Rajesh Tambe, HOR, Sunchan Securities is of the view that one should hold DLF with a long-term perspective.
Tambe told CNBC-TV18, "DLF is one of the best rated companies in the infrastructure segment and they are the best in constructions. They started off their career in the constructions by taking Gurgaon project in DLF. They started off with housing and they subsequently moved in the commercial space also and so that in fact the so that the housing and the commercial space becomes very successful. The land acquisition was also a very successful model, which nobody else has been able to emulate that model in the housing area."
He further added, "They are riding high to the other builders and they have been able to deliver a quality product so as far as the numbers are concerned, the net sales is Rs 1,120 crore for the September’07 quarter, where the operating profit is Rs 815 crore. This company has got a very good land bank and they got very good goodwill, the net profit is of Rs 767 crore. But in this third quarter of 2008 the net has seen up at around 19.15. But what I am more skeptical about it is since they are concentrating in every areas and housing is also one of the main areas that they are concentrating into and they are targeting the NRI customers."
"The kind of the whole scenarios which are going on in the global markets, I suppose the Indians are also going to be effected by the subprime things. So there’s definitely going to be some effect where the selling is going to be seen. Some pressures also will be felt there. So from the long term perspective one should definitely hold on it."
Source: Moneycontrol.com
Wednesday, January 30, 2008
Stay away from RPL
Amit Dalal of Amit Nalin Securities is of the view that one should stay away from Reliance Petroleum, RPL.
Dalal told CNBC-TV18, "RPL and RNRL gave us the biggest fall when the market fell last and as much as I think its a great company which going to go into production soon. I’m not sure that the valuations is something that I would feel very confident of at these levels and I would stay away from RPL."
Source: Moneycontrol.com
Dalal told CNBC-TV18, "RPL and RNRL gave us the biggest fall when the market fell last and as much as I think its a great company which going to go into production soon. I’m not sure that the valuations is something that I would feel very confident of at these levels and I would stay away from RPL."
Source: Moneycontrol.com
Buy FMCG stocks
Amit Dalal of Amit Nalin Securities is of the view that one can buy FMCG stocks.
Dalal told CNBC-TV18, "I like the FMCG sector. I would look at Dabur, Marico and in the largecaps I like ITC. They are growing very well and as the rural penetration improvement will comes the FMCG sector will see their ability to push up prices, sell larger packets and these small things make a big difference to their bottom line. We won’t perhaps see in the beginning but once we see it there will be a steep upward curve and that would be difficult to time, so it’s a good time to buy them right now."
Source: Moneycontrol.com
Dalal told CNBC-TV18, "I like the FMCG sector. I would look at Dabur, Marico and in the largecaps I like ITC. They are growing very well and as the rural penetration improvement will comes the FMCG sector will see their ability to push up prices, sell larger packets and these small things make a big difference to their bottom line. We won’t perhaps see in the beginning but once we see it there will be a steep upward curve and that would be difficult to time, so it’s a good time to buy them right now."
Source: Moneycontrol.com
Market end deep in red; oil&gas, power stocks worst hit
It was yet another weak and disappointing day for the markets which opened on weak and inconclusive note and traded under pressure through the day and finally ended with a deep cut. Oil & gas, realty, power and auto scrips were the worst hit counters however all the BSE indices ended in red.
Midcaps and smallcaps are still finding difficult to attract investors attention and both the indices closed with over 2% decline. Market breadth was negative through out the day and the volume was also not very impressive.
Sensex ended down 344.98 points or 1.91% at 17746.96, and the Nifty closed down 113.20 points or 2.14% at 5167.60. On BSE about 839 hares advanced, 2115 shares declined, and 43 shares were unchanged. BSE midcap ended down 2.57% at 7814.80 and Smallcap was down 2.2% at 10148.95.
BSE capital good index was down 2.07% at 16610.90. Major losers were Triveni Engineering, Lakshmi machine and Kirloskar Brother.
BSE auto index was down 2.19% at 4816.07. Major losers were Escorts, Exide Industries, TVS Motors and Hind Motor.
BSE Bankex was down 2.18% at 10877.70. Centurion bank, Kotak Mahindra bank and IOB were the top losers.
BSE FMCG index was down 1.6% at 2170.51. Bata India, HUL and GSK were the top losers in this space.
BSE pharma index ended down 0.74% at 3641.28. Aurbindo Pharma, Glenmark Panacea Biotech were the top losers.
BSE IT index closed down 0.88% at 3697.67. I-Flex Solution, Tech Mahindra and Patni Computers were the worst hit counters.
BSE metal index was down 1.06% at 15375.86. Maharasthra, Seamless, Sesa Goa and Shree Precoated were the top losers in this space.
BSE oil & gas index ended down 4.64% at 10663.35. Reliance natural, Petronet LNG, RPL and BPCL were the weakest in todays trade.
BSE power index closed 2.87% at 3823.27. In the power space, top losers were Suzlon Energy, Reliance energy and Torrent Power were the weakest scrips.
BSE realty index closed 3.42% at 10045.73. Mahindra Life, Peninsula land and Parsvnath were the top losers.
Turnover today:
* NSE cash - Rs 11087.47 cr
* NSE F&O - Rs 57973.91 cr
* BSE cash - Rs 4046.87 cr
* Total - Rs 73108.25 cr
Markets snapshot:
* FOMC expectation jitters fretter Asian markets; Indian markets follow suit
* Sensex down 333 pts at 17759; Nifty down 113 pts at 5168
* CNX Midcap down 2.4%; BSE Smallcap down 2.2%
* BSE Oil & Gas down 4.4%; RPL down 6.1%, BPCL down 5.6%, ONGC down 5%, Reliance down 4.1%
* BSE Auto down 2.3%; Tata Motors down 2.6%, Bajaj Autoo down 4.3%
* BSE Capgoods down 2%; ABB down 4.1%, Siemens down 3%, L&T down 1.8%
* Other Index Gainers: Sun Pharma up 8.7%, Zee Ent up 4.3%
* Other Index Losers: Suzlon Energy down 6.9%, HUL down 6.2%, REL down 5.6%, VSNL down 5.5%, NTPC down 4.7%
* Non Index Gainers: Hind Zinc up 4.6%, Godrej Ind up 5%, Nicholas Piramal up 4.7%, Lupin up 5.9%, Raymond up 5.5%, S Kumars 6%, Geodesic Indo up 10.1%, Visa Steel up 5%Renaissance Jewellery up 13.6%
* Non Index Losers: JP Associates down 5.7%, Essar Oil down 6%, RNRL down 6.5%, Indiabulls Fin down 6.4%, Glenmark Pharma down 6%, Lanco Infra down 8.9%, IDBI down 6.8%, Welspun Guj down 6.6%
* NSE Advance Decline is 1:4
* Total Turnover at Rs 73,108 Cr Vs Rs 72,874 Cr
Source: Moneycontrol.com
Midcaps and smallcaps are still finding difficult to attract investors attention and both the indices closed with over 2% decline. Market breadth was negative through out the day and the volume was also not very impressive.
Sensex ended down 344.98 points or 1.91% at 17746.96, and the Nifty closed down 113.20 points or 2.14% at 5167.60. On BSE about 839 hares advanced, 2115 shares declined, and 43 shares were unchanged. BSE midcap ended down 2.57% at 7814.80 and Smallcap was down 2.2% at 10148.95.
BSE capital good index was down 2.07% at 16610.90. Major losers were Triveni Engineering, Lakshmi machine and Kirloskar Brother.
BSE auto index was down 2.19% at 4816.07. Major losers were Escorts, Exide Industries, TVS Motors and Hind Motor.
BSE Bankex was down 2.18% at 10877.70. Centurion bank, Kotak Mahindra bank and IOB were the top losers.
BSE FMCG index was down 1.6% at 2170.51. Bata India, HUL and GSK were the top losers in this space.
BSE pharma index ended down 0.74% at 3641.28. Aurbindo Pharma, Glenmark Panacea Biotech were the top losers.
BSE IT index closed down 0.88% at 3697.67. I-Flex Solution, Tech Mahindra and Patni Computers were the worst hit counters.
BSE metal index was down 1.06% at 15375.86. Maharasthra, Seamless, Sesa Goa and Shree Precoated were the top losers in this space.
BSE oil & gas index ended down 4.64% at 10663.35. Reliance natural, Petronet LNG, RPL and BPCL were the weakest in todays trade.
BSE power index closed 2.87% at 3823.27. In the power space, top losers were Suzlon Energy, Reliance energy and Torrent Power were the weakest scrips.
BSE realty index closed 3.42% at 10045.73. Mahindra Life, Peninsula land and Parsvnath were the top losers.
Turnover today:
* NSE cash - Rs 11087.47 cr
* NSE F&O - Rs 57973.91 cr
* BSE cash - Rs 4046.87 cr
* Total - Rs 73108.25 cr
Markets snapshot:
* FOMC expectation jitters fretter Asian markets; Indian markets follow suit
* Sensex down 333 pts at 17759; Nifty down 113 pts at 5168
* CNX Midcap down 2.4%; BSE Smallcap down 2.2%
* BSE Oil & Gas down 4.4%; RPL down 6.1%, BPCL down 5.6%, ONGC down 5%, Reliance down 4.1%
* BSE Auto down 2.3%; Tata Motors down 2.6%, Bajaj Autoo down 4.3%
* BSE Capgoods down 2%; ABB down 4.1%, Siemens down 3%, L&T down 1.8%
* Other Index Gainers: Sun Pharma up 8.7%, Zee Ent up 4.3%
* Other Index Losers: Suzlon Energy down 6.9%, HUL down 6.2%, REL down 5.6%, VSNL down 5.5%, NTPC down 4.7%
* Non Index Gainers: Hind Zinc up 4.6%, Godrej Ind up 5%, Nicholas Piramal up 4.7%, Lupin up 5.9%, Raymond up 5.5%, S Kumars 6%, Geodesic Indo up 10.1%, Visa Steel up 5%Renaissance Jewellery up 13.6%
* Non Index Losers: JP Associates down 5.7%, Essar Oil down 6%, RNRL down 6.5%, Indiabulls Fin down 6.4%, Glenmark Pharma down 6%, Lanco Infra down 8.9%, IDBI down 6.8%, Welspun Guj down 6.6%
* NSE Advance Decline is 1:4
* Total Turnover at Rs 73,108 Cr Vs Rs 72,874 Cr
Source: Moneycontrol.com
Rollovers, budget will wash excesses out of Market
Pre-FOMC jitters gripped the markets. The indices open weak and traded inconclusively. Nervous traders pulled the Nifty 113 lower to 5,168, while the Sensex shut shop at 17,759 down 333 points. Oil and gas, realty, power and auto scrips were the worst hit counters.
Moreover, midcaps and smallcaps are still finding it difficult to attract investors attention. Both the indices closed with over 2% decline. The market breadth was negative throughout the day and the volume was also not very impressive.
In an exclusive interview with CNBC-TV18, Amit Dalal Of Amit Nalin Securities said that he is positive on the markets. “I think that the market will perhaps, after the rollover, go in a lighter weight that it has been carrying of this over bought market,” he explained.
Excerpts of CNBC-TV18’s exclusive interview with Amit Dalal:
Q: What do you see the market doing over the next week to 10 days?
A: My opinion is on the positive side. I think that the market will perhaps, after the rollover, go in a lighter weight that it has been carrying of this over bought market. It’s also going to perhaps, look towards the budget and look at the market on a more positive stream because of expectations of huge revenue collections of the government. So after this whole wash up that we are having, it’s like a washing machine cleaning out everything that is excess right now, I think the market will look on a positive side.
Q: Is that hope in your voice or conviction?
A: Right now it’s more like hope, because everytime I put that together in a thought process, it seems to correct 200-points. But if you look at the results, M&M’s result today, I think it’s a spectacular example to give. Against all expectations, a turn in the cycle is something, which is very important.
If the CV cycle also starts turning which hasn’t turned yet, there is no way anybody cannot look at that as a sign of positive economic growth. I’m betting that’s going to happen by January or February numbers which one will see from Tata Motors.
I remain positive on that account, I remain positive on everything else said about Mr Reddy’s report and that is that economic growth will be 8.5% with enough liquidity without changing the CRR or changing the interest rates. I think the US and the factors that are playing out right now, like the UBS right off, all these factors are so spectacularly large, we are forgetting the India story is not yet effected, the demand is still growing.
Q: You spoke about M&M but are you totally convinced that, at the end of this earnings season, that everything is fine or have there been some nasty surprises this time?
A: I don’t think I’ve found anything specifically negative. What disappoints me continuously is the domestic pharma market, some how its still not giving us profitable growth. Some of the global pharma company like Sun Pharma have started doing better.
Real estate, I’m still worried more on the fact that I think that the current revenue of bookings is not reflected in the profits. We are seeing profits because of what they might have booked a year ago and what is perhaps under work in progress right now. So if we take that kind of information, and that’s not available, I think the ratio is diminishing and therefore, one is going to have lower volume growth in the next year or in the year after that.
That remains my biggest concerns on the developers, a huge base that they have created, they are going in for constructions and the loans that they have taken.
Otherwise, banks have done well. Technology companies have done well even though we don’t look at them more positively for the future. Two wheelers of course, remains in an area of underperformance. Besides that I haven’t found anything which was sharply negative.
Q: FMCG has more or less been a strong set of numbers, especially so for some of the smaller guys. Would you buy anything from that space?
A: I like the full sector and I would look at perhaps Dabur and even Marico. In the largecaps I like ITC. I like that space and the fact that they are growing very well.
Also, as rural penetration improvement has started coming, I think the FMCG sector will see their ability to push up prices and sell larger packets. These small things make a big difference to their bottom line, which we won’t perhaps see in the beginning, but once we see it, there will be a steep upward curve and that would be difficult to time, so it’s a good time to buy them right now.
Q: When do you think this aversion of the midcap space will ease?
A; Not for a while, not till the largecaps start performing and we see at least another 2000-point rally. So the midcap confidence market has to come back, it will have to be at least above the 20,000 Index. not before that.
Even then, many of the companies that went up and which have become large, liquid stocks, their businesses itself are difficult to evaluate, their performance in the past has been a suspect or poor. However, the stocks still went up because of some land proposal etc. These things will never do anything for investors for a long time to come.
Q: How material is the Fed announcement going to be for this market in the short-term? If it’s 50bps, are we looking at a gap up opening tomorrow morning?
A: I think more than what Bernanke says or Bernanke does now, I think it’s the whole attitude towards equities and the allocations that we want. We are starved of FIIs and the word decoupling should now be out of all equity market dictionaries, at least in India, nobody should talk about it. We have absorbed stocks as much as we can and now we need flows to start. So if 50 bps can do that for us, or whether the global markets movement upwards brings some more equity performance, I think what we need is flows. If that comes through than our markets can show us some better colours.
Q: At this price, would you be a buyer in Reliance Petro?
A: RPL and RNRL gave us the biggest fall when the market fell last and as much as I think it’s a great company which going to go into production soon, I’m not sure the valuations is something that I will feel very confident of at these levels. I would stay away from RPL.
Q: Would you be budgeting for a pre-budgeting rally. There will also be the Reliance Power money that will come back in and perhaps some liquidity from abroad going by the stock of rate cuts. Is there any possibility of a huge rally before the budget?
A: I’m very much of the view that we will have an upward rally in the month of February, whether it starts on February 5 or whether it starts on February 1, but I remain positively biased for the month of February. I’ll give you three or four reasons why I think so. One of the best reasons that we have here is that we have seen a huge sell off from the foreigners. We are not now going to see a sell off, perhaps there’s a case to be made out that may be the sell off is ending and now we will see buying coming back.
Further there’s been a huge wash out in the domestic market, we were in a momentum market, we were in a market where an Ispat could go up Rs 20 in a day, an Essar Oil went up Rs 200 in a less then a month’s time. These were the companies that people didn’t understand, they didn’t understand what the prospects of these companies are. However, they went up because of the sheer strength of the market and perhaps there was some change in the story in that company, but that itself was never understood.
Now all that is behind us and one will have concentration of wealth coming into the market only in stocks which have earnings growth, which have a good business cycle in front of them. There are at least 20 out of 30 stocks in the Sensex which can give you that. So why wouldn’t money flow back here? There’s a very good potential that it will give us at least 15-20%, if not higher return, on a YoY basis and which market offers that in a world now, If Bernanke reduces by 50 bps money is going to find no return anywhere.
Disclosure:
It is safe to assume that my clients and I may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Moreover, midcaps and smallcaps are still finding it difficult to attract investors attention. Both the indices closed with over 2% decline. The market breadth was negative throughout the day and the volume was also not very impressive.
In an exclusive interview with CNBC-TV18, Amit Dalal Of Amit Nalin Securities said that he is positive on the markets. “I think that the market will perhaps, after the rollover, go in a lighter weight that it has been carrying of this over bought market,” he explained.
Excerpts of CNBC-TV18’s exclusive interview with Amit Dalal:
Q: What do you see the market doing over the next week to 10 days?
A: My opinion is on the positive side. I think that the market will perhaps, after the rollover, go in a lighter weight that it has been carrying of this over bought market. It’s also going to perhaps, look towards the budget and look at the market on a more positive stream because of expectations of huge revenue collections of the government. So after this whole wash up that we are having, it’s like a washing machine cleaning out everything that is excess right now, I think the market will look on a positive side.
Q: Is that hope in your voice or conviction?
A: Right now it’s more like hope, because everytime I put that together in a thought process, it seems to correct 200-points. But if you look at the results, M&M’s result today, I think it’s a spectacular example to give. Against all expectations, a turn in the cycle is something, which is very important.
If the CV cycle also starts turning which hasn’t turned yet, there is no way anybody cannot look at that as a sign of positive economic growth. I’m betting that’s going to happen by January or February numbers which one will see from Tata Motors.
I remain positive on that account, I remain positive on everything else said about Mr Reddy’s report and that is that economic growth will be 8.5% with enough liquidity without changing the CRR or changing the interest rates. I think the US and the factors that are playing out right now, like the UBS right off, all these factors are so spectacularly large, we are forgetting the India story is not yet effected, the demand is still growing.
Q: You spoke about M&M but are you totally convinced that, at the end of this earnings season, that everything is fine or have there been some nasty surprises this time?
A: I don’t think I’ve found anything specifically negative. What disappoints me continuously is the domestic pharma market, some how its still not giving us profitable growth. Some of the global pharma company like Sun Pharma have started doing better.
Real estate, I’m still worried more on the fact that I think that the current revenue of bookings is not reflected in the profits. We are seeing profits because of what they might have booked a year ago and what is perhaps under work in progress right now. So if we take that kind of information, and that’s not available, I think the ratio is diminishing and therefore, one is going to have lower volume growth in the next year or in the year after that.
That remains my biggest concerns on the developers, a huge base that they have created, they are going in for constructions and the loans that they have taken.
Otherwise, banks have done well. Technology companies have done well even though we don’t look at them more positively for the future. Two wheelers of course, remains in an area of underperformance. Besides that I haven’t found anything which was sharply negative.
Q: FMCG has more or less been a strong set of numbers, especially so for some of the smaller guys. Would you buy anything from that space?
A: I like the full sector and I would look at perhaps Dabur and even Marico. In the largecaps I like ITC. I like that space and the fact that they are growing very well.
Also, as rural penetration improvement has started coming, I think the FMCG sector will see their ability to push up prices and sell larger packets. These small things make a big difference to their bottom line, which we won’t perhaps see in the beginning, but once we see it, there will be a steep upward curve and that would be difficult to time, so it’s a good time to buy them right now.
Q: When do you think this aversion of the midcap space will ease?
A; Not for a while, not till the largecaps start performing and we see at least another 2000-point rally. So the midcap confidence market has to come back, it will have to be at least above the 20,000 Index. not before that.
Even then, many of the companies that went up and which have become large, liquid stocks, their businesses itself are difficult to evaluate, their performance in the past has been a suspect or poor. However, the stocks still went up because of some land proposal etc. These things will never do anything for investors for a long time to come.
Q: How material is the Fed announcement going to be for this market in the short-term? If it’s 50bps, are we looking at a gap up opening tomorrow morning?
A: I think more than what Bernanke says or Bernanke does now, I think it’s the whole attitude towards equities and the allocations that we want. We are starved of FIIs and the word decoupling should now be out of all equity market dictionaries, at least in India, nobody should talk about it. We have absorbed stocks as much as we can and now we need flows to start. So if 50 bps can do that for us, or whether the global markets movement upwards brings some more equity performance, I think what we need is flows. If that comes through than our markets can show us some better colours.
Q: At this price, would you be a buyer in Reliance Petro?
A: RPL and RNRL gave us the biggest fall when the market fell last and as much as I think it’s a great company which going to go into production soon, I’m not sure the valuations is something that I will feel very confident of at these levels. I would stay away from RPL.
Q: Would you be budgeting for a pre-budgeting rally. There will also be the Reliance Power money that will come back in and perhaps some liquidity from abroad going by the stock of rate cuts. Is there any possibility of a huge rally before the budget?
A: I’m very much of the view that we will have an upward rally in the month of February, whether it starts on February 5 or whether it starts on February 1, but I remain positively biased for the month of February. I’ll give you three or four reasons why I think so. One of the best reasons that we have here is that we have seen a huge sell off from the foreigners. We are not now going to see a sell off, perhaps there’s a case to be made out that may be the sell off is ending and now we will see buying coming back.
Further there’s been a huge wash out in the domestic market, we were in a momentum market, we were in a market where an Ispat could go up Rs 20 in a day, an Essar Oil went up Rs 200 in a less then a month’s time. These were the companies that people didn’t understand, they didn’t understand what the prospects of these companies are. However, they went up because of the sheer strength of the market and perhaps there was some change in the story in that company, but that itself was never understood.
Now all that is behind us and one will have concentration of wealth coming into the market only in stocks which have earnings growth, which have a good business cycle in front of them. There are at least 20 out of 30 stocks in the Sensex which can give you that. So why wouldn’t money flow back here? There’s a very good potential that it will give us at least 15-20%, if not higher return, on a YoY basis and which market offers that in a world now, If Bernanke reduces by 50 bps money is going to find no return anywhere.
Disclosure:
It is safe to assume that my clients and I may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Tuesday, January 29, 2008
Stocks to watch: Tanla Solutions, 3i Infotech
Markets settled flat after a highly volatile session, as positive global cues battled against sharp losses owing to weakened sentiment after the RBI kept rates steady. The Nifty closed 7 points higher at 5,280 and the Sensex shed 61 points to close at 18,091.
Harit Shah of Angel Broking is positive on Tanla Solutions, 3i Infotech and Infotech Enterprises.
Here’s how Harit Shah views the stocks on board:
On 3i Infotech:
This company is a well diversified midcap software company. They have managed to differentiate themselves quite well. They are mainly a product-based company and are also into the services segment.
An interesting fact is that they are present in a strong way in India. They have 35% share of their revenues coming from the Indian market, which is poised for some pretty strong growth, going forward. So, that is one of the positive factors that I see about the company.
Also their product base is pretty large. They have used the acquisition route to grow in the last few years and have grown very successfully. They have raised a lot of money through FCCBs for that purpose and have managed to get some accretion to the EPS, on account of these acquisitions. They have integrated them without any problems.
So, to that extent, they have been able to grow without compromising on profitability. So, in that sense, it is an overall good business model and is coming at a pretty reasonable valuation. So, these factors make it one of our top picks in the midcap IT space right now.
On Tanla Solutions:
Tanla is another interesting story. It is basically a play on the mobile value and its services. Globally, if you look at how the telecom sector is shaping up, markets like UK are well developed. Subscriber growth is negligible. So, you have more revenues coming from value-added services like SMS, ring tone downloads and mobile Internet. These services are obviously picking up at a very fast rate. So, Tanla is an aggregator.
They provide an interface for operators and content developers, to grow these kinds of services. So, they operate as a platform and are also expanding in markets apart from the UK, in Singapore and US where there is also a lot of scope of growth in these markets.
The business model is very scalable. They have about 50% EBIDTA margins and they can sustain this, going forward. Their business is coming at a valuation of 12 times in FY10 earnings. So, given the kind of strong return ratio and growth that is it expected in this business, it is a pretty attractive valuation. So, the stock can deliver at least about 20% upside from current levels.
On Infotech Enterprises:
Infotech Enterprises is also another midcap focused software company. They are focused mainly on the outsourcing space. This segment is expected to grow at about USD 40 billion, over the next few years, according to a survey by NASCOM. So, they are well placed to exploit this growth.
They also have some good marquee clients like Pratt and Whitney. They are the largest makers of aircraft engines in the world. So, that is a very positive factor. In fact, Pratt and Whitney also have an investment in Infotech Enterprises, which is another positive factor for the company.
Going forward, they are pretty well placed to exploit this growth. Right now, we have a hold recommendation on the stock. Our target is about Rs 270 from current levels.
Disclosure:
I personally hold 3i Infotech and Tanla Solutions. We also have a recommendation to our clients for all these three stocks.
Source: Moneycontrol.com
Harit Shah of Angel Broking is positive on Tanla Solutions, 3i Infotech and Infotech Enterprises.
Here’s how Harit Shah views the stocks on board:
On 3i Infotech:
This company is a well diversified midcap software company. They have managed to differentiate themselves quite well. They are mainly a product-based company and are also into the services segment.
An interesting fact is that they are present in a strong way in India. They have 35% share of their revenues coming from the Indian market, which is poised for some pretty strong growth, going forward. So, that is one of the positive factors that I see about the company.
Also their product base is pretty large. They have used the acquisition route to grow in the last few years and have grown very successfully. They have raised a lot of money through FCCBs for that purpose and have managed to get some accretion to the EPS, on account of these acquisitions. They have integrated them without any problems.
So, to that extent, they have been able to grow without compromising on profitability. So, in that sense, it is an overall good business model and is coming at a pretty reasonable valuation. So, these factors make it one of our top picks in the midcap IT space right now.
On Tanla Solutions:
Tanla is another interesting story. It is basically a play on the mobile value and its services. Globally, if you look at how the telecom sector is shaping up, markets like UK are well developed. Subscriber growth is negligible. So, you have more revenues coming from value-added services like SMS, ring tone downloads and mobile Internet. These services are obviously picking up at a very fast rate. So, Tanla is an aggregator.
They provide an interface for operators and content developers, to grow these kinds of services. So, they operate as a platform and are also expanding in markets apart from the UK, in Singapore and US where there is also a lot of scope of growth in these markets.
The business model is very scalable. They have about 50% EBIDTA margins and they can sustain this, going forward. Their business is coming at a valuation of 12 times in FY10 earnings. So, given the kind of strong return ratio and growth that is it expected in this business, it is a pretty attractive valuation. So, the stock can deliver at least about 20% upside from current levels.
On Infotech Enterprises:
Infotech Enterprises is also another midcap focused software company. They are focused mainly on the outsourcing space. This segment is expected to grow at about USD 40 billion, over the next few years, according to a survey by NASCOM. So, they are well placed to exploit this growth.
They also have some good marquee clients like Pratt and Whitney. They are the largest makers of aircraft engines in the world. So, that is a very positive factor. In fact, Pratt and Whitney also have an investment in Infotech Enterprises, which is another positive factor for the company.
Going forward, they are pretty well placed to exploit this growth. Right now, we have a hold recommendation on the stock. Our target is about Rs 270 from current levels.
Disclosure:
I personally hold 3i Infotech and Tanla Solutions. We also have a recommendation to our clients for all these three stocks.
Source: Moneycontrol.com
Market to settle around 17K levels
Speaking to CNBC-TV18, JP Sinha of Mangal Keshav said that the markets would settle around 17K levels. He added that the markets have been expecting around 75 bps rate cut from the Fed and also hoping for a rate cut by the RBI. The markets may be in for a disappointment, he added.
Excerpts from CNBC-TV18's exclusive interview with JP Sinha:
Q: What’s your sense of what the RBI may do and how the stock market is positioned before that event?
A: There are no compelling reasons for it just because somebody else has done it and there is an interest rate differential which has gone up. Having said that if one looks at some of the negatives, which are still continuing, which is the money supply growth is still at more than 23%. If one looks the credit growth has decelerated but it is still in the higher 20’s.
I don’t see a compelling reason to reduce at this point in time, particularly when there is inflationary pressure from the oil side not getting factored into. Having said that if one looks at the market at 18,200, I think we have very much bounced back to a level which again makes it slightly overvalued and as we have mentioned time and again that this is a level, which doesn’t makes a fresh entry level to get into stocks.
My sense will be settling somewhere around 17,000 levels which will be more comfortable. The market has gone ahead on the basis of US Fed reducing 75 bps and in anticipation that India will also reduce it but I think the market may have a disappointment from that perspective.
Q: Which of these rate sensitives makes the most sense to you banks, real estate or autos?
A: Infact banking is fundamentally looking very attractive. If some amount of reduction happens in interest rates by RBI or even otherwise because of market forces. I think banks stand to gain maximum.
Then you have autos to a large extent, however we have already seen them shedding quite a bit and now slightly recovering from the lows.
Real estate still valuation wise doesn’t offer very high numbers from the current levels. There are other secondary sectors, like cements to some extent, which is driven by these things, and auto ancillary to that extent and they will also probably start gaining little bit.
Q: Would you buy anything from the autos now?
A: Stocks like M&M and Maruti still provide some upside purely from fundamentals and valuations not getting carried away by the recent upside.
I am still skeptical on the two-wheelers but there are opportunities in the auto ancillary and we are observing that the margin pressure, which was there, is now easing to some extent and so that is another space to look at.
Q: How would look at fertilizers as a sector, its corrected quite sharply most stocks are down more than 50%, is there an opportunity there or not quite?
A: The way it has gone up, I don’t think the fundamentals were the main reason behind it and so fundamentally I don’t see any strength coming in there, so I will not be a buyer in those stocks.
Q: Would you buy an IFCI at this price?
A: The fundamentals if I look at the profitability what we have observed over last 2-3 quarters is purely on account of absence of the interest outflow because that has been getting amortized to large extent. The basis for this price is again based on whether there is deal and if that deal happens then at what price? And there is still some probability of that happening.
I will not be a buyer again at the price given but yes, there could be some news driven activity, which may happen.
Disclousres:
I do not hold any stocks but my clients may have an interest in them.
Source: Moneycontrol.com
Excerpts from CNBC-TV18's exclusive interview with JP Sinha:
Q: What’s your sense of what the RBI may do and how the stock market is positioned before that event?
A: There are no compelling reasons for it just because somebody else has done it and there is an interest rate differential which has gone up. Having said that if one looks at some of the negatives, which are still continuing, which is the money supply growth is still at more than 23%. If one looks the credit growth has decelerated but it is still in the higher 20’s.
I don’t see a compelling reason to reduce at this point in time, particularly when there is inflationary pressure from the oil side not getting factored into. Having said that if one looks at the market at 18,200, I think we have very much bounced back to a level which again makes it slightly overvalued and as we have mentioned time and again that this is a level, which doesn’t makes a fresh entry level to get into stocks.
My sense will be settling somewhere around 17,000 levels which will be more comfortable. The market has gone ahead on the basis of US Fed reducing 75 bps and in anticipation that India will also reduce it but I think the market may have a disappointment from that perspective.
Q: Which of these rate sensitives makes the most sense to you banks, real estate or autos?
A: Infact banking is fundamentally looking very attractive. If some amount of reduction happens in interest rates by RBI or even otherwise because of market forces. I think banks stand to gain maximum.
Then you have autos to a large extent, however we have already seen them shedding quite a bit and now slightly recovering from the lows.
Real estate still valuation wise doesn’t offer very high numbers from the current levels. There are other secondary sectors, like cements to some extent, which is driven by these things, and auto ancillary to that extent and they will also probably start gaining little bit.
Q: Would you buy anything from the autos now?
A: Stocks like M&M and Maruti still provide some upside purely from fundamentals and valuations not getting carried away by the recent upside.
I am still skeptical on the two-wheelers but there are opportunities in the auto ancillary and we are observing that the margin pressure, which was there, is now easing to some extent and so that is another space to look at.
Q: How would look at fertilizers as a sector, its corrected quite sharply most stocks are down more than 50%, is there an opportunity there or not quite?
A: The way it has gone up, I don’t think the fundamentals were the main reason behind it and so fundamentally I don’t see any strength coming in there, so I will not be a buyer in those stocks.
Q: Would you buy an IFCI at this price?
A: The fundamentals if I look at the profitability what we have observed over last 2-3 quarters is purely on account of absence of the interest outflow because that has been getting amortized to large extent. The basis for this price is again based on whether there is deal and if that deal happens then at what price? And there is still some probability of that happening.
I will not be a buyer again at the price given but yes, there could be some news driven activity, which may happen.
Disclousres:
I do not hold any stocks but my clients may have an interest in them.
Source: Moneycontrol.com
RBI keeps all key policy rates intact
RBI has not changed any of the key policy rates. All the rates including the Reverse Repo remain the same. The cash reserve ratio (CRR) has also been left untouched by the RBI.
RBI Policy Snapshots:
* RBI keeps bank rate, repo rate, reverse repo rate unchanged
* RBI keeps key policy rates unchanged
* RBI keeps repo rate unchanged at 7.75%
* RBI keeps reverse repo rate unchanged at 6%
* RBI keeps CRR unchanged at 7.50%
Analysis by Latha Venkatesh, CNBC-TV18
There is no change in any of the rates. The much awaited repo rate has not been cut, it remains at 7.75%. The argument is what all of us expected: Elevated asset prices, expansionary monetary and liquidity conditions - basically pointing to the fact that money supply is at 23% against a target of 17-17.5%.
The big culprit, of course, being the accretion of Forex reserves and consequently higher than projected deposit growth. So, basically too much money in the system can always ignite inflation, and therefore a caution on that area.
Also the RBI Governor refers to elevated asset prices in a couple of places, and the potential rise in food and fuel prices globally. This combination is what seems to have won the day today, and kept the RBI from cutting any of the operational rates. The RBI goes on to point out that there is some moderation in industrial activity. But it says that in the months to come, you are going to see a modest figure because the base is high. It points to arguments that export slowdown and high fuel prices can all impact, but doesn’t seem to be entirely convinced of that argument. In fact, Dr Reddy, the Governor, meanders into smaller areas like they have to look at exploring the slowdown very carefully. It is probably because of sector specific reasons. It wonders why there is a slowdown in private consumption expenditure. I am myself wondering why the RBI should be wondering.
You have to call the stance as neutral. The document itself of the last policy was a bit hawkish. This time the document is not sounding so hawkish, except for pointing out to these inflation threats. The tone is overall definitely not as harsh as it was last quarter. But the policy stance itself is completely confusing. Most of the words are towards what we saw in the previous policy stance - the number of paragraphs has been crunched from four to three. But it doesn’t really give you an idea whether the RBI’s stance has changed. It seems to be in complete neutrality in terms of the policy stance. The moderation in industry that the RBI has noted in several parts is perhaps one idea of dovishness. But otherwise, there is no explicit dovishness. Using the word ‘dovishness’ is a bit difficult. I would just say that it is more neutral than what it was in the previous quarter. You cannot call it a hawkish document for sure.
One of the peculiar paragraphs in this monetary policy stance seemed to be almost an admonishing by the RBI Governor to the banks, pointing out if there is an expansionary liquidity conditions.
As the Governor points out - why haven’t deposit and lending rates fallen? He is asking, at some point time deposit rates are even higher than the repo rates and he is wondering why they have not fallen. He also goes on to say that if there is so much surplus liquidity; which there is - after all deposits have expanded above the projected trajectory - both aggregate deposits and M3 being high, why have banks not increased the credit offtake?
This is a little peculiar since on the previous occasion, he had said that he is uncomfortable with that kind of credit growth. This sentence is - despite comfortable liquidity conditions; banks have not expanded credit proportionately. Instead, banks have proposed to make excess investments in SLRs including MSS issuance. The other sentence is, effective interest rates on time deposits at the margin are currently ruling above the last repo rates. Apparently there has been little or no adverse impact on bank margins.
He goes on to wonder - expansionary liquidity conditions engineered by capital flows have not prompted banks to reduce deposit and lending rates, which have been maintained at elevated levels. So, this is a veiled attempt at asking banks to lower deposit and lending rates and perhaps left to themselves - bankers will be doing it when their high cost deposits decline. But this is peculiar; he has not cut rates but is wondering why banks have not cut rates.
RBI says:
* Headline inflation picked up since December 2007
* Liquidity management to be priority for policy
* Inflation to go up even if fuel prices remain unchanged
* Upside risks to inflation to increase going ahead
* Flexibility to change reverse repo, repo rates
* CRR unchanged on preview of current liquidity situation
* Financial markets warrant careful monitoring on large fx flows
* Emphasis on price stability, anchoring inflation
* Retain inflation aim of 4-4.5% for FY08, 3% in medium-term
* To maintain GDP growth target of 8.5% for FY08
* Can't exclude likely Forex flows reversal on global sentiment
Source: Moneycontrol.com
RBI Policy Snapshots:
* RBI keeps bank rate, repo rate, reverse repo rate unchanged
* RBI keeps key policy rates unchanged
* RBI keeps repo rate unchanged at 7.75%
* RBI keeps reverse repo rate unchanged at 6%
* RBI keeps CRR unchanged at 7.50%
Analysis by Latha Venkatesh, CNBC-TV18
There is no change in any of the rates. The much awaited repo rate has not been cut, it remains at 7.75%. The argument is what all of us expected: Elevated asset prices, expansionary monetary and liquidity conditions - basically pointing to the fact that money supply is at 23% against a target of 17-17.5%.
The big culprit, of course, being the accretion of Forex reserves and consequently higher than projected deposit growth. So, basically too much money in the system can always ignite inflation, and therefore a caution on that area.
Also the RBI Governor refers to elevated asset prices in a couple of places, and the potential rise in food and fuel prices globally. This combination is what seems to have won the day today, and kept the RBI from cutting any of the operational rates. The RBI goes on to point out that there is some moderation in industrial activity. But it says that in the months to come, you are going to see a modest figure because the base is high. It points to arguments that export slowdown and high fuel prices can all impact, but doesn’t seem to be entirely convinced of that argument. In fact, Dr Reddy, the Governor, meanders into smaller areas like they have to look at exploring the slowdown very carefully. It is probably because of sector specific reasons. It wonders why there is a slowdown in private consumption expenditure. I am myself wondering why the RBI should be wondering.
You have to call the stance as neutral. The document itself of the last policy was a bit hawkish. This time the document is not sounding so hawkish, except for pointing out to these inflation threats. The tone is overall definitely not as harsh as it was last quarter. But the policy stance itself is completely confusing. Most of the words are towards what we saw in the previous policy stance - the number of paragraphs has been crunched from four to three. But it doesn’t really give you an idea whether the RBI’s stance has changed. It seems to be in complete neutrality in terms of the policy stance. The moderation in industry that the RBI has noted in several parts is perhaps one idea of dovishness. But otherwise, there is no explicit dovishness. Using the word ‘dovishness’ is a bit difficult. I would just say that it is more neutral than what it was in the previous quarter. You cannot call it a hawkish document for sure.
One of the peculiar paragraphs in this monetary policy stance seemed to be almost an admonishing by the RBI Governor to the banks, pointing out if there is an expansionary liquidity conditions.
As the Governor points out - why haven’t deposit and lending rates fallen? He is asking, at some point time deposit rates are even higher than the repo rates and he is wondering why they have not fallen. He also goes on to say that if there is so much surplus liquidity; which there is - after all deposits have expanded above the projected trajectory - both aggregate deposits and M3 being high, why have banks not increased the credit offtake?
This is a little peculiar since on the previous occasion, he had said that he is uncomfortable with that kind of credit growth. This sentence is - despite comfortable liquidity conditions; banks have not expanded credit proportionately. Instead, banks have proposed to make excess investments in SLRs including MSS issuance. The other sentence is, effective interest rates on time deposits at the margin are currently ruling above the last repo rates. Apparently there has been little or no adverse impact on bank margins.
He goes on to wonder - expansionary liquidity conditions engineered by capital flows have not prompted banks to reduce deposit and lending rates, which have been maintained at elevated levels. So, this is a veiled attempt at asking banks to lower deposit and lending rates and perhaps left to themselves - bankers will be doing it when their high cost deposits decline. But this is peculiar; he has not cut rates but is wondering why banks have not cut rates.
RBI says:
* Headline inflation picked up since December 2007
* Liquidity management to be priority for policy
* Inflation to go up even if fuel prices remain unchanged
* Upside risks to inflation to increase going ahead
* Flexibility to change reverse repo, repo rates
* CRR unchanged on preview of current liquidity situation
* Financial markets warrant careful monitoring on large fx flows
* Emphasis on price stability, anchoring inflation
* Retain inflation aim of 4-4.5% for FY08, 3% in medium-term
* To maintain GDP growth target of 8.5% for FY08
* Can't exclude likely Forex flows reversal on global sentiment
Source: Moneycontrol.com
Monday, January 28, 2008
RBI may hike CRR by April
Indranil Sengupta, Chief Economist, DSP ML, said India would not see monetary easing, even if there is a rate cut.
He feels the rupee will appreciate from current levels. "It will head towards 38 per dollar by April."
DSP ML sees RBI hiking CRR by April, he added.
Excerpts from CNBC-TV18’s exclusive interview with Indranil Sengupta:
Q: You told us that you are in the pro-rate cut camp. If there isn't a rate cut, do you think we are going to see severe reverses in any of the markets - equities and bonds?
A: I do not think so. A 25 bps rate cut is essentially going to be, from the perspective of exchange rate management, because the differential between the US and us is clearly widening.
At the same time, it is necessary to distinguish between the meaning of a rate cut and monetary easing. I do not think they are going to see monetary easing. Even if RBI cuts rates, they are going to keep liquidity tight for the time being. Money supply is 22%. So, one should not read too much into a rate cut, except from the angle of exchange rates.
Q: Where would you say the 10-year bond is headed from here on?
A: The momentum is in favour of the 10-year right now. Inflation is not likely to go much beyond 4%. Probably, RBI is going to be hawkish to soft at the same time.
The medium-term risks are against the 10-year. You have money supply that is high, RBI will tighten at some stage, and the winter crop is open to question. So, there are inflationary risks alongside.
Right now, there isn't anything on the horizon that could immediately stop this rally. That is unless RBI comes in with higher doses of MSS, which is also a possibility, given the fact that they bought USD 10 billion since December.
Q: What is your take on the rupee, considering that even USD 6 billion or thereabouts have been pulled out by FIIs? Do you think the liquidity problem will persist from there or are you seeing pressures of rupee depreciation?
A: The rupee will appreciate a bit more because the dollar will fall a bit more. On the other hand, the rupee negatives are clearly mounting. The trade balance is clearly rising and exports are hit. You have also seen a higher oil bill. At the same time, for the rupee to depreciate, the dollar has to stop falling. Until there is some evidence that the Fed is done, the dollar is not going to re-trench meaningfully from current levels.
Q: Can you make a case for anything that RBI may do with CRR, not in this meeting but maybe in the next three-six months?
A: RBI should raise CRR going forward, because the 22% growth in money supply is clearly an inflationary risk. Hiking CRR now would be counterproductive. It would probably create liquidity conditions that would be far too tight, because we are in the midst of a busy season. In April, when liquidity eases, one could expect a CRR hike. This is going to be an unconventional Monetary Policy in my view, where there is an imperative to cut rates from an exchange rate perspective and to tighten liquidity from a domestic inflationary perspective. That is why the polls are so divided, because the situation is tricky.
Q: Where does all this leave the rupee? What is your rupee-dollar target for April?
A: We are looking at the dollar depreciating to 1.57 to the euro, going forward, because the greenback is beginning to become a negative carry. If that happens, the rupee would see 38 levels before it peaks off this year.
Source: Moneycontrol.com
He feels the rupee will appreciate from current levels. "It will head towards 38 per dollar by April."
DSP ML sees RBI hiking CRR by April, he added.
Excerpts from CNBC-TV18’s exclusive interview with Indranil Sengupta:
Q: You told us that you are in the pro-rate cut camp. If there isn't a rate cut, do you think we are going to see severe reverses in any of the markets - equities and bonds?
A: I do not think so. A 25 bps rate cut is essentially going to be, from the perspective of exchange rate management, because the differential between the US and us is clearly widening.
At the same time, it is necessary to distinguish between the meaning of a rate cut and monetary easing. I do not think they are going to see monetary easing. Even if RBI cuts rates, they are going to keep liquidity tight for the time being. Money supply is 22%. So, one should not read too much into a rate cut, except from the angle of exchange rates.
Q: Where would you say the 10-year bond is headed from here on?
A: The momentum is in favour of the 10-year right now. Inflation is not likely to go much beyond 4%. Probably, RBI is going to be hawkish to soft at the same time.
The medium-term risks are against the 10-year. You have money supply that is high, RBI will tighten at some stage, and the winter crop is open to question. So, there are inflationary risks alongside.
Right now, there isn't anything on the horizon that could immediately stop this rally. That is unless RBI comes in with higher doses of MSS, which is also a possibility, given the fact that they bought USD 10 billion since December.
Q: What is your take on the rupee, considering that even USD 6 billion or thereabouts have been pulled out by FIIs? Do you think the liquidity problem will persist from there or are you seeing pressures of rupee depreciation?
A: The rupee will appreciate a bit more because the dollar will fall a bit more. On the other hand, the rupee negatives are clearly mounting. The trade balance is clearly rising and exports are hit. You have also seen a higher oil bill. At the same time, for the rupee to depreciate, the dollar has to stop falling. Until there is some evidence that the Fed is done, the dollar is not going to re-trench meaningfully from current levels.
Q: Can you make a case for anything that RBI may do with CRR, not in this meeting but maybe in the next three-six months?
A: RBI should raise CRR going forward, because the 22% growth in money supply is clearly an inflationary risk. Hiking CRR now would be counterproductive. It would probably create liquidity conditions that would be far too tight, because we are in the midst of a busy season. In April, when liquidity eases, one could expect a CRR hike. This is going to be an unconventional Monetary Policy in my view, where there is an imperative to cut rates from an exchange rate perspective and to tighten liquidity from a domestic inflationary perspective. That is why the polls are so divided, because the situation is tricky.
Q: Where does all this leave the rupee? What is your rupee-dollar target for April?
A: We are looking at the dollar depreciating to 1.57 to the euro, going forward, because the greenback is beginning to become a negative carry. If that happens, the rupee would see 38 levels before it peaks off this year.
Source: Moneycontrol.com
Market end in red but off day's low: Bank, autos up
The markets once again saw weak and disappointing opening today and proceeded to trade with deep cut for most part of the day on account of heavy selling taking place in scrips across the sectors led by realty, metal,oil & gas, power and IT. But the markets pulled back substantially in the late trade as heavy buying took place in the banking, auto, FMCG and capital goods space.
It was relatively better day for the midcaps and smallcaps than the frontline counters. Market breadth remained negative through the day and with advance decline ratio of nearly 1:2 on NSE. Turnover on the bourses today was extremely low as compared to any strong trading day. All the key BSE indices ended in red except the bankex and auto index. Both closed with a gain of over 1%.
Sensex ended down 208.88 points or 1.14% at 18152.78, and the Nifty shut shop down 109.25 points or 2.03% at 5274.10. On BSE, About 955 shares advanced, 1992 shares declined, and 42 shares remained unchanged. BSE midcap was down 0.43% at 7986.68 and Nifty was down 1.13% at 10303.51.
BSE auto index was up 1.72% at 4926.14. Bajaj Auto, Maruti Suzuki and Hind Motors were the top gainers.
BSE bankex was up 1.24% at 11521.22. Canara Bank, Bank Of India and Axis Bank were some of the top gainers in the banking space.
BSE capital good index ended down 1.99% at 17116.36. Bharat Electronics, Astra Microwave, Suzlon Energy and Kirloskar Oil were the top losers.
BSE FMCG index closed down 0.54% at 2148.45. Colgate, Bata India Nestle were the top losers in this space.
BSE pharma index ended down 1.25% at 3645.71. Dr Reddy's Lab, Ranbaxy and Lupin lost maximum in the pharma sector.
BSE IT index closed down 3.69% at 3659.96. Wipro, Infosys and I Flex were the weakest counters in the IT space.
BSE metal index ended down 1.03% at 15442.75. SAIL, NALCO and Mah Seamless were the top losers.
BSE oil & gas index was down 1.07% at 11078.11. BPCL, HPCL and Reliance Petroleum were the top losers.
BSE power index closed down 1.5% at 3911.66. Suzlon, Torrent Power and NTPC were the weakest counters.
BSE realty index ended down 4.54% at 10689.41. HDIL, Unitech and DLF were the top losers.
Turnover today:
* NSE cash - Rs 11214.92 cr
* BSE cash - Rs 3909.68 cr
* NSE F&O - Rs 43395.88 cr
* Total Turnover - Rs 58520.48 cr
Markets Today:
* Indian markets make smart recovery during later part of the day ahead of RBI policy meet tomorrow
* Indian markets outperforms Asian markets as Shanghai down 7.2%, Hang Seng down 4.2%
* Sensex ends down 209 pts at 18152.8; recovers nearly 700 pts from day's low
* Nifty ends down 109.2 pts at 5274; recovers nearly 200 pts from day's low
* CNX Midcap Index end in the green; recovers over 5% from day's low
* BSE Small-cap Index ends down 1.1%; recovers over 2% from day's low
* Interest rate sensitives like bank, auto gain ahead of RBI policy meet tomorro
* BSE Bank Index up 1.24%; PNB up 2.5%, SBI up 1.8%, ICICI Bank up 1%
* BSE Auto Index up 1.72%; Bajaj Auto up 8.8%, Maruti up 3.7%, M&M up 2.4%
* BSE Realty Index down 4.5%; Unitech down 6.7%, DLF down 5.5%
* Non-Index Gainers; Zee News up 16.8%, Guj NRE Coke up 13.9%, GHCL up 12.4%, Jindal Saw up 7.7%
* Mid-cap Banks: DCB up 7%, Syndicate Bank up 5%, Yes Bank up 4.7%, CBI up 4.5%
F&O Snapshot:
* Nifty Rollover at 36%; Market wide Rollover at 25%
* Rollovers subdued; limited to select large cap bank stocks
* Nifty witnesses’ short rollovers continue
* Nifty Jan and Feb trade a steep discount through the day
* Select Midcaps continue to see unwinding pressure
* NSE F&O Tunover at 43395 cr vs 39007 cr on Friday
* Number of contracts rolled over significantly lower than last few expiries
Source: Moneycontrol.com
It was relatively better day for the midcaps and smallcaps than the frontline counters. Market breadth remained negative through the day and with advance decline ratio of nearly 1:2 on NSE. Turnover on the bourses today was extremely low as compared to any strong trading day. All the key BSE indices ended in red except the bankex and auto index. Both closed with a gain of over 1%.
Sensex ended down 208.88 points or 1.14% at 18152.78, and the Nifty shut shop down 109.25 points or 2.03% at 5274.10. On BSE, About 955 shares advanced, 1992 shares declined, and 42 shares remained unchanged. BSE midcap was down 0.43% at 7986.68 and Nifty was down 1.13% at 10303.51.
BSE auto index was up 1.72% at 4926.14. Bajaj Auto, Maruti Suzuki and Hind Motors were the top gainers.
BSE bankex was up 1.24% at 11521.22. Canara Bank, Bank Of India and Axis Bank were some of the top gainers in the banking space.
BSE capital good index ended down 1.99% at 17116.36. Bharat Electronics, Astra Microwave, Suzlon Energy and Kirloskar Oil were the top losers.
BSE FMCG index closed down 0.54% at 2148.45. Colgate, Bata India Nestle were the top losers in this space.
BSE pharma index ended down 1.25% at 3645.71. Dr Reddy's Lab, Ranbaxy and Lupin lost maximum in the pharma sector.
BSE IT index closed down 3.69% at 3659.96. Wipro, Infosys and I Flex were the weakest counters in the IT space.
BSE metal index ended down 1.03% at 15442.75. SAIL, NALCO and Mah Seamless were the top losers.
BSE oil & gas index was down 1.07% at 11078.11. BPCL, HPCL and Reliance Petroleum were the top losers.
BSE power index closed down 1.5% at 3911.66. Suzlon, Torrent Power and NTPC were the weakest counters.
BSE realty index ended down 4.54% at 10689.41. HDIL, Unitech and DLF were the top losers.
Turnover today:
* NSE cash - Rs 11214.92 cr
* BSE cash - Rs 3909.68 cr
* NSE F&O - Rs 43395.88 cr
* Total Turnover - Rs 58520.48 cr
Markets Today:
* Indian markets make smart recovery during later part of the day ahead of RBI policy meet tomorrow
* Indian markets outperforms Asian markets as Shanghai down 7.2%, Hang Seng down 4.2%
* Sensex ends down 209 pts at 18152.8; recovers nearly 700 pts from day's low
* Nifty ends down 109.2 pts at 5274; recovers nearly 200 pts from day's low
* CNX Midcap Index end in the green; recovers over 5% from day's low
* BSE Small-cap Index ends down 1.1%; recovers over 2% from day's low
* Interest rate sensitives like bank, auto gain ahead of RBI policy meet tomorro
* BSE Bank Index up 1.24%; PNB up 2.5%, SBI up 1.8%, ICICI Bank up 1%
* BSE Auto Index up 1.72%; Bajaj Auto up 8.8%, Maruti up 3.7%, M&M up 2.4%
* BSE Realty Index down 4.5%; Unitech down 6.7%, DLF down 5.5%
* Non-Index Gainers; Zee News up 16.8%, Guj NRE Coke up 13.9%, GHCL up 12.4%, Jindal Saw up 7.7%
* Mid-cap Banks: DCB up 7%, Syndicate Bank up 5%, Yes Bank up 4.7%, CBI up 4.5%
F&O Snapshot:
* Nifty Rollover at 36%; Market wide Rollover at 25%
* Rollovers subdued; limited to select large cap bank stocks
* Nifty witnesses’ short rollovers continue
* Nifty Jan and Feb trade a steep discount through the day
* Select Midcaps continue to see unwinding pressure
* NSE F&O Tunover at 43395 cr vs 39007 cr on Friday
* Number of contracts rolled over significantly lower than last few expiries
Source: Moneycontrol.com
Sunday, January 27, 2008
Market see low volume on delayed settlement, Monday crucial
Dealing rooms have had a nightmarish last one week. The mood is a little cautious. It looks like the sanity is back in the market, at least in the dealing rooms. They are expecting these things to just settle down in the next couple of days and the markets to ease out a bit.
The markets are very light now, so that is not a problem. They just expect this volatility to die down in the next few days once these systematic corrections are over. Volumes are low today. Banks are closed, so pay-ins and payouts have been scrapped today. Monday would be crucial because the pay-ins and payouts of the last two days will be clubbed on Monday. So, that is one key trigger to watch out for, because that will give a clear picture of whether there is still margin pain left in the system.
As far as the institutional activity is concerned, the flows are marginally positive both on the FII and domestic side. The good part is that bank treasuries and large corporate treasuries have started actively buying into largecap stocks at lower levels. That is where there is a comfort among the dealers. It looks like the volatility will just die down over the next few days, once the systematic pains are over in the system.
Source: Moneycontrol.com
The markets are very light now, so that is not a problem. They just expect this volatility to die down in the next few days once these systematic corrections are over. Volumes are low today. Banks are closed, so pay-ins and payouts have been scrapped today. Monday would be crucial because the pay-ins and payouts of the last two days will be clubbed on Monday. So, that is one key trigger to watch out for, because that will give a clear picture of whether there is still margin pain left in the system.
As far as the institutional activity is concerned, the flows are marginally positive both on the FII and domestic side. The good part is that bank treasuries and large corporate treasuries have started actively buying into largecap stocks at lower levels. That is where there is a comfort among the dealers. It looks like the volatility will just die down over the next few days, once the systematic pains are over in the system.
Source: Moneycontrol.com
2008 will be volatile for market
KR Bharat, MD, Advent Advisors, said manic movement suggests that the worst is not over yet. Investors need to be extremely wary, he said. "It is time to learn some lessons. Excessive speculation is not good, especially for retail investors."
He feels the recovery will be very slow. "The markets will take much longer than a few weeks to re-test new highs. India's fundamentals remain strong but 2008 will be volatile."
According to Bharat, 1-2 days moves must not be considered to determine a trend. Most of the froth in the market has gone out, he said. “Some froth is likely to come back, if markets start rallying again.”
Excerpts from CNBC-TV18’s exclusive interview with KR Bharat:
Q: Have we hit the worst? Can we slowly rebuild from here or is there much more of a rollercoaster that lies ahead?
A: Honestly, I wish I knew. This kind of the manic movement suggests that the worst is not over. Clearly, what happens in India is a function of what happens all over the globe. The easy way out is to say the worst is over and we have seen the bottom. But we need to be extremely wary. The recovery will be slow.
Volatility is now a part of our daily lives and it is going to continue to exist. There are lots of lessons to be learnt from what has happened over the last few days.
It is the lessons now that are more important than whether the bottom has been hit or more of that is to come. Volatility is in and it is time to learn lessons.
Q: What is your own gut feeling? Are we in for a bearish patch, for a few weeks or months? Do you think we may actually get back on track and go back to those highs, in a few weeks’ time?
A: I do not think so. I think its going to take much longer than a few weeks time. If the market recovers again, from Monday or Tuesday, it will probably lull all of us in a false sense of security.
What happens on one particular day should not allow us to cover our judgment. The bottom could well get tested again and if it holds again, I would say for certain that the worst is over.
If the market goes up a couple of thousand points next week, it does not mean that everything is hunky dory and we can go back to speculating.
There is going to be a lot of volatility ahead. The fundamentals are sound and slowly, in their own good time, we will head towards recovery and appreciation. 2008 is the year not of spectacular appreciation but more a year of consolidation.
Q: You have been a big midcap fan. What are your observations on how badly they got cut this week and where it leaves the whole space for the next few months?
A: There is going to be a lot of uncertainty after the kind of blood bath we have seen. If you compare prices of good midcaps to where they were a few years ago, they have outperformed pretty much everyone in their class.
But when such a carnage happens, people tend to shy away from midcaps on grounds of liquidity. So, it is going to be a difficult time for midcaps, for the next few months. But then these stocks tend to be far more driven by the fundamentals and the large caps. In the largecaps, one of the problems is that people are investing in stories.
In midcaps, people are focusing more on numbers, valuations and earnings. Therefore, for individual stocks, as people get to see how cheap they are trading, in an otherwise expensive market even now, investment buying will be happening over the next 2-3 months and then we should be okay again.
Q: Where do you stand on the interest rate expectation argument? Do you think it could be a potent bull trigger next week, both from the Fed and the Reserve Bank?
A: The issues in front of the Fed and Reserve Bank are completely different. When markets fell in the US and there was a huge selloff in India, everybody came on television and said that India is different, there is 8% growth going on and we don’t have the same problems as the US. So, why should the Indian market fall?
My response to that would be that it is absolutely correct and our monetary policy managed exceedingly well. So, why are we clambering for an interest rate cut? Our problems are different. If we don’t have the same growth problems as the US, then why should we follow what the Fed does, in terms of an interest rate cut.
The opposite argument is that with this huge cut in the US, interest rate differentials have widened to a level, where you will have a lot of undesirable money coming in to take advantage of that differential if we don’t cut rates. So, if we don’t cut rates, this undesirable money comes in and you will have to come up with a policy that will tempo the flow of this undesirable money and will also tempo the flow of desirable money. So, these are the two camps.
I believe that the monetary policy has not been the problem in this country, particularly for the last 3-4 years. A cut, if at all it comes, will probably be a token. I am not sure that is really what we need today. That is where I stand on the issue.
Q: What about the sectors that were extremely frothy, which a lot of commentators have spoken about like power, real estate, etc? Do you think the froth has been totally skimmed off after this recent fall or would you still be wary about those sectors?
A: To a large extent, the froth has been skimmed off. The worry is not that. The worry is will the froth come back and what shape would these markets take over the next 2-4 weeks. When I say that I am not talking about the level of the indices. I am talking about the kind of participation that we have seen in this market. Will it be similar, will there be a fundamental change in the way people in this country invest their money. That is what will decide whether the froth comes back or not. Until about 2-3 weeks ago, people were investing money in stocks because they were told to by their broker, otherwise their neighbour. They were borrowing money to invest in stocks that they knew nothing about. Until the way we invest our money in equity markets change, the froth will come back very quickly.
There is one more rider here. Everybody here, myself included, has a vested interest in interest rates coming down and in the markets going up, because we are all invested in these markets. I am invested in this market. I don’t want to see this market coming off. I did not like to see the fall that came this week, even though I have been shouting from the rooftops for the last 2-3 years that what is happening here in terms of the way we invest our money is not good and needs to change. Excessive speculation is not good particularly for the retail investor.
It is only when something like this happens that there is blood on the carpet and people withdraw to their shells. Lo and behold, two or three months later, the party is back on again. There is nothing wrong with having a party. It is what you do at a party which is the problem. If you are going to have a party, where everybody eats and drinks up to their limit, has a wonderful time and goes home, that is great. If you have a party where people are snorting coke and marijuana, then that is a big problem.
Sometimes our market seem to resemble that particular jumble where everybody seems to think that making money is the easiest thing in the world. All you have to do is buy a stock today and sell it tomorrow because everybody in the print and electronic media is talking about resistance and supports and buy here and sell tomorrow and you will make 10 bucks and so on. That is what needs to change and that is what will determine whether the froth comes back or not.
Q: What do you see in 2008 as leaders? Some people have been making the point that now those long five and six-year dream based investing will go out of the window for a while and people will focus on earnings. Therefore, some of the more staid sectors might come back into vogue? Do you see a possibility of that?
A: Yes, I do. For me dream investing is where I can see earnings growth over the next three to five years and not where I see something big happening five years from now. I discount today's NPV. There are plenty of stocks across sectors where you actually can see that happening. They may be old-fashioned sectors or they may not be depending on what you think are old fashioned or not. I think that will come back and people will focus on investing for the long-term, based on earnings that are as predictable as can be under the circumstances and not some magical event happening three or five years from now. I completely agree with you. I think that is entirely desirable.
Source: Moneycontrol.com
He feels the recovery will be very slow. "The markets will take much longer than a few weeks to re-test new highs. India's fundamentals remain strong but 2008 will be volatile."
According to Bharat, 1-2 days moves must not be considered to determine a trend. Most of the froth in the market has gone out, he said. “Some froth is likely to come back, if markets start rallying again.”
Excerpts from CNBC-TV18’s exclusive interview with KR Bharat:
Q: Have we hit the worst? Can we slowly rebuild from here or is there much more of a rollercoaster that lies ahead?
A: Honestly, I wish I knew. This kind of the manic movement suggests that the worst is not over. Clearly, what happens in India is a function of what happens all over the globe. The easy way out is to say the worst is over and we have seen the bottom. But we need to be extremely wary. The recovery will be slow.
Volatility is now a part of our daily lives and it is going to continue to exist. There are lots of lessons to be learnt from what has happened over the last few days.
It is the lessons now that are more important than whether the bottom has been hit or more of that is to come. Volatility is in and it is time to learn lessons.
Q: What is your own gut feeling? Are we in for a bearish patch, for a few weeks or months? Do you think we may actually get back on track and go back to those highs, in a few weeks’ time?
A: I do not think so. I think its going to take much longer than a few weeks time. If the market recovers again, from Monday or Tuesday, it will probably lull all of us in a false sense of security.
What happens on one particular day should not allow us to cover our judgment. The bottom could well get tested again and if it holds again, I would say for certain that the worst is over.
If the market goes up a couple of thousand points next week, it does not mean that everything is hunky dory and we can go back to speculating.
There is going to be a lot of volatility ahead. The fundamentals are sound and slowly, in their own good time, we will head towards recovery and appreciation. 2008 is the year not of spectacular appreciation but more a year of consolidation.
Q: You have been a big midcap fan. What are your observations on how badly they got cut this week and where it leaves the whole space for the next few months?
A: There is going to be a lot of uncertainty after the kind of blood bath we have seen. If you compare prices of good midcaps to where they were a few years ago, they have outperformed pretty much everyone in their class.
But when such a carnage happens, people tend to shy away from midcaps on grounds of liquidity. So, it is going to be a difficult time for midcaps, for the next few months. But then these stocks tend to be far more driven by the fundamentals and the large caps. In the largecaps, one of the problems is that people are investing in stories.
In midcaps, people are focusing more on numbers, valuations and earnings. Therefore, for individual stocks, as people get to see how cheap they are trading, in an otherwise expensive market even now, investment buying will be happening over the next 2-3 months and then we should be okay again.
Q: Where do you stand on the interest rate expectation argument? Do you think it could be a potent bull trigger next week, both from the Fed and the Reserve Bank?
A: The issues in front of the Fed and Reserve Bank are completely different. When markets fell in the US and there was a huge selloff in India, everybody came on television and said that India is different, there is 8% growth going on and we don’t have the same problems as the US. So, why should the Indian market fall?
My response to that would be that it is absolutely correct and our monetary policy managed exceedingly well. So, why are we clambering for an interest rate cut? Our problems are different. If we don’t have the same growth problems as the US, then why should we follow what the Fed does, in terms of an interest rate cut.
The opposite argument is that with this huge cut in the US, interest rate differentials have widened to a level, where you will have a lot of undesirable money coming in to take advantage of that differential if we don’t cut rates. So, if we don’t cut rates, this undesirable money comes in and you will have to come up with a policy that will tempo the flow of this undesirable money and will also tempo the flow of desirable money. So, these are the two camps.
I believe that the monetary policy has not been the problem in this country, particularly for the last 3-4 years. A cut, if at all it comes, will probably be a token. I am not sure that is really what we need today. That is where I stand on the issue.
Q: What about the sectors that were extremely frothy, which a lot of commentators have spoken about like power, real estate, etc? Do you think the froth has been totally skimmed off after this recent fall or would you still be wary about those sectors?
A: To a large extent, the froth has been skimmed off. The worry is not that. The worry is will the froth come back and what shape would these markets take over the next 2-4 weeks. When I say that I am not talking about the level of the indices. I am talking about the kind of participation that we have seen in this market. Will it be similar, will there be a fundamental change in the way people in this country invest their money. That is what will decide whether the froth comes back or not. Until about 2-3 weeks ago, people were investing money in stocks because they were told to by their broker, otherwise their neighbour. They were borrowing money to invest in stocks that they knew nothing about. Until the way we invest our money in equity markets change, the froth will come back very quickly.
There is one more rider here. Everybody here, myself included, has a vested interest in interest rates coming down and in the markets going up, because we are all invested in these markets. I am invested in this market. I don’t want to see this market coming off. I did not like to see the fall that came this week, even though I have been shouting from the rooftops for the last 2-3 years that what is happening here in terms of the way we invest our money is not good and needs to change. Excessive speculation is not good particularly for the retail investor.
It is only when something like this happens that there is blood on the carpet and people withdraw to their shells. Lo and behold, two or three months later, the party is back on again. There is nothing wrong with having a party. It is what you do at a party which is the problem. If you are going to have a party, where everybody eats and drinks up to their limit, has a wonderful time and goes home, that is great. If you have a party where people are snorting coke and marijuana, then that is a big problem.
Sometimes our market seem to resemble that particular jumble where everybody seems to think that making money is the easiest thing in the world. All you have to do is buy a stock today and sell it tomorrow because everybody in the print and electronic media is talking about resistance and supports and buy here and sell tomorrow and you will make 10 bucks and so on. That is what needs to change and that is what will determine whether the froth comes back or not.
Q: What do you see in 2008 as leaders? Some people have been making the point that now those long five and six-year dream based investing will go out of the window for a while and people will focus on earnings. Therefore, some of the more staid sectors might come back into vogue? Do you see a possibility of that?
A: Yes, I do. For me dream investing is where I can see earnings growth over the next three to five years and not where I see something big happening five years from now. I discount today's NPV. There are plenty of stocks across sectors where you actually can see that happening. They may be old-fashioned sectors or they may not be depending on what you think are old fashioned or not. I think that will come back and people will focus on investing for the long-term, based on earnings that are as predictable as can be under the circumstances and not some magical event happening three or five years from now. I completely agree with you. I think that is entirely desirable.
Source: Moneycontrol.com
Friday, January 25, 2008
Market's correction: Jan 2008 = May 2006?
There is some consensus in the markets that the recent correction has similarities to the one in May 2006. Today we identify stocks traded in the 'A', 'B', 'R' and 'Z' groups of the BSE and take a look at the volume trends pre and post the correction, and see if there is any correlation to the present correction.
Post-May 2006 correction, we saw volumes dry significantly for a long period of time. If one goes by that historical data, one may see volumes dry up a fair bit.
In the last 2-3 trading sessions including today, we have seen volumes go down by about 40% -both on the BSE and the NSE cash segment and on the F&O segment.
If one draws some parallels back to about May 2006, 10 days before the May 15 correction, one saw the NSE volumes average traded volumes at 24 crore, BSE average traded volumes was about 34 crore. The percentage of the 'A' group shares and these are the shares with usually the highest marketcap and most liquidity, was at 25%.
Next in rung – ‘B1’+’B2’ formed about 50% of the total BSE cash turnover and the ‘S’+’T’+’TS’+’Z’ group formed about 26%. The markets bottomed out somewhere around June 14, after 23 trading sessions and post-June 14 - from June 15 to about June 30, the NSE average traded quantity and the BSE average traded quantity reduced by about 50% for those 15 trading sessions.
Volumes and trades was concentrated primarily around those ‘A’ group shares and it went up to 25% to about 36% an the ‘B’+’B1’ group came down from about 49% to 44%; even the other remaining groups came down from about 27% to about 21%.
In July, the volumes shrunk even further and we saw the average volumes concentrated primarily around the A groups again. About 40% of volumes were concentrated on the blue chips ‘A’ stocks; with the largest marketcap.
And only after 2.5 months after the market had bottomed out, after the correction, did the volumes start picking up in August - both on the NSE and the BSE. We saw the ‘A’ group, ‘B1’ and the remaining groups form a similar sort of percentage to what they were prior to the May correction. In terms of absolute trading volumes, the volumes only picked up after seven months in 2007, they were back to those 2006 levels.
If we look at the 2008 correction, market started down trend around January 8 and ten days prior to that, NSE average traded quantity was about 48 crore and the BSE average traded quantity was about 74 crore shares and the ‘A’ group, as a percentage of BSE traded quantity, was 17%. The midcap stocks, primarily the ‘B1’ and ‘B2’ group formed about 51% - so a lot more trade has been concentrated on this midcap space in this rally. Going by the past data, it should take a fair bit of time for us to go back to those old volumes prior to this correction.
TRADING VOLUMES
10 Days Before May 15,'06
-NSE average traded quantity at 24.3 cr shares
-BSE average traded quantity at 34.4 cr shares
10 days Before Jan 8
-A group saw 25% of total BSE traded vols
-B1+B2 saw 49% of total BSE traded vols
-S+T+TS+Z saw 26% of total BSE traded vols
June 15-30, 2006
-NSE average traded quantity at 12.6 cr shares
-BSE average traded quantity at 17.35 cr shares
June 15-30, 2006
-A group saw 36% of total BSE traded vols
-B1+B2 group saw 44% of total BSE traded vols
-S+T+TS+Z group saw 21% of total BSE traded vols
July, 2006
-NSE average traded quantity at 10.13 cr shares
-BSE average traded quantity at 14.5 cr shares
July, 2006
-A group saw 39% of total BSE traded vols
-B1+B2 group saw 38% of total BSE traded vols
-S+T+TS+Z group saw 22% of total BSE traded vols
August, 2006
-NSE average traded quantity at 13.3 cr
-BSE average traded quantity at 18.9 cr shares
August, 2006
-A group saw 29% of total BSE traded vols
-B1+B2 group saw 45% of total BSE traded vols
-S+T+TS+Z group saw 26% of total BSE traded vols
-Trading vols returned to pre-May levels in 2007
10 Days Before Jan 8
-NSE average traded quantity at 48 cr
-BSE average traded quantity at 73.4 cr shares
10 Days Before Jan 8
-A group saw 17% of total BSE traded vols
-B1+B2 group saw 51% of total BSE traded vols
-S+T+TS+Z group saw 26% of total BSE
Source: Moneycontrol.com
Post-May 2006 correction, we saw volumes dry significantly for a long period of time. If one goes by that historical data, one may see volumes dry up a fair bit.
In the last 2-3 trading sessions including today, we have seen volumes go down by about 40% -both on the BSE and the NSE cash segment and on the F&O segment.
If one draws some parallels back to about May 2006, 10 days before the May 15 correction, one saw the NSE volumes average traded volumes at 24 crore, BSE average traded volumes was about 34 crore. The percentage of the 'A' group shares and these are the shares with usually the highest marketcap and most liquidity, was at 25%.
Next in rung – ‘B1’+’B2’ formed about 50% of the total BSE cash turnover and the ‘S’+’T’+’TS’+’Z’ group formed about 26%. The markets bottomed out somewhere around June 14, after 23 trading sessions and post-June 14 - from June 15 to about June 30, the NSE average traded quantity and the BSE average traded quantity reduced by about 50% for those 15 trading sessions.
Volumes and trades was concentrated primarily around those ‘A’ group shares and it went up to 25% to about 36% an the ‘B’+’B1’ group came down from about 49% to 44%; even the other remaining groups came down from about 27% to about 21%.
In July, the volumes shrunk even further and we saw the average volumes concentrated primarily around the A groups again. About 40% of volumes were concentrated on the blue chips ‘A’ stocks; with the largest marketcap.
And only after 2.5 months after the market had bottomed out, after the correction, did the volumes start picking up in August - both on the NSE and the BSE. We saw the ‘A’ group, ‘B1’ and the remaining groups form a similar sort of percentage to what they were prior to the May correction. In terms of absolute trading volumes, the volumes only picked up after seven months in 2007, they were back to those 2006 levels.
If we look at the 2008 correction, market started down trend around January 8 and ten days prior to that, NSE average traded quantity was about 48 crore and the BSE average traded quantity was about 74 crore shares and the ‘A’ group, as a percentage of BSE traded quantity, was 17%. The midcap stocks, primarily the ‘B1’ and ‘B2’ group formed about 51% - so a lot more trade has been concentrated on this midcap space in this rally. Going by the past data, it should take a fair bit of time for us to go back to those old volumes prior to this correction.
TRADING VOLUMES
10 Days Before May 15,'06
-NSE average traded quantity at 24.3 cr shares
-BSE average traded quantity at 34.4 cr shares
10 days Before Jan 8
-A group saw 25% of total BSE traded vols
-B1+B2 saw 49% of total BSE traded vols
-S+T+TS+Z saw 26% of total BSE traded vols
June 15-30, 2006
-NSE average traded quantity at 12.6 cr shares
-BSE average traded quantity at 17.35 cr shares
June 15-30, 2006
-A group saw 36% of total BSE traded vols
-B1+B2 group saw 44% of total BSE traded vols
-S+T+TS+Z group saw 21% of total BSE traded vols
July, 2006
-NSE average traded quantity at 10.13 cr shares
-BSE average traded quantity at 14.5 cr shares
July, 2006
-A group saw 39% of total BSE traded vols
-B1+B2 group saw 38% of total BSE traded vols
-S+T+TS+Z group saw 22% of total BSE traded vols
August, 2006
-NSE average traded quantity at 13.3 cr
-BSE average traded quantity at 18.9 cr shares
August, 2006
-A group saw 29% of total BSE traded vols
-B1+B2 group saw 45% of total BSE traded vols
-S+T+TS+Z group saw 26% of total BSE traded vols
-Trading vols returned to pre-May levels in 2007
10 Days Before Jan 8
-NSE average traded quantity at 48 cr
-BSE average traded quantity at 73.4 cr shares
10 Days Before Jan 8
-A group saw 17% of total BSE traded vols
-B1+B2 group saw 51% of total BSE traded vols
-S+T+TS+Z group saw 26% of total BSE
Source: Moneycontrol.com
Stocks to watch: Syndicate Bank
It was a day of absolute strength for the markets. The bulls were back with vengence they not only reversed yesterday's loses but added more weight to close near the highest point of the day. Sensex added over 1150 points and Nifty closed with gains of around 350 points. It was the biggest single day absolute gain for Sensex.
On a weekly basis, Nifty closed down 320 points after swinging around 910 points Sensex down over 600 points after swinging over 3,000 points.
Technical Analyst Ashwani Gujral is positive on Syndicate Bank.
This is how Ashwani Gujral views stocks on board.
On Syndicate Bank:
Syndicate can be bought, currently it has a support at Rs 87, which can be used as a stop. In case interest rates do decline, I think it could easily retest its previous high of about Rs 130.
Source: Moneycontrol.com
On a weekly basis, Nifty closed down 320 points after swinging around 910 points Sensex down over 600 points after swinging over 3,000 points.
Technical Analyst Ashwani Gujral is positive on Syndicate Bank.
This is how Ashwani Gujral views stocks on board.
On Syndicate Bank:
Syndicate can be bought, currently it has a support at Rs 87, which can be used as a stop. In case interest rates do decline, I think it could easily retest its previous high of about Rs 130.
Source: Moneycontrol.com
Mkt ends near day's high: Sensex adds over 1100 pts
It was a day of absolute strength for the markets. The bulls were back with vengence they not only reversed yesterday's loses but added more weight to close near the highest point of the day. Sensex added over 1150 points and Nifty closed with gains of around 350 points. The breadth wasin favour of advances and NSE advance:decline was at 3:1. Banking, power and realty stocks were among the star performers. Broader markets alos joined in the party and ended higher but the frontliners outperformed .
In the midcap space Essar Oil up 12%, Bajaj Hindustan up 11% followed by Indiabulls, Bank of Indian and Eduomp were up 7% each.
All the Sensex and Nifty stocks closed in green. Stocks were buzzing today Unitech was up 20%, Reliance Energy up 11%, L&T up 10%. ICICI Bank, ONGC and Nalco were up over 9% each, followed by GAIL, Ranbaxy, Tata Motors, Mahindra & Mahindra and Sun Pharma.
On a weekly basis, Nifty closed down 320 points after swinging around 910 points Sensex down over 600 points after swinging over 3050 points. This week saw the biggest single day absolute gain for Sensex.
Sensex closed up 1,139.92 points or 6.62% at 18361.66, and the Nifty up 349.90 points or 6.95% at 5383.35.
About 1629 shares have advanced, 1309 shares declined, and 47 shares are unchanged
The BSE Midcap Index ended at 8,021.12 up 6.4%.
The BSE Smallcap Index ended at 10,420.90 up 4%.
The BSE Bankex was up 7.5% at 11,379.77. IOB, ICICI Bank, Centurion bank, Axis closed in green.
The BSE Capital Goods Index closed at 17,463.18 up 6.6%. Suzlon, Reliance Infra, Siemens, Triveni Engineering closed higher.
The BSE Auto Index closed at 4,842.87 up 6%. Tube Investment, Apollo Tyres, Escorts, Ashok Leyland, Hind Motors closed higher
The BSE Metal Index closed at 15,603.79 up 10%. JSW Steel, Jindal Steel, Jindal Stainless, Hind Zinc closed higher.
The BSE FMCG Index closed up 5% at 2,160.03. Colgate, ITC, Nestle, Dabur ended higher
BSE Oil and Gas Index closed at 11,197.84 up 7%. BPCL, HPCL, IOC, Reliance Natura, GAIL ended higher.
The BSE IT Index was at 3,800.36 up 6%. HCL, Infosys, Tech mahindra, TCS, Tech Mahindra closed higher.
The NSE cash turnover was at Rs 13388.84 crore and the NSE F&O turnover was at Rs 39007.70 crore. The BSE cash turnover was Rs 5206.56 crore. Total market wide turnover was at Rs 57603.10 crore.
Mkt trades with hefty gains: Sensex, Nifty up 5%
The markets continue to trade stable at the higher levels with hefty gains. Sensex is trading well above 18,000 mark with a handsome gains of over 800 points. Nifty is hovering around 5,300 mark and is up over 250 points. The breadth is in favour of advances and NSE Advance:Decline is at 2:1. Banking, power and realty stocks are among the gainers. Broader markets are also doing well along with the frontliners but the frontliners have outperformed.
At 2 pm, the Sensex is up 948.09 points or 5.51% at 18169.83, and the Nifty up 294.25 points or 5.85% at 5327.70. About 1352 shares have advanced, 1589 shares declined, and 42 shares are unchanged.
In the midcap space Essar Oil up 12%, Bajaj Hindustan up 11% followed by Indiabulls, Bank of Indian and Eduomp are 7% each.
All the Sensex and Nifty stocks are trading in green. ICICI Bank, Unitech and ONGC, Reliance Energy which has breached Rs 2000, and Nalco are up over 9% each, followed by GAIL, Ranbaxy, Tata Motors, Mahindra & Mahindra and Sun Pharma.
Neyvelli Lignite and GMR Infra are up over 8% each. IndusInd Bank, RNRL, RPL, Reliance, Essar Oil were the most active counters on the bourses today so far.
All the BSE sector indices are in green realty and bank index are up over 6%, followed by metal, oil & gas, power indices up over 5%. Auto, capital goods and FMCG index are up over 4%.
Bankex is up nearly 7%. In the banking space, Axis Bank, ICICI bank, Bank Of Baroda, PNB and IFCI were trading with hefty gains.
IT index is an underperformer compared to rest and is up 3%. In the IT sector, I Flex Solution, Patni Computer, Financial Tech and Infosys were leading from the front.
BSE Power index is up over 5%. Power stocks were also in focus, leading gainers in this space were Rel Energy, GMR Infra, Suzlon Energy and Tata Power.
Mkt trading at day's high: Sensex above 18K
The markets have surged and are trading at day's high on account of heavy buying seen in scrips across sectors. Sensex is trading well above 18,000 mark and has breached 18,100 with a hefty gain of 900 points. Nifty has breached 5,300 mark and is up nearly 300 points. Banking, power and realty stocks. Broader markets are also doing well along with the frontliners. Market breadth has been very impressive so far with good volume.
At 12.05 hrs IST, the Sensex is up 914.58 points or 5.31% at 18136.32, and the Nifty up 278.35 points or 5.53% at 5311.80.
About 1267 shares have advanced, 1663 shares declined, and 53 shares are unchanged.
All the Sensex and Nifty stocks are trading in green. ICICI Bank, Unitech and ONGC, Reliance Energy which has breached Rs 2000, and Nalco are up over 9% each, followed by GAIL, Ranbaxy, Tata Motors, Mahindra & Mahindra and Sun Pharma.
Neyvelli Lignite and GMR Infra are up over 8% each. IndusInd Bank, RNRL, RPL, Reliance, Essar Oil were the most active counters on the bourses today so far.
All the BSE sector indices are in green realty and bank index are up over 6%, followed by metal, oil & gas, power indices up over 5%. Auto, capital goods and FMCG index are up over 4%.
Bankex is up nearly 7%. In the banking space, Axis Bank, ICICI bank, Bank Of Baroda, PNB and IFCI were trading with hefty gains.
IT index is an underperformer compared to rest and is up 3%. In the IT sector, I Flex Solution, Patni Computer, Financial Tech and Infosys were leading from the front.
BSE Power index is up over 5%. Power stocks were also in focus, leading gainers in this space were Rel Energy, GMR Infra, Suzlon Energy and Tata Power.
Mkts in momentum; bank,power stocks surge
The markets are still trading extremely strong and have gained further as some more accumulation was witnessed in the banking, powewr and realty stocks. Midcaps are also doing well along with the frontliners but the smallcap index on the BSE is little subdued.
At 11.22 hrs IST, the Sensex is up 733.55 points or 4.26% at 17955.29, and the Nifty up 236.95 points or 4.71% at 5270.40. About 1194 shares have advanced, 1739 shares declined, and 50 shares are unchanged.
Market breadth has been very impressive so far with good volume. On NSE over 700 stocks are green against nearly 300 stocks on the downside.
IndusInd Bank, RNRL, RPL, Reliance, Essar Oil were the most active counters on the bourses today so far. Top Sensex gainers are ONGC, Rel Energy, ICICI Bank, M&M and Tata Motors.
In the banking space, Axis Bank, ICICI bank, Bank Of Baroda, PNB and IFCI were trading with hefty gains.
In the IT sector, I Flex Solution, Patni Computer, Financial Tech and Infosys were leading from the front. Power stocks were also in focus, leading gainers in this space were Rel Energy, GMR Infra, Suzlon Energy and Tata Power.
Mkts in momentum; power, bank, IT, oil&gas stocks in focus
The markets have gained further ground and are in momentum on the back of heavy buying seen across the sectors. All the key BSE indices are in green with substantial gains led by the banking, power, oil & gas and IT space.
Market breadth has been very impressive so far with good volume. On NSE over 700 stocks are green against nearly 300 stocks on the downside.
At 10.48 hrs IST, the Sensex is up 724.98 points or 4.21% at 17946.72, and the Nifty up 228.35 points or 4.54% at 5261.80. About 1223 shares have advanced, 1700 shares declined, and 60 shares are unchanged.
Major gainers on the Sensex were ONGC, Reliance Energy, Bajaj Auto. Major gainers on the NSE were Reliance Energy, Sun Pharma and Nalco.
IndusInd Bank, RNRL, RPL, Reliance, Essar Oil were the most active counters on the bourses today so far.
Mkts open on strong note; power, IT,metal stocks up
The markets opened on a very strong note today taking cues from the global markets. Heavy buying was witnessed in the opening trade today across the sectors led by power, metal, IT and oil & gas. Asia was trading extremely strong baring Sanghai and the US markets also closed with smart gains yesterday.
At 9:56 am, Sensex was up 402 points at 17664 and Nifty was up 114 points at 5147. major gainers in the opening trade were Rel Petroleum, Reliance Energy, BHEL, Infosys, Unitech, DLF, Tisco, ONGC, Cipla, NTPC and Rel Comm.
Asian markets were trading firm. Hong Kong's Hang Seng surged 4.98% or 1171.19 points at 24,710.46. Japan's Nikkei rose 2.80% or 367.05 points at 13,459.83. Taiwan's Taiwan Weighted advanced 2.48% or 186.20 points at 7,703.45. Singapore's Straits Times was up 2.63% or 80.25 points at 3,130.34. South Korea's Seoul Composite shot up 1.42% or 23.67 points at 1,686.67.
US markets: The Dow Jones gained 108.44 points, or 0.88%, to 12,378.61. The Standard & Poor's 500 index advanced 13.47 points, or 1.01%, to 1,352.07, and the Nasdaq composite index rose 44.51 points, or 1.92%, to 2,360.92.
Market cues:
* FIIs net sell USD 619.7 million in equity
* MFs net buy Rs 876.9 cr in equity
* NSE F&O Open Interest down by Rs 4441 crore at Rs 85,574 crore
Source: Moneycontrol.com
In the midcap space Essar Oil up 12%, Bajaj Hindustan up 11% followed by Indiabulls, Bank of Indian and Eduomp were up 7% each.
All the Sensex and Nifty stocks closed in green. Stocks were buzzing today Unitech was up 20%, Reliance Energy up 11%, L&T up 10%. ICICI Bank, ONGC and Nalco were up over 9% each, followed by GAIL, Ranbaxy, Tata Motors, Mahindra & Mahindra and Sun Pharma.
On a weekly basis, Nifty closed down 320 points after swinging around 910 points Sensex down over 600 points after swinging over 3050 points. This week saw the biggest single day absolute gain for Sensex.
Sensex closed up 1,139.92 points or 6.62% at 18361.66, and the Nifty up 349.90 points or 6.95% at 5383.35.
About 1629 shares have advanced, 1309 shares declined, and 47 shares are unchanged
The BSE Midcap Index ended at 8,021.12 up 6.4%.
The BSE Smallcap Index ended at 10,420.90 up 4%.
The BSE Bankex was up 7.5% at 11,379.77. IOB, ICICI Bank, Centurion bank, Axis closed in green.
The BSE Capital Goods Index closed at 17,463.18 up 6.6%. Suzlon, Reliance Infra, Siemens, Triveni Engineering closed higher.
The BSE Auto Index closed at 4,842.87 up 6%. Tube Investment, Apollo Tyres, Escorts, Ashok Leyland, Hind Motors closed higher
The BSE Metal Index closed at 15,603.79 up 10%. JSW Steel, Jindal Steel, Jindal Stainless, Hind Zinc closed higher.
The BSE FMCG Index closed up 5% at 2,160.03. Colgate, ITC, Nestle, Dabur ended higher
BSE Oil and Gas Index closed at 11,197.84 up 7%. BPCL, HPCL, IOC, Reliance Natura, GAIL ended higher.
The BSE IT Index was at 3,800.36 up 6%. HCL, Infosys, Tech mahindra, TCS, Tech Mahindra closed higher.
The NSE cash turnover was at Rs 13388.84 crore and the NSE F&O turnover was at Rs 39007.70 crore. The BSE cash turnover was Rs 5206.56 crore. Total market wide turnover was at Rs 57603.10 crore.
Mkt trades with hefty gains: Sensex, Nifty up 5%
The markets continue to trade stable at the higher levels with hefty gains. Sensex is trading well above 18,000 mark with a handsome gains of over 800 points. Nifty is hovering around 5,300 mark and is up over 250 points. The breadth is in favour of advances and NSE Advance:Decline is at 2:1. Banking, power and realty stocks are among the gainers. Broader markets are also doing well along with the frontliners but the frontliners have outperformed.
At 2 pm, the Sensex is up 948.09 points or 5.51% at 18169.83, and the Nifty up 294.25 points or 5.85% at 5327.70. About 1352 shares have advanced, 1589 shares declined, and 42 shares are unchanged.
In the midcap space Essar Oil up 12%, Bajaj Hindustan up 11% followed by Indiabulls, Bank of Indian and Eduomp are 7% each.
All the Sensex and Nifty stocks are trading in green. ICICI Bank, Unitech and ONGC, Reliance Energy which has breached Rs 2000, and Nalco are up over 9% each, followed by GAIL, Ranbaxy, Tata Motors, Mahindra & Mahindra and Sun Pharma.
Neyvelli Lignite and GMR Infra are up over 8% each. IndusInd Bank, RNRL, RPL, Reliance, Essar Oil were the most active counters on the bourses today so far.
All the BSE sector indices are in green realty and bank index are up over 6%, followed by metal, oil & gas, power indices up over 5%. Auto, capital goods and FMCG index are up over 4%.
Bankex is up nearly 7%. In the banking space, Axis Bank, ICICI bank, Bank Of Baroda, PNB and IFCI were trading with hefty gains.
IT index is an underperformer compared to rest and is up 3%. In the IT sector, I Flex Solution, Patni Computer, Financial Tech and Infosys were leading from the front.
BSE Power index is up over 5%. Power stocks were also in focus, leading gainers in this space were Rel Energy, GMR Infra, Suzlon Energy and Tata Power.
Mkt trading at day's high: Sensex above 18K
The markets have surged and are trading at day's high on account of heavy buying seen in scrips across sectors. Sensex is trading well above 18,000 mark and has breached 18,100 with a hefty gain of 900 points. Nifty has breached 5,300 mark and is up nearly 300 points. Banking, power and realty stocks. Broader markets are also doing well along with the frontliners. Market breadth has been very impressive so far with good volume.
At 12.05 hrs IST, the Sensex is up 914.58 points or 5.31% at 18136.32, and the Nifty up 278.35 points or 5.53% at 5311.80.
About 1267 shares have advanced, 1663 shares declined, and 53 shares are unchanged.
All the Sensex and Nifty stocks are trading in green. ICICI Bank, Unitech and ONGC, Reliance Energy which has breached Rs 2000, and Nalco are up over 9% each, followed by GAIL, Ranbaxy, Tata Motors, Mahindra & Mahindra and Sun Pharma.
Neyvelli Lignite and GMR Infra are up over 8% each. IndusInd Bank, RNRL, RPL, Reliance, Essar Oil were the most active counters on the bourses today so far.
All the BSE sector indices are in green realty and bank index are up over 6%, followed by metal, oil & gas, power indices up over 5%. Auto, capital goods and FMCG index are up over 4%.
Bankex is up nearly 7%. In the banking space, Axis Bank, ICICI bank, Bank Of Baroda, PNB and IFCI were trading with hefty gains.
IT index is an underperformer compared to rest and is up 3%. In the IT sector, I Flex Solution, Patni Computer, Financial Tech and Infosys were leading from the front.
BSE Power index is up over 5%. Power stocks were also in focus, leading gainers in this space were Rel Energy, GMR Infra, Suzlon Energy and Tata Power.
Mkts in momentum; bank,power stocks surge
The markets are still trading extremely strong and have gained further as some more accumulation was witnessed in the banking, powewr and realty stocks. Midcaps are also doing well along with the frontliners but the smallcap index on the BSE is little subdued.
At 11.22 hrs IST, the Sensex is up 733.55 points or 4.26% at 17955.29, and the Nifty up 236.95 points or 4.71% at 5270.40. About 1194 shares have advanced, 1739 shares declined, and 50 shares are unchanged.
Market breadth has been very impressive so far with good volume. On NSE over 700 stocks are green against nearly 300 stocks on the downside.
IndusInd Bank, RNRL, RPL, Reliance, Essar Oil were the most active counters on the bourses today so far. Top Sensex gainers are ONGC, Rel Energy, ICICI Bank, M&M and Tata Motors.
In the banking space, Axis Bank, ICICI bank, Bank Of Baroda, PNB and IFCI were trading with hefty gains.
In the IT sector, I Flex Solution, Patni Computer, Financial Tech and Infosys were leading from the front. Power stocks were also in focus, leading gainers in this space were Rel Energy, GMR Infra, Suzlon Energy and Tata Power.
Mkts in momentum; power, bank, IT, oil&gas stocks in focus
The markets have gained further ground and are in momentum on the back of heavy buying seen across the sectors. All the key BSE indices are in green with substantial gains led by the banking, power, oil & gas and IT space.
Market breadth has been very impressive so far with good volume. On NSE over 700 stocks are green against nearly 300 stocks on the downside.
At 10.48 hrs IST, the Sensex is up 724.98 points or 4.21% at 17946.72, and the Nifty up 228.35 points or 4.54% at 5261.80. About 1223 shares have advanced, 1700 shares declined, and 60 shares are unchanged.
Major gainers on the Sensex were ONGC, Reliance Energy, Bajaj Auto. Major gainers on the NSE were Reliance Energy, Sun Pharma and Nalco.
IndusInd Bank, RNRL, RPL, Reliance, Essar Oil were the most active counters on the bourses today so far.
Mkts open on strong note; power, IT,metal stocks up
The markets opened on a very strong note today taking cues from the global markets. Heavy buying was witnessed in the opening trade today across the sectors led by power, metal, IT and oil & gas. Asia was trading extremely strong baring Sanghai and the US markets also closed with smart gains yesterday.
At 9:56 am, Sensex was up 402 points at 17664 and Nifty was up 114 points at 5147. major gainers in the opening trade were Rel Petroleum, Reliance Energy, BHEL, Infosys, Unitech, DLF, Tisco, ONGC, Cipla, NTPC and Rel Comm.
Asian markets were trading firm. Hong Kong's Hang Seng surged 4.98% or 1171.19 points at 24,710.46. Japan's Nikkei rose 2.80% or 367.05 points at 13,459.83. Taiwan's Taiwan Weighted advanced 2.48% or 186.20 points at 7,703.45. Singapore's Straits Times was up 2.63% or 80.25 points at 3,130.34. South Korea's Seoul Composite shot up 1.42% or 23.67 points at 1,686.67.
US markets: The Dow Jones gained 108.44 points, or 0.88%, to 12,378.61. The Standard & Poor's 500 index advanced 13.47 points, or 1.01%, to 1,352.07, and the Nasdaq composite index rose 44.51 points, or 1.92%, to 2,360.92.
Market cues:
* FIIs net sell USD 619.7 million in equity
* MFs net buy Rs 876.9 cr in equity
* NSE F&O Open Interest down by Rs 4441 crore at Rs 85,574 crore
Source: Moneycontrol.com
Wednesday, January 23, 2008
Market to remain volatile going forward
A pullback was expected and we got that today. It may be a relief rally but relief rallies look beautiful when they happen. That is exactly what we saw today after the carnage of the last couple of days. It was really a balm for sore eyes. 850 points up, but it could have been better. It got trimmed off a little bit towards the end. At one point, the Sensex was up 1,200 points, knocking on the doors of 18,000. However, after the pull down we closed 850 points up, closer to that 17,600 mark. The Nifty put on a full 300 points today closing at 5,200.
But price is only part of the story. The real damage has been done on participation and volumes. Trading volumes have shrunk to about half of last week’s volumes. That is the other big part of the story. People are out of the market because they have been stung. Also, there are lots of complications of participating between brokers and exchanges. Margins have been hiked again and those factors might also have interfered with people participating in the market. It is not a punters playfield as it was one-week back. Now, serious investors are in the market and may be some short covering is happening. That probably was the reason rather than the large directional long positions which saw the markets go up today.
In the futures market, there were signs of unwinding using the rise that we have seen in many midcap stocks. However, many largecap sectors participated today led by the big ones like Reliance Industries and Hindustan Unilever. Power stocks, which have got killed over the last few days, have bounced back today led by NTPC, Reliance Energy, and Tata Power. We have seen real estate also spring back with Unitech, DLF, HDIL, and Omaxe. These stocks had fallen very sharply and they have all bounced back today.
Metals like SAIL and Sterlite have done well. Even technology stocks, like Satyam and TCS, bounced nearly 10% a piece. So, there is good leadership in the largecaps. But one would expect that, from the nature of fall that they have seen in the last couple of days.
On the midcap side, all the stock futures were running up very sharply today, whether it is Ispat, IFCI, RNRL, RPL, Essar Oil, Nagarjuna Fertilisers, Petronet LNG, or JP Hydro. The ones that had fallen the most, in the range of 50-70%, were the stocks, which have bounced back the most in an expected relief rally.
Some stocks did not quite participate. Stocks like Hindustan Motors, Geojit and Prime remained very weak through the day. But we have seen a big recovery in midcaps.
Interestingly, smallcaps did not do nearly as well as midcaps today, which is why market breadth is not very big. Typically, on such relief rallies, one would expect to see 8:1-9:1 kind of advance-decline ratios. But today was just about 2:1. That shows that the smallcap end of the market is still licking its wounds and has not been able to bounceback, as smartly as some of their midcap counterparts.
We have had our relief rally today. The big question is that if we move a little bit higher from here, where do we go? Does the market stabilize at a much higher band or after the relief rally is over, does it go back and test lower levels? That is something that we need to figure out over the next few days.
While Asia bounced back today, Europe left us guessing in the second half of the session, because those markets were quite weak while we closed trade. So, the global situation might still be a little iffy, but we will find that over the next few days. Those will be very important cues for us.
Expect more volatility, going forward, though the day has been good. It may get better from here. But do not rule out some more volatility in the days to come.
Source: Moneyconrol.com
Lessons from January 2008
The thing about life is that one makes mistakes. Many mistakes were made in the second half of 2007 and those sins have to be washed away by blood, such is the way of financial markets. Some participants will go down under and never be able to get back to the market again but most will survive. The pain will linger for many months, maybe years but lessons have to be learnt. Every such debacle has lessons for us and the sooner we forget them the more we suffer.
The first lesson is not to let stock price performance become the sole reason for buying, a mistake which was made in abundance in the last 3 months. What couldn't be explained by fundamentals was credited to liquidity. The present lost all relevance as people chose to focus on the distant future, perhaps simply because the present could never justify those ticker prices; only a hazy dream of the future could. Traders and investors had no time for fundamental analysts, in many cases they were labelled "cribbing fools". Chartists became the most celebrated tribe on the street as only they could see and predict the one way run to glory for many of the hot stocks even as fundamental watchers cringed at valuations....till the music stopped. Don't get me wrong, charts do work in trending markets but once stock prices veer away completely from fundamental value, people need to get careful. But they never are. Now that the blinkers are off, people should ask themselves why stocks like RNRL, Ispat, RPL, Essar oil and Nagarjuna fertilisers have lost 50-70% of their value. It is simply because their stock prices had snapped all connection with underlying business fundamentals, earnings and value. Their stock prices became the only reasons for buying them which works for a while but not forever.
The other big lesson, one which should have been driven in earlier in May 2006, is the danger of overextending oneself in the futures market. The lure of stock futures is easy to understand. Put in some margin, take a big exposure on a fast moving stock, make a killing when prices shoot up. Repeat exercise. Just that people forgot that prices may also come down and at a pace which noone can even imagine, maybe their friendly stockbrokers forgot to tell them that part of the story. The result : unbridled speculation that ran into lakhs of crores, excesses that we are paying for today. Even this fall will not cure investors of their love for futures speculation but if at least some amount of caution is injected it would have been a worthwhile learning. Futures are not toys for amateurs, they are time bombs in the hands of inexpert and inexperienced traders, it's only a matter of when the fuse runs out.
The other learning which I hope will play out in the future, as it has in the past, is that it pays to be brave in times of panic such as these. If I was allowed to invest myself , which I am not, I would have no hesitation in deploying serious money into the market today, knowing fully well that prices may fall more tomorrow. And I would be standing there tomorrow to buy more of the same, till my money ran out. India is going to be a terrific stock market story for many years to come, even an intermediate bearish patch cannot shake that conviction of mine. At best, one will have to wait a bit for the returns to follow. That's alright. You are happy to put money in a bank FD and then wait for one full year to collect that measly 8%, aren't you? Then why does the stock market need to give you 20% every month? In the last one year, I haven't seen so many good stocks trade at such mouth watering levels. Forget trading, avoid the duds which were fuelled up by operators, just go out and buy those bluechips. They will deliver, even if there is a global market meltdown for a while, and if you are a bit patient you will be rewarded. But do remember January 2008, as history will repeat itself again in the future. Just that our memories tend to be too short and our greed too much.
NOTE: This column was written at 2pm, even as the markets were trading.
Source: Moneycontrol.com
The first lesson is not to let stock price performance become the sole reason for buying, a mistake which was made in abundance in the last 3 months. What couldn't be explained by fundamentals was credited to liquidity. The present lost all relevance as people chose to focus on the distant future, perhaps simply because the present could never justify those ticker prices; only a hazy dream of the future could. Traders and investors had no time for fundamental analysts, in many cases they were labelled "cribbing fools". Chartists became the most celebrated tribe on the street as only they could see and predict the one way run to glory for many of the hot stocks even as fundamental watchers cringed at valuations....till the music stopped. Don't get me wrong, charts do work in trending markets but once stock prices veer away completely from fundamental value, people need to get careful. But they never are. Now that the blinkers are off, people should ask themselves why stocks like RNRL, Ispat, RPL, Essar oil and Nagarjuna fertilisers have lost 50-70% of their value. It is simply because their stock prices had snapped all connection with underlying business fundamentals, earnings and value. Their stock prices became the only reasons for buying them which works for a while but not forever.
The other big lesson, one which should have been driven in earlier in May 2006, is the danger of overextending oneself in the futures market. The lure of stock futures is easy to understand. Put in some margin, take a big exposure on a fast moving stock, make a killing when prices shoot up. Repeat exercise. Just that people forgot that prices may also come down and at a pace which noone can even imagine, maybe their friendly stockbrokers forgot to tell them that part of the story. The result : unbridled speculation that ran into lakhs of crores, excesses that we are paying for today. Even this fall will not cure investors of their love for futures speculation but if at least some amount of caution is injected it would have been a worthwhile learning. Futures are not toys for amateurs, they are time bombs in the hands of inexpert and inexperienced traders, it's only a matter of when the fuse runs out.
The other learning which I hope will play out in the future, as it has in the past, is that it pays to be brave in times of panic such as these. If I was allowed to invest myself , which I am not, I would have no hesitation in deploying serious money into the market today, knowing fully well that prices may fall more tomorrow. And I would be standing there tomorrow to buy more of the same, till my money ran out. India is going to be a terrific stock market story for many years to come, even an intermediate bearish patch cannot shake that conviction of mine. At best, one will have to wait a bit for the returns to follow. That's alright. You are happy to put money in a bank FD and then wait for one full year to collect that measly 8%, aren't you? Then why does the stock market need to give you 20% every month? In the last one year, I haven't seen so many good stocks trade at such mouth watering levels. Forget trading, avoid the duds which were fuelled up by operators, just go out and buy those bluechips. They will deliver, even if there is a global market meltdown for a while, and if you are a bit patient you will be rewarded. But do remember January 2008, as history will repeat itself again in the future. Just that our memories tend to be too short and our greed too much.
NOTE: This column was written at 2pm, even as the markets were trading.
Source: Moneycontrol.com
Saturday, January 19, 2008
2008 to be difficult year for EMs
Speaking to CNBC-TV18, Arnab Das of Dresdner Kleinwort Wasserstein said that he sees more downside in economic performance in EMs. 2008 will be a difficult year for EMs, he added.
Excerpts from CNBC-TV18’s exclusive interview with Arnab Das:
Q: What do you make of what's going on globally and what would you expect emerging markets to do now in the light of what's going on in the US?
A: What's going on is a gradual kind of spread of this problem that started from the housing problem in the United States - a subprime meltdown through all of this structured credit issues into bank capital being destroyed in large global banks affecting credit markets and then gradually moving into the equity markets.
A lot of people until now have been using a couple of buzzwords for emerging markets and emerging markets in Asia, in particular. They have been talking about the decoupling and about safe havens. We have always thought that essentially an unsustainable proposition like where in a world of globalization, increasing integration and inter-effectiveness.
In the end there is no place to hide from what is shaping up - it is a very difficult year economically and financially in US and in high-income countries. The chances of a recession in the US is nearly even - our estimation at the firm is that there will be 45% chance of recession. Other firms are calling for an actually technical recession in a very difficult year in the US and that’s going to have a global effect. The dollar is going to help US exports - it's way out of its problem to some degree but the weakness of the dollar and its domestic demand in the US is going to be a problem for the rest of the world which now has been relying heavily on a few motors of growth and if US domestic demands and strong growth in China, growth in India and in the emerging markets - much of the growth in the emerging markets has associated and has benefited from the growth in US and from exceedingly favorable financial conditions and all of those things are starting to unwind altogether starting in the second half of 2007.
So I think there is more downside in economic performance and there is more financial problems and credit problems would continue and it’s going to be difficult year for equities and there is going to be an affect on the growth rate in Asia as a result. I don't think there is going to be a recession in the emerging markets as a whole or in emerging Asia. But a slowdown in the US or a recession in the US will certainly slowdown the rate of growth of exports from Asia to the US and from other emerging market countries to the US.
Source: Moneycontrol.com
Excerpts from CNBC-TV18’s exclusive interview with Arnab Das:
Q: What do you make of what's going on globally and what would you expect emerging markets to do now in the light of what's going on in the US?
A: What's going on is a gradual kind of spread of this problem that started from the housing problem in the United States - a subprime meltdown through all of this structured credit issues into bank capital being destroyed in large global banks affecting credit markets and then gradually moving into the equity markets.
A lot of people until now have been using a couple of buzzwords for emerging markets and emerging markets in Asia, in particular. They have been talking about the decoupling and about safe havens. We have always thought that essentially an unsustainable proposition like where in a world of globalization, increasing integration and inter-effectiveness.
In the end there is no place to hide from what is shaping up - it is a very difficult year economically and financially in US and in high-income countries. The chances of a recession in the US is nearly even - our estimation at the firm is that there will be 45% chance of recession. Other firms are calling for an actually technical recession in a very difficult year in the US and that’s going to have a global effect. The dollar is going to help US exports - it's way out of its problem to some degree but the weakness of the dollar and its domestic demand in the US is going to be a problem for the rest of the world which now has been relying heavily on a few motors of growth and if US domestic demands and strong growth in China, growth in India and in the emerging markets - much of the growth in the emerging markets has associated and has benefited from the growth in US and from exceedingly favorable financial conditions and all of those things are starting to unwind altogether starting in the second half of 2007.
So I think there is more downside in economic performance and there is more financial problems and credit problems would continue and it’s going to be difficult year for equities and there is going to be an affect on the growth rate in Asia as a result. I don't think there is going to be a recession in the emerging markets as a whole or in emerging Asia. But a slowdown in the US or a recession in the US will certainly slowdown the rate of growth of exports from Asia to the US and from other emerging market countries to the US.
Source: Moneycontrol.com
Likely to see near-term pressure
Sanjay Sinha, CIO of SBI MF told CNBC-TV18 that large IPOs have sucked out money from markets. Likely near-term pressure will be seen though some recovery can be expected by Jan end. He added that Sensex is likely to see strong support around 18,500 levels.
Excerpts from the exclusive interview with Sanjay Sinha:
Q: What’s your sense, are we somewhere close to the bottom or do you see more pain left?
Sinha: I would say that since the closing has been above 19,000 levels maybe as a milestone that would act as a support but if one looks as to what are the technical factors in the markets and not strictly technicals. We have a large issue, which is closing today which has had a fairly strong response in terms of subscription. I’m sure it has sucked out a lot of money from various other sources into the subscription amount and this money is not going to come back till the February 4, which means that for quite some period of time, they may not be access to liquid money to be invested in the markets. So that maybe one of the reason why we have seen this sort of pressure in the markets and the global markets have also not been very supportive in terms of the news flow that is coming from there.
So if I look at the horizon in the time form now upto first week of February, we have some events which are there before us in this intervening period such as the RBI credit policy and also the Fed meet in the background of statement, which have been made by Bernanke. We will start building in expectations leading upto the budget and there are some expectations about some fiscal measures, which the government will take in this budget, which might be looked at as a very strong signal to the economy in general and corporates in particular. So in a mix of these events, I would say that this is the near-term pressure which would probably not hold for too long and we should see the market again gaining traction maybe from the last week of January or maybe from the early week of February.
Q: Do you think 19,000 is around the levels where we could bottom out or do you see a chance for the market going down and testing somewhere close to 18,000 levels in this fall?
Sinha: I would say that this level should hold and while it would be difficult to take a very accurate call as to weather we might or we may not slip another 400-500 points from here, I would say that we are suppose to go 18,500 levels hypothetically there. There would be a fairly strong support, which would come from the money which is setting on the sidelines waiting to come to the market and which has been waiting for a correction for quite some period of time.
So I would say that even if we slip to those levels, those levels will not stay for too long and will bounce back very sharply.
Q: What’s your sense of how these power stocks might fare now from here on?
Sinha: There is certain amount of skepticism about the valuations of power stocks in general and I would say that skepticism would continue till the time, as one can see execution on the ground. So we have a scenario that the Reliance Power issue is not the only one, we have infact also a series of other power stocks coming in with initial public offerings. So this sector might be in the limelight, the valuations maybe in the upper end of the stretched band and if one do not have negative news coming into the sector, we would have to live with a situation of an overvaluations for sometime to come, pending news on execution.
Q: What about sugar that had a great run and sold off completely today, where do you stand on fundamentals and valuations of that sector?
Sinha: The fault today was triggered by an event, which happened in Uttar Pradesh because of a judicial call, and also by the government’s decision to act on that. But if one looks at the sugar future, those futures have spiked off very sharply responding to the fact that the Indian sugar output may not be as much as what it was initially estimated to be and if that be true and if the Indian sugar output is somewhere close to 24 million tonnes this year, then one will have a scenario where the sugar prices globally will be firming and the Indian sugar prices will also take one from there. So there maybe a need to revisit the view that one has had on the sugar stocks for quite some time and that view has been bearish.
Source: Moneycontrol.com
Excerpts from the exclusive interview with Sanjay Sinha:
Q: What’s your sense, are we somewhere close to the bottom or do you see more pain left?
Sinha: I would say that since the closing has been above 19,000 levels maybe as a milestone that would act as a support but if one looks as to what are the technical factors in the markets and not strictly technicals. We have a large issue, which is closing today which has had a fairly strong response in terms of subscription. I’m sure it has sucked out a lot of money from various other sources into the subscription amount and this money is not going to come back till the February 4, which means that for quite some period of time, they may not be access to liquid money to be invested in the markets. So that maybe one of the reason why we have seen this sort of pressure in the markets and the global markets have also not been very supportive in terms of the news flow that is coming from there.
So if I look at the horizon in the time form now upto first week of February, we have some events which are there before us in this intervening period such as the RBI credit policy and also the Fed meet in the background of statement, which have been made by Bernanke. We will start building in expectations leading upto the budget and there are some expectations about some fiscal measures, which the government will take in this budget, which might be looked at as a very strong signal to the economy in general and corporates in particular. So in a mix of these events, I would say that this is the near-term pressure which would probably not hold for too long and we should see the market again gaining traction maybe from the last week of January or maybe from the early week of February.
Q: Do you think 19,000 is around the levels where we could bottom out or do you see a chance for the market going down and testing somewhere close to 18,000 levels in this fall?
Sinha: I would say that this level should hold and while it would be difficult to take a very accurate call as to weather we might or we may not slip another 400-500 points from here, I would say that we are suppose to go 18,500 levels hypothetically there. There would be a fairly strong support, which would come from the money which is setting on the sidelines waiting to come to the market and which has been waiting for a correction for quite some period of time.
So I would say that even if we slip to those levels, those levels will not stay for too long and will bounce back very sharply.
Q: What’s your sense of how these power stocks might fare now from here on?
Sinha: There is certain amount of skepticism about the valuations of power stocks in general and I would say that skepticism would continue till the time, as one can see execution on the ground. So we have a scenario that the Reliance Power issue is not the only one, we have infact also a series of other power stocks coming in with initial public offerings. So this sector might be in the limelight, the valuations maybe in the upper end of the stretched band and if one do not have negative news coming into the sector, we would have to live with a situation of an overvaluations for sometime to come, pending news on execution.
Q: What about sugar that had a great run and sold off completely today, where do you stand on fundamentals and valuations of that sector?
Sinha: The fault today was triggered by an event, which happened in Uttar Pradesh because of a judicial call, and also by the government’s decision to act on that. But if one looks at the sugar future, those futures have spiked off very sharply responding to the fact that the Indian sugar output may not be as much as what it was initially estimated to be and if that be true and if the Indian sugar output is somewhere close to 24 million tonnes this year, then one will have a scenario where the sugar prices globally will be firming and the Indian sugar prices will also take one from there. So there maybe a need to revisit the view that one has had on the sugar stocks for quite some time and that view has been bearish.
Source: Moneycontrol.com
Friday, January 18, 2008
Asian markets plunge; Hang Seng slips 826 points
Asian markets were trading lower today. Hong Kong's Hang Seng tumbled 3.29% or 826.33 points at 24,288.65.
Japan's Nikkei plunged 2.81% or 387.67 points at 13,395.78.
Taiwan's Taiwan Weighted declined 1.50% or 121.89 points at 7,979.74.
Singapore's Straits Times slipped 2.61% or 81.91 points at 3,057.97.
South Korea's Seoul Composite fell 1.67% or 28.80 points at 1,694.75
Source: Monecycontrol.com
Japan's Nikkei plunged 2.81% or 387.67 points at 13,395.78.
Taiwan's Taiwan Weighted declined 1.50% or 121.89 points at 7,979.74.
Singapore's Straits Times slipped 2.61% or 81.91 points at 3,057.97.
South Korea's Seoul Composite fell 1.67% or 28.80 points at 1,694.75
Source: Monecycontrol.com
Thursday, January 17, 2008
Stocks to watch: Reliance, Ambuja Cement, RNRL
The markets continued to be directionless, sawing violently through the day. Global cues too were inconclusive, denting investor confidence. The Nifty closed at 5,913 down 23 points, while the Sensex shut shop at 19,701 down 167 points.
Rajat Bose of rajatkbose.com is positive on Relaince Industries, Ambuja Cement and RNRL.
Here’s how Rajat Bose views the stocks on board:
On Reliance:
Reliance has broken 3,000 levels. We need to see if it goes to about 2,975 and stay there, then maybe 2,910 might well be tested. Actually, the level between 3,050 and 2,800 is kind of a congestion zone for Reliance, so shorting here may not be advisable. Reliance has a track record that on most result days, it opens higher and closes lower. I thought that today it may be a bit different but it isn’t. At these levels, it has already entered that congestion zone, so maybe some kind of lower momentum fall is likely in this.
On Ambuja Cement:
Technically, it was showing hammer lines at least twice and then they got broken. Each time it was giving signals as if the bottom has been reached and now it will bounce back. But it isn’t showing the real bounce back, so I would be more watchful. I would rather sacrifice 10 points and buy above Rs 140 when it sustains there. Otherwise, Ambuja at this point of time is not showing that much of attractiveness from the technical prospective.
On RNRL:
Except RNRL, I wouldn’t be playing long in any of the Reliance pack. RNRL has got technical and relative strength compared to the whole group; it shows the best performance there. Unless RNRL breaks Rs 208 on dips, one can still go along. While Reliance can actually go down, the severity of the fall may not be there because it has already entered a congestion zone.
On Reliance Capital:
Reliance Capital showed quite a bit of promise this morning. However, it sold off after that. Chances are that you may see about Rs 2,520 levels.
On Reliance Energy:
Reliance Energy is trading weak as the whole power sector shows weakness. My target of Rs 2,050, maybe reached in the short-term.
Disclaimer:
It is safe to assume that my clients and I may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Rajat Bose of rajatkbose.com is positive on Relaince Industries, Ambuja Cement and RNRL.
Here’s how Rajat Bose views the stocks on board:
On Reliance:
Reliance has broken 3,000 levels. We need to see if it goes to about 2,975 and stay there, then maybe 2,910 might well be tested. Actually, the level between 3,050 and 2,800 is kind of a congestion zone for Reliance, so shorting here may not be advisable. Reliance has a track record that on most result days, it opens higher and closes lower. I thought that today it may be a bit different but it isn’t. At these levels, it has already entered that congestion zone, so maybe some kind of lower momentum fall is likely in this.
On Ambuja Cement:
Technically, it was showing hammer lines at least twice and then they got broken. Each time it was giving signals as if the bottom has been reached and now it will bounce back. But it isn’t showing the real bounce back, so I would be more watchful. I would rather sacrifice 10 points and buy above Rs 140 when it sustains there. Otherwise, Ambuja at this point of time is not showing that much of attractiveness from the technical prospective.
On RNRL:
Except RNRL, I wouldn’t be playing long in any of the Reliance pack. RNRL has got technical and relative strength compared to the whole group; it shows the best performance there. Unless RNRL breaks Rs 208 on dips, one can still go along. While Reliance can actually go down, the severity of the fall may not be there because it has already entered a congestion zone.
On Reliance Capital:
Reliance Capital showed quite a bit of promise this morning. However, it sold off after that. Chances are that you may see about Rs 2,520 levels.
On Reliance Energy:
Reliance Energy is trading weak as the whole power sector shows weakness. My target of Rs 2,050, maybe reached in the short-term.
Disclaimer:
It is safe to assume that my clients and I may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Wednesday, January 16, 2008
Buy ICICI Bank, target Rs 1528
Sharekhan research has maintaiend buy rating on ICICI Bank with target price of Rs 1528 in its January 14, 2008 report. "Currently, we value ICICI Bank's core banking business at Rs 1,054 a share and various subsidiaries at a collective value of Rs 474 a share. This leads to a price target of Rs1,528 with a Buy rating. We are confident that the listing of ICICI Securities, ICICI Ventures and the other subsidiaries can provide further upside to ICICI Bank. The table below presents the estimated additional upside (of Rs 299 a share) to our current sum-of-the-parts valuation of Rs 1,528. We maintain our Buy rating on ICICI Bank with price target of Rs 1,528," according to ICICI Bank 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
Correction over, mkts set for reversal
Speaking to CNBC-TV18, Amit Dalal of Amit Nalin Securities said that there has already been a correction of close to 1,200-1,400 points. He added that this correction has perhaps done its job and there might be a reversal in markets.
However, Dalal stated that the market does not seem to have the strength to go back and cross the pervious high, at least for another month.
Excerpts from CNBC-TV18’s exclusive interview with Amit Dalal:
Q: How do you see things panning out for the whole power space, as we get through the Reliance Power opening, closing and listing?
A: The Reliance Power issue has done exceedingly well. The collection numbers show that people are talking about a 100% premium on listing. So, I don’t think there is any concern over there.
One of the concerns that one may have is in the power stocks, which had gone up by the derivative of the Reliance Power issue itself. The stock has gone up almost 100% in the last quarter. One will not get earnings growth, from September to December, to make one feel confident that these valuations should perhaps go up from here or remain at these levels, for the next one year also.
It still remains a gestation period story and that could be one-downer for power stocks.
Q: How is Reliance Power different from that? How do you say there is no problem with Reliance Power?
A: I meant that in terms of the success of the issue. The valuation is something that was an expensive valuation, even at the time of the IPO. So, the people who have applied are fully aware of that. If there is a premium, then that is because it is a market story, which people are definitely confident about.
How to look at that relative to the rest of the power sector, is something that analysts will continue to discuss. But the reality is that there is demand at these levels.
Q: How are you feeling about the market now, after the last couple of days?
A: We had a very exuberant market from October onwards. We did a study on this and found that the market went up 36%. We had more than 600 companies, which had a turnover of less than Rs 10 crore giving us an average return of 143% in this period.
I have more numbers like this, which tell us that there was tremendous over exuberance in re-valuing stocks, irrespective of the fact whether we are doing a reality check or whether these companies can give us what we want. When the quarterly numbers start coming out, obviously the market is going to find that these things have not got the backbone that it needs for further interest.
That is why you are going to see more of a meltdown, in some of the small and midcap stocks, which are not warranted at current levels.
Q: Do you see more downside in the near-term? Do you think we are more or less done with this leg of the fall?
A: I think this leg has been pretty sharp. We have already seen a correction of close to 1,200-1,400 points. So, maybe this correction has perhaps done its job and we might see a reversal up.
But I don’t see the market having the strength to go back and cross the pervious high, at least for another month or so. The market will rally around because the next piece of good news is going to come from either Ben Bernanke or the RBI Governor.
The results are well discounted at current valuations. I do not think the results are something that will make a difference or give us any major surprises on the positive side.
The next round of IPOs or the next round of issuance is not there till the middle of February. Also the Budget is around that time. So, I think we are going to be in a restful period for a while.
Q: What about telecom? How do you look at Reliance Communications versus Bharti, after what has happened with their stock prices?
A: Definitely, with the regulator and what is happening with the court has a big effect on the shareprices of these stocks. Now that BSNL is also going to give an IPO and perhaps going to move into this space in a very big way, that is a completely new paradigm for looking at telecom as an industry, in terms of cost and revenue growth.
We are seeing a period where this sector is not going to give us the kind of growth, the kind of numbers and the capital appreciation, which we have seen in the past. We are going to see a period of consolidation for a while, especially when the largest of the companies start having such big conflicts with themselves. It is not a very good sign for the sector.
Q: Would you buy anything in metals, after the fall in the last few days?
A: I would perhaps look at Hindalco or a Nalco. But I am wary of industrial commodities for 2008. I completely concur with the global view that if there is going to be a slowdown and if China is going to start limiting its capacities based on pollution constraints, we have perhaps seen the best of prices for the underlying commodities.
I see tremendous speculation or the underlying fund allocations towards oil or any other industrial commodity. So, the pullback from these prices towards the downside can be pretty sharp too. I am a little wary on metals on the whole.
Q: Any thoughts on the other IPO that is closing today-Future Capital Holdings?
A: I am positive on that and think the group has an ability of putting business out of this on a growth path. They will be able to raise more money in the future. But if one is going to see a company which can come up with a hedge fund model for developing capital gains for itself, I think Future Capital can do it.
Q: We have been talking about the big paper that has opened right now. But there have actually been a lot of new listings in the past few days-Aries Agro and Precision Pipes. The most volatile is Burnpur Cements. Is there anything that you like from all these papers that has hit the market recently?
A: Honestly, I have not studied those three companies. I do find myself lost, as far as the IPO is concerned. There is tremendous demand for these new companies, which people have less familiarity with and valuations are higher than what their peers are quoting in the secondary market listed space.
They do very well in many cases and remain at very high valuations for periods of time. But unless one really studies any particular stock, I would be wary of the IPO market in such a bullish phase, that we are in right now.
Q: What is a good way to approach this market now?
A: I think the stocks you talked about little earlier-IDFC and IDBI and perhaps even some of the real estate stocks have not fallen a lot. One should remain with those stocks, which do not fall a lot in a correction.
You do not see both price and fundamental risk, when you see a correction in the market for such stocks. I think they will be the leaders again for the next rally. One should remain or even take buy positions when you see a correction there.
As the market goes higher and higher, even though there is exuberance in certain periods of time, we are going to find that the market will get narrower and narrower. It cannot be that you will have the next 10% rally with a wide market.
It is going to be a narrow market and one should remain with those stocks where market finds confidence, both in its numbers or perception. That becomes very clear in a period like today, where you have seen a sharp correction, in what type of stocks to buy.
Q: Do you track Petronet LNG? What is your take on numbers in this quarter?
A: The numbers are reasonable. They had an increase in capacity because they had changed their technology last year. Therefore, one saw another pipe starting in. Therefore, there was an increase in volume from the June-September quarter itself.
Now, they are going to have a huge increase in capacity, towards the end of 2008. That is when the next kicker will come. This problem does remain between the spot rate and the rate at which they able to sell here. So, the spot rates go up and the availability of spot becomes a problem. At current levels, it is fairly priced.
Q: What would your pick be, out of the whole brokerage clutches? There has been a lot said and done from many of those stocks. What do you like over there?
A: There is a bit of a personal touch over here, in terms of Motilal Oswal. It has got the full mix of business that one needs to invest in, if one is investing into a financial services firm. I think that company would be something to buy.
Q: Aside from all the valuation concerns, what would you do with Reliance Power. Would you subscribe?
A: I have not subscribed mainly because I do not think I will get any allotment. If I am going to get 0.5% allotment or 2% allotment, I don’t think there is much to be made in terms of capital gains there.
But considering the demand and the prospect of listing, an investor should make money. The retail market, if someone gets an allotment, they will make some money out of it.
Disclosure:
It is safe to assume that my clients and I may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol.com
However, Dalal stated that the market does not seem to have the strength to go back and cross the pervious high, at least for another month.
Excerpts from CNBC-TV18’s exclusive interview with Amit Dalal:
Q: How do you see things panning out for the whole power space, as we get through the Reliance Power opening, closing and listing?
A: The Reliance Power issue has done exceedingly well. The collection numbers show that people are talking about a 100% premium on listing. So, I don’t think there is any concern over there.
One of the concerns that one may have is in the power stocks, which had gone up by the derivative of the Reliance Power issue itself. The stock has gone up almost 100% in the last quarter. One will not get earnings growth, from September to December, to make one feel confident that these valuations should perhaps go up from here or remain at these levels, for the next one year also.
It still remains a gestation period story and that could be one-downer for power stocks.
Q: How is Reliance Power different from that? How do you say there is no problem with Reliance Power?
A: I meant that in terms of the success of the issue. The valuation is something that was an expensive valuation, even at the time of the IPO. So, the people who have applied are fully aware of that. If there is a premium, then that is because it is a market story, which people are definitely confident about.
How to look at that relative to the rest of the power sector, is something that analysts will continue to discuss. But the reality is that there is demand at these levels.
Q: How are you feeling about the market now, after the last couple of days?
A: We had a very exuberant market from October onwards. We did a study on this and found that the market went up 36%. We had more than 600 companies, which had a turnover of less than Rs 10 crore giving us an average return of 143% in this period.
I have more numbers like this, which tell us that there was tremendous over exuberance in re-valuing stocks, irrespective of the fact whether we are doing a reality check or whether these companies can give us what we want. When the quarterly numbers start coming out, obviously the market is going to find that these things have not got the backbone that it needs for further interest.
That is why you are going to see more of a meltdown, in some of the small and midcap stocks, which are not warranted at current levels.
Q: Do you see more downside in the near-term? Do you think we are more or less done with this leg of the fall?
A: I think this leg has been pretty sharp. We have already seen a correction of close to 1,200-1,400 points. So, maybe this correction has perhaps done its job and we might see a reversal up.
But I don’t see the market having the strength to go back and cross the pervious high, at least for another month or so. The market will rally around because the next piece of good news is going to come from either Ben Bernanke or the RBI Governor.
The results are well discounted at current valuations. I do not think the results are something that will make a difference or give us any major surprises on the positive side.
The next round of IPOs or the next round of issuance is not there till the middle of February. Also the Budget is around that time. So, I think we are going to be in a restful period for a while.
Q: What about telecom? How do you look at Reliance Communications versus Bharti, after what has happened with their stock prices?
A: Definitely, with the regulator and what is happening with the court has a big effect on the shareprices of these stocks. Now that BSNL is also going to give an IPO and perhaps going to move into this space in a very big way, that is a completely new paradigm for looking at telecom as an industry, in terms of cost and revenue growth.
We are seeing a period where this sector is not going to give us the kind of growth, the kind of numbers and the capital appreciation, which we have seen in the past. We are going to see a period of consolidation for a while, especially when the largest of the companies start having such big conflicts with themselves. It is not a very good sign for the sector.
Q: Would you buy anything in metals, after the fall in the last few days?
A: I would perhaps look at Hindalco or a Nalco. But I am wary of industrial commodities for 2008. I completely concur with the global view that if there is going to be a slowdown and if China is going to start limiting its capacities based on pollution constraints, we have perhaps seen the best of prices for the underlying commodities.
I see tremendous speculation or the underlying fund allocations towards oil or any other industrial commodity. So, the pullback from these prices towards the downside can be pretty sharp too. I am a little wary on metals on the whole.
Q: Any thoughts on the other IPO that is closing today-Future Capital Holdings?
A: I am positive on that and think the group has an ability of putting business out of this on a growth path. They will be able to raise more money in the future. But if one is going to see a company which can come up with a hedge fund model for developing capital gains for itself, I think Future Capital can do it.
Q: We have been talking about the big paper that has opened right now. But there have actually been a lot of new listings in the past few days-Aries Agro and Precision Pipes. The most volatile is Burnpur Cements. Is there anything that you like from all these papers that has hit the market recently?
A: Honestly, I have not studied those three companies. I do find myself lost, as far as the IPO is concerned. There is tremendous demand for these new companies, which people have less familiarity with and valuations are higher than what their peers are quoting in the secondary market listed space.
They do very well in many cases and remain at very high valuations for periods of time. But unless one really studies any particular stock, I would be wary of the IPO market in such a bullish phase, that we are in right now.
Q: What is a good way to approach this market now?
A: I think the stocks you talked about little earlier-IDFC and IDBI and perhaps even some of the real estate stocks have not fallen a lot. One should remain with those stocks, which do not fall a lot in a correction.
You do not see both price and fundamental risk, when you see a correction in the market for such stocks. I think they will be the leaders again for the next rally. One should remain or even take buy positions when you see a correction there.
As the market goes higher and higher, even though there is exuberance in certain periods of time, we are going to find that the market will get narrower and narrower. It cannot be that you will have the next 10% rally with a wide market.
It is going to be a narrow market and one should remain with those stocks where market finds confidence, both in its numbers or perception. That becomes very clear in a period like today, where you have seen a sharp correction, in what type of stocks to buy.
Q: Do you track Petronet LNG? What is your take on numbers in this quarter?
A: The numbers are reasonable. They had an increase in capacity because they had changed their technology last year. Therefore, one saw another pipe starting in. Therefore, there was an increase in volume from the June-September quarter itself.
Now, they are going to have a huge increase in capacity, towards the end of 2008. That is when the next kicker will come. This problem does remain between the spot rate and the rate at which they able to sell here. So, the spot rates go up and the availability of spot becomes a problem. At current levels, it is fairly priced.
Q: What would your pick be, out of the whole brokerage clutches? There has been a lot said and done from many of those stocks. What do you like over there?
A: There is a bit of a personal touch over here, in terms of Motilal Oswal. It has got the full mix of business that one needs to invest in, if one is investing into a financial services firm. I think that company would be something to buy.
Q: Aside from all the valuation concerns, what would you do with Reliance Power. Would you subscribe?
A: I have not subscribed mainly because I do not think I will get any allotment. If I am going to get 0.5% allotment or 2% allotment, I don’t think there is much to be made in terms of capital gains there.
But considering the demand and the prospect of listing, an investor should make money. The retail market, if someone gets an allotment, they will make some money out of it.
Disclosure:
It is safe to assume that my clients and I may have an investment interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Don’t enter at these levels
Fundamental Analyst Gul Teckchandani said today's correction is the beginning of a downward move. "Investors must not enter at these levels. There is a lot of confusion in the market and investors must keep an eye on valuations."
The market needs to fall further from here before it can go up again, he said. "One needs to be cautious. It looks like an ideal time to sit on cash in your portfolio." Investors should not try to call direction in the near-term, he added.
Neppolian Pillai, Head Institutional Equity, Modern Shares & Stock Brokers, said the market might fall further. "The little pullback today was not surprising. This is the third occasion when the 50-day moving average has been tested."
The Nifty is likely to see a lower top around 6,150 levels, he said. "It can fall to 5,760 and then to 5,285 in case of a deeper correction."
Excerpts from CNBC-TV18’s exclusive interview with Gul Teckchandani and Neppolian Pillai:
Q: What is going on for the last couple of days?
Teckchandani: We just started a downward movement. It is just the beginning and I don’t think one should enter this market now. From a trading perspective, people would do what they have to but from a fundamental perspective, I would rather sit on cash to the extent of about 50-60%. I would wait for things to kind of slide down and come into the right valuation perspective.
There is tremendous confusion in terms of the mindset of people. Everybody has kind of seen and instilled surgically into their minds that India is a great story for 10 years or may be 20-30 years. There is no denying that fact but one has to constantly keep an eye on valuations and stock prices. People believe every time there is a correction, it is an opportunity to go in and we don’t care if we get hurt.
That is right to some point. If your capital gets eroded by 30%, 40%, or 50%, you need to hang in there, which I think is very easily said but very difficult to follow in practice. This market has to head down before it moves up, on the basis of what is happening in the world and our own valuations. Today, you have nearly 1.7 times GDP in terms of market capitalization, which is USD 1.7 trillion in market capitalization or thereabouts and USD 1 trillion economic environment. To put into context, this is where Japan had a problem.
This is exactly where the US had a problem. When you have these kinds of situations being created, I don’t think India is going to be treated any differently. You have to look at valuations, you can’t throw that away completely. Don’t forget those textbook kinds of things, which are there. We have to come back to basics and it will be an ideal time, though the market has come off 1,000-points. I have been maintaining from December that one needs to be very cautious. If you see people are now into buying dreams, particularly when it comes to IPOs.
So, one has to be very vigilant and not try to call which way this is going to go and how far. Let it first settle down, let the valuations come down properly. There is so much of an IPO pipeline. There is negative news in terms of the world. There is a slowdown domestically. You will see that probably in February and March, when the numbers start coming out from automobiles. The cement industry doesn’t look very well placed come September-October. You have to think six-months in advance, so from my perspective it is an ideal time to sit on cash.
Q: From a technical perspective, do you think we will get away with that 5,850 on the Nifty or do you think the cuts will be deeper?
Pillai: To some extent, I must agree with Teckchandani that this market may come down further. But the way it has pulled back here was not a surprise. I must put a theory in perspective here that every time the market falls from the top, the 50-day moving average comes as the first saviour. This is the third time that the 50-day moving average is trying to save the market. Past evidence from the first two times shows that when the market falls up to the 50-day moving average, it then goes and makes a new high. The third time it tries to do that, it normally makes a lower high. Then, when it rolls down below the 50-day moving average, it is when the pain starts getting inflicted on the people, because the third time people believe that it will go and make a new high. But this time around it is the third time it has done that. I feel that it went close to about 5,880, it recovered from 5,825 and closed around 5,950.
Going forward, I look at the markets to go up to 6,028 and about 6,150 as the best-case scenario. 6,150 is going to be the top we are looking at, which should be the lower top. And then, when eventually on the downside it rolls over to 5,905, where the 50-day moving average is, after that the real trouble for the market would start. On the downside, I feel the first top for the Nifty would be around 5,760.
On a larger pain kind of situation, it can go up to about 5,285. So, the idea is right from 5,950 up to 6,150 ‑ a 200-point range on the upside ‑ the best thing to do will be to cut down on positions and sit on cash. Depending on what kind of cash limit, you could either go up to 60% cash or 30% cash based on your position and your perspective on the market. Ideally, there is nothing wrong in creating more cash on the books going forward in the next 100 to 200 point range on the Nifty, then wait for a proper time to come in and buy back stocks at a lower level. So, to that extent, I would agree with Teckchandani.
Q: There is more attention on the primary market now than the secondary market. What is your take on the IPOs that are open and how people are approaching them?
Teckchandani: People are buying into the IPOs but are not necessarily looking at the fundamentals. For the past five years, from 3,000 to about 21,000, all of us have made very hefty returns. Every correction ultimately resulted in the market going up. This time around, people are confident that the same is going to repeat. But you have to look at valuations. We are not talking about just a corrective kind of situation here, let us say, a couple of thousand points down. But it has to be deeper.
People have conjured it up in their minds that this is a permanent gravy train and we are going to make money permanently, there won’t be any downside. If you look at any asset class in India, it is completely out of whack compared to what is happening elsewhere in the world.
Yes these bumps will come, where the market may probably go up because of technical reasons, but one should take a cautious attitude.
I think you need to take some surgical measures. From 3,000 to 21,000, the index has gone up seven times, even if I take out 50% of my money, it effectively means that I still have 350% more than what I invested, assuming you invested Re1. You are still riding on 250% profit. You have to save capital and have to safeguard that and not all the time remain bullish.
You have got to close your bet sometimes. What you are seeing on the Street is that making money has become exceedingly easy. People are just kind of buying whatever is in sight.
I have not been negative on the market through this whole run of five years. However, I would recommend investors to exit midcaps and smallcaps, where P/E ratios have gone out of whack, and keep the money on the sidelines. Don’t be in a hurry to come back until a reality check takes place here and people have to come back from their dizzying levels of their own thought processes.
These are all flights of fancy that you are seeing in the market place today, where stocks are giving you 20% and 40% returns in a week. You have to control your greed. It is exceedingly difficult unless you pound the people and that pounding will happen when the markets come down. Then, there will be a sense of reality. I hope for my own sake and for everybody else’s sake, I am wrong. But the way the valuations are, I can only hope.
Source: Moneycontrol.com
The market needs to fall further from here before it can go up again, he said. "One needs to be cautious. It looks like an ideal time to sit on cash in your portfolio." Investors should not try to call direction in the near-term, he added.
Neppolian Pillai, Head Institutional Equity, Modern Shares & Stock Brokers, said the market might fall further. "The little pullback today was not surprising. This is the third occasion when the 50-day moving average has been tested."
The Nifty is likely to see a lower top around 6,150 levels, he said. "It can fall to 5,760 and then to 5,285 in case of a deeper correction."
Excerpts from CNBC-TV18’s exclusive interview with Gul Teckchandani and Neppolian Pillai:
Q: What is going on for the last couple of days?
Teckchandani: We just started a downward movement. It is just the beginning and I don’t think one should enter this market now. From a trading perspective, people would do what they have to but from a fundamental perspective, I would rather sit on cash to the extent of about 50-60%. I would wait for things to kind of slide down and come into the right valuation perspective.
There is tremendous confusion in terms of the mindset of people. Everybody has kind of seen and instilled surgically into their minds that India is a great story for 10 years or may be 20-30 years. There is no denying that fact but one has to constantly keep an eye on valuations and stock prices. People believe every time there is a correction, it is an opportunity to go in and we don’t care if we get hurt.
That is right to some point. If your capital gets eroded by 30%, 40%, or 50%, you need to hang in there, which I think is very easily said but very difficult to follow in practice. This market has to head down before it moves up, on the basis of what is happening in the world and our own valuations. Today, you have nearly 1.7 times GDP in terms of market capitalization, which is USD 1.7 trillion in market capitalization or thereabouts and USD 1 trillion economic environment. To put into context, this is where Japan had a problem.
This is exactly where the US had a problem. When you have these kinds of situations being created, I don’t think India is going to be treated any differently. You have to look at valuations, you can’t throw that away completely. Don’t forget those textbook kinds of things, which are there. We have to come back to basics and it will be an ideal time, though the market has come off 1,000-points. I have been maintaining from December that one needs to be very cautious. If you see people are now into buying dreams, particularly when it comes to IPOs.
So, one has to be very vigilant and not try to call which way this is going to go and how far. Let it first settle down, let the valuations come down properly. There is so much of an IPO pipeline. There is negative news in terms of the world. There is a slowdown domestically. You will see that probably in February and March, when the numbers start coming out from automobiles. The cement industry doesn’t look very well placed come September-October. You have to think six-months in advance, so from my perspective it is an ideal time to sit on cash.
Q: From a technical perspective, do you think we will get away with that 5,850 on the Nifty or do you think the cuts will be deeper?
Pillai: To some extent, I must agree with Teckchandani that this market may come down further. But the way it has pulled back here was not a surprise. I must put a theory in perspective here that every time the market falls from the top, the 50-day moving average comes as the first saviour. This is the third time that the 50-day moving average is trying to save the market. Past evidence from the first two times shows that when the market falls up to the 50-day moving average, it then goes and makes a new high. The third time it tries to do that, it normally makes a lower high. Then, when it rolls down below the 50-day moving average, it is when the pain starts getting inflicted on the people, because the third time people believe that it will go and make a new high. But this time around it is the third time it has done that. I feel that it went close to about 5,880, it recovered from 5,825 and closed around 5,950.
Going forward, I look at the markets to go up to 6,028 and about 6,150 as the best-case scenario. 6,150 is going to be the top we are looking at, which should be the lower top. And then, when eventually on the downside it rolls over to 5,905, where the 50-day moving average is, after that the real trouble for the market would start. On the downside, I feel the first top for the Nifty would be around 5,760.
On a larger pain kind of situation, it can go up to about 5,285. So, the idea is right from 5,950 up to 6,150 ‑ a 200-point range on the upside ‑ the best thing to do will be to cut down on positions and sit on cash. Depending on what kind of cash limit, you could either go up to 60% cash or 30% cash based on your position and your perspective on the market. Ideally, there is nothing wrong in creating more cash on the books going forward in the next 100 to 200 point range on the Nifty, then wait for a proper time to come in and buy back stocks at a lower level. So, to that extent, I would agree with Teckchandani.
Q: There is more attention on the primary market now than the secondary market. What is your take on the IPOs that are open and how people are approaching them?
Teckchandani: People are buying into the IPOs but are not necessarily looking at the fundamentals. For the past five years, from 3,000 to about 21,000, all of us have made very hefty returns. Every correction ultimately resulted in the market going up. This time around, people are confident that the same is going to repeat. But you have to look at valuations. We are not talking about just a corrective kind of situation here, let us say, a couple of thousand points down. But it has to be deeper.
People have conjured it up in their minds that this is a permanent gravy train and we are going to make money permanently, there won’t be any downside. If you look at any asset class in India, it is completely out of whack compared to what is happening elsewhere in the world.
Yes these bumps will come, where the market may probably go up because of technical reasons, but one should take a cautious attitude.
I think you need to take some surgical measures. From 3,000 to 21,000, the index has gone up seven times, even if I take out 50% of my money, it effectively means that I still have 350% more than what I invested, assuming you invested Re1. You are still riding on 250% profit. You have to save capital and have to safeguard that and not all the time remain bullish.
You have got to close your bet sometimes. What you are seeing on the Street is that making money has become exceedingly easy. People are just kind of buying whatever is in sight.
I have not been negative on the market through this whole run of five years. However, I would recommend investors to exit midcaps and smallcaps, where P/E ratios have gone out of whack, and keep the money on the sidelines. Don’t be in a hurry to come back until a reality check takes place here and people have to come back from their dizzying levels of their own thought processes.
These are all flights of fancy that you are seeing in the market place today, where stocks are giving you 20% and 40% returns in a week. You have to control your greed. It is exceedingly difficult unless you pound the people and that pounding will happen when the markets come down. Then, there will be a sense of reality. I hope for my own sake and for everybody else’s sake, I am wrong. But the way the valuations are, I can only hope.
Source: Moneycontrol.com
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