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 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 13th Sept 2010

Buoyed by better-than-expected US data, markets across the globe had a positive week during the week ended. Ignoring the surge in food inflation and flood situation in many parts of the country, benchmark indices closed at a 32-month high.

On the BSE, the Sensex surged towards 19,000-levels closing at 18,800 gaining 579 points and the Nifty on the NSE ended 161 points higher at 5,640. The indices are now only 11 per cent below their all-time high. Market breadth continued to be positive with heightened activity in many midcap and smallcap counters. Stick to stocks that have stood the test of time.

Weekend IIP numbers were pleasant surprise with exceptional performance from capital goods sector. Despite the base effect, analysts feel that the economy is slowly inching towards high-growth path.

However, the faster-than-expected growth has also revived expectations of monetary tightening by RBI in its next review. Barring any surprises from the global front, advance tax numbers and expectations over second quarter numbers may determine near term direction of markets.

For the week ahead, chartists predict a trading range of 18,520 and 19,180 for the Sensex and 5,500 and 5,780 for the Nifty. Strong resistance can come at 18,960 and 19,100 and 5,685 and 5,740. Immediate supports are at 18,670 and 18,540 and 5,610 and 5,560. Stock markets are becoming more and more volatile. The stock market reacts to breaking news by shooting stock prices higher one day, then pounding them lower the next. So, be flexible.

FUTURES & OPTIONS
Mirroring the strong bullish undertone, robust volumes were seen in the derivative segment. Sentiment indicators like open interest, implied volatility, put/call ratio and VIX reflect a positive undercurrent. Open interest build up in the Nifty5700 strike opti-ons reflects bullish trend in the market currently.

Metal stocks are back in the limelight. Tata Steel, JSPL and Hindalco look good for targets of Rs 650, Rs 800 and Rs 210 in next few weeks. Capital goods stocks BHEL, L&T, Crompton Greaves, BGR Energy, Voltas and Cummins can touch targets of Rs 2,650, Rs 1,975, Rs 340, Rs 900, Rs 255 and Rs 800 in the near term.

US restrictions on outsourcing is unlikely to hurt IT majors significantly. Analysts feel that present sloganeering is only for election gains. Accumulate on declines good counters like Infosys, TCS, HCL Tech and Wipro. Disclosure of Satyam’s restated results may give fillip to stock price of Tech Mahindra.

Led by SBI, banking counters were on a roll. Further gains are likely in BOI, BOB, Corporation Bank, ICICI Bank, IDBI Bank, Kotak Bank, Federal Bank and PNB. Ride the boom in the sector with trailing stop loss.

Neglected sectors such as fertilisers, sugar and paper are getting a‘re-look’ from savvy punters. Stories of decontrol, price revisions are doing rounds. Adopt buy on rumour; sell on news strategy. Among the stocks looking good are Chambal Fertiliser, Dabur, Godrej Industries, HCC, IDFC, Noida Toll, Piramal Health, Opto Circuits, United Spirits and Onmobile.

A good trader need to have — A chronic inability to accept things at face value, to feel continuously unsettled, and to have humility.

STOCK SCAN
Micro Technologies Ltd is one of the leading electronic security devices company with product diversity in various segments as vehicle, premises, mobile, other assets and now diversified into energy, health and agriculture also. The company has been listed as one of the best under $1 billion firms by Forbes. Book value of `281, trailing 12 month EPS of `45 and high OPM of 39 per cent make the stock good buy for target price of `350 in medium term.

Mahindra Forgings Ltd, a M&M group company, is one of the finest and amongst the top three forging companies in India, with an installed capacity of 42,000 tonnes. It is the largest supplier of forged components like crankshafts and steering knuckles, commanding a 40 per cent market share. Buy on declines for a price target of `200.

Analysts predict turnaround results in second quarter from Heritage Foods. Reports of improvement in the operational performance of retail division and likely demerger of it are indicated by company insiders. Stay invested for further gains.

Apart from being the second largest phosphatic player in the country, Coromandel International has made impressive strides in specialty nutrients and crop protection chemicals. Buy on declines for a target price of `900 in medium term. Select midcap companies like Crew BOS, Rane Holdings, Greaves Cotton, TIL and Foods & Inns are witnessing good buying from savvy market players. Buy on declines for steady gains in medium term. Renewed buying is likely to be seen in Vishnu Chemicals, AP Petro and Pochiraju Industries. Stay invested for further 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 : Deccanchronicle.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

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Indian Stock Markets BSE, NSE Outlook 9 Aug 2010

After trading higher during the early part of the week, markets shed some of the gains during the later part of the week on tepid global trends. On the BSE, the Sensex ended 276 points higher at 18,144 and the Nifty on the NSE closed with 72 points gains at 5,439. The broader market witnessed heightened activity with the participation of smallcap stocks in the rally. The season of “cats and dogs” has started. Be cautious and buy good standard stocks that have stood the test of time. Sustained FII inflows continued even while domestic investitional investors were seen selling on the redemption pressure. Undertone of caution is clearly visible due to concern over rising inflation, subdued IIP numbers and lukewarm first quarter results. Good monsoon and easing of food inflation have kept sentiment positive.

With no major positives or negatives in the market, range bound trading may continue for some more time. With most of the recent declines in the market driven by global corrections and bouts of risk aversion, markets may continue to swing to global cues.

Key event in the coming week will be statement from US Federal Reserve and economic data from Europe. For the week ahead, chartists predict a trading range of 17,840-18,420 for the Sensex and 5,320-5,570 for the Nifty. Supports for the week are at 18,020 and 17,860 and 5,410 and 5,360. Expect resistance to the indices in the bands of 18,300-18,600 and 5,500-5,575. Short term traders are advised to trim positions if Nifty trades below 5,400 level.

Futures & Options
Trading volumes were disappointing in the derivatives segment. Sentiment indicators like open interest, put/call ratio, implied volatility and VIX indicate that sideways trend will continue in near-term. With open interest close to Rs 1,50,000 crore, caution is advised. Avoid large positions and trade lightly.

IT stocks were back in the limelight on the back of good results and guidance from Cognizant. Dollar weakness may play spoilsport for the IT party. However use sharp corrections to buy TCS and Wipro for short-term.
Led by Tata Motors, auto stocks continued to trade firmly. Stay invested for gains in Tata Motors and Mahindra and Mahindra.

As expected, bank stocks continued to attract buyers at every fall. The passage of the SBI Bill in Parliament has given fillip to the stock. Use declines to buy Andhra Bank, Indusind Bank, UCO Bank and Yes Bank.

Selling pressure was seen in pharma and oil and gas counters. Despite the acquisition of shale gas assets, Reliance Industries stock has closed at a two-month low. Selling in the counter has been attributed to a hedge fund. Long-term investors can use present weakness for accumulating.

Lackluster results triggered selling in select from pharma companies. Lack of information on Sebi’s not-ice to Mr Anil Ambani’s Reliance ADAG is fuelling speculation. Tread cautiously in stocks of ADAG companies.
Among the stock futures, looking good for trading gains are Bharat Forge, Century, Educomp Solutions, GSPL, ITC, LIC Housing Finance, Mphasis, Onmobile, Opto Circuits, Petronet LNG, Powergrid, Sun TV and Tulip IT.
Stock scan
On the back of fast growing automobile sales, ancillary auto component industry has shown healthy growth and many companies are being lapped up by fund mangers. On the radar of savvy market players is Omax Autos, one of the top three companies in sheet metal and tubular segment. The company has largest sprocket manufacturing capacity in South East Asia, largest welding and tri nickel chrome facilities in India. Apart from supplying to auto majors such as Hero Honda, Tata Motors and others, the company has also begun manufacturing home furnishing metal houseware to global giant Ikea. With an expected turnover of Rs 1,200 crore and EPS of Rs 12 for current year and book value of Rs 72, the stock is a good bet for a target price of Rs 125.

Heightened activity seen in Nitesh Estates, Hinduja Ventures, eClerx Services and Bayer Crop Sciences.
Nitesh Estates has reportedly finalised two large development deals recently and is also reportedly hiking its stake in the hotel venture. Trading below its issue price, the counter is witnessing active accumulation by a big bull. Buy at the current level for a target price of Rs 65 in the medium term.

Hinduja Ventures’ strategy to act as incubator for new businesses like media and entertainment has started paying rich dividends. IMCL, the flagship cable subsidiary, may be demerged soon to unlock value say sources. Buy on declines for a target price of Rs 650. eClerx is one of the successful providers of Knowledge Process Outsourcing and Business Process Outsourcing services. Stay invested in the counter for further 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 Outlook 2 Aug 2010

Spooked by hawkish comments of RBI, disappointing corporate results and volatility on account of F&O settlement, markets lost ground during the week ended. On the BSE, the Sensex ended 1.5 per cent or 263 points lower at 17,868 and the Nifty on the NSE shed 1.5 per cent or 81 points closing at 5,368.

However, BSE Midcap and Smallcap indices outperformed the benchmark indices by falling just 0.3 per cent and 0.9 per cent. However, a sustained buying from FIIs, revival of monsoon in north India and easing of food inflation prevented a sharp fall in the markets.

Retail investor sentiment is upbeat, but the inflation is still sticky point with many, finds a recent market survey. Market players expect the announcement of incentives for struggling export sectors like textiles, leather and others. Barring any unexpected news flow, markets may remain range bound for next few sessions.

Reports of slowdown in the Chinese manufacturing, could weaken global recovery, already constrained by debt and unemployment in advanced countries may impact global markets. Keep a watch on US job data also. For the week ahead, chartists predict a trading range of 17,560 and 18,240 for the Sensex and 5,240 and 5,500 for the Nifty. Supports for the week are at 17,720 and 17,580 and 5,330 and 5,280.

Only a sustained trading above 18,200 and 5,450 levels will turn the outlook bullish.

FUTURES & OPTIONS
Volumes were higher in the derivatives segment on settlement considerations. Rollovers were significantly higher in both Nifty futures and stock futures.
Open interest at Rs 1,20,000-crore plus is the highest ever for the beginning of new series. Put/call ratio moved lower to 1.25 from 1.28 reflecting covering of some shorts. Most of the sectors ended the week in the red. Modest buying was seen in banks and consumer durables. The major sectoral losers were capital goods, oil and gas, realty and power.
Buoyed by the RBI move to keep the CRR unchanged, strong buying interest was seen in banking stocks. Stay overweight in the sector and use sharp declines to accumulate. Lack of positives from oil and gas majors triggered selling in Gail, RIL and ONGC.

Profit-booking was seen in the realty space with DLF leading the downtrend. However, punters do not rule out a rally on the back of auction prices for Mumbai mill land. After a sustained rally in the past few weeks, capital goods counters witnessed strong correction. Buy at lower levels Crompton Greaves, Cummins and APIL.

The news-driven volatility in Maruti and Hero Honda has affected other auto counters. Rumours of Hero group breaking its association with Honda is also doing the rounds.

Among the stock futures, HCC, Hindalco, CESC, Dena Bank, Vijaya Bank, Tata Chemicals, HCL Tech, M&M, Tata Motors, Noida Toll and Opto Circuits are looking good for price targets of Rs 148, Rs 175, Rs 425, Rs 110, Rs 80, Rs 360, Rs 425, Rs 685, Rs 880, Rs 35 and Rs 290. A relief rally is likely in Century and Dabur. Traders can attempt shorts in counters trading below their last week closing levels or lows.

STOCK SCAN
The Indian starch industry is a sunrise sector and has immense potential to grow at rapid pace in coming years. Among the organised players Anil Products, Riddhi Siddhi Gluco, Sukhjit Starch and Gayatri Bioorganics are the leading ones. After expansion of sorbitol and maize crushing capacities, Gayatri Bioorganics is also setting up 6 MW co-generation power plant to optimise costs. The company has also formed an alliance with Fursa and is expected to triple the production in the coming months.

With good crop prospects for maize and corn — the basic raw material — in the current year, Gayatri Bio looks good bet for price target of Rs 35 in medium term.

Low profile Vijayeswari Textiles Ltd has grown from a small generic yarn manufacturer into a high quality lucrative home textiles company. The company supplies to the world’s leading home textile retailers such as Macy’s, Kohl’s, Laura Ashley and others; and also has own brands like Kotton Dor, and others. First quarter results reflect an impressive turnaround performance with 110 per cent growth in turnover and registering half of last year’s profit in this quarter itself. Buy at current levels for short term target of Rs 60.

Source : DC

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Market Khabar 26 July 2010

Buoyed by positive global cues, changes in takeover code and good earnings from banking, auto component and capital goods sectors, Indian markets extended gains for the third straight week.

The BSE Sensex added 175 points and closed at 18,131. The Nifty rose 55 points ending at 5,449 — above 5,400-mark after 30 months. However, under-performance of midcap and smallcap indices reflects the underlying fears and scepticism of market players over the ongoing rally.

Strong FII inflows and positive economic news may see markets gaining momentum in coming days. To combat inflation, RBI is expected to hike repo and reverse repo rates by 25 basis points.

Weekend global cues such as results of stress tests of major European banks, rally in euro and better than expected results from Microsoft and others may ease investor worries about the strength of the global economy.

Important events for next week are RBI credit policy, first quarter results of RIL and F&O settlement.

For the week ahead chartists predict a trading band of 17,800 and 18,600 for the Sensex and 5,320 and 5,600 for the Nifty. The indices can face resistance at 18,340 and 18,560 and 5,490 and 5,560. Supports for the week are at 18,020 and 17,860 and 5,380 and 5,320.

Probability of short-covering rally propelling the indices closer to 19,000 and 5,700 levels is not ruled out in next few weeks discount fundamental outlook.

Futures & options

Robust volumes were seen in the derivatives segment. Open interest of the market has crossed Rs 1,70,000 crore. Nifty PCR has increased to 1.47 indicating addition of short positions. Good roll over of positions seen in many stock futures.

In August series, 5,600 call and 5,300 put have seen good addition indicating a higher trading range for the Nifty in the near term.

Spurred by Chinese rumours, metal stocks witnessed good buying interest. Buy on declines SAIL, Tata Steel, JSPL and JSW Steel. Non-ferrous counters Sterlite and Hindalco may seek higher levels on short covering.

Good buying was seen in capital goods stocks Crompton Greaves, BHEL and BEL. Stay invested and add on declines.

True to predictions, smaller PSU banks continued to attract buyers on every decline. Buy Allahabad Bank, UCO Bank, Syndicate Bank, Indian Bank and Dena Bank on declines.

Rumours of “surprise” bonus from SBI are doing rounds. Short covering in Bank Nifty may push it closer to 10,500 level. Telecom counters are witnessing heightened activity.

Further gains indicated in Idea, Bharti and Onmobile. After a minor correction, realty stocks will seek higher levels say punters. DLF, Unitech and HDIL are the favorites in the space.

Maruti results were a big disappointment. Drop in profits was due to higher royalty to Suzuki. Punters expect the stock to slide to Rs 1,250 level.

Among the side counters Alstom Projects, Dabur, HCC, Jain Irrigation and Sintex Inds look good for higher levels.

New entrants to F&O, Shriram Transport, Adani and NHPC witnessed heightened activity. Book profits at higher levels.

Stock scan

Astral Polytechnik primarily manufactures chlorinated poly vinyl chloride (CPVC)/PVC (lead free) pipes and fittings.

The company has launched innovative products like fire fighter pipes, soil waste rain water pipes and many more.

With many user industries preferring CPVC pipes over GI pipes, the company is expected to report strong growth in sales and net profit for next few quarters. Buy on declines for a price target of Rs 450. Camphor & Allied Products is the largest manufacturer of terpene chemicals and other specialty aroma chemicals, which find application in vast array of industries like flavours and fragrances, pharmaceuticals, soaps and cosmetics, paints and varnishes and many more. Book value of Rs 125 and an EPS of Rs 20 make the stock a good bet for a target price of Rs 225 in the medium term.

Shilp Gravures is pioneer and undisputed leader in electro-mechanical engraving, with a substantial share of the flexible packaging industry. The company’s client list includes In-dia’s most reputed na-mes in FMCG, liquor and cigarette segments. Buy at current levels for target price of Rs100. True to predictions, Andhra Petro has reported excellent turnaround performance.

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 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 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

Bought to you by

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Near Hoodi, Whitefield

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