The markets closed in the green on the last day of the year despite some mixed cues from Asia and Europe. Telecom space was buzzing along with power, realty, pharma, FMCG and auto stocks. However, select banking and IT stocks were trading weak languishing at the lower levels. Broader markets continued to outperform giving markets an excellent breadth.
2007 was a year of records for Indian markets. We saw the highest number of 1000 marks being croseed on the Sensex. Sensex crossed six thousand marks as compared to five in 2005. Sensex gave areturn of around 47% in 2007. Metals, capital goods and oil & gas stocks had a tear away rally giving over 100% returns.
In 2007 IT stocks like Infosys, Subex and pharma stocks like Cipla and Dr Reddy's gave negative return.BHEL, SBI, NTPC, Bharti were among the top frontline gainers. In the midcap space RNRL, Ispat, Indiainfoline, Essar Oil gave hefty reurns.
Sensex closed up 80.04 points or 0.40% at 20286.99, and the Nifty up 58.90 points or 0.97% at 6138.60.
About 2684 shares have advanced, 393 shares declined, and 27 shares are unchanged.
The BSE Midcap Index ended at 9,789.49 up 2%.
The BSE Smallcap Index ended at 13,348.37 up 3.5%.
The BSE Bankex was up 0.2% at 11,418.00. Canara Bank, Centurion Bank, Oriental Bank, Allahabad Bank closed in green.
The BSE Capital Goods Index closed at 19,755.39 up 0.6%. Astra Microwave, Reliance Infra, Kirloskar Oil, Bharat Bijlee closed higher.
The BSE Auto Index closed at 5,667.45 up 1.2%. Tube Investment, Apollo Tyres, Escorts, Ashok Leyland, Hind Motors closed lower.
The BSE Metal Index closed at 20,020.22 up 0.4%. Mah Seamless, JindalStainless, Jindal Saw, SAIL, Jindal Steel closed higher
The BSE FMCG Index closed up 2% at 2,319.92. Bata India, Godrej Consumer, GlaxoSmith Con, United Spirits, Nestle ended higher
BSE Oil and Gas Index closed at 13,301.60 up 1%. BPCL, HPCL, IOC, Reliance Natura, GAIL ended higher.
The BSE IT Index was at 4,529.59 down 0.5%. I-Flex Solution, Financial Tech, Satyam, Tech Mahindra, Infosys closed lower.
The NSE cash turnover was at Rs 19090.53 crore and the NSE F&O turnover was at Rs 46186.73 crore. The BSE cash turnover was Rs 9448.7 crore. Total market wide turnover was at Rs 74725.96 crore.
Mkts still in green: Bharti, BPCL, M&M, DLF up
The markets are still trading in green holding out their gains despit some mixed cues from Asia and weak cues from Europe. Telecom space is buzzing along with power, realty, pharma, FMCG and auto stocks. However, select banking and IT stocks are trading weak languishing at the lower levels. Broader markets continue to outperform giving markets an excellent breadth.
At 2.37 hrs IST, the Sensex is up 127.06 points or 0.63% at 20334.01, and the Nifty up 59.05 points or 0.97% at 6138.75.
About 2746 shares have advanced, 330 shares declined, and 28 shares are unchanged.
In the consumer durables space Videocon, Mirc Electronics and Bata are among the gainers.
In the midcap space GTL Infra, Monsanto India, GBN, Bilcare, TV 18, Himatsingka Seide, Tube Investment, HMT, FDC were the top gainers.
Bharti Airtel, M&M, ITC Hindalco, DLF and Tata Power were top gainers on the bourses while Wipro, ICICI Bank, Ambuja Cements, Infosys, HDFC Bank, HCL Tech and Nalco top losers.
The BSE Midcap and Small Cap indices were up 2% and 3%, respectively.
Most active shares on the exchanges were Brigade Enterprises, eClerx Services, Videocon Industries and Bharti Airtel.
The BSE Realty Index surged 2%. The BSE Auto, FMCG, Healthcare, Metal and Power indices gained 1-1.5%.
New listings like Brigade Enterprises was trading at Rs 384.05, down 1.53% to its issue price of Rs 390 and eClerx Services at Rs 406.10, up 29% over its offer price of Rs 315.
Mkt trades higher: FMCG, pharma, realty, auto up
The markets continue to trade at the higher levels on the last day of the year and cues from Asia were mixed. Telecom space is buzzing along with power, realty, pharma, FMCG and auto stocks. However, select banking and IT stocks are trading weak languishing at the lower levels. Broader markets continue to outperform giving markets an excellent breadth.
At 1.18 hrs IST, the Sensex is up 116.92 points or 0.58% at 20323.87, and the Nifty up 56.45 points or 0.93% at 6136.15.
About 2774 shares have advanced, 300 shares declined, and 30 shares are unchanged.
Bharti Airtel, M&M, ITC Hindalco, DLF and Tata Power were top gainers on the bourses while Wipro, ICICI Bank, Ambuja Cements, Infosys, HDFC Bank, HCL Tech and Nalco top losers.
The BSE Midcap and Small Cap indices were up 2% and 3%, respectively.
Most active shares on the exchanges were Brigade Enterprises, eClerx Services, Videocon Industries and Bharti Airtel.
The BSE Realty Index surged 2%. The BSE Auto, FMCG, Healthcare, Metal and Power indices gained 1-1.5%.
New listings like Brigade Enterprises was trading at Rs 384.05, down 1.53% to its issue price of Rs 390 and eClerx Services at Rs 406.10, up 29% over its offer price of Rs 315.
Market trades steady: Bharti, ITC, Hindalco up
The markets are trading steady with smart gains mirroring its Asian peers. Most of the Asia is trading in green. Telecom space is buzzing along with power, realty, pharma, FMCG and auto stocks. However, select banking and IT stocks are trading weak languishing at the lower levels. Broader markets continue to outperform giving markets an excellent breadth.
At 12.00 hrs IST, the Sensex is up 95.05 points or 0.47% at 20302.00, and the Nifty up 43.60 points or 0.72% at 6123.30.
About 2746 shares have advanced, 332 shares declined, and 26 shares are unchanged.
Bharti Airtel, ITC Hindalco, DLF and Tata Power were top gainers on the bourses while Wipro, ICICI Bank, Ambuja Cements, Infosys, HDFC Bank, HCL Tech and Nalco top losers.
The BSE Midcap and Small Cap indices were up 2% and 3%, respectively.
Most active shares on the exchanges were Brigade Enterprises, eClerx Services, Videocon Industries and Bharti Airtel.
The BSE Realty Index surged 2%. The BSE Auto, FMCG, Healthcare, Metal and Power indices gained 1-1.5%.
New listings like Brigade Enterprises was trading at Rs 384.05, down 1.53% to its issue price of Rs 390 and eClerx Services at Rs 406.10, up 29% over its offer price of Rs 315.
Mkts strong: Realty, metal, auto, FMCG, pharma gain
The market is trading strong with the supportive buying interest from realty, metal, auto, FMCG, pharma, power and telecom stocks and also mirroring strong Asian cues. The market has seen good bounce today after profit booking in Friday's session. Midcap and small cap stocks continued their upmove.
At 10.50 am, the Sensex was up 168 points at 20,375 and the Nifty up 52 points at 6,131. About 2743 shares have advanced, 328 shares declined, and 33 shares are unchanged.
Bharti Airtel, Hindalco, DLF and Tata Power were top gainers on the bourses while Ambuja Cements, Infosys, HDFC Bank, HCL Tech and Nalco top losers.
The BSE Midcap and Small Cap indices were up 1.66% and 2.7%, respectively.
Most active shares on the exchanges were Brigade Enterprises, eClerx Services, Videocon Industries and Bharti Airtel.
The BSE Realty Index surged 2.46%. The BSE Auto, FMCG, Healthcare, Metal and Power indices gained 1%-1.5%.
New listings like Brigade Enterprises was trading at Rs 384.05, down 1.53% to its issue price of Rs 390 and eClerx Services at Rs 406.10, up 29% over its offer price of Rs 315.
The Indian Rupee was trading at 39.41 as against its previous close of 39.43.
Mkts open higher mirroring Asian cues; power, telecom up
Markets have opened higher on the back of strong cues from Asian markets and buying interest in metal, power, telecom, oil, real estate and cement stocks.
At 9:56 am, the Sensex was up 116 points at 20,323 and the Nifty up 56 points at 6,136..
Tata Steel, Reliance Energy, Bharti Airtel, GAIL, Wipro, Tata Power, Reliance Communications, Zee, Idea Cellular, ACC, Reliance and DLF gained.
Brigade Enterprises has listed at Rs 395 versus issue price of Rs 390 and eClerx Services opened at Rs 369 versus issue price of Rs 315.
Asian markets were trading firm. Taiwan's Taiwan Weighted gained 0.42% or 34.99 points at 8,431.94. Singapore's Straits Times was up 0.60% or 20.60 points at 3,466.42.
Market cues:
* FIIs net buy USD 234 million in equity on Dec 27
* MFs net buy Rs 716 crore in equity on Dec 27
* NSE F&O Open Interest up by Rs 6,878 crore at Rs 1.02 lakh crore
F&O cues:
* Futures Open Interest up by Rs 4,242 crore, Options Open Interest up by Rs 2,636 crore
* Stock Futures add over 9 cr shares in Open Interest
* Nifty Futures add 12.1 lakh shares in Open Interest
* Nifty Open Int PCR at 1.28 vs 1.21
* Nifty Puts add 19.6 lakh shares in Open Interest
* Nifty Calls add 12.6 lakh shares in Open Interest
* Nifty 6000 Put adds 6 lakh shares in Open Interest
* Nifty 6100 Put adds 3.6 lakh shares in Open Interest
* Nifty 6100 Call adds 2.9 lakh shares in Open Interest
* Nifty 6200 Call adds 2.5 lakh shares in Open Interest
Source: Moneycontrol.com
Monday, December 31, 2007
Sunday, December 30, 2007
BSE launches SENSEX mini Contracts
The Bombay Stock Exchange will launch SENSEX mini derivatives Contracts from January 1, 2008 in a market lot of FIVE. This is a first in India. The small size of the contract would be attractive for retail investors as there would be comparatively lower capital outlay, lower trading costs, more precise hedging and flexible trading. It is a step to encourage and enable small investors to mitigate risk and enable easy access to India’s most popular index, SENSEX, through futures & options.
The Security Symbol for SENSEX mini Contracts will be MSX. The contract is available for one, two & three months along with weekly options.
The SEBI Board has approved introduction of 7 new derivative products for the Indian market based on the recommendations made by the SEBI Committee on Derivatives headed by Prof. M. Rammohan Rao. As stated by SEBI, the introduction of these products is a step intended to progressively encourage markets to move onshore.
Source: Moneycontrol.com
The Security Symbol for SENSEX mini Contracts will be MSX. The contract is available for one, two & three months along with weekly options.
The SEBI Board has approved introduction of 7 new derivative products for the Indian market based on the recommendations made by the SEBI Committee on Derivatives headed by Prof. M. Rammohan Rao. As stated by SEBI, the introduction of these products is a step intended to progressively encourage markets to move onshore.
Source: Moneycontrol.com
Sensex to give 15-20% returns in long-term
Ajit Dayal of Quantum Advisors says Sensex has given compounded returns of 35% peranum in the last 7 years and one must not expect similar returns but returns of 15-20% over the long-term is possible.
He further told CNBC-TV18 that valuations in India are not cheap but they are not near bubble phase either and so they are not uncomfortable with current valuations. At present at Quantum Advisors they have fairly low cash levels said Dayal.
Excerpts from CNBC-TV18's exclusive interview with Ajit Dayal:
Q: The expectation is that come January there is going to be big dollops of cash and that’s probably going to take the market a bit higher than where it is. Would you go with that theory?
A: We have to go back a bit and look at- if you had put Rs 100 in the BSE 30 Index in January 2001, today that Rs 100 standing in December 2007, seven years later effectively would have been Rs 874. So that’s a profit of Rs 774 over the last 7 years i.e a compounded rate of return of about 35% per annum or about 2.5% per month. I don’t think that people should expect January-February-March-April 2008 to sort of give you that sort of return.
Having said that we are very optimistic on India. We believe that Indian economy is totally in many ways dealing from what's happening in the US. It never has really been coupled to the global economy. India is very much a domestic driven economy. Unfortunately, some mishaps in policy where we have gotP-notes that has made us part of global capital flows in a far more accelerated fashion then probably what we can handle and so if something happens in the US- subprime crisis, if the big groups out there begin to withdraw capital from all their sort of territorial expansion plans and territorial investment plans which includes India and they take capital back home then yes, because of the P-note exposure and linkage that the Indian capital market has you could see a sell off.
So will January 2008 see a sell off because of what's happening in the US or will January 2008 see an increase-We don’t know but one should expect about a 15-20% rate of return in our view from Indian stocks in the long run not the 35% per annum that we have seen since 2001 in last seven years but certainly a 15-20% long-term sustainable number still looks very good us.
Q: How comfortable are you feeling about valuations at this point- the 20,000 plus? Are you feeling okay about the way we are stepping into earnings?
A:We are a value investor and we tend to be in cash when we don’t like the valuations. We actually are in fairly low cash right now. We had taken a bit of profits if you will in the month of October and we looked quite smart because the market fell off when the P-notes thing was announced. We looked very stupid when the market rebounded and we are still sitting in some cash but we have been in fairly low cash levels right now and that’s should indicate to you and to our viewers that we are very comfortable with valuations, we are not saying it is cheap but we don’t think it is anywhere close to bubble environments.
There is always stock selection that’s going on in our processes and within a basket of 20-25 stocks we have a portfolio now, which is in our view still a value portfolio. So yes, there is value; we are not uncomfortable with the valuation at this index level.
Q: How are you feeling about that midcap and smallcaps? Do you think its still a valuation catch up that’s playing out or is it just the money flows, which are being diverted to that part of the market?
A: It is more like money flows. There is always sector rotation in stock market. Many fund managers have got sort of favorite sectors. We are sort of cap insensitive and sector insensitive in many ways when we pick and choose our stocks. But if one looked at what happened in the indices from 2006 May, which sort of bottom in May-June 2006, it’s been really the largecaps, the BSE 30 led stocks and within the BSE 30, 5-6 stocks have accounted for a much of the rise in the Index till about the third quarter this year.
So there is some sort of a leadership change, as you all would talk about it. With regards to DSP Merrill Lynch forecast of estimated 10% GDP growth rate, our numbers and our valuation numbers are based upon a 6.5-7% the rate of growth of GDP, and if the GDP numbers do indeed end up at been 8-9 or 10% that would make the market in our view very cheap. So at 6.5% we are seeing the market to be not expensive, not cheap but if a 10% number did pan out which we don’t believe it will but if it did pan out and in the next few years if we get the infrastructure right then we believe it can, then the market is trading still in our view extremely cheap.
So we will be rushing into buy, if we got new cash and the 10% GDP numbers did sort of pan out.
Q: From the earnings lot though would you include IT in your list this time around or you will still stay away?
A: No we have been buyers of IT. We have been buying IT; we had some IT exposure at the start of the year. We have actually been adding to it over the last few quarters. We don’t believe that currencies, a weak currency is the only reason to buy IT stocks. We believe there are some fabulous companies out there and we hope that we own them in the portfolio and have made the right selection.
We have been buyers of IT. So it has been a nice last one or two weeks for us though not nice one-two quarters for us because we have been sort of buying up the IT as they have been coming down.
Q: Have you had reason to add any agro commodities to your list such as sugar?
A: No, we actually looked at sugar a couple of months ago and we know the share prices have rebounded a bit since then. But we haven’t really had the strength to go in and buy into sugar because that is sort of driven a lot by political influence and by near-term political events. Our job as analyst, as fund managers we believe in the long-haul is to try to sort of analyze things that we can understand and we have little understanding of what makes sugarcane and sugar prices move around given all the political stuff going on around it. So we are not able to guess that and we don’t have it.
We have been certainly watching it, studying it but don’t have the conviction or the strength to put money behind it as yet. One day we will probably but haven’t done so far.
Q: What is the top pick for 2008?
A: We do not disclose names but I recently spoke about IT and we like IT. We haven’t bought IT with a view of three-six months; we do not buy stocks with three-six months views. We invest in them after studying and trying analyze where things could end up on the three-five year view at the very minimum. So our view is that IT as a sector could recover.
We are not believers in a strong rupee. I think we kind of fool ourselves a bit by saying that when we strengthen against US dollar that we are a strong currency. There have been some issues in America and America has had an inherently weak currency. So a basic currency trade is a two way game; if one has a weak dollar it got to be something strong on the opposite side. So we have happened by accident to have a strong rupee against the US dollar.
And our view is that the Indian rupee given the fact that if one looks at the current account deficits or trade flows, you stripe out of the portfolio money that’s coming into India every year and we have had about USD 50 billion of portfolio money in India over the last four years and so if you strip at money out, India is actually running a current account deficit and is been funded by portfolio flows and no one has any control or any understanding of how sustainable these portfolios flows are on a month to month basis, on a quarterly basis or even on annual basis specially given the fact that P-Notes account for half of those flows.
We are not convinced that a weak dollar in that sense a strong Indian rupee is a given and the IT companies that we own in the portfolios we believe can manage the environment around them.
Source: Moneycontrol.com
He further told CNBC-TV18 that valuations in India are not cheap but they are not near bubble phase either and so they are not uncomfortable with current valuations. At present at Quantum Advisors they have fairly low cash levels said Dayal.
Excerpts from CNBC-TV18's exclusive interview with Ajit Dayal:
Q: The expectation is that come January there is going to be big dollops of cash and that’s probably going to take the market a bit higher than where it is. Would you go with that theory?
A: We have to go back a bit and look at- if you had put Rs 100 in the BSE 30 Index in January 2001, today that Rs 100 standing in December 2007, seven years later effectively would have been Rs 874. So that’s a profit of Rs 774 over the last 7 years i.e a compounded rate of return of about 35% per annum or about 2.5% per month. I don’t think that people should expect January-February-March-April 2008 to sort of give you that sort of return.
Having said that we are very optimistic on India. We believe that Indian economy is totally in many ways dealing from what's happening in the US. It never has really been coupled to the global economy. India is very much a domestic driven economy. Unfortunately, some mishaps in policy where we have gotP-notes that has made us part of global capital flows in a far more accelerated fashion then probably what we can handle and so if something happens in the US- subprime crisis, if the big groups out there begin to withdraw capital from all their sort of territorial expansion plans and territorial investment plans which includes India and they take capital back home then yes, because of the P-note exposure and linkage that the Indian capital market has you could see a sell off.
So will January 2008 see a sell off because of what's happening in the US or will January 2008 see an increase-We don’t know but one should expect about a 15-20% rate of return in our view from Indian stocks in the long run not the 35% per annum that we have seen since 2001 in last seven years but certainly a 15-20% long-term sustainable number still looks very good us.
Q: How comfortable are you feeling about valuations at this point- the 20,000 plus? Are you feeling okay about the way we are stepping into earnings?
A:We are a value investor and we tend to be in cash when we don’t like the valuations. We actually are in fairly low cash right now. We had taken a bit of profits if you will in the month of October and we looked quite smart because the market fell off when the P-notes thing was announced. We looked very stupid when the market rebounded and we are still sitting in some cash but we have been in fairly low cash levels right now and that’s should indicate to you and to our viewers that we are very comfortable with valuations, we are not saying it is cheap but we don’t think it is anywhere close to bubble environments.
There is always stock selection that’s going on in our processes and within a basket of 20-25 stocks we have a portfolio now, which is in our view still a value portfolio. So yes, there is value; we are not uncomfortable with the valuation at this index level.
Q: How are you feeling about that midcap and smallcaps? Do you think its still a valuation catch up that’s playing out or is it just the money flows, which are being diverted to that part of the market?
A: It is more like money flows. There is always sector rotation in stock market. Many fund managers have got sort of favorite sectors. We are sort of cap insensitive and sector insensitive in many ways when we pick and choose our stocks. But if one looked at what happened in the indices from 2006 May, which sort of bottom in May-June 2006, it’s been really the largecaps, the BSE 30 led stocks and within the BSE 30, 5-6 stocks have accounted for a much of the rise in the Index till about the third quarter this year.
So there is some sort of a leadership change, as you all would talk about it. With regards to DSP Merrill Lynch forecast of estimated 10% GDP growth rate, our numbers and our valuation numbers are based upon a 6.5-7% the rate of growth of GDP, and if the GDP numbers do indeed end up at been 8-9 or 10% that would make the market in our view very cheap. So at 6.5% we are seeing the market to be not expensive, not cheap but if a 10% number did pan out which we don’t believe it will but if it did pan out and in the next few years if we get the infrastructure right then we believe it can, then the market is trading still in our view extremely cheap.
So we will be rushing into buy, if we got new cash and the 10% GDP numbers did sort of pan out.
Q: From the earnings lot though would you include IT in your list this time around or you will still stay away?
A: No we have been buyers of IT. We have been buying IT; we had some IT exposure at the start of the year. We have actually been adding to it over the last few quarters. We don’t believe that currencies, a weak currency is the only reason to buy IT stocks. We believe there are some fabulous companies out there and we hope that we own them in the portfolio and have made the right selection.
We have been buyers of IT. So it has been a nice last one or two weeks for us though not nice one-two quarters for us because we have been sort of buying up the IT as they have been coming down.
Q: Have you had reason to add any agro commodities to your list such as sugar?
A: No, we actually looked at sugar a couple of months ago and we know the share prices have rebounded a bit since then. But we haven’t really had the strength to go in and buy into sugar because that is sort of driven a lot by political influence and by near-term political events. Our job as analyst, as fund managers we believe in the long-haul is to try to sort of analyze things that we can understand and we have little understanding of what makes sugarcane and sugar prices move around given all the political stuff going on around it. So we are not able to guess that and we don’t have it.
We have been certainly watching it, studying it but don’t have the conviction or the strength to put money behind it as yet. One day we will probably but haven’t done so far.
Q: What is the top pick for 2008?
A: We do not disclose names but I recently spoke about IT and we like IT. We haven’t bought IT with a view of three-six months; we do not buy stocks with three-six months views. We invest in them after studying and trying analyze where things could end up on the three-five year view at the very minimum. So our view is that IT as a sector could recover.
We are not believers in a strong rupee. I think we kind of fool ourselves a bit by saying that when we strengthen against US dollar that we are a strong currency. There have been some issues in America and America has had an inherently weak currency. So a basic currency trade is a two way game; if one has a weak dollar it got to be something strong on the opposite side. So we have happened by accident to have a strong rupee against the US dollar.
And our view is that the Indian rupee given the fact that if one looks at the current account deficits or trade flows, you stripe out of the portfolio money that’s coming into India every year and we have had about USD 50 billion of portfolio money in India over the last four years and so if you strip at money out, India is actually running a current account deficit and is been funded by portfolio flows and no one has any control or any understanding of how sustainable these portfolios flows are on a month to month basis, on a quarterly basis or even on annual basis specially given the fact that P-Notes account for half of those flows.
We are not convinced that a weak dollar in that sense a strong Indian rupee is a given and the IT companies that we own in the portfolios we believe can manage the environment around them.
Source: Moneycontrol.com
Thursday, December 27, 2007
BENAZIR BHUTTO SUCCUMBS TO INJURY
Rawalpindi: Pakistan opposition leader Benazir Bhutto died on Thursday from her injuries sustained in a suicide attack, a party aide said.
''At 6:16 pm she expired,'' said Wasif Ali Khan, a member of Bhutto's party who was at Rawalpindi General Hospital where Bhutto died.
A senior military official, who spoke on condition of anonymity because he was not authorized to comment, confirmed that Bhutto had died.
A suicide bomber had struck shortly after Bhutto addressed a political rally in Rawalpindi on Thursday, killing at least 25 people, witnesses said.
An Associated Press reporter at the scene could see body parts and flesh scattered at the back gate of the Liaqat Bagh park where Bhutto had spoken. He counted about 20 bodies, including police, and could see many other wounded people.
Another police official, Saud Aziz, said it was a suicide attack.
Farahtullah Babar, spokesman for Bhutto party, said her vehicle was about 50 meters away from blast, just after leaving the rally venue in Rawalpindi.
"She had just crossed the gate when we heard a deafening sound. We could feel its impact but by the grace of God she is safe," he said. "She has been moved to a safe place."
Party supporter Chaudhry Mohammad Nazir said that two gunshots rang out when Bhutto's vehicle pulled into the main street and then there was a big blast next to her car.
Police cordoned off the street with white and red tape, and rescue workers rushed to put victims in ambulances as people wailed nearby.
Body parts, pieces of clothing and party banners scattered on the street. The clothing of some of the victims was shredded and people put party flags over their bodies. Police caps and shoes littered the asphalt.
It was the second suicide attack apparently targeting the former prime minister in two months.
Her homecoming parade in southern city of Karachi from an eight-year exile on October 18 was also targeted, killing more than 140 people.
On Thursday, hundreds of riot police had manned security checkpoints to guard the venue. It was Bhutto's first public meeting in Rawalpindi since she came back to the country.
Rahman Malik, Bhutto's security adviser, told Pakistan's Geo news channel that she escaped unhurt just because she was in a bulletproof vehicle.
"She was the prime target," he said. "I have been told by eyewitnesses that someone first opened fire and then detonated the bomb ... We had information that Benazir Bhutto's life is in danger."
Malik said one of the vehicles in Bhutto's convoy was badly damaged.
In November, Bhutto had also planned a rally in the city, but President Pervez Musharraf forced her to cancel it, citing security fears.
In recent weeks, suicide bombers have repeatedly targeted security forces in Rawalpindi, a city near the capital where Musharraf stays and the Pakistan army has its headquarters.
Earlier Thursday, pro-government party supporters clashed with backers of opposition leader Nawaz Sharif a few kilometers from Rawalpindi, killing four people and wounding three.
Source: ibnlive.com
Household savings and Markets
Household savings invested in equity mkts at 8-yr high
Household savings invested in equity markets are at 8-year high. According to CNBC-TV18 analyst, Haresh Soneji, this is a very interesting trend; the 8-year high is in percentage terms. In absolute terms, they are at an all-time high at Rs 50, 000 crore, he informed.
He pointed that in terms of the percentage - household saving to gross household saving, it is At a 8-year high, at 6.4% of gross financial savings. In the previous bull-run, in year 2000, it was at 6.9%. But in absolute terms, that amounted to only Rs 16, 000 crore, Soneji informed.
He added that, in terms of all-time high, the household savings in equity at 9% in FY 94 were the highest-ever. So, in absolute terms, the markets are at absolutely high, but in percentage terms, they are getting at that high, Soneji said.
He picked up some other interesting trends – this Rs 50000 crore in equities and equity-assets has moved five-times in the last couple of years. This is provision fiscal year 2007, he reminded, adding that the information has been obtained from the RBI and CSO. This means, the investments have moved from Rs 10, 000 crore to Rs 50000 crore. This suggests that a lot of money has come into the markets from the households - small retail investors, Soneji said. This amounts to a little over 1% of the current total market capitalisation (about USD 1 trillion), he pointed out.
Another important statistics is the bank deposits have hit all time high of 55.6% in FY07, Soneji said. Experts and analysts say that last year interest rates were almost at their decadal high. Another interesting trend is that flows into pension & PFs show a declining trend; lowest ever at 9%, he added. This means that money is shifting or slowing down from pension funds and moving to bank assets, insurance and equity markets, Soneji interpreted.
Another interesting aspect, he said is that money is not entering equity markets directly; household investors have grown smart and they are pumping money into the equity market through the mutual fund route.
From the 6.4%, almost about 450-500 bps is invested through mutual funds only, he concluded.
Source: Moneycontrol.com
Household savings invested in equity markets are at 8-year high. According to CNBC-TV18 analyst, Haresh Soneji, this is a very interesting trend; the 8-year high is in percentage terms. In absolute terms, they are at an all-time high at Rs 50, 000 crore, he informed.
He pointed that in terms of the percentage - household saving to gross household saving, it is At a 8-year high, at 6.4% of gross financial savings. In the previous bull-run, in year 2000, it was at 6.9%. But in absolute terms, that amounted to only Rs 16, 000 crore, Soneji informed.
He added that, in terms of all-time high, the household savings in equity at 9% in FY 94 were the highest-ever. So, in absolute terms, the markets are at absolutely high, but in percentage terms, they are getting at that high, Soneji said.
He picked up some other interesting trends – this Rs 50000 crore in equities and equity-assets has moved five-times in the last couple of years. This is provision fiscal year 2007, he reminded, adding that the information has been obtained from the RBI and CSO. This means, the investments have moved from Rs 10, 000 crore to Rs 50000 crore. This suggests that a lot of money has come into the markets from the households - small retail investors, Soneji said. This amounts to a little over 1% of the current total market capitalisation (about USD 1 trillion), he pointed out.
Another important statistics is the bank deposits have hit all time high of 55.6% in FY07, Soneji said. Experts and analysts say that last year interest rates were almost at their decadal high. Another interesting trend is that flows into pension & PFs show a declining trend; lowest ever at 9%, he added. This means that money is shifting or slowing down from pension funds and moving to bank assets, insurance and equity markets, Soneji interpreted.
Another interesting aspect, he said is that money is not entering equity markets directly; household investors have grown smart and they are pumping money into the equity market through the mutual fund route.
From the 6.4%, almost about 450-500 bps is invested through mutual funds only, he concluded.
Source: Moneycontrol.com
Wednesday, December 26, 2007
Stocks & sectors to include in your '08 wish list!
Rajesh Jain, Director & CEO, Pranav Securities told CNBC-TV18 that he is positive on the PSU space. Overall, he feels that the entire PSU power and power capital goods space will continue to give a good performance. The leader in terms of buying for 2008 would the oil sector followed by the fertilizer space, he added.
Excerpts from CNBC-TV’s exclusive interview with Rajesh Jain:
Q: The entire power space- Do you like stories like Power Grid and Power Trading?
A: Going forward into 2008, it becomes very critical at the 20,000 mark to be able to pick up a set of stocks which have absolutely unflinching fundamental value even at the 20,000 mark and going forward, one can see sustained uptick in all of them and to that extent, I am not answering your question in the order you have asked.
The theme that we have liked over the last 6 months is the PSU space, for the simple reason that the markets have chugged along but because of lack of fancy; because of the Left factor in the UPA government at the Center. The entire PSU space barring an odd BHEL, NTPC has been given the complete thumbs down signal, it is not being fancied and more or less people have written off the disinvestment as a driver for the PSU stocks and that precisely makes these - grand buys at the 20,000 mark.
Within the PSU space there are 3 sub-segments, which offer tremendous value to investors and a great element of safety considering that the markets are perched at the 20,000-mark and there is noise of global turmoil economically as well as in the markets.
So in that context, PSU power capital goods is a sub segment that we like and within that, we would still lead with the likes of BHEL and NTPC than the BEMLs and BELs, and then the Power Grid and Power Finance kind of stocks.
Q: What is it that you expect to see by way of earnings performance from something like NTPC next year?
A: We would not want to place earnings growth as the sole reason for buying these stocks. I think the bigger drivers would be revival of disinvestment direct or indirect through the strategic mode or the IPO mode or sustained offering from the government as it strides to set its balance sheet right. I think that is going to be one driver.
The second driver is the lack of fancy factor. Over the last 8,000 Sensex movement through 2007, we haven’t seen PSU participate with full energy and therefore the underperformance factor or the lack of fancy has led to tremendous under ownership of these great stocks and so as and when the under ownership corrects itself, the fancy for these stocks would rejuvenate and that would make them better performers compared to the rest of the market.
Then comes the underpinning in terms of fairly good robust performance. We have seen the likes of NTPC or BEML or a BEL give QoQ performance; that is not as steady as the public limited companies for the simple reason that there is lumpiness or because of government policy has not seen the traction or suitability in QoQ performance. But overall we maintain that the entire PSU power and power capital good space will continue to give a good performance. A 15-20% EPS growth cannot be ruled out particularly over the next 3 years. So that gives one the confidence to buying into this space.
In the PSU space, the leader in terms of buying for 2008 would easily be the oil sector followed by the fertilizer space.
Q: Oil segment- with all that is happening in terms of the policy, with the way crude is moving, what do you see by way of financial performances particularly for the oil and marketing like HP, BP, although not so much of ONGC because that would benefit, what are the kind of returns that you would expect over 2-3 years?
A: Over 2-3 years easily a two-bagger if not more. It is extremely economically infeasible for the government to sustain the kind of bleeding these companies are sustaining because of an administered pricing policy. So either directly you have to allow market driven prices or indirectly through bonds or some other method, one has to make good the losses to these companies, which automatically will reflect, in the stock tickers of these companies.
My theme for 2008 rests more on the confidence that here is a good business which is suffering because of externalities not intrinsic to the business and these externalities cannot continue for too long and hence if you were to buy an oil or a fertilizer space, particularly the PSU one given the huge case of land, real estate holdings, under valued operating assets, I think one cannot go wrong but I wouldn’t want to wedge it a 3 year time horizon.
This is a classic contrarian buy scenario for the long-term investor and one should be prepared to look at a 5-year period whereupon one can almost underwrite a 2 to 3 times gain.
Q: With the all the developments that have been announced so for, for the fertilizer pack what is your long-term view on this space?
A: I think the fertilizer space is going to be a big indirect beneficiary of the retail revolution and the agriculture revolution that is incipient in this country. We are seeing the first signs of it and we will see fertilizer as a commodity run away into the realm of consumerism and significant jump in offticks will take place, market driven pricing will come in over next half decade, there will be elements of price control and all because it is a sensitive area. But having said that, I think corporate farming is coming in, and the retail revolution is going to trigger of a need for better quality in stuff and fertilizer is bound to benefit.
So if one takes the combination of all these sectors I think one will see the fertilizer space give 2-3 times kinds of gains and one must not forget that all of them are sitting on gold mine that investors love to read about - in the stock, that is the land banks and real estate values.
Source: Moneycontrol.com
Excerpts from CNBC-TV’s exclusive interview with Rajesh Jain:
Q: The entire power space- Do you like stories like Power Grid and Power Trading?
A: Going forward into 2008, it becomes very critical at the 20,000 mark to be able to pick up a set of stocks which have absolutely unflinching fundamental value even at the 20,000 mark and going forward, one can see sustained uptick in all of them and to that extent, I am not answering your question in the order you have asked.
The theme that we have liked over the last 6 months is the PSU space, for the simple reason that the markets have chugged along but because of lack of fancy; because of the Left factor in the UPA government at the Center. The entire PSU space barring an odd BHEL, NTPC has been given the complete thumbs down signal, it is not being fancied and more or less people have written off the disinvestment as a driver for the PSU stocks and that precisely makes these - grand buys at the 20,000 mark.
Within the PSU space there are 3 sub-segments, which offer tremendous value to investors and a great element of safety considering that the markets are perched at the 20,000-mark and there is noise of global turmoil economically as well as in the markets.
So in that context, PSU power capital goods is a sub segment that we like and within that, we would still lead with the likes of BHEL and NTPC than the BEMLs and BELs, and then the Power Grid and Power Finance kind of stocks.
Q: What is it that you expect to see by way of earnings performance from something like NTPC next year?
A: We would not want to place earnings growth as the sole reason for buying these stocks. I think the bigger drivers would be revival of disinvestment direct or indirect through the strategic mode or the IPO mode or sustained offering from the government as it strides to set its balance sheet right. I think that is going to be one driver.
The second driver is the lack of fancy factor. Over the last 8,000 Sensex movement through 2007, we haven’t seen PSU participate with full energy and therefore the underperformance factor or the lack of fancy has led to tremendous under ownership of these great stocks and so as and when the under ownership corrects itself, the fancy for these stocks would rejuvenate and that would make them better performers compared to the rest of the market.
Then comes the underpinning in terms of fairly good robust performance. We have seen the likes of NTPC or BEML or a BEL give QoQ performance; that is not as steady as the public limited companies for the simple reason that there is lumpiness or because of government policy has not seen the traction or suitability in QoQ performance. But overall we maintain that the entire PSU power and power capital good space will continue to give a good performance. A 15-20% EPS growth cannot be ruled out particularly over the next 3 years. So that gives one the confidence to buying into this space.
In the PSU space, the leader in terms of buying for 2008 would easily be the oil sector followed by the fertilizer space.
Q: Oil segment- with all that is happening in terms of the policy, with the way crude is moving, what do you see by way of financial performances particularly for the oil and marketing like HP, BP, although not so much of ONGC because that would benefit, what are the kind of returns that you would expect over 2-3 years?
A: Over 2-3 years easily a two-bagger if not more. It is extremely economically infeasible for the government to sustain the kind of bleeding these companies are sustaining because of an administered pricing policy. So either directly you have to allow market driven prices or indirectly through bonds or some other method, one has to make good the losses to these companies, which automatically will reflect, in the stock tickers of these companies.
My theme for 2008 rests more on the confidence that here is a good business which is suffering because of externalities not intrinsic to the business and these externalities cannot continue for too long and hence if you were to buy an oil or a fertilizer space, particularly the PSU one given the huge case of land, real estate holdings, under valued operating assets, I think one cannot go wrong but I wouldn’t want to wedge it a 3 year time horizon.
This is a classic contrarian buy scenario for the long-term investor and one should be prepared to look at a 5-year period whereupon one can almost underwrite a 2 to 3 times gain.
Q: With the all the developments that have been announced so for, for the fertilizer pack what is your long-term view on this space?
A: I think the fertilizer space is going to be a big indirect beneficiary of the retail revolution and the agriculture revolution that is incipient in this country. We are seeing the first signs of it and we will see fertilizer as a commodity run away into the realm of consumerism and significant jump in offticks will take place, market driven pricing will come in over next half decade, there will be elements of price control and all because it is a sensitive area. But having said that, I think corporate farming is coming in, and the retail revolution is going to trigger of a need for better quality in stuff and fertilizer is bound to benefit.
So if one takes the combination of all these sectors I think one will see the fertilizer space give 2-3 times kinds of gains and one must not forget that all of them are sitting on gold mine that investors love to read about - in the stock, that is the land banks and real estate values.
Source: Moneycontrol.com
Midcap stocks you shouldn't ignore!
Speaking to CNBC-TV 18, Harit Shah of Angel Broking identified Tanla Solutions, 3i Infotech and Sasken as his favourite midcap picks. He has a target of about Rs 750 on Tanla Solutions. He has a target of about Rs 180 on 3i Infotech. Shah gives a target of about Rs 395 on the Sasken.
Excerpts from CNBC-TV18 ‘s exclusive interview with Harit Shah:
Q: Why do you like Tanla Solutions?
A: If one looks globally, specially in developed telecom markets an increasing use of data services by consumers, as subscriber goods is typically not very strong in these markets. One is going to see a lot of data services growth rather than voice-based growth. Tanla is of course, into aggregation business; they have got some strong relationships with major mobile phone operators like Vodafone and O2. So they are well placed right now to capitalize on the strong growth expected. In fact, Vodafone recently in the latest quarter, managed to get a billion pounds in data revenue. So that trend is very much on.
So definitely with an expansion in newer markets like Singapore, Australia and US, there is a lot of scope for growth in the company and they have got scalable business model of almost 50% EBITDA margin. So going forward, we expect the company to record about 45-50% CAGR in EPS over the next two-three years. So we have a target of about Rs 750 on the stock right now.
Q: We have heard a lot of 3i Infotech because it’s been an acquisition spree across the globe. What is it that you think will benefit it and how soon?
A: One thing is that they have been able to differentiate themselves from an normal midcap software company through these acquisitions. All them have been EPS accretive with about 10-15% net margins. It's helped them to build a good spread of banking products for itself.
Another thing is that they are very strongly present in the domestic market. There is a lot of strong growth expected in this space and more specifically in e-governance space in which they have already won couple of orders from the Government of Gujarat and Government of Harayana. So going forward, we expect this also to drive growth for them and the fact that they are very geographically diverse company not dependent on the US.
Only about 5% of net revenue is exposed to US dollar fluctuation. So to that extent, the currency risk is also not significant for this company. So these are some of the main reasons why we like the stock and we have a target of about Rs 180 on the stock right now.
Q: What about Sasken considering their expertise in the wireless space. What target are you setting?
A: Sasken is unique, interesting story and slightly risky because of the fact that it's focused just on one sector. But going forward, given the fact that with increasing features been used in mobile phones, users demanding much better features on them. The software component in these mobile phones is increasing always and Sasken has got strong relationship particularly with Nokia, which is of course the largest handset vendor in the world - that’s a positive thing and of course a fact that they have products business which as of now is not very significant. But going forward, as and when they are able to get scale in that business, it’s a good lever to protect their margins. We have a target of about Rs 395 on the stock.
Q: Give us an idea of the overall IT domain. The big boys have taken quite a bit of a beating than a lull now, recovery coming into them pre-earnings. In the midcap space where you spoke about the three picks how do expect this entire industry as a whole to perform relative to the markets from hereon and is the differentiator is going to be global dependence on the US. On what parameters would you bet on IT?
A: As of now, in the interim at least, we would like to get some more clarity on how CY08 IT Budget will pan out; as yet there is still some clarity to emerge. So that will be a key factor in the short-term that will determine how it’s going to move. Going forward, we think that as a trend, offshoring will continue regardless of whether or not there is a slowdown in IT spending; still we think that its very much a secular trend over the next few years.
I think it's still a multi-year story; rupee appreciation and wage inflation will impact these companies. But we believe as long as rupee appreciation is gradual, the top tier IT companies at least will be able to manage it. Therefore, we are by and large positive on the top tier IT companies as of now.
As far as midcap space is concerned, one needs to go for a bottom-up approach. They are not very similar in terms of business models, as one would see the top tier companies. So one needs to have a little more bottom up approach on this space and we have already mentioned the stocks that we like in the midcap space.
Disclosure:
I hold Tanla and 3i Infotech.
Source: Moneycontrol.com
Excerpts from CNBC-TV18 ‘s exclusive interview with Harit Shah:
Q: Why do you like Tanla Solutions?
A: If one looks globally, specially in developed telecom markets an increasing use of data services by consumers, as subscriber goods is typically not very strong in these markets. One is going to see a lot of data services growth rather than voice-based growth. Tanla is of course, into aggregation business; they have got some strong relationships with major mobile phone operators like Vodafone and O2. So they are well placed right now to capitalize on the strong growth expected. In fact, Vodafone recently in the latest quarter, managed to get a billion pounds in data revenue. So that trend is very much on.
So definitely with an expansion in newer markets like Singapore, Australia and US, there is a lot of scope for growth in the company and they have got scalable business model of almost 50% EBITDA margin. So going forward, we expect the company to record about 45-50% CAGR in EPS over the next two-three years. So we have a target of about Rs 750 on the stock right now.
Q: We have heard a lot of 3i Infotech because it’s been an acquisition spree across the globe. What is it that you think will benefit it and how soon?
A: One thing is that they have been able to differentiate themselves from an normal midcap software company through these acquisitions. All them have been EPS accretive with about 10-15% net margins. It's helped them to build a good spread of banking products for itself.
Another thing is that they are very strongly present in the domestic market. There is a lot of strong growth expected in this space and more specifically in e-governance space in which they have already won couple of orders from the Government of Gujarat and Government of Harayana. So going forward, we expect this also to drive growth for them and the fact that they are very geographically diverse company not dependent on the US.
Only about 5% of net revenue is exposed to US dollar fluctuation. So to that extent, the currency risk is also not significant for this company. So these are some of the main reasons why we like the stock and we have a target of about Rs 180 on the stock right now.
Q: What about Sasken considering their expertise in the wireless space. What target are you setting?
A: Sasken is unique, interesting story and slightly risky because of the fact that it's focused just on one sector. But going forward, given the fact that with increasing features been used in mobile phones, users demanding much better features on them. The software component in these mobile phones is increasing always and Sasken has got strong relationship particularly with Nokia, which is of course the largest handset vendor in the world - that’s a positive thing and of course a fact that they have products business which as of now is not very significant. But going forward, as and when they are able to get scale in that business, it’s a good lever to protect their margins. We have a target of about Rs 395 on the stock.
Q: Give us an idea of the overall IT domain. The big boys have taken quite a bit of a beating than a lull now, recovery coming into them pre-earnings. In the midcap space where you spoke about the three picks how do expect this entire industry as a whole to perform relative to the markets from hereon and is the differentiator is going to be global dependence on the US. On what parameters would you bet on IT?
A: As of now, in the interim at least, we would like to get some more clarity on how CY08 IT Budget will pan out; as yet there is still some clarity to emerge. So that will be a key factor in the short-term that will determine how it’s going to move. Going forward, we think that as a trend, offshoring will continue regardless of whether or not there is a slowdown in IT spending; still we think that its very much a secular trend over the next few years.
I think it's still a multi-year story; rupee appreciation and wage inflation will impact these companies. But we believe as long as rupee appreciation is gradual, the top tier IT companies at least will be able to manage it. Therefore, we are by and large positive on the top tier IT companies as of now.
As far as midcap space is concerned, one needs to go for a bottom-up approach. They are not very similar in terms of business models, as one would see the top tier companies. So one needs to have a little more bottom up approach on this space and we have already mentioned the stocks that we like in the midcap space.
Disclosure:
I hold Tanla and 3i Infotech.
Source: Moneycontrol.com
Thursday, December 20, 2007
Will market react to Sebi order on Monday?
This week can be best described as a week you would want to forget. It was a week when we saw the largest single day point fall for the Nifty and ofcourse, the second largest fall for the Sensex.
Though the markets for themselves have closed about 4.5% down for the frontliners. The Sensex was fairly range bound; you can see the amount of volatility that there was in that 200-220 point band that it moved.
Similar for the Nifty, it moved only about 60-70 points. But it kept becoming volatile intraday. Those cuts and edges were quite sharp, even dipping into the red occasionally. The advance/decline as a consequence of what was happening on the frontliners have actually pressurized themselves into closing yet again in favour of the declines. The mid and smallcap index have closed about 3.5-5% down for the week themselves as well.
We are stepping into a long weekend. So expectedly the turnover has been on the lower side of what we have seen over the last few days, not making it to the 1 lakh crore mark. But what is picking up are those rollovers. They will pick up as well as next week comes around, just 3-4 trading sessions left before we hit expiry. Close to about 40% of the Nifty positions rolled over. A decent premium came on the December series, January actually cooling off just a little bit from the highs of the day.
The stock of the day was IFCI. The stock was always going to get hammered out of shape and was 25% down for the better part of the day on very big volumes, over 14 crore volumes traded over there.
Deccan would be the other stock that would have reacted positively. It started off on a good footing, eventually closing about 5.5% down, selling off in the last moments of trade. But it opened on a strong footing.
But one sector that looked good was the IT index. It came back with a 3% plus move for itself because stocks like Infosys, Satyam, TCS, HCL Tech, Wipro have had very sharp gains, up anywhere between 2-5-6% for some of those stocks, even stocks likePolaris, Mphasis, Sonata Software from the midcap space. So technology was the strongest sector of the day.
Pharmaceutical was mixed. On one hand, you had stocks like Dr. Reddy’s, Shasun Chemicals and Sun Pharmaceuticals holding out well. On the other hand, stocks like GSK Pharma, Ranbaxy and Cipla slipped a little bit. So this has been one sector that has been in the limelight for the last few days.
Reliance Energy, Tata Motors, Cairn as well as SAIL had a very good session in trade today in terms of percentages. Some stocks had lost out with the likes of ABB, BHEL, Suzlon and VSNL.
VSNL had a 20% move yesterday, shaving off about a couple of percentage point in trade today.
Some other stocks like ITC, GAIL, Hero Honda and Reliance Petroleum as well shaved off a little bit weight. Not too much, but about 1-1.5% damage done over there.
After the phenomenal rally that we saw yesterday sugar cooled off on very big volumes today led by the bellwethers in that sector like Bajaj Hindustan, Balrampur Chini.
Some stocks like Chambal, Gujarat Alkalies, Inox stood out in the midcap space on decent price and volumes.
But stocks that have run up very hard, nearly 20% everyday areKaushalya, Suven, Essar Oil, Alok Industries - all of these stocks cooled off quite remarkably today and shaved off between 5-10%.
Even stocks like WWIL, CBoP, Ispat and Hindustan Motors have seen a sharp run up as well cooling off. There was a little bit of F&O pressure on some of these stocks like LML, TTML, Arvind Mills, Nagarjuna Fertiliser, on account of being on the curb and all of these stocks shedding weight.
When the market open on Monday, they will react to the news on SEBI allowing short selling in stock lending and borrowing and watch out for the cement sector as well.
Source: Moneycontrol.com
Though the markets for themselves have closed about 4.5% down for the frontliners. The Sensex was fairly range bound; you can see the amount of volatility that there was in that 200-220 point band that it moved.
Similar for the Nifty, it moved only about 60-70 points. But it kept becoming volatile intraday. Those cuts and edges were quite sharp, even dipping into the red occasionally. The advance/decline as a consequence of what was happening on the frontliners have actually pressurized themselves into closing yet again in favour of the declines. The mid and smallcap index have closed about 3.5-5% down for the week themselves as well.
We are stepping into a long weekend. So expectedly the turnover has been on the lower side of what we have seen over the last few days, not making it to the 1 lakh crore mark. But what is picking up are those rollovers. They will pick up as well as next week comes around, just 3-4 trading sessions left before we hit expiry. Close to about 40% of the Nifty positions rolled over. A decent premium came on the December series, January actually cooling off just a little bit from the highs of the day.
The stock of the day was IFCI. The stock was always going to get hammered out of shape and was 25% down for the better part of the day on very big volumes, over 14 crore volumes traded over there.
Deccan would be the other stock that would have reacted positively. It started off on a good footing, eventually closing about 5.5% down, selling off in the last moments of trade. But it opened on a strong footing.
But one sector that looked good was the IT index. It came back with a 3% plus move for itself because stocks like Infosys, Satyam, TCS, HCL Tech, Wipro have had very sharp gains, up anywhere between 2-5-6% for some of those stocks, even stocks likePolaris, Mphasis, Sonata Software from the midcap space. So technology was the strongest sector of the day.
Pharmaceutical was mixed. On one hand, you had stocks like Dr. Reddy’s, Shasun Chemicals and Sun Pharmaceuticals holding out well. On the other hand, stocks like GSK Pharma, Ranbaxy and Cipla slipped a little bit. So this has been one sector that has been in the limelight for the last few days.
Reliance Energy, Tata Motors, Cairn as well as SAIL had a very good session in trade today in terms of percentages. Some stocks had lost out with the likes of ABB, BHEL, Suzlon and VSNL.
VSNL had a 20% move yesterday, shaving off about a couple of percentage point in trade today.
Some other stocks like ITC, GAIL, Hero Honda and Reliance Petroleum as well shaved off a little bit weight. Not too much, but about 1-1.5% damage done over there.
After the phenomenal rally that we saw yesterday sugar cooled off on very big volumes today led by the bellwethers in that sector like Bajaj Hindustan, Balrampur Chini.
Some stocks like Chambal, Gujarat Alkalies, Inox stood out in the midcap space on decent price and volumes.
But stocks that have run up very hard, nearly 20% everyday areKaushalya, Suven, Essar Oil, Alok Industries - all of these stocks cooled off quite remarkably today and shaved off between 5-10%.
Even stocks like WWIL, CBoP, Ispat and Hindustan Motors have seen a sharp run up as well cooling off. There was a little bit of F&O pressure on some of these stocks like LML, TTML, Arvind Mills, Nagarjuna Fertiliser, on account of being on the curb and all of these stocks shedding weight.
When the market open on Monday, they will react to the news on SEBI allowing short selling in stock lending and borrowing and watch out for the cement sector as well.
Source: Moneycontrol.com
Watch out for the pharma space!
Speaking to CNBC-TV18, S Ranganathan of LKP Shares said that there are four spaces in the pharma space that could benefit in the next one-year. It includes the contract manufacturing space, which could do well, as they are vertically integrated across APIs and intermediaries.
The second space is the R&D based companies, where there might be some scale-up. Apart from that, the midcaps having a strong presence in the domestic market and scaling up the generic business could also benefit. The fourth beneficiary could be the multinational companies, that are cash rich and trying to acquire brands.
Excerpts from CNBC-TV18’s exclusive interview with S Ranganathan:
Q: There has been a significant run-up in pharma shares, both in heavyweights as well as in the midcap space. What are the specific categories of the pharma space that will be able to benefit in the next 12 months?
A: If one has to categorise specific segments, it would firstly be the contract manufacturing space, wherein you have leading players like Jubilant, Divi’s Labs and Nicholas Piramal.
These are the players who could do well, going forward, in the CRAMS space, primarily because most of these companies are vertically integrated across APIs and intermediates. It is a logical extension for them to leverage their chemistry skills over here. So, this is one space, which we believe will do well.
The second space would obviously be the R&D based companies, like Glenmark and Lupin, where we will see scale-up happening. The recent trend towards spinning off the R&D makes sense, especially for companies who have a robust R&D pipeline. That is a space to watch out for.
Thirdly, it would be companies in the midcaps, who have a very strong presence in the domestic market and are also scaling up their generic business. So, these are the three spaces we would watch out for.
Lastly, some of the multinational companies, who are cash rich and are trying to acquire brands, even though they are not really available. So, these are the four spaces within the sector, where one could be looking at.
Source: Moneycontrol.com
The second space is the R&D based companies, where there might be some scale-up. Apart from that, the midcaps having a strong presence in the domestic market and scaling up the generic business could also benefit. The fourth beneficiary could be the multinational companies, that are cash rich and trying to acquire brands.
Excerpts from CNBC-TV18’s exclusive interview with S Ranganathan:
Q: There has been a significant run-up in pharma shares, both in heavyweights as well as in the midcap space. What are the specific categories of the pharma space that will be able to benefit in the next 12 months?
A: If one has to categorise specific segments, it would firstly be the contract manufacturing space, wherein you have leading players like Jubilant, Divi’s Labs and Nicholas Piramal.
These are the players who could do well, going forward, in the CRAMS space, primarily because most of these companies are vertically integrated across APIs and intermediates. It is a logical extension for them to leverage their chemistry skills over here. So, this is one space, which we believe will do well.
The second space would obviously be the R&D based companies, like Glenmark and Lupin, where we will see scale-up happening. The recent trend towards spinning off the R&D makes sense, especially for companies who have a robust R&D pipeline. That is a space to watch out for.
Thirdly, it would be companies in the midcaps, who have a very strong presence in the domestic market and are also scaling up their generic business. So, these are the three spaces we would watch out for.
Lastly, some of the multinational companies, who are cash rich and are trying to acquire brands, even though they are not really available. So, these are the four spaces within the sector, where one could be looking at.
Source: Moneycontrol.com
Markets to look up in January
A week of wild volatility came to a tame close. The Nifty closed at 5,767 up 15 points, while the Sensex shut shop at 19,163 up 71 points.
The markets traded rangebound throughout the day, amid volatility and ended on a flat note. It was a low participation day, as traders and investors played with caution, before the December F&O expiry. IT stocks were the star performers in today’s trade. However, metal, realty and banking stocks remained quite volatile. Capital goods, FMCG, oil & gas and power stocks were the laggards.
Market breadth remained narrow but positive for most part of the day and the volume was relatively lower. It was yet another bad day for the midcaps and smallcaps, which underperformed the frontline counters.
Sensex ended up 70.61 points or 0.37% at 19162.57, and the Nifty closed up 15.35 points or 0.27% at 5766.50.
The Sensex and Nifty went down 4.5% each. CNX midcap index is down 5% while the BSE smallcap index is down 3.2%. The BSE metals index is down 7.5% and the BSE realty index is down 6.4%. BSE oil & gas and capital goods index is down nearly 6% each. BSE bankex is down 5.4% and the BSE auto index is down 3.4%.
Speaking to CNBC-TV18, Deven Choksey of KR Choksey Securities said the market is showing remarkable resilience at current levels. He is hopeful of a good amount of rollover happening because of the long weekend, which suggests the bulls are still hopeful about the market, observed Choksey. He commented that markets will look up in the month of January.
“At current levels, the market is showing remarkably good resilience. At the same time, because of the long weekend, there is a good amount of rollover taking place. It suggests that in the coming month, the bulls are still hopeful about the market. I believe the market is probably stabilised at this level. If you have to look at a certain range and justify that as a consolidation period, which is somewhere around 18,830 and 19,630 for the Sensex, then we will see the market going above 19,630 and going into the territory of 20,500-21,200, going forward,” stated Choksey.
“In my viewpoint, it is a consolidation phase. Having corrected, the market may probably have more reasons to go up; particularly because of stronger fundamental factors like advance tax collections, which we have. The higher amount of money with the local mutual funds, which will force them to put money into the market at lower price may also contribute. The market will look up in the month of January,” he added.
According to Choksey, “You have Rs 3 lakh crore worth of advance tax collection, which translates into more than Rs 9 lakh crore worth of income coming in. This results into good amount of money coming into the projects as well as investment markets. Can we sustain 20% plus of growth into the Nifty and Sensex stocks? If that is the case then probably every fall in the market would be an opportunity.”
Source: Moneycontrol.com
The markets traded rangebound throughout the day, amid volatility and ended on a flat note. It was a low participation day, as traders and investors played with caution, before the December F&O expiry. IT stocks were the star performers in today’s trade. However, metal, realty and banking stocks remained quite volatile. Capital goods, FMCG, oil & gas and power stocks were the laggards.
Market breadth remained narrow but positive for most part of the day and the volume was relatively lower. It was yet another bad day for the midcaps and smallcaps, which underperformed the frontline counters.
Sensex ended up 70.61 points or 0.37% at 19162.57, and the Nifty closed up 15.35 points or 0.27% at 5766.50.
The Sensex and Nifty went down 4.5% each. CNX midcap index is down 5% while the BSE smallcap index is down 3.2%. The BSE metals index is down 7.5% and the BSE realty index is down 6.4%. BSE oil & gas and capital goods index is down nearly 6% each. BSE bankex is down 5.4% and the BSE auto index is down 3.4%.
Speaking to CNBC-TV18, Deven Choksey of KR Choksey Securities said the market is showing remarkable resilience at current levels. He is hopeful of a good amount of rollover happening because of the long weekend, which suggests the bulls are still hopeful about the market, observed Choksey. He commented that markets will look up in the month of January.
“At current levels, the market is showing remarkably good resilience. At the same time, because of the long weekend, there is a good amount of rollover taking place. It suggests that in the coming month, the bulls are still hopeful about the market. I believe the market is probably stabilised at this level. If you have to look at a certain range and justify that as a consolidation period, which is somewhere around 18,830 and 19,630 for the Sensex, then we will see the market going above 19,630 and going into the territory of 20,500-21,200, going forward,” stated Choksey.
“In my viewpoint, it is a consolidation phase. Having corrected, the market may probably have more reasons to go up; particularly because of stronger fundamental factors like advance tax collections, which we have. The higher amount of money with the local mutual funds, which will force them to put money into the market at lower price may also contribute. The market will look up in the month of January,” he added.
According to Choksey, “You have Rs 3 lakh crore worth of advance tax collection, which translates into more than Rs 9 lakh crore worth of income coming in. This results into good amount of money coming into the projects as well as investment markets. Can we sustain 20% plus of growth into the Nifty and Sensex stocks? If that is the case then probably every fall in the market would be an opportunity.”
Source: Moneycontrol.com
Wednesday, December 19, 2007
Buy Elecon Engineering; target of Rs 400
HDFC Securities has maintained buy rating on Elecon Engineering, EEL in its December 19, 2007 report. "We believe that the performance of the company going forward is likely to grow at a robust pace, mainly due to the large investment capex lined up by Indian corporates across the industries, which will create a huge demand for the company’s products. EEL, given its expertise and scale, is likely to see brisk order flows augmenting revenue. Initiatives of the company in tapping the growing windmill gear box market and windmills, will also result in further revenue flow. At the CMP of Rs 322, the stock is trading at 22.5x FY2009E EPS and 16.1x its FY2010E EPS. Over the last few years, the stock has got significantly re-rated on the back of robust growth momentum. Thus, with a target P/E of 20x FY10E earnings, we maintain the ‘BUY’ recommendation with and upgraded price target of Rs 400 (an upside of 24.5%)," says HDFC Securities research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decision.
Source: Moneycontrol.com
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decision.
Source: Moneycontrol.com
Markets to stay positive in next few weeks
Where does Anand Tandon of Gryffon Investment Advisors see markets around 2007-end and 2008-opening?
Speaking to CNBC-TV18, he says the recent pattern of sharp corrections followed by sharp openings show that in the next few weeks, markets may go up because the trading range is well established, and so for the next few weeks markets should stay reasonably positive.
However, markets may not be looking at a huge upside from here, but a 1,000-2,000 points range is quite possible, he said.
Excerpts from CNBC-TV18's exclusive interview with Anand Tandon:
Q: What’s your sense after looking at all the global cues, how do you see 2007 closing and the first bit of 2008?
A: The last couple of days have been down and given the experience we have had in the recent bull run, sharp corrections are followed by sharp upticks. So I wouldn’t be surprised if in the next few days we see the market going up a bit because the trading range is reasonably well established now. I don’t think that the market is going to make new moves one way or the other in the next week or so. So, for the moment the market mood will be reasonably positive.
Q: What is the range for you? At 19,000 are we at the lower end or somewhere in the middle? Where are we?
A: For the near-term, I would think that we are closer to the near end than to the upper end. That doesn’t mean necessarily that we are looking at a huge upside from here. But even 1,000-2,000 move is quite possible, or a range of that nature is quite possible. So, I would think that from hereon possibly trading up for the next few weeks.
Q: How would you position yourself on IFCI? The deal almost done looks like there is only one contender. What would be the right way to approach it at Rs 100?
A: If one were to look at the numbers, one would never have been able to justify a price, which is much higher than what it is at currently. But if one were to look at the circumstances in which the deal is done; I would think that one would expect to see higher prices from hereon. The investor base that is looking to buy into the company would have a few plans to make sure that they add value to the rest of the shareholders as well as to themselves.
Q: To your mind how big a deal is politics going to be in 2008?
A: It is going to be reasonably big. But I think we will have both US as well as India getting into issues on politics. I still maintain that while we have been ignoring what’s been going in our neighbourhood that can be a big problem for us on the defense side going forward. We have already begun to see some issues in terms of terrorist threats resurfacing especially in Punjab.
But for the moment what matters to the market is not politics or anything. That’s not what matters to the market that we are getting into January where expectation of allocations going up is again building up and therefore in the near-term flows of money coming into the market will dominate all other issues.
I think on a fundamental basis, one has to still worry whether or not the margin pressures will start to build-up given that commodity prices have started to harden, and whether given that most of the companies that have made significant profits in the current year have been commodity companies, and whether that trend can continue or that will adversely affect some of the user industries.
So, in that overall context it’s difficult to take a longer-term call and say that if the markets headed this way or that. One has to necessarily go with the momentum and momentum right now would be positive, is my bet.
Q: What do you do in the aviation space now leading up to the Deccan-Kingfisher eventual merger that is being contemplated? At Rs 320 how would you read Deccan Aviation?
A: The business itself is now beginning to perhaps show some signs of life because the consolidation will eventually lead to the industry trying to make sure that their profitability improves by raising prices. So, to that extent perhaps we could argue that eventually the companies will start to make money.
If one looks at it, however the fact is that on a sustained basis aviation has not been a value creator. So, to argue that one can make a lot of money on this industry will require a lot more on the structural reforms in a way that allows more capacity to be built up on airports and so on, before they are able to cut their cost down to meaningful levels.
So, on a momentum basis one might want to get into the stock because nowadays every time a company announces a fund raising programme, stocks tend to rally. And therefore to that extent this company also would presumably move in the same way. But on a fundamental basis, I find it difficult to argue that it will be a great value creator for shareholders.
Q: People have been calling for a contrarian buy on pharma for a while now. But it is not giving though those kind of sustainable moves. How confident are you that one of those moves will materialise this time?
A: I think it is not going to be a momentum sector. But it is now a sector where earnings growth is beginning to resume especially in the large companies. I think the visibility of earnings for example for Ranbaxy has improved tremendously for the next few years barring next year. The expectation is there would be another deal announced, which will take care of significant earnings growth for the next year as well. One is looking at robust earnings for the near three years for a company like Ranbaxy, which has to do well for the sector.
If one has to look at the prices then companies like Glenmark, Ranbaxy even Glaxo, which had a fall recently; have actually done about 15% for the month to date. So actually the sector has shown quite a bit of upside in the near-term.
There is now a rotation in portfolio, which is including pharma, which to my mind also reflects somewhat more defensive nature of fresh investment perhaps.
Q: Any thoughts on an FMCG play like Jyothy Laboratories?
A: I haven’t looked at the company. But the sector is due for another bounce from here. Obviously ITC has been doing reasonably well and is expected to continue to do well. Even somewhat sedate companies like GSK Consumer have done reasonably well in the past.
But as I mentioned earlier that if one gets use to the fact that the frontliners are not going to be having a 30% growth then 18-19% growth rate at a similar P/E starts to make sense.
So, to my mind the fact that pharma and FMCG are beginning to show strength means that the market is beginning to factor-in a perhaps slightly slower earnings and topline growth than what we have witnessed in the past few years.
Q: One word on the metal space and how you would approach it? Stocks like SAIL, Ispat, and Sterlite have been big leaders. Would you buy them?
A: As I mentioned a while back, commodities have been doing quite well, and at this stage I would imagine aluminium is slightly better off. But the expectation is that for steel because the raw material prices are going up, the end product prices will also go up. That is a strange argument to make always but right now one is not averse to listening to strange arguments.
So, the assumption that the end product prices will go up would mean that the earnings for many of these companies are likely to expand. Obviously for many of the steel companies, the largesse of the government in terms of giving them coal and ore mines has helped quite significantly.
So, overall the sector seems to be in fine fettle. Valuations are somewhat on the higher side in terms of historic valuations, but still much lower than the rest of the market which is as it should be given the nature of the business. But what is to argue between an eight times EV/EBITDA, or six or ten times.
Q: Where do you stand on the buy sugar argument?
A: Very much on the sidelines. I see no reason why one should buy more sugar because of the sugar. And if one has to buy it for alcohol, there are breweries to buy.
But that aside, it is difficult to predict what the government will do in terms of its policies. On its own, there is not much argument to be made for sugar even now.
Disclosures:
It is safe to assume that my clients & I have interest in the stocks/sectors that have been spoken about.
Source: Moneycontrol.com
Speaking to CNBC-TV18, he says the recent pattern of sharp corrections followed by sharp openings show that in the next few weeks, markets may go up because the trading range is well established, and so for the next few weeks markets should stay reasonably positive.
However, markets may not be looking at a huge upside from here, but a 1,000-2,000 points range is quite possible, he said.
Excerpts from CNBC-TV18's exclusive interview with Anand Tandon:
Q: What’s your sense after looking at all the global cues, how do you see 2007 closing and the first bit of 2008?
A: The last couple of days have been down and given the experience we have had in the recent bull run, sharp corrections are followed by sharp upticks. So I wouldn’t be surprised if in the next few days we see the market going up a bit because the trading range is reasonably well established now. I don’t think that the market is going to make new moves one way or the other in the next week or so. So, for the moment the market mood will be reasonably positive.
Q: What is the range for you? At 19,000 are we at the lower end or somewhere in the middle? Where are we?
A: For the near-term, I would think that we are closer to the near end than to the upper end. That doesn’t mean necessarily that we are looking at a huge upside from here. But even 1,000-2,000 move is quite possible, or a range of that nature is quite possible. So, I would think that from hereon possibly trading up for the next few weeks.
Q: How would you position yourself on IFCI? The deal almost done looks like there is only one contender. What would be the right way to approach it at Rs 100?
A: If one were to look at the numbers, one would never have been able to justify a price, which is much higher than what it is at currently. But if one were to look at the circumstances in which the deal is done; I would think that one would expect to see higher prices from hereon. The investor base that is looking to buy into the company would have a few plans to make sure that they add value to the rest of the shareholders as well as to themselves.
Q: To your mind how big a deal is politics going to be in 2008?
A: It is going to be reasonably big. But I think we will have both US as well as India getting into issues on politics. I still maintain that while we have been ignoring what’s been going in our neighbourhood that can be a big problem for us on the defense side going forward. We have already begun to see some issues in terms of terrorist threats resurfacing especially in Punjab.
But for the moment what matters to the market is not politics or anything. That’s not what matters to the market that we are getting into January where expectation of allocations going up is again building up and therefore in the near-term flows of money coming into the market will dominate all other issues.
I think on a fundamental basis, one has to still worry whether or not the margin pressures will start to build-up given that commodity prices have started to harden, and whether given that most of the companies that have made significant profits in the current year have been commodity companies, and whether that trend can continue or that will adversely affect some of the user industries.
So, in that overall context it’s difficult to take a longer-term call and say that if the markets headed this way or that. One has to necessarily go with the momentum and momentum right now would be positive, is my bet.
Q: What do you do in the aviation space now leading up to the Deccan-Kingfisher eventual merger that is being contemplated? At Rs 320 how would you read Deccan Aviation?
A: The business itself is now beginning to perhaps show some signs of life because the consolidation will eventually lead to the industry trying to make sure that their profitability improves by raising prices. So, to that extent perhaps we could argue that eventually the companies will start to make money.
If one looks at it, however the fact is that on a sustained basis aviation has not been a value creator. So, to argue that one can make a lot of money on this industry will require a lot more on the structural reforms in a way that allows more capacity to be built up on airports and so on, before they are able to cut their cost down to meaningful levels.
So, on a momentum basis one might want to get into the stock because nowadays every time a company announces a fund raising programme, stocks tend to rally. And therefore to that extent this company also would presumably move in the same way. But on a fundamental basis, I find it difficult to argue that it will be a great value creator for shareholders.
Q: People have been calling for a contrarian buy on pharma for a while now. But it is not giving though those kind of sustainable moves. How confident are you that one of those moves will materialise this time?
A: I think it is not going to be a momentum sector. But it is now a sector where earnings growth is beginning to resume especially in the large companies. I think the visibility of earnings for example for Ranbaxy has improved tremendously for the next few years barring next year. The expectation is there would be another deal announced, which will take care of significant earnings growth for the next year as well. One is looking at robust earnings for the near three years for a company like Ranbaxy, which has to do well for the sector.
If one has to look at the prices then companies like Glenmark, Ranbaxy even Glaxo, which had a fall recently; have actually done about 15% for the month to date. So actually the sector has shown quite a bit of upside in the near-term.
There is now a rotation in portfolio, which is including pharma, which to my mind also reflects somewhat more defensive nature of fresh investment perhaps.
Q: Any thoughts on an FMCG play like Jyothy Laboratories?
A: I haven’t looked at the company. But the sector is due for another bounce from here. Obviously ITC has been doing reasonably well and is expected to continue to do well. Even somewhat sedate companies like GSK Consumer have done reasonably well in the past.
But as I mentioned earlier that if one gets use to the fact that the frontliners are not going to be having a 30% growth then 18-19% growth rate at a similar P/E starts to make sense.
So, to my mind the fact that pharma and FMCG are beginning to show strength means that the market is beginning to factor-in a perhaps slightly slower earnings and topline growth than what we have witnessed in the past few years.
Q: One word on the metal space and how you would approach it? Stocks like SAIL, Ispat, and Sterlite have been big leaders. Would you buy them?
A: As I mentioned a while back, commodities have been doing quite well, and at this stage I would imagine aluminium is slightly better off. But the expectation is that for steel because the raw material prices are going up, the end product prices will also go up. That is a strange argument to make always but right now one is not averse to listening to strange arguments.
So, the assumption that the end product prices will go up would mean that the earnings for many of these companies are likely to expand. Obviously for many of the steel companies, the largesse of the government in terms of giving them coal and ore mines has helped quite significantly.
So, overall the sector seems to be in fine fettle. Valuations are somewhat on the higher side in terms of historic valuations, but still much lower than the rest of the market which is as it should be given the nature of the business. But what is to argue between an eight times EV/EBITDA, or six or ten times.
Q: Where do you stand on the buy sugar argument?
A: Very much on the sidelines. I see no reason why one should buy more sugar because of the sugar. And if one has to buy it for alcohol, there are breweries to buy.
But that aside, it is difficult to predict what the government will do in terms of its policies. On its own, there is not much argument to be made for sugar even now.
Disclosures:
It is safe to assume that my clients & I have interest in the stocks/sectors that have been spoken about.
Source: Moneycontrol.com
Kingfisher, Deccan to have separate formats
Captain Gopinath has said that Kingfisher and Deccan will be separate entities and will have separate formats irrespective of the merger, reports CNBC-TV18.
"Deccan is one of the best low cost carriers. The brands will remain separate and Deccan will continue to cater to the low cost segment and remain one of the best low cost airlines," said Captain GR Gopinath, Executive Chairman, Air Deccan.
Earlier, the UB Group Chairman, Vijay Mallya said that Accenture would make a presentation to both, the Kingfisher and Deccan Aviation boards. The report added that the Air Deccan Board felt that partnering UB would aid profitability and boost infrastructure. Accenture’s report was essentially on synergies between the two companies.
CNBC-TV18's Roshni Menon, spoke to Mr. Vijay Mallya before he was going in for the AGM of Air Deccan, being held in Bangalore. That was to be followed by a board meet of Air Deccan where Accenture was expected to make a presentation to the entire board. Mr. Mallya did say that it is likely that a decision would come out today, but was unwilling to say anymore in terms of what kind of synergies they are looking at.
Source: Moneycontrol.com
"Deccan is one of the best low cost carriers. The brands will remain separate and Deccan will continue to cater to the low cost segment and remain one of the best low cost airlines," said Captain GR Gopinath, Executive Chairman, Air Deccan.
Earlier, the UB Group Chairman, Vijay Mallya said that Accenture would make a presentation to both, the Kingfisher and Deccan Aviation boards. The report added that the Air Deccan Board felt that partnering UB would aid profitability and boost infrastructure. Accenture’s report was essentially on synergies between the two companies.
CNBC-TV18's Roshni Menon, spoke to Mr. Vijay Mallya before he was going in for the AGM of Air Deccan, being held in Bangalore. That was to be followed by a board meet of Air Deccan where Accenture was expected to make a presentation to the entire board. Mr. Mallya did say that it is likely that a decision would come out today, but was unwilling to say anymore in terms of what kind of synergies they are looking at.
Source: Moneycontrol.com
Tuesday, December 18, 2007
Experts feel markets may stabilise around current levels
Concerns of a slowdown in the US continued to haunt the markets in today’s trade, reports CNBC-TV18. They were hit by intense volatility and finally slumped into the red. The Nifty closed at 5,742 down 35 points, while Sensex shut shop at 19,080 down 182 points
The breadth of the market remained negative throughout the day. It was a disappointing day for the midcap and smallcap counters which had been outperforming the frontliners for some time now. The volume in today's trade was quite appreciable. Metal, banking, power, cap goods and realty stocks traded under pressure for most part of the day. However, pharma, durables and FMCG stocks remained firm.
Commenting on what he made of yesterday’s selloff Amitabh Chakraborty of Religare Securities said that yesterday’s 800 point fall was unexpected. He said that their call today morning was that markets should come back from 19000, 19100 levels and that’s what has happened. “But still we have to watch the market very closely that whether we are out of woods,” he added.
So does he expect more downside or will the markets stabilize and bounce back? Chakraborty said, “As of now it looks like that after a jerk, probably the market will stabilise around this level. If it stabilises at this level, the market will go up by the end of this month or beginning of January and it will then scale towards 6,200.
Chakraborty said that he’d be worried if the market closes below 19,000 levels. “In that case, for my next levels I would be looking at 18500-18600 levels,” he added.
Meanwhile Rajat Bose of rajatkbose.com said that now that the Nifty has come very close to about 5,710, which is it’s intra-day low, suppose we were to breach that now and close below that on a real time basis, not on the adjusted close, then chances are that we might actually test that support zone between 5,640 to about 5,600. “That would roughly correspond to about 18,750 to 18,700 levels and that is a very strong support area,” he explained. According to Bose, one can expect some kind of buying to re-emerge.
However, he added that the one thing actually giving him a lot of concern is the premium that Nifty Futures is enjoying. “In recent months I’ve never seen Nifty Future enjoying so much of a premium. So, 5,850 kind of level was a very strong resistance for the Nifty future and it could not go beyond that. We need to see how the premium actually comes down. At least some short build up is required for a good bounce back,” Bose said.
Source: Moneycontrol.com
The breadth of the market remained negative throughout the day. It was a disappointing day for the midcap and smallcap counters which had been outperforming the frontliners for some time now. The volume in today's trade was quite appreciable. Metal, banking, power, cap goods and realty stocks traded under pressure for most part of the day. However, pharma, durables and FMCG stocks remained firm.
Commenting on what he made of yesterday’s selloff Amitabh Chakraborty of Religare Securities said that yesterday’s 800 point fall was unexpected. He said that their call today morning was that markets should come back from 19000, 19100 levels and that’s what has happened. “But still we have to watch the market very closely that whether we are out of woods,” he added.
So does he expect more downside or will the markets stabilize and bounce back? Chakraborty said, “As of now it looks like that after a jerk, probably the market will stabilise around this level. If it stabilises at this level, the market will go up by the end of this month or beginning of January and it will then scale towards 6,200.
Chakraborty said that he’d be worried if the market closes below 19,000 levels. “In that case, for my next levels I would be looking at 18500-18600 levels,” he added.
Meanwhile Rajat Bose of rajatkbose.com said that now that the Nifty has come very close to about 5,710, which is it’s intra-day low, suppose we were to breach that now and close below that on a real time basis, not on the adjusted close, then chances are that we might actually test that support zone between 5,640 to about 5,600. “That would roughly correspond to about 18,750 to 18,700 levels and that is a very strong support area,” he explained. According to Bose, one can expect some kind of buying to re-emerge.
However, he added that the one thing actually giving him a lot of concern is the premium that Nifty Futures is enjoying. “In recent months I’ve never seen Nifty Future enjoying so much of a premium. So, 5,850 kind of level was a very strong resistance for the Nifty future and it could not go beyond that. We need to see how the premium actually comes down. At least some short build up is required for a good bounce back,” Bose said.
Source: Moneycontrol.com
Monday, December 17, 2007
Daily Market Commentary
Indian shares closed sharply lower on Monday extending a sell-off in equities across the globe. All sectoral indices posted significant losses but metals slumped the most. Markets across the world tumbled on concerns surging inflation may prevent the US Federal Reserve from lowering interest rates further to revive the economy from the housing and credit crisis. The 30-share BSE Sensex slumped 769.48 points or 3.84% to 19,261.35. It had hit a low of 19,177.19 in late trade. The Nifty declined 270.7 points or 4.48% to 5,777. Reliance Industries declined 3.86% to Rs 2,777.50. Tata Steel lost 6.15% to Rs 823.85, Sterlite Industries was down 8.45% to Rs 976.15, Nalco was down 6.87% to Rs 418.50, and Hindalco industries plunged 5.69% to Rs 200.65. Reliance Communications declined 5.55% to Rs 717.80. BHEL declined 5.32% to Rs 2,425.25. Larsen & Toubro was down 2.2% to Rs 4,082.10. Tata Motors declined 5.8% to Rs 701.25. Reliance Energy was down 4.22% to Rs 1,828.95, NTPC was down 7.3% to Rs 228.60, and Tata Power Company was down 0.39% to Rs 1,295.90. GV Films clocked the highest volume of 5.05 crore shares on the BSE. It declined 7.41% to Rs 11.12. IFCI clocked the second highest volume of 3.97 crore shares on BSE. It declined 4.62% to Rs 108.40. Harig Crankshaft declined 3.43% to Rs 3.94 and clocked the third highest volume of 3.8 crore shares. Ispat Industries declined 1.45% to Rs 77.90 and clocked the fourth highest volume of 3.77 crore shares. Bellary Steels declined 0.13% to Rs 7.93 and clocked the fifth highest volume of 2.6 crore shares.
Source: ICICIDirect.com
Source: ICICIDirect.com
Sensex down over 750 pts, Nifty slips 260 pts
CNBC-TV18's stocks editor, Udayan Mukherjee - It has not been a good session and it won’t close well. The Sensex will close around 750 points and Nifty will close certainly sub 5,800, now 262 points down or 4.5% down.
The midcap index came back, towards the end of the session as in recovered a little bit. Even the breath recovered somewhat but will still close 3.7% down on the midcaps. Volumes are very high today and that’s a little disturbing because on a day when the markets have fallen off such a bate one is almost pushing one lakh crores in trade which is certainly a good deal higher than the average of the last few days. So today the internals were not looked good as indeed days of 4% falls never do.
High volumes poor breath, sudden sell-offs in the liquid midcap names and no support for many largecap sectors and global markets too to compound the agony have not been very good. But that’s the note on which we close- 750-points down on the Sensex and Nifty down 260-points.
Source: Moneycontrol.com
The midcap index came back, towards the end of the session as in recovered a little bit. Even the breath recovered somewhat but will still close 3.7% down on the midcaps. Volumes are very high today and that’s a little disturbing because on a day when the markets have fallen off such a bate one is almost pushing one lakh crores in trade which is certainly a good deal higher than the average of the last few days. So today the internals were not looked good as indeed days of 4% falls never do.
High volumes poor breath, sudden sell-offs in the liquid midcap names and no support for many largecap sectors and global markets too to compound the agony have not been very good. But that’s the note on which we close- 750-points down on the Sensex and Nifty down 260-points.
Source: Moneycontrol.com
Buy TTML, Ashok Leyland, RNRL
Sudarshan Sukhani of Technical Trends is of the view that in liquid stock like TTML, Ashok Leyland, RNRL are buying opportunities at the right time maybe sometime this week as he feels that they have not entered a bear market. So, they would unwind with the market but at some point whenever the trader feels that the Nifty is nearing some support at that point these momentum stocks should still be bought.
Sukhani told CNBC-TV18, "I would still be a buyer in liquid stock like TTML, Ashok Leyland, RNRL. It’s not an opportunity today as we speak because the market could go down more. So, they would unwind with the market but at some point whenever the trader feels that the Nifty is nearing some support at that point these momentum stocks should still be bought. I don’t think they have entered a bear market, as I don’t think the Nifty has entered a bear market. So, these momentum stocks are buying opportunities at the right time maybe sometime this week."
Disclosure: I have delta neutral positions in Nifty and investments in shares.
Source: Moneycontrol.com
Sukhani told CNBC-TV18, "I would still be a buyer in liquid stock like TTML, Ashok Leyland, RNRL. It’s not an opportunity today as we speak because the market could go down more. So, they would unwind with the market but at some point whenever the trader feels that the Nifty is nearing some support at that point these momentum stocks should still be bought. I don’t think they have entered a bear market, as I don’t think the Nifty has entered a bear market. So, these momentum stocks are buying opportunities at the right time maybe sometime this week."
Disclosure: I have delta neutral positions in Nifty and investments in shares.
Source: Moneycontrol.com
Strategies to adopt in a falling market
The markets have fallen heavily since morning on the back of heavy selling across sectors. Currently the Nifty is down about 150 points and the Sensex is down nearly 400 points. So why are the markets seeing such a deep cut? To a major extent it is a reflection of the Asian trend which has not recovered since the Fed cut rates by 25 bps against the worldwide expectation of 50 bps.
According to technical analyst Ashwani Gujral, with a 100 points stop loss if someone goes long, the risk reward is pretty much in their favour. “This is because, at some point we would expect the global markets to bounce back and we have just come off new highs. So the market is just doing some backing and filling, and all this action is in the midcap. So it’s a good idea to be in spaces that are doing well in such a market like sugar, cement, pharma and FMCG types.
Commenting on what stance he has taken on the Nifty now, Gujral said that though the resilience remains, our markets can’t keep on making new highs while other markets correct. “This still remains a strong bull market, even the 200 DMA is quite far off so you would find support at lower levels,” Gujral said adding that once global markets stabilize we should make new highs probably next month. However, he advised that investors should be going long and this is not the time to panic unless the Nifty really goes below 5,750-5,800 levels.
So what strategy should investors adopt on the back of such falls? Gujral opines that this is a good point for investors to initiate a long as in a bull market the strategy has to be to remain long. “100 point here or there should not really matter,” he added. According to Gujral, with the Nifty reaching levels of 5750-5800, it has corrected sufficiently from previous highs. He added that once some stability is seen across global markets, a lot of buying will be seen in our markets too.
Meanwhile, CNBC-TV18’s analyst Anuj Singhal said that the extended Asian weakness is impacting sentiments. According to him, in a global environment, markets would have fallen in line with global markets and now that the Sensex and Nifty are both below crucial levels, some semblance of sense is prevailing in the markets.
Singhal said that a clear trend of delivery based selling is being seen in index heavies like Bharti, ONGC and Suzlon. He added that the lack of FII inflows is largely hurting largecaps stocks. Singhal said that the midcaps and smallcaps have continued their out performance but added that if the current fall trickles down to midcap stocks, it will then be time for investors to worry
Source: Moneycontrol.com
According to technical analyst Ashwani Gujral, with a 100 points stop loss if someone goes long, the risk reward is pretty much in their favour. “This is because, at some point we would expect the global markets to bounce back and we have just come off new highs. So the market is just doing some backing and filling, and all this action is in the midcap. So it’s a good idea to be in spaces that are doing well in such a market like sugar, cement, pharma and FMCG types.
Commenting on what stance he has taken on the Nifty now, Gujral said that though the resilience remains, our markets can’t keep on making new highs while other markets correct. “This still remains a strong bull market, even the 200 DMA is quite far off so you would find support at lower levels,” Gujral said adding that once global markets stabilize we should make new highs probably next month. However, he advised that investors should be going long and this is not the time to panic unless the Nifty really goes below 5,750-5,800 levels.
So what strategy should investors adopt on the back of such falls? Gujral opines that this is a good point for investors to initiate a long as in a bull market the strategy has to be to remain long. “100 point here or there should not really matter,” he added. According to Gujral, with the Nifty reaching levels of 5750-5800, it has corrected sufficiently from previous highs. He added that once some stability is seen across global markets, a lot of buying will be seen in our markets too.
Meanwhile, CNBC-TV18’s analyst Anuj Singhal said that the extended Asian weakness is impacting sentiments. According to him, in a global environment, markets would have fallen in line with global markets and now that the Sensex and Nifty are both below crucial levels, some semblance of sense is prevailing in the markets.
Singhal said that a clear trend of delivery based selling is being seen in index heavies like Bharti, ONGC and Suzlon. He added that the lack of FII inflows is largely hurting largecaps stocks. Singhal said that the midcaps and smallcaps have continued their out performance but added that if the current fall trickles down to midcap stocks, it will then be time for investors to worry
Source: Moneycontrol.com
Friday, December 14, 2007
VSNL can touch Rs 800 says Gujral
Technical Analyst, Ashwani Gujral is of the view that Videsh Sanchar Nigam, VSNL can touch Rs 800.
Gujral told CNBC-TV18, "I have maintained that Bharti is range bound between Rs 900-1,050 and it really came back from Rs 1,050. Right now quite strangely, TTML looks to be the strongest telecom stock because that is the only one that is trading at new highs.
He further added, "RCOM is little better than Bharti and if it can maintain Rs 660 kind of levels, you could probably head back towards Rs 840-850. VSNL is another one that looks good and that could probably be headed towards Rs 800. But broadly, telecom is not consistent mover right now and one would probably try to avoid it rather than trade it. The sectors do back, probably are interest rates sensitive. Realties, cement, pharma has started today, sugar, textile probably the guys who have lead this rally so far will be taking a break for a while."
Disclosure: It is safe to assume that analyst & his clients may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Gujral told CNBC-TV18, "I have maintained that Bharti is range bound between Rs 900-1,050 and it really came back from Rs 1,050. Right now quite strangely, TTML looks to be the strongest telecom stock because that is the only one that is trading at new highs.
He further added, "RCOM is little better than Bharti and if it can maintain Rs 660 kind of levels, you could probably head back towards Rs 840-850. VSNL is another one that looks good and that could probably be headed towards Rs 800. But broadly, telecom is not consistent mover right now and one would probably try to avoid it rather than trade it. The sectors do back, probably are interest rates sensitive. Realties, cement, pharma has started today, sugar, textile probably the guys who have lead this rally so far will be taking a break for a while."
Disclosure: It is safe to assume that analyst & his clients may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Sensex target of 22,600 by '08-end
Speaking to CNBC-TV18, Manishi Raychaudhuri, ED, UBS Securities said that they have a Sensex target of 22,600 by 2008-end and added that they expect 21-22% Sensex earning CAGR over three years. He said that the markets, at 21 times, are fully valued and that there isn’t much re-rating potential for markets at these levels. According to him, the cost of capital is coming down and higher a P/E is sustainable.
Raychaudhuri said that many sectors are appearing fully valued but no collapse is likely. He is positive on the markets for 2008. According to him, midcaps are playing catch up with largecaps due to huge valuation gaps. He added that IT, some engineering and construction largecaps have bidding advantage for large, high margin projects.
“The is plenty of money from both, international and domestic investors, waiting on the sideline,” Raychaudhuri said.
Excerpts of CNBC-TV18’s exclusive interview with Manishi Raychaudhuri:
Q: How are you feeling about India in the next year and what kind of targets has UBS setout?
A: We have a target 22,600 by the end of 2008. We have actually increased it from 19,000, which was our previous target. That entire increase is predicated on re-rating as we believe that the cost of capital in India is coming down, so it possibly deserves higher PE sustainably.
Currently, the market is trading at about 21 times, that would obviously mean that the market is possibly fully valued even though the valuation is supported by the earnings growth in different sectors. In fact, for the Sensex, we anticipate about 21-22% earnings CAGR over the next three years. But, it is fair to say that there is hardly any re-rating potential for this market because many of the sectors are appearing fully valued right now.
But all in all, we feel that earnings growth is likely to remain stable. Valuations, even if they correct a little from these levels, they won’t collapse. Net-net we are quite positive on the Indian market for 2008.
Q: How are you feeling about the way this entire midcap space has come out and got counted. Do you think that part of the market as well is going to show this much momentum over the next few months?
A: If one looks at the first nine-ten months of the year 2007, the entire rally in the market was driven by the largecaps, that too a very small concentrated group of largecap stocks. So obviously the midcap space is now playing catch-up because the valuation gap between the largecaps and the midcap names had become just too divergent and too large. So several of the midcap names were appearing attractive on the relative valuations, that’s exactly what’s happening now. So they are, at least partly, catching up with their largecap peers in terms of growth adjusted valuations.
Ultimately I think the investor would be interested in those companies where the earnings growth is sustainable, where the valuations are supported by sustainable earnings growth going forward and the companies which can differentiate themselves from the rest of the pack. In fact, in some areas, let say in IT services, maybe in some cases in engineering and construction, possibly the largecap companies have an advantage because they can bid for the bigger projects which typically tend to have slightly higher margins.
So, I don’t think one can paint the picture with a broad brush that midcaps are better or largecaps are better. I think it will differ across sectors and even across different company groups.
Q: However in the near-term it is valuation that is a matter of concern for the market the way stocks have been running up. You also talked about 21 times PE on the index. Is that a big concern right now and what kind of earnings potential you think this market will do or the companies would deliver to justify the PE?
A: If one looks at the Sensex, which is typically easier to comment because of the relatively small number of companies there, the EPS growth forecast that we have for next three years is somewhere between 21-22% CAGR. I would stress on the word EPS because the earnings growth forecast is actually a little higher. But we are seeing dilution in some of the metal companies and some of the banks, so the EPS growth numbers tends to come down little.
Having said that, this 21-22% CAGR is actually forecast to come down from a level of 30-35% that we have seen for the last three years. So there is a bit of main reversion that we are seeing. But on an absolute basis, this 21-22% is not a bad number. The current one year forward PE at 21 times is possibly supported by 21-22% earnings growth because that essentially implies a PEG of about one time. But at the same time, I would also mention that this level of PEG, which is just about one time or slightly higher than that, is possibly the historical peak that the market has traded at. If one leaves out one or two instances in 1994-95 and again in 1999-2000, which would mean that the market is fully valued right now.
I don’t think there is any further re-rating potential from these levels. We may see some correction from these levels though I don’t think that the correction would be severe, it will possibly not be more than 8-10% because ultimately there is still a lot of money waiting in the sidelines to be invested in the Indian market both, from the foreign investor side and from the domestic investor side.
Q: In terms of sectoral performances we have been seeing lot of action in the real estate pack again purely in terms of valuation argument. How are you viewing the way these stocks have gained over the last few months?
A: If I take a broad view on the sector itself, I think real estate, construction and the bridging of the demand supply gap essentially; the kind of housing stocks that’s available and the housing stocks that would be needed going forward, that gap has to be bridged over maybe next three-five years. Therefore, over a long-term one has to remain positive in this sector.
In our model portfolio, we have a neutral weight on real estate right now. One of the reasons for that is we have seen some slowdown in sales this year which could a impact on the topline of the large companies going forward, maybe about six months to one year down the line. That’s why, even though we have overweights on other interest rate sensitive sectors like banks and automobiles, we have a neutral weight on real estate.
Q: Your report indicates that some of the under valued spaces include the steel stocks. What is the story there you see over the next 6-12 months?
A: Metals in general is a sector that we are overweight on. I’ll give a brief outlook on the themes that we are playing on. We think that this whole investment cycle both in infrastructure, industrial capex and real estate is likely to continue over at least the next three-five years. So one has to keep playing that investment cycle or the capex cycle.
Secondly, we also think that the lending and interest rates, from the bank’s perspective, have possibly peaked out at these levels. Anecdotally we know that mortgage rates have come down a little, auto loans have come down to 100-125 bps and even though the RBI may not signal a peak in the interest rate cycle in the very near-term, we think that the actual lending and deposit rates may have peaked out at the current levels.
So from that perspective, we are obviously positive on the sectors which are geared to this investment and capex cycle. So we have overweights on engineering, construction, cement and on metals as well.
On metals, particularly on both, steel and non-ferrous, there is another angle which is the global metal prices. On global metal price we are positive on aluminium and we have a neutral to positive view on steel as well because we think that the large capacity additions that we had seen recently, they are possibly tapering off in 2008 and 2009. So if one looks at the valuations of steel companies, in that context, then there is reason to be bullish on the large frontline names.
Q: What’s the sense you get when you speak to some of your institutional clients because the expectation here is that come January, there is going to be a large dollop of liquidity for this market and that more than anything will probably propel us higher. Are you getting the sense that money is been banked on the side waiting to get in?
A: As far as the interest on India is concerned, that remains considerably high, not just from the traditional long only investors in India, but also from the alternative investors and the relatively new investors. We have seen this repeatedly in the successive conferences that we have had or for that matter even some of the events organized by the competitors - that the interest in India from the new investors is considerably high.
Add to this the fact that there is injection of liquidity into the emerging markets by the easing by the Fed and the European Central Bank. One also has a situation where this combination of investor interest and liquidity in the emerging markets is propelling the important emerging markets higher. So that certainly is a possibility, I don’t know whether that will happen in January itself, it’s almost impossible to take that kind of a short-term call.
But, if one looks at the fundamental factors influencing the continued investments into India, which are a combination of currency strength in the emerging markets and a continuation of easing by the Fed and the other Central Banks, I think these two fundamental factors are likely to remain and they would continue to influence investor preferences over 2008 as well.
Q: In terms of sectoral calls, IT and autos, two ranked under performers, are you taking a contrarian call on IT right now and particularly autos since there is so much M&A activity happening in that space. What’s the view?
A: We are overweight on automotives. Right now we have an overweight on the model portfolio primarily because we think that in different segments of automotives, demand revival in 2008 is a distinct possibility. This is a combination of our view that the interest rate cycle is possibly peaking out and some of the new model launches both in two-wheelers and four-wheelers. These we think, would review consumer interest in this space.
On IT on the other hand, we have a neutral stance. We don’t yet have an underweight because the concerns on IT are two fold. Firstly, the rupee would continue to appreciate and therefore, the dollar based growth would be higher then the rupee denominated growth. Secondly, the United States’, BFSI space as well call it, they are significant contributors to the topline and margins of the IT companies. But that space in the United States is seeing turmoil. So we don’t know yet, but it could have a cut in the IT Budget. So these are two main concerns.
But at the same time, we think that the valuations of the frontline IT companies are close to the lower end of their historical trading ranges. So it’s possibly not the right time to capitulate on IT and go underweight. So we have a neutral stance and we are playing predominantly the largecap frontline companies there.
Source: Moneycontrol.com
Raychaudhuri said that many sectors are appearing fully valued but no collapse is likely. He is positive on the markets for 2008. According to him, midcaps are playing catch up with largecaps due to huge valuation gaps. He added that IT, some engineering and construction largecaps have bidding advantage for large, high margin projects.
“The is plenty of money from both, international and domestic investors, waiting on the sideline,” Raychaudhuri said.
Excerpts of CNBC-TV18’s exclusive interview with Manishi Raychaudhuri:
Q: How are you feeling about India in the next year and what kind of targets has UBS setout?
A: We have a target 22,600 by the end of 2008. We have actually increased it from 19,000, which was our previous target. That entire increase is predicated on re-rating as we believe that the cost of capital in India is coming down, so it possibly deserves higher PE sustainably.
Currently, the market is trading at about 21 times, that would obviously mean that the market is possibly fully valued even though the valuation is supported by the earnings growth in different sectors. In fact, for the Sensex, we anticipate about 21-22% earnings CAGR over the next three years. But, it is fair to say that there is hardly any re-rating potential for this market because many of the sectors are appearing fully valued right now.
But all in all, we feel that earnings growth is likely to remain stable. Valuations, even if they correct a little from these levels, they won’t collapse. Net-net we are quite positive on the Indian market for 2008.
Q: How are you feeling about the way this entire midcap space has come out and got counted. Do you think that part of the market as well is going to show this much momentum over the next few months?
A: If one looks at the first nine-ten months of the year 2007, the entire rally in the market was driven by the largecaps, that too a very small concentrated group of largecap stocks. So obviously the midcap space is now playing catch-up because the valuation gap between the largecaps and the midcap names had become just too divergent and too large. So several of the midcap names were appearing attractive on the relative valuations, that’s exactly what’s happening now. So they are, at least partly, catching up with their largecap peers in terms of growth adjusted valuations.
Ultimately I think the investor would be interested in those companies where the earnings growth is sustainable, where the valuations are supported by sustainable earnings growth going forward and the companies which can differentiate themselves from the rest of the pack. In fact, in some areas, let say in IT services, maybe in some cases in engineering and construction, possibly the largecap companies have an advantage because they can bid for the bigger projects which typically tend to have slightly higher margins.
So, I don’t think one can paint the picture with a broad brush that midcaps are better or largecaps are better. I think it will differ across sectors and even across different company groups.
Q: However in the near-term it is valuation that is a matter of concern for the market the way stocks have been running up. You also talked about 21 times PE on the index. Is that a big concern right now and what kind of earnings potential you think this market will do or the companies would deliver to justify the PE?
A: If one looks at the Sensex, which is typically easier to comment because of the relatively small number of companies there, the EPS growth forecast that we have for next three years is somewhere between 21-22% CAGR. I would stress on the word EPS because the earnings growth forecast is actually a little higher. But we are seeing dilution in some of the metal companies and some of the banks, so the EPS growth numbers tends to come down little.
Having said that, this 21-22% CAGR is actually forecast to come down from a level of 30-35% that we have seen for the last three years. So there is a bit of main reversion that we are seeing. But on an absolute basis, this 21-22% is not a bad number. The current one year forward PE at 21 times is possibly supported by 21-22% earnings growth because that essentially implies a PEG of about one time. But at the same time, I would also mention that this level of PEG, which is just about one time or slightly higher than that, is possibly the historical peak that the market has traded at. If one leaves out one or two instances in 1994-95 and again in 1999-2000, which would mean that the market is fully valued right now.
I don’t think there is any further re-rating potential from these levels. We may see some correction from these levels though I don’t think that the correction would be severe, it will possibly not be more than 8-10% because ultimately there is still a lot of money waiting in the sidelines to be invested in the Indian market both, from the foreign investor side and from the domestic investor side.
Q: In terms of sectoral performances we have been seeing lot of action in the real estate pack again purely in terms of valuation argument. How are you viewing the way these stocks have gained over the last few months?
A: If I take a broad view on the sector itself, I think real estate, construction and the bridging of the demand supply gap essentially; the kind of housing stocks that’s available and the housing stocks that would be needed going forward, that gap has to be bridged over maybe next three-five years. Therefore, over a long-term one has to remain positive in this sector.
In our model portfolio, we have a neutral weight on real estate right now. One of the reasons for that is we have seen some slowdown in sales this year which could a impact on the topline of the large companies going forward, maybe about six months to one year down the line. That’s why, even though we have overweights on other interest rate sensitive sectors like banks and automobiles, we have a neutral weight on real estate.
Q: Your report indicates that some of the under valued spaces include the steel stocks. What is the story there you see over the next 6-12 months?
A: Metals in general is a sector that we are overweight on. I’ll give a brief outlook on the themes that we are playing on. We think that this whole investment cycle both in infrastructure, industrial capex and real estate is likely to continue over at least the next three-five years. So one has to keep playing that investment cycle or the capex cycle.
Secondly, we also think that the lending and interest rates, from the bank’s perspective, have possibly peaked out at these levels. Anecdotally we know that mortgage rates have come down a little, auto loans have come down to 100-125 bps and even though the RBI may not signal a peak in the interest rate cycle in the very near-term, we think that the actual lending and deposit rates may have peaked out at the current levels.
So from that perspective, we are obviously positive on the sectors which are geared to this investment and capex cycle. So we have overweights on engineering, construction, cement and on metals as well.
On metals, particularly on both, steel and non-ferrous, there is another angle which is the global metal prices. On global metal price we are positive on aluminium and we have a neutral to positive view on steel as well because we think that the large capacity additions that we had seen recently, they are possibly tapering off in 2008 and 2009. So if one looks at the valuations of steel companies, in that context, then there is reason to be bullish on the large frontline names.
Q: What’s the sense you get when you speak to some of your institutional clients because the expectation here is that come January, there is going to be a large dollop of liquidity for this market and that more than anything will probably propel us higher. Are you getting the sense that money is been banked on the side waiting to get in?
A: As far as the interest on India is concerned, that remains considerably high, not just from the traditional long only investors in India, but also from the alternative investors and the relatively new investors. We have seen this repeatedly in the successive conferences that we have had or for that matter even some of the events organized by the competitors - that the interest in India from the new investors is considerably high.
Add to this the fact that there is injection of liquidity into the emerging markets by the easing by the Fed and the European Central Bank. One also has a situation where this combination of investor interest and liquidity in the emerging markets is propelling the important emerging markets higher. So that certainly is a possibility, I don’t know whether that will happen in January itself, it’s almost impossible to take that kind of a short-term call.
But, if one looks at the fundamental factors influencing the continued investments into India, which are a combination of currency strength in the emerging markets and a continuation of easing by the Fed and the other Central Banks, I think these two fundamental factors are likely to remain and they would continue to influence investor preferences over 2008 as well.
Q: In terms of sectoral calls, IT and autos, two ranked under performers, are you taking a contrarian call on IT right now and particularly autos since there is so much M&A activity happening in that space. What’s the view?
A: We are overweight on automotives. Right now we have an overweight on the model portfolio primarily because we think that in different segments of automotives, demand revival in 2008 is a distinct possibility. This is a combination of our view that the interest rate cycle is possibly peaking out and some of the new model launches both in two-wheelers and four-wheelers. These we think, would review consumer interest in this space.
On IT on the other hand, we have a neutral stance. We don’t yet have an underweight because the concerns on IT are two fold. Firstly, the rupee would continue to appreciate and therefore, the dollar based growth would be higher then the rupee denominated growth. Secondly, the United States’, BFSI space as well call it, they are significant contributors to the topline and margins of the IT companies. But that space in the United States is seeing turmoil. So we don’t know yet, but it could have a cut in the IT Budget. So these are two main concerns.
But at the same time, we think that the valuations of the frontline IT companies are close to the lower end of their historical trading ranges. So it’s possibly not the right time to capitulate on IT and go underweight. So we have a neutral stance and we are playing predominantly the largecap frontline companies there.
Source: Moneycontrol.com
Thursday, December 13, 2007
Buy Zee Entertainment; target of Rs 360
CLSA Research has recommended buy rating on Zee Entertainment Enterprises in its December 10, 2007 reports. "Early indications post the launch of 9X, a new competitor channel, suggests that Zee TV has been able to maintain its market share even as its peer gains share at the expense of other rival channels. Meanwhile, direct-to-home (DTH) subscriber ramp-up and the launch of new distribution platforms makes us confident of our 24% FY07-10CL subscription revenue forecast. With upside risk to our 32% FY07-10CL earnings Cagr, we remain ‘Buyers” on Zee, " according to CLSA Research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decision .
Source: Moneycontrol.com
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decision .
Source: Moneycontrol.com
Buy Dish TV; target of Rs 120
CLSA Research is bullish on Dish TV and has recommended buy rating on the stock in its December 08, 2007 report. "By adding 126k new subscribers, Dish TV has increased its monthly subscriber addition rate to 100K+ in 3Q from 60K in 1Q; and now appears well on course to have total 3.0 million subscribers by Mar 08. Meanwhile Tata Sky has added 1.2m+ subscribers in the past year. With launch of DTH from Reliance and Bharti still 3-6 months away, Dish TV has a chance to consolidate its base. To fund its fast growing operations, Dish TV has done an equity placement of Rs 2.5 billion at Rs100-130 per share. We value DISH TV at Rs 120, based on discounted cash-flow. Maintain BUY, "according to CLSA research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decision.
Source: Moneycontrol.com
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decision.
Source: Moneycontrol.com
Tuesday, December 11, 2007
Markets to move up smartly in next ten days
Portfolio Manager PN Vijay feels that the markets are about to ‘take-off.’ There has been a lot of action from the small caps and midcaps over the past forty days, he said. But now, it’s the time for largecaps to make a move; the big money is waiting for Fed news, Vijay said. He sees the markets moving up smartly in the next ten days.
Excerpts from CNBC-TV18's exclusive interview with PN Vijay:
Q: Do you think the Fed meeting will finally take us above 20,000 or do you think it will remain a midcap market till the end of this year?
A: My sense is that this market is about to take off. There is a lot of activity among midcap and smallcap stocks, which is not getting reflected in the headline indices but that is just a temporary phenomenon. We have had this midcap run for about 40 days now.
Now, it is time for the largecaps to come in. The big money is waiting for the Fed meet to get out of the way. Even if it is 25 basis point rise, I expect this market to move very smartly after the next 10 days.
Q: Do you think it is going to be an either/ or situation that for the largecaps to move or build momentum, the midcaps would have to ease off a little bit?
A: A little bit, I would go wiht emphasis on little bit because there is only that much of money that comes in. I would say that going forward into December, the largecaps would definitely do well, the midcaps may become a bit more selective. We have been seeing a lot of speculative buying in many sectors, not really backed by fundamentals. That might taper off a bit.
I don’t think the midcap rally that we are seeing is anywhere near its end. But it would taper off in my view and the largecaps would sort of start taking off from here.
Q: Eicher Motors got slammed yesterday after the news came in, ofcoure you sit on the board of the company. Why do you think the market has been so circumspect after the news came in?
A: In Eicher Motors to some extent the market misread the deal. To my mind, as an investment banker, apart from being a board member, the deal is very simple. Volvo paid USD 350 million for a 45% stake, which means the equity value of Eicher Motors stake in the joint venture, which they will be consolidating, is about USD 418 million, which is about Rs1,650 crore or so. That works out to a per share Eicher Motors value of Rs 600 on a Rs 28 crore capital and if you put their oil and field business and some other ancillary business valued at about Rs 75, the true value of Eicher Motors share to my mind is that it should be Rs 675 because that is the way market value companies. If you see Aban or Reliance Capital or Suzlon, we are really paying the share price for the value of the subsidiary included, to the extent of the equity value of that subsidiary.
This point, punters didn’t sort of understand among all the numbers and I am sure that the share will eventually would go to what it is worth which in my view is around Rs 675.
Q: Yesterday was the first time, the non F&O trio from sugar and the rest of the space was moving. How would you position yourself on those stocks now?
A: We are seriously looking at getting back into sugar. The reason being, one is that there has been a wave of government relaxations in terms of subsidies, the Allahabad High Court ruling on the SNP, then the interest waiver etc. and that is keeping investors’ interest up. Apart from that one understands from sugar barons that ’07-08 will be quite bad because they are carrying a huge surplus forward into this season. But ’08-09, they expect the sowing to be substantially less, given also the high paddy and wheat procurement prices that they are getting from private traders.
So, we may see a sea change in the demand-supply into ’08-09. Unlike textiles, where many of the companies have run up a lot, in sugar if you see when compared to one and half years ago, shares are trading at about 60% of value. The more aggressive investors could think of this as a serious sector now.
Q: From the entire textile space and even some of the retail plays, which one would you look at carefully now or would be interested in buying?
A: We are looking at S Kumars Nationwide quite seriously. The reason is not only because it is a textile play but there is a major corporate restructuring, which is on the card and they have the Reid and Taylor brand. There will be a lot of unlocking of value in S Kumars. Even though, I am neutral on the sector as a whole, S Kumars could lead to some big gains due to unlocking play.
Q: Would you buy companies like Abhishek Industries, Alok Industries and even Arvind Mills?
A: I am not so sure because they do have problems of margins and many of them have created huge capacities that were based on export model, terry towels, denims etc. The strong rupee is hitting them very hard because unlike the software industry, which works on 35-40% margin, this industry works on a 10-15% margin. So, the rupee appreciation hits them very hard. Fundamentally, I don’t think this sector is an outperformer, though it is a very asset rich sector, people may be playing some asset plays there.
Q: Anything that you have been looking in the pharmaceutical space?
A: I have always held the view that the best spark in the Indian pharmaceutical sector is the contract manufacturing because it is a breaking type of thing, it is not dependent on penetration of US market, it is not dependent on formulation pricing in India etc. I go for Divis Lab, that has run up a lot. It has been a 10 bagger in the last five years. But even today stock like Divis Lab will give you extremely good return because of the strength of the basic contract manufacturing model.
Q: What is your take on GAIL at Rs 510, it has had a good run? Would you buy it here?
A: I missed out a little bit on the action in GAIL.. It is fast becoming one of India’s most interesting oil and gas plays. It has built huge capacities for transportation in what is definitely India’s biggest energy source that is gas in the years to come at least. They have got a very predominant position and the share has run up a lot. But the way gas pricing has been gradually freed by the government, I feel that GAIL still has a very long way to go. It is one of the best oil and gas picks today in the country.
Q: If you had to pick one or two stocks in the real estate space for relative gains, what would you pick now?
A: I would still go for some of the older entities like Unitech. Now since we are seeing a sectoral buying, even the cats and dogs are moving up and you saw the IPO pricing brigade at such high P/E ratios. So, the entire sector is in the limelight. But for the longer term investor, a higher and superior brand with a strong margins and excellent land banks like Unitech, even at this level would be a sure shot bet in my view.
Disclosures:
It is safe to assume that my clients & I have an interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Excerpts from CNBC-TV18's exclusive interview with PN Vijay:
Q: Do you think the Fed meeting will finally take us above 20,000 or do you think it will remain a midcap market till the end of this year?
A: My sense is that this market is about to take off. There is a lot of activity among midcap and smallcap stocks, which is not getting reflected in the headline indices but that is just a temporary phenomenon. We have had this midcap run for about 40 days now.
Now, it is time for the largecaps to come in. The big money is waiting for the Fed meet to get out of the way. Even if it is 25 basis point rise, I expect this market to move very smartly after the next 10 days.
Q: Do you think it is going to be an either/ or situation that for the largecaps to move or build momentum, the midcaps would have to ease off a little bit?
A: A little bit, I would go wiht emphasis on little bit because there is only that much of money that comes in. I would say that going forward into December, the largecaps would definitely do well, the midcaps may become a bit more selective. We have been seeing a lot of speculative buying in many sectors, not really backed by fundamentals. That might taper off a bit.
I don’t think the midcap rally that we are seeing is anywhere near its end. But it would taper off in my view and the largecaps would sort of start taking off from here.
Q: Eicher Motors got slammed yesterday after the news came in, ofcoure you sit on the board of the company. Why do you think the market has been so circumspect after the news came in?
A: In Eicher Motors to some extent the market misread the deal. To my mind, as an investment banker, apart from being a board member, the deal is very simple. Volvo paid USD 350 million for a 45% stake, which means the equity value of Eicher Motors stake in the joint venture, which they will be consolidating, is about USD 418 million, which is about Rs1,650 crore or so. That works out to a per share Eicher Motors value of Rs 600 on a Rs 28 crore capital and if you put their oil and field business and some other ancillary business valued at about Rs 75, the true value of Eicher Motors share to my mind is that it should be Rs 675 because that is the way market value companies. If you see Aban or Reliance Capital or Suzlon, we are really paying the share price for the value of the subsidiary included, to the extent of the equity value of that subsidiary.
This point, punters didn’t sort of understand among all the numbers and I am sure that the share will eventually would go to what it is worth which in my view is around Rs 675.
Q: Yesterday was the first time, the non F&O trio from sugar and the rest of the space was moving. How would you position yourself on those stocks now?
A: We are seriously looking at getting back into sugar. The reason being, one is that there has been a wave of government relaxations in terms of subsidies, the Allahabad High Court ruling on the SNP, then the interest waiver etc. and that is keeping investors’ interest up. Apart from that one understands from sugar barons that ’07-08 will be quite bad because they are carrying a huge surplus forward into this season. But ’08-09, they expect the sowing to be substantially less, given also the high paddy and wheat procurement prices that they are getting from private traders.
So, we may see a sea change in the demand-supply into ’08-09. Unlike textiles, where many of the companies have run up a lot, in sugar if you see when compared to one and half years ago, shares are trading at about 60% of value. The more aggressive investors could think of this as a serious sector now.
Q: From the entire textile space and even some of the retail plays, which one would you look at carefully now or would be interested in buying?
A: We are looking at S Kumars Nationwide quite seriously. The reason is not only because it is a textile play but there is a major corporate restructuring, which is on the card and they have the Reid and Taylor brand. There will be a lot of unlocking of value in S Kumars. Even though, I am neutral on the sector as a whole, S Kumars could lead to some big gains due to unlocking play.
Q: Would you buy companies like Abhishek Industries, Alok Industries and even Arvind Mills?
A: I am not so sure because they do have problems of margins and many of them have created huge capacities that were based on export model, terry towels, denims etc. The strong rupee is hitting them very hard because unlike the software industry, which works on 35-40% margin, this industry works on a 10-15% margin. So, the rupee appreciation hits them very hard. Fundamentally, I don’t think this sector is an outperformer, though it is a very asset rich sector, people may be playing some asset plays there.
Q: Anything that you have been looking in the pharmaceutical space?
A: I have always held the view that the best spark in the Indian pharmaceutical sector is the contract manufacturing because it is a breaking type of thing, it is not dependent on penetration of US market, it is not dependent on formulation pricing in India etc. I go for Divis Lab, that has run up a lot. It has been a 10 bagger in the last five years. But even today stock like Divis Lab will give you extremely good return because of the strength of the basic contract manufacturing model.
Q: What is your take on GAIL at Rs 510, it has had a good run? Would you buy it here?
A: I missed out a little bit on the action in GAIL.. It is fast becoming one of India’s most interesting oil and gas plays. It has built huge capacities for transportation in what is definitely India’s biggest energy source that is gas in the years to come at least. They have got a very predominant position and the share has run up a lot. But the way gas pricing has been gradually freed by the government, I feel that GAIL still has a very long way to go. It is one of the best oil and gas picks today in the country.
Q: If you had to pick one or two stocks in the real estate space for relative gains, what would you pick now?
A: I would still go for some of the older entities like Unitech. Now since we are seeing a sectoral buying, even the cats and dogs are moving up and you saw the IPO pricing brigade at such high P/E ratios. So, the entire sector is in the limelight. But for the longer term investor, a higher and superior brand with a strong margins and excellent land banks like Unitech, even at this level would be a sure shot bet in my view.
Disclosures:
It is safe to assume that my clients & I have an interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Gayatri Projects has target of Rs 450
Sejal Doshi, CEO of Finquest Securities feels that Gayatri Projects has target of Rs 450. It is a midsize player, having an order book of Rs 35 bn, and order pipeline is also pretty strong. It is available just at 10-11 times its ’09 earnings. Further there is upside on the BOT valuations, because the BOT projects will get executed by March 2009.
Doshi told CNBC-TV18, "We like Gayatri because it is a midsize player, having an order book of Rs 35 billion, and order pipeline is also pretty strong. But we feel that current Rs 35 billion is enough for execution over 24-30 months. So, we are expecting this to be expected over the next two years and we are expecting an EPS somewhere around Rs 37.”
He further added, “If I compare, it is available just at 10-11 times its ’09 earnings. Further there is upside on the BOT valuations, because the BOT projects will get executed by March 2009. So, that is where we see a lot of value unlocking coming because they have already invested Rs 150 crore in BOT projects. So we expect a conservative target of Rs 450, but a rerating in the stock could come up from their BOT valuations. And also in the order pipeline, we feel irrigation would be the major driver as more states get into that drive."
Disclosures: Analyst has been recommending above stocks to their clients. So he may be having some positions on that, and his clients may also be holding the stock.
Source: Moneycontrol.com
Doshi told CNBC-TV18, "We like Gayatri because it is a midsize player, having an order book of Rs 35 billion, and order pipeline is also pretty strong. But we feel that current Rs 35 billion is enough for execution over 24-30 months. So, we are expecting this to be expected over the next two years and we are expecting an EPS somewhere around Rs 37.”
He further added, “If I compare, it is available just at 10-11 times its ’09 earnings. Further there is upside on the BOT valuations, because the BOT projects will get executed by March 2009. So, that is where we see a lot of value unlocking coming because they have already invested Rs 150 crore in BOT projects. So we expect a conservative target of Rs 450, but a rerating in the stock could come up from their BOT valuations. And also in the order pipeline, we feel irrigation would be the major driver as more states get into that drive."
Disclosures: Analyst has been recommending above stocks to their clients. So he may be having some positions on that, and his clients may also be holding the stock.
Source: Moneycontrol.com
Above Rs 1260, ONGC can touch Rs 1300
Technical Analyst, Rajat K Bose is of the view that chart patterns suggest above Rs 1260, Oil and Natural Gas Corporation, ONGC can touch Rs 1300 in the short-term. He added that ONGC had a very good move today but this kind of a move of 3-4% in a day is not carried forward the very subsequent day.
Bose told CNBC-TV18, "Bharti has actually posted a breakout, it has been consolidating between Rs 850 and Rs 950 for quite a while. Rs 1,040 is a very crucial level for this stock. Once it stays above that decisively then one can expect it to move upto Rs 1,100 and it can even go beyond that if the momentum is sustained."
He further added, "ONGC has a very good move today. This kind of a move of 3-4% in a day is not carried forward the very subsequent day. But overall definitely ONGC chart pattern suggest that if we get pass for about Rs 1,260 then more than Rs 1,300 levels would be seen in the short-term and that of course occurs well for the Nifty because they are heavy weights for the index."
ICIC
Source: Moneycontrol.com
Bose told CNBC-TV18, "Bharti has actually posted a breakout, it has been consolidating between Rs 850 and Rs 950 for quite a while. Rs 1,040 is a very crucial level for this stock. Once it stays above that decisively then one can expect it to move upto Rs 1,100 and it can even go beyond that if the momentum is sustained."
He further added, "ONGC has a very good move today. This kind of a move of 3-4% in a day is not carried forward the very subsequent day. But overall definitely ONGC chart pattern suggest that if we get pass for about Rs 1,260 then more than Rs 1,300 levels would be seen in the short-term and that of course occurs well for the Nifty because they are heavy weights for the index."
ICIC
Source: Moneycontrol.com
Stocks to watch: Bharti, ONGC
It was a power packed session on Dalal Street. Expectations of a Fed rate cut boosted investor sentiment and the Nifty and the Sensex surged to new all time highs. Nifty closed at 6,097 up a whopping 137 points, while the Sensex shut shop at 20,291 up 360 points.
Technical Analyst Rajat Bose of rajatkbose.com is positive on Bharti and ONGC.
Here’s how Rajat Bose views the stocks on board:
On Bharti:
Bharti has actually posted a breakout. It has been consolidating between Rs 950 and Rs 850 for quite a while. Today, it has given that breakout and Rs 1,040 is a very crucial level for this stock. Once it stays above that decisively, than you can expect it to move up to Rs 1,100. It can even go beyond that, if the momentum is sustained.
On ONGC:
ONGC has a very good move today. Generally, for ONGC, this kind of a move of 3-4% in a day is not carried forward. But overall, the ONGC chart pattern suggests that if we get past Rs 1,260, then Rs 1,300 levels and above would be seen in the short-term. That augurs well for the Nifty, because they are heavy weights for the index.
On MTNL:
It is posting a breakout. Such kind of big moves, either in ONGC or MTNL, is actually not sustained. So, we need to see whether MTNL really stays above Rs 190, at atleast in the next couple of trading sessions. But around these levels of between Rs 200 and Rs 210, one might actually see some kind of selling pressure coming in.
There could be some amount of short covering and that is happening in MTNL for some reason. IT does not look like a delivery-based buying here at this juncture. Generally, when delivery-based buying happens in MTNL, it is actually a very slow mover and we need to see how it pans out.
On heavyweights:
ONGC and Bharti are both rising from much lower levels. Another heavyweight that looks a little weak is Reliance. If Reliance manages to bulk up strength, then it would be very good for the index.
But Bharti, as of now, is showing maximum strength. ONGC, above Rs 1,260, would also show considerable strength. Above Rs 745 Reliance Communications would also be showing considerable strength.
On Centurion Bank:
I hold positions in Centurion Bank. The stock has moved up very sharply in the last three trading sessions. From the kind of movement, that you have seen around Rs 62 levels, some profit booking was warranted. It has happened and it has come down.
But overall, the trend continues to remain up. Long-term and medium-term trends are up. The short-term trend is a bit vertical. So, it requires some consolidation. But overall chart patterns suggest that Rs 72 would be the next target.
Disclosures:
It is safe to assume that my clients and I have an interest in the stocks/sectors discussed.
Technical Analyst Rajat Bose of rajatkbose.com is positive on Bharti and ONGC.
Here’s how Rajat Bose views the stocks on board:
On Bharti:
Bharti has actually posted a breakout. It has been consolidating between Rs 950 and Rs 850 for quite a while. Today, it has given that breakout and Rs 1,040 is a very crucial level for this stock. Once it stays above that decisively, than you can expect it to move up to Rs 1,100. It can even go beyond that, if the momentum is sustained.
On ONGC:
ONGC has a very good move today. Generally, for ONGC, this kind of a move of 3-4% in a day is not carried forward. But overall, the ONGC chart pattern suggests that if we get past Rs 1,260, then Rs 1,300 levels and above would be seen in the short-term. That augurs well for the Nifty, because they are heavy weights for the index.
On MTNL:
It is posting a breakout. Such kind of big moves, either in ONGC or MTNL, is actually not sustained. So, we need to see whether MTNL really stays above Rs 190, at atleast in the next couple of trading sessions. But around these levels of between Rs 200 and Rs 210, one might actually see some kind of selling pressure coming in.
There could be some amount of short covering and that is happening in MTNL for some reason. IT does not look like a delivery-based buying here at this juncture. Generally, when delivery-based buying happens in MTNL, it is actually a very slow mover and we need to see how it pans out.
On heavyweights:
ONGC and Bharti are both rising from much lower levels. Another heavyweight that looks a little weak is Reliance. If Reliance manages to bulk up strength, then it would be very good for the index.
But Bharti, as of now, is showing maximum strength. ONGC, above Rs 1,260, would also show considerable strength. Above Rs 745 Reliance Communications would also be showing considerable strength.
On Centurion Bank:
I hold positions in Centurion Bank. The stock has moved up very sharply in the last three trading sessions. From the kind of movement, that you have seen around Rs 62 levels, some profit booking was warranted. It has happened and it has come down.
But overall, the trend continues to remain up. Long-term and medium-term trends are up. The short-term trend is a bit vertical. So, it requires some consolidation. But overall chart patterns suggest that Rs 72 would be the next target.
Disclosures:
It is safe to assume that my clients and I have an interest in the stocks/sectors discussed.
Do you own these prized midcaps?
Among his top midcap picks, Sejal Doshi, CEO, Finquest Securities recommended Cinemax as he feels their expansion is going to drive the company’s earnings and profitability reports CNBC-TV18.
JK Lakshmi Cement is his other pick as he feels the entire effect of their expansion will kick-off in 2009. Also he is expecting and EPS of about Rs 45 and the stock is trading at less than five times which he finds very attractive.
He also like Gayatri Projects as it has an upside on the BOT valuations. According to him, a lot of value unlocking will come in as the company has already invested Rs 150 crore in BOT projects.
Excerpts of CNBC-TV18’s exclusive interview with Sejal Doshi:
Q: Let’s start off with Cinemax first. You have about a 40% appreciation in terms of price target from hereon. What is going to drive growth?
A: Essentially Cinemax, as we are looking at the multiplex play, is one that is predominantly concentrated on Mumbai. But I think it’s the expansion, which is going to drive their earnings and profitability. They are looking to expand from 8 properties to 40 properties and to around 140-150 screens. So, that is what we see over the next 2-3 years.
So, essentially we are expecting a profit CAGR of over 70%, essentially driven by more volume play, more number of screens getting on stream, especially in 2009. That’s where we are seeing it. If I compare the valuations, it is trading at around 11 times of our ’09 expected EPS of Rs 13-14. If compared with any other multiplex player, it’s relatively cheap. So, that is why we are saying that this stock is due for re-rating.
Secondly, the promoters do have a real estate developer background. That helps them in identifying suitable sites at the new locations at appropriate pricing. That is where they have some advantage. If you see in the multiplex, most of the players have been affected because of the late delivery of the properties, but I think Cinemax, to an extent, can curtail that concern.
Q: The other pick you have is JK Lakshmi Cement. What is it that you like about this stock and could you give us a price target on that one?
A: JK Lakshmi Cement is a predominant player in the Northern and Western markets which are the two most lucrative markets for the cement sector per se. It has a capacity of 3.4 million tonnes per annum.
The main part is that JK Lakshmi did their expansion, most of the players are on an expansion stream in the cement industry per se, but they did their expansion at the right time. In 2007, they expanded from 2 million tonne to 3.4 million tonne and now they are on the verge of expanding it further to 5 million tonne by October 2008. We will see the entire effect of that new expansion kick-in, in 2009.
But even on current valuations, we are expecting an EPS of around Rs 45 odd. So, the stock is trading at less than 5 times, which is pretty attractive.
Secondly, apart from expansions, they are also going in for operational efficiencies. They are setting up their captive power plant, which will result in some Rs 12-15 crore of savings per annum and once that too comes in, we will see the margins as sustainable. Also, even though there is some uncertainty prevailing on cement prices, prices may come down and this sort of power cost saving will help them in sustaining their margins. We are expecting a target of around Rs 250-260.
Q: What are you expecting in terms of a price target for Gayatri Projects and what sort of an order book growth over the next couple of years?
A: We like Gayatri because it is a midsize player, having an order book of Rs 35 billion and its order pipeline is also pretty strong. But we feel that current Rs 35 billion is enough for execution over 24-30 months. So, we are expecting this to be executed over the next two years and we are expecting an EPS of around Rs 37. If I compare, it is available just at 10-11 times its ’09 earnings.
Further, there is an upside on the BOT valuations, because the BOT projects will get executed by March 2009. So, that’s where we’ll see a lot of value unlocking coming because they have already invested Rs 150 crore in BOT projects. So, we expect a conservative target of Rs 450, but a re-rating in the stock could come up from their BOT valuations.
Also in their order pipeline, we feel irrigation would be the major driver as more states get into that drive.
Disclosures:
We have been recommending these stocks to our clients. So, we may be having some positions on that, and our clients may also be holding these stocks.
Source: Moneycontrol.com
JK Lakshmi Cement is his other pick as he feels the entire effect of their expansion will kick-off in 2009. Also he is expecting and EPS of about Rs 45 and the stock is trading at less than five times which he finds very attractive.
He also like Gayatri Projects as it has an upside on the BOT valuations. According to him, a lot of value unlocking will come in as the company has already invested Rs 150 crore in BOT projects.
Excerpts of CNBC-TV18’s exclusive interview with Sejal Doshi:
Q: Let’s start off with Cinemax first. You have about a 40% appreciation in terms of price target from hereon. What is going to drive growth?
A: Essentially Cinemax, as we are looking at the multiplex play, is one that is predominantly concentrated on Mumbai. But I think it’s the expansion, which is going to drive their earnings and profitability. They are looking to expand from 8 properties to 40 properties and to around 140-150 screens. So, that is what we see over the next 2-3 years.
So, essentially we are expecting a profit CAGR of over 70%, essentially driven by more volume play, more number of screens getting on stream, especially in 2009. That’s where we are seeing it. If I compare the valuations, it is trading at around 11 times of our ’09 expected EPS of Rs 13-14. If compared with any other multiplex player, it’s relatively cheap. So, that is why we are saying that this stock is due for re-rating.
Secondly, the promoters do have a real estate developer background. That helps them in identifying suitable sites at the new locations at appropriate pricing. That is where they have some advantage. If you see in the multiplex, most of the players have been affected because of the late delivery of the properties, but I think Cinemax, to an extent, can curtail that concern.
Q: The other pick you have is JK Lakshmi Cement. What is it that you like about this stock and could you give us a price target on that one?
A: JK Lakshmi Cement is a predominant player in the Northern and Western markets which are the two most lucrative markets for the cement sector per se. It has a capacity of 3.4 million tonnes per annum.
The main part is that JK Lakshmi did their expansion, most of the players are on an expansion stream in the cement industry per se, but they did their expansion at the right time. In 2007, they expanded from 2 million tonne to 3.4 million tonne and now they are on the verge of expanding it further to 5 million tonne by October 2008. We will see the entire effect of that new expansion kick-in, in 2009.
But even on current valuations, we are expecting an EPS of around Rs 45 odd. So, the stock is trading at less than 5 times, which is pretty attractive.
Secondly, apart from expansions, they are also going in for operational efficiencies. They are setting up their captive power plant, which will result in some Rs 12-15 crore of savings per annum and once that too comes in, we will see the margins as sustainable. Also, even though there is some uncertainty prevailing on cement prices, prices may come down and this sort of power cost saving will help them in sustaining their margins. We are expecting a target of around Rs 250-260.
Q: What are you expecting in terms of a price target for Gayatri Projects and what sort of an order book growth over the next couple of years?
A: We like Gayatri because it is a midsize player, having an order book of Rs 35 billion and its order pipeline is also pretty strong. But we feel that current Rs 35 billion is enough for execution over 24-30 months. So, we are expecting this to be executed over the next two years and we are expecting an EPS of around Rs 37. If I compare, it is available just at 10-11 times its ’09 earnings.
Further, there is an upside on the BOT valuations, because the BOT projects will get executed by March 2009. So, that’s where we’ll see a lot of value unlocking coming because they have already invested Rs 150 crore in BOT projects. So, we expect a conservative target of Rs 450, but a re-rating in the stock could come up from their BOT valuations.
Also in their order pipeline, we feel irrigation would be the major driver as more states get into that drive.
Disclosures:
We have been recommending these stocks to our clients. So, we may be having some positions on that, and our clients may also be holding these stocks.
Source: Moneycontrol.com
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