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Monday, March 31, 2008


Trending with global markets, Indian indices posted their biggest weekly gains in five months during the week ended. On the BSE, the Sensex gained 1,376 points to close at 16,371 and the Nifty on the NSE logged 368 points to end at 4,942.

Moving in tandem with frontline indices after a long time, both the CNX Midcap and the BSE Smallcap indices also gained eight per cent plus. Market breadth clearly reflects that worst may be over for present. Rise in commodity prices was seen impacting inflation numbers. While inflation and GDP are the most talked about numbers, market players feel fourth quarter results will determine near term direction of markets.

Though decoupling theory has been discarded, some savvy old timers believe that domestic consumption and investment story as far as real economy is concerned will emerge a winner in long term. Do not be too obsessed with global picture and focus on Q4 results and domestic events.

With the Left Parties showing red flags to IndoUS nuclear deal and inflation becoming primary concern markets are likely to remain range bound till macro economic picture improves and monsoon prediction is available. For the week ahead, chartists predict trading bands of 15,680 to 17,360 for the Sensex and 4,580 to 5,240 for the Nifty. Expect stiff resistance to the indices on upside at 16,800 and 17,200 and 5,100 and 5,250. On downside support is evident at 16,080 and 15,800 and 4,820 and 4,680.

Cut all short term longs if indices trade below 15,860 and 4,760 levels. Do not be too exuberant and adopt cautious approach as markets are not out of woods yet. With onset of results season, adopt stock specific approach for near term trading. Buy when stocks have few friends. Be patient. Don't be rattled by fluctuations. Rational and clear thinking are what's needed to succeed as an investor.

F&O segment D espite thevolumesended week being settlement week, trading continued to be moderate. Strong recovery in the markets was not reflected in volumes indicating that "confidence" level is still low. Punters were seen preferring to cover most of the shorts, and fresh build up in long positions resulted in Nifty futures trading at premium to spot. Key resistance level for Nifty traders is 5,100 points. One interesting observation is active trading in Nifty 5000 strike December call option and Nifty 4300 December put option. Barring couple of sectors nearly all the sectors witnessed good buying interest from lower levels.

Side counters like HDIL, Edelweiss, GBN and others scored impressive gains. Modest buying interest was seen in technology, metals, capital goods and power counters. Banking counters were seen facing resistance on every upmove. Reports of most banks likely to take a hit in their investment portfolio and slowdown in credit disbursal are clouding the picture.

Ahead of Q4 numbers, tech counters are witnessing good warehousing. Stay invested in Infosys, Wipro and Satyam for further gains. Media stocks are attracting renewed buying. Buy on declines Adlabs, GBN and Zee. Surprise move in WWIL not ruled out. Buy for target price of Rs 55. Cement counters are beginning to show comeback gains. Buy ACC, Ambuja Cements and Birla Corp. Among the side counters, looking good for gains are Idea Cellular, Redington, Praj Inds and Gitanjali. Issuance of petro bonds may give fillip to PSU oil refiners like IOC, BPCL and HPCL.

Network18 which has acquired Infomedia India is likely to rename the company as Infomedia18 and also leverage the substantial printing capacity of the company for launch of specialist magazines. Already a JV with Forbes Media has been to launch a fortnightly has been inked. Buy Infomedia for medium term target of Rs 350. ¦ Jain Irrigation Systems is planning to expand into food processing, piped gas and water management. A little known fact of the company is that it is the world's largest processor of mangoes and pomegranates. Buy on declines for steady gains in medium term. ¦ Edible oil player Sanwaria Agro Oils has reportedly undertaken wind power project to improve operating margins. The company also manufactures Lecithin, an emulsifier used in edible oil industry. With sales rising by an average of 101 per cent over past five quarters, PAT will improve the valuation. Buy at current levels for good long term gains. ¦ Select stocks like Prime Focus, Allied Digital, Subex, Gati, and Electrotherm have witnessed spurt in volumes. Prime Focus operates in niche segment of media sector concentrating on high class processing and digital arena. Post recent correction the stock looks good bet for short term price target of Rs 825. Subex is reportedly back on growth path and has restructured for better performance. The company is focusing on branding and improvement of margins. ¦ Electrotherm is reportedly expanding into related areas. The company is reportedly making QIP at attractive price. Good results and booming user industry make the stock good bet on every decline. ¦ Allied Digital has recently launched remote management services. Excellent results and reports of inorganic growth by acquisition route make the stock good buy on declines.

Monday, March 24, 2008


Mimicking the high volatility in global markets and caught in the bear grip, Indian markets witnessed another week of manic trading.

After recording the second biggest single day decline, the Sensex on BSE made a feeble recovery to close the week with 4.9 per cent loss at 14,995 and the Nifty on the NSE shed 3.6 per cent to end at 4574. The steep fall in the BSE Smallcap index by 11 per cent and the CNX Midcap by 8.5 per cent clearly reflect the panic and dilemma of retail investors.

Volumes continued to be dismal on low trading interest. Negative news flow like selling of Bear Stearns portfolio and impact of derivatives and FCCB exposure losses to some corporates turned markets jittery. Fears of more bad news from US and rise in inflation index kept the markets in nervous mode.

The US Federal Reserve's rate cut, falling commodity prices and good corporate advance tax numbers failed to enthuse traders. With strong inflation numbers dampening expectations of a rate cut by RBI in near term, only robust fourth quarter results may trigger stock-specific buying in coming days. Many stocks in B group are available at below five P/E levels at mouth watering valuations.

Start bottom fishing advice savvy market players. For the week ahead chartists predict a trading band in the range of 14,400 to 15,800 for the Sensex and for the Nifty a range of 4,200 to 4,960. Expect stiff resistance to the indices on upside at 15,400 and 4,750 levels. Support is evident at 14750 and 4450 levels for BSE and NSE respectively.

Initiate fresh positions if indices trade steadily with improvement in volumes above 15,400 and 4,800 levels. Aggressive short selling is not suggested at present levels.

Never assume a market fact based on what you read or what others say; verify everything yourself. Fundamentals are not bullish or bearish in a vacuum; they are bullish or bearish only relative to price.

F&O segment E xpectedly volumes continued to be on the lower side due to high volatility and uncertain environment. With overnight global trends determining market openings (either gap up or gap down), keeping an open position is like buying a single day lottery ticket. Rollover of shorts in index futures is evident from Nifty April futures trading at deep discount of 22 points to spot.

Volume selling below 4,490 may see Nifty futures slide to 4,350. Move above 4,850 may propel it to 5,100 level. Ahead of settlement week sentiment indicators like implied volatility, put/call ratio and open interest indicate another bout of volatility.

Moderate rollover of open interest positions was seen ahead of settlement week due to long weekend.

Volumes may show strong improvement in the coming week. Nearly all the sectors witnessed savage selling. Realty, banking, metals and power counters witnessed unwinding of positions. Nibbling was seen at some IT and auto counters on the last trading day. Further upside indicated in Tata Motors, Mahindra & Mahindra, Satyam Computers and Wipro. Banking stocks are at crucial support levels.

Modest bounce back from current levels is not ruled out. Buying suggested in small quantities in both PSU and private banks. Defensive buying was seen in select FMCG stocks.

Stay invested in Hind Unilever, Colgate and ITC. Beaten down by news flow Orchid, S Kumar, Purvankara, IFCI, Wockhardt and Idea Cellular look good short term bets at lower levels.

Among the side counters, Indian Hotels, Sesa Goa, IRB Infra, JP Hydro and Tulip IT look good for some gains from current levels. Never buy or sell merely on the basis of background statistics. Technical market considerations and psychology must also be taken into account.

The recent meltdown has relegated the stocks of once high-flying sectors to market's scrap yard. The time to make money in the stock market is not when everything looks gung-ho, but when things look as if they are going bust. Many midcap and smallcap companies have already lost fifty to over seventy five per cent of their value. While it is agreed that just because these stocks or sectors are down does not mean that they will not fall further, there are bargains which may turn out to be multibaggers. Sift through the salvage yard, separate the gems from the scrap yard. If you wait too long to buy, until every uncertainty is removed and every doubt is lifted at the bottom of a market cycle, you may keep on waiting and waiting. ¦ Maytas Infra, Solar Explosives, Bilcare, Spanco Tele and Sagar Cements are witnessing buying interest from savvy players. Belonging to the kin of Satyam's promoters Maytas Infra is aggressively moving in all segments of infrastructure like ports, airports, housing etc. Stay invested and accumulate on declines for good medium term returns. Solar Explosives is the second largest explosives and explosive initiating devices manufacturer. With the user industries mining and infrastructure undergoing tremendous expansion the company is poised to report excellent topline growth. Buy on declines. Many south-based cement companies are on the radar of foreign majors for tie ups or mergers. Unlisted My Home got good valuation for its cement division. Positive news is on cards in Sagar Cements. Stay invested for further gains. Pharma packaging major Bilcare and RADAG owned Spanco Tele are witnessing good buying at lower levels. Buy for medium term.

Monday, March 17, 2008


Dancing to the tunes of global markets and reacting to economic data in the form of weak IIP numbers, markets continued to be in a bearish phase. Encountering heavy selling on rallies the Sensex and the Nifty shed 215 points and 26 points to close at 15,761 and 4,746 during last week.

Expectedly market breadth continued to be very negative with many midcap and smallcap stocks hitting lower circuit filter regularly. It is pertinent to note that many B group stocks are already at 8,000 Sensex level and two year lows reflecting that markets are excessively oversold due to the negative sentiment.

Weak IIP numbers have raised doubts of India growth story coming to premature end and the possibil ity of an economic slowdown. Key event to watch in the week ahead will be US Fed meet and reaction of global markets to the outcome.

With two holidays in the coming week trading activity may be range bound with negative bias. Likely trading range for the Sensex is 15,300-16,600 and for the Nifty is 4,300-5,200. If it falls below last week's low of 15,230, the Sensex may slip to 14,600. Initiate trading longs if Sensex stabilises above 16,000 level.

F&O segment V olumes continuedintothe be on lower side derivatives segment. Low open interest at around Rs 65,000 crore reflects trader's aversion and disinterest for risk in highly volatile markets. Sentiment indicators like implied volatility, open interest and put/call ratio indicate further volatility with negative bias. Punters were seen avoiding stock futures and playing actively in index futures. Contrarians expect Nifty futures to touch at least 5,300 once before the end of current settlement.

Bulls hope US Federal Reserve governor Bernanke to come out with liberal cut and infusion of capital for relief rally. With markets in a strong intermediate downtrend, continuation of lower top-lower bottom trend is likely. Short sellers can use bulges to create fresh shorts. Avoid large positions till volatility subsides. Selling was seen across the boa-rd in nearly all the sectors.

Modest buying interest was seen in sugar counters at lower levels. Accumulate Shree Renuka, Balrampur Chini and Bajaj Hindustan at lower levels. Punters expect relief rally in PSU banks. BOI, BOB, Canara and PNB look good for comeback gains. With fertiliser prices at all time high. Accumulate Chambal, GNFC and GSFC.

Ahead of commissioning of the plant in October punters expect Reliance Petro to cross Rs 200 mark again.
Obsession over every bit of market news only raises the odds of overestimating risk. Punters are keenly awaiting advance tax numbers of major companies due on Monday to reassess whether weak IIP numbers are aberration compared to ground reality. Keep close watch on last quarter numbers to gauge whether Indian growth story is intact or the slow down is for real. Stock specific approach is the mantra for gains in these difficult times. ¦ Select stocks such as GSS America, English India Clay, Thomas Cook, PTL Enterprises and Balaji Tele are bucking the weak trend by clocking smart gains. Open offer from the parent company and possibility of higher revised offer triggered good buying in Thomas Cook. Book partial profits at current levels. PTL Enterprises, which was pre viously known as Premier Tyres, has reportedly finalised plans to unlock the value of its Kochi property. Use sharp declines to buy for price target of Rs 45.

Unlike other recently listed public issues GSS America has defied gravity to give smart returns. Reports suggest that limited subscription has led to cornering of stock. Orchestrated buying cannot be ruled out say observers. Positive news is on cards in Balaji Tele says company source.

Use the current decline in the recently listed V-Guard for buying. Good brand equity and results spell better price for counter when markets revive. Goof up in the relisting of English I Clay with a low base price of Rs 179 after the demerger of a division and subsequent remedial measure in fixing circuit filter at 20 per cent saw the scrip now tou-ch Rs 1,740 after being loc-ked at circuit filter for several days on the stock exch-anges. A similar goof up was seen in Gujarat Glass wherein the relisting was done at a higher base price saw the stock fall sharply after relisting. Whether the regulator will act is the million dollar question.

Monday, March 10, 2008


Reflecting the continued recession in the United States, most of the global equity markets are weak and hitting multimonth lows. Recording the biggest weekly loss since May 2006, the Sensex last week tanked 9.1 per cent to close below-the-16,000level at 15,976 points and the Nifty slid by 8.7 per cent to end at 4,772 points.

Extremely negative market breadth shows that there is revulsion to risk and a lack of confidence in the market. Weak sentiment and lack of self-confidence among investors are causes for magnification of every small negative news.

Soaring crude oil prices, rising commodity and food prices across the globe and weak economic data from the US continued to be sentiment dampeners. Reports of renewed differences between the Left Front and the ruling coalition UPA on the progress of Indo-US nuclear deal compounded the bearish talk.

Rising inflation may not allow US Fed cut interest rates as liberally as expected but may continue to infuse liquidity in the system at regular intervals. On the home front also, fears of spiralling inflation may see RBI adopt neutral stance. Barring any major negative surprises in the Q4 earnings season, a good monsoon may see markets recover substantially in the second half of the year.

For the week ahead, chartists predict trading band of 15,400-16,600 for the Sensex and 4,444-5,100 for the Nifty. Expect resistance on upside at 16,300 and 4,940 on the indices.

Avoid aggressive shortselling from current levels. After a weak opening markets may recover in the later part of the week on institutional buying due to compelling valuations and short covering ahead of US Fed meet. Do not let emotion or prejudice warp your judgment. Base your trading operations on facts.

F&O Segment M irroring the overall market sentiment, trading volumes continued to be on lower side. Nifty futures were seen trading at deep discount of 45 points to spot indicating the "confidence" of bears and existence of shorts. Violation of 4,650 support level may see Nifty futures tumbling to 4,350. However, good volumes above 4,850 may trigger short covering and see the futures touch 5,300 in near term.

Sentiment indicators like implied volatility, open interest and put/call ratio indicate that hyper volatility will continue for some more time. Banking, realty and power stocks were the worst hit in the last week's mayhem.

From over ownership, observers say, the sectors are likely to be under owned ones very soon if the present wave of selling continues. Start nibbling at good public sector banks, low P/E realty and power counters for good medium term returns.

Pharma and FMCG counters look good defensive bets. Hike of its holding in Orchid by Life Insurance Corporation and steady buying in other pharma counters in the post-budget scenario augurs well for the sector. Stay invested and add on declines in pharma counters.

Despite volatility, metal stocks are witnessing steady buying. Stay invested in Tata Steel, JSW Steel, SAIL, Hindalco and Nat Aluminum. After the recent sharp fall, select infra stocks like HCC, IVRCL Infrastructure Ltd and Punj Lloyd are attracting good buying at lower levels. Further gains likely in near term. Among the beaten down counters, short covering gains are likely in Reliance Communication, Suzlon, Bharti and Reliance Energy Ltd, GE Shipping, United Spirits and Adlabs.

Avoid big positions and stick to stocks showing better relative strength. Do not try to outguess the market. Don't try to pick the top and the bottom of the market.

One sector that is attracting attention of savvy fund managers is steel sector. Analysts say that iron ore shortages and also coking coal shortage due to floods in Australia are leading to demand/supply mismatch and further hikes in global steel prices are not ruled out. However, only integrated steel players like Tata Steel are likely to benefit because they are insulated from raw material shortages. Scout for good value picks in the sector. ¦ One country's gain is other country's loss. Strong rally in international crude oil prices may generate forex reserves of over $2 trillion for the Opec nations. Analysts feel that most of these funds may come to global equity markets in next few months in some form or other. Recent buyout of some equity in Citigroup by a Gulf nation's investment arm is a pointer. Sovereign wealth funds are likely to play key role in the current global crisis. ¦ Select stocks showing good resilience in the current downturn are Sun Pharma and Asian Paints. Post-demerger of research division Sun Pharma has repositioned itself for major organic and inorganic growth. Positive news flow on cards say sources. Buy on declines for target price of Rs 1,600. Paints major Asian Paints is reaping benefits of boom in the infra, housing and auto sectors. A true Indian multinational Asian Paints has profitable overseas production operations. Despite rise in raw material prices the company has performed creditably in the last quarter. Bonus issue is on cards say sources. Buy for excellent medium term gains. ¦ It is interesting to note that more than 200 stocks which have touched lifetime highs in January are now trading at 1-2 year lows. How sharp the correction has been can be seen by this. Many stocks have been sliced of their ‘flab' and are now available at extremely reasonable valuations. Nobody can time the market and despite possibility of some more downside to markets, long-term investors are advised to start building good portfolio from current levels.

Wednesday, March 5, 2008

Recommendation for March 15, 2008

Recommendation for March 15, 2008

Portfolio Choice

Large-Priced Scrip
Healthy choice
BSE ticker code: 532300
NSE ticker code: WOCKPHARMA
Major activity: Pharmaceutical-India Bulk
Chairman Habil F Khorakiwala
Equity capital: Rs. 54.72 cr. (FV Rs.5)
52 week high/low: Rs. 450/295
CMP: Rs. 332
Market Capitalisation: Rs. 1817 cr.
Recommendation: Buy at declines

Wockhardt which is a global pharmaceutical and biotechnology company engaged in development and manufacture of formulations, biopharma ceuticals, nutrition products, vaccines and active pharmaceutical ingredients (APIs) has healthy prospects ahead. Just consider:
The company with an active multi-disciplinary R&D programme employing over 400 scientists has been a frontrunner in biotechnology research in the country. It has 15 manufacturing plants in India, UK, Ireland, France and US. These have the approval of major regulatory bodies, including US FDA and UK’s MHRA, with capabilities for both finished dosage formulations and APIs. Besides, it has subsidiaries in US, UK, Ireland and France and marketing offices in Africa, Russia, Central and South East Asia.
 As per ORG-IMS, the domestic business of the company recorded an annual growth of 19% vis-à-vis 13% industry growth rate. Its business in UK, Ireland, Germany and France recorded double-digit growth, almost twice the industry growth in these markets. The European formulation business grew 97% FY 2007. In the UK, the company launched the NRT (Nicotine Replacement Therapy) in patches and lozenges forms for curbing smoker’s habit.
 In October 2007, the company acquired Morton Grove Pharmaceuticals, the leading liquid generic and specialty dermatology company in US. With this acquisition, Wockhardt now have the right size of operations in US. It now has a complete range of dosage forms tablets, capsules, liquids and injectibles. Morton Grove has a portfolio of 31 products, 13 of which occupy the No.1 market position. All others are in the Top 3. The overall product range has now swelled to around 56 products for the US market, of which Wockhardt USA Inc is currently marketing 25 products. The US FDA also approved 13 ANDA’s, of which 11 products have already been launched.
 Wockhardt has in principle decided to hive off its research & development business into a separate entity. The new company will house the new drug discovery programme and the innovative new technologies being developed by the R&D team.
Wockhardt has a strong track record in acquisition management, with five successful acquisitions in the European market. The European business now contributes about 55% of revenues. The company which is enjoying a leading position in Europe, is steadily growing its market presence in the US. The management is confident of achieving the corporate target of becoming a $1 billion company by 2009.
The company is doing quite well. For the FY ended December 2007, it registered a 53% rise in sales to Rs 2,653 crore. PAT went up by 60% to Rs 386 crore. OPM grew by 100 basis points to 24.1%. For 2008, we expect the company to register EPS of Rs 42.5. The share price trades at Rs 332 P/E works out to just 8. 

Performance indicators (RS IN CRORE)
Year Net Op Net EPS Div BV RONW
sales profit profit (Rs.) (%) (Rs) (%)
2006 1731.48 400.27 301.62 27.6 100 87.4 29.3
2007 2653.20 639.10 382.50 35.1 225 111.5 29.7
2008 3250.00 780.00 465.00 42.5 275 141.3 30.0

Medium-Priced Scrip
Jagran Prakashan
Wake up to it
BSE ticker code: 532705
NSE ticker code: JAGRAN
Major activity: Entertainment-Electronic Media
Chairman Mahendra Mohan Gupta
Equity capital: Rs. 60.23 cr. (F V Rs. 2)
52 week high/low: Rs. 169/60
CMP: Rs. 110
Market Capitalisation: Rs. 3312.65 cr.
Recommendation: Buy

Jagran Prakashan is a leading media house, which publishes Dainik Jagran, India’s largest read daily with a total readership of 536 lakh (IRS 2007 R2). It was also voted the most credible and trusted newspaper in India, according to a survey by Globscan, prospects for the company are quite encouraging. Just consider:
Dainik Jagran is now published in 31 editions across 11 states from 29 different facilities. The company also publishes two youth-oriented newspaper brands viz. I-Next a daily bilingual compact and City Plus, an English infotainment weekly compact, besides Sakhi, a monthly magazine targeted at women. The group also publishes Jagran Varshiki, an annual general knowledge digest, and various national and state statistical compilations. All these publications are doing quite well.
JP has consolidated its presence in established markets and added 17 new editions in the last five years. It is also expanding its operations pan India in out-of-home and events management. It has been building on its strong regional franchise and is open to inorganic route to further boost presence and growth.
Jagran Engage provides specialized ‘Out of Home’ (OOH) advertising services with a pan India footprint. Jagran Solutions is its event management business. Since this business compliments the OOH business, the company shares most of its clients with Jagran Engage. The clients of Jagran Solutions include Microsoft, Hutch, Godrej, TVS, ICICI Prudential, Escorts, Standard Chartered Bank, M&M, Bajaj and HLL.
 In FY06, JPL entered into a strategic partnership with Independent News and Media (INM), a reputed media house in Europe, publishing 175 titles of newspapers and magazines in nine countries across four continents. INM holds 20.8% stake in JPL and is eager to increase its stake though current FDI regulations do not permit it.
The Hindi language newspapers make 44.6% of the total newspaper industry in India. Thus JPL has the advantage of being the market leader in the largest media segment. The spread of literacy also augurs well for the future growth of the company. The literacy rate in Bihar (47.53%), Jharkhand (54.13%), Uttar Pradesh (57.36%), Jammu & Kashmir (54.46%) are all below the average literacy rate. As a result the growth potential is higher.
 We expect the company to register EPS of Rs. 3.4 in FY 2008 and Rs. 4.2 in FY 2009. The share price trades at Rs. 116. While P/E on FY 2008 EPS works out to 34.1, it falls to 27.6 on FY 209 EPS. Due to its premier position in Hindi daily news media which it is capitalising on through ad rate hikes, increased colour advertising, new synergistic launches, outdoor advertising, event management, internet and business newspaper, the company will continue to command premium valuations.

Performance indicators (RS IN CRORE)
Year Net Op Net EPS Div BV RONW
sales profit profit (Rs) (%) (Rs) (%)
2005-06 480.53 70.16 31.70 1.1 50.00 97.0 11.41
2006-07 598.18 119.84 73.48 2.4 75.00 84.9 15.28
2007-08 (E) 770.00 170.00 101.00 3.4 90.00 86.5 15.42
2008-09 (E) 960.00 212.00 125.00 4.2 100.00 88.7 15.81

Small-Priced Scrip
Hydro S&S Industries
Reinforced growth potential
BSE ticker code: 524019
NSE ticker code: Not listed
Major activity: Plastics
Chairman V Srinivasan
Equity capital: Rs. 6.53 cr. (FV. Rs. 10)
52 week high/low: Rs. 82/30
CMP: Rs. 58
Market Capitalisation: Rs. 37.87 cr.
Recommendation: Buy

Headquartered in Chennai, Hydro S&S Industries (HSSIL) is a leading manufacturer and supplier of high quality re-inforced polypropylene compounds, thermoplastic elastomers, and fibre reinforced composites. Polypropylene modified by the addition of reinforcements such as talc, chalk, mica and glass fibre has enabled it to establish itself as a metal substitute in engineering applications. This is a safe investment bet. Just consider:
 Established in 1987, in technical collaboration with the Performance Plastics Division of Norsk Hydro Polymers Limited, UK to manufacture polypropylene compounds, the company’s products find application in various industries like automotive, electrical, furniture and home appliances segments. Its clientele list includes Tata Motors, Maruti Udyog, Hyundai Motors, General Motors, Motherson Automotive Tech & Eng, Pricol, Fiat India, BPL, Tata Auto Plastics Systems, Tractor And Farm Equipments, Sundaram Auto Components, Nilkamal Plastics, Supreme Industries, Titan Plast, Indo Matsushita Appliances Co, Whirlpool of India, Amararaja Batteries, etc.
 The company’s production facilities are located at Pudukkottai in Tamil Nadu and Pondicherry. It has the capacity to supply 18000 MTS of compounds per annum and has latest R&D and testing facilities, which include Instron UTM, Ceast Impact and HDT testers, ATLAS weatherometer, UL Chamber, computerised colour matching facilities etc. Both the plants are certified under TS16949 quality standards by Det Norske Veritas.
 HSSIL is also evaluating plans to set up a new plant at Uttranchal in order to cater the north Indian market. Along with access to untapped market, the company will also get tax benefit.
The company is also the authorized distributor in India for a whole range of masterbatches, produced by Tosaf Compound Limited, Israel, a global leader in the field of performance masterbatches. Hydro S&S Industries is working in conjunction with Tosaf to service its clients needs of performance masterbatches.
The company has been appointed by ExxonMobil Petroleum & Chemical, BVBA as an authorised distributor in India for their ‘Santoprene’ range of Thermoplastic Elastomers. Field trials are underway to introduce various grades of these compounds into the market.
For the quarter ended December 2007, HSSIL registered sales growth of 25% to Rs. 30.01 crore. OPM improved by 680 basis points to 11.7%, which took OP up by 196% to Rs. 3.52 crore. PBT improved by 568% to Rs. 2.47 crore and PAT was up 645% to Rs. 1.66 crore. For the nine month ended December 2007, the company registered sales growth of 17% to Rs. 84.32 crore. PAT was up 149% to Rs. 4.49 crore.
For the fiscal 2008, we expect HSSIL to register EPS of Rs. 9.6. This is likely to rise to Rs. 12.4 in FY 2009. The share price trades at Rs. 58. While P/E on FY 208 EPS is just 6.1, if falls to 4.7 on FY 2009 EPS. 

Performance indicators (RS IN CRORE)
Year Net Op Net EPS Div BV RONW
sales profit profit (Rs) (%) (Rs) (%)
2005-06 81.47 4.36 2.61 1.6 12.00 30.8 5.7
2006-07 100.69 6.99 2.94 4.5 12.00 33.9 12.0
2007-08 (E) 120.00 13.50 6.24 9.6 18.00 41.7 13.4
2008-09 (E) 144.00 17.20 8.09 12.4 20.00 52.0 13.6

Market Wind

Mahindra & Mahindra
(Ticker code 500520)
A fund manager with a leading mutual fund has turned distinctly bullish on Mahindra and Mahindra after the budget. According to him M & M is one of the top beneficiary companies on account of the budgetary provisions. While the debt waiver for farmers would give a boost to demand for tractors and utility vehicles in rural areas, the provision of deduction for dividend tax paid by its subsidiaries will push up the bottom line. “I will not be surprised if the M & M remains in demand even when the overall market is slack,” the fund manager avers and insists the share price is bound to move up.
(FV Rs. 10, H/L Rs. 872/543, CMP Rs.692.80)
Ashok Layland
(Ticker code 500477)
A Mumbai-based investment banker feels that Ashok Leyland will be a scrip to watch on the stock market in the current year. Of course, the company’s fundamentals are sound and its growth prospects are quite encouraging. Now the liberal duty concessions announced in the union budget will further improve its future financial performance. The reduction in the excise duty on buses and their chassis from 16 per cent to 12 per cent will go a long way in giving a boost to its bottom line besides pushing up demand for its buses. He expects the share price to move up to Rs. 50 in due course.
(FV. Rs. 1, 52, H/L Rs.58/26, CMP Rs. 37.45)
Sesa Goa
(Ticker code 500295)
An investment expert at a FII favours Sesa Goa, the iron one mining company located in Goa which now belongs to the Vedanta group. The company is also in the manufacture of pig iron and metallurgical coke, the market for which is growing. The widespread fears of a hike in export duty on iron ore have proved wrong as the Finance Minister Mr. Chidambaram has kept the export duty unchanged. During the third quarter of the current fiscal, the company’s net profit has shot up by 153 per cent to Rs. 493 crore and the FII investment expert expects a further improvement in the last quarter.
(FV. Rs.10, H/L Rs. 3969/1485, CMP Rs. 3464.20)
Infosys Technologies
(Ticker code 500209)
A knowledgeable market operator advises his friends and associates to keep away from IT stocks in general and Infosys Technologies in particular for the time being. The fiscal year 2008-09 is not a good year for Infosys, he maintains and adds “the finance minister has not taken the right step by not extending the STPI tax benefit beyond March 2009, and creating uncertainties. The operator fears the share price may go down to Rs. 1000-Rs. 1200 range
(FV Rs. 5, H /L Rs.2183/1212, CMP Rs. 1546.85)
State Bank of India
(Ticker code 500112)
An analyst of the banking sector working with a leading financial institution is very bullish on State Bank of India. According to him, the prospects for the banking company are highly encouraging and the union budget has brightened them all the more. The writing off of the farm loans will not only bring the funds which were unlikely to be received but will also clean its balance sheet. The relief provided in terms of the distribution of the dividend tax will further push up the bottom line as SBI has several subsidiaries.
(FV Rs. 10, H/L Rs. 2397/797 CMP Rs. 2109.70)
Hitachi Home & Life
(Ticker Code 523398)
A senior fund manager with a FII stronlgy recommends Hitachi Home and Life, the Indian outfit of the Japanese giant Hitachi for medium to long term investment. According to him, the company was on a strong wicket itself and the union budget has made it all the more attractive invesmnt bet. As the demand for refrigerators and air conditioners is likley to shoot up on account of liberal tax concession, so will the sales as well as the bottomline of Hitachi.
Again, the share is available rather cheap around Rs 130, indicating a price equity ratio of just 7. “One should not wonder if the share price doubles within the next 2 to 3 years”, the fund manager insists.
(FV Rs 10, H/L Rs. 180/64 , CMP Rs. 132.60)
Jain Irrigation
( Ticker Code 500219)
A high networth investor who is a buyer in Jain Irrigation strongly advocates the inclusion of this scrip in the portfolios of his friends. According to him, the union budget is extremely favourable to the company. Even before the budget the company has been doing very well with its net profit during the first three quarters amounting to Rs 103 crore as against the net of Rs. 98.80 crore earned in the entire previous year. According to him, the company’s reserves will shortly reach Rs. 100-crore mark against its paid up capital of Rs. 67 cropre and one can certainly expect a bonus issue within a couple of years or so.
( FV Rs. 10, H/L Rs. 766/399, CMP Rs. 716.85 )

Monday, March 3, 2008


D espite few expectations from the Union Budget to dole out any mithai, sentiment on the bourses turned negative by the hike in the shortterm capital gains tax and changes in treatment of STT. For the week ended the Sensex closed at 17,579 with weekly gain of 229 points and the Nifty gained 113 points to end at 5,224. The intra week high and low for the Sensex were 18,137 and 17,137 and for the Nifty were 5,368 and 5,055.
FM's claims that the Budget will bring about inclusive growth and growth momentum in economy can be maintained may prove hollow if global inflationary trends continue. Galloping international commodity prices and weak trends in US markets continued to keep the broader sentiment negative. The Budget mithais like farm loan waiver scheme and others clearly indicate that elections are not very far away.

Weekend cues from the US clearly reflect that worst on sub prime and bond insurance is not yet over. Brace for a roller coaster ride with unexpected speed breakers in the markets in coming months. For the week ahead trading range suggested for the Nifty and the Sensex are 5,030 to 5,440 and 16,800 to 18,100.

Expect support on downside for the Nifty and the Sensex at 5,100 and 4,800 and 17,100 and 16,800. For intermediate uptrend key levels to cross are 18,160 and 5,380. Adopt sell on rally strategy for present. Hope for the best, but expect the worst. Being braced for disaster - by diversifying and by learning market history - can help keep you from panicking. Every good investment performs badly some of the time. Intelligent investors stick around until the bad turns back to good.

F&O segment V olumes week segment.

improved during the ended in the derivatives Despite clouds of uncertainty decent rollover of positions for the new settlement at over 75 per cent was seen. While R-pack witnessed muted rollover, metals, pharma and cement counters saw enthusiastic rollovers. Nifty put/call ratio at 1.5 clearly reflects build up of short positions. Other sentiment indicators like implied volatility, open interest and put/call ratios in stock futures indicate highly volatile sessions in near-term.

Despite rally in bank counters after clarification that farmer loan waiver amounts will be compensated by the government, near term outlook is turning hazy. Use sharp declines in PSU banks to accumulate for long term. Pharma and auto stocks witnessed good buying interest after the Budget sops.

Buy Ranbaxy, Aurobindo, Orchid, Hero Honda, Maruti, Tata Motors, M&M and TVS Motors on declines. Expect selling in technology and fertiliser counters on rallies. Oil and Gas stocks are attracting buying at lower levels from savvy market players.

Sources indicate that Budget changes are going to benefit standalone refiners. Stay invested for present. PFC, Cairn, HLL, Glaxo, Gitanjali Gems, Maha Seamless, Voltas and Aban Offshore look good for short-term.

With many holidays curtailing trading days in March settlement F&O players are advised to avoid large positions and quickly change sides in line with the trend. Investigate each stock thoroughly before you buy. It's not enough to do the homework; one has to do the right homework. Different kinds of trades and investments call for different kinds of homework.

There's nothing more dangerous than thinking you've done all the right homework only to find out later that you've been researching the wrong aspects of a company.

Thrust on infrastructure projects and focus on public private partnership projects are likely to benefit wide cross-section of players in the construction sector. BOT players and construction companies with infrastructure assets housed in SPVs are being favoured by savvy fund managers. Dark horse buys in the sector include Roman Tarmat, Madhucon, Pratibha and Shristi Infra. Q3 results of Roman Tarmat clearly reflect the growing profitability and good results in next few quarters. Thrust on road projects is paying off for the company. Buy for target price of Rs 175 in next few weeks. ¦ Increased power sector investment and focus on transmission and distribution segment may improve the prospects of suppliers like AIA Engg, Elecon, KEC Intl, Kalpataru and Crompton Greaves.

With the goveernment stressing focus on UMPPs and also continuation of 80 IA benefits for generation and T&D projects, power and power utilities companies will continue to attract buying at lower levels from long term investors. Use sharp declines to buy REL, Tata Power, CESC and NTPC. ¦ Dull sectors like tyre and paper are likely to be back in limelight on the recent duty cut benefits in Budget. Among the tyre counters buying is suggested in Apollo Tyres, JK Inds and MRF. From the paper sector favourites include TNPL, Sirpur Paper, Speciality Paper and Seshasayee Paper. ¦ Changes in treatment of Securities transaction tax, which is to be treated like any other deductible expenditure against business income (currently allowed as rebate against tax liability) may prove to be big deterrent for day traders and arbitrage players and could impact market liquidity. As STT earlier got a 100 per cent rebate against tax liability and would now attract only a 30 per cent deduction for the highest slab, the tax implications are very high and literally kill arbitrage business. Negative impact on markets is likely to be high.

Monday, February 25, 2008


Markets continued to remain highly unpredictable, moving erratically with global trends, dictating the near-term market trend. On the BSE the Sensex fell by 816 points to close at 17,349 and the Nifty on the NSE fell by 192 points to close at 5,111. Rising commodity prices and weak global cues continued to keep the sentiment negative.
Lack of volumes clearly shows investors apathy and aversion for equities at present. Despite expectations of an election oriented budget market men expect the finance minister to come out with a rational growth oriented budget. If ‘wishes' of investors and corporates are met positively a strong post-budget rally is not ruled out since there is low open interest position and no pre-budget build up.

After the talks of recession, fears of the US economy could be heading for a period of "stagflation" the unwanted combination of stagnant economic growth and destructive inflation - are bugging global markets.

Key events in the week ahead are the all important Union Budget and F&O settlement. Technically markets are in consolidation mode but may see breakout in either direction post-budget. Key levels on downside are 17,060 and 16,680 on the Sensex and 5,030 and 4,860 on the Nifty.

If indices trade below 17,000 and 5,000 regularly a retest of January lows in next few weeks can not be ruled out. For safe zone indices need to trade above 18,000 and 5,640 steadily. Avoid aggressive positions for now. Buying those stocks that are the most highly recommended by analysts according to the consensus recommendation score is a strategy that works well when the market is going up. However, when the market trades down, such stocks tend to perform horribly.

In fact, over the last bear market those most highly recommended by analysts actually fell 53 per cent. Do not follow another man's advice unless you know that he knows more than you do.

F&O segment M irroring the nervousness in the markets are the shrinking volumes in the derivatives segment. Average daily turnover has fallen to below Rs 40,000 crore. Inclusive of rollovers open interest has fallen to about Rs 75,000 crore.

Adopt strangle or straddle strategy on Nifty to take advantage of directional change in markets.

Note of caution is that options are trading very costly due to high volatility. Barring selective buying in technology, metals and pharma, nearly all the sectors witnessed good selling. Pharma counters Ranbaxy, Cipla and Sun Pharma are good defensive bets. Rising commodity prices globally have sparked buying interest in metal stocks. National Aluminium, Hindalco, Sterlite, SAIL and Tata Steel look good on every decline.

Liberal bonus of 3:5 by RPower to retail sharehold ers and good subscription to IPO of REC may trigger renewed interest in power stocks.

Select buying is indicated in Tata Power, REL and NTPC. Among the side counters looking good are Infoedge, BEL, Matrix Labs, Zee Entertainment, JP Associates, Jindal Saw, AIA Engg, Suzlon, United Spirits and Sesa Goa. Never change your position in the market without a good rea son. When you make a trade, let it be for some good reason or according to some definite rule; then do not get out without a definite indication of a change in trend. Avoid getting in and out of the market too often.

Cubex Tubings manufactures copper and copper alloy products-seamless tubes, bus bars, rods etc which find application in core industries of power generation, refineries, ship building, defence, railways etc. The company is almost debt free, having B.V. of Rs 49, trailing 12m EPS of Rs13.5 and has blue chip clients like Siemens, NTPC, GE Power, SAIL, Kirloskar Electric and others. After the recent correction the stock looks very good bet for medium-term target of Rs 150 at current levels. ¦ Sadbhav Engineering is one of the leading construction companies operating in the business verticals of construction of roads and highways, irrigation and mining operations. Apart from the huge order book of Rs 2,600 crore in roads, highways and irrigation works, the company has reportedly bagged large orders in mining operations from GHCL and GMDC. It is also setting up lignite based power plants for Ultratech and Neyveli in Gujarat. Bonus or stock split predicted in near-term. Buy on declines for steady gains in medium-term. ¦ Maintenance, repair and overhaul segment of the aviation industry is expected to grow at 10 to 12 per cent CAGR. Dynamatic Technologies and Taneja Aerospace are the two listed stocks in this segment. Biggies like Lufthansa in association with GMR, Boeing, ATR and others are also planning to set up MRO facilities. Dynamatic Tech is Asia's largest producer of hydraulic gear pumps and has division of airframe structures. Taneja has recently tied up with France's Sabena to develop MRO facility. Buy both the stocks on sharp decline for good returns in long-term. ¦ Select stocks in textiles and logistics sectors like Gokaldas Exports, Bombay Rayon, S. Kumars, Allcargo, Balmer Lawrie, Sical and Gateway Dist are attracting buying interest. Rumours of revised open offer are doing rounds in Gokaldas. Blackstone holds nearly 70 per cent of the equity. Punters tip price of Rs 300 in short-term. Post commissioning of their new facilities, Bombay Rayon and S. Kumars are expected to stitch good numbers in coming quarters. Buy on declines. Blackstone's interest in Allcargo shows the importance of logistics space. Stay invested in logistics stocks and use current weakness to buy.

Saturday, February 23, 2008






F & O PICKS :-



BEML : CMP 1124 TARGET 1300




Monday, February 18, 2008


I t was a week of mild recovery for the markets. Recovering from a weak start, the markets rallied strongly from midweek on positive news flow like lower inflation data, the PM's statements that Indian economy will sustain its 9 per cent growth rate and mixed global cues. On the Bombay Stock Exchange the Sensex gained 650 points to close at 18,115 and the Nifty on the National Stock Exchange moved up by 183 points to end at 5,303.
Market breadth turned positive reflecting the change in sentiment. However, volumes continued to be low indicating lack of confidence. Things cannot get any worse from present levels feel market men.

Renewed buying by FIIs after a long hibernation, gave steam for the pullback rally. Anil Ambani's move to reduce the cost of acquisition for shareholders of Reliance Power by bonus issue may improve the sentiment and also set a new benchmark in corporate governance.

It is pertinent to note that despite the failure of recent IPOs new fund offerings from mutual funds have received excellent subscription reflecting investors shift to safety.

Market players expect the FM to give a positive growth budget addressing both domestic and global concerns.

Fears of fallout from the US markets are not ruled out in the event of escalation of bond insurers' problems. Pre-budget rally may see the indices attempting to cross 19,000 and 5,800 levels in near term.

Expect strong resistance to the Sensex at 18,660 and 19,000 and for the Nifty at 5,545 and 5,820. Key levels of support for the indices are at 17,800 and 5,060.

Stay invested for present. Hope for the best, but expect the worst. Being braced for disaster - by diversifying and by learning market history - can help keep you from panicking. Every good investment performs badly some of the time. Intelligent investors stick around until the bad turns back to good.

F&O segment D espiteoverall derivative improvement in the sentiment volumes in the segment continued to be sluggish. FII's were seen covering their Nifty short positions and doing shopping in select stocks. Buy Nifty 5,400 call option for surprising gains, tip punters. Crucial support level for Nifty futures is at 5,150. Sentiment indicators like open interest, implied volatility and put/call ratio indicate continued volatility with positive bias.

Leadership for the rally is being provided by biggies like RIL, BHEL, Reliance Capital and Tata Steel.

Banks and realty stocks led by the State Bank of India and Unitech have begun to show comeback signs. Rebound in infrastructure stocks was seen with GMR Infra leading from the front. After the recent correction sugar stocks are back in reckoning offering good trading moves.

Technology and select pharma counters are witnessing good accumulation. Among the stock futures looking good for upside gains are Tata Steel, Gail, Hindalco, M&M, Ranbaxy, JP Associates, Balrampur, Hotel Leela and ITC.

Punters tip IDBI and IFCI for price targets of Rs 145 and Rs 85 in the near-term. Among the side counters showing interesting patterns are Bombay Rayon, AIA Engg, Ballarpur and Crompton Greaves.

Momentum counters led by R-Pack may trigger volumes game again. Buy on declines Reliance Capital, Reliance Communication, RNRL and Reliance Petroleum.

Further gains not ruled out in fertiliser counters. Stay invested in NFCL and Chambal Fert. The past is not prologue. On stock market, what goes up must come down, and what goes way up usually comes down with a sickening crunch. Never buy a stock or mutual fund because it has been going up. Intelligent investors buy low and sell high, not the other way around.

Select cash group counters like Man Inds, Haldyn Glass, KLG Systel, PTC, Whirlpool, Indus Fila, Sandur Manganese and ECE Inds are witnessing good buying from savvy market players and funds. Excellent order book and buoyant user industry spells good times for Man Inds. Haldyn Glass is expanding its range of pharma packing in tune with changing needs. Buy on declines.

MNC major Whirlpool is reportedly making its Indian outfit outsourcing hub for exports to other Asian nations. Turnaround of operations indicated. Add on declines.

KLG Systel and Indus Fila are attracting good buying interest at lower levels. Savvy punters were seen accumulating mining company Sandur Manganese. Something is cooking say observers. ¦ One dark horse recom mendation doing the rounds is Shloka Infotech. It belongs to Yash Birla group and the name of the company is being changed to Birla Shloka Edutech. The company is reportedly expanding in a big way in the online education segment. Punters tip target of Rs 75 in coming months. ¦ Huge subscription to Reliance Natural Resources Fund (Rs 5,660 crore) has put the spotlight on mining and natural resource dependent companies. Companies reportedly on the radar of the funds are Sarda Energy, Electrosteel Castings, Usha Martin, Sesa Goa, Gujarat NRE Coke, Jai Balaji Industries, Ferro Alloy Corp, Ashapura Minechem and Kalyani Steel. Keep a watch on investments made by RNRF to spot winners.

Monday, January 28, 2008


F rom the beginning of last week the markets across the globe are experiencing the stock market version of a perfect Tsunami, where everything seems to be going wrong at the same time. On the BSE the Sensex fell by 652 points to end at 18,362 and the Nifty on the NSE lost 422 points to close at 5,383. However, the losses on the indices do not reflect the volatile intraday swings of over 1,000 points on the Sensex and 500 points on the Nifty during the course of the week.

Market breadth was extremely weak with several midcap and smallcap stocks locked at downward circuit filter. After scaling new highs during the early part of the new year Ignoring and overlooking negative developments like subprime, rising crude oil prices, fear on a US recession, weakening IIP numbers and the domestic political wrangles within the UPA, the markets displayed false sense of ‘decoupling' and ‘insulation' to scale new highs.

With reality now catching up, markets have ‘crashed', say observers. Barring fresh negative news flow markets may consolidate at current levels with positive bias in the week ahead. Refunds of Future and RPL IPO's may ease liquidity situation.

Key events to watch in the coming week will be the US Fed meet, RBI policy meeting and F&O settlement.

Chartists predict wide trading bands of 17,240 to 19,300 for the Sensex and 4,920 to 5,900 on the Nifty. The indices touched what might have been intermediate term bottoms during the week ended and they may retouch it over the next few weeks.

Key support levels on downside are 17,800 and 17,400 on the Sensex and 5,120 and 4,900 on the Nifty. Do not try to outguess short-term fluctuations. Very few investors can do it consistently enough to beat the market over the long term. The stock market may seem more risky and scary, but now is a good time to add depressed shares to your portfolio. The outlook is not as bad as many investors fear, spread your risk and keep your investment plan on track.

F&O segment M irroring thederivatives turmoil in the markets open interest in the segment crashed to Rs 85,000 crore. Trading volumes and rollover of positions got affected due to margin pressures and deep mark to market differences in several counters.

Traded turnover on both exchanges fell sharply to Rs 57,000 crore, almost half the daily volumes seen regularly. High implied volatility of puts and calls indicate volatile trading pattern.

F&O settlement without any major hiccups and rollover positions may dictate short term direction. Avoid large positions and trade lightly till markets stabilise. Brutal and savage selling was seen across the board.

Many counters witnessed manic intraday swings of over 40 per cent, fallout of excessive speculation. Highs recorded on Fridays rally are key levels to watch. Stocks failing to cross the highs may see attracting selling again. Contemplate shorts if indices fail to sustain above 18,800 and 5,560 levels.

Technology and FMCG sectors showed good resilience. Buy Infosys, Satyam and ITC on declines for target prices of Rs 1,850, Rs 475 and Rs 250 in next few weeks.

TechMahindra, Mphasis, Redington, 3i Infotech and Tulip look good for short term. Banking stocks look good for accumulation at current levels. Results of many PSU banks are better than expectations. Use sharp declines for buying. Among the private banks Axis Bank and Kotak Bank are good buys at lower levels.

Ranbaxy, Orchid, Divi Labs and Matrix have come out with decent numbers. Buying is suggested at current levels. Use the current sharp correction in sugar stocks like Shree Renuka Sugars, Bajaj Hindustan and Triveni for accumulation.

Specific stocks looking good at lower levels are APIL, Educomp, Bharat Electronics, Welspun Gujarat, Praj Inds, Havells, Biocon and JP Associates. Diversification is less important in a bull market when a rising tide lifts nearly all boats. But when stocks are falling, some groups really get pummelled while others hold up surprisingly well.

The key is reacting to extremes in stock prices, not to the market's short term direction.
Select recent picks looking good after the recent wave of selling are Jayant Agro Organics, Hind Dorr Oliver, Cubex Tubings, Intense Technologies and Radico Khaitan. Radico Khaitan is one of larger players in liquor industry owning important brands like 8PM. Heineken buy of S&N's stake in UB likely to improve valuations of liquor stocks. Accumulate at current levels for good medium term returns. Jayant Agro has approved placement of equity to a global major at Rs 105. Stay invested and buy at current levels for steady returns. Cubex Tubings got listed recently on the NSE also. The stock is available at a low P/E of just 5. Buy at current levels. Intense has won recently MTN Irancell project from MTN group an established market leader in West Asia and African telecom space. Many more orders are in offing. Buy at current levels. Results of Hind Dorr Oliver are reportedly very good. Accumulate at current levels. ¦ After the recent carnage select midcaps looking good for medium term are Exide Inds, Jain Irrigation, Sintex Inds and Amara Raja. Falling lead prices and growing auto sector spells good tidings for battery majors like Exide and Amara Raja. Results have also been very good. Exide has embedded value of its insurance division. Buy the stocks at current levels. Jain Irrigation is one of the major beneficiaries of Govt's initiatives to improve agricultural productivity. The company is leading supplier of micro irrigation equipment and second largest globally.

Monday, January 21, 2008


W eighed down by global factors and liquidity drain caused by the mega IPO of Reliance Power, markets wilted under bear grip. All emerging markets witnessed brutal sell-off triggered by fears about a likely recession in the US, the world's largest economy.

Recording its steepest weekly point loss of 1,814 points the Sensex closed at 19,014 and the Nifty shed 495 points to end at 5,705 during the week ended. Leading the selling brigade were FIIs, which resorted to heavy selling to cover up sub prime losses in the US.

Market breadth was also extremely negative reflecting nervousness among market players. Fairly good results from many of the frontline companies failed to enthuse the markets. Analysts expect buying support to come from domestic institutions and insurance companies which are flush with fund flows. Refunds from Reliance Power IPO in coming days may also ease the liquidity pressure in secondary market.

Watch out for global cues as expectations over liberal Fed cut are building up. Pre Budget rally looks likely after the end of current F&O settlement. Chartists predict broad trading range of 18,400 to 19,900 for the Sensex and 5,555 to 5,940 for the Nifty. The 50-day moving averages at 19,900 and 5,940 on the indices are key trend levels.

Failure to cross them will confirm lower top/lower bottom scenario. Expect resistance on the upside at 19,340 and 19,780 on the Sensex and 5,840 and 5,960 on the Nifty. Watch out for volumes below 18,800 and 5,620 on the indices, panic may see the indices dropping very sharply.

With much of the froth of recent euphoria getting skimmed look out for good trading and investment opportunities in the current correction. Do not try to outguess the market. Do not let emotion or prejudice warp your judgment.

F&O segment T rue to predictions the week ended saw heightened volatility. Trading volumes were low and only the decline on Thursday was accompanied by high volumes. Open interest is still above Rs 1,25,000 crore and is a cause for concern. While implied volatility has shot up sharply to 35 per cent indicating high volatility, put/call ratio decreased implying that the fall would get arrested shortly.

Avoid aggressive short selling as rebound is imminent. Key levels for Nifty futures are 5,850 on upside and 5,620 on downside. Selling was seen across the board in all sectors. Realty, oil & gas, banking, metals and power witnessed savage cuts. FMCG, IT and cement sectors showed some resilience. FMCG and IT are under owned sectors and look good defensive bets.

Stay invested in HLL and ITC. Expectations of good results kept cement counters concrete. Contrarian gains look possible in ACC, Grasim, Ambuja and Ultratech. Despite good delivery of results IT stocks continued to languish on lack of buying interest.

Long term investors can use the opportunity to accumulate quality counters like Infosys, TCS and others for excellent long term returns. Medium term earnings of ferrous companies like Tata Steel, SAIL, JSW Steel and others are likely to be strong as almost all of them are fully integrated from raw material point of view.

Reports indicate that global HR coil prices have shot up from $620 to $800 per tonne in last few weeks. Buy at current levels Tata Steel and JSW Steel for target prices of Rs 950 and Rs 1,450 in next two months.

Pharma stocks are witnessing modest buying interest. Results of Ranbaxy, Nicholas and Orchid were better than expectations. Stock specific buying interest is likely in the sector. Brutal selling in RIL and IDBI may be short lived. Attempt buying in the counters at closer to Rs 2,750 and Rs 140 levels for short term.

True to repeated warnings of that too many stocks in ban period indicate excessive speculation sharp cuts were seen in counters like NFCL, Parsvnath and others. Do not buy more stock than you can safely carry.

Excellent working of Seshasayee Paper is reflected in the results. In the first nine months itself the company has nearly clocked profit of last financial year. Post completion of mill development plan by March performance is likely to be still better. Buy on declines for one year price target of Rs 400. ¦ Suprajit Engineering, manufacturer of mechanical control cables for both automotive applications and non-auto, like material handling equipment, earthmovers and washing machines has embarked on aggressive expansion through both organic growth and acquisitions. The company has commenced operations at second unit at Manesar and acquired Gills Cables in the UK. Buy the emerging engineering stock on declines for excellent returns in medium term. ¦ Buy in the current decline stocks like Zen Technologies, Amara Raja, Jayaswal Neco, Omnitech Info, Tilaknagar Inds, Essar Shipping and Oil Country which have touched 52week highs in the past week for short term gains. Entry of RJ likely to sustain the momentum in Zen counter. Good fund buying seen in Omnitech Info. Mining and integrated manufacturing story seen in Jayaswal Neco. Open offer rumours and unlocking of value in subsidiaries floating in Essar Shipping.


Monday, January 14, 2008


D uring the week ended markets witnessed high volatility, and choppy trade saw midcap and smallcap stocks decline sharply. Uncertainty and indecisive trend was evident in the two way movement of the benchmark indices. While the Sensex on the Bombay Stock Exchange managed to gain 141 points to close at 20,828, the Nifty on the National Stock Exchange shed 74 points to end at 6,200.

After witnessing strong run in the past few weeks midcap and smallcap stocks have started to correct sharply. The CNX Midcap and the BSE Smallcap indices lost 6.9 per cent and 8.6 per cent respectively.

Market breadth was weak in the last week, market players attributing it to heavy sales by investors who are showing strong appetite for the IPO of Reliance Power.

Weak US markets and uninspiring IIP numbers were dampeners but have raised hopes of interest rate cut. Encouraging results from tech biggie Infosys failed to trigger any rally in the tech sector. Marginal price hike in petrol and diesel is likely to be decided in the coming week.

Barring any unexpected negative results surprises, markets are likely to remain flat up to the Budget with occasional bouts of volatility. Narrow breadth of the pullback rally is a concern and indicates a lack of buying conviction from the retail investors.

For the indices to move higher, participation is required from more stocks from more sectors. For the week ahead chartists predict trading band of 20,340 to 21,260 for the Sensex and 6,000 to 6,530 for the Nifty. Strong support is evident at 20,500 and 20,260 for the Sensex and 6,120 and 6,040 for the Nifty. Key trend determining levels on the indices are at 20,020 and 6,020.

Avoid aggressive longs and initiate fresh positions only if indices cross last week's highs. Put trailing stops to protect profits. Where there is panic, there is also opportunity. Luck is the opportunity you take when it presents itself.

F&O segment D uring the week, trading volumes were on lower side in the derivatives segment. High intraday volatility is taking toll on traders. Nifty futures were seen facing stiff resistance around 6,330 and 6,350 level and good support was visible at 6,120. Risk takers can attempt short straddle at 6,200 strike to take advantage of prevailing volatility.

Encouraging Q3 results from tech major Infosys and second rung Mastek and IGate failed to enthuse the markets. Despite volatile rupee-dollar environments, good management of finances and holding of operating margins reflect that worst is over for the tech companies. Contrarian buying is suggested in technology stocks.

Buy TCS, Wipro, Satyam, Polaris and HCL Tech at current levels. Expectedly possible unlocking of embedded value of subsidiaries triggered good buying interest in ICICI Bank. Good results from Axis Bank vaulted the stock to new highs. Use corrections to accumulate both private and public sector banks. Metals hit rough patch with BSE Metals index falling by 7.6 per cent. However good results may see the stocks recover lost ground. Buy at current levels Tata Steel, Sterlite, Nalco and Hindalco. Ahead of Q3 results rumours of stock split or some very good news are back again in Reliance Inds. Punters tip price of Rs 3,450 in short term. With the spectrum issue slowly unfolding telecom stocks are back in the buy list. Buy RComm and Idea for surprising gains. Pricing pressures may see cement stocks fall some more.

Delay in payment of subsidy amount may keep fertiliser counters range bound. Riding piggy back on Reliance Power IPO power stocks continued to hold their recent gains. Avoid fresh buying for present as valuations look too pricey.

Realty stocks are witnessing good buying interest at lower levels. Buy DLF and Sobha Developers for further gains. After good run up, sugar stocks encountered profit booking at higher levels. Use sharp declines to take entry. Side counters and momentum plays like RNRL, RPL, Essar Oil, Ispat and others may witness sharp fluctuations in near term. Remember that as many as 17 stocks are under ban in F&O indicating rampant speculation and overbought condition.

Caution is the watch word. Timing the market, and not having any sense of how long you should hold the stock will not work in the markets.

Hind. Dorr-Oliver Ltd is a leading engineering company engaged in turnkey projects to serve a diverse range of industries like environmental engineering, pulp and paper, chemicals and fertilisers. The company has executed some outstanding phosphatic fertiliser plants, systems for water management, and the petrochemical and oil and gas industries. The company has secured mega orders for design, supply, engineering and construction of integrated effluent treatment plants from IOC and HPCL. Excellent results are forecast from the company. Buy at current levels for target price of Rs 300. ¦ Jayant Agro-Organics Ltd (JAOL) is an emerging global oleo chemical company with leadership in the castor based speciality chemicals industry. The company offers the largest range of Castor-based products in the world and global giant Japan's Mitsui & Co has taken 24 per cent stake in JAOL's fully owned subsidiary Ihsedu. Another Japanese major Itoh Oil Chemicals is taking 4.54 per cent equity in JAOL. Buy this budding global giant castor speciality chemical for target price of Rs 250. ¦ Technologies has fallen from its recent highs on orchestrated selling. Savvy punters are accumulating the counter aggressively. Boom in valuations for online advertising and social networking portals may see the stock regain its old glory. Buy at current levels ahead of results for price target of Rs 700. After moving up sharply in past few weeks the stock prices of Videocon Inds and Empee Distilleries have corrected to reasonable valuations. Datacom, a subsidiary of Videocon Inds has secured telecom license also. Unlocking of value by demerger of different divisions is on track. Buy at current levels for target price of Rs 950. Empee Dist is likely to report excellent Q3 results. Announcement of positive news is on cards. Buy for Rs 425 target.

Monday, January 7, 2008


M arkets ended the first week of the New Year on an optimistic note with both the benchmark indices the Sensex and the Nifty touching new highs. On weekly basis the Sensex moved up by 480 points to close at 20,687 and the Nifty shot up by 194 points to finish at 6,274.
Despite not having much encouraging cues from global markets and continued selling from FII's, the Indian markets were on a roll on strong buying from domestic institutions and better retail investor participation. While FM's plea to bank chiefs to reduce lending rates to maintain economic growth is positive, the weekend decline in the US markets on fears of recession and soaring crude oil prices are dampeners for the week ahead.

In the short term market direction will be determined by the Q3 results and global cues. Chartists predict trading band of 20,180 to 21,360 for the Sensex and 5,900 to 6,560 for the Nifty for the coming week. Expect support for the indices on the downside at 20,200 and 20,040 and 6,120 and 6,020. Key trend deciding levels are 19,600 and 5,900 in the event of correction, and if present momentum continues 22,000 and 6,800 are the targets in medium term.

With the indices in uncharted territory, be prepared for unexpected sharp up or down moves. Strong outperformance of midcaps and smallcaps in the past few weeks has seen many "penny" stocks joining the party. Do not buy "cats and dogs", buy only good standard stocks that have stood the test of time. Many "stories" are doing rounds of all kinds of stocks, check the genuineness of the "script" before investing.

F&O segment M irroring the bullish sentiment in the cash market, volumes continued to be robust in the derivatives segment. Sentiment indicators like open interest, implied volatility and put/call ratio indicate volatile times in short term. Implied volatility has crossed 30 per cent foretelling sharp swings in near term. After trading at premium for most of the days Nifty futures moved into discount reflecting build up of short positions. Hedge longs in stock futures by buying Nifty6000 put option. Bulls tip buying of Nifty6100 call option for surprising gains.

Expectedly banking and power stocks continued to hog limelight on spirited buying interest. Buy PSU banks on declines. Power stocks look pricey at current levels. Avoid fresh longs for present. Financial services stocks were in keen demand on expectations of good results and buoyant outlook. Buy on declines India Infoline, Motilal Oswal, Edelweiss and Kotak Bank. Sugar and fertiliser stocks are attracting buying on every dip indicating rerating of the sectors. Reports of cane arrears disputes and late start of crushing season affecting sugar production in the current season are doing rounds.

Industry analysts estimate the production to fall to 28 million tonnes from earlier estimated figure of 33 million tonnes. Buy Shree Renuka, Bajaj Hindustan, Triveni and Balrampur Chini on every correction for steady gains in medium term. Results of Infosys will dictate the fate of tech nology counters feel industry watchers. Keep an eye on the guidance and strategy of tech giant to combat rupee strength. Contrarian's advice buying of tech counters in the current weakness for long term. Dollar weakness may give fillip to metal stocks. Stay invested in Nalco, Sterlite and Tata Steel. FMCG counters are back in reckoning on value buying from savvy players. Buy HLL, Dabur, Colgate and ITC on declines for short term gains. Capital goods and engineering stocks may witness buying at lower ahead of results. Use corrections to buy BHEL, L&T, Siemens, Punj Lloyd and Praj Inds.

Pokarna Ltd is the country's number one granite company and also has apparel division with branded retail chain under the label of Stanza. The company is setting up quartz stone unit which is likely to be commissioned in the next couple of months and is also likely to demerge its textile division into a separate company. Having overcome the hiccups on export front due to weakening dollar the company is well on its way to glory. Improving volumes in the counter indicate good accumulation. Low equity of just Rs 6.2 crore and B.V. of Rs 136 makes the stock good investment bet for price target of Rs 350 in medium term. ¦ MRO Tek is an established hardware player across all the access networking product segments catering to a diversified and growing client base like Bharti Tele, Reliance Info and other telecom majors. Rapid expansion of telecom tower networks by different telecom majors and its recent tie up with Japanese major NTT Comm augur well for the company's growth. Benefiting from weakness in dollar and booming telecom sector the company is expected to report excellent results. Buy at current levels for target price of Rs 250 in medium term. ¦ KCP is a company with interests in heavy engineering, cement, sugar, hydel power, IT and biotechnology. Buoyancy in many of its divisions has seen the company report trailing 12 month EPS of Rs 51. To utilise the business opportunity presented by its real estate assets (reportedly worth about Rs 500 crore) in Tamil Nadu and Andhra Pradesh and invest the surplus funds from the buoyant cement and engineering businesses the company is diversifying into new business areas like container freight stations, hotels, commercial complexes and wind farm. Sources close to company indicate a liberal bonus issue in near future. Buy this asset rich stock for target price of Rs 1,250. ¦ Savvy market players are targeting Andhra Sugars, Tube Investments, TTK Healthcare, Valecha Engg, Monsanto, Essar Shipping and Shreyas Shipping. Sum of the parts game is gaining strength in Andhra Sugars. Soaring volumes at 52week highs indicate short term target of Rs 225. Tube Investments belonging to the Muruggapa group has huge investment portfolio of the group companies in its books. Recent fancy for holding company stocks may see the counter vault to new highs. Buy on declines for target price of Rs 140. Demerger of group company TTK Prestige has put spotlight on TTK Healthcare also. Stay invested for further gains. Interested buying in Essar Shipping was clearly evident. News flow expected in near term to drive the counter to new highs. Logistics play evident in Shreyas Shipping.

Friday, January 4, 2008




Ford to focus on detailed talks with Tata Motors
2008-01-03 15:28:50 Source : CNBC-TV18
Ford has announced that they will focus on detailed talks with Tata Motors. They added that a considerable amount of work is left and there is no final decision yet. The company will hold substantive discussions with Tata Motors in the coming weeks, reports CNBC-TV18.
Speaking to CNBC-TV18, Roger Maddison, National Secretary of Unite, Jaguar Land Rover Trade Union, said the preferred bidder could be Tata Motors. He added that One Equity and M&M are still in the race for JLR.
Union is putting pressure on the management to back Tata Motors, he stated. The Tatas do not foresee any problem with regards to pension, commented Maddison.
CNBC-TV18 has learnt from sources that the Tatas will get full access to JLR financials.
Tata Motors said that they had positive discussions with Ford so far and are entering more detailed and focused discussions with the company. They added that these are complex discussions and there is still work to be done. Tata Motors is pleased by the progress of talks until now and are very positive on the prospects of business, going forward. They hope both parties can reach an agreement in the coming weeks.
The JLR union has said that they want plant and job security to be the main criteria for discussions and the discussions must include wages, pensions, terms and conditions.
According to CNBC-TV18’s Sumantra Barooah, Ford deal is going to be quite a complex deal. And the final announcement of the deal being signed, can take anywhere between a couple of weeks or perhaps over a month. According to sources, as many as 40-50 different agreements, which will address issues like power train supply by Ford and also short-term servicing and IPR related issues, he says.
Swati Khandelwal of CNBC-TV18 says that the Union has been backing Tata Motors ever since they made presentations on November 20, when they met. So, Tata Motors have been in the race. But now that the tables have turned to Tata Motors, sources say that they will access to the accounts of both Land Rover-Jaguar, full financial details of both these brands. She elaborates that there will get into intense discussions even on the bid price also.
Excerpts from CNBC-TV18’s exclusive interview with Roger Maddison:
Q: What have you been told by the Ford management?

A: Early this morning, Ford’s management said they expect an announcement within the next hour. So, by 11 am hopefully they will be announcing to the workforce whom Ford have chosen as the preferred bidder. The UK trade unions are very hopeful that that preferred bidder would be Tata.

Q: Any conformation then on whether or not it is indeed Tata Motors and is there any other names that are still in the fray?

A: As far as we know, there is One Equity led by Jacques Nasser and the M&M Group. As we said before Christmas, all our pressure was being put on the company to support the Tata bid. We do believe that it is the best bid to secure a long-term future for the people that we represent in UK and a long-term future for Jaguar-Land Rover. They were very impressive people when they made their presentation to us. We are very hopeful that Tata is the preferred bidder but there is no conformation on that yet. Hopefully, that should be within the next hour.

Q: Who will be giving the final confirmation to the Union as well? Do you have any idea what this deal has been valued at?

A: No, we have got no idea of the value. We have never been preview to that information from the start. We are just waiting now. It would be somebody from the HR team who would give confirmation. But, hopefully, the word would go out to the shop floor from the managers of different plants.

Q: Have you got any undertaking from the Tata Group about the maintenance of pensions, jobs or any commitments at all?

A: Not very much. We did have some when we spoke very briefly when we met in November with the three potential buyers. At that time, Tata said that they did not foresee any problems with pensions or anything like that.
But they have got to go through the books and look at it, do all their duties to make sure that they still want the company, even after they do all that. I am pretty sure that they do.

They seem a very well organised company and have not gone this far to fall out. But we have obviously said to all the three bidders that we would want more detailed discussions, with regards to terms and conditions- pensions, job security, source and agreement, things like that. Whoever the preferred bidder is, we would want to meet with them soon and discuss those things in more detail.

Thursday, January 3, 2008