short-term position that is fine but please do not indulge in any kind of long-term buying at these levels thinking that valuations are cheap and this is actually going to be a major rally because the long-term charts either on the stocks, or metals or real estate or banking or even the indices, the long-term charts are suggesting that we are in a multiyear bear market and this is only a relief rally because we have extended too far away from 200 DMA (day moving average) and that is why we are playing a catch up game and once that is through a downtrend will begin."
"My guess is that these metal stocks will not be rallying anything more than 10-15% from current levels and the Nifty has major resistance around 3,150-3,200 and so I would suggest booking profits on those levels and not banking on any further."
Dislcosure: It is safe to assume that analyst and his clients may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol
Sell Suzlon Energy on rise: Bose
Technical Analyst, Rajat K Bose suggests those who have stuck earlier in Suzlon Energy to liquidate at higher levels because this chart looks very weak on the medium and long-term perspective.
Bose told CNBC-TV18, "There is a bounce back in Suzlon, but beyond that I would suggest that one should not be reading too much into this because unless and until Suzlon staying above Rs 53-57 range, there would be no sustained rallies. Sustained rallies might actually take up then maybe to Rs 69-70 but as of now crossing Rs 53-57 would be a tall order."
He further added, "Even if it crosses Rs 49 during the day, I would happy then we can look up to something like Rs 54-57. I would suggest anybody who has got stuck earlier to liquidate at higher levels because this chart looks very weak on the medium and long-term perspective."
Dislcosure: It is safe to assume that analyst and his clients may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol
Bank of India looks good in PSU banks: Bose
Technical Analyst, Rajat K Bose is of the view that among PSU banks, Bank of India looks pretty good.
Bose told CNBC-TV18, "My favourites are HDFC Bank and Axis Bank. These bank stocks have got good momentum. Axis if it maintains above Rs 591 although now it is above Rs 600 then atleast one can get 5-10% move even during the day itself."
He further added, "If HDFC bank maintains above Rs 1,104 then one can expect further upswing otherwise say between Rs 1,100 to Rs 1,105 there would be some resistance, some profit taking maybe possible. One can look at Bank of India among the PSU banks that look pretty good."
"So instead of opening short position, I would rather play long and chances are that today we would actually have a up day and close will also be pretty high."
Dislcosure: It is safe to assume that analyst and his clients may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol
Do not buy Reliance says Pillai
Neppolian Pillai of Modern Shares & Stock Brokers is of the view that one should not buy Reliance Industries unless it closes above Rs 1550.
Pillai told CNBC-TV18, "That’s why I feel I was negative on Reliance even at Rs 2,300 with a target of Rs 1,500. Now Rs 1,500 seems to be the best-case scenario in a rally . The importance of this 50-month averages, the same averages for Reliance is in a band of about Rs 1,350-1,510, so the upside is capped surely at about Rs 1,510."
He further added, "I am more worried not from the point of view of Reliance as a stock, but then if these averages act as resistance, I think the next time around this stock collapses then it is going to give up easily Rs 500-600 from here, the downside target is about Rs 875 now if that were to happen then you know what a Nifty or a Sensex could do eventually on the downside. So for us as a house on the upside any stocks rallying, which is broken through the 50-month is a sure sell at least it is not a sure buy that’s very clear. If one doesn’t want to sell it’s their personal call but absolutely don’t make any mistake in buying into this stock, so that stock would continue to remain a sell for us unless and until it doesn’t close above Rs 1,550 then we will take a fresh call on it."
Source: Moneycontrol
Hold Hindalco: Bhambwani
Technical Analyst, Vijay Bhambwani is of the view that one should hold Hindalco Industries as the stock is likely to go to more than Rs 200 levels in the coming 2-3-4 years.
Bhamwani told CNBC-TV18, "Over the last fortnight, I have been bullish and I have been recommending a buy on Hindalco. I think part of the jig saw puzzle is in the commodity’s market, I think Hindalco is also likely to derive direction from aluminium prices after touching Rs 92/kg on the MCX, aluminium is now again back to more than Rs 102-103 levels. I think the negative news that you are seeing over the large inventories in London Metal Exchange (LME) etc is clearly indicating that cyclicals are nearing absolute bottom in the down phase."
He further added, "I would advice this gentlemen not only to hold on but if his budget permits to average more at the current levels and wait for 2-3 years. I am pretty optimistic that the stock is likely to go to more than Rs 200 levels in the coming 2-3-4 years, and this would turn out to be a multi bagger for people buying at Rs 60-65 levels."
Source: Moneycontrol
Exit Glenmark on advances above Rs 365-370: Bhambwani
Technical Analyst, Vijay Bhambwani is of the view that one should exit Glenmark Pharma on advances above Rs 365-370.
Bhamwani told CNBC-TV18, "In the short to medium-term Rs 365 is a level I would look at for signs of resistance. Unless it crosses Rs 365 with heavy volumes and fresh commitment from bulls, the stock has poor chances of going above the Rs 365 levels on a sustained basis."
He further added, "Unless one has ample time on hand, he/she should be looking at exiting on advances above Rs 365-370. If one is taking two-three year view maybe its something else because the stock has strong market out performer. Its out performed the Nifty and BSE-30 by huge margin. So one might have opportunity losses elsewhere, but it’s a call that one has to take whether he/she has the kind of time to wait for 36 months."
Source: Moneycontrol
Expect Hindalco to rise 40-50% from current levels: Tulsian
Investment Advisor, SP Tulsian is of the view that one can at least see a further rise of 40-50% in Hindalco Industries from the current levels in 6-8 months.
Tulsian told CNBC-TV18, " I think all the negative things started in the company, when the promoters did not convert their warrants and the rights issue devolved both things happened on the same time on October 10. Obviously Rs 96 was very high price, even the secondary market was Rs 80 but since then, in fact the fall from Rs 80 to Rs 40 or whatever level, which we are referring may be Rs 36-35 has mainly come by selling by the under writers. There were 22 under writers and all of them have dumped the stock by making a loss to the extent of over 30-40%. Probably I think that was the last straw that may be whatever negative news we had in the market or in the stock has come, since then may be I think in less than three days, if you see the effective working, I think on Monday the stock touched the low of Rs 40 and today we are seeing Rs 66 almost a rise of close to may be 60% or more than 65%. Probably this share will inch back to the three-digit mark in the next 6-8 months, it is definite that these cycles or the metal cycle is on a downturn."
He further added, "The aluminium prices have fallen to USD 2,000/tonne but this company is in a very interesting place because with a fall in aluminium prices Novelis the company which they have acquired and for which they have made the rights issue will stand to gain, while the domestic operations will get marginally effected because of the lower realizations of the aluminium. Same thing is happening with copper but whatever bad has to happen has happened. But in the next 6-8 months one can expect three digit price in the stock. From here on there are very low chances of again share even slipping below Rs 60 because the fundamental and the massive selling by the under writer has resulted in the share’s price to fall to Rs 40 levels, which we will not see happening again may be technical correction of Rs 5 here and there is not too material for the stock but yes, it has upside potential from here on, and as I said that from 6-8 months one can at least see a further rise of 40-50% from the current levels."
Disclosure: The analyst has holdings in Shree Renuka, Hindalco, Ranbaxy.
Source: Moneycontrol
Exit Ranbaxy above Rs 220-225: Bhambwani
Technical Analyst, Vijay Bhambwani is of the view that short term investors should get out from Ranbaxy Laboratories above Rs 220-225.
Bhamwani told CNBC-TV18, "If Ranbaxy has to fall in a panic kind of a situation, I doubt it will fall below Rs 145 in a worst case scenario, at least what is apparent from the current situation. On the upside, I see resistance at Rs 210 in the short-term, once one see a crossover above Rs 210 with very heavy volumes and very convincing fresh commitments from bulls, then it could be a trend determining kind of a breakout. But the strength of the breakouts needs to be very strong for the stock to actually start to go up with strong momentum. If one has a very short time frame in mind, I think Rs 220-225 is where he/she should get out at. But if one has time and patience by all means please wait."
Source: Moneycontrol
Banking sector looks good: Tulsian
Investment Advisor, SP Tulsian is of the view that overall prospects for the banking sector looks quite good from hereon.
Tulsian told CNBC-TV18, "If you take the liquidity scenario, I think it has eased out that is the reason you have seen the call rates also dropping from about 20% to now about 7-8%. Definitely there won’t be any problem or fear for the large corporate or the rated securities which are highly rated one and they can definitely able to avail but problem will continue to remain maybe for the rate sensitive sectors like automobiles or housing or even the SMEs because it will be difficult, bank will be a bit cautious. Right now they have been putting their house in order in respect to the overdrawn amount which they have been operating all along. All these rate cuts will give them relief to adjust or to settle that."
He further added, "Coming on the policy front, I do not think RBI will really be able to go or slash further in the CRR. The prospects or the possibility of reduction remains in SLR, remains in repo rate but I do not think that will really happen for CRR. But if I take an overall scenario the kind of credit squeeze and all that and the rate cut which is inevitable for banks for both deposit as well as for lending all makes good way for them to have the credit growth beyond the expected maybe 15-18% which was earlier thought of. Now they will be able to do it or maybe able to do better so overall prospects for the banking sector looks quite good from hereon."
Disclosure: The analyst has holdings in Shree Renuka, Hindalco, Ranbaxy.
Source: Moneycontrol
Glenmark has potential to move back to Rs 375-400: Tulsian
Investment Advisor, SP Tulsian is of the view that Glenmark Pharma has potential to move back to Rs 375 to Rs 400 in the next two-three months.
Tulsian told CNBC-TV18, "I think Glenmark Pharma having tested or breached Rs 300 level and post September quarter results which have been good, online with Q1. At least has been given a base that may not breach Rs 300. From hereon the stock has potential to move up to Rs 375 or maybe closer to Rs 400 over next three-four months time because the problem of the research coming to an end of the company and taking a hit on that will definitely be hampering that next two quarters results if that may not happen in Q3 maybe in the next year. But taking overall call on the profitability and looking to the results. I think share has potential to move back to Rs 375 to Rs 400 in the next two-three months. From hereon the downside is very limited so one can remain invested. Think of exiting at the time when the stocks moves up to those levels of about Rs 375 or so."
Disclosure: The analyst has holdings in Shree Renuka, Hindalco, Ranbaxy.
Source: Moneycontrol
Buy UCO Bank: Tulsian
Investment Advisor, SP Tulsian is of the view that UCO Bank, Dena Bank, Andhra Bank, Allahabad Bank they all are having a PE of 4-5 but amongst them also this is probably the cheapest available, restructuring of the equity as we have discussed by Rs 250 is a big booster for the bank. This qualifies as a buy at the current level.
Tulsian told CNBC-TV18, "In UCO Bank there has been a positive effect that was all expected from the government that they will be restructuring part of the equity; out of 800 crore they have restructured it 250. Earlier it was thought that probably government will convert 300 crore into preferring shares making the paid up equity at 500 crore but now it has remained at 550 – never mind because if you take the financial performance of the bank for the first two quarters they have reported a net profit of about 120-135 crore respectively for Q1 and Q2 and if I take the normal growth as just now we have discussed overall for the banking sector the bank should be able to post an EPS close to Rs 10; share is now ruling at Rs 31 definitely makes a PE multiple lowest amongst all the public sector banks."
He further added, "It’s true that even larger ones have a PE ratio of about 5-6% while the smaller ones like UCO Bank, Dena Bank, Andhra Bank, Allahabad Bank they all are having a PE of 4-5 but amongst them also this is probably the cheapest available, restructuring of the equity as we have discussed by Rs 250 is a big booster for the bank. This qualifies as a buy at the current level those who have been waiting for the stock to buy at the current levels."
Disclosure: The analyst has holdings in Shree Renuka, Hindalco, Ranbaxy.
Source: Moneycontrol
Buy Shree Renuka Sugars: Tulsian
Investment Advisor, SP Tulsian is of the view that Shree Renuka Sugars is virtually rolling at its lowest level. So it is a good buy.
Tulsian told CNBC-TV18, "I am very positive on the sugar sector because the production this year will be very low though the expectation is of about 21 milion but probably the production figures will be close to 19-20 million. So that will definitely see the sugar prices going up from April 2009 because by the time crushing season ends in UP and Maharashtra and by that time the general elections in the country are likely to get over. So post that I won’t be surprised, if I see a rise of may be Rs 3-4/kg in the sugar prices, which will be very good and that will be on a sustainable basis for next 1-2 years because production thereafter will still be lower than 20 million tonne all this."
He further added, "Shree Renuka Sugars being one of the largest player in the country and one of the largest player in Ethanol and sugar also, the share is virtually rolling at its lowest. So it is a good buy. My advice is that remain invested and even this qualifies as a buy at the current levels."
Disclosure: The analyst has holdings in Shree Renuka, Hindalco, Ranbaxy.
Source: Moneycontrol
Punj Lloyd a best choice for a trader: Sukhani
Technical Analyst, Sudarshan Sukhani is of the view that Punj Lloyd would be the best choice for a very short-term trader.
Sukhani told CNBC-TV18, "I used to like Punj Lloyd and then it fell down 50%. So it becomes very difficult - all of them are at 20-30% off their levels.
He further added, "Frankly, I like Punj Lloyd and Hindustan Construction both. That does not mean much because they have fallen a lot. So they need to make those bases before anyone can invest in it. For a trader who is looking for a very short-term move, I think Punj Lloyd would be the best choice."
Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol
Don't buy real estate stocks: Sukhani
Technical Analyst, Sudarshan Sukhani is of the view that one should not buy real estate stocks.
Sukhani told CNBC-TV18, "I would not buy DLF. We have to remember it was Rs 1,200. So these 15% moves are coming of very low basis. I would not touch real estate, no matter what happens to it in the near-term. It is very risky and it can collapse - even if it does not there are much better opportunities. After all capital is scarce."
Source: Moneycontrol
Clariant Chem an opportunity for investment: G Shah
Gaurang Shah of Geojit Financial Services is of the view that at current market price the Clariant Chemicals India is a fantastic opportunity for an investment period of something like 18-24 months. It has a price target of around about Rs 215 with that kind of a timeframe in mind, he added.
Shah told CNBC-TV18, "A lot of industries and sectors have been spoken about and the slow down like the four-wheelers. We feel that speciality chemicals is one particular segment that is going to outperform going forward and in that we have identified that Clariant Chemicals India Limited as our pick in the midcap pack. The reason why we like this particular stock is because it is one of the leading manufacturers of speciality chemicals in India. The company has got a good support from its parent company Clariant AG Switzerland wherein the parent company going forward is going to increase its focus as far as the outsourcing is concerned from the Indian subcontinent which automatically translates into a great growth opportunities going forward."
He further added, "Clariant incidentally caters to sectors like pharmaceuticals, agrochemicals, dyes and pigments. We feel that these verticals have not witnessed as much slow down as witnessed in some sectors like real estate, may be IT or four-wheelers and considering the kind of product accessibility and market share that Clariant has in the Indian subcontinent, we are quite confident that at current market price the company is a fantastic opportunity for an investment period of something like 18-24 months. We have a price target of around about Rs 215 with that kind of a timeframe in mind."
Disclaimer: Analyst personally does not hold this stock but has recommended it to his clients.
Source: Moneycontrol
T stocks end weak on fear of US outsourcing slowing
Despite a positive rally in the market after Reserve Bank of India moved to ease liquidity in the financial system, frontline IT stocks including Infosys, Satyam and HCL, on Monday, ended the session in red on worries over increasing possibility of Barack Obama becoming the next US president.
IT stocks witnessed a downward pressure on speculation that if Obama wins the US presidential election, the outsourcing business of the country will be curtailed and the direct impact will be on IT sector, brokers said.
Amid persisting global financial crisis, volatile rupee has also raised concern for the IT sector as most of the companies are export dependent and a major business share comes from US, said a senior official of a leading foreign broking firm.
Reports of further widening Satyam-World Bank scam also pulled down Satyam Computer shares, which fell nearly 2 per cent to close at Rs 300 Infosys was down 1.06 per cent at Rs 1367 and HCL Technologies closed marginally down at Rs 172.25. However, TCS and Wipro managed to end with a positive gap at Rs 549 and Rs 276.25, respectively.
The Sensex surged by nearly 550 points to close above 10K level after the RBI announced rate cuts last week.
The apex bank cut the cash reserve ratio to 5.5 per cent and statutory liquidity ratio by 1 per cent to 24 per cent and 50 basis points cut in repo rate to 7.5 per cent under liquidity adjustment facility.
Source: EconomicTimes
Sensex, Nifty end at day's high
Fresh buying in the last one hour of trade saw indices close towards day’s high on Monday. Rate cut by the Reserve Bank of India provided much needed momentum to capital goods, power, realty and banking stocks. All the sectoral indices ended in the green.
Bombay Stock Exchange’s Sensex closed at 10,358.75, up 5.83 per cent or 570.69 points. The index touched an intra-day high of 10,363.31 and a low of 10,112.66.
National Stock Exchange’s Nifty ended at 3057.15, up 5.95 per cent or 171.55 points. The 50-share index hit a high of 3062.05 and a low of 2885.40.
BSE Midcap Index ended 4.89 per cent higher and BSE Smallcap closed 4.47 per cent up.
Amongst the sectoral indices, BSE Capital Goods Index surged 9.18 per cent, BSE Realty Index jumped 8.15 per cent and BSE Power Index surged 7.68 per cent.
Reliance Infrstructure (20.39 per cent) Jaiprakash Associates (18.02 per cent), DLF (15.73 per cent), Ranbaxy Laboratories (14.34 per cent) and State Bank of India (14.02 per cent) were the top Sensex gainers.
Satyam Computers (- 1.56 per cent) and Infosys Technologies (-1.06 per cent) were the top losers.
Market breadth was positive on the BSE with 1968 advances and 634 declines.
(All the figures are provisional)
Source: EconomicTimes
Global investors pull out $480 mn from India funds in October
Global investors have pulled out a whopping over 480 million dollars from India-focused funds last month, with as much as 120 million doll
ars flowing out in the last week, amid the meltdown in the equity markets.
India-focused funds have witnessed the highest outflows among all the Asian funds in the last four weeks, followed by China funds, which saw redemptions of over 286 million dollars, as per data compiled by global fund tracking firm EPFR.
India-focused country funds saw an outflow of 119.7 million dollars in the last week of October, while for the past four weeks the toll has been as much as 482.2 million dollars, according to the data.
However, so far this year, the total redemptions from India-dedicated funds have been the second highest, of over two billion dollars, while China-focused funds have witnessed the highest outflows of 2.8 billion dollars in 2008 so far.
The Indian benchmark index Sensex dropped over 3,000 points from over 13,000 to below 10,000 in October, while China's Shanghai SE Composite Index had fallen from over 2,100 to below 1,700 in the last month.
Asian equity funds excluding Japan extended their losing streak to the eighth week in a row and recorded net outflows of USD one billion in October. In the last week of October they suffered an outflow of over 386 million dollars.
"Risk aversion and fears of softer US demand dominated hopes of developed market rate cuts during late October, with trade-dependent Asian markets being hit particularly hard," the EPFR report stated.
Source: EconomicTimes
RBI move may extend rally; all eyes on global cues
The sooner-than-expected measures by the Reserve Bank of India (RBI) to ease the money-supply crunch, including an interest rate cut, may ena
ble the bulls to stretch Friday’s rally into early next week. But as the week progresses, the domestic investors will look for directional cues from US and European markets.
The US market rose nearly 2% on Friday, as investors cheered JP Morgan Chase’s measures to stem the crash in America’s housing market. The Fed slashed the benchmark interest rates last week and indicated additional cuts to revive the economy, prompting other central banks to trim the rates in a co-ordinated manner. Equities across the world rallied strongly as a result. Investors in Indian equities took a special note of the decline in inflation, triggering hopes of interest rate cuts, and the Standard & Poor’s (S&P) statement that India’s investment-grade credit ratings is safe.
Investors expected RBI to cut rates next week, with the overnight inter-bank lending or call rates rising to a 19-month high of roughly 20%. “We expect more upsides in stocks early next week, as the much-needed interest rate cut was earlier than anticipated,” said Mirae Asset Global Investments senior fund manager Gopal Agrawal. “For any rally to sustain, it is important that there are no fresh issues in global markets and economies,” he added.
The liquidity-injecting measures initiated by several countries last week, following the free fall in equities to four-year lows, has improved investor sentiment world-wide. “In the past few days, we’ve received more requests for stock screens than usual. This may mark a shift in sentiment, from the relentless selling of recent weeks to finding buy ideas,” said UBS Securities in a report on Asian equities. Analysts are, however, unsure whether the bear market is nearing an end. Global investors remain averse to risky assets. Moreover, the credit crunch threatens to jeopardize the growth plans of companies in developing economies such as India. “We continue to believe that investors are underestimating the impact of the credit crunch on countries having current account deficits,” Nomura International Asia and emerging markets analyst Sean Darby said. Driven by high oil prices in recent years, India has a large current account deficit and this shows the extent to which a country’s consumption exceeds its production.
Source: EconomicTimes
Global crisis impacts India; do everything to push growth:PM
Prime Minister Manmohan Singh today said the global crisis had impacted corporates, banks and investor sentiment, but assured that the banking system and deposits were safe and the government would take more steps to protect economic growth.
"A crisis of this magnitude was bound to affect our economy and it has. International credit has shrunk with adverse effects on our corporates and banks. Global uncertainty is also tending to dampen investor sentiment," he said during a meeting with India Inc to review the state of the economy in the face of the global meltdown.
He asked industry to refrain from any "knee-jerk" reaction such as large-scale layoffs, which might lead to a negative spiral, and said "industry must bear in mind its societal obligations in coping with the effects of this global crisis", which the Prime Minister felt "is now likely to be more severe and prolonged".
"Our first priority was to protect the Indian financial system from possible loss of confidence or contagion effect ... the situation is abnormal and we need to be constantly on the alert. The situation is being watched on a day to day basis and more steps will be taken if required."
The meeting was attended, among others, by Ratan Tata, Mukesh Ambani, K V Kamath, Shashi Ruia, Deepak Parekh, K P Singh, where Finance Minister P Chidambaram, RBI Governor D Subbarao and Planning Commission Deputy Chairman Montek Singh Ahluwalia represented the government.
Singh said additional liquidity and reduction in repo rate will help to "provide credit at reasonable rates".
He said, "The government will take necessary monetary and fiscal policy measures on the domestic front to protect our growth rates," adding that India will also seek reform of international financial institutions to prevent recurrence of such crisis.
The Prime Minister said that Indian "banks are well regulated and also well capitalised. I think we have successfully conveyed to our people that our banking system, both in the public and private sector, is safe, and the government stands behind it and that no one should fear for the safety of bank deposits."
Detailing the several measures taken to infuse liquidity into the system to ensure adequate flow of credit, he said, "I believe these steps have made a substantial difference. We recognize that the situation is abnormal and we need to be constantly on the alert. The situation is being watched on a day-to-day basis and more steps will be taken if required."
Singh exuded confidence that the country's financial system would be stable and function well following recent measures, while adding that the negative impact on the real economy needs to be minimised.
"The public sector banks have been instructed to ensure that they act counter cyclically in this situation to counter the general erosion of confidence," he said.
Source: EconomicTimes
British banks Lloyds and HBOS raising $28 billion in new capital
British banks Lloyds and HBOS said on Monday that they are raising 17 billion pounds ($27.7 billion) of new capital, backed by the government
, and confirmed that Lloyds is going ahead with its planned takeover of HBOS.
Lloyds TSB Group PLC said it will try to raise 4.5 billion pounds ($7.3 billion) from investors in a share offering, while HBOS PLC is looking for 8.5 billion pounds ($13.8 billion) worth of investor money, the banks said in a statement.
However, if private investors do not buy the shares, the British government has guaranteed that it will _ on the condition that Lloyds takes over HBOS, on the terms agreed to in October.
The government has also agreed to buy a total of 4 billion pounds ($6.5 billion) worth of preference shares in the two banks on the same condition.
Monday's statement allowed Lloyds and HBOS to confirm that the merger, which has been plagued by market doubts, is indeed going ahead.
``The acquisition of HBOS represents a compelling opportunity to accelerate Lloyds TSB's strategy and create the U.K.'s leading financial services group,'' the banks' statement said.
It added the name of the new company would be Lloyds Banking Group PLC.
In separate statements Monday, both Lloyds and HBOS also published their third quarter earnings reports, which revealed that both suffered sharp falls in profits during the third quarter as a result of the ongoing market turmoil and mounting bad debts.
Lloyds said it had sustained a ``substantial'' fall in pretax profits for the first nine months of the year, with before-tax profit in its wholesale and international banking division dropping 270 million pounds ($438 million) during the third quarter compared to a year earlier.
HBOS said writedowns will reduce its 2008 profit by 5.2 billion pounds ($8.4 billion) and cut reserves by 3.8 billion pounds ($6.2 billion).
The losses are evidence that both banks need the government money, which they will only receive if the takeover is completed.
The planned merger would also result in important cost savings for the banks. Lloyds said Monday its takeover of HBOS would save it over 1.5 billion pounds ($2.5 billion) a year _ more than previously estimated.
Lloyds did not say how many jobs would be cut following the takeover.
Source: EconomicTimes
South Korea unveils 14 trln won economy package
South Korea unveiled on Monday an economic stimulus package worth at least 14 trillion won ($10.98 billion) to help assure a soft landing in
Asia's fourth-largest economy in the face of a looming global recession.
The Finance Ministry said it would expand fiscal spending by 11 trillion won in 2009 and offer additional tax cuts totalling 3 trillion won. It also said it would sharply raise the size of bond sales to fund intervention in the foreign exchange market and offer a state guarantee on foreign-currency deposits at local financial institutions.
Source: EconomicTimes
US heads into another real estate mess
Walk the streets of midtown Manhattan, listen to the jackhammers, look at the cranes on so many blocks and you might conclude: these people are in the midst
US mortgage crisis: A subprimer
of a big commercial real estate boom.
You might be right, but not for long.
Non-residential property investment in the United States, which usually tracks economic growth with a delay, has stayed unusually strong unusually long into what is looking like an increasingly ugly and protracted recession.
And that is pretty bad news, both for the economy and the banks. The economy is about to suffer the latest dropping of other shoes when non-residential construction, which includes everything from hotels to office buildings to manufacturing plants, turns sharply south and removes one of its few supports.
There simply won't be enough demand for all of these new office buildings, malls and hotels, even in places that aren't banking centres. And manufacturing and power construction, which have been very strong, may be hit by dropping demand, both at home and overseas, as a global downturn takes hold.
Development will slow or contract, jobs will be lost and economic activity diminish.
And the banks themselves, which are already such basket cases they require government support, are about to see the value of the commercial real estate loans they own get whacked, prompting yet another self-reinforcing cycle of loan writedowns, tightening credit and loss of confidence. "It takes a lot of time until projects are finished and there were a lot of things in the pipeline. But developers are probably not very happy about it," said Harm Bandholz, an economist at Unicredit in New York.
Because it takes time to plan, finance and build a building, it is not unusual for development to carry on after gross domestic product growth begins to weaken, but this time it has defied gravity. "Usually you have a tight correlation between GDP and construction, with a lag of two quarters. This is unprecedented," he said.
Private investment in structures grew by 14.3 per cent in the second quarter as compared with the quarter before and though it is a fairly small sector actually contributed almost a half a percentage point to GDP growth.
The growth was concentrated in the manufacturing, power, lodging and office sectors, all of which face considerable headwinds now. Manufacturing is sensitive to domestic and global growth, which is falling. Power plants may be less profitable with oil now in double rather than triple digits. Hotels would seem to be a natural to lose out during a recession, and offices need businesses and workers, of which there will be fewer.
Source: EconomicTimes