Market 17 Jan 2011

Bugged by high inflation, poor industrial numbers and uncertainty over the ability of the government over policymaking in the Budget session, markets continued to trade on a weak note during the week-ended.

On the Bombay Stock Exchange, the Sensex shed 769 points closing at 18,860 and the Nifty ended 250 points lower at 5,655. It was a nightmarish week that left market players gasping and exposed the shallowness of the market.

Renewed FII selling, disappointment over Infosys’ results, petrol price hike and fears over a possible interest rate hike have spooked the market sentiment. Analysts expect markets to stabilise and perform better, if the earnings next week come up with positive surprises.

After the consent order of Reliance ADAG group companies, the next will be consent order to Reliance Industries, say sources. The impact of the consent orders is likely to be shortlived. It is pertinent to see that while the US stocks rose for a seventh straight week, the longest rally since May 2007, Indian markets had their worst weekly fall in more than eight months. As expected, domestic factors are weighing more on the markets than optimism prevailing in global markets.

For the week ahead, chartists predict a trading band between 5,380 and 5,850 for the Nifty, and 18,160 and 19,000 for the Sensex. Supports for the week are at 5,605, 5,540 and 5,380 for the Nifty and 18,700, 18,520 and 18260 for the Sensex. Cut all short-term position trades, if the Nifty closes below 5,605, the 200-day moving average of Nifty.

The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell.

Futures & Options

Intra-day swings of 200 points in the Nifty reflect the heightened volatility in the markets. Alternate bouts of buying and selling have kept the traders on edge throughout the week ended.

Stock scan

Ahmednagar Forgings Ltd (AFL) of the Amtek group is the second largest manufacturer of forged automotive components, cold forged parts and high tensile fasteners in India. The company also manufactures components for non-auto sectors such as railways and specialty vehicles.

Within the industry, AFL has the highest operating profit margin. Analysts expect the company to report earnings of `24 per share for the current year. Buy on declines for a target price of `250 in the medium term.

Artson Engineering Ltd has reportedly bagged lar-ge orders in the last couple of months. With Tata Projects Ltd as strategic investor and co-promoter, the company is back on track, say company sources. With a good visibility of earnings, the stock is a good buy on declines for a price target of `125 in the medium term.

West Coast Paper Mills Ltd is one of the larger players in the paper industry. It manufactures writing, printing and packaging paper. After the completion of expansion, the production capacity is presently 3,20,000 tonnes per annum and the introduction of superior grade paper has improved operating margins of the company. Buy on declines for a price target of `150.

Sentiment indicators like put/call ratio, implied volatility, open interest and VIX indicate continued volatility in near term. Volumes in the option segment are on the rise reflecting traders’ fears over the dangerous volatility in the futures segment. Buy Nifty call option of 5,800-strike, if Nifty holds the 200-day moving average level.

* Renewed buying was seen in cement counters on the back of expectations of an improved off-take and an increase in retail prices in several parts of the country. Buy on declines ACC, Ultratech and Birla Corp.

* Mild sell-off was seen in technology counters after the announcement of Infy results. However, punters were seen accumulating TCS, Wipro and HCL Tech at lower levels. Surprising gains are likely.

* The weekend hike in petrol prices will not offset the losses made in diesel and LPG, assert oil marketing companies. Adopt sell on rallies strategy.

* Metal stocks lost sheen on heavy profit booking. Avoid for present and wait for the FPOs of Tata Steel and SAIL to be completed, say industry sources.

* Among the stock futures looking good in an otherwise uncertain market are Petronet LNG, Power Grid, Bharti, Adani Enterprises, Grasim, M&M, Jain Irrigation and Suzlon.

Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected. The key is not to get scared out of them.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are strongly recommended to consult their financial advisors before making any financial investments. This newspaper is not liable for investment decisions made on the basis of recommendations in these columns.

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Market Khabar 10 Jan 2011

Spooked by negative economic cues such as the surge in food inflation, the markets have begun the New Year on a bad note. On the BSE, the Sensex ended 880 points lower at 19,692 and the Nifty on the NSE shed 230 points to close at 5,905. Markets suffered their worst single-day fall in more than seven months on the “Black Friday”. Selling was seen across the board and all the sectoral indices ended in the red. Bulk of the damage was done by metals and rate sensitive sectors.

Ahead of third quarter results, profit taking was seen in frontline IT counters. The market sentiment turned negative due to the concern over a possible interest hike by the RBI during its next policy meeting on January 25, renewed institutional selling and stubborn inflation. Fears over the stalemate between the ruling coalition UPA and the opposition NDA spilling over to the Budget session and impacting policy-making are casting a negative shadow. Weekend positives such as strong export performance, stability in the US markets and assurances over the state of economy by the Prime Minister and the finance minister may see markets recoup some of the recent losses.

Key events to watch in the week ahead are the announcement of IIP and WPI data. For the week ahead, chartists predict a trading band of 19,320 and 20,140 for the Sensex and 5,820 and 6,080 for the Nifty. Supports for the week are at 19,510 and 19,330 and 5,840 and 5,780. Expect resistance to the indices at 19,820 and 20,100 and 5,970 and 6,040.

It is pertinent to recall that the Nifty has found strong support near 5,680 and 5,750-level and similarly faced a strong resistance at 6,175 and 6,225-level in the last eight weeks.

An important key to investing is to remember that stocks are not lottery tickets. The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell.

FUTURES & OPTIONS
Mirroring the weak undercurrent in the cash market, a lackluster trading was seen in the derivatives segment. Volumes improv-ed as the selling during the latter part of the week accelerated unwinding of longs and build up of shorts.

Low rollovers and open interest was indicative of low confidence and caution among the market players over the near-term direction of the markets. Contrarians feel that selling action is slightly overdone and a mild recovery is on the cards ahead of the Q3 numbers.

* The finance minister’s promise to support oil companies suffering from under-recoveries may trigger some action in counters such as IOC, HPCL, BPCL and ONGC. Strong refining margins may give fillip to Reliance Industries.

* Corrections in frontline IT counters will be short lived, assert industry watchers. Results of Infosys and its guidance will provide clues over the health of the IT sector.

* Banking stocks are facing selling pressure on every corrective rally on the fears of erosion in net interest margins and high interest rate regime impacting credit off-take. Contrarian buying suggested in selective banks.

* Healthcare and power stocks are attracting buying at lower levels. Follow up buying may see counters like Ranbaxy, Divi Labs, CESC, GMDC and Tata Power post gains.

* Auto stocks may continue to skid on slippery outlook. Sell on rallies suggest punters.

* Firm dollar may put metals and other commodities on back foot. Slight caution warranted.

STOCK SCAN
* Maharashtra Seamless is the country’s largest manufacturer of seamless steel pipes used by sectors such as oil and gas, boilers and heat exchangers, bearing and general engineering industries. The company also manufactures another category of pipes called ERW pipes used in drinking water and sewage treatment; and also has a power division. A recent expansion to produce pipes of 14-inch diameter for the first time in India and a good order book spell good earnings growth in the coming quarters. Buy on declines for a target price of `550 in the medium term.

* Gujarat Flourochemicals is India’s largest and most competitive producer of refrigerant (HCFC22) and has a strong presence in international markets. The company has a healthy revenue stream by sale of carbon credits and commissioned power plants of 53 MW. The company also has a subsidiary, Inox Wind Ltd, which has manufacturing facilities for wind turbines. After the weak second quarter performance, the company is expected to post improved operational margins in next few quarters. Accumulate in the present corrective phase for a target price of `375 in the medium term.

Smallcap counters such as Carol Info, Visa Steel, Bharat Rasayan, Xpro India and REI Six Ten are witnessing ‘interested’ action.

* Carol Info is the holding company of Wockhardt Group’s hospital division. Sources indicate that an M&A action in the counter. Buy on declines for speculative gains.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are strongly recommended to consult their financial advisors before making any financial investments. This newspaper is not liable for investment decisions made on the basis of recommendations in these columns.

Source DC

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Market Khabar 03 Jan 2010

Stock markets signed off 2010 on a high note on the back of robust economic growth, record FII inflows and mild recovery in the recession-hit developed economies. On the Bombay Stock Exchange (BSE), the Sensex ended 435 points higher at 20,509 and the Nifty on the National Stock Exchange (NSE) ended 123 points up at 6,134.

The year 2010 was a year marked by uncertainty and volatility but for the year overall, the Sensex rose 17.43 per cent and the Nifty finished up 17.95 per cent. Investors are hoping to put some of the recent wild swings behind and expect the global recovery to prime the rally in 2011.

However, there are challenges like stubborn inflation, political stalemate pushing policy making into cold storage, flat earnings growth and unexpected sovereign defaults in Europe that could cause bumps in 2011. Rising international crude oil prices continue to be a cause of concern.

Pick stocks that can thrive in a high interest rate regime but are also beneficiaries of the strongest growth impulses in the economy. Near term direction of markets will be dictated by third quarter earnings, RBI’s steps to tackle inflation and the ability of political parties to find out a solution to the political jam ahead of the Budget session.

For the week ahead, chartists predict a trading band of 20,260 and 21,200 for the Sensex and 6,060 and 6,320 for the Nifty. Supports for the week are at 20,280 and 19,990 and 6,090 and 5,980. Indices can touch all time new highs if resistances at 20,625 and 20,870 and 6,170 and 6,260 are surpassed. Don’t trade on the basis of “tips”. In other words, “trade with the trend, not with your friend.” When in doubt, get out!

FUTURES & OPTIONS
Despite markets reversing the two-month losing streak and Nifty futures logging 4.6 per cent gain during the month ended, market wide rollovers were significantly lower. Nifty OI was lesser by 14.75 per cent and stock futures saw a drop of 6.6 per cent. Buy Nifty 6,300-strike call option for surprising gains, suggest punters.

Sectors such as FMCG, fertiliser, sugar, construction, cement and capital goods have witnessed higher than average rollovers. Cautious trend in rollovers was seen in the IT and metal pack after their recent outperformance. Buying at lower levels was seen in the banking stocks. Buy smaller PSU banks for near term gains.

Ahead of quarterly numbers range bound trading at higher levels is indicated in IT stocks. Metal stocks are showing good resilience on the back of firm trends in global prices. Further gains are likely in Tata Steel, Sterlite and Hindalco.

Selective buying was seen pharma stocks. Buy on declines Ranbaxy, Lupin, Aurobindo and Sun Pharma. Infrastructure and power stocks are witnessing strong accumulation. Unexpected rally may push the stocks higher from current levels. As expected Reliance ADAG stocks are showing renewed buying interest. Stay invested in the group companies for further gains.

Among the side counters, BRFL, DCHL, MLL, Century Textiles, Suzlon, India Cements and IBRL may strengthen on speculative buying.

STOCK SCAN
Savita Oil Technologies is one of the largest manufacturers and suppliers of industrial lubricants, waxes and other industrial consumables. After the recent expansion, the company is poised to become the largest supplier of transformer oil to power companies. With good promoters, a sound business model, a great dividend record and a scorching growth in net profit, the stock is good bet at current levels. Buy for a target price of `750 in medium term.

Jubilant Life Sciences is attracting steady buying from savvy fund managers. After the recent demerger of its agri and performance polymers divisions, Jubilant Life is proceeding aggressively in its competent area of CRAMS. Buy on declines for a target price of Rs 475 in an year’s time.

With global pharma majors turning attention towards India, strong domestic focused companies like Torrent Pharma are getting re-rated. Buy for target price of Rs 750 in medium term. The stock is accumulated by savvy fund managers.

PE players suggest a heightened interest in hospital stocks indicated in 2011. Aggressive expansion plans of hospital major Apollo Hospitals make it a good investment bet in the healthcare sector. The company has raised funds through qualified institutional placement (QIP) issue and is also investing in medical education.

Research-based API manufacturer Parabolic Drugs is expected to post strong CAGR. The company has recently received EU-GMP certification and is also expecting US FDA approval shortly. Buy on declines for target price of Rs 100.

Market Khabar 27 Dec 2010

Amidst dull trading ahead of year-end holidays, markets eked out gains for second successive week moving in a tight range. On the BSE, the Sensex ended 209 points higher at 20,074 and the Nifty on the NSE closed with 63 points gain at 6,012. The advan-ce/decline ratio during the course of the week reflects return of some stability to the broader market.

Absence of many FIIs and big market players due to holidays dampened volumes considerably. High inflation environment, rising international crude prices threatening to bulge fiscal deficit and stalemate in political consensus are impacting the sentiment.

For financial year 2011, three improbable factors — the viability of US QE2, financially decoupling of emerging markets from Western markets and the rise of Indian stock market in a high inflation environment — hold key for market direction. Analysts feel that if at least two factors do not work out, stock markets will be very volatile with a downward bias.

Key events that may impact trading in the coming week are Chinese rate hike, steps by the government to combat inflation, a probable fuel price hike and F&O settlement.

For the week ahead, chartists predict a trading band between 19,780 and 20,340 for the Sensex and 5,870 and 6,160 for the Nifty.
Supports for the week are at 19,880 and 19,740 for the Sensex and 5,940 and 5,870 for the Nifty. Indices may face resistance at 20,180 and 20,320 and 6,090 and 6,140. Cut short term longs if indices close below 19,850 or 5,950 levels.

Futures & Options

Reflecting a holiday undercurrent in the cash segment, trading volumes were low in the derivative segment on the lack of interest. Rollovers were also subdued with traders adopting a wait-and-watch attitude. An increase in PCR indicates a steady build-up of short positions. Avoid large positions and trade lightly till volumes improve, say savvy punters.

On the back of strong gains in London Metal Exchange, metal stocks hogged limelight. Non-ferrous counters like Hindalco and Sterlite witnessed a good buying interest. Mild correction is not ruled out in the coming week due to a rate hike by China.

Positive data from the United States, robust hiring numbers and expectations over third quarter numbers boosted technology stocks. Hold positions in frontline counters for further gains. The sale of a controlling stake in Patni Computers may give a fillip to the M&A activity in the sector and improve valuations of midcap IT stocks.

A weekend rally in Reliance ADAG stocks has caught traders off-guard. Wild rumours like a big bang announcement about restructuring of the group and possible offer of stake in Reliance Communications to brother Mukesh were doing rounds. Further gains are likely in Reliance Infra, Reliance Capital and Reliance Power.

Steady accumulation is seen in telecom counters. Buy on declines Bharti and Idea.

Introduction of sugar futures after nearly 18 months on commodity exchanges, relaxation in export norms and firm retail prices may see sugar stocks gain traction from current levels. Sources indicate surge in FMCG sales. Stay invested in FMCG counters for Q3 gains. Stock futures looking good for next series are Alok Inds, FSL, Essar Oil, TechMahindra, Sesa Goa, Idea and NMDC.

Stock scan

A slew of insider trading reports have battered stocks of midcap and smallcap companies, hurting investor’s confidence since the beginning of December. Some good midcaps and smallcaps which have corrected 20 per cent to 40 per cent from their November highs and offer an attractive entry point at current levels are Deepak Fertilisers, Nava Bharat Ventures, Jindal SAW, Marg, Pipavav Shipyard, Vardhaman Textiles, Prism Cement, OnMobile, Pantaloon Retail, VIP Inds, Bajaj Electricals and IRB Infra. Replace emotions with analysis, knowledge and common sense while making investment decisions. Contrarians are accumulating realty counters. Many private equity players are reportedly finding the cash strapped real estate counters good bet for next year.

Phoenix Mills with its successful High Street Phoenix and upcoming Market City projects in tier-1 cities offers a unique play on Indian consumption story. Sum of the parts valuation of `300 makes the stock good bet for medium term at current levels.

Worst is over for BF Utilities, a Kalyani group company engaged in infrastructure business and executing BMIC (Bengaluru-Mysore Infrastructure Corridor). With institutional players like JP Morgan and others evincing interest to invest in the company, analysts feel true valuation of the company will unfold in next few quarters. Buy for long term target of `1600.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are strongly recommended to consult their financial advisors before making any financial investments. This newspaper is not liable for investment decisions made on the basis of recommendations in these columns.

Source : deccanchronicle.com

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Market Outlook 6th Dec 2010

Buoyed by strong Q2 GDP number, fall in the headline inflation and positive global cues markets staged a strong comeback during the week ended after three weeks of losses. On the BSE the Sensex closed 830 points higher at 19,967 and the Nifty ended 241 points up at 5,993.

Renewed buying from FIIs kept the sentiment positive. However some sections of the broader market were badly battered after the exposure of a stock rigging scam by the market regulator SEBI. Global cues and liquidity flows hold the key for near term direction of markets. Rise in international crude oil prices to $88+ level may impact inflation again.

With upbeat macro economic numbers lending a hand for market recovery, the next big trigger for markets is Q3 advance tax numbers. Sustaining the present level will be difficult if there are disappointments in Q3 numbers. Barring any ‘surprising’ negative domestic political or global economic cues markets may trade in a tight range till the year end.

For the week ahead chartists predict trading range of 19,650-20,450 for the Sensex and 5,750-6,175 for the Nifty. Key supports for the indices are at 19,780 & 19,540 and 5,880 & 5,790. Immediate resistances are at 20,160 & 20,340 and 6,060 & 6,140. In the near future, in spite of short term volatility select large-caps and mid-caps will throw up good opportunities. Keep an eye on opportunities. Be greedy when others are fearful and fearful when others are greedy.

Futures & Options

Despite high volatility brisk trading volumes were seen in the derivative segment. Overall open interest jumped by `23000 crore or 20 per cent to `143000 crore suggesting revival in confidence among traders and fresh long build up of positions. Sharp fall in VIX is also indicative of return of normalcy. However, sharp trader’s advice caution and buying of put options as hedge for portfolios.

Banking and realty stocks which were battered recently on account of bribery scandal staged a strong rebound. ICICI Bank, Canara Bank, BOB and IDBI Bank from the larger ones and smaller banks like UCO Bank, Andhra Bank, DCB and InduSind Bank look good for near term gains. Buy on declines DLF, HDIL and IBRL. Good defensive buying seen in pharma and IT counters. Large cap IT stocks Infosys, TCS and Wipro are showing good resilience. Buy on dips. From the pharma pack, Cipla, Dr Reddy, Lupin and Ranbaxy look set for healthy gains.
Metal counters are witnessing good buying interest at lower levels. This is being attributed to weakness in dollar and also robust domestic demand. Ahead of MOIL listing NMDC may jump to `300+ levels say punters.

Oil & Gas space is attracting institutional buying. With FPO’s of IOC and ONGC on cards, oil stocks may continue to trade steadily in near term. Huge volatility in many of the midcaps in F&O segment has reportedly put many traders to loss. Swings of 5 to 25 per cent in counters like BGR Energy, Welspun and others showcase the present high level of “risk” in the segment. Trade lightly with strict trailing stop loss advice old-timers. Avoid hindsight error and unrealistic optimism.

Stock scan

International Travel House, an associate company of ITC Ltd is one of the largest complete travel management companies in India. The company has bagged some of the travel and tourism industry’s most coveted awards and recognitions.

ITHL is pursuing the niche segment of medical tourism and travel insurance aggressively. With revival in demand, both inbound and outbound traffic showing strong growth, the company is expected to report OPM of 30 per cent and EPS of `24 for the current year. Buy at current levels for target price of `375 in medium term.

Agro Tech Foods Ltd affiliated to ConAgra Foods of USA, one of the world’s largest food companies is engaged in the business of marketing food and food ingredients.
Some of the leading brands include Sundrop, Act II, Rath, Healthy World etc. Recently the company has sold its vanaspati brand Rath to Cargill India for an undisclosed sum and intends to focus on value-added high margin products. Buy on declines for target price of `550 in medium term.

Many midcap and smallcap stocks have fallen anywhere between 10 per cent to 50 per cent in the recent meltdown. While some have fallen on account of links to operators, others have corrected only on ‘panic’ selling. Ahead of Q3 results, select counters like Vishnu Chemicals, Savera Inds, Arcotech and others recommended in this column look good buys at current levels. Start bottom fishing in smallcap and midcap counters.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are strongly recommended to consult their financial advisors before making any financial investments.

Source : DC

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Market Khabar 22 Nov 2010

Concerns about China clamping down on inflation, Irish debt crises and unexpected political ‘tension’ over the telecom scam pummeled markets last week. On the BSE the Sensex closed 345 points lower at 19,585 and the Nifty on the NSE ended at 5,890 shedding 108 points. Crashing for the second consecutive week, the Nifty lost 422 points and the Sensex shed 1420 points from their Diwali highs. Sporadic selling from FIIs, tense political situation and rumors of resignation of the Prime Minister have dampened investor sentiment.
Good news like fall in food inflation and sharp growth in tax collections have been ignored by the markets. On the global front, the US-China spat over the Yuan policy shows that “currency war” is more of a political than an economic condition. Currency realignments can be painful as seen in the past.
Expect high volatility during next week also due to F&O settlement and ongoing political drama. However avoid fresh shorts at current level, as a relief rally may be on the cards. Use rallies to exit from weak stocks. For the week ahead chartists predict trading range of 19, 140-20,120 for the Sensex and 5,720-6,080. Resistances for the week are at 19,800, 19,980 or 20,120 and 5,960, 6,040 or6,120. Short term supports are at 19,320 and 5,820.
In the near term the indices may not head anywhere, but by keeping eyes open savvy investors can latch onto opportunities that markets give.
FUTURES & OPTIONS
Frenzied trading was seen in the derivative segment during the week ended. Average daily turnover was close to Rs 2 lakh crore.
Sentiment indicators like put/call ratio, open interest, implied volatility and VIX indicate turbulent two way trading pattern in near term. Punters tip: buy Nifty 6000 strike call option for ‘chance’ gains. Banking and financial stocks fell sharply on profit booking and also on concerns of exposure to MFI sector.
After the recent correction IDBI Bank, BOB, UCO Bank, Shriram Transport and M&M Financial look good for medium term. Fears over monetary tightening after the recent RBI norms ‘squeezed’ realty counters. Contrarians say bad days are over for the sector and advice buying with medium term perspective.
Metal stocks have shown good resilience during last weeks sell off. Buy Tata Steel, Hindalco and Sesa Goa for short term. Defensive sectors FMCG and Pharma were the preferred ones in an otherwise uncertain weak market. Further gains are likely in Dr Reddy, Lupin, Cipla, Dabur and HLL.
Ahead of the FPO of SCI and IPO of MOIL, PSU stocks may exhibit good resilience. Buy NMDC and REC for target price of Rs 320 and Rs 390 in near term. Bump up likely in Power Grid on short covering. RADAG stocks were “butchered” after reports of involvement of Reliance Comm in the 2G scam have surfaced. Gutsy traders can attempt buying in Reliance Infra and Reliance Power.
STOCK SCAN
Plethico Pharmaceuticals Ltd is a an emerging healthcarecompany with strong emphasis on the herbal and nutraceuticals segments. Despite none too enthusiastic Q2 results, volumes in the counter have shot up significantly recently. Sources indicate that positive news is on cards and consolidated turnover of the company will cross `1500 crore in the current year. Buy for target price of `475 in medium term.
Indian Metal & Ferro All-oys Ltd is India’s lar-gest, fully integrated producer of ferro alloys with 157 MVA installed furnace capacity, a 108 MW coal based captive power plant and extensive chrome ore mining tracts.
Q2 results show improvement in operational performance. Investments by large mutual funds like Reliance are indicative of the bright prospects for the company. Buy for target price of Rs 1000 in medium term. Blue Star Ltd is India’s largest central air conditioning company with annual turnover close to Rs 3000 crore. Lack luster Q resu-lts have been attributed due to delay in execution of some projects.
Analysts feel that the company is good play on rising infrastructure spending—in airports, hot-els, hospitals, construction etc. Buy in the current weakness for long term target of Rs 750.
Cerebra Integrated Technologies Ltd apart from LPO business, medical transcription and electronic products like energy meters, GPS tracking modules, precision weighing scales; operates in the niche segment of electronic waste management.
Bright pros-pects of electronic waste management segment andfirst mover advantage make the company good bet for medium term investment.

Source : DC

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Market Khabar 15 Nov 2010

Spooked by global worries and weak macro economic data, markets ‘cracked’ during the week ended registering highest weekly losses in six months. On the BSE the Sensex plunged by 848 points to 20,157 and the Nifty on the NSE dropped by 236 points to 6,072. It was bloodbath across the board and all the sectoral indices ended negative.

Potential tightening of China’s monetary policy, concerns about sovereign debt crises from Euro zone and worries about global economy triggered some selling from FIIs. Weak IIP data for second successive month triggered fears over ‘growth’ story. Flow of funds from secondary markets to primary market was evident in the subscription to Powergrid FPO.

The latest round of concerns is being used as ‘reason’ to book profits on the back of strong gains made since September, say market players. Investors need to watch carefully global economic concerns and also the effect of Seoul summit consensus of G-20 “to refrain from competitive devaluation of currencies”.

For the week ahead chartists predict trading range of 19,700-20,500 for the Sensex and 5,820-6,240 for the Nifty. Strong support for indices is evident at levels of 20K, 19,850 & 19,700 and 6K, 5880 & 5750. Initiate fresh positions only if indices close above 20,500 and 6,175 with volume action. The fall in the markets is not likely to last long. Do not initiate shorts at lower levels. Don’t try to pick the top and bottom of the market.

Futures & Options

Mirroring the ‘mild’ panic in underlying cash market, derivative segment witnessed high volatility on massive unwinding of positions by some section of market players. Selling by FIIs whole week in index futures was a big dampener. Sell off in Nifty futures suggests short build up. Any bounce in next week should be used to trim positions.

Option activity indicates trading range of 5,800-6,200 for Nifty in near term. Lower than expected Q2 numbers from SBI sparked selling in banking counters. Further weakness in select stocks is not ruled out in near term. Use sharp corrections to accumulate for long term. Realty stocks continued to face selling pressure on the back of higher provisioning norms by RBI. Avoid for present.

Resurgence in dollar may trigger mild buying in IT stocks feel observers. Buying suggested in TCS and Infosys. Expectedly 3i Infotech is moving into strong hands. Buy for target price of `90. Defensive buying seen in FMCG and select pharma stocks. Show of strength by HLL is indicative of re-rating of the stock. Buy on declines. Dr Reddy Labs and Aurobindo look good for near term gains.

Use rallies to exit from Ranbaxy and Divi Labs. After showing good strength during the early part of last week, metal stocks lost ‘shine’ in the sell off. Punters suggest buying at lower levels in Tata Steel and Hindalco. Among the side counters looking good after correction are DCHL, IDBI Bank, Patni Computers, Idea, Bombay Dyeing, Max, Bata and Financial Technologies. Use corrections in textile counters Alok and S Kumar to buy. Never get out of the market just because you have lost patience or get into the market because you are anxious from waiting.

Stock scan

True to predictions, Andhra Petrochemicals Ltd and India Glycols Ltd have reported excellent turnaround performances. India Glycols Ltd is a leading company that manufactures green technology based bulk, specialty and performance chemicals and natural gums, spirits, industrial gases, sugar and nutraceuticals. Prices of glycols have improved from a low of $544 to $1050 per tonne in the recent quarter and are expected to rule at higher levels for next few quarters. Apart from chemicals, India Glycols has significant presence in the natural active pharmaceuticals, a spirits division that manufactures IMFL and owns Shakumbari Sugar with crushing capacity of 7,500 TCD and cogeneration power plant of 25.5 MW. Buy at current levels for target price of `350 in medium term. Andhra Petrochemicals’ oxo-alcohols facility in Visakhapatnam is the only producer of oxo alcohols in India and accounts for nearly 40 per cent of the market. It produces isobutanol, 2-ethylhexanol and n-butanol which are used in plasticizers, resins, pesticides, pharmaceuticals, printing inks, varnishes, rubber chemicals etc. Product prices have reportedly improved by 30-40 per cent in the past few months auguring well for the company which has completed the modernization cum optimization of the expanded plant. For the first six months turnover is up by 100 per cent and net profit zoomed by 1,400 per cent reflecting the changed fortunes of the company. Share holding patterns of last few quarters indicate that promoters are increasing their stake by market purchases. Buy at current levels for target price of `60 in medium term.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are strongly recommended to consult their financial advisors before making any financial investments. This newspaper is not liable for investment decisions made on the basis of recommendations in these columns.

Source : DC

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Market Khabar 20th Sept 2010

Markets remained buoyant during the week ended on the back of global liquidity flows, advance tax numbers and general positive sentiment. They had also ignored the hawkish monetary policy of Reserve bank.
The Sensex closed at 19,594 with a gain of 794 points and the Nifty ended 245 points higher at 5,885. Market breadth reveals out-performance by frontline stocks and subdued activity in midcap and smallcap stocks.

Weekend action in broader market indicates that the coming week may witness heightened activity in midcap and smallcap counters.

According to market players, all-time highs for indices are not ruled out before Diwali. Analysts say that the present exuberance in stock markets is not irrational and justified by fundamentals. FII inflows, economic growth story and corporate earnings performance are the reasons touted for the rally. Changes in WPI suggest that the government is keen on passing on changes in global crude oil prices or foodgrain procurement prices to consumers. Inflation continues to bother RBI and bankers do not rule out another hike in November. Barring any political turmoil ignited by Ayodhya verdict or unexpected weakness in global markets, markets may seek higher levels in the near term. For the week ahead, chartists predict a trading range of 19,360 and 20,130 for the Sensex and 5,760 and 6,040 for the Nifty. Expect the indices to take a pause before crossing 20,000 and 6,000 levels. Supports for the week are at 19,440 and 19,280 and 5,830 and 5,760.

Futures & Options

Mirroring the strong bullish undertone, robust volumes were seen in the derivative segment. Open interest continues to soar with punters building positions in stock futures. Option activity indicates strong support for Nifty between 5,750 and 5,825 band and resistance closer to the 6,000-level. All the sectoral indices ended in the green on a weekly basis reflecting the spread of the rally. Apart from the banking and oil and gas counters, sustained buying was seen in consumer durables, realty and healthcare stocks. Despite strong momentum in the banking sector, traders are advised caution at higher levels. From the pharma pack, Lupin, Ranbaxy Labs, Dr Reddy’s Labs and Sun Pharma may touch new highs. Stay invested for present. Renewed buying interest was seen in telecom and cement stocks. Buy on declines Bharti and Idea.

Reports of cartelisation and price hikes have given fillip to the cement counters. Buy on declines ACC, Shree Cements, Ultratech and Birla Corp for contrarian gains.

Dollar weakness prompted buying in metal and mining stocks. Tata Steel, National Aluminum, Bhushan Steel and Sesa Goa may touch Rs 640, Rs 450, Rs 2,300 and Rs 350 in the near term.

Comeback rally in RIL may witness mild setback due to the government’s reluctance to increase the price of KG Basin gas. Use correction for buying only. From power stocks, CESC and Ril Power may see a renewed buying interest. Among the side counters, Dabur, Biocon, Aditya Birla Nuvo, Ril Capital, Essar Oil, Suzlon, Adani Enterprises, Everest Kanto, and Godrej Inds looks good.

Stock scan

Albert David Ltd belonging to the Kothari group is the manufacturer of pharmaceutical formulations, infusion solutions, herbal products, bulk drugs and disposable syringes and needles. The company has tied up with the world’s largest manufacturer of amino acids, Ajinomoto Co. Inc. of Japan and has received the approval of US FDA for DMF of bulk drugs tolbutamide and chlorpropamide. An approved WHO supplier, the company exports to more than 20 countries. A book value of Rs 110 and trailing EPS of Rs 20 make the stock a good bet for the target price of Rs 225 in the medium term.

Hinduja Foundries Ltd is the largest automobile jobbing foundry in the country with a production capacity of 1,43,000 tonnes of grey iron casting and 3,000 tonnes of aluminum gravity die-casting. In India, one vehicle out of three in India is fitted with HFL made cylinder block casting. With a strong revival in the demand for castings on the back of a dramatic turnaround in auto sector and expansion of its Hyderabad and Sriperumbudur plants, the company is well placed to report a good performance in coming quarters. Buy on declines for a price target of Rs 250.

Savvy market players are accumulating Vishnu Chemicals, Parekh Aluminex, Essar Shipping Ports, Elder Pharma, Bilcare and Artson Engineering. True to predictions breakout gains are seen in Vishnu Chemicals. A target price of Rs 175 on cards. Parekh Aluminex is the largest manufacturer of aluminum foil products used for packaging. Recent completion of expansion has trebled the capacity. Buy on declines for a target of Rs 600.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are strongly recommended to consult their financial advisors before making any financial investments. This newspaper is not liable for investment decisions made on the basis of recommendations in these columns.

Source : DC.com

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Market Khabar 6th Sept 2010

MARKETS RECOUPED most of its earlier week’s losses on the back of positive global cues, renewed FII buying, robust automobile sales and a strong show of agriculture sector in GDP numbers. On the Bombay Stock Exchange, the Sensex gained 223 points to close at 18,221 and the Nifty on the NSE surged 71 points to 5,479. Midcap and smallcap indices outperformed benchmark indices reflecting stock specific activity in the markets.

Confusion and revision of GDP numbers have raised fears about the robustness of the Indian growth story. Data discrepancies have been attributed to use of different GDP deflators. Analysts expect that the controversy will be put to rest quickly by the government.

With the timeline for introduction of GST and DTC extended, the market’s focus is now back to global cues and second quarter numbers. Ahead of the second quarter results, marketmen expect a positive build up of positions in ‘strong’ stocks. A better than expected report on the US job market pushed the US market indices into the black for the year. Chartists predict a trading range of 18,000-18,680 for the Sensex and 5,380-5,640 for the Nifty. Expect resistance to indices around 18,450 and 18,570 and 5,550 and 5,640. Supports for the week are at 18,020 and 17,800 and 5,420 and 5,350. A sustained volume action over 5,550 can propel Nifty all the way to 5,700. The willingness to take small losses in some stocks and to let profits grow bigger and bigger in the more promising stocks is essential for good investment management.

Source : DC

Bought to you by :

Bought to you by

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Talk / SMS 08105737966

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