As expected markets fell below the 4000 levels, again another spectacular call. Markets after falling below 4000 levels rebounded very sharply and the move is very swift. In my last I clearly mentioned that two issues can act as triggers for this call and they were monsoon and the disinvestment plan. Both the issues turned positive and the markets too reacted for that. Finance secretary’s announcement on disinvestment forced the bears to cover their shorts and the global cues too encouraged bulls to take fresh longs.
The most important issue is the US major indices now just crossed the 200day moving average means some technical breakout was happened.
Now the question is where we headed further? We are going to touch the 4680 levels or 3660 levels? We can believe this up move or not?
In my view, Nifty is likely to be in range in the short term. The range may be little wide from the 3800-4850. Now, we are at the middle of the band and the momentum suggests that we are going to touch the 2009 high i.e., 4680. So, one should have the long view only. This up move is very very crucial and it will act as key rally to judge that we are entering in to a bull market. When we viewed one year period from here nifty surely touch the 5200. So, trade should be long.
Those who are willing to enter aiming the 2-3 year period can pick the stocks on every decline. The immediate question is what stocks to buy? At what levels we should buy?
ST, MT and for the LT:
1. Larsen
2. Alstom Projects
3. Reliance Infra
4. Siemens
5. BGR energy
MT and for the LT:
6. Bartronics
7. ICSA
8. JKcement
Only for the LT:
9. Tantia constructions
10. Gammon India.
According your risk appetite and the target time you can pick the stocks from the above list. Along with the above stocks I prefer some other stocks (NTPC, Punj Lloyd) but the valuations and the momentum not enticing to pick at the current levels hence whenever the opportunity comes on that counters I will initiate fresh call.
Wednesday, July 22, 2009
Stocks Which Posted Very Good Results
Checkout the list of companies which have posted very good financial results for the past quarter.
Triveni Engineering and Industries Ltd :
Net profit of Triveni Engineering and Industries rose 61.83% to Rs 39.81 crore in the quarter ended June 2009 as against Rs 24.60 crore during the previous quarter ended June 2008. Sales rose 17.62% to Rs 518.32 crore in the quarter ended June 2009 as against Rs 440.68 crore during the previous quarter ended June 2008.
Tinplate Company of India Ltd :
Net profit of Tinplate Company of India rose 538.48% to Rs 21.90 crore in the quarter ended June 2009 as against Rs 3.43 crore during the previous quarter ended June 2008. Sales rose 69.97% to Rs 195.33 crore in the quarter ended June 2009 as against Rs 114.92 crore during the previous quarter ended June 2008.
Henkel India Ltd :
Net profit of Henkel India rose 418.92% to Rs 5.76 crore in the quarter ended June 2009 as against Rs 1.11 crore during the previous quarter ended June 2008. Sales rose 12.89% to Rs 152.36 crore in the quarter ended June 2009 as against Rs 134.96 crore during the previous quarter ended June 2008.
Supreme Industries Ltd :
Net profit of Supreme Industries rose 192.58% to Rs 59.95 crore in the quarter ended June 2009 as against Rs 20.49 crore during the previous quarter ended June 2008. Sales rose 27.59% to Rs 563.85 crore in the quarter ended June 2009 as against Rs 441.91 crore during the previous quarter ended June 2008.
Essar Oil Ltd :
Net profit of Essar Oil rose 463.33% to Rs 169.00 crore in the quarter ended June 2009 as against Rs 30.00 crore during the previous quarter ended June 2008. Sales declined 24.41% to Rs 6774.00 crore in the quarter ended June 2009 as against Rs 8961.00 crore during the previous quarter ended June 2008.
Sterlite Technologies Ltd :
Net profit of Sterlite Technologies rose 416.82% to Rs 45.48 crore in the quarter ended June 2009 as against Rs 8.80 crore during the previous quarter ended June 2008. Sales rose 7.92% to Rs 436.18 crore in the quarter ended June 2009 as against Rs 404.18 crore during the previous quarter ended June 2008.
Free Intraday Stock Trading Tips / Calls for 21st July 2009
Satyam, Buy at Rs. 97, tArget- Rs. 101, Stop Loss- Rs. 95
Aban Offshore, Buy at Rs. 927, Target- Rs. 975, Stop Loss- Rs. 900
Cairn India, Buy at Rs. 246, Target- Rs. 252, Stop Loss- Rs. 242
ICICI Bank, Buy at Rs. 785, Target- Rs. 805, Stop Loss- Rs. 770
BOI, Buy at Rs. 362, Target- Rs. 370, Stop Loss- Rs. 357
R-Com, Sell at Rs. 270, TArget- Rs. 262, Stop Loss- Rs. 275
Tata Steel, Sell at Rs. 395, Target Rs. 384, stop Loss- Rs. 399
Wipro, Buy at Rs. 460, Target - Rs. 471, Stop Loss- Rs. 450![]()
Aban Offshore, Buy at Rs. 927, Target- Rs. 975, Stop Loss- Rs. 900
Cairn India, Buy at Rs. 246, Target- Rs. 252, Stop Loss- Rs. 242
ICICI Bank, Buy at Rs. 785, Target- Rs. 805, Stop Loss- Rs. 770
BOI, Buy at Rs. 362, Target- Rs. 370, Stop Loss- Rs. 357
R-Com, Sell at Rs. 270, TArget- Rs. 262, Stop Loss- Rs. 275
Tata Steel, Sell at Rs. 395, Target Rs. 384, stop Loss- Rs. 399
Wipro, Buy at Rs. 460, Target - Rs. 471, Stop Loss- Rs. 450
Thursday, May 28, 2009
Expiry on Thursday , Beware !!
Markets closed just above important resistance levels of 4270 . Tomorrow is expiry day and bias is on upside now .
- US markets are trading Flat .
- GM is close to bankruptcy .
I expect market to open flat tomorrow and it might start its upmove towards R1 levels of 4337 .
R2 4,397
R1 4,337
Pivot 4,226
S1 4,165
S2 4,055
I expect market to open flat to low and then start its upmove high. I am planning to avoid trading tomorrow . People who want to trade should buy at dips only and that too for June series . Last day of expiry can be very risky .
USA,EUROPE,SGX NIFTY PLAYING SMART WITH INDIAN MKTS
USA,EUROPE ,AND SGX NIFTY are playing smart with Indian Investors sentiments.By the time we open SGX NIFTY comes off from days high,ASIAN mkts also follow,the whole day NASDAQ,DOW remains in negative territory followed by EUROPIAN MKTS after seeing all these effects our mkts also tend down. But the trick is that they show us negative and after we close these mkts trade well above what they showed us in our trading hours.All these international mkts have shown a pattern as our old proverb says ( THE TEETH WHICH ARE SHOWN TO US ARE DIFFERENT THAN THOSE ACTUAL TEETH).Seeing the negative effect on our mkts MARCh FABER an oppurtunist Investors starts shouting on TV from HONG KONG that MKTS MAY GO DOWN TO 10000 TO 12000,and the DALAL STREET starts getting HALAL. I swear this old man is such a negative mentality person that when ever there is some weak sentiments prevailing this man never leaves a single stone unturned to spoil the mkt mood.After all who the hell is he and why should we listen and interview this person whose contributions and analysis carry no significant impact on our mkts.Probably he has missed the rally and by telling negative things he wants to enter Indian mkts.When the whole world is cheering INDIANNOMICS and SENSEX TRGT SET TO CROSS 22000 in couple of months,after all we should forgive him since he cannot control or predict USA economy from where he belongs what he will tell about our economy plz neglect this old mans comments.
Rupee may climb to 46 a dollar in 12 months
The Indian rupee is likely to appreciate to 46 a dollar in the backdrop of a stable government at the centre and relatively resilient domestic demand, says a report by global financial services giant Goldman Sachs.
"We expect the INR to appreciate further from current levels as the stable government and relatively resilient domestic demand become key catalysts for foreign inflows," the report said, adding that the Indian currency "may touch Rs 46 to a dollar within 12 months."
Noting that there are significant pressures for rupee appreciation, the report said that the Indian currency gained about 5 per cent against dollar since the victory for the Congress-led UPA in the general elections.
With the rupee strengthening, it said the sectors dependent on imports will gain, the exports will be hit.
"Oil distribution, fertiliser and capital goods companies are amongst the largest importers and are likely to benefit from a stronger INR. On the other hand, IT, textiles, pharmaceutical, and export-oriented oil refining are likely to be hit by a strong INR," the report added.
Having appreciated during the last six trading sessions, rupee on Monday declined by 22 paise to 47.32 a dollar in early trade on expectations of fresh capital outflow by foreign funds.
Source - Rediff.com
Reliance Mutual Fund launches infra fund
Reliance Anil Dhirubhai Ambani group-controlled Reliance Mutual Fund, today annnounced the launch of its Reliance Infrastructure Fund.
The infrastructure fund, an open-ended fund, will invest predominantly in companies engaged in infrastructure and infrastructure-related sectors in the country, Reliance Capital Asset Management CEO Sundeep Sikka told reporters here.
The primary investment objective of the fund will be to generate long-term capital appreciation. It will invest in equity and equity-related instruments of companies engaged in infrastructure and infrastructure-related sectors like transport, banks and financial institutions, energy, power and oil, metals and minerals, telecom and urban infrastructure amongst others.
"Infrastructure is a key priority for India and we hope a spurt of infrastructure spending in the economy on the back of a stable Government and ease of project financing," Sikka said.
The right time is now to invest in infrastructure and infrastructure-related firms, a sector which is likely to get a boost from the new government, he said.
"The valuations look more attractive and the environment stable with the new government settling in. This makes it the right time to launch an infastructure fund more than ever," Sikka said.
The new fund offers two plans-Retail and Institutional. Each plan has a growth and dividend plan option.
The fund will invest at least 65 per cent of its assets in engineering, cement and power stocks as well as banks, whereas the rest will be invested in debt and money markets.
"We expect investors in large numbers to participate in the ever-growing sector with long-term capital appreciation," Sikka said.
Reliance MF saw no meaningful redemptions in the last one year and is very optimistic on global flows into India.
The fund-house is currently avoiding sectors that can be hurt by a rupee rise.It was currently overweight on the textile and pharmaceutical sectors and underweight on the information technology sector.
The fund-house is keen to buy shares of PSUs when their disinvestment takes place and if valuations are good, a Reliance Mutual Fund official said on condition of anonymity.
Reliance Mutual Fund is managing a corpus of over Rs 88,388 crore for over 71-lakh investors as on April 2009.
Source : Business Standard
The infrastructure fund, an open-ended fund, will invest predominantly in companies engaged in infrastructure and infrastructure-related sectors in the country, Reliance Capital Asset Management CEO Sundeep Sikka told reporters here.
The primary investment objective of the fund will be to generate long-term capital appreciation. It will invest in equity and equity-related instruments of companies engaged in infrastructure and infrastructure-related sectors like transport, banks and financial institutions, energy, power and oil, metals and minerals, telecom and urban infrastructure amongst others.
"Infrastructure is a key priority for India and we hope a spurt of infrastructure spending in the economy on the back of a stable Government and ease of project financing," Sikka said.
The right time is now to invest in infrastructure and infrastructure-related firms, a sector which is likely to get a boost from the new government, he said.
"The valuations look more attractive and the environment stable with the new government settling in. This makes it the right time to launch an infastructure fund more than ever," Sikka said.
The new fund offers two plans-Retail and Institutional. Each plan has a growth and dividend plan option.
The fund will invest at least 65 per cent of its assets in engineering, cement and power stocks as well as banks, whereas the rest will be invested in debt and money markets.
"We expect investors in large numbers to participate in the ever-growing sector with long-term capital appreciation," Sikka said.
Reliance MF saw no meaningful redemptions in the last one year and is very optimistic on global flows into India.
The fund-house is currently avoiding sectors that can be hurt by a rupee rise.It was currently overweight on the textile and pharmaceutical sectors and underweight on the information technology sector.
The fund-house is keen to buy shares of PSUs when their disinvestment takes place and if valuations are good, a Reliance Mutual Fund official said on condition of anonymity.
Reliance Mutual Fund is managing a corpus of over Rs 88,388 crore for over 71-lakh investors as on April 2009.
Source : Business Standard
Market tips and Predection for 27th May.
Yesterday we saw Indian Markets witnessing profit booking because of which we ended in deep red.
US markets ended positive.
Europe also ended positive.
Asia is trading positive.
Expect the Indian Markets to have a gap up opening.
The support for the Sensex is 13278-12889 and the resistance to the up move is at 13820
Nifty: (4117) the support for the Nifty is at 4022-3907 and the resistance to the up move is at 4205
Day Trading Ideas :
IFCI Buy above 45.80 for targets of 46.50 and 47.25 with SL of 43.
HDIL Buy above 268 for targets of 274 and 278 with SL of 260.
LNT Buy above 1261 for targets of 1270 and 1728 with SL of 1249
Happy Investing !
US markets ended positive.
Europe also ended positive.
Asia is trading positive.
Expect the Indian Markets to have a gap up opening.
The support for the Sensex is 13278-12889 and the resistance to the up move is at 13820
Nifty: (4117) the support for the Nifty is at 4022-3907 and the resistance to the up move is at 4205
Day Trading Ideas :
IFCI Buy above 45.80 for targets of 46.50 and 47.25 with SL of 43.
HDIL Buy above 268 for targets of 274 and 278 with SL of 260.
LNT Buy above 1261 for targets of 1270 and 1728 with SL of 1249
Happy Investing !
Why Market went up by more than 500 points ?
Sensex ended up 3.83 percent or 520.41 points at 14109.64. The Advance-Decline ratio stood at 7:1. Realty, Banking, Power, Metal and Capital Goods sectors surged in today’s trade. Realty ended up 6.17%, Banking ended up 5.15%, Power ended up 4.92, Metal ended up 4.45% and Capital Goods ended up 4.14%.Major Index gainer was Reliance Infra, which ended up 14.79%. Other index gainers were Sterlite Industries, DLF, ONGC, Grasim Industries, Ranbaxy Labs, ICICI Bank and JP Associates.
Finance Minister Pranab Mukherjee helped the sensex to have a another big leap by organizing a press conference.
>The government will try to complete the budget process before July 31 and will present budget in the first week of July.
>He said that reviving the economy growth momentum is the top most priority of the government.
>Fiscal prudence has also to be kept in mind.
>He said the government is assessing an impact of 3 doses of economic stimulus which have been given already. >He said the Industrial business has been hurt by the cost of funds and availability and for that he wants the banks to commit to more plan of action and said will talk to the bankers regarding the intrest rate in which they give loans to these industries.
>He further said that the government will focus on infrastructure in the Union Budget.
>The pipeline of infra projects will be re-appraised.
>He said the Budget will streamline the norms to boost the core sector investment.
>He said that the government is focussed on fiscal consolidation over the next 2-3 years.
>He Said that the government will address measures for financial sector and will make anti-money laundering regime stronger.
>He said that Incremental government borrowing will continue this fiscal year.
>He feels that the growth of 6.5-7% is a respectable rate.
>Debt management office is under consideration. He hopes that the banks will take advantage of RBI rate cuts.
>He said the government will address export oriented sectors like Textiles, Jewellery & Leathers, he added.He almost touched those sector which needs good push to grow and not go in negative path.
NHPC IPO to hit market by July
NHPC IPO which filed DHRP almost in 2008 , may come out with the ipo by endif july or august 2009.The size of the IPO is likely to be between 2000-3000 crore , with this market condition im sure everyone will try to come out with the delayed IPO and have some fund out of it .
Saturday, April 18, 2009
Tech Mahindra becomes No 4 in IT cos' list
Maimed and left gasping for a lifeline, Satyam Computer Services has finally found its new knight in shining armour, Tech Mahindra.
The bidding process for the beleaguered software firm culminated on Monday with TechMa emerging as the highest bidder with an offer price of Rs 58 per share. TechMa's price outbid other suitors, engineering giant Larsen & Toubro and private equity player Wilbur Ross, by a comfortable margin.
L&T's bid of Rs 45.90 per share and Wilbur Ross' Rs 20, were not even within striking distance of TechMa's deal-winning bid.
At Rs 58 per share, Tech Mahindra will acquire a controlling stake of 51% in Satyam for Rs 2,889 crore, pegging the total value of the company at Rs 5,665 crore. In the first stage, Satyam will issue 30.27 crore shares to TechMa, representing 31% of the company's share capital, which will infuse Rs 1,756 crore into the company. In the second stage, TechMa will have to mandatorily make an open offer to Satyam's existing shareholders for another 20%.
However, L&T, which holds a 12% stake in Satyam, will not participate in the open offer for shareholders as it has a lock-in period of six months.
Predictably, both the TechMa and Satyam stocks were caught in a volatile vortex during the days trading. Soon after the Satyam board meet in the early part of the day, the Tech Mahindra scrip on BSE gained 25% to Rs 400. However, late profit-taking shaved off part of its early gains and the stock closed at Rs 349, up 12.3%. While the Satyam stock rallied 16.5% in intra-day trades, it closed at Rs 49, up a mere 3.6%. In mid-session trading, the Satyam ADR was down 15% at $2.25 on New York Stock Exchange.
The acquisition catapults TechMa into the fourth position in the pecking order of IT firms, after HCL Technologies.
However, inevitably, questions are being asked about the winning bid. Have the Mahindras over-valued Satyam, especially since distressed asset buyer Wilbur Ross priced its bid as low as Rs 20? Interestingly, Cognizant, which was to bid jointly with Wilbur Ross, decided to back off at the last minute. Some IT analysts have also described the deal as ``disastrous''.
Defending his bid price, TechMa chairman Anand Mahindra said: ``When you are running in a race, you don't look behind who's chasing you. We believe our bid is rightly priced.'' It is estimated that Satyam's liabilities could be as high as $1 billion. TechMa director Bharat Doshi said that the bid price was determined by the company after taking into account Satyam's liabilities.
Even though the auditors, Deloitte and KPMG, are still in the process of restating Satyam's accounts, a rough calculation of the company's financials was presented to the bidders. As per this calculation, Satyam's annual revenues are expected to decline from $1.8 bn to $1.3 bn. Satyam's operating margin is said to be around 3% vis-a-vis Tech Ma's 22%.
For TechMa, Satyam complements its business, with no client overlap. While the former is a strong player in telecom (75% of revenues), Satyam caters to financial services, manufacturing and healthcare, among others. ``It will require a fair amount of work to bring Satyam back to its past glory. It will be a challenge to make Satyam financially strong so as to retain clients,'' said Vineet Nayyar, TechMa vice chairman and CEO.
With Satyam having a large clientele of over 500 clients -some of them as large as GE, Cisco, Citi and General Motors -Mahindra said: ``I will personally reach out to John Chambers (chairman of Cisco), Vikram Pandit of Citi and Fritz Henderson (GM CEO) to restore confidence in Satyam and us.''
After 100 days of uncertainty, Satyam's acquisition dispels the anxiety of 48,000 Satyamites, ushering in a sense of positivity. The company's former chairman B Ramalinga Raju had, in January, revealed that he had manipulated the company's accounts to the extent of Rs 7,800 crore. He has been behind bars since then, awaiting trial.
Announcing the winning bid, Kiran Karnik, chairman of the government-appointed Satyam board, said: ``Today, we have reached a final culmination stage, and though there are a few steps more to go, what it marks is the end of uncertainty.''
The other logical question is: will TechMa retain the Satyam brand name, given the unwholesome ring it has acquired in the past five months? Meanwhile, Mahindra rubbished rumours that TechMa's strategic partner, British Telecom, did not support the Satyam bid. Incidentally, British Telecom is also TechMa's largest client. - Economic Times
The bidding process for the beleaguered software firm culminated on Monday with TechMa emerging as the highest bidder with an offer price of Rs 58 per share. TechMa's price outbid other suitors, engineering giant Larsen & Toubro and private equity player Wilbur Ross, by a comfortable margin.
L&T's bid of Rs 45.90 per share and Wilbur Ross' Rs 20, were not even within striking distance of TechMa's deal-winning bid.
At Rs 58 per share, Tech Mahindra will acquire a controlling stake of 51% in Satyam for Rs 2,889 crore, pegging the total value of the company at Rs 5,665 crore. In the first stage, Satyam will issue 30.27 crore shares to TechMa, representing 31% of the company's share capital, which will infuse Rs 1,756 crore into the company. In the second stage, TechMa will have to mandatorily make an open offer to Satyam's existing shareholders for another 20%.
However, L&T, which holds a 12% stake in Satyam, will not participate in the open offer for shareholders as it has a lock-in period of six months.
Predictably, both the TechMa and Satyam stocks were caught in a volatile vortex during the days trading. Soon after the Satyam board meet in the early part of the day, the Tech Mahindra scrip on BSE gained 25% to Rs 400. However, late profit-taking shaved off part of its early gains and the stock closed at Rs 349, up 12.3%. While the Satyam stock rallied 16.5% in intra-day trades, it closed at Rs 49, up a mere 3.6%. In mid-session trading, the Satyam ADR was down 15% at $2.25 on New York Stock Exchange.
The acquisition catapults TechMa into the fourth position in the pecking order of IT firms, after HCL Technologies.
However, inevitably, questions are being asked about the winning bid. Have the Mahindras over-valued Satyam, especially since distressed asset buyer Wilbur Ross priced its bid as low as Rs 20? Interestingly, Cognizant, which was to bid jointly with Wilbur Ross, decided to back off at the last minute. Some IT analysts have also described the deal as ``disastrous''.
Defending his bid price, TechMa chairman Anand Mahindra said: ``When you are running in a race, you don't look behind who's chasing you. We believe our bid is rightly priced.'' It is estimated that Satyam's liabilities could be as high as $1 billion. TechMa director Bharat Doshi said that the bid price was determined by the company after taking into account Satyam's liabilities.
Even though the auditors, Deloitte and KPMG, are still in the process of restating Satyam's accounts, a rough calculation of the company's financials was presented to the bidders. As per this calculation, Satyam's annual revenues are expected to decline from $1.8 bn to $1.3 bn. Satyam's operating margin is said to be around 3% vis-a-vis Tech Ma's 22%.
For TechMa, Satyam complements its business, with no client overlap. While the former is a strong player in telecom (75% of revenues), Satyam caters to financial services, manufacturing and healthcare, among others. ``It will require a fair amount of work to bring Satyam back to its past glory. It will be a challenge to make Satyam financially strong so as to retain clients,'' said Vineet Nayyar, TechMa vice chairman and CEO.
With Satyam having a large clientele of over 500 clients -some of them as large as GE, Cisco, Citi and General Motors -Mahindra said: ``I will personally reach out to John Chambers (chairman of Cisco), Vikram Pandit of Citi and Fritz Henderson (GM CEO) to restore confidence in Satyam and us.''
After 100 days of uncertainty, Satyam's acquisition dispels the anxiety of 48,000 Satyamites, ushering in a sense of positivity. The company's former chairman B Ramalinga Raju had, in January, revealed that he had manipulated the company's accounts to the extent of Rs 7,800 crore. He has been behind bars since then, awaiting trial.
Announcing the winning bid, Kiran Karnik, chairman of the government-appointed Satyam board, said: ``Today, we have reached a final culmination stage, and though there are a few steps more to go, what it marks is the end of uncertainty.''
The other logical question is: will TechMa retain the Satyam brand name, given the unwholesome ring it has acquired in the past five months? Meanwhile, Mahindra rubbished rumours that TechMa's strategic partner, British Telecom, did not support the Satyam bid. Incidentally, British Telecom is also TechMa's largest client. - Economic Times
Taza samachar
Norwegian telecom major Telenor has informed the Indian government that it plans to invest up to Rs 11,200 crore ($2.24 billion) in Unitech Wireless and has also sought approval to increase its stake in the telecom company to up to 74%.
The original deal signed in October 2008 involved Telenor buying 60% stake in Unitech Wireless for Rs 6,120 crore. But, last month, the cash strapped realtor had agreed to give away an additional 7.25% stake in its mobile phone business to Telenor at no additional cost in return for not having to pump in more funds into the JV for the next two years and higher repayment of debt.
Telenor’s actual investment in Unitech Wireless will be anywhere between Rs 6,120 cr and Rs 11,200 crore since it cannot hold more than 74% stake in the Unitech Wireless. Under Indian regulations, the maximum FDI that is allowed in the telecommunications space is 74%.
With Telenor seeking permission to invest an additional Rs 6,070 crore than what was earlier announced, the larger implication is that its Indian partner Unitech must invest proportionally to retain its 32.75% stake in its telecom arm.
In fact, Telenor has already made it clear to the government that it could increase its stake beyond the current 67.25% if Unitech fails to make proportional contributions for network rollout and expansions: “In the event, the other share holders (Unitech) do not contribute in proportion, then the shareholding of Telenor Asia may increase beyond 67.25% in the licensee companies, but in any case, will be within the limit of 74% in the licensee companies,” the Norwegian telecom major said in its application to the foreign investment promotion board (FIPB), seeking approval for the JV.
The FIPB is the government body that clears all major foreign investment proposals in India. Last month, both companies had announced that they had closed the first stage of the deal with Unitech Wireless getting the first tranche of Rs 1,250 crore from Telenor for a 33.5% stake in the company.
The four-tranche deal, which will eventually take Telenor’s stake to 67.25% is set to be completed by the year-end. Unitech’s eight telecom subsidiaries, together referred to as Unitech Wireless, have the necessary licences to launch services in 22 markets across India and the wireless spectrum critical for a launch, but are yet to start services.
The FIPB will have to obtain the nod of the Home Ministry and security agencies before it can clear the Telenor-Unitech deal because of the Norwegian group’s operations in Pakistan and Bangladesh. Companies operating in these two countries have previously faced problems securing security clearances to operate in India.
The original deal signed in October 2008 involved Telenor buying 60% stake in Unitech Wireless for Rs 6,120 crore. But, last month, the cash strapped realtor had agreed to give away an additional 7.25% stake in its mobile phone business to Telenor at no additional cost in return for not having to pump in more funds into the JV for the next two years and higher repayment of debt.
Telenor’s actual investment in Unitech Wireless will be anywhere between Rs 6,120 cr and Rs 11,200 crore since it cannot hold more than 74% stake in the Unitech Wireless. Under Indian regulations, the maximum FDI that is allowed in the telecommunications space is 74%.
With Telenor seeking permission to invest an additional Rs 6,070 crore than what was earlier announced, the larger implication is that its Indian partner Unitech must invest proportionally to retain its 32.75% stake in its telecom arm.
In fact, Telenor has already made it clear to the government that it could increase its stake beyond the current 67.25% if Unitech fails to make proportional contributions for network rollout and expansions: “In the event, the other share holders (Unitech) do not contribute in proportion, then the shareholding of Telenor Asia may increase beyond 67.25% in the licensee companies, but in any case, will be within the limit of 74% in the licensee companies,” the Norwegian telecom major said in its application to the foreign investment promotion board (FIPB), seeking approval for the JV.
The FIPB is the government body that clears all major foreign investment proposals in India. Last month, both companies had announced that they had closed the first stage of the deal with Unitech Wireless getting the first tranche of Rs 1,250 crore from Telenor for a 33.5% stake in the company.
The four-tranche deal, which will eventually take Telenor’s stake to 67.25% is set to be completed by the year-end. Unitech’s eight telecom subsidiaries, together referred to as Unitech Wireless, have the necessary licences to launch services in 22 markets across India and the wireless spectrum critical for a launch, but are yet to start services.
The FIPB will have to obtain the nod of the Home Ministry and security agencies before it can clear the Telenor-Unitech deal because of the Norwegian group’s operations in Pakistan and Bangladesh. Companies operating in these two countries have previously faced problems securing security clearances to operate in India.
Weekly market update 17th April: FIIs pull markets higher
Eight consecutive days of gains on the BSE were interupted by a 3% downward correction on Thursday but despite this the markets continued their advance with another week of gains on both the headline indices. The Sensex ended the week on 11,805, up 218 points or 2% from the previous week. The Nifty made a more modest gain of 1.3%, ending the week on 3,384 or 42 points higher.
Volumes again grew week-on-week and FII inflows continue to be positive, with 1,400 crore of net purchases being made on Monday and Wednesday alone (the markets were closed on Tuesday). The begining of April has now seen 7 striaght sessions of positive FII inflow and 3,000 crore of net purchases so far. This figure is higher than for any full month since Feb 2008 and has provided much needed impetus to the rally as domestic institutions have relaxed their buying slightly.
The major movers this week have been the metals infrastructure and auto stocks, advancing heavily on Monday and Wednesday and correcting heavily on Thursday. This pattern was repeated in the Small and Mid Cap sectors which outperformed the major indices on the advances but corrected more heavily on the decline. Banks made solid gains today and will remain in the spotlight next week with HDFC and Axis reporting their results on Monday and Yes Bank also expected to release their numbers next week.
The big corporate news this week was the acquisition of a controling stake in Satyam by many people’s outsiders Tech Mahindra. The stock rallied following the announcement but has since fallen off as the market waits to hear more about management plans to inegrate their massive but ailing new business. Also in the IT space, Infosys reported slighlty below expectation figures for Q409 and expressed the belief that IT and offshoring budgets will be reduced at many of their clients in FY10. This gloomy forecast is putting pressure on the sector as a whole.
Looking forwards we are now in earnings season proper so the market will once again become driven by domestic news. Although the rally appears to be going strong, the risk to the downside is probably greater than the upside in the short term as disappointing results from some of the bellweather stocks have the potential to trigger a significant correction. However the absence of such disapointments and the continued interest of foreign funds could continue to drive the markets higher.
Elsewhere the other major Asian indices also made ground this week and the Rupee ended the week up against the dollar despite advances in the US domestic markets. The Rupee has now gained 5% since the record low on March 3rd as foreign funds continue to flow into the Asian markets, weakening the US currency.
All rise in Reliance Industrial Infrastructure.
All saw a sudden boom in RIIL (Reliance Industrial Infrastructure.) The stock which made the people crazy giving 150% + returns in a couple of weeks.
At present RIIL's CMP is 737. It had touched Rs 920 odd levels from 35o odd levels.
The main reasons why the stock rose - (The two main reasons)
It is learnt that the Group is contemplating to bring all this pipeline network and business into RIIL, with a view to attain leadership in the sector.
This move could benefit the stock in long term on the basis of Market Cap.
The current Market Cap is 1,114 Rs Crores and the pipeline project is worth over Rs 15,000 crore. If RIIL and RGTIL are merged the market cap of RIIL would be over Rs 17,000 Crores.
This would benefit the share holders.
Considering the current market price (CMP) of 737.35 the price seems to be over valued due to speculation.
The fair price may lie below 600 levels.
Here are few short term Support and Resistance for RIIL
Spot Price - 750
Support - 610, 670 , 702
Resistance - 794, 851 , 908
PS - What we learn from this is that don't go according to rumors!
At present RIIL's CMP is 737. It had touched Rs 920 odd levels from 35o odd levels.
The main reasons why the stock rose - (The two main reasons)
- There were rumors in markets that RIIL is merging with RIL.
- RIL is planning to make RIIL as a gas carrier & distribution company. Reliance Gas Transportation Infrastructure Ltd. (RGTIL)
It is learnt that the Group is contemplating to bring all this pipeline network and business into RIIL, with a view to attain leadership in the sector.
This move could benefit the stock in long term on the basis of Market Cap.
The current Market Cap is 1,114 Rs Crores and the pipeline project is worth over Rs 15,000 crore. If RIIL and RGTIL are merged the market cap of RIIL would be over Rs 17,000 Crores.
This would benefit the share holders.
Considering the current market price (CMP) of 737.35 the price seems to be over valued due to speculation.
The fair price may lie below 600 levels.
Here are few short term Support and Resistance for RIIL
Spot Price - 750
Support - 610, 670 , 702
Resistance - 794, 851 , 908
PS - What we learn from this is that don't go according to rumors!
Friday, April 10, 2009
Fundamental Anlysis of Stocks
All the above three dimensions will have to be weighed together and not in exclusion of each other. In this section we would give you a brief glimpse of each of these factors for an easy digestion
In the table below are some economic indicators and their possible impact on the stock market are given in a nut shell.
| | Economic indicators | Impact on the stock market |
| 1. | GNP -Growth -Decline | -Favourable -Unfavourable |
| 2. | Price Conditions - Stable - Inflation | -Favourable -Unfavourable |
| 3. | Economy - Boom - Recession | -Favourable -Unfavourable |
| 4. | Housing Construction Activity - Increase in activity - Decrease in Activity | -Favourable -Unfavourable |
| 5. | Employment - Increase - Decrease | -Favourable -Unfavourable |
| 6. | Accumulation of Inventories | - Favourable under inflation - Unfavourable under deflation |
| 7. | Personal Disposable Income - Increase - Decrease | -Favourable -Unfavourable |
| 8. | Personal Savings | - Favourable under inflation - Unfavourable under deflation |
| 9. | Interest Rates - low - high | -Favourable -Unfavourable |
| 10. | Balance of trade - Positive - Negative | -Favourable -Unfavourable |
| 11. | Strength of the Rupee in Forex market - Strong - Weak | -Favourable -Unfavourable |
| 12. | Corporate Taxation (Direct & Indirect - Low - High | -Favourable -Unfavourable |
The Industry Analysis
Every industry has to go through a life cycle with four distinct phases
i) Pioneering Stage
ii) Expansion (growth) Stage
iii) Stagnation (mature) Stage
iv) Decline Stage
These phases are dynamic for each industry. You as an investor is advised to invest in an industry that is either in a pioneering stage or in its expansion (growth) stage. Its advisable to quickly get out of industries which are in the stagnation stage prior to its lapse into the decline stage. The particular phase or stage of an industry can be determined in terms of sales, profitability and their growth rates amongst other factors.
The Company Analysis
There may be situations were the industry is very attractive but a few companies within it might not be doing all that well; similarly there may be one or two companies which may be doing exceedingly well while the rest of the companies in the industry might be in doldrums. You as an investor will have to consider both the financial and non-financial aspects so as to form a qualitative impression about a company. Some of the factors are
History of the company and line of business Product portfolio's strength Market Share Top Management Intrinsic Values like Patents and trademarks held Foreign Collaboration, its need and availability for future Quality of competition in the market, present and future Future business plans and projects Tags - Like Blue Chips, Market Cap - low, medium and big caps Level of trading of the company's listed scripts EPS, its growth and rating vis-Ã -vis other companies in the industry. P/E ratio Growth in sales, dividend and bottom line
Clarification on Reliance " KG Basin D6 Block " News
Impact Of News On Stock MarketThe news of beginning of gas production from KG Basin D6 Block in coming 2 days has heated up the stock and thereby acting as a great support for the stock at 1500-1550 level to digest the global negative news and has been able to resist at the level giving a great support to the entire capital market of India being the most heavy weightage stock of the major Indices.
Clarification On News
1. KG Basin D6 Block production is estimated at 10 mmscmd of gas in April which will be ramped-up to 40 mmscmd by July and reach peak production of 80 mmscmd in a year.
2. RIL signed gas sale and purchase agreements (GSPA) with 12 urea manufacturers for its 15 Urea manufacturing units of 15.36 mmscmd across the country. These belong to Nagarjuna Fertilisers and Chemicals Ltd, IFFCO, KRIBHCO, Gujarat State Fertiliser Company, National Fertilisers Ltd, Tata Chemicals Ltd, Chambal Fertilisers and Chemicals Ltd, Indo Gulf Fertilisers Ltd, Shriram Fertilisers and Chemicals Ltd, Gujarat Narmada Valley Fertiliser Company, and KRIBHCO-Shyam Fertilisers.
3. The GSPA envisages supply of D6 gas at a landfall price of $4.2 per mBtu. This price excludes pipeline transmission tariff, marketing margin, and State levies.
4. The gas is expected to be available to customers in Andhra Pradesh such as Nagarjuna Fertilisers’
5.This allocation of 15.36 mmscmd will increase Urea production of the country by about 7 million tones against 20mt at present. This will also result in annual fertilizer subsidy saving of about Rs. 3,000 crores for the Centre.
6.The Govt. has first made an allocation of virtually the entire production of first two months to Fertiliser sector and in the second stage will allot 18mmscmd of Gas to Power Sector, for which RIL has to enter into GSPA with Power plants.
Impact Of News
1. Obviously this will also give big cost savings to power generators apart from making many plants run to its optimum capacity, which otherwise were either lying closed or using high cost alternate fuel or were lying closed.
2. This will thus ease the power situation also in the country, maybe from second half of 2009.With RIL, expected to reach its full capacity of gas at 80mmscmd in a year, the country’s gas production will almost double, which is now at about 90mmscmd.
3. We will definitely be seeing a big revolution in the self sufficiency to a great extent of our Gas needs which in turn will make us increase our fertilizer and power production which are key contributors for our economy to grow.
1. This will also be having a positive impact on the financials of RIL. If we calculate a peak production of 80mmscmd of Gas of RIL, this will result in a daily turnover of Rs. 67 crores or Rs. 22,500 crores, annually.
2. On this, RIL is estimated to have a PAT of Rs. 10,000 crores, which would imply an incremental EPS of Rs. 60, on estimated equity base of Rs.1,650 crores, post RPL merger as also ESOP conversion. This kind of profit addition can definitely be expected for FY 11 while it may be to the extent of 30% in the FY10.
3. This will make RIL to grow big which is already heading to become the largest Indian company on various parameters of largest bottomline, largest market capitalization and largest topline company of the country.
My View On BASF
About The Company
A part of the giant conglomerate, BASF India made big news a few months when it made its open offer. The open offer was not the big news but the fact that the its parent company, which was buying back the share revised the price from Rs 274 to Rs 300 a share after the offer opened on July 9. The offer price was hiked on July 14, two weeks ahead of the closing. And this strategy worked very well for the company. As against the target of acquiring 22.31% in the open offer, it managed to acquire 18.49% of the shares. After this offer, promoters holding - BASF Societas Europaea and BASF Aktiengesellschaft, stands increased at 71.18% from 52.69%. Institutional holding is at 10.02% and the floating stock is now at a mere 18.80%.
The company has not done too well for the third quarter ended 31st Dec 2008. Net sales fell 9.75% to Rs 20,099 crore on a YoY. But the decline in net profit was sharper. It was down by a shocking 96.27% on a YoY at a meager Rs.41 lakhs. OPM was down from 9.91% to 3.22% and NPM was down to a paltry 0.205 from 4.94%. Economic slowdown & steep fall in prices since September 08 affected sales & profitability of some of the segments. Inventory increased significantly YoY to Rs.15 crore v/s Rs.61 lakhs
In September, its parent company made an open offer to acquire to acquire Ciba Holding AG, Basel, Switzerland, [CIBN], and was expected to make a public takeover offer to Ciba’s shareholders. BASF will pay CHF 50.00 in cash for each nominal share in Ciba.
Position could be hold upon but any fresh investment is not suggested.
Disclaimer : I do not have any personal holding in this stock.
My View On Assam Company
About The Company
Assam Company is in the business of cultivation, manufacture and sale of tea. It is also engaged in the business of oil and gas exploration.
The stock has been in lime light during the boom period in the capital market and was most fancied stock among the traders.
About The Results
The company has posted results for the year ended 31st Dec 2008, the limited review shows exactly why the stock market had valued this stock in the “speculative” category. Understating its depreciation and employee costs, while overstating its segmental profits by plantation and oil and gas sectors, the company has only got deeper into the red. Its MTM forex loss for the year stood at Rs.45.33 crore, arising on account of outstanding FCCB Loan of US$ 44.70 million.
The seasonal cycle indicates that the fourth quarter is usually its best but this time, it posted a net loss during the fourth quarter. A purely “penny” trading stock and that too in the range of Rs.3-5.
About the Stock
My View On S.Kumar's
About The Company
The product of the company includes uniforms, work-wear fabrics & blended suitings (P/V) marketed under S.Kumars & Belmonte brands. Home textiles are sold under Carmichaelhouse brand & Ready-to-wear Garments sold under Belmonte brands. Worsted suitings, Wool-polyester blended suitings, Ready to wear garments are also now sold under Reid & Taylor brand. And it has brand ambassadors as Amitabh Bachchan and also Shahrukh Khan during the IPL matches.
The company has ambitious plans for the future and is using this lull to spread its presence and operations. Fundamentals would not mean much if there is no investor fancy. So for now, textile stocks, how much ever brand savvy it might be, would not be a good idea.
The company has posted results for Q3FY09, on a YoY, the net sales was up 33% but PAT was down 34%. For the 9MFY09, the company posted a net sales of Rs.1698.72 crore as against Rs.1748.65 crore in FY08. Net profit for the nine months was at Rs.150.82 crore compared to Rs.205.59 crore in FY08. Surely, a miracle would be needed to post a 36% rise to maintain the same net profit. Its topline will surpass that of FY08 but bottomline would be difficult.
About The Stock
Despite a good performance, the company touched new low at Rs.13.15 on 9th March 09’ and is now hovering around the same levels. There exists a low investor fancy for textile stocks, brand equity makes no difference. And given the overall slowdown and the major impact it is having on the textile sector, it no wonder that investors prefer to stay away.
My View On ICICI BANK
About The Company
Being the second largest Indian bank after SBI and the largest private Bank of the country with widest network of branches and ATMs has significant ratio of the total banking field of the country.
About The Banking Sector
The stock has been fancied from long time in the market and nowadays after spread of negative news about its financial instability the stock has been under pressure and volatile on account of pressure in the whole banking sector , due to unexpected slowdown in the economy.
Following the foreign countries , we have seen a significant bad move in the Indian market regarding the percentage of defaulters in all types of loans repayment including car loan , home loan , education loan , personal loans , business loans. The list of credit card user defaulters has also shown significant rise.
Banks have now taken remarkable steps to check the problem and have totally controlled the frequency of loan sanctioning and allotment of credit cards. Consumers are finding difficulties in getting there loan sanctioned even after continuous fall in PLR's .Deposit rates has been reduced to check excess deposit in bank, due to high rate of interest in Post office deposits the deposit will be shifted from banks thereby avoiding any chance of excess cash surlpus.
My View On the Stock
Stock has recently made a low of 250 and expected to be highly volatile in the upcoming time. The stock could be bought for trade view but investment at about 250 level is recommended for long term prospective.
Disclaimer : I do not have any personal holding in this stock.
Updates on FCCB Issue
We have seen India Inc. making good overseas acquisitions, as also initiating huge capex plans in the last 2-3 years, mainly based on Foreign Currency Convertible Bonds (FCCB) as a source of funds.
An FCCB holder gets a very low rate of interest, in the form of premium, at the end of maturity period, if it is not converted into equity, at a pre-fixed price, during its tenure. Between 2004- 2008, about 158 Indian companies have issued FCCB of close to US $20 Billion, of which, $3 Billion only have been converted, thus leaving $17 Billion still outstanding. Majority of them are not likely to get converted, due to share now ruling between 20% to 30% of its pre fixed conversion price.
These FCCBs generally have a tenure of 5 years 1 day and hence they will be having maturity between end of 2009 to end of 2012 for redemption. However, many few companies have made provisions for such redemption as they have been presuming it to get converted. Apart from this, the redemption amount increased by about 40% in rupee term, partly due to weakening rupee (20%) and partly due to interest/ redemption premium of about 20%.
A recent case in point is that of Wockhardt, which made an FCCB of $110 million mainly to finance its 3 overseas acquisitions, which is becoming due for redemption on 25/09/2008 with liability of $142.54 million, with interest calculated thereon. These FCCBs will not get converted, as its conversion price is Rs.486 per share, while present price is Rs. 76. Risk of non-conversion of FCCB even persist for those companies, who have reset its conversion price at the lower rate, as per the terms contained in its issue, as current price is still lower than re-set price.
Due to this redemption fear, all the companies having raised FCCBs are taking a beating on the bourses. Many of these companies have not provided for redemption premium while some of them have been providing exchange loss to Profit & Loss (P&L) Account. However Reliance Industries, R-Com and Bajaj Hindustan are not even charging this exchange loss to P&L, relying upon the legal opinion sought by them. However recent relaxation in AS -11, till 31-03-2011, will give a big relief to thsese companies , as now, all this exchange losses and premium can get added to the capital value of assets or charged to P&L Account, as desired by the company.
International Accounting Practices require companies to expend redemption premiums to P&L account, over the FCCB life. But, in India, many companies are charging the FCCB redemption premium to share premium account, while a few companies are even treating it as contingent liability. Contingent liabilities, the other common accounting treatment, may or may not be incurred, as it depends on the outcome of a future event. The reason behind FCCB redemption premium as a contingent liability is an assumption by the company that redemption may or may not occur. This practice is aimed at protecting the P&L of these companies till the maturity of FCCB.
Recently, we have seen about 16 companies buying back its own FCCB, post RBI, initiating liberalised norms of FCCB repayments, since December,08. Some of these companies are Jindal Saw, Firstsource Solutions, Aurobindo Pharma, Financial Technologies, Hotel Leela , Jaiprakash Associates, Moser Baer and Orchid Chemicals. The market has given thums up to these companies, as it was found that these companies are in a position to meet its liabilities and that too at a discount of about 40%, by buying back FCCB at the discounted prices. Due to this, the effective outgo is at its original principal having raised by them in Indian Rupee in the past.
So it is essential to keep an eye on those 158 companies who are able to meet its FCCB redemption and hence those stocks qualify a good and risk free buy as they are ruling at beaten down valuations of about 50% of its net present value.
My View On House of Pearl Fashion
About The Company
House of Pearl Fashions (HOPF) is a ready-to-wear apparel company operating in three distinct business streams: manufacturing, marketing and distribution, and sourcing of garments. Basically, the company is good but right now, the investor perception for the entire textile sector, be it ready made or any apparel company, there are no willing buyers. This can be seen from the listless way in which the stock has been moving in the narrow range of Rs.35-45 since past few days. As such, things were not good for the sector with salary cuts and retrenchment across sectors. Demand has slumped and House of Pearls is also feeling the impact of this slowdown.
About The Results
This had begun to show in the bottomline of the company and it has got further accentuated during the third quarter performance, For the period ended 31st Dec 2008, the company's net sales were at Rs 11 crore versus Rs 4.34 crore in Q3FY08. Its net profit was at Rs 84 lakh versus Rs 6.5 crore. The company, in its Notes to Accounts has stated that profitability for the quarter was adversely impacted due to due to new ventures which are at the gestation period. Also its subsidiary in Bangladesh - Nor Pearl Knitwear incurred extra ordinary order executation cost in ensuring timely delivery to its customers by sending goods by Air at its own cost & by incurring high overtime. This has resulted in a loss of Rs 7.83crore for the quarter. The company has not provided for MTM forex losses which it will do so at the end of the year. Over and above all this, the global slowdown.
The stock touched a new low at 36 on 5th March 2009 but it recovered a bit on news that its subsidiary in Bangladesh is in the process of restructuring its business. This entails in a temporary closure of its manufacturing facility till 30 June 2009 and the management will, in due course review its decision of closure of factory. No major fireworks are expected in this stock. Best to avoid this out-of-fashion stock.
Disclaimer : I do not have any personal holding this stock.
My View On Bajaj Auto
About The CompanyIt just comes as a complete surprise to see that a loss making unit, which has shut down its main business of making scooters since 2006 and its present activity is limited to the manufacture of pressure die casting dies, jigs and fixtures primarily for two and three-wheeler industry and posts a net loss for QFY09, continues to remain a gainer on the bourses.
About The Results
The company has a net sales of Rs.71 lakhs and on this sales, it continues to have a staggering employee cost of Rs.3.28 crore. It posted an other income of Rs.2.17 crore. In Q2FY09, it posted its best ever PAT of Rs.12.98 crore and this was mainly on account of the interest received on Income-Tax refunds. This was at nil for Q3FY09. Infact it plans to make provision for tax and deferred tax only in Q4. Yet, its net loss for the current third quarter was at Rs.1.10 crore.
1. There has been talk of Blackstone wanting to buy out the 27% stake held by Western Maharashtra Development Corporation (WMDC) but that has apparently not happened.
2. Its holdings in Bajaj companies is the most obvious answer. It holds 16.39 lakh shares in Bajaj Auto Finance as on 31st Dec 2008. And as on 30th Sept 2008, it held 33.87 lakh shares each in Bajaj Holdings, Bajaj Finserve and Bajaj Auto. So the value of investments in these three companies alone is itself worth Rs.317 crore. And this valuation is based as of now, when the markets are so low.
3. Another big positive for the company is that it is totally debt-free, it has got absolutely no term loans or unsecured loans or working capital loans and is stated to have cash close to Rs 95-100 crore in its books.
About The Stock
Value buying could be done in this stock waiting for a ripe time to arrive for value buying.
Disclaimer : I do not have any personal holding in this stock
IIP: not as bad as it looks
Sentiment: 
Do the negative numbers for industrial production in February mean the gloom will continue? Not really, say most economists. First, there’s the base effect. As Kotak Mahindra Bank Ltd chief economist Indranil Pan said, in February 2008 “the manufacturing and the mining sector had grown at a healthy 7.9% and 9.6%, respectively, while the electricity sector had grown at 9.8%. As a result, manufacturing and the mining sector contracted sharply by 1.4% and 1.6%, respectively, in February 2009 while the electricity sector managed to record a marginal positive growth of 0.7%”. February 2008 also had an extra working day. Economists who independently come up with seasonally adjusted month-on-month numbers for the Index of Industrial Production (IIP) have pointed to an improvement. Nomura Financial Ltd’s Sonal Varma says that output rose 0.4% month-on-month on a seasonally adjusted basis, slightly higher than the comparable figure of 0.2% in January. According to Goldman Sachs ’s Tushar Poddar and Pranjul Bhandari, seasonally adjusted monthly momentum rose by 0.6% month-on-month in February, compared with 0.2% in January. There are other signs of improvement. Of the 17 broad industry groups that make up the IIP, as many as eight showed growth in February. That’s against five industry groups that showed growth in January 2009 and seven that showed growth last December. Having said that, the 10.4% growth in the capital goods index was a surprise and indicates that investment remains robust in certain pockets such as the power sector. The industry group called machinery and equipment other than transport equipment showed a growth of 15.6% in February. The growth is also the result of past orders getting executed as new capital expenditure is unlikely given that industry is now grappling with excess capacity. A study by ABN Amro Securities shows that while implementation of central projects remains unsatisfactory, tenders issuance picked up in February, especially for state transport projects. To cut a long story short, the IIP numbers aren’t as bad as they look. True, there are lots of headwinds and the March data on exports has been bad. But as Nomura’s Varma put it, “while another negative output reading is likely in March, we judge that the worst phase for industrial output growth may be close to over.”
My View On Thermax
About The CompanyThe stock has been on the lime light for long time and been fancied among the investors.
About The Financials
The financial performance of Thermax for the third quarter ended 31st Dec 2008, on a QoQ has been better than its performance when compared on a YoY. Q3 net sales QoQ was down marginally by 1.12% at Rs.795.06 crore while it was down 6% YoY. The company managed to show a lower operating expense despite a forex loss of Rs.10.60 crore. Net profit for the quarter, on a QoQ was up 27% at Rs.72.30 crore, which on a YoY was down 4%.
Net profit YoY might have come down but the profit margins have been better. NPM was at 9.09% as against 8.87% in Q3FY08.
It has an order book of Rs. 4,103 crore as of December 31, 2008. The company has stated that given the prevailing economic conditions coupled with the credit squeeze, many industries are reviewing their capital expenditure plans. Orders would come in but yet, the order execution, due to the slowdown and the liquidity scenario might get staggered or even cancelled. The company expects execution of orders slowing down and in Q4 it does not expect the situation to be any different from what it was in Q3.
About The Stock
Despite the flat or slowdown in growth predicted by the company, Thermax is a good investment on three counts – firstly its orders to the power sector will not get unduly affected as power remains a priority sector for growth. Secondly, it is a zero debt company, a rare breed to come across in today’s time and thirdly, with inflation down, its costs would come down further, which in turn would help maintain the bottomlines.
Disclaimer : I do not have any personal holding in this stock.
Satyam to announce winning bid on Monday
Satyam Computer Services Ltd. will open the bids to buy a stake in the company Monday , Deepak Parekh , one of its government-appointed directors, said Wednesday. The Satyam board has asked S. P. Bharucha , a former chief justice of India, to oversee the sale process. Mr. Parekh had said Saturday Satyam will decide on the winning bid Monday.
With Friday being a holiday hence no trading day, this gives us one last chance to enter in to Satyam related stocks like Spice Communications , which had a tremendous run yesterday registering nearly 18% gains intra-day . LNT is on a roll being up nearly 5%. Tech Mahindra is up 2%.
But there is certain amount of risk here, the company which does not win the bid will be on Bear-Radar and can go in to free-fall mode. So let's just say this is a risky trade to get in to.Worst case scenario if IBM is to win the bid, we will see the Indian companies give up gains and we may even see up to 10% fall in prices.
In my personal opinion, Satyam is a buy under 45 to reach at least 50-52 levels. This is a win-win situation for Satyam so can be safely bought for a short term trade. See my Satyam Stock Pick here
What do you guys think?
Inflation eases to 0.26 per cent
Inflation declined to 0.26 per cent, the lowest ever in more than three decades, for the week ended March 28 mainly on account of food items and mineral products, fuelling expectations of rate cuts by the Reserve Bank.
The wholesale price-based index declined by 0.05 percentage points against 0.31 per cent in the previous week.
During the week, the minerals group declined by a whopping 11.8 per cent due to prices of fire clay going down 19 per cent, iron ore 14 per cent, and chromite two per cent.
Prices of some food items like tea have declined. But the fuel index remained unchanged at its previous week's level of 320.9.
However, manufactured items like imported edible oil were dearer by six per cent, benzene by 14 per cent, and enamelled copper wires by 9 per cent. - ET.
The wholesale price-based index declined by 0.05 percentage points against 0.31 per cent in the previous week.
During the week, the minerals group declined by a whopping 11.8 per cent due to prices of fire clay going down 19 per cent, iron ore 14 per cent, and chromite two per cent.
Prices of some food items like tea have declined. But the fuel index remained unchanged at its previous week's level of 320.9.
However, manufactured items like imported edible oil were dearer by six per cent, benzene by 14 per cent, and enamelled copper wires by 9 per cent. - ET.
Industrial output down 1.2% YoY in February
India's industrial output fell 1.2 per cent in February against a growth of 9.5 per cent in the like month of last fiscal, even as the provisional drop reported for January has been revised now to a marginal growth of 0.39 per cent.
As per data on index for industrial production (IIP) released on Thursday, manufacturing output, which accounts for the bulk of the weight in the overall index, declined 1.4 per cent in February, against 9.6 per cent growth in the like month of last year.
While mining output also fell 1.6 per cent, against 8 per cent growth in February 2008, that for electricity increased marginally by 0.7 per cent compared with a 9.8-per cent growth during the period under review, the official statistics showed.
Cumulatively, the general index expanded 2.8 per cent during the first 11 months of 2008-09, as against 8.8 per cent in the same period of last year. Industrial output was up 8.1 percent in 2007-08 and 11.6 per cent in the year before. - ET
As per data on index for industrial production (IIP) released on Thursday, manufacturing output, which accounts for the bulk of the weight in the overall index, declined 1.4 per cent in February, against 9.6 per cent growth in the like month of last year.
While mining output also fell 1.6 per cent, against 8 per cent growth in February 2008, that for electricity increased marginally by 0.7 per cent compared with a 9.8-per cent growth during the period under review, the official statistics showed.
Cumulatively, the general index expanded 2.8 per cent during the first 11 months of 2008-09, as against 8.8 per cent in the same period of last year. Industrial output was up 8.1 percent in 2007-08 and 11.6 per cent in the year before. - ET
Is economy close to bottoming out?
Did the stock markets smell it ahead of others? The Indian economy is close to bottoming out, says leading research outfit Nomura.
After four quarters of consecutive declines, the index which measures real M2 money supply, non-oil imports, equity returns, repo rate, real bank credit, industrial output and tourists rose in first quarter (Q1) of fiscal 2009-10 suggesting pick-up in economic activity.
Nomura uses a composite leading index (CLI) to identify turning points in the growth rate cycle. The index which had fallen from near 102 levels in September 2007 to 99, shows a breakout from current levels and seems to be rising upwards.
Since the CLI has a lead of two quarters over non-agricultural GDP growth rate-the pick up in Q1 suggests some pick-up in economic activity from the third quarter, feels Nomura economist Sonal Varma.
“Export and production data in several Asian countries (including India) have continued the improvement seen in previous months,” chief analyst Allan Von Mehren of Dankse Bank, Denmark’s largest bank.
Purchasing managers’ index for new orders show that after falling in mid-2008, the index for India has recovered significantly.
However, the recovery for the economy may not be very quick. Nomura says the decline in real GDP growth (the latest data available are Q4 of fiscal 2008-2009 ) will continue in first six months of 2009.
“We forecast real GDP growth to trough in the second quarter of FY09 at 4.5% year-on-year, led by inventory de-stocking and a further weakening of output in the services sector.”
But it maintains that overall, the turnaround in the leading index is positive . “We interpret it as a sign that the Indian economy is now close to bottoming out,” the Japanese outfit said.
Meanwhile, Citigroup economists feel that consumer price index could fall from 9.6% levels in Feb 09 to 5-6 % range soon as good monsoons could see new crop coming in. While latest inflation data pegs the WPI at 0.3% for the week ended 14 Mar, however the consumer price index (CPI) - released on a monthly basis - remained at neardouble-digit levels, up 9.6% in Februray 09.
“Given the base effect and new crop coming in, it is now consensus that normal monsoons will result in the CPI moderating to 5-6 % levels. Importantly , food articles comprise 14% of the wholesale price index but 57% of the CPI,” Citigroup economists Rohini Malkani and Anushka Shah said. - ET
After four quarters of consecutive declines, the index which measures real M2 money supply, non-oil imports, equity returns, repo rate, real bank credit, industrial output and tourists rose in first quarter (Q1) of fiscal 2009-10 suggesting pick-up in economic activity.
Nomura uses a composite leading index (CLI) to identify turning points in the growth rate cycle. The index which had fallen from near 102 levels in September 2007 to 99, shows a breakout from current levels and seems to be rising upwards.
Since the CLI has a lead of two quarters over non-agricultural GDP growth rate-the pick up in Q1 suggests some pick-up in economic activity from the third quarter, feels Nomura economist Sonal Varma.
“Export and production data in several Asian countries (including India) have continued the improvement seen in previous months,” chief analyst Allan Von Mehren of Dankse Bank, Denmark’s largest bank.
Purchasing managers’ index for new orders show that after falling in mid-2008, the index for India has recovered significantly.
However, the recovery for the economy may not be very quick. Nomura says the decline in real GDP growth (the latest data available are Q4 of fiscal 2008-2009 ) will continue in first six months of 2009.
“We forecast real GDP growth to trough in the second quarter of FY09 at 4.5% year-on-year, led by inventory de-stocking and a further weakening of output in the services sector.”
But it maintains that overall, the turnaround in the leading index is positive . “We interpret it as a sign that the Indian economy is now close to bottoming out,” the Japanese outfit said.
Meanwhile, Citigroup economists feel that consumer price index could fall from 9.6% levels in Feb 09 to 5-6 % range soon as good monsoons could see new crop coming in. While latest inflation data pegs the WPI at 0.3% for the week ended 14 Mar, however the consumer price index (CPI) - released on a monthly basis - remained at neardouble-digit levels, up 9.6% in Februray 09.
“Given the base effect and new crop coming in, it is now consensus that normal monsoons will result in the CPI moderating to 5-6 % levels. Importantly , food articles comprise 14% of the wholesale price index but 57% of the CPI,” Citigroup economists Rohini Malkani and Anushka Shah said. - ET
Thursday, April 9, 2009
Hint-o-hint
Something is cooking in Unitech.Looks like targets of 50 are on the cards.
Stocks for next week:
a)Satyam comp
b) Unitech
c) Mercator lines
d) IRB Infra
e)JP hydro
Stocks for next week:
a)Satyam comp
b) Unitech
c) Mercator lines
d) IRB Infra
e)JP hydro
Research report
Micro Technologies with a target price of Rs 100 in the medium term in its April 8, 2009 research report. “During Q3FY09, consolidated sales have gone up by 43% to Rs 77 crore and net profit by 17% to Rs 18.4 crore.
OP & NP margin during this quarter stood at 36.7% and 23.9% respectively against 41.7 and 29% (YoY). During the 9 months of FY09, sales have gone up by 65 per cent to Rs 213 crore whereas net profit has increased by 43 per cent to Rs 38.1 crore. OP & NP margins stood at 38.9 % and 25.5 against 41.5% and 29.5% respectively (Y0Y). We recommend BUY with a target price of Rs 100 in the medium term
OP & NP margin during this quarter stood at 36.7% and 23.9% respectively against 41.7 and 29% (YoY). During the 9 months of FY09, sales have gone up by 65 per cent to Rs 213 crore whereas net profit has increased by 43 per cent to Rs 38.1 crore. OP & NP margins stood at 38.9 % and 25.5 against 41.5% and 29.5% respectively (Y0Y). We recommend BUY with a target price of Rs 100 in the medium term
Research report
ESS DEE Aluminium with a target price of Rs 200 in its April 8, 2009 research report. “EDAL acquired a 90% stake in IFL for Rs 120 crore from Vedanta Group, making it a subsidiary.
The remaining 10% stake is with Vedanta. During Q3FY09, sales have gone by 45% to Rs 103 crore whereas net profit has moved up by 11% to Rs 20.1 crore. During the 9 months of FY09, sales have gone up by 54% to Rs 333.5 crore and net profit by 31% to Rs 64.4 crore. OP & NP margin during the nine months of FY09 stood at 29.5% and 19.3% respectively against 30% and 22.7% (YoY). We recommend BUY with a target price of Rs 200,” says Sunidhi Securities & Finance’s report.
The remaining 10% stake is with Vedanta. During Q3FY09, sales have gone by 45% to Rs 103 crore whereas net profit has moved up by 11% to Rs 20.1 crore. During the 9 months of FY09, sales have gone up by 54% to Rs 333.5 crore and net profit by 31% to Rs 64.4 crore. OP & NP margin during the nine months of FY09 stood at 29.5% and 19.3% respectively against 30% and 22.7% (YoY). We recommend BUY with a target price of Rs 200,” says Sunidhi Securities & Finance’s report.
Election risk
My feeling is that as of today most of the institutional investors are assuming there will be a reasonable reform oriented government post election. However, as we go into the election, as some of the opinion poll suggests something to contrary then those kind of things may force investors to book profit. We are up about 25-30% from the bottom and hence people will try to anticipate the future and discount it before it actually happens. So there could be some rally from the current level but definitely the election risk will have to be priced in before the election and not only after the election.
Election factor..................
I think we have moved near fair value in the short-term. There has been bit of short covering, bit of FII buying, and bit of insurance companies fourth quarter buying. There is also bit of global and Indian recovery. All these forces put together have pushed the market up. Till the elections results are out and the reform process for the next government is set up, we will probably see a market which is tapering off at current level rather than move in a particular direction.
Monday, April 6, 2009
NIFTY VIEW @ APRIL SECOND WEEK
AS EXPECTED NIFTY COMPLETED ONE DOWNSIDE TARGET AFTER CLOSING BELOW 3042.
NOW THREE CONSECUTIVE NIFTY CLOSE BELOW 3042 WILL OPEN DOWNSIDE TARGETS OF 2980/2928/2813/2725/2613.
HOWEVER TWO CONSECUTIVE NIFTY CLOSE ABOVE 3221 WILL OPEN UPSIDE TARGETS OF 3333/3447/3505/3550/3630.
STOCK FUTURE POSITIONS NEEDS TO BE HEDGED WITH OPTIONS.
NOW THREE CONSECUTIVE NIFTY CLOSE BELOW 3042 WILL OPEN DOWNSIDE TARGETS OF 2980/2928/2813/2725/2613.
HOWEVER TWO CONSECUTIVE NIFTY CLOSE ABOVE 3221 WILL OPEN UPSIDE TARGETS OF 3333/3447/3505/3550/3630.
STOCK FUTURE POSITIONS NEEDS TO BE HEDGED WITH OPTIONS.
Strong Futures and Weak Futures
Strong Futures:::
::This is list of 10 Strong Futures: JSW Steel, Nagar Const, Matrix Labs, Aptech Train, Mah Life, HDIL, Punj Lloyd, Hind Oil Exp, Finan Tech & Kotak Bank
Weak Futures:::
::This is the list of 10 Weak Futures: Wock Pharma, Sterling Bio, Alok Text, Hind Unilvr, Glaxo, IOC, Power Grid, Hinduja Ventures, Hind Petro & ColpalI
::This is list of 10 Strong Futures: JSW Steel, Nagar Const, Matrix Labs, Aptech Train, Mah Life, HDIL, Punj Lloyd, Hind Oil Exp, Finan Tech & Kotak Bank
Weak Futures:::
::This is the list of 10 Weak Futures: Wock Pharma, Sterling Bio, Alok Text, Hind Unilvr, Glaxo, IOC, Power Grid, Hinduja Ventures, Hind Petro & ColpalI
stock in news
Here are stocks that are in news today:Satyam says:Qualified Bidders Whose Tech Bids Satisfactory To Be Ranked By PriceTo Have Open Auction If One Or More Bids Are 90% Of Highest PriceHighest Bid Price To Be Made Floor Price In Case Of Open AuctionThose Bidders Whose Bids Are 90% Of Highest Bid Allowed To Raise BidIf No Bidder Raises Financial Bids, Highest Bid Declared Successful BidMechanism For Open Auction To Be Notified To Bidders SeparatelySatyam Modifies Bidding Process For Selection Of BiddersSatyam Final Bid Date Pushed To April 13 From April 9 Earlier: Sources
Exclusive: BK Modi Says:Have Got Satyam Bid Process Clarification From Board; Not Yet Decided To Re-enter Race For Satyam
Exclusive:Unitech May Roll Over Dues To MFs For The Second Time: SourcesUnitech Has To Repay Rs 500 Cr To MFs By Apr 19: Sources
WockhardtDenies reports to sell Mumbai HQ; admits to liquidity crisis in coApollo now joins the race for Wockhardt hospital – ETGets Rs 100 cr from SBI for working capital needs – ET
From NW18:Nalco ups aluminium rolled products prices by Rs 1,000/tNalco ups aluminium cast strips price by Rs 1,000/t
Other stocks and sectors in the news
Maruti to launch Ritz in May, will be placed between Rs 4-5 lakh – ETCement cos get stern warning; no stimulus package without price cut, says govt – ETTata Motors looking for $2 bn refinancing: BSHCL Tech bags $170 m MS deal – ETSanofi-Piramal talks fail – ETOswal Chem eyes Indonesian mines, deal estimated at around Rs 250 cr – ETAircell in talks to acquires Essar controlled Loop Mobile (earlier known as BPL Mobile) – ETReligare to acquire controlling stake in housing finance co – ETShashun shuts Scottish drug making unit – BSBhushan group ask CLB to restrain Orissa Sponge promoters from share deal – BSAlcatel-Lucent look at partial buyout of ITI – ETIT Firms vie for $500 m Shyam Tele contract – DNAAshok Leyland March Sales Down 52% To 5,112 Units (YoY)ACC March Cement Sales At 2.01 mt Vs 1.92 mt (YoY)
Ex-dividend:Aventis Pharma @ Rs 12.50, Castrol India @ Rs 9, Merck @ Rs 17.50
Indian ADRs:Satyam up 10%, Wipro up 6%, HDFC Bank up 3%, ICICI Bank up 1%
Exclusive: BK Modi Says:Have Got Satyam Bid Process Clarification From Board; Not Yet Decided To Re-enter Race For Satyam
Exclusive:Unitech May Roll Over Dues To MFs For The Second Time: SourcesUnitech Has To Repay Rs 500 Cr To MFs By Apr 19: Sources
WockhardtDenies reports to sell Mumbai HQ; admits to liquidity crisis in coApollo now joins the race for Wockhardt hospital – ETGets Rs 100 cr from SBI for working capital needs – ET
From NW18:Nalco ups aluminium rolled products prices by Rs 1,000/tNalco ups aluminium cast strips price by Rs 1,000/t
Other stocks and sectors in the news
Maruti to launch Ritz in May, will be placed between Rs 4-5 lakh – ETCement cos get stern warning; no stimulus package without price cut, says govt – ETTata Motors looking for $2 bn refinancing: BSHCL Tech bags $170 m MS deal – ETSanofi-Piramal talks fail – ETOswal Chem eyes Indonesian mines, deal estimated at around Rs 250 cr – ETAircell in talks to acquires Essar controlled Loop Mobile (earlier known as BPL Mobile) – ETReligare to acquire controlling stake in housing finance co – ETShashun shuts Scottish drug making unit – BSBhushan group ask CLB to restrain Orissa Sponge promoters from share deal – BSAlcatel-Lucent look at partial buyout of ITI – ETIT Firms vie for $500 m Shyam Tele contract – DNAAshok Leyland March Sales Down 52% To 5,112 Units (YoY)ACC March Cement Sales At 2.01 mt Vs 1.92 mt (YoY)
Ex-dividend:Aventis Pharma @ Rs 12.50, Castrol India @ Rs 9, Merck @ Rs 17.50
Indian ADRs:Satyam up 10%, Wipro up 6%, HDFC Bank up 3%, ICICI Bank up 1%
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