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18 January 2010

Morning Calls

Wait for a breakout

The market remained tightly range-bound with only nominal movements among the major indices. The Nifty was up 0.1 per cent at 5,252.2 points while the Sensex gained even less in closing at 17,554 points. The Defty gained 0.3 per cent as the rupee strengthened further.

Volumes were on the low side but advances outnumbered declines, so breadth indicators were not bad. Both FIIs and domestic institutions were net buyers in moderate quantities. The BSE 500 rose by about 0.7 per cent while the Midcaps rose 1.85 per cent. However, the standout performer was the CNXIT index, which was up by a startling 9 per cent.

Outlook: The Nifty stayed locked in the narrow range of 5,170-5,300 and predicting direction will be impossible unless it closes outside say 5,150-5,320. A breakout should trigger a move of around 150-200 points, as and when it comes. There is previous history of very heavy trading between 5,000-5,400, so it will take volume expansion to breakout and establish a trend.

Rationale: The long-term trend is firmly up. But the intermediate trend is difficult to read and the short term trend is neutral. Volatility has been very low for several weeks. Given previous congestion at the current price levels, major volume expansion is required to trigger breakouts. Right now, volume is just not there and direction cannot be established until it occurs.

Counter-view: Low volume is associated with range-trading but also with lack of demand. Hence, one may fear a downtrend. The intermediate trend has been up since late November and is now in week seven. Intermediate trends can mature any time between 4-12 weeks. If the market does slide below 4,950, it will hit the next support at 4,800. Below 4,800, the intermediate trend would be likely to reverse, since a pattern of lower lows will be established.

Bulls & bears: The CNXIT, as mentioned above, saw strong gains. This was driven by decent results and good advisories from Infosys and TCS. All the IT majors appear in bullish mode. Tech Mahindra, Wipro and Financial Technologies could be outperformers. However, further rupee strengthening could also retard the sector's momentum.

Balancing the CNXIT, the Bank Nifty lost nearly 2 per cent and few financial sector scrips looked capable of bucking fears of higher rates or CRR hikes. On Friday, it appeared however that a few scrips like Axis Bank and Federal Bank had weathered the bearishness. The real estate sector saw mixed trading with some sell offs but Purvankara and Brigade also did well. Metals including non-ferrous metals were also weak but cement did well with ACC and Ambuja finding buyers.

PSUs did well in general with counters such as REC, Neyveli, SCI, Engineers India, BEML, Concor, NTPC, all finding support as rumours of disinvestment abounded. Winners and losers were scattered randomly outside these sectors. Tata Motors and Power Grid were among the scrips that ended strong as did Lupin and Cipla.

MICRO TECHNICALS

AMBUJA CEMENT
Current Price: Rs 113.25
Target Price: Rs 120

The stock has made an upside breakout backed by strong volumes. It has the potential to run up till around the Rs 120 mark though it will hit strong resistance above Rs 118. Keep a stop at Rs 109 and go long. Start booking profits above Rs 118.

FINANCIAL TECHNOLOGIES
Current Price: Rs 1,620
Target Price: N.A.

The stock is testing key resistance between Rs 1,625-1,645. If it closes above Rs 1,635, it could move till the Rs 1,750 level. Volumes are good. Keep a stop at Rs 1,600 and go long. Add to the position above Rs 1,635. Book partial profits at Rs 1,700.

SCI
Current Price: Rs 172.70
Target Price: Rs 185

The stock is benefiting from a focus on PSUs as well as a bounce in the shipping sector. It has risen on volume expansion. There's very little resistance until around Rs 185 and that would be a potential target. Keep a stop at Rs 167 and go long.

AXIS BANK
Current Price: Rs 1,078
Target Price: Rs 1,120

Axis shows signs of a breakout, which is against the trend in the banking sector. It has cleared resistance at Rs 1,055 and it could run up till somewhere between Rs 1,100-1,130. Keep a stop at Rs 1,065 and go long. Start booking profits above Rs 1,110.

PURVANKARA PROJECTS
Current Price: Rs 115.75
Target Price: Rs 130

The stock has jumped on volume expansion. It's testing resistance at Rs 120 and will hit that level again, on intra-day basis at least. If it closes above Rs 120, it could run till the Rs 130 level or higher. Keep a stop at Rs 110 and go long. Add to this above Rs 120 and book profits at Rs 130.

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'Stick to bottom-up, buy on dips and hold strategy'	18-JAN-10
In the second series of interviews for Smart Portfolios, Amar Ambani talks about his expectations for 2010, reveals his strategy of sticking to mid-caps and suggests that investors look at individual stocks rather than sectors for the year.

Markets at a glance	18-JAN-10
The markets traded in a narrow range this week in spite of stellar numbers from Infosys.

Analysts' corner	18-JAN-10
The brokerage has revised earnings downwards and thus has cut the company’s 20010-12 EPS estimates by 8-11 per cent.

Premiums drop due to low volatility	18-JAN-10
The market saw practically no change in the major index levels in what is turning into an extended phase of very low volatility.

Wait for a breakout	18-JAN-10
The market remained tightly range-bound with only nominal movements among the major indices.

Alpha India updated	18-JAN-10
The January 4 yearly outlook carried numeric ranking for 50 Nifty Stocks.

Bharti: Looking out	18-JAN-10
India’s largest wireless service provider, Bharti Airtel is expanding its international operations by buying a majority stake in Bangladesh’s fourth largest wireless telephony service provider, Warid Telecom.

Bajaj: Motoring ahead	18-JAN-10
Buoyed by the demand for its Discover range of motorcycles, the country’s second largest two-wheeler maker, Bajaj Auto, posted healthy numbers for the second quarter in a row.

Green shoots are for real	18-JAN-10
Infosys Technologies’ December 2009 quarter results brought an air of optimism into the sector.

Pricey pizza	18-JAN-10
As the frequency of eating out or preference for fast food increases, players in the take-away or home-delivery space should benefit.

The PSU opportunity	18-JAN-10
Many would have reservations about investing in public sectors companies (PSUs) due to reasons such as government interference and so on.

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Weekly Newsletter - Jan 18 2010

Weekly Newsletter - Jan 17 2010

Top 5 picks of the day I Mid-term picks

Src:ET, Business-Standard and DP Blog and etc

17 January 2010

Stock Reports for the Week Started Jan 18

Heard on the street

HUL quarterly numbers seen below expectations

Consumer goods major HUL seems to have a new obsession, that of holding its board meeting and announcing its quarterly results on public holidays. The company has issued a communication to stock exchanges that its board meeting will be held on January 26 to consider the unaudited financial accounts for the quarter ended December 2009, along with the limited review report of the auditors for the corresponding period.

The last quarterly results were also announced on a Sunday. Market watchers are amused by this move considering that multinationals as a rule begin their weekends on Friday evening every week. This has also led to some speculation that the company’s quarterly numbers may be below market expectations.

Old Fox & gang looking for quick returns lap up Dish TV

DISH TV shares were among the notable gainers in Friday’s lacklustre session, rising nearly 7% to close at Rs 50.35. On BSE, around 90 lakh shares, thrice the two-week daily average volume in the stock, were traded on BSE, with 42% of it resulting in delivery. Dealers tracking the counter say Old Fox and gang were big buyers at the counter on Friday.

It is not clear if the Fox is in it for the long haul or is merely looking for some quick returns. While the company continues to post losses at the net level, it has shown a good growth in revenues for the half year ended September. Also, it appears that the company may end the current financial year with much lower losses compared with last year.

Contrarian play seen at bank counters ahead credit policy

WITH the indecisive movements in benchmark indices giving little opportunities to trade, smart traders are using their skills to make money in sectoral plays. They have sold stock futures of banks and capital goods, while bought that of oil and information technology. But some bravehearts within the trader community have suddenly reversed their short positions in banks, two weeks before RBI’s monetary and credit policy review.

They are going against the crowd on judgement that the undertone has been too pessimistic about the outcome of the policy review. It is widely expected that the central bank may hike cash reserve ratio, but a slight dip in bond yields this week, even as inflation rate showed a jump, has these traders go contrarian. Derivative market participants said some of these traders have created long positions in futures and options contracts in banks.

Contributed by Kala Vijayraghavan, Santosh Nair & Nishanth Vasudevan

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HDFC Bank looks able to maintain interest margin

Jindal Saw: Maximising capacity usage to drive future nos

TCS: Fresh hiring indicates hopes of recovery soon

Inflation: Key issue in credit policy review

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Geodesic Ltd

McNally Bharat Engineering

Allahabad Bank

IPO Analysis - Jubilant Foodworks

Axis Bank

ONGC Ltd

HDFC Bank

Weekly Watch - Jan 16 2010

Oudh sugar, Engineers India Limited

Gitanjali Gems

Usha Martin

Jubilant Foodworks - Subscribe

TECHNICAL ANALYSIS: Nifty bear put spread
A better-than-expected start to the Q3 earnings season and strong IIP readings failed to enthuse traders as the markets closed the week on almost a ...

TECHNICAL ANALYSIS: Shree Renuka may move in narrow range
Suzlon (Rs 89.7): After reaching its recent high at around Rs 95, the stock has seen some weakness. Now, only a close above Rs 95 could lift the stock to Rs 110-115 levels. But if current dull trend sustains, Suzlon might head back towards ...

TECHNICAL ANALYSIS: Query Corner: Hindalco to move towards a new high
Please let me know the outlook for ABB bought at Rs 1,200 and IVRCL at Rs 484 from a medium and long-term ...

TECHNICAL ANALYSIS: Pivotals- Reliance Industries (Rs 1,109.2)
Reliance Industries witnessed wild intra-day swings last week though the ending was on an insipid note with a meagre Rs 4 gain. The near-term view for the stock stays positive but the resistance at Rs 1130 needs to be cleared before the ...

TECHNICAL ANALYSIS: Index Outlook: Roadblocks ahead
IT bellwethers, Infosys and TCS began the third quarter earnings season with a flourish, making the BSE IT index rally 9 per cent higher last week. But this optimism failed to percolate to rest of the market resulting in Sensex meandering in ...

Upside breakout seen next week

Src: ET, DP Blog , Businessline and etc

16 January 2010

Stock Analysis from Other Blogs/Webs

Satyam: Line of Confidence

One Breakout and One Breakdown Play

Random Observations

MTNL - Only Listed Telecom Company Having 3G License

IDBI Bank moves ahead on bank buy and update

Tea without Sugar

Airlines Views!!!

TATA Coffee!!!

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http://www.stateofthemarket.net

http://www.anirudhsethireport.com/

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Src: Leading Weblogs.

Results Corner

15 January 2010

Heard on the street

Heard on the street

Speculation over Welspun Gujarat-MSK Projects

buy

TALK of Welspun Gujarat Stahl Rohren looking to buy MSK Projects refuses to die despite the latter denying it. Grapevine has it that discussion between Welspun and MSK for the deal is in the final stage and will be announced soon. It is also speculated that MSK promoters are likely to offload their stake at Rs 140 a piece, followed by an open offer to buy another 20% from minority shareholders.

On Thursday, MSK shares fell 3% to Rs 120.65. Welspun shares fell 1% to Rs 279.50. Promoters hold 21.68% in MSK, while Subhkam Venture holds 23.66%, as on September 30. MSK officials were not available to comment on the matter.

Mid-cap cement stocks back in demand

INVESTORS took a fancy to midcap cement stocks on Thursday on talk that cement prices were likely to firm up soon. Stocks like Binani Cement, Andhra Cement, Saurashtra Cement, Dalmia Cement, Shree Cement and Prism Cement were among the prominent gainers, rising between 3-6 %.

Analysts tracking the sector say fund houses have been steadily buying cement shares in anticipation of further growth in the construction sector. According to them, many cement companies are set to increase prices further, sensing good demand in the residential property segment. Indian cement industry is witnessing a growth rate of about 8%, the fastest growing market next to China.

Satyam Computer basks in IT glory

SHARES of Satyam Computer are seeing a renewed burst of activity. Probably, strong quarterly numbers from Infosys Technologies could have raised expectations from other leading IT services companies as well. On Thursday, a US-based investor is said to have bought close to 30 lakh shares. Some of the bull operators too are said to be steadily building up long positions at the counter.

Dealers tracking the counter say the rise in the stock price from hereon may be a bit gradual, since many players who are tired of holding on to the stock may decide to cash in. The stock had touched a high of Rs 128 in September last year, but has been moving in a narrow band ever since. On Thursday, the stock closed at Rs 120.85, up 1.2% from the previous close. On the BSE, 1.23 crore shares changed hands, with roughly a fourth of it resulting in delivery.

Contributed by Nishanth Vasudevan & Apurv Gupta

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Top 5 picks

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Src: ET

14 January 2010

Heard on the street

14 Jan 2010, 0356 hrs IST, ET Bureau

Save

Comment

Text:

Scooters India seen riding the divestment

wave

A group of punters appear to have taken control of the Scooters India stock. Shares of the loss-making public sector undertaking (PSU) hit a 52-week high of Rs 45.45, amid a sudden surge in volumes, and ended the day at Rs 44, up 14% over the previous close. Around 13.6 lakh shares changed hands on Wednesday, compared to an average daily volume of around 8,000 shares on most trading sessions in the past three months.

The stock has risen nearly 60% this month alone. Cornering the stock does not need too much capital, considering that the non-promoter holding in the company is barely 20 lakh shares. With divestment being the flavour of the season, PSU shares are suddenly in demand.

It is not too difficult for an operator to whip up volumes in an illiquid stock and then unload the shares to the unsuspecting public by spreading the divestment story. There were more than a dozen bulk deals in the stock on Wednesday, with all of them being squared off before close of trading.

The sudden interest in the stock by arbitrageurs does raise eyebrows, considering the illiquid nature of the stock. Of the 13 players who took up positions at the counter, 8 squared off their positions for a small loss, two barely managed to break even, and four made a small profit. Scooters India made a net loss of Rs 2.27 crore for FY09, and a net loss of Rs 1.2 crore for the half year ended September 2009.

Alarm bells ringing for second-rung stocks

IS THE rally in second-line stocks close to peaking out? Yes, say some dealers, pointing out to the fact that money-making is becoming a bit too easy.

“We get at least half-a-dozen tips daily with likely price targets over the next few days,” says a dealer at an institutional brokerage. “But, of late, the target prices are being attained before the specified period. That is too fast for comfort,” he says.

NTPC follow-on offer may open on Feb 3

THE FOLLOW-ON public offering of NTPC is likely to start from February 3-5, according to people involved with the process. The company along with government officials and bankers has started meeting domestic institutional investors including insurance companies and mutual funds to gauge investor appetite for the Rs-11,000 crore share sale.

The company filed its offer document with Sebi on Tuesday and is likely to be flexible in the new auction process by not placing any cap either in terms of the number of shares or percentage to issued capital. Investment bankers say that the success of the NTPC issue will play a crucial role in the government’s future disinvestment plan.

Contributed by Santosh Nair & Reena Zachariah

Src:ET

13 January 2010

Is China the next Enron?

Is China the next Enron?

TAIWAN: Reading The Herald Tribune over breakfast in Hong Kong harbor last week, my eye went to the front-page story about how James Chanos —

reportedly one of America's most successful short-sellers, the man who bet that Enron was a fraud and made a fortune when that proved true and its stock collapsed — is now warning that China is "Dubai times 1,000 or worse" and looking for ways to short that country's economy before its bubbles burst.

China's markets may be full of bubbles ripe for a short-seller, and if Chanos can find a way to make money shorting them, God bless him. But after visiting Hong Kong and Taiwan this past week and talking to many people who work and invest their own money in China, I'd offer Chanos two notes of caution.

First, a simple rule of investing that has always served me well: Never short a country with $2 trillion in foreign currency reserves.

Second, it is easy to look at China today and see its enormous problems and things that it is not getting right. For instance, low interest rates, easy credit, an undervalued currency and hot money flowing in from abroad have led to what the Chinese government Sunday called "excessively rising house prices" in major cities, or what some might call a speculative bubble ripe for the shorting.

In the last few days, though, China's central bank has started edging up interest rates and raising the proportion of deposits that banks must set aside as reserves - precisely to head off inflation and take some air out of any asset bubbles.

And that's the point. I am reluctant to sell China short, not because I think it has no problems or corruption or bubbles, but because I think it has all those problems in spades - and some will blow up along the way (the most dangerous being pollution). But it also has a political class focused on addressing its real problems, as well as a mountain of savings with which to do so (unlike us).

And here is the other thing to keep in mind. Think about all the hype, all the words, that have been written about China's economic development since 1979. It's a lot, right? What if I told you this: "It may be that we haven't seen anything yet."

Why do I say that? All the long-term investments that China has made over the last two decades are just blossoming and could really propel the Chinese economy into the 21st-century knowledge age, starting with its massive investment in infrastructure. Ten years ago, China had a lot bridges and roads to nowhere.

Well, many of them are now connected. It is also on a crash program of building subways in major cities and high-speed trains to interconnect them. China also now has 400 million Internet users, and 200 million of them have broadband. Check into a motel in any major city and you'll have broadband access. America has about 80 million broadband users.

Now take all this infrastructure and mix it together with 27 million students in technical colleges and universities - the most in the world. With just the normal distribution of brains, that's going to bring a lot of brainpower to the market, or, as Bill Gates once said to me: "In China, when you're one-in-a-million, there are 1,300 other people just like you."

Equally important, more and more Chinese students educated abroad are returning home to work and start new businesses. I had lunch with a group of professors at the Hong Kong University of Science and Technology, or HKUST, who told me that this year they will be offering some 50 full scholarships for graduate students in science and technology. Major US universities are sharply cutting back.

Tony Chan, a Hong Kong-born mathematician, recently returned from America after 20 years to become the new president of HKUST. What was his last job in America? Assistant director of the U.S. National Science Foundation in charge of the mathematical and physical sciences. He's one of many coming home.

One of the biggest problems for China's manufacturing and financial sectors has been finding capable middle managers. The reverse-brain drain is eliminating that problem as well.

Finally, as Liu Chao-shiuan, Taiwan's former prime minister, pointed out to me: When Taiwan moved up the value chain from low-end, labor-intensive manufacturing to higher, value-added work, its factories moved to China or Vietnam. It lost them. In China, low-end manufacturing moves from coastal China to the less developed Western part of the country and becomes an engine for development there. In Taiwan, factories go up and out. In China, they go East to West.

"China knows it has problems," said Liu. "But this is the first time it has a chance to actually solve them." Taiwanese entrepreneurs now have more than 70,000 factories in China. They know the place. So I asked several Taiwanese businessmen whether they would "short" China. They vigorously shook their heads no as if I'd asked if they'd go one on one with LeBron James.

But, hey, some people said the same about Enron. Still, I'd rather bet against the euro. Shorting China today? Well, good luck with that, Mr Chanos. Let us know how it works out for you.

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Markets Review: Sensex closes above 17500; IT, metals lead

China CRR hike sends rate sensitives in a tizzy

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Src: Economictimes.com

Results Corner

12 January 2010

Heard on the Street

Heard on the Street

Investors lap up shares of PSUs ahead of FPOs
Savvy traders are said to be accumulating shares of public sector undertakings such as

NTPC, Rural Electrification Corporation (REC) and National Mining Development Corporation (NMDC), which have lined up follow-on public offerings (FPOs). Officials at investment banks say the companies will be going in for the auction method, as the government is looking to maximise its collection from the sale of shares.

Punters are betting that institutional investors will bid at a decent premium to market price if they hope to be allotted the quantity they have bid for. The highest bid could then set the benchmark for the stock price, punters feel. REC shares rose 5% to close at Rs 252.50, NMDC gained 3.6% to
close at Rs 434, and NTPC closed 1% up at Rs 233.10.

Rar(e)ing Bull, loyalists take fancy to GIC Housing
Trade volumes in the GIC Housing Finance stock have shot up over the past few sessions. The counter witnessed a few bulk deals on Thursday and Friday, with Caledonia Investments, the largest institutional investor in the company, offloading nearly 32 lakh shares of the 51 lakh shares it held in its portfolio. Stock exchange websites (BSE and NSE) have no details of the buyers.

Buzz is that the Rar(e)ing Bull and his loyalists have been accumulating the shares. The Bull has publicly said that he’s no fan of real estate companies. But it looks like he doesn’t mind betting on sectors
that stand to gain if property developers do well.

Sebi wants to trace route of mutual fund ‘trail’
Not long ago, Sebi had slammed mutual fund houses for demanding a no-objection certificate from investors who wished to change distributors. The issue is back in focus, with a section of the industry protesting that some AMCs have continued to pass on trail to the ‘old’ distributor, despite knowing that it amounts to restrictive trade practice.

Perception is that companies want to protect old distributors who had bought in the client. Talk is that the regulator is taking a serious view of the issue and is likely to check whether trail has been going to the old distributor despite an investor having indicated otherwise. The issue clearly highlights the divide between larger and smaller asset management companies (AMCs).

Contributed by Reena Zachariah, Santosh Nair & Deeptha Rajkumar

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Mid-term picks of the day | Top 5 picks of the day

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