Market Khabar 19 July 2010

Despite shedding some of its recent gains, markets closed on an optimistic note during the week ended. On the BSE, the Sensex closed 122 points higher at 17,956 and the Nifty on the NSE ended with 42 points gain at 5,394. Though the Sensex crossed the psychological 18,000-mark twice this month, it failed to close above that level at the end of the sessions. The reason for this is said to be the prevalent scepticism over the ongoing rally and the lack of a follow-up buying from domestic institutions.

Inflation continues to be a worrying factor and a modest rate hike by RBI is not ruled out at the next policy meeting. In the short term, everything is being driven by earnings. But in the longer-term, the question is where is the economy really going and do other economies across the globe have enough momentum to get out of the recession? Weekend negative global cues may see markets open weak at the start of next week.

However, the recovery during the latter part may see indices close at new short-term highs. For the week ahead, chartists predict a trading band of 17,650 and 18,250 for the Sensex and 5,240 and 5,450 for the Nifty. Resistances for the week are at 18,140 and 18,280 and 5,460 and 5,520. Expect support to the indices at 17,720 and 17,540 and 5,330 and 5,240.

Short-term traders are advised to cut longs, if indices dip below the 17,650 and 5,300 levels.

FUTURES & OPTIONS
The derivatives segment continued to witness robust volumes and open interest has crossed Rs 1,50,000-crore mark. Sentiment indicators like open interest in stock futures, put/call ratio, implied volatility and VIX signal heightened volatility. TCS results clearly show that there is nothing fundamentally wrong with IT outsourcing services and that business from now onwards will be volume-driven and not margin-driven. Use sharp declines to accumulate large cap IT counters.

Steady buying was seen in both PSU and private banks. Axis Bank, Yes Bank, Canara Bank, OBC, UCO Bank and Union Bank were the favourites. With RBI policy meeting due in the next fortnight, buy only on corrections. Automobile counters continue to attract buyers at lower levels. Rumour mills are active saying bonus and stock split on cards in Maruti. Buy on declines Tata Motors, Bajaj Auto and Ashok Leyland. As expected, profit-booking was seen in PSU OMCs like HPCL, BPCL and IOC.

Modest buying interest was seen in sugar stocks on the expectation of an improvement in retail prices and decontrol of the industry. Buy on declines Shree Renuka and Bajaj Hindustan. Among side-counters looking good for strong gains are Onmobile Global, Power Finance Corp, Godrej Industries, IFCI, Tata Global Beverages and Zee Entertainment. 3G rollout indicates an exponential growth in the mobile VAS sector. Onmobile is well placed to reap the benefits. Buy for target price of Rs 350 in short term and Rs 475 in medium term.

Power Finance to report quarterly numbers, indicate sources. Buy for a target price of Rs 375 in near-term. IFCI may be granted banking licence, say insiders.

STOCK SCAN
Among niche food product companies, Unique Organics Ltd is attracting the attention of savvy players. The company is a pioneer in processing and export of certified organic spices, herbs, oil seeds, pulses and other products. A certification from the US department of agriculture and consistent quality resulted in exports to more than 20 countries. Buy for a target price of Rs 40 in coming months.

Andhra Petrochemicals Ltd, which belongs to Andhra Sugars group, is the only producer of oxo-alcohols like isobutanol, 2-ethylthexanol and n-butanol in India and accounts for over 30 per cent of the market. Results for the year-ended were weak on the account of plant shutdown for expansion. With the completion of expansion, sources predict excellent results for the current year. HPCL — which supplies feedstock naphtha — and yet another petroleum major are reportedly evinced interest in picking up a stake in the company. Buy at current levels for price target of Rs40.

South Indian Bank and DCB are on the radar of investors. The latest results of DCB reflects the success of ongoing business restructuring plan. The bank was able to reduce losses and is expected to post profits by next quarter itself.

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 05 July 2010

Markets ended 114 points lower at 17,461 and the Nifty on the NSE shed 32 points to close at 5,237. Market breadth however reveals heightened action in many midcap and small cap stocks.

As expected, RBI hiked key policy rates to tame inflation ahead of its monetary policy review on July 27. Another round of “hike” is not ruled out say observers. Movement of monsoon continues to be a cause for concern. However, IMD predicts that monsoon will “spread” in July.

Weak global cues like US job data, downgrade of Spain by Moody’s, impact of Euro zone crises and concerns over Chinese economic data continued to “weigh” heavily on the markets.

Indian markets look more resilient at present than other global markets, but traders should stay alert to news flow.

Use sharp corrections triggered by either policy rate hike or global cues for accumulating good counters.

For the week ahead chartists predict trading range of 17,080-17,780 for the Sensex and 5,080-5,360 for the Nifty. Resistance for the week are at 17,560 and 17,740 and 5,290 and 5,340.

Expect support to the indices at 17,320 and 17,160 and 5,180 and 5,120. Stock prices track earnings.

Over the short term, the behaviour of the market is based on enthusiasm, fear, rumours and news. Over the long term, it is mainly company earnings that determine stock movement.

Futures & options

Despite uncertain global cues, derivative segment witnessed robust volumes. Open interest continued to hover over Rs 1,20,000 crore levels. Short term indicators like put/call ratio and others present bearish view, but reversal from lower levels is not ruled out. Option activity indicates active call writing at most of the out-of-the money strikes in Nifty suggesting strong resistance on the upmove.

Announcement of RNRL-RPL merger in a 4:1 swap ratio may trigger sharp swings in both counters on valuation concerns. It is pertinent to remember that 80 per cent of RNRL shareholders received their shares free on demerger from RIL. Sources indicate that RIL will pick up small stake in the new merged entity as a “fuel supplier”.

Policy rate hike may have only marginal impact on banking, realty and auto sectors. Robust monthly auto sales numbers clearly indicate that “good times” are likely to last longer than expected.

Buy on declines Tata Motors, M&M, Maruti Suzuki and TVS Motors. Oil marketing companies continued to have good run. Book partial profits at current levels.

Despite weakness in dollar, metal stocks failed to play catch up on fears over Chinese slow down. Bargain hunters can start accumulating. Capital Goods and Pharmaceuticals continue to attract buyers on every correction. Stay invested in the sectors.

True to expectations, sugar stocks are showing good resilience. Stay invested for further gains. Media stocks are back in the reckoning. Buy DCHL, TV 18, Dish TV and Zee on declines. Ahead of Infosys numbers technology stocks may witness heightened activity. Second rung counters such as Mphasis, Rolta and Polaris may see an upmove.

Stock scan

Swaraj Engines, owned by M&M group is a rare example of supplier/customer joint venture. Strong volume growth in engine dispatches to Swaraj tractor division of M&M coupled with growth in hi-tech engine components supplies to Swaraj Mazda and continuous focus on productivity improvement helped the company report excellent results for the year ended. Buy on declines for target price of Rs500 in medium term.

Tile companies Somany Ceramics, Kajaria Ceramics and Nitco Tiles are on the radar of savvy value hunters. Somany is one of the leading manufacturers of tiles and sanitary ware with market leadership in niche segments in the country. Sources indicate bonus issues in near term. Stay invested in this low equity value stock. Turnaround performance indicated from Nitco Tiles. The company has valuable real estate in Mumbai. Plans to unlock value are being drawn say sources. Buy on declines for price target of Rs75 in short term.

Renewed buying interest seen in mid-rung technology counters Nucleus Software and Zensar Technologies. Zensar provides end to end services from IT development to Business Process Outsourcing, from consulting to implementation.

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 28 June 2010

AFTER a strong opening, markets lost ground during the latter part of the week ending on weak global cues and worries on inflation front.

On the BSE, the Sensex marginally ended up 3 points at 17,574 and the Nifty on the NSE inched up 6 points to close at 5,269. It is pertinent to note that while FIIs have been steady buyers, domestic institutions were sellers.

However, broader markets were ‘good’ with heightened activity in many midcap and smallcap counters. government’s nod to give a free hand to oil companies to fix petrol prices was a surprise move. The move to ‘control’ deficit by rationalising subsidies has enthused foreign investors. However, analysts fear the cascading effect of the decision on the already high inflation.

“Underperforming” monsoon is becoming a cause of worry. Expectations over the Q1 results may spark stock specific movements. Impact of Wall Street reform bill on global markets is not ruled out. For the week ahead, chartists predict trading range of 17,280-17,920 for the Sensex and 5,140-5,380 for the Nifty. Short term resistances for the indices are at 17,740 and 17,880 and 5,320 and 5,365. Hold long positions with stop at 17,300 on the Sensex or 5,200 on the Nifty. Gutsy traders can initiate fresh shorts if indices fail to cross 17,800/ 5,340 levels. Do not rule out yet another attempt by the indices to record new yearly highs if ‘conditions’ cooperate. Markets change continuously and so must investors.

Futures & options

EXPECTEDLY the settlement week witnessed robust volumes in the derivative segment. Overall rollovers were healthy and higher than last three months’ average. Interestingly, Nifty ‘short’ rollover is also much higher than last three months average. Option activity shows heavy call writing at 5,300 and 5,400 levels indicating strong resistance to Nifty in this band.

After the spike in the prices of PSU oil marketing companies, mild profit booking is not ruled out. However, use sharp corrections to buy ONGC, IOC, BPCL and HPCL. Spill over effect on other oil and gas counters such as Essar Oil, MRPL, GSPL and Oil India is not ruled out. Fears of policy rate hike have kept banking stocks subdued. Use the ongoing correction to accumulate smaller PSU banks like IDBI Bank, Andhra Bank, Vijaya Bank and others.

Fuel price hike will only be a short-term dampener for automobile companies. Use correction to buy auto stocks. Capital goods counters are showing good leadership and are good bets for medium term. Buy APIL, Punj Lloyd and BHEL for target prices of Rs 700, Rs 144 and Rs 2,550. Steady buying seen in pharma stocks. Further gains indicated in Aurobindo, Orchid Chemicals, Dr Reddy and Lupin. Range bound activi ty indicated in metal counters till global cues improve.

Among the side counters Noida Toll, Opto Circuits, GTL Infra, India Infoline, KFA and GMR Infra look good for targets of Rs 36, Rs 265, Rs 52, Rs 108, Rs 55 and Rs 64. Nothing goes up or down forever. After a sustained move in either direction, markets will enter a protracted period of narrow range trading and consolidate.

Stock scan

Low profile JOCIL, a subsidiary of Andhra Sugars Ltd, after listing on the NSE is attracting the attention of savvy investors. The company is engaged in the manufacture of stearic acid flakes, fatty acids, hydrogenated non-edible oils, glycerin, soap noodles and application in pharmaceuticals and is involved in the generation of power from biomass and wind. The company also offers contract manufacturing services related to its products and has customers of repute such as Hindustan Unilever. B.V. of nearly Rs 195, EPS of Rs 48 and dividend of 100 per cent make this ‘value’ stock good for target price of Rs 575 in medium term.

Onward Technologies Ltd is one of the fastest growing engineering design services company and is one of the largest ISVs for banking software solutions. Sources indicate turnaround performance from the company in Q1. Buy on declines for target price of Rs 50.

Precot Meridian Ltd, an Elgi group unit is one of the few totally integrated textile players with a total turnover of over Rs 445 crore. The company has market leadership in ‘eco-friendly’ 100 per cent organic combed cotton yarn used for knitting and weaving. Riding on the boom in the yarn sector, the firm reported turn-around in the year ended with EPS of Rs 23.

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 21 June 2010

Buoyed by strong advance tax numbers, positive global cues and the Ambani charisma, markets carved out strong gains during the week-ended. On the BSE, the Sensex added 506 points to close at 17,571 and the Nifty on the NSE gained 143 points to end at 5,263.

All the sectoral indices ended higher. Good market breadth indicates a higher participation from market players and improved appetite for midcap and smallcap stocks. Strong rebound in earnings performance and re-rating of some sectors have created new winners. Track volumes and news flow to spot bargains. Inflation continues to be a dampener and markets anticipate a policy rate hike sooner rather than later because of demand side inflation.

Worries about the Euro crisis will continue to influence markets, but less dramatically than earlier times. Use dips as buying opportunities. Expect a sharp rise in Shanghai Index on the back of China’s Yuan policy move. Key events in the coming week are F&O settlement and policy meeting of US Fed.

The direction over the short-term is likely to stay volatile. For the week ahead, chartists predict a trading band of 17,240 and 18,040 for the Sensex and 5,120 and 5,480 for the Nifty. Immediate resistances are at 17,720 and 17,870 and 5,330 and 5,400. Supports for the week are at 17,380 and 17,240 and 5,180 and 5,130.

Futures & options

Mirroring the bullish undertone in cash markets, robust volumes were seen in the derivative segment. Open interest is at all time high at over Rs 1,50,000 crore.

Sentiment indicators like implied volatility, put/call ratio, open interest and VIX indicate a sharp short covering rally. Hold longs with trailing stops.

On the back of strong IIP data, capital goods stocks were among the major gainers. Buy Voltas and Crompton Greaves at current levels. Renewed buying was seen in IT counters. Hold positions for further gains.

Expect selling at higher levels in realty stocks. However, use sharp dips to buy DLF, HDIL and Unitech.

Selling triggered in ADAG counters after the RIL AGM is likely to taper off very soon. Use the correction to buy Reliance Infra, Reliance Power and Reliance Capital.

Appetite for consumer oriented and pharma stocks is increasing. Stay overweight in the sectors. From the pharma pack, buy Aurobindo Pharma, Cipla and Biocon.

Buy Tata Tea cum split for strong ex split gains. Metal stocks are poised for rebound. Bottom fishing can be attempted in Tata Steel, SAIL and Sterlite.

Among the stock futures looking good are Bank of India, G E Shipping, ITC, IDFC, JP Power, Mphasis, Rolta, United Spirits and Union Bank of India. Heightened activity indicated in BGR Energy, BRFL, Essar Oil, GVKPIL, HCC, Noida Toll, Punj Lloyd, Moser Baer, Sintex and Exide Inds.

Never buy just because the price of a stock is low or sell short just because the price is high. Technical market considerations and psychology must also be taken into account.

Stock scan

After the rally in footwear companies like Relaxo Footwear and Liberty Shoes, leather products and garments manufacturing companies like Crew BOS Products, Mirza International and Bhartiya International are back on the radar of savvy market players. A sharp growth in sales and net profit has triggered buying in Crew BOS and Mirza International. Stay invested for further gains. Sources close to the management are reportedly buying into Bhartiya. Punters tip a target price of Rs 100 shortly. After its poor performance in FY10, 3i Infotech has embarked on restructuring its operations with emphasis on the bottomline. Sources indicate a surprising growth with improvement in net margin in first quarter of this fiscal. Buy at current levels for a target price of Rs 95.

Recently listed travel and tourism major Cox & King’s is attracting good buying from HNIs. Focus on high-end luxury segment coupled with the economic recovery and Commonwealth Games spell good times for the company in next few quarters. Buy for steady gains in the medium term.

Improved input supply on account of the KG Basin gas and strong end user demand has made gas distribution companies such as Indraprastha Gas good bet.

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 14th Jun 2010

After a weak start during the early part of the week, markets staged a strong rebound in the latter part to close on an optimistic note. The Sensex gained nearly one per cent to close at 17,065 points and the Nifty remained almost unchanged at 5,119 points on the account of many Nifty stocks going ex-dividend.

Markets are interestingly poised with possibilities of a strong breakout in either upward or downward direction. With scepticism “high” over the ongoing rally, sharp short covering rally is not ruled out ahead of the F&O settlement in the next fortnight.

Strong IIP numbers, better than expected collection from BWA spectrum auction, good monsoon and positive global economic cues have turned the sentiment positive and allayed fears of traders.

Keep updated on the markets across the world and follow the trend. Barring any unexpected negative global cues, the ongoing rally may gain further steam. For the week ahead, chartists predict a trading band of 16,690 and 17,460 for the Sensex and 4,940 and 5,320 for the Nifty. Immediate supports for the indices are at 16,840 and 16,680 and 5040 and 4960.

Over the short term, the behaviour of the market is based on enthusiasm, fear, rumors and news. Over the long term though, it is mainly company earnings that determine whether a stock’s price will go up, down or sideways.

FUTURES & OPTIONS
Despite the improvement in sentiment, volumes were tepid in the derivatives segment. Open interest continued to surge and is now over Rs1.3 lakh crore. High put/call ratio indicates build-up in short positions. Gutsy traders can attempt straddle or strangle strategy to take advantage of change in market direction.

With the entry of Reliance Industries Ltd into broad band services, the telecom sector looks set for yet another shake up.

Stock specific action indicated. Analysts expect a renewed buying in the capital goods sector. Buy on every dip L&T, BHEL and Siemens. Contrarians with a medium-term horizon can start accumulating Punj Lloyd and Suzlon from the current levels. From the power space, NLC, BGR Energy and JP Power Ventures may witness heightened action.

Auto sector continues to be the favoured sector for buying on every decline. Monthly sales numbers clearly indicate that happy times for auto companies are likely to last for more time than expected.

Capital infusion by the government is expected to give a fillip to public sector bank stocks. Price action indicated in the five PSBs — Bank of Maharashtra, Central Bank of India, IDBI Bank, UCO Bank and UBI.
From the private bank space accumulate ICICI Bank, Kotak Bank and Axis Bank.Clear signs of bottom formations seen in infrastructure stocks. Buy JP Associates, NCC, LITL, GMR Infra, HCC and IVRCL at current levels for both short term and medium term gains.

Stocks looking good for short term long positions are ACC, BHEL, Biocon, HDFC, JSPL, RIL, Reliance Capital, Reliance Infra, Siemens, Tech Mahindra, Cipla and Ranbaxy. Pull back gains likely in Mphasis, GVKPIL and GMDC. Given the way the stock market has been behaving lately or I should say misbehaving, traders need to be cautious and trade lightly.

STOCK SCAN
Fenoplast Ltd is a manufacturer of PVC leather cloth, non toxic rigid PVC film used for blister packaging in pharmaceutical industry and soft PVC films for stationary and other applications.

The company has recently added new lines of production and is expected to post strong performance in next few quarters.

Its market cap is just one-fifth of its asset base. The stock is witnessing quiet accumulation from sources close to the management. Buy at current levels for a price target of Rs 90 in medium term.
Emami Ltd is a leading player in the personal and healthcare consumer products based on ayurvedic formulation. It has reported good results reflecting success of its inorganic growth strategy.

Post acquisition of Zandu Pharma, a century old household name in India; and M. Bhattacharya, the largest homeopathy company in India, Emami is well placed to grow at a rapid pace of 40 per cent CAGR. Buy on declines for a target price of Rs 1,000.
Jyothy Labs, the manufacturer of Ujala-liquid fabric whitener, is reportedly expanding its laundry services to new territories in coming months.

Buy at current levels for steady gains 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 24 May 2010

Markets were volatile throughout the week-ended due to the European crisis putting the global economic recovery at risk.

On the BSE, the Sensex dropped 549 points and the Nifty on the NSE shed 162 points to end the week at 16,446 and 4,931 respectively. Volatility indices — fear gauge — across the world have shot up to new short-term highs reflecting investor anxiety. Selling was seen across the board and nearly all the sectoral indices closed in the red. FII selling and weak rupee, which had seen the worst fall in 15 years, also acted as dampener.

According to analysts, the clearance of Wall Street reform bills — supposedly the most comprehensive regulation of the finance industry since the Great Depression — by the US Senate will have a huge impact on the emerging market flows.

Truce between the world’s richest siblings — Mukesh Ambani and Anil Ambani — agreeing to scrap all existing non-competition agreements between their business groups and to negotiate the gas deal may prove to be the biggest trigger for the markets.

With indices trading below 200-day moving averages, a corrective move to cross them is not ruled out. For the week ahead, chartists predict a trading band of 16,200 and 17,000 for the Sensex and 4,840 and 5,100 for the Nifty.

Resistances for the week are at 16,740 and 16,960 and 4,990 and 5,070. Last week’s lows of the indices at 16,187 and 4,842 may act as major support levels.

Futures & Options

Robust volumes were seen in the derivative segment. It is pertinent to note that the weekly volume also increased the most since second week of March. Trend change, however, is the worry plaguing traders mind. Buy Nifty5000 call option of June series for unexpected returns tip savvy punters. Watch rollovers of stock futures to spot winners for new series. Expectedly Reliance stocks will hog limelight on the back of harmony between the Ambani brothers. Buy RCom, Reliance Infra and Reliance Capital from ADAG pack for relief gains. Buy RIL for surprising gains in the medium-term with a stop loss at Rs 940. A short term target of Rs 1,100 is not ruled out.

After the recent slide infrastructure and metal stocks look good for corrective gains. Buy Lanco Infra, JP Associates, HCC, Tata Steel and SAIL for targets of Rs 62, Rs 132, Rs 130, Rs 540 and Rs 215.

Despite disappointment at the contours of the Abbott-Piramal deal, industry sources say that the deal will help in improving the valuations of other companies. Use corrections to buy and stay overweight in pharma sector.

Savvy long term players have begun nibbling telecom counters. With 3G auction process over, valuations of the battered telecom stocks are looking attractive. Buy Bharti and Idea at current levels for medium term. Banking and capital goods counters may remain range bound in near term.

Stock futures looking attractive are M&M, Tata Motors, IFCI, REC, PTC, Biocon and Maruti. Sharp down moves in counters like Educomp, Aban Offshore and others have unnerved punters. Place stops at technical danger points always on all trades in such wild counters.

Stock scan

Piramal Glass is among the top three flacconage (glass bottle) manufacturers in the world supplying to pharmaceutical, cosmetics and perfumery, specialty food and beverages and decoration industries. Restructuring of operations coupled with improved realisations helped the company post excellent turnaround performance. With the promoter group Piramal flush with cash from Abbott deal, market players expect them to concentrate more on Piramal Glass. Buy on declines for price target of Rs 175 in medium term.

Ramco Industries is one of the best performing, highly efficient producers of fibre cement sheets in India. It has pioneered and introduced the innovative calcium silicate board — a versatile building interior product — in India. The company holds investments in the group companies, presently valued at Rs 400 crores giving an enterprise value of Rs 880 crore to the company. At current price levels, the market capitalisation is only Rs 550 crore, making Ramco a good investment bet for the medium term.

Solar Industries is one of the largest comprehensive explosives and explosive initiating devices manufacturers in the country. With the superior quality of its products, the company has garnered good market share in southeast Asia, Middle East and some African countries.

Results of many smallcap and midcap textile companies are better than expectations. Re-rating and a renewed interest is clearly evident in several stocks.

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 3 May 2010

Surviving the Greek tsunami, the markets have posted gains for the third straight month. Despite being a “down” week, the markets have ended on a optimistic note. On the BSE, the Sensex declined by 135 points to 17,559 and the Nifty on the NSE shed 26 points to end at 5,278.

However, true to predictions the BSE Midcap and Smallcap indices rose by 0.78 per cent and 0.08 per cent outperforming the benchmark indices. Market focus has shifted from frontline stocks to small and midcap stocks.

Spurt in the volumes accompanied by price rise in any particular company should not be the sole criteria for “entry”. Remember that good stocks always make a come back, while unknown stocks may disappear. Passage of the Finance Bill, prediction of normal monsoon and “soft” inflation numbers have kept the sentiment upbeat. Global markets are slightly nervous over the Goldman Sachs imbroglio.

Analysts feel that the US way of regulation by litigation will create an atmosphere of uncertainty. Keep close watch on global trends. In the coming week, apart from global cues and inflation numbers, volatility may set in over the Supreme Court verdict in RIL-RNRL case.

For the week ahead chartists predict wide trading range of 17,180-18,040 for the Sensex and 5,100-5,440. Supports for the week are at 17,420 and 17,260 and 5,230 and 5,160. Resistances for the near term are at 17,750, 18,000 5,340 and 5,400.

Futures & Options

Barring the first day of new series, derivative segment witnessed robust volumes. Despite the negative global cues, roll over of positions to the May series have been higher at 87 per cent in comparison with the three month average of 83 per cent. Overall open interest is “heavy” at Rs 1,03,281 crore and PCR is at 1.15.

Option activity clearly indicates strong resistance to Nifty in the 5,300-5,400 range and a strong support in the 5,100-5,200 range. Expectedly banking, auto, PSU and health care stocks were in the “buy” list; and realty, oil and gas, technology and cement were in the “sell” list of market players. Range bound activity was seen in metal and consumer durable stocks.

From the banking space good buying opportunities exist in smaller PSU banks. Buy on declines Andhra Bank, UCO Bank, OBC, Indian Bank and Allahabad Bank. Among the infra counters NCC and Lanco Infra are exhibiting good strength. Add on declines. Q4 numbers of HCC were pleasant surprise. Sudden spurt cannot be ruled out. Piramal Healthcare and Lupin look set to record 52-week highs. Stay invested. Use sharp corrections to “drive” into auto counters such as Tata Motors, M&M and Ashok Leyland.

After a long “rest” PSU oil marketing majors IOC, HPCL and BPCL are looking good for near term gains. Among the stock futures, BGR Energy, Godrej Inds, Praj Inds, Tata Chemicals, Siemens, HCL Tech, Lupin, EKC, Cairn GVKPIL, IDBI and RNRL.

Stock scan

Thinly traded counters such as India Motor Parts & Accessories Ltd, Hercules Hoists and Blue Star are attracting attention of some savvy market players. IMPAL, a TVS group company is one of the few all India distributors of motor parts and engine components representing over 50 manufacturers.

Through its 50+ branch network the company is engaged in the distribution of automobile spare parts and accessories like brake systems, radiators, fasteners, axles, wheels and instrument clusters. Good value stock to buy on declines. Sources indicate bonus in near future.

Hercules Hoists, a Bajaj group company is manufacturer of material handling equipment including light profile crane systems, stacker cranes, winches.

The company sells its products under the brand name Indef and has also recently set up four wind mills. Buy on declines for target price of Rs 300 in medium term.

Blue Star is India’s largest central air conditioning company and has business alliances with world renowned technology leaders in the field.

The company also offers services in air, water and energy management and LEED certification consultancy for Green Buildings and has extended its mechanical contracting to building electrification, plumbing and fire fighting projects. Buy on declines for target price of Rs 600 in medium term.

Kemrock Inds, Garware Poly and carbon companies Graphite, Goa Carbon and Phillips Carbon have been scaling 52-week highs on steady buying interest. Kemrock Inds is one of the largest manufacturers of composite materials and thermosetting resins for a wide range of applications.

Garware Poly is the largest manufacturer of polyester film in India catering to sun control, packaging and reprographic industries. Turnaround performance has triggered fresh buying in the counter.

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 19 April 2010

Spooked by the stand off between the stock market and insurance regulators SEBI and IRDA; and fears of an imminent rate hike by the RBI, markets closed in negative zone after nine weeks winning streak during the week ended. On the BSE the Sensex shed 342 points closing at 17,591 and the Nifty ended at 5,263.

However market breadth was positive on some days of weakness reflecting heightened “action” in the midcap and smallcap segments. Track earnings numbers to spot winners. Good earnings are already priced in, negative surprises are not. Exercise caution.

The IMD has indicated that the monsoons this year are likely to be normal with more rainfall expected July onwards. Keep fingers crossed for monsoons. Treat any correction in stock prices triggered by RBI’s credit policy as healthy; this will bring valuations to reasonable levels offering good buying opportunity. The news of SEC charging Goldman Sachs has introduced an “unknown” into the US markets with possibility of more sub prime “skeletons”.

Markets may trade weak during the early part of the coming week with signs of recovery during the later part. For the week ahead chartists predict trading range of 17,120-17,860 for the Sensex and 5,110-5,360 for the Nifty. Supports below 17,500 for the Sensex are at 17,320 and 17,110. Nifty support levels are 5,180 and 5,120.

Futures & Options

In contrast to the subdued volumes in cash segment, robust trading was seen in the derivatives segment.

As the earnings season unfolds expect sharp stock specific movements. Option activity and the low index put/call ratio indicate that the ongoing correction will be short lived one.

Expect sharp directional move after the RBI’s credit policy. Expectedly, buoyed by good results from Infosys IT stocks outperformed the broader markets. Use corrections to buy frontline counters. After exhibiting “unusual” strength during past few weeks’, ahead of credit policy meet realty stocks attracted profit booking at higher level. Begin accumulating DLF, HDIL and Unitech in the ongoing correction for strong gains in both short and medium term.
Defensive bets pharma and FMCG counters may witness good buying interest in near term. Buy Lupin, Dr Reddy, Sun Pharma, Orchid Chemicals, Hind Unilever, Tata Tea and ITC. Punters predict sharp short term rebound in banking stocks after the credit policy.

Avail corrective moves to buy smaller PSU banks and private banks like ICICI Bank and Federal Bank. Infra, power and capital goods counters are attracting selling at higher levels. Track results to pick value counters. L&T, Crompton Greaves and Cummins look good after recent correction. Among the side counters looking good are Financial Technologies, GE Shipping, CESC, Ispat Inds, Petronet LNG, Orchid Chemicals, Hotel Leela and Pantaloon Retail.

The average long term experience is never surprising, but the short term experience is always surprising. Focus not on rate of return, but on the informed management of risk.

Stock scan

Kallam Spinning Mills is engaged in the manufacture and sale of cotton yarn. The company has set up a hydro electric plant used for captive consumption of spinning division, and has modernised the existing spinning machinery with modern equipment such as ring frames and auto caners.

Improved performance in the last few quarters reflects the changed fortunes of the company. Buy at current levels for the target price of Rs 55 in the short term.

Poddar Pigments is the largest manufacturer of master batches in the country and has the unique distinction of being the first company in India to introduce and manufacture master batches for dope dyeing of polypropylene, nylon and other multifilament yarns.

The company has recently completed buy back of shares and is expected to post good results in Q4. Buy at current levels for target price of Rs 75. Orchid Chemicals, Plethico Pharmaceuticals and Tilaknagar Inds are on the radar of savvy fund managers.

After the sale of injectables division to Hospira, Orchid Chemicals is adopting first-to-file strategy for the oral basket and has already made applications for seven drugs, which treat allergies, Alzheimer’s disease, central nervous disorders, and osteoporosis

Sources indicate the firm is getting window of exclusivity for two drugs soon. Buy at current levels for the target price of Rs 300 in the medium term. Plethico Pharma is a major player in the nutraceuticals formulations segment with 45 per cent sales coming from US.

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 : deccan.com

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Talk / SMS 08105737966

Market Khabar 5 April 2010

Buoyed by positive global cues and expectations of strong earnings season, markets closed on an optimistic note for the fifth straight quarterly rise during the week ended.

On the BSE the Sensex gained 47 points to close at 17,693 and the Nifty on the NSE ended 9 points higher at 5,291. Market breadth was good indicating heightened activity in midcap and smallcap space.

FIIs continued to “pour” money into the markets, keeping the sentiment positive. Shrugging off a slowdown in manufacturing growth in March, markets have begun to focus on the earnings season. Near term direction of the markets to be dictated by monsoon prediction, earnings numbers and RBI credit policy.

Inflation continues to be cause of concern. With the revival of NAC, some analysts fear that “social” spending may go up again on political considerations. Barring unexpected negative news flow markets are likely to gain further steam in next few weeks.

Stay invested and use sharp corrections for buying. For the week ahead chartists predict trading range of 17,460-18,200 for the Sensex and 5,210-5,460 for the Nifty.

Immediate supports for the indices are at 17,560 and 17,400 and 5,240 and 5,180. Expect stiff resistance at 17,900 and 5,400 levels.

Analysts are sensing that a long run for stocks is nearing, after the statement of Mr Bill Gross, who manages the world’s biggest bond fund, who predicts that the bull run in fixed securities is nearing the end. Always check the big picture.

Futures & Options

Trading volumes continued to be subdued in the derivatives segment. Market players attribute this to lack of market dictating “triggers”.

With “weak” players cutting positions ahead of results season, institutions were seen “building” positions. Start of the new financial year may see higher participation from institutional players in the next few weeks.

Options data indicates likely upward move of 150-200 points in Nifty. Hold longs with trailing stop loss. Expectedly technology counters after losses during the early part of the week on reports of dollar weakness have made strong comeback.

Industry sources indicate strong numbers and “positive” guidance for next few quarters. Buy on declines TCS, Infosys, Wipro and HCL Technologies. Metal and cement stocks were back in demand on reports of robust demand despite recent price increases.

Stay invested and add on declines SAIL, Tata Steel, Sterlite, ACC and Ambuja Cements. Increase in fuel prices on migration to Euro IV compliance norms had “sobering” effect on auto stocks.

However, robust March sales numbers of auto majors indicate that bull run will continue. Stay invested and use declines to buy Ashok Leyland, M&M and Tata Motors.

Firm crude prices and revival in exploration activity in USA may see ONGC, Cairn and Aban Offshore gain strength. Ahead of credit policy banking stocks may trade in a tight range.

Sale of equity by promoters of Mundra Port is reportedly for subscribing to rights issue of another group company Adani Enterprises. Buy in the current weakness Mundra Port for four figure target in next couple of months.

Stock scan

The Supreme Court is expected to pronounce its verdict on the case between Mukesh Ambani-led RIL and Anil Ambani-led RNRL in the next few weeks. Analysts are already studying the possible impact of the verdict. Punters advise “play” in the Ambani stocks through the “options” route to minimise losses and maximise returns.

IFGL Refractories Ltd is engaged in the manufacture of specialised refractories and requisite operating systems for the steel industry. The company has manufacturing facilities in Brazil, China, UK, USA, Taiwan and India. Sources indicate that turnaround performance of last quarter is likely to be repeated in Q4 also. Buy on declines for price target of Rs100 in medium term. Good buying interest seen in Max (I), FDC and Indoco Remedies. Max India has business interests in insurance, healthcare, clinical research and packaging films. Value buy at current levels.

Good brand equity makes “Electral” manufacturer FDC a good buy on declines for three figure target in short term. Heightened interest in the midcap pharma has put Indoco Remedies also in limelight. Buy on declines.

Volume action indicates healthy developments on cards in Secunderabad Healthcare Ltd. Punters tip a target of Rs 45 in the medium term. Vikas Granaries, a manufacturer of single super phosphate fertilizers is tipped for Rs 50 in short term. A strong performance in the last quarter by Standard Industries has seen punters target the stock in recent times. Possible target of Rs75 on cards.

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 : deccan.com

Bought to you by

Ingenious Investor

Equity Research Division

Ravina Consulting

No.429 Mahavir Tuscan

Near Hoodi, Whitefield

Mahadevapura Post

BANGALORE 560048

For Free Stock Advise + Ideas

sowmya@ravinaconsulting.com

Talk / SMS 08105737966

Read - www.ingeniousinvestor.blogspot.com

Follow us - www.twitter.com/smartinvestor