A litmus test for the markets

A litmus test for the markets

A late surge in US stocks, allowed the Dow to post a back-to-back triple digit rally.

The Dow Jones Industrial Average added 121 points at 10,139. The S&P 500 gained 10 points at 1070, while the NASDAQ finished up by 16 points at 2175.

That sets the tone for our markets to open higher in the morning but it is going to be a litmus test for the markets. 5350-70 regions will be full of booby traps.

US markets were bolstered by a larger-than-expected drop in initial weekly jobless claims and a buoyant June retail sales data (Same–store sales). Obviously the sales look better because two holidays, the Memorial Day holiday and The Independence Day holiday sales have been added in June, which were not a part of the June sales last year. This apart, the Same-store sales numbers have to be taken with a pinch of salt. In one of the weekend articles, we will explain why.

The Bank of England kept its base interest rate at a record low of 0.5% for the 17th consecutive month and continued to leave its asset-purchasing program on hold. The European Central Bank also held rates steady.

Earlier in the day, International Monetary Fund raised its 2010 global growth forecast to 4.6% from 4.1%. The IMF said that while economic recovery will likely be faster than expected, Europe's debt crisis could stall the rebound.

The IMF also raised India’s economic growth forecast for 2010 to 9.4%. IMF’s forecast has been received well because GDP growth during the March quarter was only 8.6%. It implies that growth in the rest of the quarters will be much higher.

Today being a Friday, the bulls will like the week to close on a strong note. But a crossing of the important levels like 5366 looks rather premature. The markets will like to read the hand out by Infosys first, before it makes up its mind. For that we will have to wait till next week.

The bottom line is, unless the Nifty crosses the 5400 humps, don’t be in any hurry.

Godrej Industries and Gail look better placed for the day.

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

Tata Steel Limited

Technical Picks – Stocks

08 Jul 2010 | 12:07

Options Strategy

ONGC Bull Spread Strategy

Src: HDFCSEC

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Heard on the Street: Top insurer sells shares in D-Street favourite SBI

State Bank of India (SBI) remained a favourite among investors on Thursday, despite concerns over hardening interest rates.

According to the market buzz, there was some churn in the stock among foreign institutional investors, driving up the stock by 2.3% to Rs 2,356.75 on higher-than-average volumes in a firm market on Thursday.

But domestic institutions took a contrarian view on the stock, as it is felt that upsides are likely to be limited from these levels. Brokers said an insurance major was a seller in the stock on Thursday.

It is also speculated that the stock has been accumulated by a group of operators as a trading bet in the near-term. The stock is expected to outperform other bank stocks, brokers said.

Vadilal Inds gains 13% as takeover talk triggers rally

Shares of Vadilal Industries, a dairy product and food-processing company, have risen over 40% in less than two weeks, on market talk that the company could be a possible acquisition target for any large FMCG player looking to consolidate its position in the sector.

On Thursday, the stock rose 13% to close at Rs 144.95, after hitting a 52-week high of Rs 149 intra-day. Vadilal Industries’ revenues have improved steadily over the past few years, helping it gain a decent market share in milk and dairy products segments.

Dealers tracking the counter rule out the possibility of a hostile takeover, since the promoters own 61% in the company.

The company reported an earnings per share of Rs 8 for FY10. While the share price has more than trebled over the past one year, institutional investors have not shown any interest so far.

(Contributed by Nishanth Vasudevan & Vijay Gurav)

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May go to 4200 if Nifty breaks 4900: Daryl Guppy

Commercial Vehicles

Reliance Industries, Asian Paints, Tata Chemicals

Daily Market Outlook - July 9 2010

Daily Technical Report - July 9 2010

Src: HDFCSEC< ET and DP BLOG and etc

Morning calls

Sell bonds, buy precious metals: Jim Rogers

SHANGHAI: Investors should sell bonds and buy commodities like silver and rice as a “refuge” as the world economy may continue having problems, Jim Rogers, chairman of Rogers Holdings said. “Bonds are not a good place to invest in. You should own commodities because that’s your only refuge,” said Mr Rogers, who predicted the start of the global commodities rally in 1999. Gold has gained 8.3% this year, leading advances in precious metals, as investors seek haven assets to protect their wealth amid concerns that global economic recovery will falter. Still, commodities overall capped their worst quarter in more than a year on investors’ concern that slower growth from China to the US will sap demand. The best place to be is in commodities and other natural resources, including precious metals like silver, platinum and palladium as supply shortages are already developing, said Mr Rogers, who co-founded the Quantum Hedge Fund in 1970. Gold prices will rise to more than $2,000 per ounce, said Mr Rogers, without giving a time-frame. Bullion for immediate delivery declined 0.4% at $1,187.85 an ounce. It reached a record $1,265.30 on June 21. While gold has been trading at an all-time high, silver remains 60 to 70% below its peak and is a better investment, he said. Silver reached an all-time high of $50.35 in New York in 1980. Silver for immediate delivery fell 1% to $17.6413 an ounce. Platinum dropped 0.6% to $1,507.68 and palladium declined 1.2% to $433.35. Still, agricultural commodities are better than metals as prices are “very depressed,” he said, pointing to sugar which is 75% below its all-time high in 1974. Raw sugar for October delivery slid 1.2% to 16.49 cents a pound on ICE Futures US in New York. It reached a record of 66 cents in November 1974. “Not many things are 75% cheaper that 36 years ago, but that’s true of sugar,” Mr Rogers said. “Agriculture commodities are desperately cheap compared to 20, 30, 40 years ago.” Rice futures on June 30 touched $9.55, the lowest price since October, 2006, on rising production and declining demand. The contract for September delivery gained 0.7% to $9.935 per 100 pounds on the Chicago board of trade in Shanghai.

Derivatives trade to get cheaper as Sebi halves exposure margins


MUMBAI: Trading in stock futures and options (F&O) contracts is set to get cheaper from July 15. The Securities and Exchange Board of India (Sebi) on Friday announced a cut in exposure margins in stock derivatives to 5% from 10% in a move to lift the sagging fortunes of these contracts.

“The step is aimed at bringing back retail traders, who are more impacted by higher costs of contracts. With the market trading range-bound in the past several weeks, the current exposure margins made it difficult to make money,” said Amit Gupta, derivatives strategist at retail broking firm ICICIdirect.

F&O margins comprise initial or SPAN and exposure margins. Initial margins are calculated by a software called SPAN, which is revised 6 times a day.

“As there is nothing that can be done to SPAN margins, the best way to encourage retail participation is by reducing exposure margins. With smaller lot sizes and more mid-cap stocks in the F&O list, there is a possibility that retail traders may come back to stock futures and options,” Mr Gupta said.

Sebi last revised exposure margins in October 2008 during the financial market crisis, following the Lehman Brothers collapse. Then, the market regulator increased exposure margins for stock derivatives to 10% from 5% to discourage retail traders from betting on stocks in volatile markets. Since then, retail traders mostly used the less-riskier index options to bet on the market.

“The step will boost intra-day volumes in stock derivatives. Traders have been loaded with costs such as SPAN margins and even mark-to-market margins in case of losses. So, a cut in exposure margins would be of great relief to them,” said Alex Mathews, head-research, Geojit BNP Paribas Financial Services.

Total number of contracts traded in stock futures and options in 2009-10 (April 2009-March 2010) were about 16 crore compared with 23.5 crore in 2008-09. In the current financial year starting April 1, 2010 to date, total number of contracts in stock futures and options was over 4.5 crore.

F&O traders say alternating bouts of volatility and range-bound movement in share prices for the past many months has led to most retail investors cutting down exposure to stock and index futures. This has set off a vicious cycle, where low liquidity further discouraged traders from betting on futures. When liquidity is low and prices move in a narrow range, traders are unable to exit their positions quickly enough and often end up suffering a loss.

India Banks

BGR Energy Systems

Daily Market Outlook - July 8 2010

TIL

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SGX Nifty jumps very high

Voltas

Heritage Foods

DB Corp

Essar Oil, Greaves Cotton, Jubilant Organosys, Persistent Systems, Dewan Housing, Uflex

Bharat Forge: Set to gain from revival

Analysts' corner

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Trading desk

Reliance Capital
Current Price: Rs 760
Target Price: Rs 785

The stock appears to have bottomed out at least temporarily and should see an uptrend over the next two or three sessions. The initial targets would be in the range of 785-790, though the closing price today may not be able to sustain above 785. Keep a stop at 752 and go long. Increase the position between 765 and 768. Start booking profits above the 785-mark.

Sesa Goa
Current Price: Rs 347
Target Price: Rs 330

The stock had an aborted uptrend on Tuesday, hitting resistance at 355. It has a downside support till around the 340-mark. If 340 is broken, the stock could fall till 330 — but this will probably take more than one session. Keep a stop at 350 and go short with an initial target of 340. If you can hold overnight, book partial profits at 340 and hold the residual position with a new target of 330 and a reset stop loss of 345.

DLF
Current Price: Rs 279
Target Price: Rs 265

The stock has broken a key resistance at the 280-281 mark. It has a potential target in the 260 zone, but has supports at 265 and at 272. It is likely to break the first support at 272 and test the 265 support. Keep a stop at 285 and go short. Increase the position between 270 and 272 and reset the stop loss to 275. Start booking profits between 265 and 267.

The target price and projected movements given above are in terms of the next one trading session unless otherwise stated

Src: HDFCSEC, ET and DP blog and Smartinvestor

Everonn Systems: Update

We had given a Call on Everonn Systems @ 440-450 levels for a Upside 10-15% returns..

Today Everonn Systems Up almost 12% at 2.30 pm IST.


See Our Previous Post Given abt EVERON SYSTEMS

See the Post

Derivative and Equity call

20-25 % Returns from Our recommendation

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Buy TATACOFFEE cmp 425

It faces multiple resistance @ 425-450 levels many times.

We expect GOOD upside
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Stock and Market Views

Technical calls: Godrej Ind, Piramal Life, Eicher Motors
Recommendations for the
forthcoming week using technical analysis
HDFC Sec, www.valuenotes.com
6 July 2010

Heard on the Street: Delisting buzz drives up KSB Pumps, MphasiS


Delisting buzz drives up KSB Pumps, MphasiS

In the absence of any other exciting “story”, delisting remains one of the favourite themes in the stock market. Shares of KSB Pumps, which makes power-driven pumps and industrial valves, extended their winning streak on Tuesday, climbing 3.5% to close at Rs 561.40.

The stock has gained around 14% in the past couple of weeks on talk that the foreign parent may buy out the minority shareholders shortly. An e-mail sent to the company remained unanswered till the time of going to print. Promoters own 66.8% of the company’s equity, with Canada-based Kay Pump holding a 40.54% stake.

An analyst said the company’s margins for the current calendar year could be under pressure, as it had quoted low price for some key projects it had bid for. The margins are expected to improve next year, once new orders at higher prices start flowing in. Shares of IT services firm MphasiS, too, have been inching up of late on rumours of a possible delisting.

The stock closed flat at Rs 605.15 on Tuesday, but have risen nearly 10% over the last week. The stock had touched a record high of Rs 796 in November last year on similar talk. Analysts say it would be risky to take event-based bets on stocks where there is little fundamental support. In the case of MphasiS, analysts say that the stock is fairly valued at current levels. Also, the outlook on the IT services sector in general has turned cautious, following renewed doubts on the health of the global economy.

eClerx Services snaps 3-day winning streak

Shares of Mumbai-based KPO Eclerx Services snapped a three-day winning streak on Tuesday, shedding 2.3% to close at Rs 664.85. The stock has risen around 10% in the past couple of weeks, on thin volumes. Dealers tracking the counter say domestic mutual funds and a leading bank-promoted PMS player have been buying the stock over the past few sessions.

The buzz is that some fund managers had met up with the management to get an idea about the company’s plans. Sensing an opportunity, some local operators, too, seem to have thrown their hats into the ring. On Monday, when the overall trading volume in the market was down around 40%, the eClerx counter logged a volume of 4.39 lakh shares on the NSE alone, compared to the two-week average daily volume of 16,000 shares. Barely a tenth of those massive volumes resulted in delivery, testifying to the speculative interest in the stock.

PK Malhotra likely to join SAT

One of the long-pending vacancies at the Securities Appellate Tribunal (SAT) is likely to be filled this month. The buzz is that PK Malhotra, additional secretary, ministry of law & justice, has been selected and will join Samar Ray, member and Justice NK Sodhi, presiding officer at SAT. Sebi had proposed to the government that the retirement age for members of the tribunal should be increased to 65 years from 62 to avoid frequent reconstitution.

Last year, there was a backlog of cases at SAT because of the absence of quorum. The situation eased after the appointment of former deputy Comptroller and Auditor General (CAG) of India, Samar Ray.

(Contributed by Deeptha Rajkumar, Apurv Gupta & Reena Zachariah)



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Eveready Industries

India Pharma - July 6 2010

India Autos - July 6 2010

Power Sector 2010

Daily Technical Report - July 7 2010

Daily Market Outlook - July 7 2010

Src: HDFCSEC, ET and DP blog and Valuenotes and etc

Morning calls

Shell-shocked investors dump RNRL


MUMBAI: Traders and investors in Reliance Natural Resources, or RNRL, watched in dismay on Monday as more than a fourth of the company’s market capitalisation was wiped out in what is being seen as a strong response to an unfavourable share-swap ratio with group firm Reliance Power.

The stock crashed 27% to close at Rs 46.40 as investors reacted to Sunday’s announcement that shareholders of RNRL would get one share in Reliance Power, also controlled by billionaire Anil Ambani, for every four shares they hold in the natural gas supplier. Most RNRL shareholders and analysts had counted on a swap ratio of one share of Reliance Power for every three they held in RNRL.

RNRL’s fall on Monday figures high in the list of stocks that have been pummelled the most in a single trading session. Realty firm Unitech is perched on top with its stock having slid 51% in October 2008 followed by Chennai-based pharma company Orchid, which slumped 39%.

Brokers say the stock could be under further pressure in the near term as many traders have heavily short sold the July futures. In short selling, an investor or trader sells a stock he does not own, betting on buying it later when the price slides.

Interestingly, the outstanding positions in RNRL July futures declined 7% while the futures closed at a premium of Rs 0.15 to the spot price. According to market participants, this indicates that many traders had squared off their short positions by purchasing the falling futures. They added these traders would have short sold the futures last week, in anticipation of an unfavourable merger ratio.

'RNRL shareholders stand to gain'

These traders are upset at what they reckon is an attempt by promoters to place their interests ahead of minority shareholders. Promoters control close to 85% in Reliance Power, and about 55% in RNRL.

Reliance Power CEO JP Chalasani told television channels that RNRL shareholders would benefit in the long run because of their exposure to the generation portfolio of R-Power.

More @ Shell-shocked investors dump RNRL


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Analysts' corner

Trading desk

BHARTI AIRTEL
Current price: Rs 267.5,
Target price: Rs 275

The stock seems to have made a mini upside breakout and it should have a target of Rs 275 on Tuesday. Keep a stop at Rs 265 and go long. Add to the position between Rs 269 and Rs 270. Start booking profits above Rs 274. If the scrip can close above Rs 275 on Wednesday, it will have a potential upside till Rs 285. This is worth bearing in mind if you can hold a futures position. On the downside, if support at Rs 263-265 is broken, the scrip could drop till Rs 255.

ONGC
Current price: Rs 1,285,
Target price: Rs 1,270

The stock is reacting after testing Rs 1,350 on the upside. It has hit what should be reasonable support at the first Fibonacci level. The pattern suggests a fall till Rs 1,270 (roughly the next Fibonacci level). The futures (Rs 1,295) is at premium to spot. Short the future with a stop-loss at Rs 1,305 and a target of Rs 1,270. Increase the position below Rs 1,285 and clear below Rs 1,270.

TATA STEEL
Current price: Rs 471,
Target price: Rs 460

The stock is still in a downtrend. The futures (Rs 464) is at discount to the spot and a target projection to the Rs 450 level can be made. In this case, it may be better to short the spot, though the position can't be rolled over. The one-session target could be about Rs 460. Take a short position with a stop-loss at Rs 477 and increase it below Rs 468. Start taking profits below Rs 462.

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Src: ET and Etc

Market cautious over rate hike, global mood

Market cautious over rate hike, global mood

MUMBAI: Banks, real estate and automobile shares could lead the stock market lower on Monday, after the Reserve Bank of India (RBI) raised interest rates sooner than expected to combat inflation.

With the Reserve Bank of India expected to go in for another increase in policy rates during its upcoming review on July 27, the market undertone is cautious, as investors fear these rate hikes may hamper economic growth. Weak global markets last week may also contribute to the subdued mood in the market.

Trading is seen light on Monday, as the nation-wide strike by opposition parties, protesting the recent fuel price hikes, would impact attendance in broking and investment houses. But market participants don’t expect any sharp fall throughout this week, unless the situation in European economies worsen.

“RBI had to make this move to curb inflation. So, it will be factored in after the initial shock,” said Jitendra Panda, assistant vice- president, Motilal Oswal Financial Services.

RBI on Friday evening raised the repo rate — the one at which banks borrow from the central bank — and the reverse repo — the rate at which the RBI absorbs money from banks — by 25 basis points each, after the wholesale price index inflation rose to 10.2% in May from 9.6% the previous month.

US markets fell on Friday, as the first decline in monthly non-farm payrolls this year for June and the biggest drop in factory orders in 14 months for May heightened fears of a slowing economic recovery.

“A run of weaker data has renewed investor concerns about the durability of the global recovery. We would caution against any substantive re-evaluation of the economic outlook, however,” said Barclays Capital, in its weekly note.

Back home, banks, real estate and auto shares could drop on concerns the rate hikes could dampen demand for loans, homes and vehicles.

Meanwhile, the boards of Reliance Power and Reliance Natural Resources (RNRL) on Sunday decided to fix the merger swap ratio at 1:4. The merger swap ratio is in line with the two companies’ market capitalisation, or the value of the total shares at ruling market price.

At Friday’s close, RNRL’s market capitalisation stood at Rs 10,394 crore, nearly one-fourth of that of R-Power’s Rs 41,979 crore.


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Reliance Power, RNRL merger ratio fixed at 1:4

Rate hike, rains and corporate results to shape the market

State-owned OMCs may revise fuel prices every fortnight

Check out stocks that are expensive but good for investors

Stocks which are expensive but still good for investors
5 Jul 2010, 0705 hrs IST

ET takes a look at stocks which are expensive but stil good for investors.

Bull's Eye: NIIT, Grasim Industries, Persistent Systems, Asian Paints, ITC
5 Jul 2010, 0415 hrs IST

Citi has upgraded NIIT from `Sell/High Risk’ to `Buy/Medium Risk’. It has set the target price at Rs 85 based on 15 times estimated earnings per share for September ‘11.

Ulips not favourable for policyholders of pension plans
5 Jul 2010, 0347 hrs IST, SKANDITA AGRAWAL

The new guidelines for Ulips are a mixed bag. While investors will gain from the higher insurance cover and reduced charges, it’s not favourable for policyholders of pension plans.

Max New York's pension plan 'SMART' not flexible in terms of features
5 Jul 2010, 0327 hrs IST, SKANDITA AGRAWAL

The cost of the product is a little high from the standpoint of the policy administration charges.

It is unlikely that Europeans economies will fail: Peter Staal
5 Jul 2010, 0248 hrs IST, Jigar Desai & Karan Sehgal

ET Intelligence Group caught up with Peter Staal, Head of Banking, Asia, Americas and the UK, ING Group.

Hindalco Industries good for long-term investment
5 Jul 2010, 0205 hrs IST, Abhineet Singh

Lower cost of operations, higher volumes and improved margins augur well for Hindalco. Investors with a long-term perspective can consider the stock.

Insecticides India looks attractive for long-term investors
5 Jul 2010, 0148 hrs IST, Parul Bhatnagar

Insecticides India is likely to gain from the increase in production capacities. The stock looks attractive for long-term investors.

Finolex Industries an attractive bet for long-term investors
5 Jul 2010, 0129 hrs IST, Ramkrishna Kashelkar

Finolex Industries' capex plans and higher cash earning ability make it an attractive bet for long-term investors.

Go for Hindustan Media Ventures only in secondary market
5 Jul 2010, 0116 hrs IST, Rajesh Naidu

Long-term investors should weigh the option of investing in Hindustan Media Ventures only in the secondary market.

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Indian stocks fare best among BRIC peers in first half of 2010

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GNFC

Monthly Report - July 5 2010

Astro View - July 5 2010

Daily Market Outlook - July 5 2010

Weekly Technicals - July 3 2010

Weekly Technical Report - July 5 2010

Fundamental Pick of the Week - July 5 2010

Weekly Watch - July 5 2010

Weekly Technicals - July 5 2010

Economy Calendar

Src: ET, Smartinvestor, HDFC Sec

Mark Mobius not worried about China growth

Mark Mobius not worried about China growth


PARIS: Templeton Asset Management's Mark Mobius is still bullish on China despite data this week showing manufacturing there was losing steam.

The benchmark Shanghai Composite Index has lost 28 per cent this year while Hong Kong's Hang Seng Index is down 9 per cent, falls Mobius said were a good buying opportunity as the correction removed some of the froth in valuation levels.

"In some ways we are very happy with the recent correction because things are getting cheap again ... We are still buying in China," Mobius, a prominent emerging markets fund manager, said on Friday.

Chalco, PetroChina and Denway Motors are among the top holdings of Templeton Emerging Markets which has about $40 billion invested in emerging and frontier equities.

Mobius also said in a news briefing that China's economy was still booming and consumption in the world's third largest economy would continue to rise at a fast pace.

"Our projection for growth in China is about 10 per cent. Sure, it could come down, but 9 per cent is still terrific, and even 8 per cent is still good," Mobius said. The sharp drop in Chinese stocks this year reflected worries over the momentum of the economy, he said, but was also the result of the country's massive IPO pipeline.

"There has been too many new shares coming in the market, too much money being drained out," he said. RUSSIA Mobius was also bullish on Russian stocks, citing the country's growth outlook and stocks' relatively low price-to-earnings ratios. "We saw Russian stocks at very reasonnable levels, and have found good opportunities.

Actually, we have been doing more in Russia than anywhere else lately," he said. "Russian companies have restructured their debt and are in a position to start growing by making capital investments. That will produce results in 2011 and 2012." Templeton Emerging Markets' top holdings in Russia include shares in Gazprom, LUKOIL, Rostneft and Uralkali.


To know About Mark Mobius See 1500th Post

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'Nothing can stop Nifty from moving up, except monsoons'

RNRL, RPower Boards to consider merger tomorrow

RBI hikes key policy rates by 25 bps to tame inflation

Bharat Forge, India Energy,

India Automobiles, Tata Power, India Technology

Smart Invest - July 2 2010

RBI Rate Hike

IDFC Ltd

India Pharma - Sun

Nestle India: Feeling the inflation heat



HDFCSEC Article

Product of the week

Gold ETF

Click to read more...

Src: Economictimes, HDFCSEC, DP blog and etc

Punters game for big play on IFCI counter

Market volatility rises as bears tighten grip


Nifty remained range-bound and was struggled to break the 5366 mark recorded on Thursday. A break above 5366 can lift the Nifty towards 5450 levels. But the chances are remote because the ongoing tussle between bulls and bears may end in favour of bears.

The daily declining open interest of Nifty put-call ratio (PCR) and volume PCR are in favour of bears. The increased implied volatility of Nifty put options at 5200 and 5100 clearly indicates weak market breadth. This can be re-confirmed if Nifty closes at or below 5214.

The NSE VIX is gaining upward momentum and represents uncertainty, which may rule for the time being in the market. The Nifty out-of-the-money call options have lower implied volatility than at-the-money call options, hinting strong call writing by bears.

On the put option side, higher implied volatility at out-of-the-money put option infers buying of put options. However, a decline in open interest of the in-the-money put options indicates profit-booking by put buyers on an intra-day basis because of lack of conviction about the future course of the market. The Nifty Bank Index is showing signs of fatigue and it can fall towards 9301-9100 levels.

With the given Nifty outlook, put-ratio-spread strategy on Nifty is more suitable. Buy one lot of July 5300 put at Rs 131 and sell two lots of 5100 put options at around Rs 65. The maximum profit will be around Rs 9,950 at 5100 level. The maximum loss of Rs 50 if Nifty moves above 5300 on July expiry, and the down-side break-even point will be at 4901.

This strategy is a classical example of delta-neutral strategy. The risk will be minimal in nature if we will recalculate the net deltas on a weekly basis to eliminate the trading risk completely.

(Alex Mathews, Head-Research, Geojit BNP Paribas Fin Svcs)



Heard on the street: Punters game for big play on IFCI counter

Punters game for big play on IFCI counter

Who says defensive stocks belong only to the fast moving consumer goods (FMCG) and pharmaceutical sectors? If a handful of influential market participants get together, they can confer that tag to any stock of their choice, or so it appears.

IFCI is turning out to be one such stock which operators turn to for a quick buck in uncertain market conditions. The stock has been a happy punting ground for day-traders, operators and short-term institutional players right for some years now.

It is usually a safe haven for bull traders who take up positions and spread rumours about favourable government policies. By the time smaller players realise they have been taken for ride, the big fish have already cashed out. This has been the pattern at the counter for at least three or four times a year since 2007.

The latest buzz is that IFCI will be granted a banking licence in a few days. Volumes in the stock have surged in the past couple of sessions, with nearly 4 crore shares being traded on the National Stock Exchange (NSE) alone.

The stock held firm in a falling market to close at Rs 57.80, up 1.5% over the previous close. Either the smaller punters are being set up for the kill, or the big boys are accumulating shares on privileged information.

HPCL may find pride of place in Nifty, again

What goes round comes around, and this seems especially true of some of the stocks that form the benchmark indices. Speculation is that the renewed interest in oil marketing shares could eventually lead to a higher weightage for the segment in the Nifty.
Hindustan Petroleum (HPCL), which was excluded from the index in 2007, is being talked of as one of the possible entrants. If the stock does manage to re-enter the Nifty, it will become the second company since Hero Honda to achieve that distinction.

However, some market players are sceptical if HPCL will be able to regain its place, since the oil sector is already well represented in the index by Reliance Industries, ONGC, Cairn and Bharat Petroleum.

There is also speculation of some stocks being excluded from the Nifty, with Suzlon Energy topping the list of probables. The stock on Thursday has the least weightage in the Nifty, with market capitalisation down 85% from its peak of Rs 65,459 crore seen in January 2008.

(Contributed by Santosh Nair)

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Nifty fall may accelerate below 5220

ANALYSIS: Alembic to demerge pharma biz




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Shoppers Stop: Profiting from rising consumption

Stock and Market Views

Global crisis won’t affect India much: Macquarie Capital


Michael Carapeit, ED and global head of Macquarie Capital, is no stranger to India. Of Armenian descent, Mr Carapeit was born in Kolkata and studied in the city till 1974, after which his family migrated to Australia. His message to Indian companies looking to expand overseas is: dominate your home market before setting your sights abroad. In an interview with ET, Mr Carapeit says that the second half of 2010 will be much better for equity markets globally. Excerpts:

Is the worst of the European debt crisis over? Do you see some more unpleasant surprises?

We have a pretty good view of what the issues are, but the actual solutions are country and organisation-specific. From our point of view, we broadly see the economies moving into a positive territory. There will always be pain and there will always will be good times, regardless of market sentiment.

From an investment banking point of view, there are lots of M&A transactions happening right now, be it in the financial institution space or governments privatising infrastructure and utilities. A falling euro has seen many manufacturing firms across Europe becoming very competitive on a pricing basis than they would have been 18 months ago.

In Asia, we have a high single-digit growth and the actual ability to now source quality European equipment far more cheaply. It is a much more compelling proposition, and as a result, we see the manufacturing sector in countries, such as Germany, doing quite well. Financial services are going to be a challenge for a while, and obviously, the sovereign debt problem is there for everybody to see.

Do you see more M&As happening from Asia into Europe?

Yes, much more. We have seen Indian companies do this progressively over time. Larger players have had international operations for a while. The strategic issue for many companies is when you have such strong domestic demand where do you allocate your scarce capital.

In my opinion, unless you dominate your home market, it’s pretty hard offshore. I see many companies, very often, say that well, the domestic market is very competitive, so let me try elsewhere. It is quite rare that a niche player in the home market can go offshore and suddenly become successful.

How do you see India faring relative to other emerging markets?

Very well, actually. The vast majority of the Indian economy is driven on a domestic basis. While not totally immune to what is happening around the world, it is a much more domestic demand-driven story rather than an international story for most of your companies.

Mega companies that have operations around the world will have to take these changes into account. The bulk of the Indian economy and majority of the Indian companies are going to see a 7-8% growth this year and if you are linked to GDP that is quite a good place to be to what is happening elsewhere.


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