September IIP up 9.1 per cent year/year: Government

September IIP up 9.1 per cent year/year: Government

EW DELHI: Industrial output rose at a faster-than-expected 9.1 per cent in September from a year earlier, data showed on Top 10 challenges for India Thursday. The median forecast in a media poll was for an annual rise of 7.3 per cent. Manufacturing production rose 9.3 per cent in September from a year earlier. August's annual industrial growth rate was revised up to 11 per cent from 10.4 per cent previously. Industrial output rose 2.6 percent in the 2008/09 fiscal year (April-March), down from 8.5 per cent in 2007/08. The 10-year benchmark bond yield rose 2 basis points after industrial data came in better than market expectations. The yield on the 10-year benchmark bond rose to 7.36 per cent from 7.34 per cent before the data. At 12:11 pm it was trading at 7.35 per cent. It closed at 7.33 per cent on Wednesday.

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Other Stories:

• FDI inflows dip to $1.5 bn in Sept
• Export shrinks slower at 11.4%
• Indirect tax collections drop 13% to Rs 25,495 cr in Oct
• Strong IIP data adds to stimulus debate
• Food price index rises 13.68 pct year/year October 31

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Sept IIP up 9.1%; Experts cheer data but differ on upgrades

he Index of Industrial Productivity for September is up 9.1% as compared to 11% month-on-month and 6% year-on-year. A CNBC-TV18 poll had seen it up 7.14% as against 10.4%.

The August IIP number has been revised to 11% as against the provisional number of 10.4%. Industrial growth in the April-September period grew by 6.5% as against 5% YoY. Also see: Markets volatile, recovers post IIP data

Consumer durables and capital goods were the key contributors to the upmove.

IIP movement in 2009	Numbers
April	1.1%
May	2.1%
June	8.2%
July	7.2%
August	11%
September	9.1%
Sectoral Growth	September	August
Manufacturing	9.3%	10.2%
Minning & Quarrying	8.6%	12.9%
Electricity	7.9%	10.6%
Use Based	September	August
Basic Goods	6.7%	10%
Intermediate Goods	10.8%	14.3%
Capital Goods	12.8%	8.3%
Consumer Goods	8.2%	8.5%
Durables	22.2%	22.3%
Non-Durables	2.6%	3.7%

CNBC-TV18’s Banking Editor Latha Venkatesh says these numbers are for a pre-Diwali month. “One may want to revise their figures and wait for the October number to check out whether the demand pool has remained even after the Diwali de-stocking and re-stocking. That might be something which analysts will want to weight before they work out their final numbers.”

So, will economists plan to upwardly revise most of their IIP numbers? Yes, says Samiran Chakrabarty, Standard Chartered Bank’s Head of Research. “If one looks at the last three months, on an average we are clocking numbers which are even better than what we did in the peak of industrial boom.”

But Sachchidanand Shukla, Chief Economist, Enam, is convinced yet. "We are seeing continuing traction in consumer durables because of the government dole outs or the sixth pay commission. We have a favourable base till December. We also need to see what happens to the basic and intermediate goods, which constitutes about 60% of the index. With export numbers now moving up, the contraction is now getting narrower. By January, we should turn positive on the export side. So, we will have to wait for the next two months to revise our numbers upwards. We believe the second half is going to be more than 9%."

GDP forecast for FY10:

Chakrabarty maintains the 6.4% GDP number for FY10. "Going forward, we will probably look at revising it after this industrial growth numbers." Enam, Shukla says, is looking at a 6.3% number. But he won't revise the figure upwards till December.

Is a rate hike on the cards?

Shukla sees the Reserve Bank hiking the cash reserve ratio (CRR) by December and cites three triggers to bolster his case. "One, if prices don't come off till December. Second, the base will boost the IIP numbers till December. If that trend continues, it will be another trigger. Third, will be capital flows which keep gushing into the economy. If all these three parameters are positive, the RBI will have to react on the liquidity front by a CRR hike by December. But for policy rates they will have to wait and watch till March."

No, says Chakrabarty. "I don't see it happening in December. This is very odd year in which year-on-year comparisons should be kept aside. This is not a year to look at those numbers. This is a year to look at softer issues in the economy, not just the domestic economy but also at a global sense to figure out whether this recovery that we are seeing is on a sound footing or not. The exit of monetary stimulus should take into account all those softer issues also – not just headline numbers – before taking a final decision. I think the RBI would probably wait a while to exit from an interest rate sense. From a liquidity sense, the exit could come much earlier."

Src: EconomicTimes, Moneycontrol.com

Srisai's Instinct Stock Calls for Dt: 12.11.2009

Srisai's Instinct Stock Calls for Dt: 12.11.2009

This(Srisai's Instinct Stock Calls) will be a New Initiative of this blog to Publish Blog Author's Own Investment/Trading Calls for Short-Medium Term perspective. But All these Calls are not given on Purely Technical perspective. Most of these Calls are given by Blog Author from His past Investment/Trading experiences. So Do not expect More depth in Calls. Author has tried his best to give some calls for the benefit of Investors/Traders from his experience and from some media/web/news based call. So author request all the investors/traders to take/try these Calls as RISK CALLS. And Keep Strict Stop Loss Own (or) Keep Resi,Supp levels As Stop Loss for their Trading(or) Trade/Invest @ your Own Financial Risk. All type of Comments are Welcome about this New Initiative. Dont Forget to Keep Stop Loss and Again Author Remembering you that he is giving calls only from his past trading experience...


Nifty Future cmp 5009

Nifty Future Resi @ 5039-5050-5076 levels... Supports at 4970-4957-4927.. Today IIP data... CNBC estimates around 7.14%... Inflation Data (Monthly) today...


MSCI India Index Rejig:

HDIL, SUZLON to replace Glenmark, Powergrid from Nov 30th or Dec 1st... Positive for Suzlon, HDIL in near term...


Neyveli Lignite cmp 156

Stock has surpassed key resi levels 135-140 and closed above that after a long time... If this holds then could see a target of 172-180 levels soon.. Keep Own Stoploss..


Kajaria Ceramics cmp 41

(Outside sources)

Buy For Longterm investments... Sources said that this company has done some pact with GAIL..... Supports at 35-30 levels...


Allied Digital (ADSL): cmp 248

Buy this Stock for Long term Investment.... Accumulate part by part...



RCF cmp 78

Every time stock bounces from 65-68 levels.... So if this holds, then stock may move to 85-90 levels.. Keep Strict StopLoss at 68....


Educomp cmp 782

CLSA has assigned downside target around Rs 580 levels.... But other Brokerages has assigned upperside target around 860-900 levels.. Lets watch this stock which target first to happen...



Keep Strict StopLoss in Trades (Or) Keep Own StopLoss (Or) Keep Given Resi, Supp as StopLoss for trading....


By


Srisai...

Heard on the Street - ET

Heard on the Street

Engineers India rides high on bonus issue buzz
The stock of Engineers India has gained over 24% in the past week on the BSE. The scrip ended over 2% higher at close on Wednesday at Rs 1,428.25. Brokers say the stock is being driven by speculation that the company may announce a bonus issue of shares shortly. The other key trigger has been the announcement last week by the government that it planned to sell stakes in profit-making public sector undertakings.

Analysts point out that Engineers India was among the few companies unaffected by the slowdown in 2008. Even as the company’s earnings grew 61% in FY09, there was a steady increase in new orders. Engineers India is well-entrenched in high-end project consulting, which provides the company an edge when it comes to bidding for hydrocarbon, metal and infrastructure projects.

IPO issuers ready to eat humble pie
The dismal performance of some of the recent initial public offerings seems to be prompting some of the prospective issuers to be a bit more “generous” when it comes to pricing their issues. For instance, last month, a mid-sized Mumbai-based realty firm announced that it was looking to raise around
Rs 1,500 crore through an IPO. Market buzz is that the projected figure has been shrinking over the past couple of weeks. Last heard, the company will raise around Rs 1,100 crore.

BSE gets ready to launch its derivatives offering
The Bombay Stock Exchange, which is also Asia’s oldest stock exchange, is likely to launch a derivative product next month. Unlike the existing derivative products, which expire on the last Thursday of every month, the expiry of this derivative product will in the middle of the month. “The trade cycle will expire on the second Thursday of every month as against the current practice of expiry on the last Thursday of the month,” said an official privy to the development. He did not disclose further details about the product.

According to the official, the exchange has received market regulator Sebi’s approval for the product’s launch. The move is aimed at boosting the fortunes of BSE’s sagging derivatives segment, which has not been able to compete with rival NSE’s derivatives segment. Trading in BSE’s derivatives segment has been non-existent, while the daily total turnover on NSE is usually around Rs 70,000-80,000 crore. NSE’s dominance in the equity derivatives segment has been a cause of concern for the market regulators.

Contributed by Deeptha Rajkumar, Santosh Nair and Reena Zachariah

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Top 5 picks of the day | Mid-term picks

RIL readying $25bn for global acquisitions: Sources

Which stocks are IDFC SSKI's betting on this year?

Ganeshaspeaks: Market prediction for Nov 12



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Src:Economictimes.Indiatimes.com, Moneycontrol.com

Srisai's Instinct Stock Calls for Dt: 11.11.2009

Srisai's Instinct Stock Calls for Dt: 11.11.2009

This(Srisai's Instinct Stock Calls) will be a New Initiative of this blog to Publish Blog Author's Own Investment/Trading Calls for Short-Medium Term perspective. But All these Calls are not given on Purely Technical perspective. Most of these Calls are given by Blog Author from His past Investment/Trading experiences. So Do not expect More depth in Calls. Author has tried his best to give some calls for the benefit of Investors/Traders from his experience and from some media/web/news based call. So author request all the investors/traders to take/try these Calls as RISK CALLS. And Keep Strict Stop Loss Own (or) Keep Resi,Supp levels As Stop Loss for their Trading(or) Trade/Invest @ your Own Financial Risk. All type of Comments are Welcome about this New Initiative. Dont Forget to Keep Stop Loss and Again Author Remembering you that he is giving calls only from his past trading experience...


Nifty Future cmp 4874

Nifty 20 DMA is at 4925... NFut has to cross 4930-4957 and holds for atleast two days for Further uptrend... otherwise NF will get weak... Support at 4873-4849-4820.... Be cautious... Tomorrow IIP data announcement....


TajGVk cmp 152

Stock has support at 128-131 levels.... As long as this level holds, then could see target upto 180-190 levels.... Buy For short-term investment with 131 as Strict StopLoss.


Orchid chem cmp 169

Buy the Stock above 177 tgt 190-208 levels with 167 as Strict StopLoss.


RIL (From News source)

Reliance INdustries weightage to crease 2% from today after RIL-RPL merger...



By

Srisai

Heard on the Street - ET

Heard on the Street

Bears move in for the kill on Bharti counter
The tug of war at the Bharti Airtel counter continues. Just when it seemed that the stock was recovering lost ground, the bears have struck again. The stock was the among the biggest losers in Tuesday’s volatile session, shedding over 4% to close at Rs 293. Near-term outlook on the sector is bearish because of the ongoing tariff war.

But bears have not been able to make a killing so far. Most fund managers have an exposure to the stock, and talk is that they have been supporting the price at lower levels. Traders see Rs 280 as a key support for the stock, as it was the lowest level touched during the market meltdown in October-November last year. Bears will be looking to push the stock below this level so as to trigger technical-based selling pressure at the counter.

KSK Energy hops on to the QIP bandwagon
Even as the near-term outlook on the equity market remains uncertain, the qualified institutional placement (QIP) bandwagon continues to roll on. The latest company to raise funds through this route is KSK Energy Ventures. The indicative price band for the issue is Rs 194.50-196, and the company hopes to mop up around $125 million. KSK shares on Tuesday closed at Rs 198.60, up 0.2% over the previous close.

Market fails to warm up to interest rate futures
Despite interest rate futures having been made accessible to a wider base of participants in its new avatar, the segment is yet to generate excitement among market participants. The buzz is that most of the players, mutual funds and financial institutions are waiting for the first round of settlement of contracts.

The main concern is about the physical delivery and the fact that it’s a 30-day delivery period. Industry participants say the product in itself needs to be tweaked to make it more ‘user friendly’.

Spinning a yarn to make a pile
An investor-cum-operator, who runs an investment company named after an ocean, is believed to be active again in his favourites — Welspun Gujarat Stahl Rohren and Gokul Refoils. The operator, who has been booked by Sebi on various counts of front-running and circular trading, and his friends have been spreading rumours about both the companies securing large orders from overseas clients, market sources said.

Grapevine has it that the operator and his friends ramp up stock prices, while floating rumours, and dump the stock after it reaches a specific price target. Shares of Welspun ended 0.7% lower at Rs 275.25 on Tuesday while Gokul Refoils closed 1.5% higher at Rs 56.80 on the BSE.

Contributed by Santosh Nair, Deeptha Rajkumar & Shailesh Menon

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Nifty may find it tough to breach 4900-mark
11 Nov 2009, 0230 hrs IST, Devangi Joshi

The Nifty appears to be facing a tough time crossing the 4900-mark. The resistance at 4900 is highlighted by an addition of 12 lakh shares.

Mid-term picks | Views/Recommendations



Src: Economictimes.Indiatimes.com

Sensex may drift down to 12500, -ve on RIL: Shankar Sharma

Sensex may drift down to 12500, -ve on RIL: Shankar Sharma

Shankar Sharma, Vice-Chairman and Joint Managing Director, First Global, says the Sensex can drift down to 12,000-12,500. He feels the next 3-4 months would to be challenging for equities. "We are looking at a 20% fall in global markets, so India would sell off more if they fall."

Shankar advises investors to stay away from high beta stocks. He is negative on Reliance Industries.

Below is a verbatim transcript of the exclusive interview with Shankar Sharma on CNBC-TV18. Also watch the accompanying video.

elated News Resistance for Nifty at 4,940-4970: An analysisSEBI cuts minimum market cap for follow-on offerings China outlook helps boost emerging mkt stocks Also Read See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets RSS feed for news Click here

Q: It looked like global markets were getting ready for a deep correction last week, and then suddenly things have turned around and the S&P has gone right back to 1,100 again. Do you think the correction is over?

A: No. In fact, when the correction happened, I was of the view that we would get another bounce. Call it a sucker rally or whatever but I was personally of the view that we would see about 16,700–16,800 on the Sensex and US markets would probably go back to their highs or close to their highs. I think the Nasdaq 100 did get back to its highs yesterday.

What is interesting is that the emerging markets are still reasonably far away, good 2% on the aggregate from their highs whilst the US markets have made their highs. That is an interesting disconnect because usually emerging markets should have made their highs a lot earlier than the US markets ought to have but that has not happened this time.

Even today the follow through from the emerging markets (EMs) is far less vigorous than what one would have imagined given the size of the move yesterday on the US markets. Even yesterday, EMs were not that robust except the European and the Latin American end. But Asia was by and large quite tepid, and even today, I don’t see much sort of vigour in the move.

So that is beginning to, at least, surface a slight disconnect between what is happening on the EM side versus what is happening on the US equity side. My sense is that EMs will begin to lag significantly and that usually happens when markets fall rather than when markets rally because it is hard to imagine that EMs won’t participate in any big rally in global equity markets from hereon. So if EMs lag, that is usually a precursor to sell-offs rather than big rallies globally. My sense, therefore, is that over the next month or so, you are going to start seeing the reversal of what began in March this year and the next three–four–six months could be extremely challenging for equity markets globally be it India or be it the rest of the world.

Q: We are at that Sensex level you just talked about. So what seems the more likely move from here that we get into a trading range or that this market corrects faster than the others?

A: If markets do sell off India will sell off a lot more and my view is that markets globally will sell off rather than rally. They could do 1–2% here or there that’s fine but by and large I would on the side of the trade that I will wait for a chance to get shorts in rather than big longs round here globally.

If markets do well, which I think they will, India will sell off a lot more than that. I am looking at about 20% fall in global equities from hereon. India being typically at the high beta end of the market will probably fall a tad more than that and so will the other high beta emerging markets like Russia or Latin America.

Q: You are saying a 25% correction in the index in India is likely which would take it back to again that 12,500 kind of zone?

A: That wouldn’t surprise me in the least, absolutely not. I would definitely hold that view over the next six months that you could go all the way back to 12,000–12,500 and who knows as we always know overshoots happen on either side of the market. So on a bad day you could slide down 500 points even from there. Definitely, I do not think the upsides are there incrementally. You get a blast last rally, which could take you 200 points higher, that’s fine, that’s for a quick trader but not for any serious investor, definitely not.

Q: You would be very surprised if the year end saw a big move up for the markets because the counter argument is that liquidity is still comfortable and there may almost be a scramble to get something done by the end of the year by way of a performance?

A: These theories are very bad except that usually when they work, we say the theory works but there are enough number of times when they don’t work. Statistically, I am not a big believer in these easy, cozy theories because markets are all about destroying, precisely, those kind of theories.

If you think about the correction that happened in the last fifteen-twenty days globally, there was no apparent reason why it should have happened. That is the interesting bid that it was accompanied by pretty much good news globally. If you would look at the US gross domestic product (GDP) numbers, they were quite strong.

South Korea did blowout numbers on their GDP end. By and large, there was nothing that merited a sudden sharp fall of the kind that we saw. That makes you begin to think that is the market reading something which the headlines are not highlighting just yet? Go back to March when the rally started, there was still bad news. It continued for a good month to a month and a half, it was only around late May or June that you started to see real sequential growth coming in. However, I do remember the headlines in late March or mid-April and I was saying that the fundamentals have still not turned. The fact is that they did turn sequentially but it took a good two and a half months.

So sometimes market moves without reasons, you need to probably think a lot deeper that what is the market’s inner mind telling you. So my sense is it could well be that the market is beginning to read that in the next three–six months’ time, this whole easy liquidity and low interest rate and low inflation theory, which has made this move happen could go out the window because now you are going to see the ill-effect of a low inflation base this year begin to creep up from Q1 of 2010 and then again sequentially earnings may not be as strong as there has been because we were coming out of an absolute trough. So maybe the market’s mind is beginning to read those things that sequentially issues––be it on inflation or on rates or on earnings––may not be as robust as is necessary to propel this market higher.

Q: There has been a lot of talk about the dollar carry trade and how that’s fuelled asset prices and whether it will reverse in the next few months. What are your thoughts on the dollar and whether that might pan out?

A: When the dollar falls then you have a big rally in global equities, and particularly, in emerging markets. But I was looking at history and I was not able to find that this is a perfectly correlated situation and I am a big believer in that theory and I belong to the camp that the dollar has to strengthen for markets to fall and it could well do so.

However, there have been reasonable periods and even in the last three years in which it was counter to the conventional theory that the dollar actually strengthen while markets went up as well. So it is not always that this theory holds. My broad view is that the dollar might strengthen a tad but I do not see huge strengthening move. It may well be that the relationship may not hold in that. If the dollar actually does not strengthen what that does is, and let us say on the other hand it weakens, what that will probably do is it might push inflation argument back to the fore. Therefore, rates will follow in the whole reversal of the cycle. That is not going to be good news for the market. So the global economy is still very fragile and the last thing any country can afford is a resurgence of inflation.

Therefore, no economy in the world, that I can think of, can afford a move to tighten rates just now. Therefore, if the dollar actually weakens and rates begin to harden then you may see equity prices begin to tumble because the dollar is weakening rather than the relationship that the dollar weakens and because of that you end up having rallies in equity markets. So maybe this relationship is due for a break because all of us have become too cozy even in assuming that this is a way the trade actually works out.

Q: What do you think about this whole Reliance settlement issue, do you think it is likely? What is your own position in First Global on the Reliance stock?

A: We have been negative on Reliance Industries for quite a while now. I see no reason to change that view. These occasional spikes keep happening as there is hopeful talk that the settlement might be reached and I am not an insider on that trade for me to know whether there will be or not.

What I am more interested is knowing how the Supreme Court (SC) will interpret all the complexities around this and how will a court of law get into very detailed analysis of a business problem because typically courts are into issues of law rather than get into what is the cost of producing gas and stuff like that which even we analysts cannot figure out. So let us see how the SC takes this but I am no insider in this.

Q: What has gone a bit back of mind now is Q2’s performance by way of earnings, there were a lot of chinks over there. The only redeemed feature seemed to be the margin performance which as well maybe up for question in the next couple of quarters, what would your own earnings outlook be?

A: In light of what we have seen, it has been basically one big pack and that has been the auto pack that has truly been good. It has been outstanding in terms of numbers on an aggregate basis. Other than that, you are searching hard to justify a lot of their valuations, you are searching hard to see how incremental earnings growth will come through, if you look at the whole fund raising pie chart from the lows of March, it has gone to companies––infrastructure and realty pack––which have been at the poorest end of the market as far as business fundamental are concerned.

They have to my mind whatever little good news was there by way of their earning sequentially or whichever way you want to cut it, they just want to say that this is the only chance, let us put some numbers together, show the market that we are in good shape, let us get some capital and then we will figure out how to rework the numbers once you got money. It has been a little bit of a logic and reverse. However, companies that have not needed capital within that pack have been only the auto pack. So that has really gladdened the hearts but other than that the earnings picture was pretty relative to where the market is.

At 8,000 same earnings picture would have looked very different but at 17,000 where the markets were, this earnings number or these aggregate numbers are not going to take you to the highs. That has been my general view that the highs while tantalizingly close are unlikely to get reached or breached anytime soon even though for a brief moments, there have been moments that I doubt that is it really going to get there in November or December, etc. but on an aggregate basis, my view by and large has been that we would get a huge bear market rally which we got but it wouldn’t take us pass the highs simply because of the internals of the market by way of their marketcap weightages, hard to see which ones will take the markets higher because autos still don’t constitute much and that is the only area I feel comfortable about.

Q: What do you do with high beta now? Do you short that, do you stay away from it? How would you position yourself in that trade?

A: I never short anything at all, not in India anyway.

This news has just come in and complete details will follow shortly. We can send you an email alert when the details come. Register for your alert here.

Src: Moneycontrol.com
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Other Stories:

No out-of-court settlement with RNRL: RIL
Ambanis rubbish settlement rumours


Src: Moneycontrol, Economictimes

Srisai's Instinct Stock Calls for Dt: 10.11.2009

Srisai's Instinct Stock Calls for Dt: 10.11.2009

This(Srisai's Instinct Stock Calls) will be a New Initiative of this blog to Publish Blog Author's Own Investment/Trading Calls for Short-Medium Term perspective. But All these Calls are not given on Purely Technical perspective. Most of these Calls are given by Blog Author from His past Investment/Trading experiences. So Do not expect More depth in Calls. Author has tried his best to give some calls for the benefit of Investors/Traders from his experience and from some media/web/news based call. So author request all the investors/traders to take/try these Calls as RISK CALLS. And Keep Strict Stop Loss Own (or) Keep Resi,Supp levels As Stop Loss for their Trading(or) Trade/Invest @ your Own Financial Risk. All type of Comments are Welcome about this New Initiative. Dont Forget to Keep Stop Loss and Again Author Remembering you that he is giving calls only from his past trading experience...


Nifty Future cmp 4906

Already NF has run nearly 10% from Recent low of 4538 levels... And 20 DMA is at 4930 levels.. PCR Ratio nearly at 1.40 levels(Slightly overbought)... Resi @ 4930-4957-4970 levels... Be cautious for next three sessions ahead of IIP Data, Inflation Data which is on November 12th... So Long traders are advised to HEDGE their LONG Positions with 4800 PE option..... Supports at 4905-4880-4864 levels...


GSPL cmp 91

Stock has breached 90 level and closed above that 90 after long time.... So If 87-90 holds with Good voulmes then can see 100-110 levels soon.... Supports at 84-78-72 levels....


Hindalco cmp 129

It seems stock has support at 117-108 levels... Resi @ 137-140 levels.. If it crosses that 140 levels, then could see 177 target in medium term... Buy for Medium term investments...


PiramalHealthcare cmp 397 (outside call)

Breakout above 408 could make stock target to 414-421-430 levels....


IDBI cmp 124

Looks good at this level... Buy this Stock with 113 as Strict StopLoss and Go LONG....


By


Srisai

Morning Views from ET etc

Financial, industrial stocks will do a lot better: Ridham Desai

Ridham Desai, the chief India equity strategist at Morgan Stanley, says stocks will be volatile in the near term and that — after the

Ridham Desai, Chief India equity strategist, Morgan Stanley More Pictures

spectacular run-up this year — further gains will be muted in 2010. In an exclusive interview with ET NOW, Desai identifies financial and industrial stocks as his top picks. He says that equity investors need to carefully watch crude oil prices, IPOs, progress in infrastructure spending, and of course, the speed of monetary tightening. Excerpts:

Aren’t you more optimistic on corporate earnings this fiscal than the rest of the Street?
Yeah, the next two quarters could be very strong, and that is where the Street may be missing a point. We are running into a favourable base effect. So, if you look at the run rate in this quarter, I am just extending it to the next two quarters, too. This will give you a broad-market earnings growth of around 25%.

Recently, you wrote that investors were becoming a little complacent about volatility. And suddenly, volatility is back with a vengeance...
It looks like it’s going to be volatile near term. Central banks are going to decide the exit policy, which may generate volatility. But fundamentally, when you plot returns versus expected growth, it appears that the market has already priced in the growth that we are expecting for the next six months. There are two outcomes now: either the economy and the company deliver the expected growth and markets go nowhere, or they exceed the growth forecast and then markets adjust. If they don’t, then we are getting into choppy waters.

The quality of US growth does appear to be rather weak. What is your view on the kind of risk the anaemic US consumer poses to Indian markets?
We don’t think that the US Fed, for example, is going to be in a hurry to pull out the stimulus, because I don’t think there is enough evidence to suggest that growth is back and will stay in the US. Now, we aren’t in the double-dip camp. But many in America believe that we are heading for a double dip in 2010. Our view is that we will get some moderate growth and then we will get some exit from the Fed. India, on the other hand, is experiencing a better quality in growth than it did in the previous cycle.

This time around, the economy is on a very strong footing. I am impressed with the way the government has managed the fiscal policy, which is why we have come out of this quite quickly. And now, we are looking at a potential growth rate of 7-7.5% in the next 12-15 months. Of course, since the US is stuck in a range-bound growth, it will affect India’s growth.

What are some of the key factors that we need to watch out for in predicting the direction of markets?
Generally speaking, the market believes that whenever crude oil goes up, it is bad for India; and if that was the case, then the Indian equity market should not have done well over the past 3-4 months. But the Indian market has done well and the reason is that crude oil is not a problem when capital flows are strong. Also, crude oil becomes a problem if you get a very sharp spike in a very short time.

RBI is taking away the punch bowl of low interest rates. Is it going to be a problem?
Well, it already has. It’s one of the few

Ridham Desai, Chief India equity strategist, Morgan Stanley More Pictures

central banks to have already moved. The central bank’s track record is very good. RBI has conducted itself very well in the past. In 2006, when RBI chose to tighten and ring-fence banking from real estate, there was criticism that it was stamping out growth and that this was not good for India. But in hindsight, it’s a good thing to do, because it prevented banks from any problem when the property bubble collapsed. RBI is doing something similar right now. So far, RBI has conducted itself extremely well.

What about the risk that all the infrastructure spending that we are hearing about does not really materialise?
We have made tremendous progress in rural infrastructure. We have added about 1.5 lakh kilometres of roads, at a run rate of 100 km a day. It’s a fantastic achievement that has happened. We have managed to get electricity into rural areas. So, NREGA has done some good work and the rural infrastructure is clearly on the upswing. Now, we need to also fix urban infrastructure. Our base case is that we will get enough spending in roads and electricity.

Is more than $20 billion of equity issuances in a year a problem for the market in terms of its absorption capacity?
That’s a moving target really, because it is all a function of where we are in terms of liquidity, what happens to global growth, where we get to on exit policy by the Fed and by ECB. So, the India market can absorb around $20-25 billion in the next 12-15 months.

What makes you overweight on consumer-discretionary stocks such as auto?
We are still at the early stages of a growth cycle where consumer discretionary tends to do well. If I have to put a pecking order on the sectors, it will be probably financials, industrials, energy and then consumer-discretionary. We are still overweight on all the four sectors, but the pecking order will shift because of the fact that we have already seen a lot of performance from autos and the cycle is now taking off. So, when the cycle is about to start, consumer-discretionary is usually the best sector, financials follow next.

In the next 12 months, you will see financials and industrials do a lot better; industrials have done well, largely because of hopes of infrastructure spending. In financials, we will go through an expansion in net interest margins. The worst of the non-performing loan (NPL) cycle is behind us and loan growth will recover quite sharply in 2010. The earnings environment for financials will be good, and in terms of valuations, some of the industrial stocks do look rich.

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It's advantage RIL in LyondellBasell bid

Top 5 picks of the day | Mid-term picks | Views/Recommendations

Top stories

Nifty may face resistance at 4950
10 Nov 2009, 0226 hrs IST, Devangi Joshi

After experiencing an initial bout of sluggishness, the Nifty managed to gain 2% at close on Monday and also managed to move past 4830.

Heard on the Street
10 Nov 2009, 0220 hrs IST

Extending trading hours may have its advantages but the proposal does not seem to have gone down well with the broking community.

Nifty could even slip below 4000: Dynamix Research
9 Nov 2009, 1629 hrs IST

Sanjeev Agrawal, Dynamic Research & Management believes that the current rally is a pullback in a wider correction and that stocks could head lower once more.

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DP Blog Updates

Gold hits new all time high

Viceroy Hotels




Src: Economictimes, DP Blog

Morning Views - 09.11.09 (From ET,BS)

Intermediate trend reversal?

A short-term correction inside a continuing intermediate downtrend

The market bottomed and turned around in what seemed like a short-term correction inside an intermediate downtrend. The Nifty was up 1.8 per cent at 4,796.15 points, while the Sensex was up 1.65 per cent at 16,158 points. The Defty was ahead 2.46 per cent with the rupee hardening again.

FIIs stopped selling and became token buyers while domestic institutions continued to be steady buyers. Volumes remained high. Smaller stocks outperformed the pivotals with the Midcaps up 3.9 per cent while the BSE 500 gained 2.47 per cent and the Junior rose 4.26 per cent.

Outlook: This looks like a short-term correction inside a continuing intermediate downtrend. There is resistance between 4,850-4,950 and the current move is likely to fizzle out somewhere in that zone within the next two sessions. In the next downtrend, it would be interesting to see if successive supports at 4,700-4,750 and 4,500-4,550 held.

Rationale: The market has corrected from the 2009 high of 5,181 (October 20) to a low of 4,538 (November 3). If it has established an intermediate downtrend starting October 21, that low of 5,538 will most likely be broken. Using Fibonacci retracements, the up move from 3,918 (July 13) to 5,181 (October 20) should be followed by a correction that lasts 4-6 weeks minimum and corrects to 4,700, 4,550, or 4,400.

The first two levels were hit in the first two weeks of the new trend. But the likely time period of correction is not over. So, the third level (62 per cent retracement) is likely to be hit. The Exponential 200 Day Moving Average is around 4,300, which reinforces support at 4,300-4,400.

Counter-view: We've seen before that intermediate downtrends within a long-term bull market are often short in terms of time and mild in terms of levels. Correction levels have already matched and it's possible that the time period will be truncated. If it happens, it will need to be driven by enthusiastic FII buying. A new intermediate uptrend would be signalled by climbing past 5,050 and confirmed only by beating 5,181.

Bulls & bears: The pullback was quite broad as indeed was the earlier slide. Stocks from all sectors participated. However, the CNXIT underperformed, probably because of rupee strength. Banks and real estate counters were among the stronger contributors to the recovery. Sugar continued to remain in a bull run that is disconnected from other market movements.

Metals, airlines and PSUs all jumped, apparently on news-based triggers. Traders should be selective about entering PSUs since many of them are noticeably illiquid. Auto stocks remained depressed. Some shuffling out of defensive FMCG counters into more aggressive plays appears to have occurred since HUL and ITC under-performed. The other defensive sector, pharma continued to do well.

MICRO TECHNICALS

JET AIRWAYS
Current Price: Rs 465
Target Price: Rs 485

The stock has seen enhanced volumes and pushed to a new 2009 high suggesting a recent reversal of the long-term trend. It has a likely target of Rs 485-495, where it will hit heavy resistance. Keep a stop at Rs 455 and go long. Book profits above Rs 485.

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POLARIS
Current Price: Rs 166.3
Target Price: Rs 175

The stock has gained over 300 per cent since March. It made another surge on high volume. There is resistance near the 2009 highs, starting at about Rs 175. Keep a trailing stop at Rs 160 and go long. Book 50 percent profit at Rs 175 and move the stop up to Rs 170.

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J P ASSOCIATES
Current Price: Rs 228
Target Price: Rs 240

The stock has seen a V-shaped recovery on good volumes from a bottom at Rs 190. It could rise till Rs 240. But there is a large downside if current support is broken. Keep a stop at Rs 225. Go long with a target of Rs 240. If the Rs 225 stop breaks, go short with a target of Rs 215.

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RCF
Current Price: Rs 73.5
Target Price: Rs 80

The stock shot up on massive volume expansion once the new PSU public holding policy was announced. There's plenty of resistance above the current price but it probably has sufficient momentum to reach Rs 80. Keep a stop at Rs 71 and go long.

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HCC
Current Price: Rs 134.1
Target Price: Rs 145

The stock has crossed a key resistance on high volumes. It has a target projection of Rs 145, which is close to the 2009 high. Keep a stop at Rs 131 and go long. Clear the position between Rs 142-145 because it's unlikely to beat the Rs 145 mark.

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Strategic moves 09-NOV-09 After a sharp correction at the start of the week which saw Smart Portfolios slip into the red, the markets bounced back sharply and recouped losses.

Markets at a glance 09-NOV-09 The markets staged a recovery after a steep correction during the first half of last week.

Sensex may fall 10% 09-NOV-09 India’s stock market may fall by as much as 10 per cent within six months as company earnings fail to meet expectations, according to Pankaj Tibrewal, manager of the country’s best performing equity fund this year.

High volatility on the cards 09-NOV-09 High turnover and high volatility characterised trading last week.

Intermediate trend reversal? 09-NOV-09 The market bottomed and turned around in what seemed like a short-term correction inside an intermediate downtrend.

Go long 09-NOV-09 The increased competitive intensity between wireless telephony service providers has not only had a dampening effect on the stock prices but is also reflecting in their September 2009 quarter results.

Analysts' corner 09-NOV-09 IVRCL's second quarter numbers were in line with expectations.

Provisioning issues 09-NOV-09 The broader indices were in the correction mode in the recent past, but the new RBI provisioning stipulations ensured that banking stocks suffered more.

'We will turn profitable in FY11' 09-NOV-09 The country’s largest film and entertainment services company Reliance MediaWorks (earlier known as Adlabs Films) has seen a 37 per cent growth y-o-y in revenues to Rs 189 crore but is still making losses at the net level for the September quarter.

Making a comeback 09-NOV-09 Financial intermediaries such as the broking companies, whose fortunes are closely linked to the markets, had a tough time till early 2009.

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Attractive midcap, small stocks can be risky

Top 5 picks of the day | Mid-term picks

RIL closes in on big-bang overseas acquisition

Analyst's Pick: Mindtree
9 Nov 2009, 0834 hrs IST

Mindtree appears to be in favourable spot in the R&D offshore market (45% of company revenues) and cyclical IT services market.

Analyst's Pick: Tulip Telecom
9 Nov 2009, 0833 hrs IST

Edelweiss rates Tulip Telecom (TTSL) as a 'Sector Outperformer' on a relative return basis.

Analyst's Pick: NTPC
9 Nov 2009, 0831 hrs IST

NTPC hinted that it might miss its target of adding 22 GW capacity in the 11th five-year plan (FY08-12).

Analyst's Pick: Jindal Steel & Power
9 Nov 2009, 0830 hrs IST

Goldman Sachs is downgrading Jindal Steel to 'Neutral' from 'Buy', with a revised target price of Rs 625.

Analyst's Pick: Federal Bank
9 Nov 2009, 0827 hrs IST

Citigroup maintains 'Buy' rating on Federal Bank. Federal's Q2FY10 profits were 20% below estimates largely due to asset delinquencies and higher loan-loss charges.

Analyst's Pick: Patni Computers
9 Nov 2009, 0825 hrs IST

Morgan Stanley maintains `Equal Weight'rating on the stock at the revised price target of Rs 425.

Nifty to get support at 4700-4600 range
9 Nov 2009, 0102 hrs IST, Devangi Joshi

With the weekly gain of 84 points, Nifty has managed to stay afloat above its 20 week moving average. For the coming sessions, the Nifty would look at 4640 due to the presence of the 100-DMA around that level.

Possible intermediate uptrend starting, buy stocks with clear uptrends: Deepak Mohoni

India Inc's Q2 results do not provide strong signs of recovery
9 Nov 2009, 0812 hrs IST, Santanu Mishra

The September 2009 quarterly result of India Inc does not provide strong signs of recovery. Investors need to watch next two quarters before jumping into any conclusion.

High premium IPOs may mar chances of quick return for retail investors
9 Nov 2009, 0755 hrs IST, Krishna Kant

Potential disinvestment candidates include some of the most profitable PSUs but given the recent experience the IPOs could be at a high premium minimising the chances of a quick return for retail investors.

Private trusts for children making a comeback
9 Nov 2009, 0749 hrs IST, Kiran Kabtta Somvanshi

Private trusts for children had its glory days in the 80s when every other film had such a thing in the storyline. It's seeing a comeback as several parents are turning to it.

Analysts' Picks: Mindtree, Tulip Telecom, NTPC, Jindal Steel & Power, Federal Bank, Patni Computers
9 Nov 2009, 0743 hrs IST

Analystss take on Mindtree, Tulip Telecom, NTPC, Jindal Steel & Power, Federal Bank and Patni Computers.

Consider PNB for long-term investment
9 Nov 2009, 0732 hrs IST, Karan Sehgal

Punjab National Bank has outperformed its peers on all important parameters including growth, asset quality and margins. Investors should consider it for long-term investment.

Valuing bonds and dollar not easy anymore
9 Nov 2009, 0722 hrs IST

The ad-hoc combination of quantitative easing, government stimulus packages and zero-interest-rate policies has distorted markets beyond recognition.

Bajaj Electricals glowing with progress
9 Nov 2009, 0712 hrs IST, Devangi Joshi

Consumer, as well as infrastructure oriented business activities make Bajaj Electrical a good buy on dips.

Chettinad Cement on growth path
9 Nov 2009, 0706 hrs IST, Amriteshwar Mathur

Chettinad Cement has increased capacity but concern over surplus supply in south remains.

Retail is all about scale: Kishore Biyani
9 Nov 2009, 0656 hrs IST, Supriya Verma Mishra

What can Pantaloon shareholders expect in future? ET Intelligence Group finds out in a conversation with the company's managing director Kishore Biyani.

Silver possesses good investment potential
9 Nov 2009, 0650 hrs IST, Devangi Joshi

While gold is trading at its all-time high, silver is restricted by its industrial usage. The white metal may, however, benefit from the strong fundamentals of the yellow metal.

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Src: EconomicTimes, Business-Standard