Indian shares are expected to have a gap-up opening on Thursday, tracking global markets. US stocks surged on Wednesday as hopes were raised that interest rate would be cut in December. However, the session is expected to be very volatile today on account of the F&O expiry. For the Sensex, yesterday's low of 18,884 would be a crucial support level. On the higher side, it could face resistance at 18,990-19,100. The Nifty has support at 5,560-5,535 and resistance at 5,635-5,675. The F&O data for the previous session indicated a short build up as the markets attempted a feeble upthrust. Among stocks that are expected to see action are DLF, Parsvnath and JK Lakshmi Cement.
Source: Icicidirect.com
Thursday, November 29, 2007
Rupee ends higher, bonds close flat
The spot rupee ended up at Rs 39.75 per USD as against its previous close of Rs 39.80.
The widely traded 7.99%, 2017 paper closed flat at Rs 100.45.
During the earlier part of the day the rupee market witness sell off by banks after US Fed VC statements.
Source: Moneycontrol.com
The widely traded 7.99%, 2017 paper closed flat at Rs 100.45.
During the earlier part of the day the rupee market witness sell off by banks after US Fed VC statements.
Source: Moneycontrol.com
Market to trade between 18,000-19,000 in Dec
Nirmal Jain, Chairman, India Infoline said that the market is likely to remain lacklustre in December. He added that there are more chances of market going down. FIIs have sold but markets have sustained on domestic money. The market is likely to be rangebound with negative bias, he commented.
Most of the retail players are looking to buy in December. Fresh FII money is likely to come in January. According to Jain, the market is likely to remain between 18,000-19,000 in December.
Karun Mutha of IL&FS Investments said that a large number of Nifty options have been written. The Nifty was a good support at 5,500-5,700 where there was a good amount of put option writing.
Excerpts from CNBC-TV18’s exclusive interview with Nirmal Jain:
Q: What is your sense going into December? Will we move up or are the chances of a correction are higher?
Jain: A lacklustre market and chances of correction are higher, because if you look at global and Indian facts, all the political developments and global developments do not favour a bullish market to continue in this kind of an environment.
Bond spreads are widening. There are concerns on the US economy and subprime, that are surfacing everyday. So, these things will affect the flow of money in the market.
Also, in the recent past, if you look at the last couple of weeks, FIIs have been net sellers more or less everyday. But still, the markets have sustained at these levels, which is a tribute to local buying and retail interest. But markets should remain rangebound or can maybe correct from here. So, if you were to take a bet on upside or downside in December, I would say slightly lower and not higher.
Q: What is retail sentiment now, because there has been a bit of correction? Do you think retail is still strong enough to keep a midcap rally going or are they also getting fatigued, because of the lack of institutional buying?
Jain: Retail is a bottom up approach and most people are looking at opportunities, HNI clients, in particular, are looking for opportunities to buy in the month of December. Retail has to be segmented into various categories. There are intraday traders, small retail buyers and HNIs.
HNI matters more because although the number may be small, they have at least some influence on the markets and are looking forward to pick up bottom up opportunities in the midcap sector. They are now looking forward to the rally resuming in the month of January, when there are fresh allocations for FIIs and most of these issues will get settled.
Q: We have spent most of November in the 18,000-20,000 zone. Do you think December will also be spent in that kind of range? Would you expect slightly lower levels than that?
Jain: I would think similar levels or maybe 500-1000 points here and there. But close to 18,000-19,000 range will be what I would expect in December also.
Q: Do you expect midcap outperformance to continue in the November series? The midcap and smallcap indices have outperformed the Sensex by a wide margin. Do you see that continuing in December or do you think that kind of outperformance will be reined in?
Jain: In midcaps, investors will look for buying opportunities and there are quite a few stocks that will appear attractive this month, after a corrective or consolidation phase that we have seen in the last few weeks.
I think midcap indices may not show as much gain in the month of November, because there are some stocks in midcap indices that are very large, say Unitech. But other than that, it is a fairly large and broad-based index that way. So, midcap stocks will do well, but I am not very sure if the indices will show the same performance at the end of the month.
Q: What does the December series portend, the way we rolled over today?
Mutha: The day started with a big bang, taking off the global cues. In fact, we were comfortably up on the gap opening. Predominantly, this feature has been there because a lot of arbitrage positions, which were there in the market for the November series, were not really finding an exciting rollover.
Normally, arbitragers look at around 140-150 basis points on a rollover. But when you get 95-100 basis points on a rollover, they predominantly tend to sell these stocks into the market and get out of the arbitrage positions.
Precisely, in the last half an hour of the November series, Reliance, Reliance Capital, SBI and most the smaller banks and even the larger banks were not converging. There have been delivery-based selling, that comes in over the November series and which incidentally saw the fall in the market. But the rollover, toward the next months series, particularly the December series was really very good, where we saw almost 87% of the market wide positions being rolled over to the next month.
Now, the numbers would actually come in short but these are the broader market numbers, where we saw almost Rs 80,000 crore of futures positions being created in the next month or December series. The Nifty itself saw a very decent rollover of around 80%. It seems that it was predominantly a long rollover, when you see the December series of Nifty. That was quoting at almost 40-50 points premium in between.
Q: What do you expect to see in the December series for some of the outperforming sectors like power, energy, and oil, the ones that have run the hardest. Do you expect them to consolidate, correct in December, or to go to fresh highs?
Jain: The sectors to look forward to in December would be private banks like Axis Bank, ICICI Bank or some of the PSU banks like SBI. The cement sector has not performed very well in the last few months. However, the companies are doing extremely well and this quarter will be sort of a record quarter for them in terms of profitability.
Among largecaps, I would look at Reliance Industries and BHEL as two interesting counters because refining margins in this quarter are probably the highest; they are significantly up QoQ as well as YoY. In terms of EPS delta, RIL should benefit a lot.
BHEL is also increasing its capacity from 6 GW to 15 GW over the next two years. In their FY10 numbers, we will see a significant jump in their topline as well as bottomline. I don’t think the market has this fully factored-in. So, these are the two largecaps.
In terms of midcaps, I will look at cement as a new sector. Some of these stocks in capital goods, construction, and power equipment will continue to do well.
Q: What was happening in RPL today, it moved up 15% suddenly? Was there a short squeeze? What sense do you get here carrying into the December series for that stock?
Mutha: It was clear case of short squeeze happening on the RPL stock. In the middle of November series, there was a deep discount on November futures and that initiated a lot of reverse cash carry trades. You sell the stock in the cash market and buy the same in futures. Now, when these people want to again reverse their positions, they let the positions for November series expire and go back to the cash market and buy that stock.
In the cash market when a lot of stocks come in for buying on a single day, it would definitely run up. Particularly stocks like RPL where a lot of short positions had been created during the whole month series. This was quite evident in the way the November series was still quoting at a slightly discount to the cash market price. Eventually, it reflected and the stock had to run up almost significantly from the day’s lower levels.
Q: What did you read into the Urban Land Ceiling repeal news that came in and how would you approach the real estate sector now?
Jain: It won’t have any material impact on real estate because there is significant shortage of commercial land in Mumbai. 4,000 acres that will come from this will not make any significant difference. A couple of companies will benefit significantly from this. The top winner of course is Godrej Industries. They have a huge property in Vikhroli. The stock can be a multi-bagger from here. Another stock that I will look at is Century Textiles, which is a big beneficiary of this.
There may be small real estate companies that could benefit. I will look at these two stocks as buys if somebody wants to have a play on real estate. I do not see this as having any sobering down impact on real estate prices particularly in Mumbai as it will be too small an addition to make any difference.
Q: In the December series, what are the chances of the Nifty actually getting back and piercing those 5900-6,000 levels?
Mutha: The chances are not really that great because we have seen a lot of call writing happening at around 5900 and 6,000 levels. Almost a large amount of Nifty options have been written. The Nifty has very good support at 5,500-5,700, where we have seen good amount of put option writing. Almost 11 lakh shares on 5,500 and close to 9 lakh shares in December at the initiation of the December series. Broadly, it will play between 5,700-5,900 during the next month’s series.
Source: Moneycontrol.com
Most of the retail players are looking to buy in December. Fresh FII money is likely to come in January. According to Jain, the market is likely to remain between 18,000-19,000 in December.
Karun Mutha of IL&FS Investments said that a large number of Nifty options have been written. The Nifty was a good support at 5,500-5,700 where there was a good amount of put option writing.
Excerpts from CNBC-TV18’s exclusive interview with Nirmal Jain:
Q: What is your sense going into December? Will we move up or are the chances of a correction are higher?
Jain: A lacklustre market and chances of correction are higher, because if you look at global and Indian facts, all the political developments and global developments do not favour a bullish market to continue in this kind of an environment.
Bond spreads are widening. There are concerns on the US economy and subprime, that are surfacing everyday. So, these things will affect the flow of money in the market.
Also, in the recent past, if you look at the last couple of weeks, FIIs have been net sellers more or less everyday. But still, the markets have sustained at these levels, which is a tribute to local buying and retail interest. But markets should remain rangebound or can maybe correct from here. So, if you were to take a bet on upside or downside in December, I would say slightly lower and not higher.
Q: What is retail sentiment now, because there has been a bit of correction? Do you think retail is still strong enough to keep a midcap rally going or are they also getting fatigued, because of the lack of institutional buying?
Jain: Retail is a bottom up approach and most people are looking at opportunities, HNI clients, in particular, are looking for opportunities to buy in the month of December. Retail has to be segmented into various categories. There are intraday traders, small retail buyers and HNIs.
HNI matters more because although the number may be small, they have at least some influence on the markets and are looking forward to pick up bottom up opportunities in the midcap sector. They are now looking forward to the rally resuming in the month of January, when there are fresh allocations for FIIs and most of these issues will get settled.
Q: We have spent most of November in the 18,000-20,000 zone. Do you think December will also be spent in that kind of range? Would you expect slightly lower levels than that?
Jain: I would think similar levels or maybe 500-1000 points here and there. But close to 18,000-19,000 range will be what I would expect in December also.
Q: Do you expect midcap outperformance to continue in the November series? The midcap and smallcap indices have outperformed the Sensex by a wide margin. Do you see that continuing in December or do you think that kind of outperformance will be reined in?
Jain: In midcaps, investors will look for buying opportunities and there are quite a few stocks that will appear attractive this month, after a corrective or consolidation phase that we have seen in the last few weeks.
I think midcap indices may not show as much gain in the month of November, because there are some stocks in midcap indices that are very large, say Unitech. But other than that, it is a fairly large and broad-based index that way. So, midcap stocks will do well, but I am not very sure if the indices will show the same performance at the end of the month.
Q: What does the December series portend, the way we rolled over today?
Mutha: The day started with a big bang, taking off the global cues. In fact, we were comfortably up on the gap opening. Predominantly, this feature has been there because a lot of arbitrage positions, which were there in the market for the November series, were not really finding an exciting rollover.
Normally, arbitragers look at around 140-150 basis points on a rollover. But when you get 95-100 basis points on a rollover, they predominantly tend to sell these stocks into the market and get out of the arbitrage positions.
Precisely, in the last half an hour of the November series, Reliance, Reliance Capital, SBI and most the smaller banks and even the larger banks were not converging. There have been delivery-based selling, that comes in over the November series and which incidentally saw the fall in the market. But the rollover, toward the next months series, particularly the December series was really very good, where we saw almost 87% of the market wide positions being rolled over to the next month.
Now, the numbers would actually come in short but these are the broader market numbers, where we saw almost Rs 80,000 crore of futures positions being created in the next month or December series. The Nifty itself saw a very decent rollover of around 80%. It seems that it was predominantly a long rollover, when you see the December series of Nifty. That was quoting at almost 40-50 points premium in between.
Q: What do you expect to see in the December series for some of the outperforming sectors like power, energy, and oil, the ones that have run the hardest. Do you expect them to consolidate, correct in December, or to go to fresh highs?
Jain: The sectors to look forward to in December would be private banks like Axis Bank, ICICI Bank or some of the PSU banks like SBI. The cement sector has not performed very well in the last few months. However, the companies are doing extremely well and this quarter will be sort of a record quarter for them in terms of profitability.
Among largecaps, I would look at Reliance Industries and BHEL as two interesting counters because refining margins in this quarter are probably the highest; they are significantly up QoQ as well as YoY. In terms of EPS delta, RIL should benefit a lot.
BHEL is also increasing its capacity from 6 GW to 15 GW over the next two years. In their FY10 numbers, we will see a significant jump in their topline as well as bottomline. I don’t think the market has this fully factored-in. So, these are the two largecaps.
In terms of midcaps, I will look at cement as a new sector. Some of these stocks in capital goods, construction, and power equipment will continue to do well.
Q: What was happening in RPL today, it moved up 15% suddenly? Was there a short squeeze? What sense do you get here carrying into the December series for that stock?
Mutha: It was clear case of short squeeze happening on the RPL stock. In the middle of November series, there was a deep discount on November futures and that initiated a lot of reverse cash carry trades. You sell the stock in the cash market and buy the same in futures. Now, when these people want to again reverse their positions, they let the positions for November series expire and go back to the cash market and buy that stock.
In the cash market when a lot of stocks come in for buying on a single day, it would definitely run up. Particularly stocks like RPL where a lot of short positions had been created during the whole month series. This was quite evident in the way the November series was still quoting at a slightly discount to the cash market price. Eventually, it reflected and the stock had to run up almost significantly from the day’s lower levels.
Q: What did you read into the Urban Land Ceiling repeal news that came in and how would you approach the real estate sector now?
Jain: It won’t have any material impact on real estate because there is significant shortage of commercial land in Mumbai. 4,000 acres that will come from this will not make any significant difference. A couple of companies will benefit significantly from this. The top winner of course is Godrej Industries. They have a huge property in Vikhroli. The stock can be a multi-bagger from here. Another stock that I will look at is Century Textiles, which is a big beneficiary of this.
There may be small real estate companies that could benefit. I will look at these two stocks as buys if somebody wants to have a play on real estate. I do not see this as having any sobering down impact on real estate prices particularly in Mumbai as it will be too small an addition to make any difference.
Q: In the December series, what are the chances of the Nifty actually getting back and piercing those 5900-6,000 levels?
Mutha: The chances are not really that great because we have seen a lot of call writing happening at around 5900 and 6,000 levels. Almost a large amount of Nifty options have been written. The Nifty has very good support at 5,500-5,700, where we have seen good amount of put option writing. Almost 11 lakh shares on 5,500 and close to 9 lakh shares in December at the initiation of the December series. Broadly, it will play between 5,700-5,900 during the next month’s series.
Source: Moneycontrol.com
Wednesday, November 28, 2007
RPL has critical support at Rs 189-190
Rahul Mohindar of viratechindia.com is of the view that Reliance Petroleum, RPL has critical support at Rs 189-190.
Mohindar told CNBC-TV18, "RPL had a fairly good correction. The thing we have got to keep in mind is Rs 189-190 is a very big, critical support. If we break that level, you are possibly looking at a lot more downside. So, it is really level specific story here. I think you need to clearly wait for these breakouts to come in."
Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the stocks/sectors that have been spoken about.
Source: Moneycontrol.com
Mohindar told CNBC-TV18, "RPL had a fairly good correction. The thing we have got to keep in mind is Rs 189-190 is a very big, critical support. If we break that level, you are possibly looking at a lot more downside. So, it is really level specific story here. I think you need to clearly wait for these breakouts to come in."
Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the stocks/sectors that have been spoken about.
Source: Moneycontrol.com
Rico Auto a good pick for long term
Portfolio Manager, PN Vijay is of the view that Rico Auto is a good pick for long term.
Vijay told CNBC-TV18, "Fundamentally Rico is a very strong counter, it is one of the best casting units in the country and it has been lying quiet for long like rest of the auto ancillaries, which are facing tremendous margin pressures. Its fortunes are very largely linked to Hero Honda so it is a good long-term pick in an industry, which is being unfairly hit by the market. So Rico Auto on one-year timeframe could be good."
Source: Moneycontrol.com
Vijay told CNBC-TV18, "Fundamentally Rico is a very strong counter, it is one of the best casting units in the country and it has been lying quiet for long like rest of the auto ancillaries, which are facing tremendous margin pressures. Its fortunes are very largely linked to Hero Honda so it is a good long-term pick in an industry, which is being unfairly hit by the market. So Rico Auto on one-year timeframe could be good."
Source: Moneycontrol.com
Market ends in red: Metals, IT, oil & gas stocks down
The markets slipped significantly in the final hour of trade closing with a deep cut. The weakness in markets was inline with Asian indices trading flat or in negative despite some positive cues from Dow yesterday. Heavy selling was seen in metal, IT and oil & gas. Selective buying is seen in auto and capital good stocks. Broader markets also ended in red but outperformed the benchmark.
Among the top Nifty losers were Nalco down 6.5% followed by BPCL, SAIL down 5% each and Siemens down 4%.
In the midcap space multiplex stocks continue to rally, with PVR Inox followed by Adlabs and Cinemax. Stocks from banking and financial space were active today.
Auto ancillary stocks are attracting attention with Rico Auto and Ceat up. Agro Dutch, Eveready, Agro Tech are among the other midcap gainers.
BHEL, Maruti Suzuki and Bajaj Auto ended in green with good gains.
However, Wipro, TCS and Hindalco were the top lagards.
Midcap momentum stocks like Essar Oil, Ashok Leyland, Neyvelli Lignite, Bongaigaon ended in red.
Yesterday's new listing Mundra Port closed down 9% below the Rs 900 mark.
Sensex was down 188.86 points or 0.99% at 18938.87, and the Nifty down 80.60 points or 1.41% at 5617.55.
About 1421 shares have advanced, 1573 shares declined, and 84 shares are unchanged.
The BSE Midcap Index ended at 8,383.49 down 0.12%.
The BSE Smallcap Index ended at 10,375.30 up 0.03%.
The BSE Bankex was down 1% at 10,389.21. Federal Bank, Axis Bank, PNB, Karnataka Bank, Centurion Bank, HDFC Bank moved downwards.
The BSE Capital Goods Index was down 1% at 19,554.19. Rel Infra, Siemens, Triveni Engg, Alstom Projects, Jyoti Structure, Lakshmi Machine, Suzlon Energy closed lower.
The BSE Auto Index closed at 5,404.15 up 1%. MICO, Cummins, Tube Investment, Maruti Suzuki, Bajaj Auto closed higher.
The BSE Metal Index closed at 16,976.36 down 2%. Nalco, SAIL, Jindal Steel, Mah Seamless, Hindalco, Sterlite Ind closed lower.
The BSE FMCG Index closed at 2,133.87 down 0.4%. ITC, Dabur India, United Spirits, Godrej Consumer closed lower.
BSE Oil and Gas Index closed at 11,917.58 down 2.3%. Essar Oil, BPCL, Petronet LNG, Reliance Petro, HPCL ended in red.
The BSE IT Index was down 0.6% at 4,081.40. TCS, I-Flex Solution, Wipro, Mphasis closed lower.
The NSE cash turnover was at Rs 16166.85 crore and the NSE F&O turnover was at Rs 86287.52 crore. The BSE cash turnover was Rs 7442.69 crore. Total market wide turnover was at Rs 109897.06 crore.
Markets slip: Midcaps, smallcaps outperform
The markets have lost some ground and have slipped in red on account of selling pressure seen in oil & gas, metal, IT and realty stocks. The weakness in markets is inline with Asian indices trading flat or in negative despite some positive cues from Dow yesterday.
Selective buying is seen in bank, power, auto and capital good stocks. Broader markets have outperformed the benchmark. Both the BSE Midcap and smallcap indices are up nearly 0.6% and 0.8% each respectively. The breadth has disappointed as it has now become neutral.
At 14.39 hrs IST, the Sensex is down 59.13 points or 0.31% at 19068.60, and the Nifty down 47.05 points or 0.83% at 5651.10.
About 1581 shares have advanced, 1424 shares declined, and 73 shares are unchanged.
F&O turnover has been strong one day ahead of expiry and strongest rollover has been in banking space followed by the pharma sector. Overall the rollover is smooth with 50%.
In the midcap space multiplex stocks continue to rally, with PVR up over 10%, Inox followed by Adlabs and Cinemax. Stocks from banking and financial space are active today with DCB up over 9% followed by Indian Bank and Central Bank.
Deccan Aviation is a hi flyer up 0.7%, trading around the Rs 250 levels its 52 week high.
Auto ancillary stocks are attracting attention with Rico Auto and Ceat up. Agro Dutch, Eveready, Agro Tech are among the other midcap gainers.
On Sensex, the BHEL, ICICI Bank and NTPC were the top gainers. Maruti Suzuki and GAIL are trading in green with good gains.
BHEL is up nearly 3% followed by Maruti, GAIL and Bajaj Auto up over 2.5% each.
However, Wipro, TCS and Hindalco were the top lagards. NALCO is down over 5% followed by Reliance Petroleum and Hindalco down around 2.5% each.
RNRL is up over 4% and is being traded with the highest volumes. GMR Infra, RPL, Jaiprakash Associates and Mundra Projects have also been the most active counters today.
Private banks are buzzing since morning today. BSE bankex was up over 1% and the Kotak Mahindra Bank, IOB and Andhra Bank and Allahabad Bank. In the capital goods space, Areva T&D, BHEL, Krloskar Bro and Gammon India were the top gainers.
Markets choppy: Midcaps, smallcaps outperform
The markets are choppy and are trading within a range due to lack of momentum. Nifty is trading absolutely flat and Sensex is marginally in the green. The weakness in markets is inline with Asian indices trading flat or in negative despite some positive cues from Dow yesterday.
Selective buying is seen in bank, power, auto and capital good stocks. Broader markets have outperformed the benchmark indices giving markets positive breadth. Both the BSE Midcap and smallcap indices are up nearly 1%.
At 1.35 hrs IST, the Sensex is up 107.48 points or 0.56% at 19235.21, and the Nifty down 6.00 points or 0.11% at 5692.15.
About 1818 shares have advanced, 1172 shares declined, and 88 shares are unchanged.
F&O turnover has been strong one day ahead of expiry and strongest rollover has been in banking space followed by the pharma sector. Overall the rollover is smooth with 50%.
In the midcap space multiplex stocks continue to rally, with PVR up over 10%, Inox followed by Adlabs and Cinemax. Stocks from banking and financial space are active today with DCB up over 9% followed by Indian Bank and Central Bank.
Deccan Aviation is a hi flyer up 0.7%, trading around the Rs 250 levels its 52 week high.
Auto ancillary stocks are attracting attention with Rico Auto and Ceat up. Agro Dutch, Eveready, Agro Tech are among the other midcap gainers.
On Sensex, the BHEL, ICICI Bank and NTPC were the top gainers. Maruti Suzuki and GAIL are trading in green with good gains.
BHEL is up nearly 3% followed by Maruti, GAIL and Bajaj Auto up over 2.5% each.
However, Wipro, TCS and Hindalco were the top lagards. NALCO is down over 5% followed by Reliance Petroleum and Hindalco down around 2.5% each.
RNRL is up over 4% and is being traded with the highest volumes. GMR Infra, RPL, Jaiprakash Associates and Mundra Projects have also been the most active counters today.
Private banks are buzzing since morning today. BSE bankex was up over 1% and the Kotak Mahindra Bank, IOB and Andhra Bank and Allahabad Bank. In the capital goods space, Areva T&D, BHEL, Krloskar Bro and Gammon India were the top gainers.
Market off day's high: Oil & gas, metal, IT stocks down
The markets are off day's high due to lack of momentum. Nifty is trading absolutely flat and Sensex is marginally in the green. The weakness in markets is inline with Asian indices trading flat or in negative despite some positive cues from Dow yesterday.
Selective buying is seen in bank, power, auto and capital good stocks. Broader markets have outperformed the benchmark indices giving markets positive breadth. Both the BSE Midcap and smallcap indices are up nearly 1%.
At 12.27 hrs IST, the Sensex is up 89.55 points or 0.47% at 19217.28, and the Nifty down 1.10 points or 0.02% at 5697.05.
About 1895 shares have advanced, 1095 shares declined, and 88 shares are unchanged.
In the midcap space multiplex stocks continue to rally, with PVR up over 10% followed by Adlabs and Cinemax. Stocks from banking and financial space are active today with DCB up over 9% followed by Central Bank.
On Sensex, the BHEL, ICICI Bank and NTPC were the top gainers. Maruti Suzuki and GAIL are trading in green with good gains.
BHEL is up nearly 3% followed by Maruti, GAIL and Bajaj Auto up over 2.5% each.
However, Wipro, TCS and Hindalco were the top lagards. NALCO is down over 5% followed by Reliance Petroleum and Hindalco down around 2.5% each.
RNRL is up over 4% and is being traded with the highest volumes. GMR Infra, RPL, Jaiprakash Associates and Mundra Projects have also been the most active counters today.
Mkts trading firm; bank, cap good, power stocks up
The markets are trading steady with decent gains. Banking, power and capital goods stocks are still trading strong. Metal, FMCG and oil & gas stocks are little subdued. Midcaps and smallcap are once again back in action today and are outperfoming the the frontliners.
At 11.00 am, the Sensex is up 121.10 points or 0.63% at 19248.83, and the Nifty up 11.65 points or 0.20% at 5709.80. About 1937 shares have advanced, 1039 shares declined, and 102 shares are unchanged.
Market breadth has been impressive since opening today. Advance decline ratio is about 2:1 on NSE. Volume has been moderate.
On Sensex, the BHEL, ICICI Bank and NTPC were the top gainers. However, Wipro, TCS and Hindalco were the top lagards.
RNRL, GMR Infra, RPL, Jaiprakash Associates and Mundra Projects have been the most active counters today.
Private banks are buzzing since morning today. BSE bankex was up over 1.25% and the Kotak Mahindra Bank, IOB and Andhra Bank and Allahabad Bank. In the capital goods space, Areva T&D, BHEL, Krloskar Bro and Gammon India were the top gainers.
Mkts in green with decent gains; power, banks up
The markets are trading in green with decent gains in the early trades today. All the key BSE indices are in green led by the consumer durables, banking, auto and power index. Market breadth has been positive and the volume modest till now.
At 10.28 am, the Sensex is up 108.18 points or 0.57% at 19235.91, and the Nifty up 19.90 points or 0.35% at 5718.05. About 1944 shares have advanced, 1036 shares declined, and 98 shares are unchanged.
Top gainers on the Sensex are HDFC Bank at Rs 1,677 up 2.73%, BHEL at Rs 2,720 up 1.76% and Maruti Suzuki at Rs 952.70 1up .62%.
Top losers on the Sensex are Wipro at Rs 457 down 0.16%, Reliance at Rs 2,838.10 down 0.14% and ITC at Rs 186 down 0.03%.
Most active shares on BSE are GMR Infra at Rs 251.10 with 1,405,842 shares, Mundra Port at Rs 975.20 with 304,864 shares and Jaiprakash Associate at Rs 1,805 with 152,514 shares.
Mkts open with decent gap up; bank, auto stocks up
The markets opened with decent gap up today taking cues from the global peers. Auto, private banks and the power stocks were looking strong in the early trade, however the capital good stocks were also attracting decent attention. Refineries were little subdued.
At 9:56 am, Sensex was up 189 points at 19316 and Nifty was up 35.95 points at 5734. Major gainers in the early trade were BHEL, RIL, SBI, ICICI Bank, HDFC Bank, Maruti, Bajaj Auto, Hindalco, NTPC, Infosys, Tata Steel and L&T.
Asian markets were trading weak. Hong Kong's Hang Seng tumbled 0.65% or 176.35 points at 27,033.86, Japan's Nikkei plunged 0.29% or 43.40 points at 15,179.45, Taiwan's Taiwan Weighted was down 0.22% or 18.81 points at 8,356.95, Singapore's Straits Times declined 0.12% or 4.02 points at 3,368.62 and South Korea's Seoul Composite dropped 0.16% or 3.05 points at 1,856.74.
Market cues:
* FIIs net buy USD 116.6 million in equity on Nov 26
* MFs net buy Rs 252.9 crore in equity on Nov 26
* NSE F&O Open Interest up by Rs 1,424 crore at Rs 1,09,960 crore
F&O cues:
* Futures Open Interest up by Rs 1,355 crore, Options Open Interest up by Rs 69 crore
* Nifty Nov Fut shed 31 lakh, Dec Fut add 53 lakh shares in Open Interest
* Nifty Nov at 32-pt premium, Dec at 14-pt premium
* Nifty Open Interest PCR at 1 vs 0.98
* Nifty Puts add 3.5 lakh shares in Open Interest
* Calls shed 0.8 lakh shares in Open Interest
* Nifty 5500 Put adds 1.42 lakh shares in Open Interest
* Nifty 5700 Call adds 1.5 lakh shares in Open Interest
* Nifty 6000 Call sheds 1.55 lakh shares in Open Interest
Source: Moneycontrol.com
Among the top Nifty losers were Nalco down 6.5% followed by BPCL, SAIL down 5% each and Siemens down 4%.
In the midcap space multiplex stocks continue to rally, with PVR Inox followed by Adlabs and Cinemax. Stocks from banking and financial space were active today.
Auto ancillary stocks are attracting attention with Rico Auto and Ceat up. Agro Dutch, Eveready, Agro Tech are among the other midcap gainers.
BHEL, Maruti Suzuki and Bajaj Auto ended in green with good gains.
However, Wipro, TCS and Hindalco were the top lagards.
Midcap momentum stocks like Essar Oil, Ashok Leyland, Neyvelli Lignite, Bongaigaon ended in red.
Yesterday's new listing Mundra Port closed down 9% below the Rs 900 mark.
Sensex was down 188.86 points or 0.99% at 18938.87, and the Nifty down 80.60 points or 1.41% at 5617.55.
About 1421 shares have advanced, 1573 shares declined, and 84 shares are unchanged.
The BSE Midcap Index ended at 8,383.49 down 0.12%.
The BSE Smallcap Index ended at 10,375.30 up 0.03%.
The BSE Bankex was down 1% at 10,389.21. Federal Bank, Axis Bank, PNB, Karnataka Bank, Centurion Bank, HDFC Bank moved downwards.
The BSE Capital Goods Index was down 1% at 19,554.19. Rel Infra, Siemens, Triveni Engg, Alstom Projects, Jyoti Structure, Lakshmi Machine, Suzlon Energy closed lower.
The BSE Auto Index closed at 5,404.15 up 1%. MICO, Cummins, Tube Investment, Maruti Suzuki, Bajaj Auto closed higher.
The BSE Metal Index closed at 16,976.36 down 2%. Nalco, SAIL, Jindal Steel, Mah Seamless, Hindalco, Sterlite Ind closed lower.
The BSE FMCG Index closed at 2,133.87 down 0.4%. ITC, Dabur India, United Spirits, Godrej Consumer closed lower.
BSE Oil and Gas Index closed at 11,917.58 down 2.3%. Essar Oil, BPCL, Petronet LNG, Reliance Petro, HPCL ended in red.
The BSE IT Index was down 0.6% at 4,081.40. TCS, I-Flex Solution, Wipro, Mphasis closed lower.
The NSE cash turnover was at Rs 16166.85 crore and the NSE F&O turnover was at Rs 86287.52 crore. The BSE cash turnover was Rs 7442.69 crore. Total market wide turnover was at Rs 109897.06 crore.
Markets slip: Midcaps, smallcaps outperform
The markets have lost some ground and have slipped in red on account of selling pressure seen in oil & gas, metal, IT and realty stocks. The weakness in markets is inline with Asian indices trading flat or in negative despite some positive cues from Dow yesterday.
Selective buying is seen in bank, power, auto and capital good stocks. Broader markets have outperformed the benchmark. Both the BSE Midcap and smallcap indices are up nearly 0.6% and 0.8% each respectively. The breadth has disappointed as it has now become neutral.
At 14.39 hrs IST, the Sensex is down 59.13 points or 0.31% at 19068.60, and the Nifty down 47.05 points or 0.83% at 5651.10.
About 1581 shares have advanced, 1424 shares declined, and 73 shares are unchanged.
F&O turnover has been strong one day ahead of expiry and strongest rollover has been in banking space followed by the pharma sector. Overall the rollover is smooth with 50%.
In the midcap space multiplex stocks continue to rally, with PVR up over 10%, Inox followed by Adlabs and Cinemax. Stocks from banking and financial space are active today with DCB up over 9% followed by Indian Bank and Central Bank.
Deccan Aviation is a hi flyer up 0.7%, trading around the Rs 250 levels its 52 week high.
Auto ancillary stocks are attracting attention with Rico Auto and Ceat up. Agro Dutch, Eveready, Agro Tech are among the other midcap gainers.
On Sensex, the BHEL, ICICI Bank and NTPC were the top gainers. Maruti Suzuki and GAIL are trading in green with good gains.
BHEL is up nearly 3% followed by Maruti, GAIL and Bajaj Auto up over 2.5% each.
However, Wipro, TCS and Hindalco were the top lagards. NALCO is down over 5% followed by Reliance Petroleum and Hindalco down around 2.5% each.
RNRL is up over 4% and is being traded with the highest volumes. GMR Infra, RPL, Jaiprakash Associates and Mundra Projects have also been the most active counters today.
Private banks are buzzing since morning today. BSE bankex was up over 1% and the Kotak Mahindra Bank, IOB and Andhra Bank and Allahabad Bank. In the capital goods space, Areva T&D, BHEL, Krloskar Bro and Gammon India were the top gainers.
Markets choppy: Midcaps, smallcaps outperform
The markets are choppy and are trading within a range due to lack of momentum. Nifty is trading absolutely flat and Sensex is marginally in the green. The weakness in markets is inline with Asian indices trading flat or in negative despite some positive cues from Dow yesterday.
Selective buying is seen in bank, power, auto and capital good stocks. Broader markets have outperformed the benchmark indices giving markets positive breadth. Both the BSE Midcap and smallcap indices are up nearly 1%.
At 1.35 hrs IST, the Sensex is up 107.48 points or 0.56% at 19235.21, and the Nifty down 6.00 points or 0.11% at 5692.15.
About 1818 shares have advanced, 1172 shares declined, and 88 shares are unchanged.
F&O turnover has been strong one day ahead of expiry and strongest rollover has been in banking space followed by the pharma sector. Overall the rollover is smooth with 50%.
In the midcap space multiplex stocks continue to rally, with PVR up over 10%, Inox followed by Adlabs and Cinemax. Stocks from banking and financial space are active today with DCB up over 9% followed by Indian Bank and Central Bank.
Deccan Aviation is a hi flyer up 0.7%, trading around the Rs 250 levels its 52 week high.
Auto ancillary stocks are attracting attention with Rico Auto and Ceat up. Agro Dutch, Eveready, Agro Tech are among the other midcap gainers.
On Sensex, the BHEL, ICICI Bank and NTPC were the top gainers. Maruti Suzuki and GAIL are trading in green with good gains.
BHEL is up nearly 3% followed by Maruti, GAIL and Bajaj Auto up over 2.5% each.
However, Wipro, TCS and Hindalco were the top lagards. NALCO is down over 5% followed by Reliance Petroleum and Hindalco down around 2.5% each.
RNRL is up over 4% and is being traded with the highest volumes. GMR Infra, RPL, Jaiprakash Associates and Mundra Projects have also been the most active counters today.
Private banks are buzzing since morning today. BSE bankex was up over 1% and the Kotak Mahindra Bank, IOB and Andhra Bank and Allahabad Bank. In the capital goods space, Areva T&D, BHEL, Krloskar Bro and Gammon India were the top gainers.
Market off day's high: Oil & gas, metal, IT stocks down
The markets are off day's high due to lack of momentum. Nifty is trading absolutely flat and Sensex is marginally in the green. The weakness in markets is inline with Asian indices trading flat or in negative despite some positive cues from Dow yesterday.
Selective buying is seen in bank, power, auto and capital good stocks. Broader markets have outperformed the benchmark indices giving markets positive breadth. Both the BSE Midcap and smallcap indices are up nearly 1%.
At 12.27 hrs IST, the Sensex is up 89.55 points or 0.47% at 19217.28, and the Nifty down 1.10 points or 0.02% at 5697.05.
About 1895 shares have advanced, 1095 shares declined, and 88 shares are unchanged.
In the midcap space multiplex stocks continue to rally, with PVR up over 10% followed by Adlabs and Cinemax. Stocks from banking and financial space are active today with DCB up over 9% followed by Central Bank.
On Sensex, the BHEL, ICICI Bank and NTPC were the top gainers. Maruti Suzuki and GAIL are trading in green with good gains.
BHEL is up nearly 3% followed by Maruti, GAIL and Bajaj Auto up over 2.5% each.
However, Wipro, TCS and Hindalco were the top lagards. NALCO is down over 5% followed by Reliance Petroleum and Hindalco down around 2.5% each.
RNRL is up over 4% and is being traded with the highest volumes. GMR Infra, RPL, Jaiprakash Associates and Mundra Projects have also been the most active counters today.
Mkts trading firm; bank, cap good, power stocks up
The markets are trading steady with decent gains. Banking, power and capital goods stocks are still trading strong. Metal, FMCG and oil & gas stocks are little subdued. Midcaps and smallcap are once again back in action today and are outperfoming the the frontliners.
At 11.00 am, the Sensex is up 121.10 points or 0.63% at 19248.83, and the Nifty up 11.65 points or 0.20% at 5709.80. About 1937 shares have advanced, 1039 shares declined, and 102 shares are unchanged.
Market breadth has been impressive since opening today. Advance decline ratio is about 2:1 on NSE. Volume has been moderate.
On Sensex, the BHEL, ICICI Bank and NTPC were the top gainers. However, Wipro, TCS and Hindalco were the top lagards.
RNRL, GMR Infra, RPL, Jaiprakash Associates and Mundra Projects have been the most active counters today.
Private banks are buzzing since morning today. BSE bankex was up over 1.25% and the Kotak Mahindra Bank, IOB and Andhra Bank and Allahabad Bank. In the capital goods space, Areva T&D, BHEL, Krloskar Bro and Gammon India were the top gainers.
Mkts in green with decent gains; power, banks up
The markets are trading in green with decent gains in the early trades today. All the key BSE indices are in green led by the consumer durables, banking, auto and power index. Market breadth has been positive and the volume modest till now.
At 10.28 am, the Sensex is up 108.18 points or 0.57% at 19235.91, and the Nifty up 19.90 points or 0.35% at 5718.05. About 1944 shares have advanced, 1036 shares declined, and 98 shares are unchanged.
Top gainers on the Sensex are HDFC Bank at Rs 1,677 up 2.73%, BHEL at Rs 2,720 up 1.76% and Maruti Suzuki at Rs 952.70 1up .62%.
Top losers on the Sensex are Wipro at Rs 457 down 0.16%, Reliance at Rs 2,838.10 down 0.14% and ITC at Rs 186 down 0.03%.
Most active shares on BSE are GMR Infra at Rs 251.10 with 1,405,842 shares, Mundra Port at Rs 975.20 with 304,864 shares and Jaiprakash Associate at Rs 1,805 with 152,514 shares.
Mkts open with decent gap up; bank, auto stocks up
The markets opened with decent gap up today taking cues from the global peers. Auto, private banks and the power stocks were looking strong in the early trade, however the capital good stocks were also attracting decent attention. Refineries were little subdued.
At 9:56 am, Sensex was up 189 points at 19316 and Nifty was up 35.95 points at 5734. Major gainers in the early trade were BHEL, RIL, SBI, ICICI Bank, HDFC Bank, Maruti, Bajaj Auto, Hindalco, NTPC, Infosys, Tata Steel and L&T.
Asian markets were trading weak. Hong Kong's Hang Seng tumbled 0.65% or 176.35 points at 27,033.86, Japan's Nikkei plunged 0.29% or 43.40 points at 15,179.45, Taiwan's Taiwan Weighted was down 0.22% or 18.81 points at 8,356.95, Singapore's Straits Times declined 0.12% or 4.02 points at 3,368.62 and South Korea's Seoul Composite dropped 0.16% or 3.05 points at 1,856.74.
Market cues:
* FIIs net buy USD 116.6 million in equity on Nov 26
* MFs net buy Rs 252.9 crore in equity on Nov 26
* NSE F&O Open Interest up by Rs 1,424 crore at Rs 1,09,960 crore
F&O cues:
* Futures Open Interest up by Rs 1,355 crore, Options Open Interest up by Rs 69 crore
* Nifty Nov Fut shed 31 lakh, Dec Fut add 53 lakh shares in Open Interest
* Nifty Nov at 32-pt premium, Dec at 14-pt premium
* Nifty Open Interest PCR at 1 vs 0.98
* Nifty Puts add 3.5 lakh shares in Open Interest
* Calls shed 0.8 lakh shares in Open Interest
* Nifty 5500 Put adds 1.42 lakh shares in Open Interest
* Nifty 5700 Call adds 1.5 lakh shares in Open Interest
* Nifty 6000 Call sheds 1.55 lakh shares in Open Interest
Source: Moneycontrol.com
Top midcap stocks for your portfolio
DD Sharma of Anand Rathi Securities’ midcap stock picks are RayBan Sun Optics, Sujana Towers and Amar Remedies.
The fundamentals of RayBan Optics are very strong and the demand for its products are growing very fast, said Sharma.
Sujana Towers is also a pick because the margins in the telecom business are quite healthy and there is a sustained demand in the towers, for telecom and power transmission.
According to DD Sharma, Amar Remedies is an attractive pick because as an FMGC company, it is available at a very attractive discounting.
Excerpts from CNBC-TV18’s exclusive interview with DD Sharma:
Q: Your first choice is RayBan Sun Optics. What is the kind of escalation or appreciation you expect in the share price from here?
A: This stock is quite steady since the last six months or so. It is moving in the range of Rs 87 to Rs 96-97. But the fundamentals of the company are quite strong. It is into lifestyle products. Typically, 80-85% of the revenue comes from goggles and frames. So, the demand for such products is growing very fast.
Apart from that, the company is a 70% subsidiary of Luxottica, which is a dominant global player in these kind of products and has 5,500 stores across the globe. They have very good brands under its portfolio. Gradually, they are launching these premium brands in the domestic markets. With the launching of those brands, the margins of the company will go up significantly.
From January 2007, they have launched two premium brands worth Rs 12,500 and Rs 10,000. They offered the biggest margins in this business. So, in the current year, for December 2007-end, the company could report EPS of around Rs 8 or so. That is discounted by 12 times the latest earnings or current year earnings. That is quite attractive for a multinational company in lifestyle products. Typically, lifestyle and retail are having discount of 20-25-30 times. So, in that way it looks very attractive to me.
Q: How much appreciation it would have?
A: I think it would appreciate by atleast 50%, in the next 6-12 months.
Q: The other pick that you have is Sujana Towers. Apparently, it is in the ancillary space to telecom. Financially, however, the company has not done well in Q2. Their margins jumped up from about 13-18%. What are you buying in the company?
A: I think this company is into the tower business. Almost 60% capacity is meant for power transmission towers and 40% is for the telecom towers. Actually, it is not into the project business. So, it supplies towers to either the telecom companies or to those companies, which are engaged in the project implementation for power transmission.
Margins in this business are quite healthy, because there is a huge and sustained demand in the towers, for telecom as well as for power transmission. The company has expanded the capacity of the tower, in the last 12-15 months, from 28,000 metric tonne to 1,28,000 metric tonne. It is now further expanding the capacity from 1,28,000 to 2,28,000, which is a significantly large capacity.
The margins are still healthy and therefore, we expect the earnings for the company in the current year, will be close to around Rs 15. The current price is discounting this Rs 15 earning by only ten times and that is very attractive. No other power transmission company or telecom tower transmission company is available at 10 P/E.
Q: What would be a fair valuation of this stock?
A: Most of the peers are discounted at 20-25 times.
Q: Amar Remedies have just taken an approval of around Rs 150 crore. They are into healthcare and dental care. What is it about the company that is worth investing?
A: This company is mainly into the toothpaste business and mainly 85% of the revenue comes from toothpaste and the toothbrushes business. These are ayurvedic toothpaste and not the general kind of toothpaste. The demand for these kind of natural or ayurvedic products is rising, not only in the rural areas, but also in the urban areas.
So, the demand is pretty good. The problem, so far, with this company was that it has one plant in Uttaranchal. The new plant was ready since the last six months, but it was not operational because of the environment clearance that was pending.
Now, the company got the environment clearance from the Centre and they hope to get it from the state. So, this investment in the new plant, which was so far useless, will now start giving results from December ‘07.
They hope to start this plant, which is in the tax free area or tax exempt area. So, the margin of the company’s products from those plants will be very good. Since, the last two years, the company is not showing any growth. Due to this new capacity, the growth will come. So, in the current year, the company can show earnings of around Rs 9 or so and next year, by ’09, it could be around Rs 13-14. Going by that, as an FMGC company, this is again available at a very attractive discounting.
Source: Moneycontrol.com
The fundamentals of RayBan Optics are very strong and the demand for its products are growing very fast, said Sharma.
Sujana Towers is also a pick because the margins in the telecom business are quite healthy and there is a sustained demand in the towers, for telecom and power transmission.
According to DD Sharma, Amar Remedies is an attractive pick because as an FMGC company, it is available at a very attractive discounting.
Excerpts from CNBC-TV18’s exclusive interview with DD Sharma:
Q: Your first choice is RayBan Sun Optics. What is the kind of escalation or appreciation you expect in the share price from here?
A: This stock is quite steady since the last six months or so. It is moving in the range of Rs 87 to Rs 96-97. But the fundamentals of the company are quite strong. It is into lifestyle products. Typically, 80-85% of the revenue comes from goggles and frames. So, the demand for such products is growing very fast.
Apart from that, the company is a 70% subsidiary of Luxottica, which is a dominant global player in these kind of products and has 5,500 stores across the globe. They have very good brands under its portfolio. Gradually, they are launching these premium brands in the domestic markets. With the launching of those brands, the margins of the company will go up significantly.
From January 2007, they have launched two premium brands worth Rs 12,500 and Rs 10,000. They offered the biggest margins in this business. So, in the current year, for December 2007-end, the company could report EPS of around Rs 8 or so. That is discounted by 12 times the latest earnings or current year earnings. That is quite attractive for a multinational company in lifestyle products. Typically, lifestyle and retail are having discount of 20-25-30 times. So, in that way it looks very attractive to me.
Q: How much appreciation it would have?
A: I think it would appreciate by atleast 50%, in the next 6-12 months.
Q: The other pick that you have is Sujana Towers. Apparently, it is in the ancillary space to telecom. Financially, however, the company has not done well in Q2. Their margins jumped up from about 13-18%. What are you buying in the company?
A: I think this company is into the tower business. Almost 60% capacity is meant for power transmission towers and 40% is for the telecom towers. Actually, it is not into the project business. So, it supplies towers to either the telecom companies or to those companies, which are engaged in the project implementation for power transmission.
Margins in this business are quite healthy, because there is a huge and sustained demand in the towers, for telecom as well as for power transmission. The company has expanded the capacity of the tower, in the last 12-15 months, from 28,000 metric tonne to 1,28,000 metric tonne. It is now further expanding the capacity from 1,28,000 to 2,28,000, which is a significantly large capacity.
The margins are still healthy and therefore, we expect the earnings for the company in the current year, will be close to around Rs 15. The current price is discounting this Rs 15 earning by only ten times and that is very attractive. No other power transmission company or telecom tower transmission company is available at 10 P/E.
Q: What would be a fair valuation of this stock?
A: Most of the peers are discounted at 20-25 times.
Q: Amar Remedies have just taken an approval of around Rs 150 crore. They are into healthcare and dental care. What is it about the company that is worth investing?
A: This company is mainly into the toothpaste business and mainly 85% of the revenue comes from toothpaste and the toothbrushes business. These are ayurvedic toothpaste and not the general kind of toothpaste. The demand for these kind of natural or ayurvedic products is rising, not only in the rural areas, but also in the urban areas.
So, the demand is pretty good. The problem, so far, with this company was that it has one plant in Uttaranchal. The new plant was ready since the last six months, but it was not operational because of the environment clearance that was pending.
Now, the company got the environment clearance from the Centre and they hope to get it from the state. So, this investment in the new plant, which was so far useless, will now start giving results from December ‘07.
They hope to start this plant, which is in the tax free area or tax exempt area. So, the margin of the company’s products from those plants will be very good. Since, the last two years, the company is not showing any growth. Due to this new capacity, the growth will come. So, in the current year, the company can show earnings of around Rs 9 or so and next year, by ’09, it could be around Rs 13-14. Going by that, as an FMGC company, this is again available at a very attractive discounting.
Source: Moneycontrol.com
Stay short or stay out, advise experts
In a choppy session today on Dalal St, the last hour jitters returned to haunt the investors and the markets slipped significantly. The Nifty closed at 5,616 down 81 points, while Sensex shut shop at 18,939 down 189 points.
The weakness in markets was inline with Asian indices trading flat or negative despite some positive cues from the Dow yesterday.
A Merrill Lynch report on the market says that they expect a consolidation before the final bubble phase. They say that fair value of Sensex is close to about 16,000. That is the 2008 target.
Rahul Mohindar of viratechindia.com believes the last half hour of volatility today indicates that the market has broken important support level today. He said, "That’s 5,650, so for shorter-term traders, someone who is trying to trade the next week or two weeks off for the next series, he is going to try and remain short. There is a very important support level punctured, which could bring in some weakness in the shorter-term. So again there is a lot of clarity, which is awaited in terms of levels being broken down, but the call is clear that either one stays short or stays out."
Sushil Kedia, Head- Institutional Equities, K&A Securities said that 5,640 and 5,840 are two important fulcrums on the Nifty. According to him, chances are that 5,640 will break on the downside in the next few sessions. Kedia advises investors to initiate a downside on the Nifty from here. “If the Nifty falls below 5,640 it may test 5,320 levels,” Kedia said, adding that until the Nifty moves beyong 5,840, there will be a downward bias.
Source: Moneycontrol.com
The weakness in markets was inline with Asian indices trading flat or negative despite some positive cues from the Dow yesterday.
A Merrill Lynch report on the market says that they expect a consolidation before the final bubble phase. They say that fair value of Sensex is close to about 16,000. That is the 2008 target.
Rahul Mohindar of viratechindia.com believes the last half hour of volatility today indicates that the market has broken important support level today. He said, "That’s 5,650, so for shorter-term traders, someone who is trying to trade the next week or two weeks off for the next series, he is going to try and remain short. There is a very important support level punctured, which could bring in some weakness in the shorter-term. So again there is a lot of clarity, which is awaited in terms of levels being broken down, but the call is clear that either one stays short or stays out."
Sushil Kedia, Head- Institutional Equities, K&A Securities said that 5,640 and 5,840 are two important fulcrums on the Nifty. According to him, chances are that 5,640 will break on the downside in the next few sessions. Kedia advises investors to initiate a downside on the Nifty from here. “If the Nifty falls below 5,640 it may test 5,320 levels,” Kedia said, adding that until the Nifty moves beyong 5,840, there will be a downward bias.
Source: Moneycontrol.com
Tuesday, November 27, 2007
Market not in hurry to reach new highs
The markets consolidated today, after yesterday's sharp rally. Midcaps outperformed the large caps yet again, the Nifty closed at 5,698, down 33 points, while the Sensex shut shop at 19,127, down 120 points. The midcap index closed up nearly a percent at 7,829.
Amitabh Chakraborty, Pres-Equity at Religare Securities has a view that that the midcaps would be moving sharply going forward because the valuation gap has widen between the large caps and the midcaps and some profit booking will happen in the large caps. “That money will get rotated in the midcaps only those where the Q2 results have been good, where the Q3 visibility would be good and the management quality is impeccable. So that is something we believe will happen and we will see that happening in January” he says.
Experts believe that in the short-term over the next few months, there will be continued volatility in the markets which has more to do with the global scenario and concerns on US recessions which are growing day by day. Global credit markets are continuing to be in a turmoil state and that’s a concern, which will certainly lead to more volatility.
Analysts feel that the participatory note issue is also having its impact over a period in terms of caped flows and FII inflows in the markets though the earnings growth trajectory remains quite strong.
Anand Tandon of Gryffon Investment Advisors, feels that for the moment, the markets are not in a hurry to reach new highs. They are near top-end of the range and the next movement would be downwards, he feels. The range is getting established and may cause a breakout in the next few weeks, Tandon said. “Since we still haven’t seen the back broken in terms of local interest in the stock market I don’t think the downside is perhaps to lock. But all said and done, the range is now getting established and there is nothing that looks like it will cause a breakout in the next few weeks, at least "
Source: Moneycontrol.com
Amitabh Chakraborty, Pres-Equity at Religare Securities has a view that that the midcaps would be moving sharply going forward because the valuation gap has widen between the large caps and the midcaps and some profit booking will happen in the large caps. “That money will get rotated in the midcaps only those where the Q2 results have been good, where the Q3 visibility would be good and the management quality is impeccable. So that is something we believe will happen and we will see that happening in January” he says.
Experts believe that in the short-term over the next few months, there will be continued volatility in the markets which has more to do with the global scenario and concerns on US recessions which are growing day by day. Global credit markets are continuing to be in a turmoil state and that’s a concern, which will certainly lead to more volatility.
Analysts feel that the participatory note issue is also having its impact over a period in terms of caped flows and FII inflows in the markets though the earnings growth trajectory remains quite strong.
Anand Tandon of Gryffon Investment Advisors, feels that for the moment, the markets are not in a hurry to reach new highs. They are near top-end of the range and the next movement would be downwards, he feels. The range is getting established and may cause a breakout in the next few weeks, Tandon said. “Since we still haven’t seen the back broken in terms of local interest in the stock market I don’t think the downside is perhaps to lock. But all said and done, the range is now getting established and there is nothing that looks like it will cause a breakout in the next few weeks, at least "
Source: Moneycontrol.com
Mundra Port to sustain CAGR of 30%
Mundra Port and Special Economic Zone, India's largest non-government cargo terminal, has listed at Rs 770, a premium of 75% over its offer price of Rs 440 and touched a high of Rs 1050 on the NSE.
Ameet Desai, ED, Mundra Port & SEZ said they would be able to sustain CAGR of a high 30%. Coal and crude will contribute to a large part of the growth, almost 50-60%, going forward.
Container cargo, fertiliser, minerals, steel products are also seen as drivers. They see small stream of SEZ revenues this year onwards.
Excerpts from CNBC-TV18's exclusive interview with Ameet Desai:
Q: It is a spectacular listing at Rs 950, but there are couple of issues that are a niggling worry for your investors. Is litigation the reason why the Mundra Stock is not trading in F&O? Have you got any clarity from Sebi or from exchanges why it’s not trading in F&O today?
A: We have been informed by the book running lead managers that the decision to list it in the F&O category is kept in abeyance for some time. We have yet to get further details from Sebi and Stock Exchanges in the matter. We will work with them and make sure that the queries are answered. I do not see much of an issue going forward in this matter.
Q: Where do the pending litigation stand with DP world and with the State Government, with Mundra Port and those bodies?
A: That is an essential matter, which has just got a subjudice between DP World and us and it will come for hearing very soon. Since the matter is subjuidiced, I would not like to make further comments on that matter.
Q: Just line out the kind of growth that Mundra can expect both from the cargo front and whether or not this comes with an intended increase in tariffs over the next few financial years?
A: What we have always consistently maintained is that Mundra Port has distinct location advantages in terms of being the Northern-Western uppermost port in the country and that caters to a vast hinterland, which is highly industrialised and growing, both in industry and services sector.
We had high 30’s of CAGR in our cargo growth over the last 5-6 years and given the general economic growth and buoyancy in trade, we think coming years will see great growth in the port sectors.
We also have the added benefit of the multi-product SEZ being in the vicinity of the port, which will lead to the ports growth. The industries will grow too based on the logistics advantage of the port; we also have the multi-model business model of inland container depots and container trains to aid our port business growth.
Q: What does accelerated growth mean? Can you benchmark yourself against something like JNPT or Mumbai port and why Mundra will grow a lot more and by how much?
A: Without getting into direct comparisons, because we have grown from a much smaller base, we have been growing at a much larger number compared to most of the ports in the country. That is why I said our historical CAGR has been 39-40% over last 6 years in our cargo growth.
And particularly the connectivity and quick evacuation to the massive hinterland is a great reason why Mundra port will continue to grow.
Q: How much of your cargo revenues would come from your two segments, coal and crude going forward?
A: Coal and crude will always be contributing to a large part of our growth, but since Mundra Port is a multi-commodity port, besides crude & coal which are the key drivers, container cargo will also continue to grow at Mundra and some other commodities like fertilisers, minerals, steel coils, steel plates and steel pipes, which will also continue to grow.
But I think coal, crude and container will constitute about 50-60% of our cargo revenues going forward.
Q: By when do you think SEZ revenues will start kicking in to your overall revenue streams, could you give us a timeline?
A: In a small way, they will start kicking in from this year itself as units start coming into the SEZ and start setting their shop, first by way of lease income we get on the land that we lease to them. I think it will go an accentuated drive as more and more units come in actualising the port logistics advantages.
So this year onwards we are seeing small stream of SEZ revenues, which will grow in times to come.
Q: How have you valued your own SEZ prospects, what do you plan to do for for industrial expansion or growth?
A: Our SEZ has the following advantages; it has a port right in the SEZ, it has got a rail link, it has got road connectivity and also airport connectivity. This provides a great impetus for growth in terms of logistics convenience to the industries.
Therefore Mundra SEZ, which has got all the ingredients of industrial infrastructure in place, should become a very good platform for industries to come in and besides reaping the economic advantages, would also reap the logistics advantages.
Source: Moneycontrol.com
Ameet Desai, ED, Mundra Port & SEZ said they would be able to sustain CAGR of a high 30%. Coal and crude will contribute to a large part of the growth, almost 50-60%, going forward.
Container cargo, fertiliser, minerals, steel products are also seen as drivers. They see small stream of SEZ revenues this year onwards.
Excerpts from CNBC-TV18's exclusive interview with Ameet Desai:
Q: It is a spectacular listing at Rs 950, but there are couple of issues that are a niggling worry for your investors. Is litigation the reason why the Mundra Stock is not trading in F&O? Have you got any clarity from Sebi or from exchanges why it’s not trading in F&O today?
A: We have been informed by the book running lead managers that the decision to list it in the F&O category is kept in abeyance for some time. We have yet to get further details from Sebi and Stock Exchanges in the matter. We will work with them and make sure that the queries are answered. I do not see much of an issue going forward in this matter.
Q: Where do the pending litigation stand with DP world and with the State Government, with Mundra Port and those bodies?
A: That is an essential matter, which has just got a subjudice between DP World and us and it will come for hearing very soon. Since the matter is subjuidiced, I would not like to make further comments on that matter.
Q: Just line out the kind of growth that Mundra can expect both from the cargo front and whether or not this comes with an intended increase in tariffs over the next few financial years?
A: What we have always consistently maintained is that Mundra Port has distinct location advantages in terms of being the Northern-Western uppermost port in the country and that caters to a vast hinterland, which is highly industrialised and growing, both in industry and services sector.
We had high 30’s of CAGR in our cargo growth over the last 5-6 years and given the general economic growth and buoyancy in trade, we think coming years will see great growth in the port sectors.
We also have the added benefit of the multi-product SEZ being in the vicinity of the port, which will lead to the ports growth. The industries will grow too based on the logistics advantage of the port; we also have the multi-model business model of inland container depots and container trains to aid our port business growth.
Q: What does accelerated growth mean? Can you benchmark yourself against something like JNPT or Mumbai port and why Mundra will grow a lot more and by how much?
A: Without getting into direct comparisons, because we have grown from a much smaller base, we have been growing at a much larger number compared to most of the ports in the country. That is why I said our historical CAGR has been 39-40% over last 6 years in our cargo growth.
And particularly the connectivity and quick evacuation to the massive hinterland is a great reason why Mundra port will continue to grow.
Q: How much of your cargo revenues would come from your two segments, coal and crude going forward?
A: Coal and crude will always be contributing to a large part of our growth, but since Mundra Port is a multi-commodity port, besides crude & coal which are the key drivers, container cargo will also continue to grow at Mundra and some other commodities like fertilisers, minerals, steel coils, steel plates and steel pipes, which will also continue to grow.
But I think coal, crude and container will constitute about 50-60% of our cargo revenues going forward.
Q: By when do you think SEZ revenues will start kicking in to your overall revenue streams, could you give us a timeline?
A: In a small way, they will start kicking in from this year itself as units start coming into the SEZ and start setting their shop, first by way of lease income we get on the land that we lease to them. I think it will go an accentuated drive as more and more units come in actualising the port logistics advantages.
So this year onwards we are seeing small stream of SEZ revenues, which will grow in times to come.
Q: How have you valued your own SEZ prospects, what do you plan to do for for industrial expansion or growth?
A: Our SEZ has the following advantages; it has a port right in the SEZ, it has got a rail link, it has got road connectivity and also airport connectivity. This provides a great impetus for growth in terms of logistics convenience to the industries.
Therefore Mundra SEZ, which has got all the ingredients of industrial infrastructure in place, should become a very good platform for industries to come in and besides reaping the economic advantages, would also reap the logistics advantages.
Source: Moneycontrol.com
Monday, November 26, 2007
Hold DLF: Emkay Research
Emkay Research has recommended hold rating on DLF with a target of Rs 868, November 22, 2007 report. “The company has a large land reserve of around 14,000 acres with a saleable area of 738 million square feet (m sft). It has over the years established a strong brand name for itself and has an experienced management team with an established track record. The company has also diversified into various related segments viz. Infrastructure development (including SEZ development), hospitality etc. which will ensure a steady stream of revenue. We have arrived at the target price of Rs 868 based on a premium of 20% to the NAV of the company’s land bank. The stock seems to be fairly priced with limited room for upside in the short run. However, given the strong visibility (huge land bank coupled with an established brand) and established track record of the management, we believe that the company has the potential to deliver growth on a sustained basis. We maintain ‘HOLD’ rating on the stock.” according to the Emkay Research report.
Source: Moneycontrol.com
Source: Moneycontrol.com
Do you own these two hidden gems?
Look for opportunities in JK Tyres, Hyd Ind
There are some companies like J&K Tyres and Hyderabad Industries which has low PEs, high dividend yield, price to book value of less than 1, positive cash EPS and good profit growth .
J&K Tyres:
JK Tyres & Industries is the third largest player in its segment with industry P/E of around 12x and it is running currently at a P/E of 6.5 times. So, it is cheaper compared to peers in its segment and has a price to book value of 0.8x and a book value per share is about Rs 151. So, if you are buying that company, you are getting it at 80% of its value.
The dividend yield is 2.1% whereas EPS of about Rs 19 and cash EPS is at about Rs 43. That is very interesting compared to the Sensex dividend yield of less than 1%.
Certainly there is some institutional activity. DSP ML Fund, Reliance Cap Fund, HDFC MF, UTI MF, LIC, all hold together about 11% in this company.
Performance wise, this company is doing well. Sales growth has de-grown by about 3% because the auto sector in itself is slowing down. But the quarterly sales PAT growth over the last quarter is up 249%, and it is not backed by other income. Other income has declined by 27% and the 52-week underperformance on the Sensex is close to about 50% on that counter.
Hyderabad Industries:
The next hidden gem is Hyderabad Industries. It is in the cement products industry and the third largest player in its segment. Price to earnings ratio of about 7.8 times, the industry average is close to 11 times. Price to book value is again 0.8x, book value per share of about Rs 207. Dividend yield is an extraordinary 2.9%. EPS at about Rs 22, and cash EPS at about Rs 36.
ICICI Pru, LIC both hold together more than 6% on this counter. Performance wise, the sales growth during the previous quarter has de-grown by about 7%. But then PAT is up 402% and It is not backed by other income. The other income is actually 22%. And the 52-week underperformance to the Sensex is close to about 80%.
These may underperform in the absolute short-term. But in the long-term they give return on investments for investors.
Source: Moneycontrol.com
There are some companies like J&K Tyres and Hyderabad Industries which has low PEs, high dividend yield, price to book value of less than 1, positive cash EPS and good profit growth .
J&K Tyres:
JK Tyres & Industries is the third largest player in its segment with industry P/E of around 12x and it is running currently at a P/E of 6.5 times. So, it is cheaper compared to peers in its segment and has a price to book value of 0.8x and a book value per share is about Rs 151. So, if you are buying that company, you are getting it at 80% of its value.
The dividend yield is 2.1% whereas EPS of about Rs 19 and cash EPS is at about Rs 43. That is very interesting compared to the Sensex dividend yield of less than 1%.
Certainly there is some institutional activity. DSP ML Fund, Reliance Cap Fund, HDFC MF, UTI MF, LIC, all hold together about 11% in this company.
Performance wise, this company is doing well. Sales growth has de-grown by about 3% because the auto sector in itself is slowing down. But the quarterly sales PAT growth over the last quarter is up 249%, and it is not backed by other income. Other income has declined by 27% and the 52-week underperformance on the Sensex is close to about 50% on that counter.
Hyderabad Industries:
The next hidden gem is Hyderabad Industries. It is in the cement products industry and the third largest player in its segment. Price to earnings ratio of about 7.8 times, the industry average is close to 11 times. Price to book value is again 0.8x, book value per share of about Rs 207. Dividend yield is an extraordinary 2.9%. EPS at about Rs 22, and cash EPS at about Rs 36.
ICICI Pru, LIC both hold together more than 6% on this counter. Performance wise, the sales growth during the previous quarter has de-grown by about 7%. But then PAT is up 402% and It is not backed by other income. The other income is actually 22%. And the 52-week underperformance to the Sensex is close to about 80%.
These may underperform in the absolute short-term. But in the long-term they give return on investments for investors.
Source: Moneycontrol.com
Sensex may not cross or hold 20K levels
The markets kicked off the week on a strong note. Boosted by positive global cues, the indices surged ahead and closed with handy gains. Nifty closed at 5,732 up 123 points, while Sensex shut shop at 19,248 up 395 points.
Markets closed the day with handsome gains on heavy buying seen in scrips across sectors. It was a good of trade for most of the equity markets across globe. Asia had a strong session today, barring Shanghai Comp most of the Asia closed in green. Europe was also trading in positive terrain.
HDFC Bank, Tata Steel, SAIL, Bharti Airtel, Unitech, HDFC, TCS, ONGC, Reliance Energy are among the top gainers. Deccan Aviation, Voltas, IndusInd Bank were among the strong midcap stocks.
Technolgy stocks have bounced back today and were among the top gainers.
Dipan Mehta, Member, BSE & NSE feels that some FII money may have been coming into the Indian markets. He said, “Markets are always right and although there is skepticism, the screen clearly shows the 400-point rally. Today I think some of the FII money may have been coming into the market. We have been seeing consistent negative flows over the past almost three weeks or so. But today, maybe slightly different, given the fact that a lot of largecap stocks have rallied on the back of decent volumes. So that is one part of the reason. Some amount of short covering as well as build up on the futures side and fresh long positions also could be responsible for this kind of a rally that we have seen.”
He further added that there may be some flows coming in from retail investors and domestic investors. “At the same time I think the retail investors who are pegged down by some other worries in the global markets and with some of the concerns easing, there maybe a surge of flows coming in from retail investors and domestic investors as well because we are seeing a lot of the action in some of the side counters and the cash group, the B group shares as well. Question is whether the market is scaled to go beyond 20,000 and holds those gains. I do not think that is a possibility,” he said.
Deepak Mohoni Of Trendwatch (India) says that he would hold on to positions because there is global rally building up, apparently on the word that the pre-Christmas sales in the US have been very good. “So if there is a global rally that you certainly don’t want to argue against, and as far as 20,000 is concerned, that is only 3.5%-4% from here. So that is not really formidable target in percentage terms. So I think its okay to be optimistic, at least in the short-term.”
Source: Moneycontrol.com
Markets closed the day with handsome gains on heavy buying seen in scrips across sectors. It was a good of trade for most of the equity markets across globe. Asia had a strong session today, barring Shanghai Comp most of the Asia closed in green. Europe was also trading in positive terrain.
HDFC Bank, Tata Steel, SAIL, Bharti Airtel, Unitech, HDFC, TCS, ONGC, Reliance Energy are among the top gainers. Deccan Aviation, Voltas, IndusInd Bank were among the strong midcap stocks.
Technolgy stocks have bounced back today and were among the top gainers.
Dipan Mehta, Member, BSE & NSE feels that some FII money may have been coming into the Indian markets. He said, “Markets are always right and although there is skepticism, the screen clearly shows the 400-point rally. Today I think some of the FII money may have been coming into the market. We have been seeing consistent negative flows over the past almost three weeks or so. But today, maybe slightly different, given the fact that a lot of largecap stocks have rallied on the back of decent volumes. So that is one part of the reason. Some amount of short covering as well as build up on the futures side and fresh long positions also could be responsible for this kind of a rally that we have seen.”
He further added that there may be some flows coming in from retail investors and domestic investors. “At the same time I think the retail investors who are pegged down by some other worries in the global markets and with some of the concerns easing, there maybe a surge of flows coming in from retail investors and domestic investors as well because we are seeing a lot of the action in some of the side counters and the cash group, the B group shares as well. Question is whether the market is scaled to go beyond 20,000 and holds those gains. I do not think that is a possibility,” he said.
Deepak Mohoni Of Trendwatch (India) says that he would hold on to positions because there is global rally building up, apparently on the word that the pre-Christmas sales in the US have been very good. “So if there is a global rally that you certainly don’t want to argue against, and as far as 20,000 is concerned, that is only 3.5%-4% from here. So that is not really formidable target in percentage terms. So I think its okay to be optimistic, at least in the short-term.”
Source: Moneycontrol.com
Sunday, November 25, 2007
Reasonable for market to correct further
Surjit Bhalla of Principal O(x)us Investments said, the markets may see more downsides from here and a consolidation was likely with a downward bias. He said the market was concerned about negative fundamental as well as technical cues. He noted that “try to take quote here”
He said he was not super bullish on the global situation. He added that global growth had slowed and was likely to remain so. According to him, it was difficult to predict the outcome of the US Fed meeting on December 11. He felt that US interest rates were still on the higher side, and the odds were favour of a 50-75 bps easing over the next six months.
When asked about sectors, he said the depreciation of the rupee was making technology worthwhile at current levels. He was also bullish on power and infrastructure sectors, adding that the long-term growth story in the sectors remained intact.
Excerpts from CNBC-TV18's exclusive interview Surjit Bhalla:
Q: What is making you circumspect, patience or is it the global cues that you are seeing? Why do you think the risks are more on the downside?
Bhalla: I think both fundamentals and technicals. On the fundamentals, it is much of what you said that the global cues are certainly not very comforting. One can argue however that all the bad news is out. But if it was a case that valuations were lower, then the argument that all the bad news is out is a very good argument and makes one extremely bullish.
Now, we are sitting close to 6,000 or 10% below that. In that context with PE ratio somewhere in the 22-25 range, the bad news may be all out. But that doesn’t make one go ahead and aggressively buy. The other side of the story, the technicals is the other side - that is suggesting that perhaps at these levels, the reasonable way for the market is to move downwards.
Most markets in the emerging markets space have corrected much beyond 10%. We are at somewhere around 8% or so. That is the third factor. I think Brazil and we are the only two countries that haven’t really depreciated or corrected by double-digit figures.
We add all of that up together - how much can you then say that - listen one should go ahead and buy, I just don’t find that a very comforting view.
Q: What about the global situation most emerging markets, as you said, have corrected more than us and there seems to be a debate on, on whether the Fed will cut in December again or not? What do you think is the likely outcome from the December meeting?
Surjit Bhalla: It is a close call. If you go by the minutes of the last Fed meeting, they clearly stated that they would on hold for the time being unless something exceptional happens. Weighed against that is the news about the economy which is not shockingly weaker but certainly weaker than what the Fed had led us to believe. Add to that the fact that the real interest rates in the US are still quite high- I am talking about the Fed funds rate though the two-year note and the 10-year have corrected or have come to very reasonable yields. So the odds are if I were to put a bet that the Fed would ease and would continue to ease - maybe there is another 50-75 basis point over the next six-months until we get imbalance with- the real Fed funds rate should be somewhere close to 2% and we are not quite there yet and that’s 2% on when the economy is doing well.
When the economy is doing badly as clearly the US economy is doing though I don’t belong to the camp that says that it will go into recession that maybe you want to get the Fed fund’s rate, the real Fed funds rate down to about 1.5% or so, which is about 3.5%. That’s again on a long-term basis; I am not saying that’s going to happen or should happen over the next six months. The international situation for the first time in a long while, actually since 2001, is not in a super bullish state and even though global growth will be there, it will clearly be slower. As far as India is concerned, we are one of the few emerging markets amongst our competitors whose growth rate already is lower than last year and that has to do with both the high interest rate policy that we are followed as well as the high rupee value that we followed.
But that is an interesting statistic that amongst all our comparators, there growth rate this year GDP growth rate is higher than what was last year. Ours is lower. So you add that to the mixture, which says that, our valuations are somewhat on the higher side. Growth in prices has been rather exceptional. We have not corrected so much and the global situation n- I am just saying it’s very long bet; all puns intended, to think that the market will make a significant move to the upside from these levels.
Q: You are sounding more circumspect than I have heard you over the last many months. Even if there is not too much downside you would feel that 20,000 is an intermediate top in place which would be difficult to take out given the factors you mentioned?
Surjit Bhalla: I really think so. Here at O(x)us, we emphasize technicals a lot as well as fundamentals and what you have is a double whammy on the 20,000 side. You have got 20,000 and 6,000 on the Nifty. This is a relatively rare occurrence. So just add up all of the elements and it just seems- and the story was very different 10-days ago where it really looked like we on our ways to make an new high and the fact that we failed that adds additional evidence. The reason we failed exposed that if you will, we haven’t corrected as much as the Asian markets. So there is definitely a bit of catch up involved. You can’t have this kind of a gap all in the space of 3-months to persist for very long. So either other Asian markets really rally and I don’t see the elements in place for that happening or we fall a bit more than the rest of our neighbours.
Q: Would you agree or would you buy them after the fall?
Bhalla: Let me answer this is a slightly belated fashion. I have been sounding circumspect or not as bullish as I have been. There is a silver lining, there is something that can be bullish and likely will be bullish and therefore that signifies a particular sector to be in. That is the dollar or the rupee. Our view is that the dollar is very close to historical lows against the Deutsche Mark, against the euro, against the yen and if you will, against the rupee as well.
So, we see a significant correction in the dollar against these currencies, not against China, not against East Asia, but certainly against the euro, the pound and the rupee. If the rupee depreciates by 2-4%, which we think is quite likely, then I think the software sector, forget the power sector - just look at the software sector as to how much has been beaten down. I think that will provide a fillip to the software sector. Also, the software sector provides a safe haven in times of when the momentum play is being unraveled.
The infrastructure story in India started, if you will, about a year-year and half ago and will persist for the next 5-10 years. This is not a fly by night, internet boom where there is no valuation and no real profits and real activity. I think you have to correct perhaps even more and then it becomes rather attractive. So I like the software sector a lot at these levels. Power and infrastructure sector, if they correct, seems at least probable, if not likely.
Then they will become attractive. But one point I do want to make, this is an unfortunate recurrence for value players like myself. That is, I just see a lot more operator activity in leading stocks than I have ever seen before. I don’t think that is a healthy development.
Basically the momentum plays that you talk about is a code word for operator activity. I think that is confusing - the value play in the market place. If that is the case and if market corrects, then the market will go much more to the downside than befits it or the fundamentals suggest. That is the other danger lurking in the Indian equity space. You would probably have a better reading on how much operator activity there is. But I certainly feel it and we measure it by indicators in several stocks that it has really zoomed up in the last six months.
Source: Moneycontrol.com
He said he was not super bullish on the global situation. He added that global growth had slowed and was likely to remain so. According to him, it was difficult to predict the outcome of the US Fed meeting on December 11. He felt that US interest rates were still on the higher side, and the odds were favour of a 50-75 bps easing over the next six months.
When asked about sectors, he said the depreciation of the rupee was making technology worthwhile at current levels. He was also bullish on power and infrastructure sectors, adding that the long-term growth story in the sectors remained intact.
Excerpts from CNBC-TV18's exclusive interview Surjit Bhalla:
Q: What is making you circumspect, patience or is it the global cues that you are seeing? Why do you think the risks are more on the downside?
Bhalla: I think both fundamentals and technicals. On the fundamentals, it is much of what you said that the global cues are certainly not very comforting. One can argue however that all the bad news is out. But if it was a case that valuations were lower, then the argument that all the bad news is out is a very good argument and makes one extremely bullish.
Now, we are sitting close to 6,000 or 10% below that. In that context with PE ratio somewhere in the 22-25 range, the bad news may be all out. But that doesn’t make one go ahead and aggressively buy. The other side of the story, the technicals is the other side - that is suggesting that perhaps at these levels, the reasonable way for the market is to move downwards.
Most markets in the emerging markets space have corrected much beyond 10%. We are at somewhere around 8% or so. That is the third factor. I think Brazil and we are the only two countries that haven’t really depreciated or corrected by double-digit figures.
We add all of that up together - how much can you then say that - listen one should go ahead and buy, I just don’t find that a very comforting view.
Q: What about the global situation most emerging markets, as you said, have corrected more than us and there seems to be a debate on, on whether the Fed will cut in December again or not? What do you think is the likely outcome from the December meeting?
Surjit Bhalla: It is a close call. If you go by the minutes of the last Fed meeting, they clearly stated that they would on hold for the time being unless something exceptional happens. Weighed against that is the news about the economy which is not shockingly weaker but certainly weaker than what the Fed had led us to believe. Add to that the fact that the real interest rates in the US are still quite high- I am talking about the Fed funds rate though the two-year note and the 10-year have corrected or have come to very reasonable yields. So the odds are if I were to put a bet that the Fed would ease and would continue to ease - maybe there is another 50-75 basis point over the next six-months until we get imbalance with- the real Fed funds rate should be somewhere close to 2% and we are not quite there yet and that’s 2% on when the economy is doing well.
When the economy is doing badly as clearly the US economy is doing though I don’t belong to the camp that says that it will go into recession that maybe you want to get the Fed fund’s rate, the real Fed funds rate down to about 1.5% or so, which is about 3.5%. That’s again on a long-term basis; I am not saying that’s going to happen or should happen over the next six months. The international situation for the first time in a long while, actually since 2001, is not in a super bullish state and even though global growth will be there, it will clearly be slower. As far as India is concerned, we are one of the few emerging markets amongst our competitors whose growth rate already is lower than last year and that has to do with both the high interest rate policy that we are followed as well as the high rupee value that we followed.
But that is an interesting statistic that amongst all our comparators, there growth rate this year GDP growth rate is higher than what was last year. Ours is lower. So you add that to the mixture, which says that, our valuations are somewhat on the higher side. Growth in prices has been rather exceptional. We have not corrected so much and the global situation n- I am just saying it’s very long bet; all puns intended, to think that the market will make a significant move to the upside from these levels.
Q: You are sounding more circumspect than I have heard you over the last many months. Even if there is not too much downside you would feel that 20,000 is an intermediate top in place which would be difficult to take out given the factors you mentioned?
Surjit Bhalla: I really think so. Here at O(x)us, we emphasize technicals a lot as well as fundamentals and what you have is a double whammy on the 20,000 side. You have got 20,000 and 6,000 on the Nifty. This is a relatively rare occurrence. So just add up all of the elements and it just seems- and the story was very different 10-days ago where it really looked like we on our ways to make an new high and the fact that we failed that adds additional evidence. The reason we failed exposed that if you will, we haven’t corrected as much as the Asian markets. So there is definitely a bit of catch up involved. You can’t have this kind of a gap all in the space of 3-months to persist for very long. So either other Asian markets really rally and I don’t see the elements in place for that happening or we fall a bit more than the rest of our neighbours.
Q: Would you agree or would you buy them after the fall?
Bhalla: Let me answer this is a slightly belated fashion. I have been sounding circumspect or not as bullish as I have been. There is a silver lining, there is something that can be bullish and likely will be bullish and therefore that signifies a particular sector to be in. That is the dollar or the rupee. Our view is that the dollar is very close to historical lows against the Deutsche Mark, against the euro, against the yen and if you will, against the rupee as well.
So, we see a significant correction in the dollar against these currencies, not against China, not against East Asia, but certainly against the euro, the pound and the rupee. If the rupee depreciates by 2-4%, which we think is quite likely, then I think the software sector, forget the power sector - just look at the software sector as to how much has been beaten down. I think that will provide a fillip to the software sector. Also, the software sector provides a safe haven in times of when the momentum play is being unraveled.
The infrastructure story in India started, if you will, about a year-year and half ago and will persist for the next 5-10 years. This is not a fly by night, internet boom where there is no valuation and no real profits and real activity. I think you have to correct perhaps even more and then it becomes rather attractive. So I like the software sector a lot at these levels. Power and infrastructure sector, if they correct, seems at least probable, if not likely.
Then they will become attractive. But one point I do want to make, this is an unfortunate recurrence for value players like myself. That is, I just see a lot more operator activity in leading stocks than I have ever seen before. I don’t think that is a healthy development.
Basically the momentum plays that you talk about is a code word for operator activity. I think that is confusing - the value play in the market place. If that is the case and if market corrects, then the market will go much more to the downside than befits it or the fundamentals suggest. That is the other danger lurking in the Indian equity space. You would probably have a better reading on how much operator activity there is. But I certainly feel it and we measure it by indicators in several stocks that it has really zoomed up in the last six months.
Source: Moneycontrol.com
Wall Street bounces back; Dow up 181 points
Yesterday's shortened session ended with moderate gains. The Dow surged 181.84 points, or 1.42%, to 12,980.88. The Standard & Poor's 500 index rose 23.93 points, or 1.69%, to 1,440.70, and the Nasdaq composite index gained 34.45 points, or 1.34%, to 2,596.60.
Source: Moneycontrol.com
Source: Moneycontrol.com
Friday, November 23, 2007
Will market consolidate or pullback
It has been a rough week for the market but at least it closed on an optimistic note. Today's closing had nothing wrong about it. It was volatile through the trading day of course. Today, we didn’t have anything by way off global cues. The US was shut, Asia was sort off indeterminate, so we just tossed and turned around after a good opening. In the middle of the day when the news of the UP blasts came in, the market fell off very sharply into the red. It managed to recover from that and finally closed at a respective level given the circumstances.
It is up to about 18,800 on the Sensex and back to 5,600 on the Nifty. Yesterday’s low was below 5,400. We have managed to claw back more than 200-points from yesterday’s lows, which is not bad. The market was oversold, from that oversold ground we have got a pullback. Now, whether this is the market getting out of the woods or is it just a pullback? We will know next week but at least the closing has not been on a terrible level.
Week-on-week, the Sensex and Nifty are down about 5% a piece. This cannot be called a good week by any stretch. It has been a difficult week for largecaps and midcaps. Today, we saw bounces in stocks, which had sold off over the last three sessions. The breath was pretty good in midcaps and largecaps and the Midcap Index also did reasonably well today.
The power sector, which got hammered over the last one-week, has come back today. Reliance Energy lead it, NTPC is doing very well and so are power utilities led by Siemens, ABB, and L&T are all looking good. Even power ancillary and capital goods stocks are doing well.
The rupee is back to the 39.60, which is why Infosys has affected a small pullback. It has been drubbed continuously, but the first signs of buying may be emerging in Infosys, perhaps linked to the rupee. Unitech which got sold off along with DLF yesterday, have both affected a little bit off a come back today.
Bad week for oil marketing companies. They showed some early promise but then HPCL and BPCL have sold off once again. In the midcap space, power has bounced back be it Neyveli Lignite, which had a spectacular come back today, or PTC, they all looked pretty good.
Fertilisers had a good pullback as well led by Nagarjuna Fertiliser and Chambal Fertiliser. We had TTML, which bounced back. Essar Oil did extremely well today and many other stocks like Voltas and Welspun Gujarat also did well.
There were couple of listing as well. The one, which stood out today, was Barak Valley Cement. That had a reasonably good listing. Managed to holdout pretty well in a difficult or volatile market. Rathi Bars was not so spectacular. It listed around that issue price of Rs 35 and drifted around a bit, finally did not do too much. So, one good and one not so good listing from the market.
The market is interestingly poised. The jury is still out on whether this is just a pullback and will get sold in to a slightly higher levels or the market is slowly trying to form a base and is about to get out of the woods. Next week, is also F&O expiry. It promises to be an interesting cliffhanger and crucial decisive kind of week.
Source: Moneycontrol.com
It is up to about 18,800 on the Sensex and back to 5,600 on the Nifty. Yesterday’s low was below 5,400. We have managed to claw back more than 200-points from yesterday’s lows, which is not bad. The market was oversold, from that oversold ground we have got a pullback. Now, whether this is the market getting out of the woods or is it just a pullback? We will know next week but at least the closing has not been on a terrible level.
Week-on-week, the Sensex and Nifty are down about 5% a piece. This cannot be called a good week by any stretch. It has been a difficult week for largecaps and midcaps. Today, we saw bounces in stocks, which had sold off over the last three sessions. The breath was pretty good in midcaps and largecaps and the Midcap Index also did reasonably well today.
The power sector, which got hammered over the last one-week, has come back today. Reliance Energy lead it, NTPC is doing very well and so are power utilities led by Siemens, ABB, and L&T are all looking good. Even power ancillary and capital goods stocks are doing well.
The rupee is back to the 39.60, which is why Infosys has affected a small pullback. It has been drubbed continuously, but the first signs of buying may be emerging in Infosys, perhaps linked to the rupee. Unitech which got sold off along with DLF yesterday, have both affected a little bit off a come back today.
Bad week for oil marketing companies. They showed some early promise but then HPCL and BPCL have sold off once again. In the midcap space, power has bounced back be it Neyveli Lignite, which had a spectacular come back today, or PTC, they all looked pretty good.
Fertilisers had a good pullback as well led by Nagarjuna Fertiliser and Chambal Fertiliser. We had TTML, which bounced back. Essar Oil did extremely well today and many other stocks like Voltas and Welspun Gujarat also did well.
There were couple of listing as well. The one, which stood out today, was Barak Valley Cement. That had a reasonably good listing. Managed to holdout pretty well in a difficult or volatile market. Rathi Bars was not so spectacular. It listed around that issue price of Rs 35 and drifted around a bit, finally did not do too much. So, one good and one not so good listing from the market.
The market is interestingly poised. The jury is still out on whether this is just a pullback and will get sold in to a slightly higher levels or the market is slowly trying to form a base and is about to get out of the woods. Next week, is also F&O expiry. It promises to be an interesting cliffhanger and crucial decisive kind of week.
Source: Moneycontrol.com
Mkt to stay rangebound until next big trigger
The markets opened firm today morning in the absence of any negative global cues, but turned volatile as serial blasts in UP, and the subsequent high alert across the country made traders jittery. But Indices shook off the shock in late afternoon trade, powered by capital goods, power, realty, and IT stocks.
The Nifty closed 89 points higher at 5,608 and the Sensex closed 326 points higher at 18,852.
Dipan Mehta, Member BSE/NSE expresses his concern over the UP blasts, "I think it is a most unfortunate event. But I think the impact in the market is evident. In any case the market was showing some signs of correction and weakness prior to these news being announced. And the entire fall has just speeded up. Also the news that the metros have been put on high alert kind of has a negative impact on the sentiment over here, but I do not think that this going to have a material impact on the trends on Monday or next week. This could just about be a passing phase unless we see some further developments."
But infact, as the news came in, the markets began gaining, and there has not been a significant or panic sell off yet.
To this he says, "Yes, there is no panic, it is just that it has an impact on the sentiment. Investors who are waiting on the sidelines to buy might just try and postpone their purchases and sellers in the markets, who just try and increase their selling or give lower limits."
While Amit Dalal of Amit Nalin Securities, said, "I think the market is exactly what one would have expected for an overbought market, which we had last week. The market is going to be rangebound till the end of the settlement and the rollover because of the huge outstanding positions. The ability of the market to go above 20,000 has been completely taken away. Therefore we will see a market perhaps in this 18,000-19,200 range until we see any big positive trigger or a negative trigger for the market."
"The trigger that I would perhaps look forward to in December is, if the Reliance Energy and Sterlite issues are going to take place in December or whether they are going to take place in January. That is one big factor, which will change how we look at energy stocks in this short-term volatility," he continues.
To a large extent the market seems to have understood that things like the UP blasts happen in India. He said, "Of course it's very tragic and one feels terrible because not one but three blast took place. There are two things 1) It's so far away, it's not something that affects us and 2) If it does not affect any strategic manufacturing outfit or strategic business areas, then again it's more a social or sociopolitical event rather than an economic event," he surmises.
Source: Moneycontrol.com
The Nifty closed 89 points higher at 5,608 and the Sensex closed 326 points higher at 18,852.
Dipan Mehta, Member BSE/NSE expresses his concern over the UP blasts, "I think it is a most unfortunate event. But I think the impact in the market is evident. In any case the market was showing some signs of correction and weakness prior to these news being announced. And the entire fall has just speeded up. Also the news that the metros have been put on high alert kind of has a negative impact on the sentiment over here, but I do not think that this going to have a material impact on the trends on Monday or next week. This could just about be a passing phase unless we see some further developments."
But infact, as the news came in, the markets began gaining, and there has not been a significant or panic sell off yet.
To this he says, "Yes, there is no panic, it is just that it has an impact on the sentiment. Investors who are waiting on the sidelines to buy might just try and postpone their purchases and sellers in the markets, who just try and increase their selling or give lower limits."
While Amit Dalal of Amit Nalin Securities, said, "I think the market is exactly what one would have expected for an overbought market, which we had last week. The market is going to be rangebound till the end of the settlement and the rollover because of the huge outstanding positions. The ability of the market to go above 20,000 has been completely taken away. Therefore we will see a market perhaps in this 18,000-19,200 range until we see any big positive trigger or a negative trigger for the market."
"The trigger that I would perhaps look forward to in December is, if the Reliance Energy and Sterlite issues are going to take place in December or whether they are going to take place in January. That is one big factor, which will change how we look at energy stocks in this short-term volatility," he continues.
To a large extent the market seems to have understood that things like the UP blasts happen in India. He said, "Of course it's very tragic and one feels terrible because not one but three blast took place. There are two things 1) It's so far away, it's not something that affects us and 2) If it does not affect any strategic manufacturing outfit or strategic business areas, then again it's more a social or sociopolitical event rather than an economic event," he surmises.
Source: Moneycontrol.com
Thursday, November 22, 2007
IFCI has strong support at Rs 80-85
Technical Analyst, Ashwani Gujral is of the view that Industrial Finance Corporation of India, IFCI has strong support at Rs 80-85.
Gujral told CNBC-TV18, "Wherever there is some quality in the story people should be with that. Although we look at things technically but still there are things like HMT and ITI, which will probably also bounce a bit but people will need to avoid that definitely around Rs 65-70 if you can get it you can get the rally back to Rs 90-95."
He further added, "IFCI has a strong support around Rs 80-85 if you can get it out there these are good stories but first of all we need to establish whether this market has turned for that the global situations needs to improve. I’m not sure just one day or rather 15 minutes of a rally the bottom has been formed and we start rising from here because you have to understand that we have fallen almost from 6,000 levels right down to 5,400. So 100-150 points of pull back doesn’t really change anything."
Disclosure: Analyst does not hold above stocks.
Source: Moneycontrol.com
Gujral told CNBC-TV18, "Wherever there is some quality in the story people should be with that. Although we look at things technically but still there are things like HMT and ITI, which will probably also bounce a bit but people will need to avoid that definitely around Rs 65-70 if you can get it you can get the rally back to Rs 90-95."
He further added, "IFCI has a strong support around Rs 80-85 if you can get it out there these are good stories but first of all we need to establish whether this market has turned for that the global situations needs to improve. I’m not sure just one day or rather 15 minutes of a rally the bottom has been formed and we start rising from here because you have to understand that we have fallen almost from 6,000 levels right down to 5,400. So 100-150 points of pull back doesn’t really change anything."
Disclosure: Analyst does not hold above stocks.
Source: Moneycontrol.com
Pick CESC with target of Rs 753
Sanju Verma, ED & Hd-Instl Biz, HDFC Securities is of the view that one can bet on CESC with target of Rs 753.
Verma told CNBC-TV18, "I am not sure of PTC but NTPC on a relative basis given the fact that it has dropped from its peak, yes value has emerged but on a standalone basis it still continues to look pretty expensive. If I may take the liberty of digressing if you have to look at power generation EPC companies I would go and place my bets on something like a CESC. In fact we have just released a report today with a pretty aggressive price target of Rs 753 which is very achievable. I cant think too many companies which are trading at about 16 to 17 times FY09 and FY10 with EBITDA margins in the region of 25% with an equally ambitious capex and mind you CESC has more to it than being just another power company."
She further added, "If there is a retail angle to it as well. Spenser retail has got merged into CESC. Spenser Retail has about 312 stores in India with a tradable area of 1 million sq feet and 1 million tradable area in terms of square feet will be added to the company for the next three years every single year. So it is a company with a mix of power a bit of land bank story a bit of a retail angle to it. I don’t know if diversified conglomerates are necessarily the favour of the season. but having said that the fact of the matter is that within the power space you have to be very discerning."
"So my top picks would be CESC. NTPC to some extent but more in importantly I would certainly go and buy something like an Alstom Projects which is also corrected very sharply and it offers excellent value at current levels."
Source: Moneycontrol.com
Verma told CNBC-TV18, "I am not sure of PTC but NTPC on a relative basis given the fact that it has dropped from its peak, yes value has emerged but on a standalone basis it still continues to look pretty expensive. If I may take the liberty of digressing if you have to look at power generation EPC companies I would go and place my bets on something like a CESC. In fact we have just released a report today with a pretty aggressive price target of Rs 753 which is very achievable. I cant think too many companies which are trading at about 16 to 17 times FY09 and FY10 with EBITDA margins in the region of 25% with an equally ambitious capex and mind you CESC has more to it than being just another power company."
She further added, "If there is a retail angle to it as well. Spenser retail has got merged into CESC. Spenser Retail has about 312 stores in India with a tradable area of 1 million sq feet and 1 million tradable area in terms of square feet will be added to the company for the next three years every single year. So it is a company with a mix of power a bit of land bank story a bit of a retail angle to it. I don’t know if diversified conglomerates are necessarily the favour of the season. but having said that the fact of the matter is that within the power space you have to be very discerning."
"So my top picks would be CESC. NTPC to some extent but more in importantly I would certainly go and buy something like an Alstom Projects which is also corrected very sharply and it offers excellent value at current levels."
Source: Moneycontrol.com
Markets recover: What's the next resistance level?
What are the views of brokerages and technical analysts on where the support and resistances for the market lie?
On speaking to technical analysts, the consensus seems to be that the intermediate downtrend has been established. The Nifty did close below the 5,700 level yesterday. Many critical support levels have been broken. But the next major level to watch out for and all seem to be unanimous on this, is 5,470-5,475.
CLSA earlier today, gave out a target of 18,275 as the next major support on the Sensex. They said that below this, a typical head-and-shoulder pattern would be formed out. In simple words, a head-and-shoulders pattern would see a huge volume build-up at the initial peak, at the peak of the market, which is at 6,000 level on the Nifty or 20,238 on the Sensex.
We saw low levels of volumes, so if this statistical support level of 18,275 is broken, a head-and-shoulders pattern may emerge, which would lead to a further downside of about a 1,000 points, where the next major support would emerge.
Technical analysts say that 5,475 would be the critical support level; 5,462 is the low of today and intermediate support levels have been broken at about 5,530.
Technical indicators like the RSI have indicated a pretty oversold market and there may be some bounce back on short covering, but all these bounce backs must be sold into and profits must be taken.
5,600-5,650 are the next major resistance levels on the top and 5,700 is the key resistance level below which the market closed yesterday.
If one does want to participate in this market, largecaps would be the safest and best bets and stocks like Reliance, L&T, NTPC and Neyveli Lignite would be the choices.
Source: Moneycontrol.com
On speaking to technical analysts, the consensus seems to be that the intermediate downtrend has been established. The Nifty did close below the 5,700 level yesterday. Many critical support levels have been broken. But the next major level to watch out for and all seem to be unanimous on this, is 5,470-5,475.
CLSA earlier today, gave out a target of 18,275 as the next major support on the Sensex. They said that below this, a typical head-and-shoulder pattern would be formed out. In simple words, a head-and-shoulders pattern would see a huge volume build-up at the initial peak, at the peak of the market, which is at 6,000 level on the Nifty or 20,238 on the Sensex.
We saw low levels of volumes, so if this statistical support level of 18,275 is broken, a head-and-shoulders pattern may emerge, which would lead to a further downside of about a 1,000 points, where the next major support would emerge.
Technical analysts say that 5,475 would be the critical support level; 5,462 is the low of today and intermediate support levels have been broken at about 5,530.
Technical indicators like the RSI have indicated a pretty oversold market and there may be some bounce back on short covering, but all these bounce backs must be sold into and profits must be taken.
5,600-5,650 are the next major resistance levels on the top and 5,700 is the key resistance level below which the market closed yesterday.
If one does want to participate in this market, largecaps would be the safest and best bets and stocks like Reliance, L&T, NTPC and Neyveli Lignite would be the choices.
Source: Moneycontrol.com
Wednesday, November 21, 2007
Will tomorrow bring some signs of stability in Market?
Terrible day for the markets though the first signs were there yesterday but today was the perfect follow-up to that huge sell off that we saw yesterday but nothing like today. There was a 700-points sell off nearly on the Sensex, which has dragged us back to 18,600 levels. The Nifty has collapsed more than 200-points and got us back to sub 5,600 levels- 5,560. There has been a big largecap sell off but even more savage and perhaps more importantly there has been a huge fall in midcap and smallcaps. That’s been the outperforming end of the market and that’s where the real money has been made and starting yesterday there has been a big pullback in midcaps.
Today the Midcap index was down 4.5%. The Nifty Junior fell 5% and many of the liquid names were down between 8% and 12% particularly the stock futures. Of course there are visible signs of not just unwinding in stock futures but heavy shorting in the Nifty futures again. Today the Nifty futures discount widened to 30-points and more than 50-lakh shares got added in OI, clear signs that there has been fresh shorting once again.
One look at the screen would convince you that there has been selling from FIIs once again today in both the cash and in the futures market. The global setup is not helping us. The Yen is gone to 109 to the dollar. There is consistent pressure in the Asian markets. The European markets also opened up weak while we were trading. So things are not looking good from a global perspective and that’s only adding pressure on the margin. India has been the biggest outperformer compared to other Asian markets and now as selling comes in this out performance is beginning to weigh on our backs as we correct and catch up with some of our peers.
So the picture has not looked very good today. Large caps across the board particularly hard hit were some of the power names across the board ABB, BHEL, Tata Power, Suzlon, Siemens and they all collapsed quite a bit. MTNL, VSNL got hit; ICICI Bank had a rough day. The entire metal space led by SAIL, Sterlite, Nalco were all down and down quite sharply.
Techs did not fall too much because they fell yesterday but otherwise they were not too many places to hide in today's fall. In the midcaps space, the carnage was even more severe. Popular stocks like IFCI, TTML, and RNRL got hammered 8-10% today. The entire fertiliser space has got butchered with Chambal and Nagarjuna leading the fall. Sugar has had a nasty fall again led by Balrampur Chini and Triveni, both those stocks were down quite a bit and many of the recent high flyers like your Hotel Leela, DCB, Bongaigaon have all come off.
Popular power stocks like Neyveli, PTC, NTPC have all corrected quite significantly. So big falls in many stocks today and the magnitude of the fall is 8-12%. From their recent highs, most of the popular midcaps have probably fallen anywhere between 10% to 20% so a meaningful erosion in value has happened already. Few like SRF, Jindal Stainless and Deccan Aviation did okay.
But the one stock, which deserves mention on the way up, is Religare. It debuted on a difficult day but finally passed the test with flying colours and ended the day around Rs 550 mark, which has to go down as a spectacular debut under the current market conditions from its issue price of Rs 185. So thumbs up for Religare but the rest of the market did quite bad, closed on a bad note and the mood cannot be good. So let us hope tomorrow there is some sign of stability because we are dangerously close to that earlier support level of 5,500 on the Nifty.
Source: Moneycontrol.com
Today the Midcap index was down 4.5%. The Nifty Junior fell 5% and many of the liquid names were down between 8% and 12% particularly the stock futures. Of course there are visible signs of not just unwinding in stock futures but heavy shorting in the Nifty futures again. Today the Nifty futures discount widened to 30-points and more than 50-lakh shares got added in OI, clear signs that there has been fresh shorting once again.
One look at the screen would convince you that there has been selling from FIIs once again today in both the cash and in the futures market. The global setup is not helping us. The Yen is gone to 109 to the dollar. There is consistent pressure in the Asian markets. The European markets also opened up weak while we were trading. So things are not looking good from a global perspective and that’s only adding pressure on the margin. India has been the biggest outperformer compared to other Asian markets and now as selling comes in this out performance is beginning to weigh on our backs as we correct and catch up with some of our peers.
So the picture has not looked very good today. Large caps across the board particularly hard hit were some of the power names across the board ABB, BHEL, Tata Power, Suzlon, Siemens and they all collapsed quite a bit. MTNL, VSNL got hit; ICICI Bank had a rough day. The entire metal space led by SAIL, Sterlite, Nalco were all down and down quite sharply.
Techs did not fall too much because they fell yesterday but otherwise they were not too many places to hide in today's fall. In the midcaps space, the carnage was even more severe. Popular stocks like IFCI, TTML, and RNRL got hammered 8-10% today. The entire fertiliser space has got butchered with Chambal and Nagarjuna leading the fall. Sugar has had a nasty fall again led by Balrampur Chini and Triveni, both those stocks were down quite a bit and many of the recent high flyers like your Hotel Leela, DCB, Bongaigaon have all come off.
Popular power stocks like Neyveli, PTC, NTPC have all corrected quite significantly. So big falls in many stocks today and the magnitude of the fall is 8-12%. From their recent highs, most of the popular midcaps have probably fallen anywhere between 10% to 20% so a meaningful erosion in value has happened already. Few like SRF, Jindal Stainless and Deccan Aviation did okay.
But the one stock, which deserves mention on the way up, is Religare. It debuted on a difficult day but finally passed the test with flying colours and ended the day around Rs 550 mark, which has to go down as a spectacular debut under the current market conditions from its issue price of Rs 185. So thumbs up for Religare but the rest of the market did quite bad, closed on a bad note and the mood cannot be good. So let us hope tomorrow there is some sign of stability because we are dangerously close to that earlier support level of 5,500 on the Nifty.
Source: Moneycontrol.com
Will market go below 18K levels?
It was a blood bath on Dalal Street. Deep cuts in markets across the globe weighed down investor sentiment, and the markets went into a free fall. The Nifty closed at 5,561, down 220 points, while Sensex shut shop at 18,603, down 678 points - the 3rd biggest single-day fall ever.
Even the midcaps and smallcaps took it on their chin today. It was large scale equity sell off across markets and sectors.
The worst hit index is bankex which has seen a sharp run up in the past few sessions followed by metal, capital goods and power. The sector that is least hit is the IT index on hopes that rupee may not appreciate further against the dollar. The rupee was trading weak at 39.385 against the dollar.
Sajiv Dhawan of JV Capital Services said that he has maintained his call for the past few days. “The call has been the same for the last few days. The midcaps were rising without the leadership from the frontline. I am not a believer that midcaps will continue to outperform frontline for a long period of time. I know it is easy to say after the event has happened. But if you had your stop losses in and you have got no problem, you are probably out at higher levels, you are probably still on a large amount of profit. But what I am finding a bit disturbing is that a lot of investors are holding on and they are now hoping that the markets will bounce back without any real conviction because they have seen this time and again and they say if they sell out now, they may not be able to buy those stocks back, if the upmove starts again.”
He opined that the investor should trade with clarity. He said, “I think you have got to be very clear which stocks you have, why you bought them, were they a tip, were they rumour, some market buzz or was that actually some fundamental in those stocks. If there is nothing fundamental then probably you are wiser off taking a small loss, exiting at the current juncture and reentering when the market stabilises and started to bounce back. If you are in stocks where you believe there is a growth story, there is something fundamental then you can use any sharp correction, 10-20% in whatever the stock is, to average out your position or add a few more.”
Dhawan adds, “I think if you are an Index trader- fine, you got a nice short position, plenty of cushion, good profit for the short after a long time. But the next 2-3 days, will be very important because I do feel a lot of people are still stuck in the futures and with the leveraged positions elsewhere and they might panic over the next 2-3 days if the market don’t stabilise or bounce back.”
Anil Manghnani of Modern Shares & Stock Brokers said that he is not very surprised by what happened in the markets today. “I think in the last two-three weeks action was only in the midcaps. For a while we had been seeing lot of the largecaps falling 3-5%. Even those that are in the midcap index itself, were up 2-3% which was clearly suggesting that some sort of delivery base selling by FIIs was taking place. In addition, continuously over the last few days on the stock futures side, we are seeing hedge sale position being buildup mainly by FIIs. This was clearly suggesting that at least on the largecap front, a fall is definitely round the corner," he said.
He added, "It was probably the euphoria in the midcaps that was not reflecting so much what is happening in the largecaps and now that is all taking place today and I think its pretty much playing catch-up in the sense that while the rest of the world corrected, we didn’t and now that everything else abroad has slowed down, that is the correction; it was likely that eventually we will have to catch-up on the down side. I think most of the markets had fallen about 10%; we were down maybe 3% yesterday. So we are pretty much catching up to that. We have broken through some serious levels and even major trend lines, I don’t think that 18,330, which was a recent bottom will hold now. I think chances are heading closer to 17,770 on the Sensex."
Should this, as a short-term trend be called down?
Manghnani says, “I will call it down and probably sell any bounce if we get like we have seen intra-day falls and pullbacks. I think immediately if suppose one might have a good day overseas also overnight, I think one is going to have a scenario where it’s going to open up and then start correcting. We have seen that already happened two-three times in the last week but like I said it didn’t get accentuated or reflected that closely because the midcaps were flying all around the place and the focus was so much on midcaps. But that phenomena of the Sensex opening up and coming down has been taking place last week and I think in the next few days if there is again a gap up opening then eventually the selling pressure would start again at higher levels and I think we will probably head it lower at least on the Sensex and Nifty in the immediate short-term.”
Source: Moneycontrol.com
Even the midcaps and smallcaps took it on their chin today. It was large scale equity sell off across markets and sectors.
The worst hit index is bankex which has seen a sharp run up in the past few sessions followed by metal, capital goods and power. The sector that is least hit is the IT index on hopes that rupee may not appreciate further against the dollar. The rupee was trading weak at 39.385 against the dollar.
Sajiv Dhawan of JV Capital Services said that he has maintained his call for the past few days. “The call has been the same for the last few days. The midcaps were rising without the leadership from the frontline. I am not a believer that midcaps will continue to outperform frontline for a long period of time. I know it is easy to say after the event has happened. But if you had your stop losses in and you have got no problem, you are probably out at higher levels, you are probably still on a large amount of profit. But what I am finding a bit disturbing is that a lot of investors are holding on and they are now hoping that the markets will bounce back without any real conviction because they have seen this time and again and they say if they sell out now, they may not be able to buy those stocks back, if the upmove starts again.”
He opined that the investor should trade with clarity. He said, “I think you have got to be very clear which stocks you have, why you bought them, were they a tip, were they rumour, some market buzz or was that actually some fundamental in those stocks. If there is nothing fundamental then probably you are wiser off taking a small loss, exiting at the current juncture and reentering when the market stabilises and started to bounce back. If you are in stocks where you believe there is a growth story, there is something fundamental then you can use any sharp correction, 10-20% in whatever the stock is, to average out your position or add a few more.”
Dhawan adds, “I think if you are an Index trader- fine, you got a nice short position, plenty of cushion, good profit for the short after a long time. But the next 2-3 days, will be very important because I do feel a lot of people are still stuck in the futures and with the leveraged positions elsewhere and they might panic over the next 2-3 days if the market don’t stabilise or bounce back.”
Anil Manghnani of Modern Shares & Stock Brokers said that he is not very surprised by what happened in the markets today. “I think in the last two-three weeks action was only in the midcaps. For a while we had been seeing lot of the largecaps falling 3-5%. Even those that are in the midcap index itself, were up 2-3% which was clearly suggesting that some sort of delivery base selling by FIIs was taking place. In addition, continuously over the last few days on the stock futures side, we are seeing hedge sale position being buildup mainly by FIIs. This was clearly suggesting that at least on the largecap front, a fall is definitely round the corner," he said.
He added, "It was probably the euphoria in the midcaps that was not reflecting so much what is happening in the largecaps and now that is all taking place today and I think its pretty much playing catch-up in the sense that while the rest of the world corrected, we didn’t and now that everything else abroad has slowed down, that is the correction; it was likely that eventually we will have to catch-up on the down side. I think most of the markets had fallen about 10%; we were down maybe 3% yesterday. So we are pretty much catching up to that. We have broken through some serious levels and even major trend lines, I don’t think that 18,330, which was a recent bottom will hold now. I think chances are heading closer to 17,770 on the Sensex."
Should this, as a short-term trend be called down?
Manghnani says, “I will call it down and probably sell any bounce if we get like we have seen intra-day falls and pullbacks. I think immediately if suppose one might have a good day overseas also overnight, I think one is going to have a scenario where it’s going to open up and then start correcting. We have seen that already happened two-three times in the last week but like I said it didn’t get accentuated or reflected that closely because the midcaps were flying all around the place and the focus was so much on midcaps. But that phenomena of the Sensex opening up and coming down has been taking place last week and I think in the next few days if there is again a gap up opening then eventually the selling pressure would start again at higher levels and I think we will probably head it lower at least on the Sensex and Nifty in the immediate short-term.”
Source: Moneycontrol.com
Experts see further correction in markets
Sanjeev Prasad, Head of Research, Kotak Securities, said the fair range for the Sensex is 16,000-19,000 based on FY09 numbers. "Can't rule out another 10% correction from current levels."
He feels hedge funds may be selling to book year-end profits. "India's relative outperformance may have triggered this selling." Prasad feel hedge funds may be selling to book year-end profits. He feels India's relative outperformance may have triggered selling. Technical Analyst Ashwani Gujral said the market might fall further if the Nifty goes below 5,470. "Nifty could go down to 5,000 levels if correction continues."
He feels we may see an intermediate downtrend if the Nifty falls below 5,500.
Excerpts from CNBC-TV18’s exclusive interview with Sanjeev Prasad and Ashwani Gujral:
Q: Was it looking inevitable, this kind of cut after the midcap gains you saw over the last fortnight?
Prasad: There were some indications that India was outperforming the rest of the region. Most markets have already pulled back 10-15% from their peaks and India was the only one which was still hovering at more or less its peak. The Sensex peaked at 20,000. There were indications that you can’t have a market performing in isolation compared to what is happening to the rest of the region.
The second indication was clearly with what is happening on the midcap space. When stocks, without any rhythm or reason, start going up 30-40% in a matter of few days, then it is clearly a dangerous signal. It is not as if these are undiscovered stocks and people haven’t been following them. Suddenly, why should stocks get re-rated 50% in a matter of few days? I guess there were indications that there would be some corrections.
Q: There has been quite a bit of FII selling over the last couple of days both in cash and futures. Do you think it is on account of India’s relative outperformance and that is why people are tactically selling this market or is there something else which could have precipitated such large selling because the figure yesterday was almost USD 1.5 billion in cash plus F&O?
Prasad: Investors should keep in mind the fact that we are heading towards the end of the year, so hedge funds and leverage funds may be just booking profits and closing out for the year. Nobody wants to go into December with large open positions in a market which is, if not overvalued, at least reasonably valued. Then you have a lot of issues on the global side. So, anything could go wrong anywhere. Why do you want to be exposed to a market which is reasonably valued? People are just booking profits before going into a vacation. People have made great gains over the years, so why not take some money off the table.
Relative outperformance of India versus others could have been the reason for people to pull back from here and then take a view later on.
Q: Do you expect more downside in the near term or the market just to consolidate in a range?
Prasad: Everything is possible. Our fair range for the market, based on FY09 numbers, is 16,000 to 19,000. It is not as if with the recent correction we have become very cheap. In terms of valuations, we are still at about 18 times March 2009 numbers, so it is still not a very cheap market. Another 10% is not a big deal from current levels.
Q: How are you approaching this huge midcap rally which has happened? Do you think some of the valuations look excessive or has it been justified? Do you expect no more than a small shave off from the top?
Prasad: Things were quite bizarre honestly. Stocks that move up 30-40% don’t make any sense to me. I can talk about oil and gas stocks and the movements over there. For example, why should Petronet LNG be at where it is? People are assuming that Reliance will find lot more gas than whatever it has announced, ONGC has already announced big discoveries and so has GSPC. If you add all that up, we are looking at a tremendous increase in domestic supply. If that is the case, then where is the other case for a business model of Petronet LNG.
People are willing to give all such valuations since it going to enter into the power space. That is completely bizarre. If Petronet LNG is not in a position to sell, as imported LNG is expensive compared to domestically produced gas, where is the question of it selling power which is even more expensive than LNG.
Anything goes in a bull market. Similarly, look what happened in the pipeline company Gujarat State Petronet. We were talking about regulations being imposed on a sector which could cap returns. But the stocks have rallied 40% or more in a matter of days. All kinds of stuff are going on in the midcap space.
Q: What would you takeaway from today’s trade and how would you approach trade now?
Gujral: We are still in that range of 5,500-6,000 on the Nifty. The previous intermediate bottom was around 5,470 to 5,500. If that gets breached, then we head into a deeper correction. The next level there could be 5,000 to 5,050. In case 5,500 is sustained on the downside, it is just another consolidation. Around 5,500, investors need to chance going long with a 40-50 point stop loss. Inspite of negative news, our markets have bounced back. In case, 5,470-5,500 gets taken out, then you probably are into an intermediate downtrend.
Q: How do you approach the liquid midcaps now? Stocks like TTML, IFCI, Chambal Fertilisers, among others that have been really creating trading gains?
Gujral: If you have gains left, you need to take profits. If you do not have them, just get out of the way because if the previous low gets taken out, then these stocks would take a much bigger punishment. Above 5,900, we had said that cats and dogs part of the rally is generally towards the end of an intermediate uptrend. That has sort of proven true. In case the intermediate downtrend starts below 5,470, you should be cutting your positions because these stocks are where futures are quite over-leveraged and could come down much further.
Source: Moneycontrol.com
He feels hedge funds may be selling to book year-end profits. "India's relative outperformance may have triggered this selling." Prasad feel hedge funds may be selling to book year-end profits. He feels India's relative outperformance may have triggered selling. Technical Analyst Ashwani Gujral said the market might fall further if the Nifty goes below 5,470. "Nifty could go down to 5,000 levels if correction continues."
He feels we may see an intermediate downtrend if the Nifty falls below 5,500.
Excerpts from CNBC-TV18’s exclusive interview with Sanjeev Prasad and Ashwani Gujral:
Q: Was it looking inevitable, this kind of cut after the midcap gains you saw over the last fortnight?
Prasad: There were some indications that India was outperforming the rest of the region. Most markets have already pulled back 10-15% from their peaks and India was the only one which was still hovering at more or less its peak. The Sensex peaked at 20,000. There were indications that you can’t have a market performing in isolation compared to what is happening to the rest of the region.
The second indication was clearly with what is happening on the midcap space. When stocks, without any rhythm or reason, start going up 30-40% in a matter of few days, then it is clearly a dangerous signal. It is not as if these are undiscovered stocks and people haven’t been following them. Suddenly, why should stocks get re-rated 50% in a matter of few days? I guess there were indications that there would be some corrections.
Q: There has been quite a bit of FII selling over the last couple of days both in cash and futures. Do you think it is on account of India’s relative outperformance and that is why people are tactically selling this market or is there something else which could have precipitated such large selling because the figure yesterday was almost USD 1.5 billion in cash plus F&O?
Prasad: Investors should keep in mind the fact that we are heading towards the end of the year, so hedge funds and leverage funds may be just booking profits and closing out for the year. Nobody wants to go into December with large open positions in a market which is, if not overvalued, at least reasonably valued. Then you have a lot of issues on the global side. So, anything could go wrong anywhere. Why do you want to be exposed to a market which is reasonably valued? People are just booking profits before going into a vacation. People have made great gains over the years, so why not take some money off the table.
Relative outperformance of India versus others could have been the reason for people to pull back from here and then take a view later on.
Q: Do you expect more downside in the near term or the market just to consolidate in a range?
Prasad: Everything is possible. Our fair range for the market, based on FY09 numbers, is 16,000 to 19,000. It is not as if with the recent correction we have become very cheap. In terms of valuations, we are still at about 18 times March 2009 numbers, so it is still not a very cheap market. Another 10% is not a big deal from current levels.
Q: How are you approaching this huge midcap rally which has happened? Do you think some of the valuations look excessive or has it been justified? Do you expect no more than a small shave off from the top?
Prasad: Things were quite bizarre honestly. Stocks that move up 30-40% don’t make any sense to me. I can talk about oil and gas stocks and the movements over there. For example, why should Petronet LNG be at where it is? People are assuming that Reliance will find lot more gas than whatever it has announced, ONGC has already announced big discoveries and so has GSPC. If you add all that up, we are looking at a tremendous increase in domestic supply. If that is the case, then where is the other case for a business model of Petronet LNG.
People are willing to give all such valuations since it going to enter into the power space. That is completely bizarre. If Petronet LNG is not in a position to sell, as imported LNG is expensive compared to domestically produced gas, where is the question of it selling power which is even more expensive than LNG.
Anything goes in a bull market. Similarly, look what happened in the pipeline company Gujarat State Petronet. We were talking about regulations being imposed on a sector which could cap returns. But the stocks have rallied 40% or more in a matter of days. All kinds of stuff are going on in the midcap space.
Q: What would you takeaway from today’s trade and how would you approach trade now?
Gujral: We are still in that range of 5,500-6,000 on the Nifty. The previous intermediate bottom was around 5,470 to 5,500. If that gets breached, then we head into a deeper correction. The next level there could be 5,000 to 5,050. In case 5,500 is sustained on the downside, it is just another consolidation. Around 5,500, investors need to chance going long with a 40-50 point stop loss. Inspite of negative news, our markets have bounced back. In case, 5,470-5,500 gets taken out, then you probably are into an intermediate downtrend.
Q: How do you approach the liquid midcaps now? Stocks like TTML, IFCI, Chambal Fertilisers, among others that have been really creating trading gains?
Gujral: If you have gains left, you need to take profits. If you do not have them, just get out of the way because if the previous low gets taken out, then these stocks would take a much bigger punishment. Above 5,900, we had said that cats and dogs part of the rally is generally towards the end of an intermediate uptrend. That has sort of proven true. In case the intermediate downtrend starts below 5,470, you should be cutting your positions because these stocks are where futures are quite over-leveraged and could come down much further.
Source: Moneycontrol.com
Tuesday, November 20, 2007
Daily Market Commentary
Indian shares are expected to slide on Tuesday, tracking weak global markets. However, some recovery may emerge in second half of day’s trading session on value buying at lower levels. It was another day of profit-booking at a Sensex level of 20,000, though it was more visible in banking stocks and a few other pivotals. The Sensex is now close to Friday's low of 19,472, below which last week's gap-up at 19,336-19,210 is the next support area. The Nifty has support at 5,920-5,890 and support at 5.960-5,990.
Make money in cement space
Pashupati Advani of Advani OTC Dealers is of the view that one can make money in cement space.
Advani told CNBC-TV18, "Infrastructure projects are coming, there was a bit of a lull during the monsoon season where construction goes down. But now that it is over, the road building and the actual building of offices and apartments and malls is continuing in full strength, and cement is a problem. There was talk that cement was coming from Pakistan in the middle to India, which was kind of keeping prices a little bit higher. But I think whatever supplies are coming are getting absorbed. So, I think people are looking at the cement pack again and I think that this is a sector that you can make money on."
Courtesy: Moneycontrol.com
Watch out for these hidden gems!
CNBC-TV18 has analysed over 4,000 small and midcap companies to find some hidden gems. These are companies with low PE, high dividend yield, price to book value of less than 1, positive cash flows, EPS and good profit growth.
All these parameters have been looked at together and some companies have been shortlisted from those 4,000 odd companies. The analysis has excluded export-oriented companies, IT companies, trading companies, investment and holding companies. It is looking at a pure manufacturing play.
One such pick is Alps Industries, which is from the textile sector. The price to earnings of Alps Industries is about 5.5 times currently and the industry PE for that sector is about 18 times. It is a low PE sector, but the segment in which Alps is working in has a PE of about 18 times. The price to book value of this company is about 0.6 times. Analysts said that even if you are buying this company for the book, you are getting it cheaper at this point. The book value per share is around Rs 90 per share and dividend yield is around 1.5%.
For those who believe in the long-term play, dividend yield is one factor. The Sensex has a dividend yield of less than 1%. The stock has an EPS of around 10 and cash EPS of around Rs 13. This is a company from the small and midcap space, but there is huge institutional demand in this segment. Morgan Stanley, SBI, GIC and Bank of New York cumulatively hold over 25%. If you buy on the institutional side, this is a story to look out for.
Sales growth is up about 65% and PAT growth is up about 27%. Its 52-week performance is such that it has underperformed the Sensex by about 70%. The textile sector is a low margin business and the government has started to offer sops like the Technology Upgradation Fund, which is coming up, and rupee appreciation is hurting that sector a bit.
The other hidden gem is from the food-processing sector and the stock is KRBL. Its PE is about 6.4 times and the industry PE is about 20 times. The price to book value is about 0.6 times. The book value per share is about Rs 130 and dividend yield is about 2.3. EPS is about 13.5 and cash EPS is about 23%. There is big institutional activity on this counter. SBI, LIC, Deutsche Bank and Reliance Commodities hold about 18% in this stock. Sales growth is about 26% and PAT growth is about 55% in this company. The food-processing sector is growing, as organized retail come into the foray.
Analysts are of the view that these companies will see some action. Historically, these companies have not seen any momentum. These institutional players look at all these parameters. In the absolute short term, these companies may underperform, but in the long-run there can be outperformance.
Source: Moneycontrol.com
Do you own these buzzing sectoral picks?
We are in a very dynamic market, analysts said. There is a lot of intra-day volatility and lower opening gaps. There has also been a lot of active churning not only from largecaps to midcaps in the last 14 days but also churning between lots of sectors. Around October 19 to November 2, the BSE Bankex, BSE Capital Goods, and BSE Metal index were star performers.
From November 1 to November 19, the BSE Oil & Gas index has been up about 7%, outperforming the Nifty by about 8%, analysts said.
Power stocks have also performed in this period. The Power Index came into existence just five days back, analysts said. Stocks like Areva T&D, BHEL, CESC, and NTPC have outperformed both the Sensex and Nifty by a gross margin.
Over the last one-week, the market has seen some amount of sluggishness in these outperforming sectors. A number of new sectors have emerged. From the infrastructure space, Maytas has gained 51% in the last one week. The other gainers include GMR Infra and Lanco Infratech.
From the construction space, HCC has given a 13.1% return in the last one-week whereas the Sensex has been up just about 4%. Nagarjuna Construction, C&C Construction, and Noida Toll Bridge are other outperformers from this sector.
In the cement space, some value buying has emerged over the last few days, analysts said. ACC, India Cements, and Birla Corporation could be stocks to watch out for.
The engineering space has seen stocks like Patel Engineering, Elecon Engineering, and Sadbhav Engineering give returns of over 10%.
PSU banks have come back into focus over the last one-week with stocks like Punjab National Bank, Bank of Baroda, UCO Bank, and Oriental Bank of Commerce rallying.
Brokerage stocks on the back of that Religare listing, which is going to happen sometime next week, and the Edelweiss IPO, which is closing today, have seen some amount of re-rating and have been running.
Some value buying has emerged in select pharma stocks. Scrips like Nicholas Piramal, Torrent Pharma, Divi's Labs, and Lyka Labs are some stocks to watch out for.
The printing and publishing space has seen stocks like Deccan Chronicle give a one-week return of 27.6%, Mid-Day Multimedia is up 39%, and Navneet Publications is up 24.2%.
These should be interesting spaces to watch out for going into the next couple of weeks, analysts added.
Source: Moneycontrol.com
From November 1 to November 19, the BSE Oil & Gas index has been up about 7%, outperforming the Nifty by about 8%, analysts said.
Power stocks have also performed in this period. The Power Index came into existence just five days back, analysts said. Stocks like Areva T&D, BHEL, CESC, and NTPC have outperformed both the Sensex and Nifty by a gross margin.
Over the last one-week, the market has seen some amount of sluggishness in these outperforming sectors. A number of new sectors have emerged. From the infrastructure space, Maytas has gained 51% in the last one week. The other gainers include GMR Infra and Lanco Infratech.
From the construction space, HCC has given a 13.1% return in the last one-week whereas the Sensex has been up just about 4%. Nagarjuna Construction, C&C Construction, and Noida Toll Bridge are other outperformers from this sector.
In the cement space, some value buying has emerged over the last few days, analysts said. ACC, India Cements, and Birla Corporation could be stocks to watch out for.
The engineering space has seen stocks like Patel Engineering, Elecon Engineering, and Sadbhav Engineering give returns of over 10%.
PSU banks have come back into focus over the last one-week with stocks like Punjab National Bank, Bank of Baroda, UCO Bank, and Oriental Bank of Commerce rallying.
Brokerage stocks on the back of that Religare listing, which is going to happen sometime next week, and the Edelweiss IPO, which is closing today, have seen some amount of re-rating and have been running.
Some value buying has emerged in select pharma stocks. Scrips like Nicholas Piramal, Torrent Pharma, Divi's Labs, and Lyka Labs are some stocks to watch out for.
The printing and publishing space has seen stocks like Deccan Chronicle give a one-week return of 27.6%, Mid-Day Multimedia is up 39%, and Navneet Publications is up 24.2%.
These should be interesting spaces to watch out for going into the next couple of weeks, analysts added.
Source: Moneycontrol.com
Monday, November 19, 2007
Do you have these stocks in your portfolio?
Sandeep Shenoy of PINC Research said that they like stocks like Pratibha Industries, KPR Mills and Royal Orchid Hotels.
Shenoy added that thought there may be pockets of outperformance in midcaps, most of the deep pocket investors will still prefer largecaps.
Excerpts from CNBC-TV18’s exclusive interview with Sandeep Shenoy:
Q: Pratibha Industries is the stock that you like. What is the target on this one and what kind of growth projections are you looking at?
A: The stock is in a niche area of water management projects, which has got some kind of huge scalability. The bigger players are slowly and steadily exiting this project, because it is perceived to be a lower-end project for them. These kind of companies have carved a niche. They are maintaining their margins and they are getting into BOT Projects, by testing the waters. So, if all goes well, this company has the potential to double up its turnover in the next 24-months and the stock has a potential of giving a 50% return in the coming three quarters.
Q: KPR Mills is also a stock that you like. What would your call be? Do you see a 50% upside here, over the next year or so?
A: The company went pubic quite recently and received some kind of a drubbing in the markets. But this is also a company, which is seen to be really scaling up.
It has got a decent presence in knitwear and it has one of the largest presence, in the knitting segment in the Indian Diaspora. Its capacity is moving, both on the yarn as well as the fabric and pieces.
On the per piece front, its capacity is moving from 12 million to closer to 3-4 times that size. The entire capex had been funded from the proceeds of the IPO. So, on the yarn side it is moving. It is able to maintain its pricing, because of having tight control on two of its input constraints. One of them is power, for which it has got internal generated capacity and manpower, where it has rationalized as well.
So, margins are being maintained at around 20%. Despite the rupee-dollar swing, this is one company, which we feel will give you atleast 40-50% return in a year’s time.
Q: Your last pick is Royal Orchid Hotels. You are expecting 100% appreciation in 12 months. What is it that is going to drive the stock? Are you essentially looking at the business model very closely, which is more lease-based?
A: It has a pretty decent business model and more than that, it is a misplacing of assets on this. So, this is a classical value story available because there is no debt on the book.
It is moving from around 520 rooms to almost double that in the next 18-24 months. In terms of earnings stability, what this company offers may probably not move in tandem with tourist arrivals, because it is in areas where you have more business dominated arrivals. It is to manage its margins pretty decently, because of the cash on the book as well as the potential, which is offered to it, by allowing it to scale up on the room inventory front. So, there is misplacing of assets. There is a huge scalability potential and high gearing potential for that company, if it wants to ramp up. If the numbers are good and valuations are low, plus there is value proposition, this makes a potent recipe for a doubler.
Q: What is the story that you are going to be following or staying away from?
A: Auto and banking are definitely going to find some takers in the investment fraternity. But in banks, it is again going to be a particular set of sops, which are going to give you returns.
In auto, we feel that the generic uptrend may slowly and steadily start in the coming quarter or so. The heavy weights are definitely going to give good returns, but as regards to the so-called purported shift from largecaps to midcaps, I do not think that is going to happen on a generic basis.
You may see pockets of outperformance in midcaps, but most of the deep pocket investors preference is definitely going to be towards the largecap. That is why the Sensex will also be one of the key outperformers, rather than the midcaps.
Disclosure:
Royal Orchid Hotels is our portfolio stock. We do not have any personal holdings.
Source: Moneycontrol.com
Shenoy added that thought there may be pockets of outperformance in midcaps, most of the deep pocket investors will still prefer largecaps.
Excerpts from CNBC-TV18’s exclusive interview with Sandeep Shenoy:
Q: Pratibha Industries is the stock that you like. What is the target on this one and what kind of growth projections are you looking at?
A: The stock is in a niche area of water management projects, which has got some kind of huge scalability. The bigger players are slowly and steadily exiting this project, because it is perceived to be a lower-end project for them. These kind of companies have carved a niche. They are maintaining their margins and they are getting into BOT Projects, by testing the waters. So, if all goes well, this company has the potential to double up its turnover in the next 24-months and the stock has a potential of giving a 50% return in the coming three quarters.
Q: KPR Mills is also a stock that you like. What would your call be? Do you see a 50% upside here, over the next year or so?
A: The company went pubic quite recently and received some kind of a drubbing in the markets. But this is also a company, which is seen to be really scaling up.
It has got a decent presence in knitwear and it has one of the largest presence, in the knitting segment in the Indian Diaspora. Its capacity is moving, both on the yarn as well as the fabric and pieces.
On the per piece front, its capacity is moving from 12 million to closer to 3-4 times that size. The entire capex had been funded from the proceeds of the IPO. So, on the yarn side it is moving. It is able to maintain its pricing, because of having tight control on two of its input constraints. One of them is power, for which it has got internal generated capacity and manpower, where it has rationalized as well.
So, margins are being maintained at around 20%. Despite the rupee-dollar swing, this is one company, which we feel will give you atleast 40-50% return in a year’s time.
Q: Your last pick is Royal Orchid Hotels. You are expecting 100% appreciation in 12 months. What is it that is going to drive the stock? Are you essentially looking at the business model very closely, which is more lease-based?
A: It has a pretty decent business model and more than that, it is a misplacing of assets on this. So, this is a classical value story available because there is no debt on the book.
It is moving from around 520 rooms to almost double that in the next 18-24 months. In terms of earnings stability, what this company offers may probably not move in tandem with tourist arrivals, because it is in areas where you have more business dominated arrivals. It is to manage its margins pretty decently, because of the cash on the book as well as the potential, which is offered to it, by allowing it to scale up on the room inventory front. So, there is misplacing of assets. There is a huge scalability potential and high gearing potential for that company, if it wants to ramp up. If the numbers are good and valuations are low, plus there is value proposition, this makes a potent recipe for a doubler.
Q: What is the story that you are going to be following or staying away from?
A: Auto and banking are definitely going to find some takers in the investment fraternity. But in banks, it is again going to be a particular set of sops, which are going to give you returns.
In auto, we feel that the generic uptrend may slowly and steadily start in the coming quarter or so. The heavy weights are definitely going to give good returns, but as regards to the so-called purported shift from largecaps to midcaps, I do not think that is going to happen on a generic basis.
You may see pockets of outperformance in midcaps, but most of the deep pocket investors preference is definitely going to be towards the largecap. That is why the Sensex will also be one of the key outperformers, rather than the midcaps.
Disclosure:
Royal Orchid Hotels is our portfolio stock. We do not have any personal holdings.
Source: Moneycontrol.com
Stick to midcap stocks, feel experts
It started as a good day for markets but the frontliners failed to hold their gains at the higher levels and ended near the lowest point of the day. The rally in the midcaps and smallcaps continued and the market breadth was significantly positive. Nifty closed flat at 5,908, while Sensex shut shop at 19,633 down 65 points.
Analysts believe that it is better to stick to the midcap index and also some of the leading frontline highly liquid counters rather than get into counters which have just about started seeing explosive volumes because volumes can dry up as fast as they have spurted up.
Ajay Srivastava of Dimensions Consulting believes a basic shift has taken place in terms of the demand and supply in the midcaps and smallcaps space. He said there is a lot of liquidity in the stocks. As an investor one should ideally allocate 20-25%, not more than that of the portfolio to midcap and smallcap, he explains. “The critical element is that whenever there is a correction, in the liquid stocks, in the mainline stocks, you can sell out. Here, there is no exit for months.” he adds.
So, he said, people must be very clear that they will have to hold these stocks for longer periods and volatility is very high. Therefore, he advises, not to allocate more than 20-25% to these stocks, irrespective of the returns of 30-35%.
Dipan Mehta, Member Of BSE & NSE feels that clearly there is a changing complexion of the investors in the market and the liquidity flows over the past couple of months was from institutions and the FIIs which were driving these stocks over here and "therefore we saw the kind of outperformance in the large cap stocks and the index stocks but over the past about 15-20 trading sessions, we have seen the emergence of the Indian retail investors category into the market and that’s the reason why we are seeing so much of action and pick up in volume in some of the midcap and the smallcap stocks".
Experts feel that there are typical stocks which are quite illiquid and even with the small dose of capital coming into these counters, they have fantastic moves, which is seen over the past few days.
Source: MoneyControl.com
Saturday, November 17, 2007
Rel Money is bullish on power, infra, & construction
Sudeep Bandyopadhyay, Director and CEO, Reliance Money, said there is no fresh money coming in from retail investors. "There is more of a churn happening. Mutual funds are getting fresh money while direct participation is less."
Bandyopadhyay is bullish on sectors like power, infrastructure, construction, education, and shipbuilding.
He said HNIs are partly bullish. "There are some HNIs who are still on the sidelines. The last few IPOs have seen huge interest from retail and HNIs."
Excerpts from CNBC-TV18’s exclusive interview with Sudeep Bandyopadhyay:
Q: What is the national retail sentiment like at this point in time with the midcap action?
A: The sentiment is extremely good. They are very bullish. We are advising retail to get into the market and not try and time the market because the secular growth story in India is not affected by all the happenings in the US. As a country, we are fortunate to be the most insulated from the happenings of the US and other developed countries.
Retail participants should come into the market without any fear. Instead of trying to time the market, they should remain in the market for sometime. If somebody has a 3-5 year time horizon in mind and picks up a right sector, I don’t think there is anything to worry about.
Q: Do you sense any kind of hesitation around this 20,000 kind of level with HNIs or retail clients, or are they not looking at those levels very closely?
A: Instead of trying to time the market, investors should select the right sector, and remain invested for 3-5 years. Retail investors should be educated on how to be patient in the market. Historically, we have seen that whenever there is some panic, they exit at the first instance and stay away from the market when really they should be in the market.
That culture needs to change. We are trying to convince investors that just as they invest in debt, national saving certificate, post office, or an RBI bond and don’t look at it every morning and evening, they should do the same for equities. They should select a good stock in a good sector and remain invested for 3-5 years.
Q: What is happening by way of retail money participation, are people committing fresh cash or is money being churned from a largecap position to a midcap or smallcap position?
A: I don’t think fresh money is coming in from retail at this point of time, there is more of churn which is happening. There is some amount of money coming into mutual funds as of now. For the last few days, we have been seeing mutual funds getting a lot of fresh money. We are seeing very little money coming directly into the market from retail at this stage.
Q: I believe you like power as a sector at Reliance Money. What leg of it do you like? Have you been booking profits or are you still invested in the story?
A: We believe in the power story. Besides power, we like infrastructure, construction, education and shipbuilding. We are advising our clients to invest in these areas because these are growth sectors. In the next foreseeable future, they will produce more than proportionate returns.
Apart from power, telecom is also another good sector,. Education is a huge area of interest for the entire economy. If you really look at how much we spend on education as a country, it is very little. That is going to change as there is a conscious policy taken by the Centre to spend more and more on education.
We will shortly see benefits coming to a few players in this sector.
Q: What is the feeling that you get from HNIs, are they skeptical about market valuations and the upmove from here, or are they participating in a big way in the last 1,000-points or so?
A: There are actually two segments. Some people are booking profits and probably waiting a bit before entering. There is one more segment which is extremely bullish. They are making fresh investments in the recommended sectors.
Q: Are you comfortable with the 30-40% kind of daily upmoves that we have been seeing for stocks in the last fortnight? Do you see any kind of excesses playing out on the screen?
A: When we advise clients and look at the markets, we really take a medium to long-term view. For intra-day, we have a segment. We have research which does advise on intra-day activities. But it is not an area where we focus too much on. We do not advise our clients on an intra-day basis too much.
On whether I am comfortable with the 800 points upward movement or the 400-500 points downward movement, it is not a very acceptable or desirable movement trend.
When we are integrated with the global economy, these kinds of factors are definitely going to be there. We better get used to these things.
Since there is no concern in the medium- to long-term, investors should not get scared. Short-term players and day-traders need to be very cautious.
Q: How actively are you tracking and recommending primary market offerings right now? What are you seeing by way of HNI and retail interest there?
A: There is an amazing level of interest. Last few issues have seen huge interest. In Mundra, there was huge retail interest. We are also seeing a lot of interest in the Edelweiss issue. We track the primary market very closely. We have a very active desk and are getting a lot of interest from HNIs and retail.
Q: Do you see a lot of interest in retail to take delivery of stocks or is there interest moving slowly to the stock futures space now?
A: Small investors are not getting into stock futures in a big manner. HNIs are into stock futures in a big way while real retail is into delivery-based trading
Source: Moneycontrol.com
Bandyopadhyay is bullish on sectors like power, infrastructure, construction, education, and shipbuilding.
He said HNIs are partly bullish. "There are some HNIs who are still on the sidelines. The last few IPOs have seen huge interest from retail and HNIs."
Excerpts from CNBC-TV18’s exclusive interview with Sudeep Bandyopadhyay:
Q: What is the national retail sentiment like at this point in time with the midcap action?
A: The sentiment is extremely good. They are very bullish. We are advising retail to get into the market and not try and time the market because the secular growth story in India is not affected by all the happenings in the US. As a country, we are fortunate to be the most insulated from the happenings of the US and other developed countries.
Retail participants should come into the market without any fear. Instead of trying to time the market, they should remain in the market for sometime. If somebody has a 3-5 year time horizon in mind and picks up a right sector, I don’t think there is anything to worry about.
Q: Do you sense any kind of hesitation around this 20,000 kind of level with HNIs or retail clients, or are they not looking at those levels very closely?
A: Instead of trying to time the market, investors should select the right sector, and remain invested for 3-5 years. Retail investors should be educated on how to be patient in the market. Historically, we have seen that whenever there is some panic, they exit at the first instance and stay away from the market when really they should be in the market.
That culture needs to change. We are trying to convince investors that just as they invest in debt, national saving certificate, post office, or an RBI bond and don’t look at it every morning and evening, they should do the same for equities. They should select a good stock in a good sector and remain invested for 3-5 years.
Q: What is happening by way of retail money participation, are people committing fresh cash or is money being churned from a largecap position to a midcap or smallcap position?
A: I don’t think fresh money is coming in from retail at this point of time, there is more of churn which is happening. There is some amount of money coming into mutual funds as of now. For the last few days, we have been seeing mutual funds getting a lot of fresh money. We are seeing very little money coming directly into the market from retail at this stage.
Q: I believe you like power as a sector at Reliance Money. What leg of it do you like? Have you been booking profits or are you still invested in the story?
A: We believe in the power story. Besides power, we like infrastructure, construction, education and shipbuilding. We are advising our clients to invest in these areas because these are growth sectors. In the next foreseeable future, they will produce more than proportionate returns.
Apart from power, telecom is also another good sector,. Education is a huge area of interest for the entire economy. If you really look at how much we spend on education as a country, it is very little. That is going to change as there is a conscious policy taken by the Centre to spend more and more on education.
We will shortly see benefits coming to a few players in this sector.
Q: What is the feeling that you get from HNIs, are they skeptical about market valuations and the upmove from here, or are they participating in a big way in the last 1,000-points or so?
A: There are actually two segments. Some people are booking profits and probably waiting a bit before entering. There is one more segment which is extremely bullish. They are making fresh investments in the recommended sectors.
Q: Are you comfortable with the 30-40% kind of daily upmoves that we have been seeing for stocks in the last fortnight? Do you see any kind of excesses playing out on the screen?
A: When we advise clients and look at the markets, we really take a medium to long-term view. For intra-day, we have a segment. We have research which does advise on intra-day activities. But it is not an area where we focus too much on. We do not advise our clients on an intra-day basis too much.
On whether I am comfortable with the 800 points upward movement or the 400-500 points downward movement, it is not a very acceptable or desirable movement trend.
When we are integrated with the global economy, these kinds of factors are definitely going to be there. We better get used to these things.
Since there is no concern in the medium- to long-term, investors should not get scared. Short-term players and day-traders need to be very cautious.
Q: How actively are you tracking and recommending primary market offerings right now? What are you seeing by way of HNI and retail interest there?
A: There is an amazing level of interest. Last few issues have seen huge interest. In Mundra, there was huge retail interest. We are also seeing a lot of interest in the Edelweiss issue. We track the primary market very closely. We have a very active desk and are getting a lot of interest from HNIs and retail.
Q: Do you see a lot of interest in retail to take delivery of stocks or is there interest moving slowly to the stock futures space now?
A: Small investors are not getting into stock futures in a big manner. HNIs are into stock futures in a big way while real retail is into delivery-based trading
Source: Moneycontrol.com
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