Fundamental Anlysis of Stocks

Fundamental Analysis

Fundamental Analysis is a conservative and non-speculative approach based on the "Fundamentals". A fundamentalist is not swept by what is happening in Dalal street as he looks at a three dimensional analysis.

The Economy

The Industry

The Company

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

The Economy Analysis

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-à-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 Market

The 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’ Kakinada plants at $5.7-5.8 per mBtu and those in Maharashtra and Gujarat in the region of $6 per mBtu. RIL has levied a marketing margin of 13.5 cents per mBtu.

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.

Impact Of news on Reliance Industries Limited.

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%.

About The Results

The company has not done too well for the third quarter ended 31^st 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.

About The Stock

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 31^st 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

The stock, on the bourses is considered mainly as a low priced speculative stock, allowing the investors to trade in a stock which is quoted even below its face value of Rs.10 per share. Currently quoted at levels of Rs.6, it is unbelievable that during the boom time, it had managed to touch a new high at Rs.40. Either today the 52-week highs have no relevance or today we are seeing a more realistic valuation of the stock.

Disclaimer : I do not have any personal holding in this 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.

About The Results

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 9^th 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.

Disclaimer : I do not have any personal holding in this stock.

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 31^st 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.

About The Stock

The stock touched a new low at 36 on 5^th 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 Company

It 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.

Cues In the Company

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 31^st Dec 2008. And as on 30^th 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 Company

The 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 31^st 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.

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

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

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

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

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.

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.

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.

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

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%

hint o hint

US markets ended flat.Europe ended negative.Asia has opended positive.Expect Indian Markets to have a gap up opening.The support for the Sensex is 10150 and the resistance to the up move is at 10708-11295Nifty: (3211) the support for the Nifty is at 3150 and the resistance to the up move is at 3451
Day Trading Ideas -IFCI Buy above 22.10 for taregst of 23.45 and 24.05Sell below 20.50 for taregst of 19.90 and 19.25
HDFC Bank Buy above 1060 for targets of 1071 and 1084Sell below 1010 for targets of 995 an 986
Sesa Goa