RIL plans mega foray into India's power sector

MUMBAI: Billionaire Mukesh Ambani today said his firm Reliance Industries will supply natural gas to Anil Ambani Group's power plants as and when they are ready to receive the gas. ( Watch )

Addressing company shareholders, Ambani mentioned the Supreme Court judgment upholding the company's stand that government has a major say in pricing and allocation of gas produced from RIL's eastern offshore KG-D6 fields and that RIL would supply gas to Anil Ambani group in accordance with government policy.

"With the legal dispute behind us, we look forward to harmonious and constructive relationship with ADAG," Ambani said at the meeting, for which Anil did not turn up as speculated in the market and media.

The supplies to Anil Ambani Group's power plants including the one proposed at Dadri near Delhi, will be subject to government approving the allocation of the fuel, Mukesh Ambani said.

The Supreme Court had last month asked the companies headed by the two brothers to rework a gas supply contract keeping the government policy on pricing and allocation in mind.

Mukesh, 53, however did not say when RIL will be entering into a new Gas Sales and Purchase Agreement (GSPA) with Anil's Reliance Natural Resources Ltd (RNRL) as had been ordered by the apex court.

RIL production from KG-D6 block exceeds 60 million standard cubic meters per day and over 30,000 barrels per day, Mukesh Ambani said.

"RIL has intensified exploration campaign off the east coast," added Ambani.

In his speech Mukesh Ambani proposed 70 per cent dividend or Rs 7 a share for 2009-10 fiscal for RIL shareholders.

The court had, on May 7, turned down gas to Anil-led RNRL from RIL's KG-D6 basin at prices arrived at in a 2005 private family agreement.

RIL, which acquired 40 per cent in shale gas assets of Atlas Energy in US, will continue to pursue shale gas opportunities, Mukesh Ambani said. The energy major was also drawing mega investment plans in coal, hydel and nuclear power.

RIL is also looking at expediting developing discoveries in blocks KG-D6 in Krishna Godavari basin, NEC-25 in Mahanadi basin, CB-10 in Cambay basin and Sohagpur CBM block.

"Annulling of non-compete agreement with ADAG was a game changing development that paved the way for Reliance to participate in power sector," added Mukesh Ambani.

Reliance Industries, which has agreed to buy Infotel, the only company to win a nationwide licence in India's wireless broadband auction, will follow an "asset light" approach in telecoms and collaborate with partners.



Reliance Industries' 36th AGM: Analysts views

MUMBAI: Mukesh Ambani, chairman of energy major Reliance Industries, said the firm is ready to provide gas to power plants controlled by his brother Anil Ambani's Reliance ADAG and looks forward to a "harmonious and constructive" relationship with the company. ( Watch )

Following are comments from analysts:

ARUN KEJRIWAL, DIRECTOR OF RESEARCH FIRM KRIS IN MUMBAI: "There were a lot of unrealistic expectations built around Reliance AGM. The hype is now fading, which is reflected in the share price movement."

NITIN ZAMRE, MANAGING DIRECTOR AT CONSULTANCY ICF INTERNATIONAL, NEW DELHI: "The AGM is on expected line. The two brothers coming together throws open opportunity for both RIL and ADAG, but more for RIL. "Given the fact Reliance has core competency in building very large projects, power is the next opportunity mainly ultra mega power Projects, data management and shale gas."

GAJENDRA NAGPAL, CEO OF UNICON FINANCIAL, NEW DELHI: On expansion into power: "They are sitting on so much cash. It's a natural extension of Reliance's business of energy. To that extent, it seems like a well thought of move. I am extremely bullish on the counter in the long run. He is absolutely making all the right moves." On share movement: "Expectations are slowly tickling down. I see no reason why shares should fall now. It's just profit taking. "One would want to hear about his financial services foray. That also seems like a big opportunity."

K.K. MITAL, HEAD OF PORTFOLIO MANAGEMENT SERVICES, GLOBE CAPITAL, NEW DELHI: "Mukesh's vision is quite clear. He wants to concentrate on 4G spectrum; he wants to concentrate on power. He wants to do global acquisitions. "There were lot of speculations that Reliance Industries may buy a stake in Reliance Communications; Mukesh may support Anil's Reliance Power. "There were also speculation that Anil Ambani might turn up at the AGM. But let's remember that this is just the beginning. Going forward there will be many more opportunities (for tie up between the brothers)"

TEJAS DOSHI, HEAD OF RESEARCH, SUSHIL FINANCE IN MUMBAI: "People had built unrealistic expectations that there would be big-bang announcements at the meeting. "The disappointment is showing in the stock price of the companies led by both Ambani brothers."

SUSHANT GUPTA, SENIOR ANALYST WITH WOOD MACKENZIE, SINGAPORE: "Refinery-wise they are the most competitive in the region. If you look at refining margins, there is a downward trend which I expect to continue for at least next few years. "Even companies like Reliance are finding it challenging to push products in the global markets at better margins. Reliance should diversify and step up focus on petrochemical sector, which is one of the major contributory to its profit."

MITEN MEHTA, FUND MANAGER BELLWETHER CAPITAL, MUMBAI: "Mukesh Ambani words were more or less expected after the end of the non-compete agreement. In fact there were more expectations than what was actually announced. Reliance Industries needs to get into other areas now and power is an obvious choice for them."

GUL TECKCHANDANI, INDEPENDENT ANALYST, MUMBAI: "His announcements on the power sector sound good. Mukesh has the record of being conservative in his announcements but delivering on what he says. "India needs more power and the more people that enter the sector, the better."

Rajesh Jain, Market Strategist: 'Mukesh Ambani’s AGM speech focussed on RIL’s core competencies': Mukesh Ambani’s AGM speech should be signalled out for the fact that he has focussed most of it on driving the core competence and the world class scale that he enjoys in the refining, petrochemical and the exploration business. That is the biggest takeaway from this speech today aside from announcements for the power and the telecom in the broadband space.

Essentially what Mukesh has signalled today is that we are not going to be trading on each others’ stores. We have our domain cut out. We are going to be thinking big in power but it will be nuclear, it will be hydel, it will be the cleaner coal based projects.

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Mukesh Ambani’s AGM speech focussed on RIL’s core competencies: Rajesh Jain, Market Strategist

RIL bets big on power and telecom

Src: ET and MOneycontrol.com

Morning Calls

Nifty may test 5400-5450 in the short term

Mid-term picks | Top 5 picks |

RIL may buy 26% stake in Pipavav

How does the RIL stock trade post its AGM?


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Heard on Street: M&M vaults 22% in 3 weeks

Bankers against French auction for PSU share sales

After the lukewarm response to recent public offers of REC and NTPC, which opted for the French auction method, merchant bankers are suggesting the book-building method to the disinvestment department for future public sector share offerings.

“In the book-building method, you essentially know the price range, which is better but in a French auction you are trying to discover the price of a listed company and investors are not willing to pay a premium as they would prefer to buy from the market,” said a senior banker. Last November, Sebi introduced the pure auction method of book-building in share sales, where institutional bidders could bid at any price above the floor price instead of restricting them to bid in a band fixed by investment bankers.

M&M vaults 22% in 3 weeks on bull bets

Shares of automobile major Mahindra & Mahindra (M&M) have risen 22% in the past three weeks. The buzz is that Rar(e)ing Bull has been active in the stock of late. Brokers said traders have been betting on M&M in the past few weeks on hopes that news of better-than-normal monsoon will enable the stock outperform the market in the short-term. The prospects of M&M, which manufactures tractors, is closely linked to the monsoon, as better-than-expected monsoon could boost demand for tractors. The stock closed marginally higher at Rs 631.65 on Thursday.

Bears tighten grip on steel stocks

Shares of leading steel companies — Tata Steel, Steel Authority of India and JSW Steel — underperformed in a firm market on Thursday. According to grapevine, local steel prices are likely to soften further due to a decline in demand. Bear traders are said to be cautiously building short positions at these counters. In the recent past, most traders who had gone short on steel stocks have been unable to profit to the extent they had hoped to.

The moment overall sentiment changes for the better, the stocks that were beaten down the most, would be the ones to rise the fastest. JSW Steel shares fell 0.8% to close at Rs 1,048.70, Tata Steel Steel ended 0.7% down at Rs 482.20, while Steel Authority shares rose marginally to close at Rs 198.35. Over the past one month, the BSE Metal Index has fallen 5.5%, compared to a 4% rise in the BSE Sensex.

(Contributed by Reena Zachariah, Nishanth Vasudevan & Santosh Nair)

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United Phosphorus: Going global

STOCK ANALYSIS: Emami

SRF

India Telecom, Adani Power, Tata Motors

Top SIP Mutual Funds - Best Picks!

Lupin Ltd

Sesa Goa

Asian Paints, TCS

HCL Technologies, IDBI Bank, Murli Industries

Reliance Communications - raising a lot of cash

Monsoon Picks - the best ones for you this rainy season

Src: ET and DP blog and Smartinvestor

Medium Term Investment Portfolio Picks

Medium Term Investment Portfolio Picks

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Experts see Nifty at

5300, cherry pick from Reliance pack

It was a quiet session for the markets. The indices moved within a tight range and closed the day absolutely flat. The Nifty ended the day at 5,233, up 11 points. The Sensex shut shop at 17,462, up 50 points. The Midcap index also ended marginally in the green. The gap between the advance and declines narrowed through the session to end at 1:1.

The mood on Dalal Street is getting optimistic. But does that mean a big rally is on its way or will global cues play spoilsport?

Naresh Kothari, President, Edelweiss Capital, sees some amount of optimism returning to the market over the last 3-5 days. "At lower levels, we are seeing continuous buying interest. At 4700-4800, we saw very good interest come in. I guess this continues to remain a period when people are sort of coming out of their shell and starting to look at opportunities and ideas."

He asks investors to be cautious around 5,300-5,400 levels. "The global phenomenon continues to be an overhang on the market. Also, the second half might not be as good as the first half. I think the market is a little bit more cautious on the upside. These two factors are actually ensuring that this will not be a runaway market. I would start buying more of Puts and build some amount of cash in the portfolio."

Ambareesh Baliga of Karvy Stock Broking expects the Nifty to continue in a 5,200-5,300 range. "Crossing this level will be quite difficult. Inspite of all the good news, whether it is advance tax figures, IIP (Index of Industrial Production) data, monsoons, GDP (gross domestic product) estimates, if you are not able to convincingly cross these levels, it clearly shows that there is no conviction inthe market. Over the next two-three months, we will be in the broad range of 4,700-4,800 and to around 5,300."

However, Sudarshan Sukhani of Technical Trends feels the market can see a 70-80 or 100 point correction. He advises investors to buy on dips.

Phani Sekhar, Fund Manager, Angel Broking, too asks investors to buy on dips. But unlike Sukhani he sees another 4-5% upside. "Individual midcaps and stocks will be doing much better than indices and that is where a lot of money is there to be created."

How should you play stocks from the Reliance pack?

On Reliance:
Baliga sees huge upside potential in Reliance Industries. "We have been talking of Rs 1400 levels, which it is refusing to go towards in the last six-eight months. But by January- February next year, once all these things settle down, it should trade over Rs 1400. At these levels, we are quite bullish on Reliance Industries."

Sekhar is betting on Reliance Industries and Reliance Infrastructure from the Mukhesh Ambani stable.

On the ADAG pack:
Reliance Communications, Baliga said, has already moved up decently from lower levels. "I don't think it can move much more looking at the way the telecom sector is doing." On the other stocks in the pack, he feels they are more of a speculative move than a fundamental move. "It is more of traders' pick at this point of time than a fundamental buy."

From the ADAG group, Sekhar likes Reliance Infrastructure. "This is a very young engineering company. The numbers that you see now are not really reflective of the potential numbers that you will see in a couple of years’ time when majority of its current projects come onstream. Valuationswise, it looks pretty attractive. We will give a pass to the rest of the stocks and pick Reliance Infrastructure."



DTC 2.0: How will new capital gains tax impact investors?

The revised discussion paper of the direct tax code proposes significant changes to the application of minimum alternate tax, capital gains tax, among others. Tax treatment of investments made by foreign institutional investors and the common man may be tweaked.

In an interview with CNBC-TV18, Ketan Dalal, Joint Head of Tax & Regulatory Services at PwC; Dinesh Kanabar, Deputy CEO & Chairman – Tax at KPMG and Ramesh Damani, Member of BSE reacted to the development.

Below is a verbatim transcript of the interview. Also watch the video.

Q: I am going to come to the broad and the big issues here which is of capital gains and the reason I am not going to minimum alternate tax (MAT) first is because they have said that they propose to compute MAT with reference to book profit which is exactly how life is today so in that sense no change for corporate Indian with reference to MAT. The big change is in capital gains and while the earlier code propose to takeaway any distinction between long-term and short-term capital gains and club all capital gains to be taxed as per year slab rate. In this code they have made or created a certain advantage for long-term holdings. But I will go through them with you one by one. They have said, “Long-term is only long-term if it is held for a period of more than one year from the end of the financial year” That means its no longer 12-months or 365 days. It could in effect be even two years if you end up buying securities on April 3 and that’s the beginning of a new fiscal year. You have to wait till your fiscal year gets over—calculate another whole fiscal year and then be able to avail of long-term benefits. Am I correct?

Dalal: Absolutely right and to that extent the beneficial impact of long-term capital gains has been diluted because you are changing the very definition of long-term capital gains. As you said, it could be 23 months and 29 days for example. So to that extent you are absolutely right and of course the benefit itself has, to that extent, also been reduced because there is an exemption if you sell on the stock exchange that has been replaced by different regime.

Q: What they have suggested is of the total quantum of long-term capital gains there will be a deduction rate, the rate which is not been specified as of now. That amount will be deducted and the rest of the capital gains will be taxed at your slab rate. As far as short-term capital gains goes all of it will be taxed at slab rate and the other important development for the market is that all income arising on the purchase and sale of securities by an foreign institutional investor (FII) will now be income chargeable under the head of capital gains and they will be subject to advance tax and finally they have said Securities Transactions Tax (STT) is proposed to be calibrated based on the revised taxation regime for capital gains. Net, are we better-off with these suggestions on the capital gains regime or do you prefer what we have today which is the current situation or what the first Code put in?

Dalal: It depends on what you are. For example if you are an FII, today most of the FIIs are coming in through the Mauritius route and Mauritius as one knows thecapital gains tax has been exempt. It does not talk specifically of business income but business income if I put it in technical terms would be chargeable to tax if you have a permanent establishment and because of the capital gain exemption FIIs coming through Mauritius claim the capital gain exemption. Now they have said that it will be characterised as capital gains to that extent there is clarity.

The point however is that while there is a treaty override neutralisation in the new discussion paper. It is subject to a carve out of few things but the one which is relevant is a carve out for general anti-avoidance route and in simple words what it means is that you entitle the benefit of the treaty however if you are resorting to what the government considers as anti-avoidance then you will not be entitled to the benefit of the treaty. What my fear is that the general anti-avoidance carve out can be use to attack the benefit of the India-Mauritius Treaty which might be the intention any way. So if you are an FII to that extent you will probably wind up paying tax at the normal rate and if you are long-term.

MOre @ http://www.moneycontrol.com/news/business/dtc-20-how-will-new-capital-gains-tax-impact-investors_464384.html

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Kalindi Rail Nirman - short term trading

Cummins India

BGR Energy Systems

State Bank of India

Maruti Suzuki India Ltd

Reliance Industries

India Financial Services

Direct Tax Code, Larsen and Tourbo, Bank of India

Top Stock Picks

Power Picks

India Utilities

Reliance Communications, Reliance Infratel

Src: HDFCSec, ET and Moneycontrol and DP blog

Decoding DTC: Implications for income from various sources

Dilution in DTC to help individuals save on tax outgo The government has retained the form, but abandoned the spirit of the Direct Taxes Code (DTC) to have a simple, clean tax system without exemptions. ET decodes the implications of DTC on income from house property, cpaital gains and the new tax treatment of savings. Tax treatment of savings Comment Mail to friend The DTC has proposed contributions up to Rs 3 lakh in a year (both by employer and employee) to any account maintained by a permitted savings intermediary be exempt from tax, and would remain untaxed if it remained in that account. Withdrawals are to be included in income from residuary sources, and taxed accordingly. Existing schemes are to be grandfathered. Since the switching over to complete exempt-exempt-exempt (EEE) method of taxation is seen to involve administrative, logistical and technological challenges, the revised discussion paper proposed to continue with EET for specified instruments till further notice. The proposal for introducing Retirement Benefits Accounts scheme also shelved for the same reason. Difficulty in putting in place a universal social security benefits tilted the balance. Taxation of income from house property Comment Mail to friend The DTC had proposed presumptive basis for calculating notional rent from house property (at the rate of 6%) with reference to cost of construction/acquisition. It has also proposed to disallow deductions on interest paid on loans for self-occupied houses. Now, rent received/receivable in a year will be gross rent. No presumptive basis to be used for calculation. Deduction on interest paid on loan taken for construction/acquisition will be allowed for one house that has not be let out, subject to overall limit of Rs 1.5 lakh. More @ http://economictimes.indiatimes.com/quickiearticleshow/6052641.cms Direct Taxes Code watered down to keep all happy NEW DELHI: The government has retained the form, but abandoned the spirit of the Direct Taxes Code (DTC) to have a simple, clean tax system without exemptions. A revised discussion paper on the Direct Taxes Code, released by the Central Board of Direct Taxes (CBDT) on Tuesday, dropped many controversial proposals of the original draft code to help individuals and companies save on their tax outgo. These include levying minimum alternate tax (MAT) on gross assets and taxing savings schemes such as the public provident fund at the time of maturity. Companies will pay MAT on book profits. A dilution of the proposals in the draft code would mean a huge revenue loss for the government, which, in turn, will impact fiscal deficit. The trade-off could be to scale down the liberal tax slabs for individuals proposed in the original code. And that is bad news for taxpayers. "The proposed revisions are like old wine in a new bottle," said Deloitte partner Homi Mistry. But revenue secretary Sunil Mitra said the slabs proposed in the draft code were only illustrative. The code has addressed 11 issues, including MAT, tax treatment of savings, taxation of house property, tax treatment of capital gains, status of double taxation agreements and general anti-avoidance rules. CBDT chairman SSN Murthy said the decision on tax rates will be taken later. The draft code had proposed a 10% tax rate for taxable income between Rs 1,60,000 and Rs 10 lakh, 20% for income above Rs 10 lakh but below Rs 25 lakh, and 30% for income above Rs 25 lakh. This could be tweaked and the prerogative to fix the rate will be with the legislature, said a senior CBDT official. Domestic investors in equities will, however, pay capital gains tax on listed shares, with CBDT retaining the overhaul of the tax treatment proposed in the draft code to scrap this exemption. Capital gains will be added to income and taxed according to an individual’s slab. The tax treatment will be similar for non-residents. The securities transaction tax (STT) will, however, stay and rates will be calibrated. CBDT has also sought to end the uncertainty over tax treatment of FIIs. The income of FIIs that buy and sell shares will be treated as capital gains and not business income, which could increase their tax liability. Going by the revised code, individuals will enjoy tax exemptions in select, but fewer, savings schemes. These include the public provident fund, pension schemes, including the government’s new pension scheme, general provident funds, recognised provident funds, pure life insurance and annuity schemes. These schemes will not be taxed at any stage. The move will give a boost to the new pension scheme, which has not found many takers so far. Other savings schemes such as the national savings certificate, bank deposits, unit-linked insurance plans and equity-linked mutual funds will continue to enjoy tax breaks for their full duration. There is, however, no clarity on their tax treatment when the code comes into force. CBDT has also softened the blow on the tax treatment of house property by scrapping the proposal to compute gross rent on 6% of the cost of construction or acquisition. The salaried class too has been spared of a higher tax burden on perks. 1|2|Next > Second DTC draft addresses wealth tax, anti-avoidance rule The effect of taxes on different investments Govt releases new DTC draft, addresses 11 key issues ****************************************** Heard on the Street: High-return hopes lure bargain hunters to DLF High-return hopes lure bargain hunters to DLF Shares of real estate firm DLF rose 3% in a lacklustre market to close at Rs 272.25. The move was supported by good volumes, with over 21 lakh shares being traded on the Bombay Stock Exchange (BSE), compared with the two-week average daily volume of around 17 lakh shares. Dealers tracking the DLF counter say bargain hunters have begun nibbling at the stock, as they feel the risk-reward ratio has improved after the 10% correction following the fourth quarter earnings. Some analysts are still bullish on the stock saying that DLF remains the leader in the sector and will be best placed to benefit from a pan-India recovery in property prices. However, another section says investors betting on DLF shares will have to be patient. They point out that a near-term recovery in the stock price will depend on the company’s ability to retire around Rs 5,000 crore of debt this financial year through a mix of internal accruals and sale of non-core assets. Short-covering fuels market upswing Rising inflation and the spectre of higher interest rates appear to be no deterrents to equity investors, as can be seen from the steady rise in benchmark indices. Dealers say the upswing is now being fuelled largely by covering of short positions by traders/fund managers who had taken a bearish short-term view on the market. Fundamentally nothing much has changed, and the market remains expensive relative to its historical valuations, say market participants. However, many foreign funds which had sold call options on the Nifty at 5100, 5150 and 5200 levels are now scrambling to minimise their losses. They are either squaring off their call positions, buying Nifty futures or a basket of Nifty stocks, say institutional dealers. On Tuesday, the Nifty closed at 5222.35, up 0.5% over the previous close. Real estate scrips fail to floor sceptics Shares of real estate firms were the best performers among sectors on the BSE on Monday. But, some of the astute names in the market are rumoured to be bearish on the sector. The buzz is that an operator, who shares his first name with a union minister, has short-sold shares of real estate companies. In 2008, this operator was believed to have profited in a big way from short-selling shares of real estate companies (Contributed by Santosh Nair & Nishanth Vasudevan) ***************************************** Sintex Industries Mahindra and Mahindra - next few years of growth invested BHEL - no improvement Infosys Technologies - confidence continues Punj LLoyd - large losses Src: ET, Moneycontrol, Smartinvestor, DP blog

Derivative and Equity call

We Wish to Start a New Initiative DERIVATIVE CALLs for Investors and Traders.. But this is purely sourced from Outside Websites, Medias, and Other Brokerages... All of you Know DERIVATIVE is High RISK also a High REWARD one.. Loss Will be More if Not keeping Strict SL.

So Kindly DO all the calls Given in DERIVATIVE Segment with STRICT STOP LOSS.

Becos HIGH RISK and HIGH REWARD..

Take these calls with Own Financial Risk/Proper Guidance.


Derivative Call

Buy ESSAR OIL FUT cmp 130 and add @ 128

Tgt 131-135 SL 125

Lot 1412. Risk Rs:4-6k

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Equity Call

Buy EVERONN SYSTEMS cmp 438

It faces multiple resistance @ 435-450 levels many times.

We expect GOOD upside
if this break out this range(435-450) ,

So Risk Takers Can Enter this Counter for 10-15 % Returns. Keep StopLoss @ own Financial Risk.





Do F&O Calls with Proper Guide

Market and Stock Views

RIL has plans for telecom, power, pharma & finance

Bull's Eye: Bharti Airtel, JSPL, TVS Motors, HUL

Top 5 picks | Mid-term picks


Weekly Market, Sectoral and Stock Perspective – Technicals

Derivative strategies: BHARTIARTL, TATAMO, BPCL


TECHNICAL ANALYSIS: Index Outlook: Investors kept guessing
Market was at its whimsical best last week. It declined in the first two sessions, taking the Sensex to the low of 16,560. But just when investors were about to throw in the towel, it reversed higher exasperating all those who were betting on ...

STOCKS: DB Corp: Buy
Investors with a two-year horizon can consider buying the shares of DB Corp, publisher of the widely read Hindi newspaper Dainik Bhaskar, given its robust prospects for expanding advertising revenues through pricing ...

STOCKS: ING Vysya Bank: Buy
Investors with a two-three year horizon and a moderate risk appetite can consider buying the ING Vysya Bank stock. The bank is an old generation private sector one in which ING, a global financial major, owns 43.72 per cent stake. While the ...

STOCKS: Hindustan Zinc: Buy
Investors can consider buying the shares of Hindustan Zinc, subsidiary of Sterlite Industries, given the company's dominant position in domestic user industries. This is supported by the fact that steel production volumes are beginning ...

STOCKS: Sasken Communication Technologies: Buy
Investors with a two-year horizon can consider buying the shares of Sasken Communication Technologies (Sasken), a telecommunications software provider. Significant improvement in key operating and cost metrics and a general pick-up in the ...

TECHNICAL ANALYSIS: Query Corner: Ranbaxy in an intermediate-term uptrend
Kindly give your view about Nagarjuna Construction bought at Rs 155 and JK Tyre bought at Rs ...

TECHNICAL ANALYSIS: Pivotals: Reliance Industries (Rs 1,046.2)
RIL declined to the intra-week low of Rs 995 on Tuesday but Friday's spurt helped the stock erase all the losses to end the week marginally higher. The stock completed one-leg of the down-move from the April peak at the low of Rs 976. It has ...

TECHNICAL ANALYSIS: Index Strategy: Consider covered call on Nifty
After the roller coaster ride of last week, there still doesn't appear to be any semblance of direction emerging ...

TECHNICAL ANALYSIS: Sizzling Stocks: Eicher Motors (Rs 921.7)
Eicher Motors revved up suddenly on Friday as news of its joint venture with Volvo, VE Commercial Vehicles, trebling its capacity to become the largest commercial vehicle engine manufacturer in the country hit the market. The stock accelerated ...

TECHNICAL ANALYSIS: Stock Strategy: Consider initiating long in GMDC
GMDC (Rs 125): Arresting the downtrend, the stock recovered sharply in last month from its support level. It now finds strong support at Rs 113, while its immediate resistance is at Rs 130. A close above Rs 130 could lift the stock towards ...




Src: ET, Businessline and etc

Mukesh Ambani's RIL back in telecom with a bang

RIL reconnects with telecom after 5 years

India's largest private firm to buy 95% in Nahata-owned Infotel for Rs 4,800 crore; to get broadest BWA footprint.

Reliance Industries Ltd (RIL) will buy Mahendra Nahata-promoted Infotel Broadband Services for Rs 4,800 crore, marking the re-entry of India's largest private sector firm into the booming telecom market.

RIL Chairman and Managing Director Mukesh Ambani was forced to hand over the telecom business to his brother Anil when they broke up the Reliance empire five years ago. The acquisition of Infotel became possible after the two brothers ended a non-compete accord a month ago.

Minutes after the acquisition announcement, Anil Ambani, who controls the country's second-largest telecom company, Reliance Communications, welcomed RIL's entry into telecom.

Infotel is a two-year-old entity, with the stated objective to roll out WiMax across all circles in India. RIL said it would buy 95 per cent of Infotel, which hours earlier became the only company to buy nationwide licences to offer wireless broadband internet services.

For the time being, RIL will go for only the lucrative corporate bandwidth market, or the business of selling telecom and internet services to companies rather than individuals.

Unlisted Infotel is the only firm to win broadband spectrum in all 22 zones in India in an auction that ended today. The firm is paying Rs 12,848 crore for the spectrum and sources familiar with the developments said RIL would pay this fee.

Nahata said the company was in talks with RIL before the BWA auction.

RIL will invest by subscribing to fresh equity capital at par to be issued by Infotel. The RIL share gained 3 per cent today to close at Rs 1,046.25 on the Bombay Stock Exchange.

While third-generation (3G) spectrum allows high-speed internet access and data transfer on mobile phones, broadband spectrum would enable firms to provide high-speed wireless data links with better coverage than fixed-line broadband.

RIL said it saw the broadband opportunity as a new frontier of the knowledge economy, in which it could take a leadership position and provide India with an opportunity to be in the forefront among the countries providing world-class 4G network and services. A single 20-MHz TDD spectrum, when used with LTE (Long Term Evolution), has the potential of providing greater capacity when compared to existing communication infrastructure in the country, the company said.

RIL said its initiative will usher in a wireless broadband revolution across the country and it planned to create state-of-the-art technology using an asset light strategy. RIL will forge several strategic relations with a host of leading global technology players, service providers, infrastructure providers, application developers, device manufacturers and others to leapfrog India to the 4G revolution.

Mukesh Ambani termed the deal as the next wave of value creation opportunity in the wireless broadband space.

RIL has re-entered telecom at a time when the sector is going through a lot of pain in terms of reduced voice rates. "The management seems to have made up its mind to enter the sector. The valuations in the sector are at their lowest. We might see Reliance Communications and Reliance Industries go for a merger or some kind of association in one or two years down the line," said S P Tulsian of sptulsian.com.

Broadband penetration in India is as low as 1 per cent. While some analysts see this as an opportunity, some say monetisation from this service will be an uphill task. "WiMax, as of now, is not a proven technology across the world. There is no substantial ecosystem which has been developed in India as well. It will take a few months for RIL to start services and we will know their strategy only after they offer their services," said Harit Shah, Analyst at Karvy Stock Broking.

Jagannadham Thunuguntla, equity head of SMC Capitals, said it is common to pay a premium in an acquisition.

"We do not know the nuances of the deal. Sometimes, the right target is not available. The amount of equity which is available for acquisition might have been an issue. There are a number of ifs and buts in a deal," he said.

RIL with a turnover of Rs 2,00,400 crore had a cash profit of Rs 27,933 crore, net profit of Rs 16,236 crore and net worth of Rs 1,37,171 crore as of March 31, 2010. The company, experts said, has the financial muscle to venture into a new sector.

RIL has laid an optical fibre cable (OFC) network to connect its refineries, pipeline network, retail outlets, petrol pumps and logistics business — similar to Gailnet or Railnet.

However, there is a huge amount of unlit (unused) fibre with the company which it could utilise to offer broadband services such as Internet Protocol TV (IPTV). It could also be used to enter the long-distance telephony segment and for relaying entertainment services.

However, the company, till now, did not have a "last mile" solution which can help it enter the customers' homes, hence it would have had to sell bandwidth to internet service providers (ISPs).

Hence, a logical way of entering the telecom sector for Mukesh Ambani at this late stage was to either buy out a broadband wireless access (BWA) spectrum winner, or acquire an existing 2G player. It has done so with Infotel now, analysts said.

Reliance Industries buys 95% stake in Infotel Broadband for Rs 4,800 cr

RIL's redial may be led by Manoj Modi

RIL entry may trigger a tariff war in broadband

Telecom: Will RIL, RCom compete or collaborate?

RIL pulls off a coup to buy BWA champion Infotel

Src: ET and Smartinvestor

Euro Recovery Soothes Nerves

Euro Recovery Soothes Nerves

Our markets are likely to open sharply higher on the back of buoyant US markets, which were tracing the gains of the Euro. However, they are likely to run into resistance in the 5150-5170 ranges. How they perform, thereafter will be a function of the IIP data that will be on tap today.

A rebound in the Euro put the Dow back on the 10,000 as the German Supreme Court rejected efforts to block Germany from taking part in guarantees that are critical to the stabilization mechanism aimed to strengthening the euro.

The Dow surged 273 points at 10,173 with the S&P 500 adding 31 points at 1087, and the NASDAQ surging by 60 points to close at 2219.

The euro continued its recent climb, regaining the 1.2100 levels for the first time in a week after trading as low as 1.1877 on Monday.

Strong demand for Spain’s €3.9 billion auction of three-year government bonds and the Bank of England holding its base interest rate at a record low of 0.5% for the 16th consecutive month also helped matters on a day when energy stocks rebounded and initial weekly jobless claims fell by 3,000 in the US.

News that the SEC stepped up its examination into a collateralized debt obligation by Goldman Sachs that wasn't part of the civil fraud charges previously filed against the firm, made the stock register a new 52 week low.

Meanwhile, Crude for July delivery gained $1.10, to settle at $75.48 a barrel. Gold contract settled $7.70 lower, at $1,222.20 an ounce. The dollar traded lower against a basket of currencies, with the dollar index down by 1%.

Coming back to our markets, we have the crucial IIP data today. The market men expect a 14% rise. If that happens that will be an improvement on the last number. Ever since the data peaked in December 2009, it is on a steady decline.

As far as the US markets go, we are not reading too much into the 273-point rally in the Dow. A study of the benchmark since the year 2000 reveals that whenever the Index rises more than 200 points, the Index falls on an average 15 points the next day. For the current year, there have been 3 other instances and it has fallen on an average 50 points the next day. You cant really read too much into this and is not something which is extra ordinary. The chances of a reversal are higher the next day.

While the Nifty’ surge may be capped in the region of 5150-5170, the mid-caps could do well. Road stocks like IRB or Gujarat Apollo may do well on the back of new projects being sanctioned. Indian Hotels and Prakash Industries look well placed.

Disclosure : No holdings or trading positions in stocks mentioned or recommended to clients

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25% float: Cos may have to revise IPO size

Nifty may rise, but resistance seen at 5215

Daily D-Street turnover dips as investors play safe

Heard on the street: Dutchman MF, FIIs

MF, HNIs lap up DRL shares

Kotak Bank seen interested in Karnataka Bank

**************************************

TRADING DESK

BANKNIFTY
Current level: 9,346,
Target level: 9,200

The index tested a strong resistance today at around the 9,350-9,375 mark and failed to break it. Several banking majors such as ICICI, SBI and IDBI closed weak. The index could take another plunge sometime tomorrow and may have a downside till around 9,200. Keep a stop loss at 9,375 and go short with an initial target of 9,275. Below that, reset the target to 9,200 and reset the stop loss to 9,300.

BHARTI AIRTEL
Current price: Rs 285,
Target price: Rs 300

The stock could have an upside till around the 300-mark if it passes resistance at 287. It has developed an uptrend alongside volume expansion.

Keep a stop at 279 and go long increase the position between 287 and 290. Start booking profits above 295 and clear the position by 300.

If the scrip drops below 276, it could slide till 260 so, consider a short trade.

RELINFRA
Current price: Rs 1,121,
Target price: Rs 1,165

The stock has reversed from a downtrend and risen on high volumes. The target projection on the basis of the chart patterns would suggest a rise till 1165-1170 levels. But, there's a fair amount of resistance between 1,120 and 1,130, and a significant potential downside. Keep a stop at 1,110 and go long. Increase the position between 1130 and 1,140 and book profits beyond 1,165. If the 1,110 stop is broken, the scrip could react till 1,070.

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HDFC, United Phosphorous

Marico - robust, best pick !

KPIT Cummins - growth via various options

Dish TV - well positioned for growth

Src: ET and HDFCSec, Smartinvestor.in

Derivative and Equity Call

Technical Pick – Indian Oil Corporation


An Over Sold Bounce is Due


Derivative strategies: CUMMINSIND, IDBI, BHARATFORG


Derivative strategies: ACC, PFC, HCLTECH

Technical calls: Cummins India, NB Ventures

Technical Calls: Siemens, Jindal Steel, DLF


Bearish `Island Reversal` in Nifty Future

ET Headline Volatile mkts: Traders advised to buy Options 10 Jun 2010, 0700 hrs IST,HARISH RAO,ET Bureau Investment advisors are asking retail clients to buy Options as a safer strategy to ride out the turbulent phase. Top 5 picks | Mid-term picks | Stocks: Gainers & losers Free-float supply may be a ‘drag’ on stock market Cos back at IPO Street as cash lines begin to choke Cash and bonds will be very dangerous: Marc Faber

Heard on the Street

Trading in KPIT frozen as stock hits upper circuit

Trading in shares of KPIT Infosystems was frozen at the upper end of the 20% intra-day circuit filter, after there were only buyers in the stock. Last week, the company had formed an equal joint venture with Bharat Forge for a hybrid technology designed to improve fuel efficiency of vehicles.

According to a note by domestic broking firm Paid Leave (PL), the joint venture is targeting revenues of Rs 300-500 in FY12, with an operating margin of 15-18%. But PL thinks this is a very conservative estimate. Strangely, PL has assigned an ‘accumulate’ rating to the stock, instead of a full-fledged ‘buy’ rating.

Leading domestic broking house Info Lion is said to have been a big buyer in the stock, though it couldn’t be ascertained if it was making the purchases on behalf of its institutional or non-institutional clients. KPIT shares closed at Rs 129.50 on the NSE, with nearly 77 lakh shares being traded. Less than a fifth of that volume resulted in delivery.

Fatpipe extends IPO bid date on low turnout

The initial public offer of Fatpipe Networks has been extended till Monday due to a low investor turnout. The company has also changed the price band of the issue from Rs 82-85 to Rs 80-85, according to merchant bankers. The issue was subscribed just 0.7 times.

According to brokers, a couple of HNIs and an institutional buyer, who had invested in the IPO, wanted to back out from the bidding process. However, merchant bankers of the issue denied any such incident.

“Investors have not backed out of the issue. The only problem we faced was when one bid came in past the IPO subscription deadline,” said a senior official of Keynote Corporate Services, the banker to the issue.

Outlicensing deal hopes trigger rally in Orchid Chem

Shares of Orchid Chemicals and Pharmaceuticals rose nearly 3% to Rs 144.35 with good volumes on Wednesday. The buzz is that some traders have taken up positions ahead of the company’s press conference on Thursday, anticipating some positive announcement. They are hoping the company may announce an outlicensing deal. When contacted, a senior company official declined to comment on market speculation.

(Contributed by Santosh Nair, Shailesh Menon & Deepali Gupta)

Fortis Healthcare - another fundraising

Daily Market Outlook - June 10 2010

Mahindra and Mahindra - acquisition moves strengthening

Jubilant Foodworks, Hindalco, Sadbhav Engineering

Hero Honda - riding strong, Shoppers Stop - consumer growth powers on

Educomp Solutions Limited - the leader in education

Rakesh Jhunjhunwala Interview - bullish on India

*********************************************
Tech view: Strength above 5053

As expected the bulls tried to fight back, however, global cues once again played spoilsport. The European markets which weakened in late noon deals, forced our markets to pare gains. The Sensex finally ended with a gain of 40-odd points at 16,658. The NSE Nifty was up 13 points at 5,000.

As things stand, the markets are trapped in an extremely narrow band - within the 20-days and 50-days DMA (Daily Moving Averages). In case of Sensex it is 16,650-16,840 and on Nifty 4997-5053. Longer the markets trade below the short-term moving averages, difficult it would get for them to bounce back. Hence one needs to watch the 20-days DMA as key reference point for future trend.

Today, the Nifty is likely to find support around 4,975-4,955, while face resistance around 5,025-5,045.




TRADING DESK

Yes Bank
Current Price: Rs 279,
Target Price: Rs 292

The stock has seen a correction to a key support. It appears to be in an inter-mediate uptrend. It has the potential to bounce till 290-295 levels in the next upmove, which could be tomorrow. Keep a stop at 276 and go long. Increase the position between 284 and 286, and start booking profits above 290. If the stop at 275 is broken however, the stock could fall till 269 and below that, 263.

Tata Motors
Current price: Rs 728,
Target Price: Rs 710

The stock is seeing heavy selling beyond the 730-mark. It has a likely downside till 705-710 level and it should test support at the top end of that band as a minimum target. Keep a stop at 735 and go short. Increase the position below 720 and reset the stop loss to 724. Clear the position below 710. Note that if 735 is exceeded, the stock could jump to 750. So consider going long if the stop is broken.

Nifty
Current price: 5,000.3,
Target Price: NA

The index is at key support. If its trades below 4,975, it could fall all the way till 4,800. On the upside, there's serious resistance at 5050 and above but if that is broken, a rise till 5,175 is possible. Two option spreads are tempting with a 2 session perspective. A long 5,100c (59) and short 5,200c (25) costs 34 and pays a maximum of 66. A long 4,900p (71) and short 4,800p (49) costs 22 and pays a maximum of 78. The bearspread has the better ratio.

Src: ET, DP blog , Smartinvestor, HDFCSec, Valuenotes and etc