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 13 Dec 2010

Concerns over the regulatory crackdown on operators indulging in stock price manipulation, fallout of 2G spectrum scam and renewed selling from FIIs pulled down the markets during the week ended. On the BSE the Sensex closed 458 points lower at 19,509 and the Nifty on the NSE 135 points down at 5,857.

The fall in benchmark indices does not reflect the extent of damage the broader market has undergone. The midcap and smallcap indices crashed by 6 to 9 per cent. Last week’s massacre of midcaps and smallcaps has shaken investor confidence and has dealt a short term blow to the sentiment. Cascading effect of margin calls aggravated the damage further.

Silence of regulators over the many market rumours floated by speculators made things dicey for market participants. However the sharp correction presents an opportunity to pick up good quality stocks ahead of Q3 results. Strong IIP data helped markets recoup some of the losses on Friday. With global markets performing strongly, punters say worst is over and relief rally is on cards.

Avoid fresh shorts at current levels. Key events to watch in coming week are RBI policy meet, advance tax numbers and US Fed meet. For the week ahead chartists predict trading band of 19,100-19,960 for the Sensex and 5,650-6,080 for the Nifty. Short term supports are at 19,340 & 19,080 and 5,760 & 5,680. Indices would face resistance at 19,760 & 19,980 and 5,920 & 5,980. Despite the strong pull back on Friday, it would be premature to say that markets are out of woods.

Futures & Options

Expectedly derivative segment witnessed turbulent times with many stocks swinging like a yo-yo; and ‘rapid fire’ volumes in many stocks reflect the prevailing nervous sentiment. Low PCR indicates substantial covering of short positions.
Sharp cut in open interest of stock futures indicates that lot of excesses have been flushed out. Freak rally from current levels is not ruled out say punters. Buy call option of Nifty 6,000 strike for surprising gains. Banking, realty, consumer durable, healthcare, auto and PSU segments witnessed sharp cuts. Negative news flow continues to “bug” banking counters. Industry watchers say news flow is being overplayed. Start bottom fishing.
Modest buying interest was seen in capital goods counters after IIP numbers. Buy on declines BHEL, L&T and Punj Lloyd. IT stocks continued to exhibit good strength in an otherwise weak market. Buy on declines Infosys, TCS, Wipro and HCL Tech for decent returns in near term. Reports of easing of pricing pressures and improvement in demand triggered rally in cement counters. Hectic volumes in ACC are a pointer. Stay invested in cement stocks. Resilience in Reliance Inds is attributed good refining margins in Q3. Above `1,080, surprising target of `1,140 is not ruled out. Punters say RIL will ‘save’ the markets from falling in near term. Oil majors ONGC, IOC, BPCL and HPCL are likely to trade firm on release of subsidy and also permission to hike fuel prices. Metal stocks are swaying to dollar index movements. Chinese inflation data and LME price moves may keep the stocks range bound in near term. Sugar stocks are witnessing good buying interest at lower levels on reports of rise of global sugar futures to 30-month highs. Stay invested and add on declines.

Stock scan

Irrational exuberance has given way to irrational depre-ssion. Many midcaps and smallcaps have been hammered to 52-week low. Remember stock prices rarely trade at fair value, they are overvalued or undervalued.
Neyveli Lignite, Arshiya Intl, Henkel India, HBL Power, ITD Cementation, Pudumjee Inds MIC Electronics and Gitanjali Gems are some of the stocks on the radar of savvy fund manager. Recent takeover of Igarshi Motors by HBL Power augurs well for the company. Accumulate at current levels. Improvement in operational performance and good order book makes LED equipment major MIC Electronics attractive buy at current levels for target price of `50. Detergent MNC Henkel India has reported good turnaround performance in the last few quarters. Good value buy at present level. Despite meltdown of many infra counters ITD Cementation had been resilient in the last few months. Use the present correction to accumulate the stock for target price of `350 in medium term. Logistics major Arshiya Intl has recently commissioned India's first Free Trade Warehousing Zone and is an integrated logistics infrastructure solution provider. Buy at current levels for target price of `300.

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 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 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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Market Khabar 23 Aug 2010

Showing good resilience against uncertain global cues markets closed near their 30-month highs. On the BSE the Sensex closed 235 points higher at 18,402 and the Nifty on the NSE added 79 points to close above the psychological level of 5,500 at 5,531.

Market breadth continued to be good with frenetic activity in several midcap and smallcap stocks. Good monsoon, easing food inflation and strong FII inflows kept the sentiment positive. Delay in rollout of GST and DTC may have modest impact on markets feel analysts.

Recent gains in high priced IPO’s like Jubilant Foods, SKS Micro, Bajaj Corp and others in too short a time frame show build up of “bubble” in some pockets of the market. Repetition of Newton’s Law not ruled out.

It is interesting to observe that during the week ended while China, India, Brazil, Sri Lanka and other emerging markets recorded hefty gains; France, UK, Germany and US markets ended with losses after some downbeat economic reports triggered fears of “double dip” recession.

Decoupling theory is back in limelight. Though macro economic data is improving, key risk for Indian market is from ‘foreign’ fear market players. Chartists predict trading band of 18,120-18,790 for the Sensex and 5,410-5,680 for the Nifty. Supports for the week are at 18,240 and 18,040 and 5,480 and 5,420. Expect resistance to indices at 18,520 and 18,620 and 5,580 and 5,660. Short term outlook will turn negative if indices trade below 18,200 and 5,420 levels.

FUTURES & OPTIONS
Ahead of the settlement week derivatives segment witnessed robust volumes. Turnover has crossed Rs1 lakh crore on three trading sessions reflecting rise in speculative activity.
Open interest is close to Rs 2 lakh inclusive of rollovers. Sentiment indicators like implied volatility, open interest, put/call ratio and VIX indicate volatile finish to the current series. Renewed buying interest was seen in FMCG and pharma stocks.
Aurobindo Pharma, Ranbaxy and Lupin look good for more gains. Buy Lupin cum split for “good” ex-split gains. Dabur, Marico and ITC are good bets for steady gains from current levels.

Banking and capital goods extended their recent gains on momentum buying. Slight “tiredness” seen in banking stocks after their recent “spectacular” run. Buy on dips. Likely clearance of Nuclear Liability Bill sparked buying in L&T, Siemens, APIL and BHEL.

Stay invested for present. Range bound activity was seen in IT, metals and realty. Metals look set to stage a strong comeback. Buy on declines Tata Steel, Hindalco and SAIL.

Stay invested in DLF, Unitech and IBREL. Underlying land valuations make Century and Bombay Dyeing good buys on declines. Mild selling was seen in power and telecom counters. After recent correction infra counters IVRCL, NCC, JP Associates and HCC look good for relief rally. Good accumulation seen in cement counters. Use corrections to buy ACC, Ambuja, Ultratech and Samruddhi. Among the side counters Financial Technologies, Noida Toll, BEL, Exide Inds, look good for short term gains.

STOCK SCAN
Sathavahana Ispat Ltd is engaged in the manufacturing of pig iron and metallurgical coke with cogeneration power. Pig iron is the basic raw material for foundry and engineering industries for making castings and engineering components.

With the significant growth in the main user industries like automobiles and construction, pig iron prices are moving upwards again. Despite modest decline in turnover, integration of operations helped the company post 107 per cent increase in net profit in Q1.

UK-based Stemcor, world’s largest steel trading firm had invested at Rs 60 per share for nearly 15 per cent stake and is reportedly not averse to hiking its stake in the company. Buy at current levels for target price of Rs 85 in the short term.

After long consolidation heightened activity seen in Vishnu Chemicals and Brigade Enterprises. Vishnu Chemicals manufactures chromium and other specialty chemicals used in pharmaceutical, pigments, dyes, metallurgy, tanning, adhesives and animal feed industries.

Turnaround Q1 performance has triggered strong buying interest in the counter. Buy for target price of Rs 150 in near term. Brigade Enterprises is one of the leading property developers from Bengaluru.
Restructuring of debt and reports of unlocking of value from the subsidiary Brigade Hospitality Services Ltd has put the company in limelight. Spurt in volumes indicates “interested” buying. Buy for target price of Rs 200 in the coming months. Indian Hume Pipes, Lupin, Apollo Hospitals, KCP and Dhanuka Agri are all trading cum split. Buy on declines.

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 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 8 Feb 2010

Markets ended in red for the third week in a row in the weekend following global worries on fiscal deficits of euro zone countries, continuous rise in food inflation and tepid response to NTPC FPO.

On the BSE, the Sensex shed 442 points to end below 16,000-level at 15,916 and the Nifty on the NSE closed 115 points lower at 4,767.

As expected market breadth continued to remain weak and jittery investors were seen cutting positions.

Sources suggest an aggressive policy action from the government to control inflation. The worst is over on inflation front.

Watch out for expectations over the Union Budget to spot likely beneficiary industries. Sources say stimulus packages will not be trimmed to a large extent and only minor tinkering is on cards. Weekend rebound in US markets from lower levels may trigger a relief rally from current levels.

For the week ahead, chartists predict a trading band of 15,550 and 16,420 for the Sensex and 4,540 and 4,960 for the Nifty.

Experts do not expect the indices to breach the 200-day moving averages at 15,530 and 4,650 levels easily and expect a mild recovery rally from current levels. Avoid aggressive shorts at current levels. Initiate fresh positions if indices sustain above 16,300 and 4,840 levels on closing basis.

You cannot tell how expensive a stock is. A stock’s value is depends on its earnings — a Rs 100 stock can be cheap if the firm’s earnings prospects are high, while a Rs 10 stock can be expensive if earnings potential is dim.

Futures & Options

High intra-day volatility is back and becoming a way of life for derivatives traders.

Overall open interest has again crossed Rs 1 lakh crore mark to settle at Rs 1,09,000 crore on Friday. As expected Nifty holds top position with 66 per cent share of the total. Contrarians tip buying of Nifty4,900 call option for unexpected returns in pre-budget rally.

Jittery market players were seen unwinding positions in bank, auto, realty and metal stocks. Punters suggest buying in SAIL, Tata Steel, Unitech, DLF and Nalco for relief rally gains. Among the stock futures looking good in an otherwise weak market are Asian Paints, Tata Power, Opto Circuits, Triveni, Essar Oil, Cummins, Mphasis and Petronet.

Buy oil marketing companies — IOC, BPCL and MRPL — for surprising returns. Side counters such as HCC, Punj Lloyd, JP Hydro and CESC are witnessing accumulation from savvy players.

Buy HCC for a target price of Rs 150 in the settlement. For the pre-budget trading, punters expect action in fertiliser, capital goods and power stocks. Buy Tata Power, Reliance Power and CESC at current levels.

Fallout from the luke warm response to the FPO of NTPC likely to be short lived. Buy strong PSU counters in the current weakness. Punters tip Engineers India, Power Finance and REC for short term.

Investors need to have realistic expectations. When expectations are too high, it results in overtrading underfinanced positions and very high levels of greed and fear, which makes objective decision-making impossible.

Stock scan

Vishnu Chemicals has posted good turnaround results. For the last nine months, the company has clocked net profit of Rs 4.18 crore in comparison to a loss of Rs 5.85 crore in the previous fiscal. Vishnu Chemicals is a world class manufacturer of chrome chemicals and animal feed ingredients and has recently set up a new state of the art manufacturing and R&D facility at Visakhapatnam. Sources indicate that the production of some peptides has also started and the company has reportedly tied up some CRAMS deals also. High promoter equity at 75 per cent reflects the confidence of the promoters. Buy at current levels for a target price of Rs 150.

Auto ancillary Subros continued its good performance on the back of reviving demand from its key clients — Maruti and Tata Motors. Volume and value led growth clearly reflect that cool times are back for the company. Buy at current levels for a target price of Rs 100.

AP Paper is reaping the benefits of its recently concluded expansion. Bettering the industry margins, the company has reported an excellent nine month performance. Stay invested in the counter for a target price of Rs 150.

Infoedge is a leading prov-ider of online recruitment (naukri.com), matrimonial (Jeevansaathi.com), real estate (99acres.com) and related services in India. The company is aggressively expanding into education, professional networking and other related segments. Buy the company’s stock at the current levels for a target price of Rs 1,300 in the next couple of months.

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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