Rahul Mohindar of viratechindia.com is of the view that short or medium-term investor should stay invested in Bharat Heavy Electricals, BHEL. The stock would steer clear about Rs 3000 mark.
Mohindar told CNBC-TV18, "In capital goods, I would pick BHEL. I think the stock would steer clear about the Rs 3000 mark. So, if one is a short or medium-term investor, I think it makes sense to be in BHEL."
Disclosure: It is safe to assume that analyst & his clients may have an interest in the stocks/sectors discussed.
Source: Moneycontrol.com
Showing posts with label Latest Share Market News India. Show all posts
Showing posts with label Latest Share Market News India. Show all posts
Tuesday, December 4, 2007
Thursday, November 29, 2007
Market to trade between 18,000-19,000 in Dec
Nirmal Jain, Chairman, India Infoline said that the market is likely to remain lacklustre in December. He added that there are more chances of market going down. FIIs have sold but markets have sustained on domestic money. The market is likely to be rangebound with negative bias, he commented.
Most of the retail players are looking to buy in December. Fresh FII money is likely to come in January. According to Jain, the market is likely to remain between 18,000-19,000 in December.
Karun Mutha of IL&FS Investments said that a large number of Nifty options have been written. The Nifty was a good support at 5,500-5,700 where there was a good amount of put option writing.
Excerpts from CNBC-TV18’s exclusive interview with Nirmal Jain:
Q: What is your sense going into December? Will we move up or are the chances of a correction are higher?
Jain: A lacklustre market and chances of correction are higher, because if you look at global and Indian facts, all the political developments and global developments do not favour a bullish market to continue in this kind of an environment.
Bond spreads are widening. There are concerns on the US economy and subprime, that are surfacing everyday. So, these things will affect the flow of money in the market.
Also, in the recent past, if you look at the last couple of weeks, FIIs have been net sellers more or less everyday. But still, the markets have sustained at these levels, which is a tribute to local buying and retail interest. But markets should remain rangebound or can maybe correct from here. So, if you were to take a bet on upside or downside in December, I would say slightly lower and not higher.
Q: What is retail sentiment now, because there has been a bit of correction? Do you think retail is still strong enough to keep a midcap rally going or are they also getting fatigued, because of the lack of institutional buying?
Jain: Retail is a bottom up approach and most people are looking at opportunities, HNI clients, in particular, are looking for opportunities to buy in the month of December. Retail has to be segmented into various categories. There are intraday traders, small retail buyers and HNIs.
HNI matters more because although the number may be small, they have at least some influence on the markets and are looking forward to pick up bottom up opportunities in the midcap sector. They are now looking forward to the rally resuming in the month of January, when there are fresh allocations for FIIs and most of these issues will get settled.
Q: We have spent most of November in the 18,000-20,000 zone. Do you think December will also be spent in that kind of range? Would you expect slightly lower levels than that?
Jain: I would think similar levels or maybe 500-1000 points here and there. But close to 18,000-19,000 range will be what I would expect in December also.
Q: Do you expect midcap outperformance to continue in the November series? The midcap and smallcap indices have outperformed the Sensex by a wide margin. Do you see that continuing in December or do you think that kind of outperformance will be reined in?
Jain: In midcaps, investors will look for buying opportunities and there are quite a few stocks that will appear attractive this month, after a corrective or consolidation phase that we have seen in the last few weeks.
I think midcap indices may not show as much gain in the month of November, because there are some stocks in midcap indices that are very large, say Unitech. But other than that, it is a fairly large and broad-based index that way. So, midcap stocks will do well, but I am not very sure if the indices will show the same performance at the end of the month.
Q: What does the December series portend, the way we rolled over today?
Mutha: The day started with a big bang, taking off the global cues. In fact, we were comfortably up on the gap opening. Predominantly, this feature has been there because a lot of arbitrage positions, which were there in the market for the November series, were not really finding an exciting rollover.
Normally, arbitragers look at around 140-150 basis points on a rollover. But when you get 95-100 basis points on a rollover, they predominantly tend to sell these stocks into the market and get out of the arbitrage positions.
Precisely, in the last half an hour of the November series, Reliance, Reliance Capital, SBI and most the smaller banks and even the larger banks were not converging. There have been delivery-based selling, that comes in over the November series and which incidentally saw the fall in the market. But the rollover, toward the next months series, particularly the December series was really very good, where we saw almost 87% of the market wide positions being rolled over to the next month.
Now, the numbers would actually come in short but these are the broader market numbers, where we saw almost Rs 80,000 crore of futures positions being created in the next month or December series. The Nifty itself saw a very decent rollover of around 80%. It seems that it was predominantly a long rollover, when you see the December series of Nifty. That was quoting at almost 40-50 points premium in between.
Q: What do you expect to see in the December series for some of the outperforming sectors like power, energy, and oil, the ones that have run the hardest. Do you expect them to consolidate, correct in December, or to go to fresh highs?
Jain: The sectors to look forward to in December would be private banks like Axis Bank, ICICI Bank or some of the PSU banks like SBI. The cement sector has not performed very well in the last few months. However, the companies are doing extremely well and this quarter will be sort of a record quarter for them in terms of profitability.
Among largecaps, I would look at Reliance Industries and BHEL as two interesting counters because refining margins in this quarter are probably the highest; they are significantly up QoQ as well as YoY. In terms of EPS delta, RIL should benefit a lot.
BHEL is also increasing its capacity from 6 GW to 15 GW over the next two years. In their FY10 numbers, we will see a significant jump in their topline as well as bottomline. I don’t think the market has this fully factored-in. So, these are the two largecaps.
In terms of midcaps, I will look at cement as a new sector. Some of these stocks in capital goods, construction, and power equipment will continue to do well.
Q: What was happening in RPL today, it moved up 15% suddenly? Was there a short squeeze? What sense do you get here carrying into the December series for that stock?
Mutha: It was clear case of short squeeze happening on the RPL stock. In the middle of November series, there was a deep discount on November futures and that initiated a lot of reverse cash carry trades. You sell the stock in the cash market and buy the same in futures. Now, when these people want to again reverse their positions, they let the positions for November series expire and go back to the cash market and buy that stock.
In the cash market when a lot of stocks come in for buying on a single day, it would definitely run up. Particularly stocks like RPL where a lot of short positions had been created during the whole month series. This was quite evident in the way the November series was still quoting at a slightly discount to the cash market price. Eventually, it reflected and the stock had to run up almost significantly from the day’s lower levels.
Q: What did you read into the Urban Land Ceiling repeal news that came in and how would you approach the real estate sector now?
Jain: It won’t have any material impact on real estate because there is significant shortage of commercial land in Mumbai. 4,000 acres that will come from this will not make any significant difference. A couple of companies will benefit significantly from this. The top winner of course is Godrej Industries. They have a huge property in Vikhroli. The stock can be a multi-bagger from here. Another stock that I will look at is Century Textiles, which is a big beneficiary of this.
There may be small real estate companies that could benefit. I will look at these two stocks as buys if somebody wants to have a play on real estate. I do not see this as having any sobering down impact on real estate prices particularly in Mumbai as it will be too small an addition to make any difference.
Q: In the December series, what are the chances of the Nifty actually getting back and piercing those 5900-6,000 levels?
Mutha: The chances are not really that great because we have seen a lot of call writing happening at around 5900 and 6,000 levels. Almost a large amount of Nifty options have been written. The Nifty has very good support at 5,500-5,700, where we have seen good amount of put option writing. Almost 11 lakh shares on 5,500 and close to 9 lakh shares in December at the initiation of the December series. Broadly, it will play between 5,700-5,900 during the next month’s series.
Source: Moneycontrol.com
Most of the retail players are looking to buy in December. Fresh FII money is likely to come in January. According to Jain, the market is likely to remain between 18,000-19,000 in December.
Karun Mutha of IL&FS Investments said that a large number of Nifty options have been written. The Nifty was a good support at 5,500-5,700 where there was a good amount of put option writing.
Excerpts from CNBC-TV18’s exclusive interview with Nirmal Jain:
Q: What is your sense going into December? Will we move up or are the chances of a correction are higher?
Jain: A lacklustre market and chances of correction are higher, because if you look at global and Indian facts, all the political developments and global developments do not favour a bullish market to continue in this kind of an environment.
Bond spreads are widening. There are concerns on the US economy and subprime, that are surfacing everyday. So, these things will affect the flow of money in the market.
Also, in the recent past, if you look at the last couple of weeks, FIIs have been net sellers more or less everyday. But still, the markets have sustained at these levels, which is a tribute to local buying and retail interest. But markets should remain rangebound or can maybe correct from here. So, if you were to take a bet on upside or downside in December, I would say slightly lower and not higher.
Q: What is retail sentiment now, because there has been a bit of correction? Do you think retail is still strong enough to keep a midcap rally going or are they also getting fatigued, because of the lack of institutional buying?
Jain: Retail is a bottom up approach and most people are looking at opportunities, HNI clients, in particular, are looking for opportunities to buy in the month of December. Retail has to be segmented into various categories. There are intraday traders, small retail buyers and HNIs.
HNI matters more because although the number may be small, they have at least some influence on the markets and are looking forward to pick up bottom up opportunities in the midcap sector. They are now looking forward to the rally resuming in the month of January, when there are fresh allocations for FIIs and most of these issues will get settled.
Q: We have spent most of November in the 18,000-20,000 zone. Do you think December will also be spent in that kind of range? Would you expect slightly lower levels than that?
Jain: I would think similar levels or maybe 500-1000 points here and there. But close to 18,000-19,000 range will be what I would expect in December also.
Q: Do you expect midcap outperformance to continue in the November series? The midcap and smallcap indices have outperformed the Sensex by a wide margin. Do you see that continuing in December or do you think that kind of outperformance will be reined in?
Jain: In midcaps, investors will look for buying opportunities and there are quite a few stocks that will appear attractive this month, after a corrective or consolidation phase that we have seen in the last few weeks.
I think midcap indices may not show as much gain in the month of November, because there are some stocks in midcap indices that are very large, say Unitech. But other than that, it is a fairly large and broad-based index that way. So, midcap stocks will do well, but I am not very sure if the indices will show the same performance at the end of the month.
Q: What does the December series portend, the way we rolled over today?
Mutha: The day started with a big bang, taking off the global cues. In fact, we were comfortably up on the gap opening. Predominantly, this feature has been there because a lot of arbitrage positions, which were there in the market for the November series, were not really finding an exciting rollover.
Normally, arbitragers look at around 140-150 basis points on a rollover. But when you get 95-100 basis points on a rollover, they predominantly tend to sell these stocks into the market and get out of the arbitrage positions.
Precisely, in the last half an hour of the November series, Reliance, Reliance Capital, SBI and most the smaller banks and even the larger banks were not converging. There have been delivery-based selling, that comes in over the November series and which incidentally saw the fall in the market. But the rollover, toward the next months series, particularly the December series was really very good, where we saw almost 87% of the market wide positions being rolled over to the next month.
Now, the numbers would actually come in short but these are the broader market numbers, where we saw almost Rs 80,000 crore of futures positions being created in the next month or December series. The Nifty itself saw a very decent rollover of around 80%. It seems that it was predominantly a long rollover, when you see the December series of Nifty. That was quoting at almost 40-50 points premium in between.
Q: What do you expect to see in the December series for some of the outperforming sectors like power, energy, and oil, the ones that have run the hardest. Do you expect them to consolidate, correct in December, or to go to fresh highs?
Jain: The sectors to look forward to in December would be private banks like Axis Bank, ICICI Bank or some of the PSU banks like SBI. The cement sector has not performed very well in the last few months. However, the companies are doing extremely well and this quarter will be sort of a record quarter for them in terms of profitability.
Among largecaps, I would look at Reliance Industries and BHEL as two interesting counters because refining margins in this quarter are probably the highest; they are significantly up QoQ as well as YoY. In terms of EPS delta, RIL should benefit a lot.
BHEL is also increasing its capacity from 6 GW to 15 GW over the next two years. In their FY10 numbers, we will see a significant jump in their topline as well as bottomline. I don’t think the market has this fully factored-in. So, these are the two largecaps.
In terms of midcaps, I will look at cement as a new sector. Some of these stocks in capital goods, construction, and power equipment will continue to do well.
Q: What was happening in RPL today, it moved up 15% suddenly? Was there a short squeeze? What sense do you get here carrying into the December series for that stock?
Mutha: It was clear case of short squeeze happening on the RPL stock. In the middle of November series, there was a deep discount on November futures and that initiated a lot of reverse cash carry trades. You sell the stock in the cash market and buy the same in futures. Now, when these people want to again reverse their positions, they let the positions for November series expire and go back to the cash market and buy that stock.
In the cash market when a lot of stocks come in for buying on a single day, it would definitely run up. Particularly stocks like RPL where a lot of short positions had been created during the whole month series. This was quite evident in the way the November series was still quoting at a slightly discount to the cash market price. Eventually, it reflected and the stock had to run up almost significantly from the day’s lower levels.
Q: What did you read into the Urban Land Ceiling repeal news that came in and how would you approach the real estate sector now?
Jain: It won’t have any material impact on real estate because there is significant shortage of commercial land in Mumbai. 4,000 acres that will come from this will not make any significant difference. A couple of companies will benefit significantly from this. The top winner of course is Godrej Industries. They have a huge property in Vikhroli. The stock can be a multi-bagger from here. Another stock that I will look at is Century Textiles, which is a big beneficiary of this.
There may be small real estate companies that could benefit. I will look at these two stocks as buys if somebody wants to have a play on real estate. I do not see this as having any sobering down impact on real estate prices particularly in Mumbai as it will be too small an addition to make any difference.
Q: In the December series, what are the chances of the Nifty actually getting back and piercing those 5900-6,000 levels?
Mutha: The chances are not really that great because we have seen a lot of call writing happening at around 5900 and 6,000 levels. Almost a large amount of Nifty options have been written. The Nifty has very good support at 5,500-5,700, where we have seen good amount of put option writing. Almost 11 lakh shares on 5,500 and close to 9 lakh shares in December at the initiation of the December series. Broadly, it will play between 5,700-5,900 during the next month’s series.
Source: Moneycontrol.com
Wednesday, November 21, 2007
Will market go below 18K levels?
It was a blood bath on Dalal Street. Deep cuts in markets across the globe weighed down investor sentiment, and the markets went into a free fall. The Nifty closed at 5,561, down 220 points, while Sensex shut shop at 18,603, down 678 points - the 3rd biggest single-day fall ever.
Even the midcaps and smallcaps took it on their chin today. It was large scale equity sell off across markets and sectors.
The worst hit index is bankex which has seen a sharp run up in the past few sessions followed by metal, capital goods and power. The sector that is least hit is the IT index on hopes that rupee may not appreciate further against the dollar. The rupee was trading weak at 39.385 against the dollar.
Sajiv Dhawan of JV Capital Services said that he has maintained his call for the past few days. “The call has been the same for the last few days. The midcaps were rising without the leadership from the frontline. I am not a believer that midcaps will continue to outperform frontline for a long period of time. I know it is easy to say after the event has happened. But if you had your stop losses in and you have got no problem, you are probably out at higher levels, you are probably still on a large amount of profit. But what I am finding a bit disturbing is that a lot of investors are holding on and they are now hoping that the markets will bounce back without any real conviction because they have seen this time and again and they say if they sell out now, they may not be able to buy those stocks back, if the upmove starts again.”
He opined that the investor should trade with clarity. He said, “I think you have got to be very clear which stocks you have, why you bought them, were they a tip, were they rumour, some market buzz or was that actually some fundamental in those stocks. If there is nothing fundamental then probably you are wiser off taking a small loss, exiting at the current juncture and reentering when the market stabilises and started to bounce back. If you are in stocks where you believe there is a growth story, there is something fundamental then you can use any sharp correction, 10-20% in whatever the stock is, to average out your position or add a few more.”
Dhawan adds, “I think if you are an Index trader- fine, you got a nice short position, plenty of cushion, good profit for the short after a long time. But the next 2-3 days, will be very important because I do feel a lot of people are still stuck in the futures and with the leveraged positions elsewhere and they might panic over the next 2-3 days if the market don’t stabilise or bounce back.”
Anil Manghnani of Modern Shares & Stock Brokers said that he is not very surprised by what happened in the markets today. “I think in the last two-three weeks action was only in the midcaps. For a while we had been seeing lot of the largecaps falling 3-5%. Even those that are in the midcap index itself, were up 2-3% which was clearly suggesting that some sort of delivery base selling by FIIs was taking place. In addition, continuously over the last few days on the stock futures side, we are seeing hedge sale position being buildup mainly by FIIs. This was clearly suggesting that at least on the largecap front, a fall is definitely round the corner," he said.
He added, "It was probably the euphoria in the midcaps that was not reflecting so much what is happening in the largecaps and now that is all taking place today and I think its pretty much playing catch-up in the sense that while the rest of the world corrected, we didn’t and now that everything else abroad has slowed down, that is the correction; it was likely that eventually we will have to catch-up on the down side. I think most of the markets had fallen about 10%; we were down maybe 3% yesterday. So we are pretty much catching up to that. We have broken through some serious levels and even major trend lines, I don’t think that 18,330, which was a recent bottom will hold now. I think chances are heading closer to 17,770 on the Sensex."
Should this, as a short-term trend be called down?
Manghnani says, “I will call it down and probably sell any bounce if we get like we have seen intra-day falls and pullbacks. I think immediately if suppose one might have a good day overseas also overnight, I think one is going to have a scenario where it’s going to open up and then start correcting. We have seen that already happened two-three times in the last week but like I said it didn’t get accentuated or reflected that closely because the midcaps were flying all around the place and the focus was so much on midcaps. But that phenomena of the Sensex opening up and coming down has been taking place last week and I think in the next few days if there is again a gap up opening then eventually the selling pressure would start again at higher levels and I think we will probably head it lower at least on the Sensex and Nifty in the immediate short-term.”
Source: Moneycontrol.com
Even the midcaps and smallcaps took it on their chin today. It was large scale equity sell off across markets and sectors.
The worst hit index is bankex which has seen a sharp run up in the past few sessions followed by metal, capital goods and power. The sector that is least hit is the IT index on hopes that rupee may not appreciate further against the dollar. The rupee was trading weak at 39.385 against the dollar.
Sajiv Dhawan of JV Capital Services said that he has maintained his call for the past few days. “The call has been the same for the last few days. The midcaps were rising without the leadership from the frontline. I am not a believer that midcaps will continue to outperform frontline for a long period of time. I know it is easy to say after the event has happened. But if you had your stop losses in and you have got no problem, you are probably out at higher levels, you are probably still on a large amount of profit. But what I am finding a bit disturbing is that a lot of investors are holding on and they are now hoping that the markets will bounce back without any real conviction because they have seen this time and again and they say if they sell out now, they may not be able to buy those stocks back, if the upmove starts again.”
He opined that the investor should trade with clarity. He said, “I think you have got to be very clear which stocks you have, why you bought them, were they a tip, were they rumour, some market buzz or was that actually some fundamental in those stocks. If there is nothing fundamental then probably you are wiser off taking a small loss, exiting at the current juncture and reentering when the market stabilises and started to bounce back. If you are in stocks where you believe there is a growth story, there is something fundamental then you can use any sharp correction, 10-20% in whatever the stock is, to average out your position or add a few more.”
Dhawan adds, “I think if you are an Index trader- fine, you got a nice short position, plenty of cushion, good profit for the short after a long time. But the next 2-3 days, will be very important because I do feel a lot of people are still stuck in the futures and with the leveraged positions elsewhere and they might panic over the next 2-3 days if the market don’t stabilise or bounce back.”
Anil Manghnani of Modern Shares & Stock Brokers said that he is not very surprised by what happened in the markets today. “I think in the last two-three weeks action was only in the midcaps. For a while we had been seeing lot of the largecaps falling 3-5%. Even those that are in the midcap index itself, were up 2-3% which was clearly suggesting that some sort of delivery base selling by FIIs was taking place. In addition, continuously over the last few days on the stock futures side, we are seeing hedge sale position being buildup mainly by FIIs. This was clearly suggesting that at least on the largecap front, a fall is definitely round the corner," he said.
He added, "It was probably the euphoria in the midcaps that was not reflecting so much what is happening in the largecaps and now that is all taking place today and I think its pretty much playing catch-up in the sense that while the rest of the world corrected, we didn’t and now that everything else abroad has slowed down, that is the correction; it was likely that eventually we will have to catch-up on the down side. I think most of the markets had fallen about 10%; we were down maybe 3% yesterday. So we are pretty much catching up to that. We have broken through some serious levels and even major trend lines, I don’t think that 18,330, which was a recent bottom will hold now. I think chances are heading closer to 17,770 on the Sensex."
Should this, as a short-term trend be called down?
Manghnani says, “I will call it down and probably sell any bounce if we get like we have seen intra-day falls and pullbacks. I think immediately if suppose one might have a good day overseas also overnight, I think one is going to have a scenario where it’s going to open up and then start correcting. We have seen that already happened two-three times in the last week but like I said it didn’t get accentuated or reflected that closely because the midcaps were flying all around the place and the focus was so much on midcaps. But that phenomena of the Sensex opening up and coming down has been taking place last week and I think in the next few days if there is again a gap up opening then eventually the selling pressure would start again at higher levels and I think we will probably head it lower at least on the Sensex and Nifty in the immediate short-term.”
Source: Moneycontrol.com
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