Intraday Tips and Market outlook for 29 th of April.

>> Wednesday, April 29, 2009

US markets ended flat.
Europe ended in deep red.
Asia has opened mixed.
Expect Indian Markets to open flat to positive.
The support for the Sensex is 10739-10506 and the resistance to the up move is at 11200
Nifty: (3362) the support for the Nifty is at 3302-3238 and the resistance to the up move is at 3440
Due to Rollover today we may witness high volatility.

Day Trading Ideas

Buy above 1260 for targets of 1275 and 1295
Sell below 1235 for targets of 1225 and 1215

Buy above 43.50 for targets of 44.25 and 45.60
Sell below 41.10 for targets of 40.50 and 40.10

Buy above 56.10 for targets of 57.25 and 58.10
Sell below 53.10 for targets of 52.40 and 51.90

Buy above 62.25 for targets of 63.50 and 64.25
Sell below 60.25 for targets of 59.10 and 58.50

Happy Investing !

Read the full post...

Intraday Tips and Market outlook for 28 th of April.

>> Tuesday, April 28, 2009

US Markets ended lower.
Europe ended mixed.
Asia is trading higher.
Expect Indian Markets to open flat to positive.
The support for the Sensex is 11175 and the resistance to the up move is at 11639
Nifty: (3470) the support for the Nifty is at 3435 and the resistance to the up move is at 3734

Day Trading Ideas

Buy above 476 for targets of 481 and 485
Sell below 469 for targets of 465 and 459

Axis Bank
Buy above 566 for targets of 571 and 575
Sell below 543 for targets of 539 and 535

Buy above 44 for targets of 45 and 46.20
Sell below 42 for targets of 41 and 39.90

Aban Offshore
Buy above 450 for targets of 458 and 463
Sell below 425 for targets of 418 and 412

Happy Investing!

Read the full post...

My Thoughts - Elections, Market Correction, Political Uncertainty

The Indian stock markets have had a dream run in the last one month. The Bombay Stock Exchange sensitive index - Sensex - has climbed a staggering 39% since the low reached on March 9, 2009. It is thus one of the best performing Asian Index and better performing indexes with respect to global markets. 

But election uncertainty seems to be getting ripe. We end elections on April 30th, which started on April 16th. The Counting of votes starts on May 16th. I do not think there would be a clear majority, with neither Congress nor BJP claiming absolute power or control in the Lok Sabha.

Which means new equations and ugly preferential tie-ups and coalitions based more on convenience than any principal or common charter. 

The 3rd front which claims to be sworn enemies of both Congress and BJP may break convention and join hands with one of the leading parties. Don't forget this has happened in the past, when left joined congress, saying they want BJP to be out, we need a secular government. Don't be too surprised if this same scenario is repeated again this year.

With every ugly coalition comes a compromise, which is paid in turn by the country, the public and over all growth suffers. We have seen this in the last 5 years. Every move to non-regulate business, privatize and increase FDI was faced with stiff competition from the Left Parties. Congress in turn could not bring about the much needed reform in the banking, insurance and other sectors. Result is simple - plagued growth. 

We all know that the myth that Indian markets will remain isolated from global economic crisis was shattered completely. Most recent indication is ICICI whose profit fell 35%.

The New-India as I would like to call it, does not need another 5 years of handicap progress. We need to run and cannot afford to limp. I do not see progress, hence do not see a healthy stock market at least in the next 1 month. 

Trade Cautiously, Book Gains. Be Bullwise and Bearaware.

Find me at

Read the full post...

Tips to survive a Stock market Correction.

>> Monday, April 27, 2009

We saw that markets corrected lately and this was a big cause of concern every where. Recession was googled every now and then. "Recession" has become a buzz word now.
There are people how booked profits when the markets were at all time high and there are people who have not at all booked profits. So the idea being is Invest Smartly. Why cant we be one among those who booked profits at a higher levels.
It is said that "no one can ever buy at a bottom price and no one can ever sell a highest price , it can only be done by liers."
As I always say don't forget the Newtons law of Motion - Every thing which has gone up has to come down one day.

Here are a few ways to survive a stock market correction -

  1. Don't Panic - Panic is not the solution to this. Instead invest wisely.
  2. Don't indulge in frequent buying and selling - Frequent buying and selling wont give any thing accept a huge loss.
  3. Stock Market recession should be seen as an opportunity. Recession is always termed as an opportunity as things are available at a cheaper rate.
  4. Don't follow peoples advice where investment is concerned. Try and figure out things on your own.
  5. Be confident in your decision. Make decisions after a detailed study , don't make any harsh decision.
  6. Stop following even analyst and also stop following their crazy tips. They give tips of rs 1 stock which will become Rs 20 in a year or so a 2000% return. Fake , stop trusting them.
  7. Don't look at your portfolio every now and then. This will give you nothing accept tension.
  8. Being patient is a key to success.
  9. Diversifying your portfolio. Recession is the best time to diversify your portfolio recession is the best time as things (stocks) you always loved are available at a dirt cheap rate.
You would love to read this.
Eight Things to do during recession.
Seven reasons to start a business during Recession.

The Post was originally published by Chirag Jethmalani on www.Squamble.Com

Read the full post...

US Markets Report, Bank Stress Test, Obama's 100 days of Presidency

U.S. Markets ended the week on the positive note with the Dow Jones Industrial Average closing at 8076:

Up 1.5% for the day, Down 0.68% for the week, Down 7.98% YTD

The Nasdaq or better known as Technology Index did fairly well in comparison closing at:

Up 2.55% for the day, Up 1.27% for the week, Up 7.44% YTD

The broad S&P500 Index closed at 866:

Up 1.68% for the day, Down 0.39% for the week, Down 4.10% YTD

This upcoming week there a lot of events which will influence the markets:

April 29: Marks the 100th day of President Obama's Presidency. A report card of sorts will be presented. Where market, american public as well as media from around the world will be scrutinizing the new president's policies and performance.

April 29: The GDP number or the rate of growth of american economy will be released on Wednesday.

April 29: The FED will give its Interest Rate decision

April 30: Personal Income and Spending information for the consumer for the month of April.

May 1: U.S. Auto makers report car sales for the month of April.

May 4: The Treasury Bank Stress Report is released.

There is far too much hype around this piece of information. It is not that a lot will be known at the end of day about the true health of each of the banks and it is well known that nearly all banks will get a clean report. But Wall Street has raised its expectations and there is much expectation which may lead to uncertainty and volatility in the market for this week. Banking stocks will be under the scanner and one can expect wild swings in the share prices.

How all this affects Indian Markets?

This is a short spread trading week with only 3 active trading days. There is expiry on wednesday the 29th which will be our last day of the week. Thursday and Friday markets will be closed. Elections results and speculations of who will form the next government will lead the market sentiment next week.

Over all I will be cautious in my moves this week.


Read the full post...

Intraday Tips and Market outlook for 27th of April.

US markets ended higher note.
Europe also ended higher.
Asia is trading mixed.
Expect Indian markets to open higher or flat.
The support for the Sensex is 11200 and the resistance to the up move is at 11639
Nifty: (3481) the support for the Nifty is at 3440 and the resistance to the up move is at 3734

Day Trading Ideas -

Buy above 156 for targets of 158 and 161
Sell below 149 for targets of 144 and 142

Adani Enterprise Ltd
Buy above 449 for targets of 456 and 461
Sell below 435 for targets of 431 and 427

Reliance Power
Buy above 136 for targets of 139 and 142
Sell below 129 for targets of 126 and 124

Lanco Infratech Ltd
Buy above 245 for targets of 247 and 250
Sell below 234 for targets of 231 and 227

Happy Investing !

Read the full post...

Weekly news letter and stocks to watch out for.

>> Sunday, April 26, 2009

The week started of with a gain and also ended with a gain.
The week was volatile.
Global cues were in favor of the Indian Markets.
More over we had banking stocks which rallied due to RBI rate cut policies.

Even though annual inflation maintained hovering around zero, banking and related stocks witnessed buying interest on hopes that falling interest rates will boost lending growth.

Highest Indian market capitalized company RIL has been no exception to the economic slowdown, as it witnessed a significant decline in topline and bottomline Y-o-Y. A trend of sharp adjustments in the final hour of trade set in, as it was only in the final hour that the upmove stimulated or selling gained pace.

The US Government is set to announce Federal Government’s ‘Stress Test’ details on the 4th of May, which could keep global cues under pressure ahead of it.

Sectors to watch out for -

  • IT.
  • Pharma
  • Banking
  • Telecom.
Stocks to watch out for in short term.

IDBI Bank - (67.45) Targets of 73 and 75. SL of 63

DLF - (242.10) Targets of 256 and 265. SL of 234

LNT - (886.25) Targets of 905 and 915. SL of 870

IFCI - (26.95) Targets of 28.10 and 29.45. SL of 24.50

NIFTY Weekly Technicals.

Read the full post...

NIFTY Weekly technical analysis.

Last week we saw NIFTY was in a range bounded mode. Average uptrend was seen. Followed by strong global cues.
Last week NIFTY closed at 3384 and this week at 3480 an increase of 100 points odd. A good one.
FII's participation was good.
The week was followed with good global cues and also good local cues. (Rate Cut by RBI)
NIFTY TRIN at 1.331
Over all Nifty is Range Bounded.
NIFTY Nature - Wait and Watch

Support - 3236 and 3170.
Resistance - 3550, 3636 and 3684.
Reversal from either of these levels would provide the opportunity to initiate fresh short positions. (Resistance)

The short-term trend in the Nifty too is sideways between 3300 and 3500. Short-term traders can buy in declines with a stop at 3250. Upper target on a break-out above 3500 are 3550, 3636 and 3684. Supports for the week would be at 3236 and 3170.

A close below 3170 would be the first indication of a medium term trend reversal. As explained earlier, a strong counter-trend rally is in force since 2539. The first target for this move lies between 3480 and 3680. If this zone is crossed, the next target zone is around 3820.

NIFTY Auto generated EOD Technicals.

Read the full post...

Markets this week : A Snapshot.

>> Saturday, April 25, 2009

On Monday, the benchmark Sensex ended down 43 points at 10,979.50, after trading between 10,863 and 11,209 in a volatile session. The Nifty closed marginally lower by 7 points at 3,377.

Tata Consultancy Services reported a seven per cent rise in consolidated net profit for the quarter ended March 31.

The net profit rose marginally to Rs 1,333 cr from compared with the Rs 1,245 cr in the year-ago quarter. Revenues for the quarter increased by 18.5 per cent to Rs 7,172 cr.

Tech Mahindra, which has deposited Rs 2,910 cr to acquire 51 per cent stake in Satyam Computer Services, has said that it will allow Satyam to continue as an independent entity with a few changes.

The company, which has begun the acquisition process by forming an Integration Team and other decisive steps by way of coordinated action on the transition process, will make an open offer to acquire 20 per cent on Tuesday.

Business software vendor Oracle Corp inched closer to rivals IBM Corp and Hewlett Packard Corp in terms of providing integrated software and hardware solutions after it agreed to buy Sun Microsystems in a $7.4-billion deal.

The RBI announcement on cut in repo and reverse repo rates by 25 basis points to 4.75 per cent and 3.25 respectively did not cut much ice with investors in the bourses. The lowering of GDP forecast to 6% seems to have hit market sentiment. The Sensex on Tuesday closed at 10,898, down by 81 points and the Nifty eased by 11 points to finish at 3365.

On Wednesday software major Wipro reported a higher net profit of Rs 1,010 crore (up 15%) for the quarter ended March 2009 against a net of Rs 879.8 crore in the corresponding last quarter.

For fiscal 2008-09, Wipro reported a net profit of Rs 3,899 crore on revenues of Rs 25,544 crore over previous year's net of Rs 3,282 crore on revenues of Rs 19,957 crore.

The Sensex on Wednesday finished lower at 10,817 down 80 points, owing to profit booking at higher levels. On the NSE, the Nifty eased 35 points,at 3,330.

Heavy buying in index stocks, particularly in IT and metal sectors, pushed up the benchmark indices on Thursday as market sentiment was boosted by expectations of better corporate results.

The Sensex ended higher at 11,135, up 317 points. The Nifty rose by 93 points to close at 3423 The major gainers were Wipro,, Grasim, Reliance Infra, Tata Steel, Maruti Suzuki and Sterlite.Industries.

Reliance Industries has reported its second consecutive decline in quarterly net profit, as adverse global conditions continued to shrink its refining margins.

Its fourth quarter net profit fell 9.4 per cent, to Rs 3,546 crore, from Rs 3,912 crore a year ago, as its gross refining margin fell to $9.9 from processing one barrel of crude against $15.5 a year ago. The company runs the world's largest refining complex in a single location.

RIL's turnover for the quarter dipped 25 per cent to Rs 29,073 crore against (Rs 38,697 crore) - the revenue decline straddling all its business segments

The Indian bourses continued its uptrend on Friday. Value buying by domestic institutions and the FIIs was seen as the main driver. The Sensex surged 194 points to close higher at 11,329 and the Nifty too spurted by 57 points to finish at 3,480.

Read the full post...

Weekly market update 17th April: markets advance for 7th consecutive week

>> Friday, April 24, 2009

A mixed week globally ended on a positive note as earnings reports in the US, Europe and domestically added some cheer to the markets. The big positives this week were Axis and HDFC whose results eased concerns about bank profitability, also Wipro beat expectations and saw a bounce in their share price towards the end of the week.

Following a stuttering start to the week, caused by weak global cues, the markets rallied on Thur and Fri to leave the Sensex on 11,329, a gain of 305 points or 2.8%. Meanwhile the Nifty advanced 97 points to close on 3,481. 

This marks the 7th consecutive week of advances and the Sensex is now 39% higher than the previous closing low of March 9th. Admittedly this still leaves it 46% below the highs of Jan 2008, but the pace of the gains has made India oneof the best performing markets during the recent rally, outperforming all of the major global indices.  

Although the cyclical sectors such as infrastucture, banking and auto are still benefiting from the increase in optomism, the sporadic release of Q4 results means that the advances are less sectorially defined than early on in the rally. 

FII inflows have reduced from the levels seen in previous weeks but remain positive which has caused speculation that the rupee may  contiune to advance against the dollar as demand is fuelled by the bouyant stock market. For the first time in 12 months the Rupee is trading close to its 100 day average price ($49.60) with analysts predicting a possible rapid appreication if this level is breached.

With the current rally having overshot the expectations of almost every analyst, opinion is divided regarding the outlook for the next few weeks. On some levels there appears to be strength left in the rally but for every week that passes without a serious correction, the downside risk grows larger. 

Those with a long term horizon continue to accumulate stocks, benefiting from the historically cheap valuations;  the Sensex is currently trading at approximately 12x reported earnings, well below the 5 year average of 17.7x. However those with a shorter term view remain cautious as the markets continue to climb.

Post originally published on

Read the full post...

Intraday Tips and Market outlook for 24th of April.

US markets ended flat after a volatile section.
Europe ended flat to negative.
Asia is trading flat.
Expect Indian Markets to open flat to negative.
The support for the Sensex is 10700 and the resistance to the up move is at 11255-11639
Nifty: (3424) the support for the Nifty is at 3303 and the resistance to the up move is at 3451-3734

Day Trading Ideas -

Ashok Leyland
Buy above 23.10 for targets of 24.25 and 25.10
Sell below 20.20 for targets of 19.50 and 18.90

Buy above 316 for targets of 320 and 324
Sell below 305 for targets of 301 and 295

Buy above 872 for targets of 876 and 881
Sell below 861 for targets of 855 and 851

Yes Bank
Buy above 75.10 for targets of 77.25 and 79.25
Sell below 70.10 for targets of 68.25 and 66.50

Read the full post...

Intraday Tips and Market outlook for 23rd of April.

>> Thursday, April 23, 2009

US markets ended mixed.
European markets ended higher.
Asian markets have opening mixed.
Expect Flat to positive opening in Indian Markets.
Support for NIFTY is at 3284 and 3238.
Resistance for NIFTY is at 3388 and 3446.
High volatility expected in todays trade.

Day Trading Ideas -

Buy above 49.50 for targets of 52 and 53.50
Sell below 47.10 for targets of 46.20 and 45.50

Praj Ind.
Buy above 69.90 for targets of 71.50 and 73
Sell below 67.10 for targets of 66.25 and 65.10

Buy above 658 for targets of 665 and 672
Sell below 649 for targets of 645 and 639

Buy above 131 for targets of 135 and 138
Sell below 126 for targets of 122 and 119

Read the full post...

Intraday Tips and Market outlook for 22nd of April.

>> Wednesday, April 22, 2009

US markets ended higher after a weak start.
Europe ended mixed.
Asia has opened marginally negative.
Expect Indian Markets to open flat to negative.
NIFTY Support at 33115 and 3257
Resistance at 3416 and 3468

Day Trading Ideas -

Buy above 77.25 for targets of 79.10 and 80.90
Sell below 73.45 for targets of 71.90 and 70.50

Buy above 110.25 for targets of 112 and 113.50
Sell below 106.10 for targets of 105.20 and 104.45

Buy above 107.50 for targets of 109.10 and 110.25
Sell below 104.20 for targets of 103.10 and 101.90

Happy Investing.

Read the full post...

Intraday tips and market outlook for 21st April.

>> Tuesday, April 21, 2009

US markets have cracked badly.
Europe also ended low.
Asia has opened weak.
Expect Indian Markets to open negative.
The pull back in the Indian markets would depend on Asian peers.
Support for NIFTY 3284.2 and 3330.6
Resistance for upmove 3432.25 and 3487.5

Day Trading Ideas -

GMR Infra
Buy above 123 for targets of 126 and 128
Sell below 116 for taregts of 114 and 111.35

Buy above 55.20 for targets of 56.50 and 57.90
Sell below 52.50 for targets of 51.10 and 50.25

Buy above 234 for targets of 238 and 241
Sell below 226 for targets of 222 and 219

Read the full post...

Safe bet: Gold shines with 26% returns

>> Monday, April 20, 2009

Even as the current economic conditions have dwindled returns from other forms of investment, Indian housewives who have been passionate gold enthusiasts and investors in the yellow metal are reaping the rewards.

Gold has yielded an annual average return of 26% in the last decade, according to the World Gold Council (WGC).

In a new report, WGC has said that the annual average gold price, in Indian rupees, has grown year on year. The first quarter of 2009 has also provided an impetus. Gold has provided a positive return of 17% when compared to the average annual price of Rs 12,147 for 2008.

The average price for Q1 of 2009 was Rs 14,180. The first quarter of 2009 also witnessed the price of gold peaking to an all time high of Rs 15,780 per 10 gms on February 24, 2009.

In 1999, when the price of 10gm of gold was Rs 3,850, the metal gained 216% in absolute returns as compared to 2008 prices. This pegs the annual return on investment (ROI) at 24%. Similarly, when 10gm of gold was priced at Rs 4,106 in 2001, absolute returns was 196% as compared to the 2008 price, registering an annual ROI of 28%.

In 2006, when 10gm of gold was Rs 8,791 aboslute returns was 38% as compared to 2008 prices. In 2008, the yellow metal touched Rs 12,147.

Commenting on gold's sustained upward trend for a decade, World Gold Council MD Ajay Mitra said, "The Indian housewife has turned out to be the best fund manager. Gold jewellery has been treasured, sought after and popular since the beginning of Indian history. The presence of a safe asset like gold in an investment portfolio ensures assured returns, which further adds to its appeal.''

The Gold Survey 2009 predicts that in the coming months, gold could easily re-attain the $1,000 mark, with an expectation of crossing the $1,100 barrier. If the current trend continues, Indian consumers could possibly witness a further appreciation of around 24%, adds the report. - ET

Read the full post...

U.S. Markets and Wall Street Report for this week

The week ending April 17th was very eventful for U.S. Markets. After much see-saw mid week the Dow, Nasdaq and S&P 500 closed in the positive. 

 Dow closed at 8131 up 0.59% for the week. Down 7.35% year to date.

 Nasdaq closed at 1673 up 1.24% for the week. Up 6.09% year to date.

 S&P 500 closed at 869 up 1.52% for the week. Down 3.73% year to date.

Last week we saw better than expected earnings from Dow bell-weather GECitibank reportedly loss less money than expected being helped by changes in mark to market accounting rules. Also financials rallied led by JP Morgan Chase andGoldman Sachs who turned out profitable Q1 and also vowed to return the government TARP ( troubled assets relief program) at the earliest.

If last week belonged to Dow components surely this week will be a Hot-Nasdaq week, with Microsoft and Apple reporting earnings. Also reporting earnings will be IBMMorgan Stanley, Bank of America, MacDonalds and Coca-cola. So lot's of action this week, which may lead to make or break in the market. 

Another key economic indicator data to be expected this week includes - Existing home sales data to be released on Thursday. On Friday we have the report on New home sales, both real estate data points are for the month of March.  Also on friday the government will release Durable Goods Orders and Shipments data for end of march. This is a leading indicator of U.S. manufacturing activity. 

U.S. markets are lead the global economic crisis and are also expected to suggest how and when the trends start moving upwards. Keep yourself ahead of the markets with news and community prediction data from wall-street, visit -

Read the full post...

Intraday tips and market outlook for 20th April.

US markets ended almost flat on Friday.
Europe ended marginally positive.
Asia has opened negative.
Expect the Indian Markets to open in the same manner.
We may see a high volatility in the markets.
The support for the Sensex is 10662-10444 and the resistance to the up move is at 11255
Nifty: (3384) the support for the Nifty is at 3303-3238 and the resistance to the up move is at 3451

Day Trading Ideas -

Buy above 54.25 for targets of 56.20 and 58.75
Sell below 50.20 for targets of 49.10 and 46.85

Buy above 875 for targets of 882 and 895
Sell below 856 for targets of 848 and 841

Buy above 236 for targets of 242 and 248
Sell below 228 for targets of 224 and 219

Indian OverSeas Bank
Buy above 68.50 for targets of 69.90 and 72.10
Sell below 64.25 for targets of 63.10 and 61.50

Read the full post...

Weekly news letter and Short term Tips.

>> Sunday, April 19, 2009

The week started off with a good opening. We had good FII's inflow in the week.
Markets went above 11K mark which indirectly increased the volumes of few stocks.
Few stocks gave excellent returns such as Unitech and Jai Corp.
With inflation near zero levels, the central bank's next monetary policy review in the week ahead has raised expectations of a rate cut. Interest rate sensitive stocks could thus continue to remain in the limelight during the beginning of the week.
Though stock specific moves can be expected due to the result season, the recent market trend suggests that there could be profit booking at higher levels.

Sectors on which I am bullish

  • FMCG
  • Fertilizer
  • Telecom
  • Banking
Stock to watch out for

Unitech (52.60) targets of 56.85 and 62.45.
SL of 46.90

Suzlon (58.00) targets of 65 and 68. SL of 54

Axis Bank (503.80) targets of 520 and 535. SL of 490

Bank of Baroda (296.50) targets of 310 and 321 . SL of 284

NIFTY Weekly technical analysis.

Read the full post...

NIFTY Weekly technicals.

Last week we saw NIFTY was in a range bounded mode. Average uptrend was seen. Followed by strong global cues.
Last week NIFTY closed at 3342.05 and this week at 3384 an increase of 40 points odd. A moderate one.
But we saw sell off's coming from higher levels.
FII's participation was good.
The week was followed with good global cues and also good local cues.

NIFTY TRIN at 0.484
Over all Nifty is Bullish.
NIFTY Nature - Wait and Watch

Support - 3310 and 3245
Resistance - 3420 and 3510
Reversal from either of these levels would provide the opportunity to initiate fresh short positions. (Resistance)

Nifty made an attempt to climb above 3500 before a mild correction set in. It is difficult to determine if the movement over the last three sessions is a terminal corrective or a running correction. According to both the counts, sharp moves can be expected in the week ahead. As explained before, if the move from the 2539 low is the B wave of a long-term bear market, its first targets would lie in the zone between 3480 and 3680.

Since Nifty is already at this zone, it would do to stay extra vigilant.

The short-term trend however continues to be up and traders can buy in declines as long as the index holds above 3300. A firm close below 3100 is needed to indicate that the medium-term trend is reversing lower. Upper targets for the week are 3550 and 3684.

NIFTY Auto generated EOD Technicals.

Read the full post...

All rise in Reliance Industrial Infrastructure.

>> Friday, April 17, 2009

All saw a sudden boom in RIIL (Reliance Industrial Infrastructure.) The stock which made the people crazy giving 150% + returns in a couple of weeks.
At present RIIL's CMP is 737. It had touched Rs 920 odd levels from 35o odd levels.

The main reasons why the stock rose - (The two main reasons)

  • There were rumors in markets that RIIL is merging with RIL.
  • RIL is planning to make RIIL as a gas carrier & distribution company. Reliance Gas Transportation Infrastructure Ltd. (RGTIL)
RGTIL is a closely held company of Mukesh Ambani, which had put up 1,400 kms., 48 inches diameter pipeline from Kakinada to Bharuch, capable to transport 120 mmscmd of gas , having set at a project cost of Rs. 15,000 crores.

It is learnt that the Group is contemplating to bring all this pipeline network and business into RIIL, with a view to attain leadership in the sector.
This move could benefit the stock in long term on the basis of Market Cap.
The current Market Cap is 1,114 Rs Crores and the pipeline project is worth over Rs 15,000 crore. If RIIL and RGTIL are merged the market cap of RIIL would be over Rs 17,000 Crores.

This would benefit the share holders.

Considering the current market price (CMP) of 737.35 the price seems to be over valued due to speculation.
The fair price may lie below 600 levels.

Here are few short term Support and Resistance for RIIL
Spot Price - 750
Support - 610, 670 , 702
Resistance - 794, 851 , 908

PS - What we learn from this is that don't go according to rumors!

Happy Investing.

Read the full post...

Weekly market update 17th April: FIIs pull markets higher

Eight consecutive days of gains on the BSE were interupted by a 3% downward correction on Thursday but despite this the markets continued their advance with another week of  gains on both the headline indices. The Sensex ended the week on 11,805, up 218 points or 2% from the previous week.  The Nifty made a more modest gain of 1.3%, ending the week on 3,384 or 42 points higher.

Volumes again grew week-on-week and FII inflows continue to be positive, with 1,400 crore of net purchases being made on Monday and Wednesday alone (the markets were closed on Tuesday). The begining of  April has now seen 7 striaght sessions of positive FII inflow and 3,000 crore of net purchases so far. This figure is higher than for any full month since Feb 2008 and has provided much needed impetus to the rally as domestic institutions have relaxed their buying slightly.

The major movers this week have been the metals infrastructure and auto stocks, advancing heavily on Monday and Wednesday and correcting heavily on Thursday. This pattern was repeated in the Small and Mid Cap sectors which outperformed the major indices on the advances but corrected more heavily on the decline. Banks made solid gains today and will remain in the spotlight next week with HDFC and Axis reporting their results on Monday and Yes Bank also expected to release their numbers next week.

The big corporate news this week was the acquisition of a controling stake in Satyam by many people’s outsiders Tech Mahindra. The stock rallied following the announcement but has since fallen off as the market waits to hear more about management plans to inegrate their massive but ailing new business. Also in the IT space, Infosys reported slighlty below expectation figures for Q409 and expressed the belief that IT and offshoring budgets will be reduced at many of their clients  in FY10. This gloomy forecast is putting pressure on the sector as a whole.

Looking forwards we are now in earnings season proper so the market will once again become driven by domestic news. Although the rally appears to be going strong, the risk to the downside is probably greater than the upside in the short term as disappointing results from some of the bellweather stocks have the potential to trigger a significant correction. However the absence of such disapointments and the continued interest of foreign funds could continue to drive the markets higher.

Elsewhere the other major Asian indices also made ground this week and the Rupee ended the week up against the dollar despite advances in the US domestic markets. The Rupee has now gained 5% since the record low on March 3rd as foreign funds continue to flow into the Asian markets, weakening the US currency.  

Originally posted on

Read the full post...

Intraday tips and market outlook for 17th April.

US markets ended higher.
Europe also ended higher.
Asia has opened positive. Expect Indian Markets to have a positive opening.
The support for the Sensex is 10662-10444 and the resistance to the up move is at 11255
Nifty: (3370) the support for the Nifty is at 3303-3238 and the resistance to the up move is at 3451

Day Trading Ideas

Buy above 57.45 for targets of 58.90 and 60.25
Sell below 54.35 for targets of 53.25 and 51.20

Buy above 580 for targets of 586 and 591
Sell below 565 for targets of 561 and 555

HCL Technology
Buy above 124 for targets of 127 and 131
Sell below 118 for targets of 115 and 111

Read the full post...

Inflation eases further to 0.18 per cent

Inflation eased to 0.18 per cent, the lowest ever in the last three decades, even as prices of food articles like pulses, cereals and vegetable hardened during the week ended April 4.

The wholesale price-based index declined by 0.08 per cent against 0.26 per cent in the previous week. The decline was mainly due to higher base effect and falling prices of some manufactured products. The inflation stood at 7.71 per cent in the same wee k a year ago.

The consistent decline in inflation but rising food prices present a difficult choice before the RBI to cut policy rates or not even as the industry clamours for easing of interest rates.

During the week, prices of food items like vegetable, pulses and imported edible oil were expensive during the week. Even the jet fuel, naptha and other fuel items were dearer during the week. - PTI

Read the full post...

Intraday tips and market outlook for 16th April.

>> Thursday, April 16, 2009

US markets ended mixed but mainly positive.
Europe ended marginally lower.
Asia is trading mixed.
Indian markets may have a flat to positive opening.
The support for the Sensex is 11070 and the resistance to the up move is at 11638
Nifty: (3484) the support for the Nifty is at 3400 and the resistance to the up move is at 3734

Day Trading Ideas

Buy above 814 for targets of 824 and 839
Sell below 789 for targets of 781 and 776

Buy above 236 for targets of 241 and 248
Sell below 219 for targets of 212 and 208

Read the full post...

Infosys Q4 revenue falls QoQ 1st time in decade

>> Wednesday, April 15, 2009

Infosys Technologies Ltd has reported first ever sequential fall in its revenue in a decade during the March 2009 quarter. Its operating margin is also under pressure as general and administrative expenses rose despite falling revenue.

The company’s revenue and net profit were more or less in line with the estimates of ET Intelligence Group (ETIG). It reported Rs 5,635 crore in revenue and Rs 1,613 crore in net profit. ETIG had estimated sales of Rs 5,684 crore and PAT of Rs 1,579 crore.

Infosys witnessed over 2% drop in its blended pricing on a sequential basis during the March quarter. It also lost four clients and reported 90 basis points (bps) fall in its employee utilisation including trainees.

Operating margin shrank by 154 bps to 33.5% from the previous quarter. However, net margin expanded by 26 bps to 28.6% thanks to the other income of Rs 252 crore.

The company’s European business suffered a drop of 12.5% sequentially due to beleaguered telecom, manufacturing, and financial sectors.

Its North American business could grow by just over a per cent despite slowdown in the US economy. Among its verticals, manufacturing revenue fell by 6% whereas telecom dropped by 15.3%.

Infosys has guided for a sluggish performance in FY10. It expects earnings per share (EPS) to skid by 3.3-7.6% to Rs 96.65-Rs 101.18. Revenue
is likely to be more or less flat between Rs 22,066 crore and Rs 22,928 crore, a growth of 1.7-5.7%. - Economic Times.

Read the full post...

Infosys declares 270 per cent final dividend

Infosys Technologies Ltd has declared a final dividend of Rs.13.50 per share, which is 270 per cent on par value of Rs.5 per share, for the just-concluded fiscal 2008-09.

In a regulatory filing Wednesday, the IT bellwether said it had made a provision of Rs.7.73 billion (Rs.773 crore) for the dividend payout after the approval by the shareholders at its annual general meeting in June 2009.

The IT bellwether had paid an interim dividend of Rs.10 per share or 200 per cent on par value of Rs.5 per share in October 2008 for the first half (April-September) of fiscal (FY 2009).

The company, however, did not declare special dividend for FY 2009 unlike for the previous fiscal (2007-08). - Economic Times

Read the full post...

Infy Q4 net profit at Rs 1613 crore; EPS guidance at Rs 96.65- Rs 101.18

IT bellwether Infosys Technologies posted a net profit of Rs 1613 crore for the quarter ended March 31, 2009 as against Rs 1641 crore in the Oct-Dec quarter, which translates a fall of 1.73 per cent in net profit on a sequential basis.

Net sales stood at Rs 5635 crore in the fourth quarter compared with Rs 5786 crore for the Oct-Dec quarter.

On a consolidated basis, the IT major has reported a net profit of Rs 5988 crore for the quarter ended Mar 31, 2009 compared with Rs 4659 crore in the corresponding quarter last year.

The company has announced an earnings guidance of Rs96.65- Rs101.18 per share for FY2010.

Infosys has recommended a final dividend of Rs.13.50 per share (270% on an equity share par value Rs 5). - Economic Times

Read the full post...

Intraday tips and market outlook for 15th April.

US markets ended in red.
Europe ended mixed.
Asia has opened in red. Expect Indian Markets to open negative.
The support for the Sensex is 10800 and the resistance to the up move is at 11113-11295
Nifty: (3383) the support for the Nifty is at 3335 and the resistance to the up move is at 3451

Day Trading Ideas

Buy above 1418 for targets of 1428 and 1436
Sell below 1394 for targets of 1386 and 1379

Buy above 59.45 for targets of 61.25 and 62.90
Sell below 56.45 for targets of 54.90 and 53.50

Tata Chemicals
Buy above 174 for targets of 178 and 181
Sell below 162 for targets of 159 and 156

Read the full post...

Analysts see a tough road ahead for Tech Mahindra

>> Tuesday, April 14, 2009

Tech Mahindra’s acquisition of Satyam Computer Services may have come as a relief to the market, but analysts see a tumultuous journey ahead for the former. As regards the upcoming open offer, analysts aren’t sure of the kind of response the offer would evoke.

They also appear to be quite cautious about the impact of the acquisition on the prospects of Satyam, given the magnitude of the crisis and a lack of clarity on strategy the winner would adopt post-acquisition.

“Satyam Computer has a wide investor base and there could be a decent response from shareholders, particularly those who invested only recently with a short-term view,” said Prabhudas Lilladher head of research Apurva Shah. He feels Tech Mahindra would be keen on completing the offer successfully, as it would help the new promoters consolidate their holdings and also put them in a better position if they eventually plan merger of the two companies.

Most analysts feel it is too early to talk about the impact of the acquisition on prospects of Satyam, as the Tech Mahindra management would have a very challenging task of cleaning up the balance sheet of the scam-tainted company and rebuilding confidence among shareholders and the clients.

“Investors would wait for more facts to emerge from the Satyam story and the detailed gameplan of Tech Mahindra. The latter would try to benefit from the tainted company’s assets, particularly infrastructure, and use the client base for growing its business,” said KR Choksey Shares and Securities chairman Kisan Choksey.
Satyam’s existing client base would be a big advantage for Tech Mahindra, feel analysts. “At present, Tech Mahindra is totally focused on its UK-based client BT. With Satyam’s acquisition, it would have diversified client base and would enjoy the benefit of dispersion of client concentration,” said Religare Securities president (equity) Amitabh Chakraborty.

There seems to be a consensus on what L&T, which offered a bid of Rs 45.90 per share, would do with its holding of 12% in Satyam. Most analysts feel it makes sense for the engineering and construction conglomerate to hold on to its stake and wait for the valuation to rise to decent levels, before taking any call on the investment. - Economic Times.

Read the full post...

Tech Mahindra becomes No 4 in IT cos' list

Maimed and left gasping for a lifeline, Satyam Computer Services has finally found its new knight in shining armour, Tech Mahindra.

The bidding process for the beleaguered software firm culminated on Monday with TechMa emerging as the highest bidder with an offer price of Rs 58 per share. TechMa's price outbid other suitors, engineering giant Larsen & Toubro and private equity player Wilbur Ross, by a comfortable margin.

L&T's bid of Rs 45.90 per share and Wilbur Ross' Rs 20, were not even within striking distance of TechMa's deal-winning bid.

At Rs 58 per share, Tech Mahindra will acquire a controlling stake of 51% in Satyam for Rs 2,889 crore, pegging the total value of the company at Rs 5,665 crore. In the first stage, Satyam will issue 30.27 crore shares to TechMa, representing 31% of the company's share capital, which will infuse Rs 1,756 crore into the company. In the second stage, TechMa will have to mandatorily make an open offer to Satyam's existing shareholders for another 20%.

However, L&T, which holds a 12% stake in Satyam, will not participate in the open offer for shareholders as it has a lock-in period of six months.

Predictably, both the TechMa and Satyam stocks were caught in a volatile vortex during the days trading. Soon after the Satyam board meet in the early part of the day, the Tech Mahindra scrip on BSE gained 25% to Rs 400. However, late profit-taking shaved off part of its early gains and the stock closed at Rs 349, up 12.3%. While the Satyam stock rallied 16.5% in intra-day trades, it closed at Rs 49, up a mere 3.6%. In mid-session trading, the Satyam ADR was down 15% at $2.25 on New York Stock Exchange.

The acquisition catapults TechMa into the fourth position in the pecking order of IT firms, after HCL Technologies.

However, inevitably, questions are being asked about the winning bid. Have the Mahindras over-valued Satyam, especially since distressed asset buyer Wilbur Ross priced its bid as low as Rs 20? Interestingly, Cognizant, which was to bid jointly with Wilbur Ross, decided to back off at the last minute. Some IT analysts have also described the deal as ``disastrous''.

Defending his bid price, TechMa chairman Anand Mahindra said: ``When you are running in a race, you don't look behind who's chasing you. We believe our bid is rightly priced.'' It is estimated that Satyam's liabilities could be as high as $1 billion. TechMa director Bharat Doshi said that the bid price was determined by the company after taking into account Satyam's liabilities.

Even though the auditors, Deloitte and KPMG, are still in the process of restating Satyam's accounts, a rough calculation of the company's financials was presented to the bidders. As per this calculation, Satyam's annual revenues are expected to decline from $1.8 bn to $1.3 bn. Satyam's operating margin is said to be around 3% vis-a-vis Tech Ma's 22%.

For TechMa, Satyam complements its business, with no client overlap. While the former is a strong player in telecom (75% of revenues), Satyam caters to financial services, manufacturing and healthcare, among others. ``It will require a fair amount of work to bring Satyam back to its past glory. It will be a challenge to make Satyam financially strong so as to retain clients,'' said Vineet Nayyar, TechMa vice chairman and CEO.

With Satyam having a large clientele of over 500 clients -some of them as large as GE, Cisco, Citi and General Motors -Mahindra said: ``I will personally reach out to John Chambers (chairman of Cisco), Vikram Pandit of Citi and Fritz Henderson (GM CEO) to restore confidence in Satyam and us.''

After 100 days of uncertainty, Satyam's acquisition dispels the anxiety of 48,000 Satyamites, ushering in a sense of positivity. The company's former chairman B Ramalinga Raju had, in January, revealed that he had manipulated the company's accounts to the extent of Rs 7,800 crore. He has been behind bars since then, awaiting trial.

Announcing the winning bid, Kiran Karnik, chairman of the government-appointed Satyam board, said: ``Today, we have reached a final culmination stage, and though there are a few steps more to go, what it marks is the end of uncertainty.''

The other logical question is: will TechMa retain the Satyam brand name, given the unwholesome ring it has acquired in the past five months? Meanwhile, Mahindra rubbished rumours that TechMa's strategic partner, British Telecom, did not support the Satyam bid. Incidentally, British Telecom is also TechMa's largest client. - Economic Times

Read the full post...

Wall Street Report for this week

On the backdrop of outstanding performance from U.S. Markets as well as dream run on domestic Indian bourses, Sensex and Nifty this week is more than interesting. Classic catch-22 situation, where technical indicators daemonly shout of an upcoming bear fall, but market sentiment defeats all by continuing to move higher. There is some important news-events coming up on Wall Street which are of importance and will help retail investors gauge as well set individual market sentiment.

Earnings season takes center stage this week with market behemoths such as General Electric and Financial Czars like Golman Sachs, JP Morgan Chase, Citibank all announcing Q1 results this week. Also stating results are Johnson & Johnson and Tech-King Google and Intel.

Goldman reported a blown out quarter today and has also decided to return U.S. government bailout money back in the coming quarter - More U.S. news? here

On April 14th we have the Producer Price Index data for March, which explains the costs of goods at wholesale level. Also on the 14th we have Retail Sales Figurers which help understand consumer buying behavior and available purchasing power.On April 15th government releases Consumer Price Index data for March. CPI measures inflation of physical goods and services.

So a good chunk of important and market changing events scheduled for the upcoming week, after a holiday weekend. We ended last week with a Bang, setting expectations for an equally eventful coming week.

Check out U.S. Markets Data and Stock Quotes - now available on stockezy. Click here

See what the community thinks about Satyam merger - Click here

Read the full post...

Tech Mahindra wins the BID for Satyam Computers.

>> Monday, April 13, 2009

Tech Mahindra wins the BID for Satyam Computers and the bid was for 58 rs , So they will paying 1757 crores for 31 percent holding from Satyam and they would be paying 2890 crore to acquire 51 percent stake in satyam .It heard that Larsen toubro bidded for only 49 rs.
Satyam fell down to Rs 48.85. A decent buy for Satyam is any level below Rs 40 with a medium term target of 60 or may be 65.

Read the full post...

Intraday tips and market outlook for 13th April.

US markets ended a higher note on Friday.
Europe also ended a higher note.
Asia has opened mixed.
Expect Indian Markets to open flat to positive.
The support for the Sensex is 10650 and the resistance to the up move is at 11113-11295
Nifty: (3342) the support for the Nifty is at 3260 and the resistance to the up move is at 3451
Satyam will finally get a new buyer today.

Day Trading Ideas -

JP Hydro Power
Buy above 41.55 for targets of 42.85 and 43.65
Sell below 39.50 for targets of 38.10 and 37.45

Reliance Infra
Buy above 659 for targets of 666 and 671
Sell below 645 for targets of 640 and 636

Buy above 23.10 for targets of 24.25 and 24.90
Sell below 22.25 for targets of 21.50 and 20.85

Happy Investing!

Read the full post...

Weekly News letter and stocks to watch out for.

>> Sunday, April 12, 2009

The Indian benchmark indices touched its five month high at the beginning of the week on the back of positive global cues which continued till mid- week.

On the last trading day of the truncated week, weak IIP numbers and a marginal decline in headline inflation numbers fuelled volatility ahead of the long weekend. Yet, the markets managed to end with a gain of close to 5 per cent.

Better than expected sales numbers for March 2009 led to buying interest at auto counters. Reliance Industrial Infrastructure shot up by as much as 157% during the week for no apparent reason, while Essar Oil Ltd rose by 65% as it is expected to close the Kenya Petroleum Refinery deal in Mombasa.

Markets worldwide appear to be harbouring a positive sentiment on the back of expectations that the economic stimulus packages undertaken worldwide will bear soon fruit.

Inflation is now at 30 years low.

Sectors I am bullish on.

  • Automobile.
  • Telecom.
  • IT
  • Textile
Short term stock ideas -

Satyam Computers - (47.15) Targets of 55.65 and 62 - SL of 44.10

LNT - (828.85) Targets of 845 and 875 - SL of 785

HDIL - (118.95) Targets of 126 and 132 - SL of 113

Unitech - (42.05) targets of 46 and 51 - SL of 36

NIFTY Weekly Technical Analysis.

Read the full post...

NIFTY Weekly Technical Analysis.

Last week we saw NIFTY was in a bullish mode. A good uptrend was seen. Followed by strong global cues.
Last week NIFTY closed at 3211.05 and this week at 3342.05 an increase of 130 points odd. A good one.
The week was followed with good global cues and also good local cues.
NIFTY TRIN at 0.566
Over all Nifty is Bullish.
NIFTY Nature - Heavily Over Bought

Support - 3150 and 3100
Resistance - 3425 and 3510
Reversal from either of these levels would provide the opportunity to initiate fresh short positions. (Resistance)

Nifty recorded the intra-week peak at 3401 and ended with a 131 points gain. The doji formation in the daily chart and the halt below the 200-day moving average at 3441 implies indecision in the short-term. A short-term correction can pull the index down to 3234 or 3131. Fresh longs should be avoided on a decline below the first support. Medium-term view will, however, turn negative only on a close below 3000.

Immediate targets for the current rally are 3326 and 3450. If there is a vertical break-out above 3450, next target would be 3911. However, targets for the B wave of the long-term down-move from the 6357 peak are 3680 and 4050. These could be the ceiling for the index for this calendar.

NIFTY Auto generated EOD Technicals.

Chart -

Read the full post...

Marico: Buy

Marico’s stock has been an underperformer in the FMCG pack despite the market preference for defensive stocks over the past year.

The better growth rates managed by larger FMCG rivals over the past three quarters and muted performance from Marico, due to higher raw material prices, have weighed on the stock. But with price hikes in the FMCG space tapering off and input prices for the company correcting from their peaks, Marico may deliver better growth in the year ahead.

An expanding international business, a promising new product pipeline and brands positioned strongly on the beauty and wellness plank, suggest that the business is well placed to weather any moderation in consumer spending. Investors can buy the stock, currently trading at a PE of about 16 times its estimated 2009-10 earnings; at a discount to larger rivals such as Hindustan Unilever, Nestle and Dabur India.

Marico delivered a strong 27 per cent sales growth in the first nine months of 2008-09, driven by healthy growth in the Parachute and hair oils business, an expanding contribution from new products (now 15 per cent of sales) and strong growth in the international business.

Though Marico’s coconut oil brands saw spiralling raw material prices (copra), significant price increases taken over the year (thanks to a dominant market share) and a volume growth of 7-9 per cent, helped the business register reasonable growth. The edible oil brands faced substitution by cheaper rivals, but this was more than made up by a strong show from Marico’s overseas operations in Bangladesh, West Asia, Egypt and South Africa.

The strong sales, however, failed to trickle down to profits (12.5 per cent growth) due to the upward spiral in the prices of safflower seed and copra.

Signs of relief on input costs are now evident, with copra prices correcting by about 13 per cent and safflower prices by about 20 per cent from their levels in December. While the former promises to expand hair oil margins, the latter allows room to revive volume growth in the Saffola brand through price offs.

Re-launch of brands in the South African business and a favourable currency equation suggests that overseas operations may continue to chip in with good growth. The company’s presence in nascent product categories such as male grooming, hair creams and styling gels, as also new product prototypes – Saffola Zest – a healthy snack and low glycemic rice – hold considerable scope for scaling up in size. HBL

Read the full post...

Hindalco: Buy

Investors with a long-term perspective can continue to hold the Hindalco (Rs 59) stock even if the company’s near-term earnings performance is lacklustre. Hindalco’s operations have delivered reasonable growth on a standalone basis, but muted profitability and high debt of the Novelis acquisition have brought down valuations in recent times. As a low cost and integrated producer of aluminium, Hindalco could capitalise on Novelis’ value-addition capability and diversified user base in the event of an economic recovery. The tilt towards user sectors such as beverages and infrastructure makes it less vulnerable to demand slowdown than many of its global peers.

At a PE multiple of 7 times its estimated 2008-09 earnings, the stock trades at a discount vis-a-vis its Indian and global competitors.

Aluminium: Main revenue generator

Aluminium and copper are Hindalco’s main business streams. On a standalone basis, aluminium contributes 37 per cent to Hindalco’s revenues, but its share in net profits is as high as 80 per cent. Extensive brownfield expansions and low-cost acquisitions implemented over the last five years have put Hindalco on the list of global low-cost aluminium manufacturers. The company concentrates on producing rolled aluminium, ingots, bars and foils. These finished goods are sought after by infrastructure companies, capital goods manufacturers and power transmission and distribution companies.

While the automobiles industry accounts for about one-fourth of Hindalco’s demand (on a consolidated basis), the improvement in domestic passenger vehicle sales offers some comfort. For the nine months ended December 2008, Hindalco’s net profits (on a standalone basis) from the aluminium segment rose by about 6 per cent and revenues by 10 per cent.

Hindalco acquired Novelis, maker of value-added products such as beverage cans and alloy wheels in May 2007 for $6 billion. Though this changed Hindalco’s business and geographic profile, the deal weakened its balance-sheet as Hindalco was forced to take on Novelis’ debt burden of $2.9 billion.

Novelis Acquisition

Born in early 2005 as a result of spin-off from its parent company Alcan, Novelis has a diversified clientele — Coke, Ford, General Motors, Audi, Lotte, Kodak and Tetra Pak. But in a bid to pump up its business, Novelis entered into fixed price supply contracts with some of its major customers.

Trouble began in 2005 when raw material prices spiralled sharply. Since Novelis was compelled to sell below cost due to contractual obligations it reported losses of $102 million from operations for the nine months ended December 2008. This swelled to $1.82 billion, after the company charged goodwill impairment and losses on derivative contracts.

Despite this, Novelis’ business does offer long-term benefits to Hindalco. Facility to produce value-added products may aid Hindalco’s margins over the long term. The fixed price contractual obligations of Novelis end by January 1, 2010. Moreover, Novelis has embarked on cost savings and had undertaken a production cut. In addition, it is accounting for goodwill impairment which may help Hindalco benefit from the deal

Copper: Yet to shine

Hindalco’s copper business (where demand is mainly from the domestic market) has been facing margin pressures from declining realisations. While the segment’s contribution to revenues is 67 per cent, its high cost structure has limited its share in profits to as low as 20 per cent.

Copper cathodes and rods find use in high end industries such as electrification, housing and construction and infrastructure projects. Apart from US and Europe, Hindalco exports copper to the BRIC nations, which offset decline in demand from US and Europe in 2007-08. But with even the BRICs witnessing a slowdown in 2008, Hindalco’s revenues from copper slipped by 5 per cent for the nine months ended December 2008.

LME prices

Copper prices in the London Metal Exchange corrected sharply, by 62 per cent, between July and December 2008. They have since recovered 44 per cent. Easing warehouse stocks and signs of higher Chinese demand have raised hopes about an early recovery in the copper price cycle.

On the other hand, aluminium prices remain subdued, though they have risen 19 per cent from the February 2009 lows. LME inventories show some improvement in aluminium demand but the recovery is more tentative than for copper.

Financial overview

A strong commodity cycle saw Hindalco deliver sales growth of 24 per cent and operating profit growth of 25 per cent between 2003 and 2007.

In 2007-08, the company saw a manifold growth in consolidated sales from Rs 193 crore to Rs 600 crore (attributable to the acquisition of Novelis), while operating profits rose 50 per cent. But high interest costs from the Novelis acquisition led to a dip in net profits. From a consolidated debt service coverage ratio of 15 times in until 2006-07, it fell to three in 2007-08.

The bridge loan taken for the buyout (due in November 2008) has been fully repaid by the company, through rights issue proceeds amounting to $920 million. For the remaining debt, the company has again borrowed $982 million (at a rate of LIBOR + 80 bps) after liquidating its investments.

The financial year 2007-08 saw a sharp surge in crude oil prices, which had cascading effect on transportation costs and cost of alternative energy sources such as coal. Going forward, Hindalco’s margins are likely to benefit from the substantial correction in crude oil and coal prices.

Other concerns

The major constraint for the aluminium division is the threat of import substitution. With the government recently hiking import duties on the metal, this problem has been addressed adequately. The copper division continues to face raw material supply constraints, resulting in production capacities remaining unutilised.

Moreover, Hindalco faces margin pressures because of depressed treatment and refining charges, which determine conversion margins on copper and this is expected to persist in the near future also.

Read the full post...

AIA Engineering: Buy

Investors can consider buying the stock of AIA Engineering, the world’s second largest manufacturer of high-chrome mill internals. Our recommendation stems from the steady demand for AIA’s products from cement companies, both domestic and global, as also the revival of enquiries from the mining sector. Production cuts taken by some of its potential clients in the mining sector had earlier limited AIA’s revenue opportunities.

AIA, with a dominant presence in the domestic and overseas markets, appears well-placed to leverage from the revival in demand from the mining sector. At the current market price of Rs 163, the stock trades at about 9 times its likely FY-10 per share earnings.

While valuations are at a premium to capital goods stocks, that AIA is the only listed player in this space justifies its premium. However, given the recent surge in the markets, investors may be better off phasing out their exposure to this stock over a period of time.

Demand boosters

AIA specialises in design, manufacture, installation and servicing of high-chrome mill internals (which find application in cement, mining and thermal power industries). The demand for AIA’s products stems primarily from the switch in the user industries’ preference to high-chrome mill internals against the conventional forged ones.

This leaves plenty of room for growth as the current share of high-chrome mill internals stands at only about 15 per cent of the total demand. High-chrome mill internals, which are used to grind clinker in cement mills; coal in thermal power plants and mineral ore in mines are likely to attract higher demand in the coming years as they offer higher productivity, greater control over grinding process, lower power consumption and lower wear rates.

Demand for AIA’s products may also derive strength from the fact that there has not been any major scaling down in capex plans by the cement majors.

While sustained capex may help keep the demand from the cement sector strong (the sector is the primary revenue contributor for AIA), a good part of the company’s overall business (nearly 70 per cent) comes from replacement demand. That, to an extent, insulates AIA’s revenues from any sharp slowdown in its user industry’s capital spending cycle.

Besides, AIA is also looking to increase the share of its revenues from the mining sector. This appears to hold promise, as the market potential in this sector is immense, while competition is limited. Besides, it also plans to tap global market in this space. Trends in order inflows from the mining sector, therefore, may bear a close watch in the coming quarters.

Going slow on expansion

While the company had earlier gone in for a large capacity expansion programme, it has in conformity with the current market scenario toned its capex plans considerably. The second phase of its capacity expansion plan (100,000 tonnes) is now under review. AIA now plans to incur limited capex that will entail only the de-bottlenecking its current capacity. This appears prudent, as it will help the company conserve its cash.

Earnings scorecard

For the quarter ended December 08, AIA managed to report a 45 per cent growth in consolidated revenues, helped primarily by the new capacities it had added last May as also an improvement in its realisations. In terms of sales break up, exports made up for 57 per cent of its revenues and domestic sales the rest.

The cement sector continued to be the lead contributor, making up a good 65 per cent of its total sales. Utilities and mining segment made up for 25 per cent and 10 per cent respectively. But revenues in the coming year may be more or less flat as the management expects realisations to drop, led by the correction in raw material prices, even as it expects an increase in sales volumes.

Operating margins for the quarter, however, dropped by about 2.2 percentage points to 25.5 per cent, driven by a high base effect (as the company had initiated price hikes last year) and then prevalent high raw material prices. Net profit growth was pegged at about 17 per cent. HBL

Read the full post...

Weekly market update: domestic sentiment still driving rally

>> Friday, April 10, 2009

This three day trading week saw further gains for the Indian markets, which seemed to ignore a mixed week elsewhere to continue on their upward path. FII inflows were positive in the early part of the week but the real driver of the rally remains the domestic players whose positive sentiment is continuing unabated.

Monday was a positive day globally as the major indices rallied and the Sensex gained 1.8%. Tuesday saw no trading but on Wednesday the markets bucked the global trend as the Sensex advanced 2% while losses were seen almost everywhere else.  Not least in the US where profit booking dragged the Dow down over 2%. Thursday was flat, following a morning rally and afternoon sell-off. The Sensex ended the week on 10,805 up 456 points or 4.4% for the week. The Nifty closed on 3,342, up 131 points or 4.1%. 

The big gainers this week have again been Realty, Metals and Banking with Capital Goods and Infrastructure also gaining ground, including Reliance Industrial Infrastructure which jumped a massive 33% in Thursday trading. The mid cap and small cap indices also had a good week as buying interest continues to increase in companies outside the benchmark indices, indicating a general increase in risk appetite amongst investors. This weeks advance means gains from the previous lows are now approaching 30% and the markets stand at a 6 month high going into voting season.

Other domestic news saw WIP inflation fall again to 0.26% (although CPI remains much higher) and the Index of Industrial Production (IIP) come in at -1.2%. Neither was a huge suprise and had minimal impact on the markets mood. Neither did the announcement that the RBI has monetised 1.5 lakh cr of government debt, increasing the money supply and reducing the need for debt to be issued, but as some analysts have pointed out risking future inflation.

With the market at least acting like it has priced in the worst of the slowdown, the big tests coming up are earnings season and the election. Q4 resuls which beat, meet or are not a great deal worse than expectations will probably support the belief that the worst news is already priced in and may fuel a continuation of the rally. 

However, uncertainty about who will be returned to power will loom heavy throughout the last weeks of April and most of May. This will probably increase volatility and a may reduce buying interest until a government is returned. The mood however appears to be positive for the coming week.

Post originally published on

Read the full post...

Is economy close to bottoming out?

>> Thursday, April 9, 2009

Did the stock markets smell it ahead of others? The Indian economy is close to bottoming out, says leading research outfit Nomura.

After four quarters of consecutive declines, the index which measures real M2 money supply, non-oil imports, equity returns, repo rate, real bank credit, industrial output and tourists rose in first quarter (Q1) of fiscal 2009-10 suggesting pick-up in economic activity.

Nomura uses a composite leading index (CLI) to identify turning points in the growth rate cycle. The index which had fallen from near 102 levels in September 2007 to 99, shows a breakout from current levels and seems to be rising upwards.

Since the CLI has a lead of two quarters over non-agricultural GDP growth rate-the pick up in Q1 suggests some pick-up in economic activity from the third quarter, feels Nomura economist Sonal Varma.

“Export and production data in several Asian countries (including India) have continued the improvement seen in previous months,” chief analyst Allan Von Mehren of Dankse Bank, Denmark’s largest bank.

Purchasing managers’ index for new orders show that after falling in mid-2008, the index for India has recovered significantly.

However, the recovery for the economy may not be very quick. Nomura says the decline in real GDP growth (the latest data available are Q4 of fiscal 2008-2009 ) will continue in first six months of 2009.

“We forecast real GDP growth to trough in the second quarter of FY09 at 4.5% year-on-year, led by inventory de-stocking and a further weakening of output in the services sector.”

But it maintains that overall, the turnaround in the leading index is positive . “We interpret it as a sign that the Indian economy is now close to bottoming out,” the Japanese outfit said.

Meanwhile, Citigroup economists feel that consumer price index could fall from 9.6% levels in Feb 09 to 5-6 % range soon as good monsoons could see new crop coming in. While latest inflation data pegs the WPI at 0.3% for the week ended 14 Mar, however the consumer price index (CPI) - released on a monthly basis - remained at neardouble-digit levels, up 9.6% in Februray 09.

“Given the base effect and new crop coming in, it is now consensus that normal monsoons will result in the CPI moderating to 5-6 % levels. Importantly , food articles comprise 14% of the wholesale price index but 57% of the CPI,” Citigroup economists Rohini Malkani and Anushka Shah said. - ET

Read the full post...

Industrial output down 1.2% YoY in February

India's industrial output fell 1.2 per cent in February against a growth of 9.5 per cent in the like month of last fiscal, even as the provisional drop reported for January has been revised now to a marginal growth of 0.39 per cent.

As per data on index for industrial production (IIP) released on Thursday, manufacturing output, which accounts for the bulk of the weight in the overall index, declined 1.4 per cent in February, against 9.6 per cent growth in the like month of last year.

While mining output also fell 1.6 per cent, against 8 per cent growth in February 2008, that for electricity increased marginally by 0.7 per cent compared with a 9.8-per cent growth during the period under review, the official statistics showed.

Cumulatively, the general index expanded 2.8 per cent during the first 11 months of 2008-09, as against 8.8 per cent in the same period of last year. Industrial output was up 8.1 percent in 2007-08 and 11.6 per cent in the year before. - ET

Read the full post...

Inflation eases to 0.26 per cent

Inflation declined to 0.26 per cent, the lowest ever in more than three decades, for the week ended March 28 mainly on account of food items and mineral products, fuelling expectations of rate cuts by the Reserve Bank.

The wholesale price-based index declined by 0.05 percentage points against 0.31 per cent in the previous week.

During the week, the minerals group declined by a whopping 11.8 per cent due to prices of fire clay going down 19 per cent, iron ore 14 per cent, and chromite two per cent.

Prices of some food items like tea have declined. But the fuel index remained unchanged at its previous week's level of 320.9.

However, manufactured items like imported edible oil were dearer by six per cent, benzene by 14 per cent, and enamelled copper wires by 9 per cent. - ET.

Read the full post...

Satyam to announce winning bid on Monday

Satyam Computer Services Ltd. will open the bids to buy a stake in the company Monday , Deepak Parekh , one of its government-appointed directors, said Wednesday. The Satyam board has asked S. P. Bharucha , a former chief justice of India, to oversee the sale process. Mr. Parekh had said Saturday Satyam will decide on the winning bid Monday.

With Friday being a holiday hence no trading day, this gives us one last chance to enter in to Satyam related stocks like Spice Communications , which had a tremendous run yesterday registering nearly 18% gains intra-day . LNT is on a roll being up nearly 5%. Tech Mahindra is up 2%.

But there is certain amount of risk here, the company which does not win the bid will be on Bear-Radar and can go in to free-fall mode. So let's just say this is a risky trade to get in to.Worst case scenario if IBM is to win the bid, we will see the Indian companies give up gains and we may even see up to 10% fall in prices.

In my personal opinion, Satyam is a buy under 45 to reach at least 50-52 levels. This is a win-win situation for Satyam so can be safely bought for a short term trade. See my Satyam Stock Pick here

What do you guys think?

Read the full post...

Intraday tips and market outlook for 9th April.

US markets ended positive after a volatile trading section.
Europe ended mixed.
Asia has opened positive.
Expect the Indian Markets to open positive.
The support for the Sensex is 10525 and the resistance to the up move is at 11295
Nifty: (3343) the support for the Nifty is at 3260 and the resistance to the up move is at 3451

Day Trading Ideas -

Buy above 109.25 for targets of 110.25 and 111.45
Sell below 105.45 for targets of 104.25 and 103.10

Buy above 814 for targets of 821 and 834
Sell below 796 for targets of 785 and 776

Buy above 55.25 for targets of 56.10 and 57.45
Sell below 52.45 for targets of 51.40 and 50.75

Happy Investing.

Read the full post...

Intraday tips and market outlook for 8th April.

>> Wednesday, April 8, 2009

US markets cracked down.
Europe was trading negative.
Asia is trading negative.
Expect Indian Markets to open flat to negative.
The support for the Sensex is 10150 and the resistance to the up move is at 10708-11295
Nifty: (3257) the support for the Nifty is at 3125 and the resistance to the up move is at 3451

Day Trading ideas

Buy above 274 for targets of 278 and 283
Sell below 259 for targets of 254 and 251

Buy above 53.90 for targets of 54.85 and 55.95
Sell below 51.25 for targets of 50.65 and 49.50

Buy above 896 for targets of 904 and 914
Sell below 875 for targets of 870 and 864

Happy Investing.

Read the full post...