Stock Xchange News

Buy : Fedders Lloyd Corp

2009-11-10T09:05:00.000+05:30

Investors with a short-term trading perspective can buy Fedders Lloyd Corporation at current level. Short-term trend in the stock is bullish. It has been moving up vertically without any correction since October 6. Momentum indicators in the daily chart have moved in to the overbought region but there is no sign of weakness yet. The stock closed above the immediate resistance at Rs 69 on Monday implying that the vertical climb can extend. Investors can buy the stock with a stop at Rs 68. The uptrend is expected to take the stock to the target of Rs 82 in the short-term.

Experts pick stocks/sectors to buy ahead

2009-11-09T22:55:00.000+05:30

After a bout of correction, Indian equity markets seem to have changed track again, upwards. The National Stock Exchange’s Nifty 50 closed Monday at 4,898 bouncing back after a brief but strong correction to about 4,600 levels.

The road ahead

The Indian market has been rising on the back of the weakening dollar, feels Jitendra Sriram, VP & Fund Manager – Equities at HSBC. “The markets will remain volatile ahead because the amount of cues that’s are coming in from global sources whether be the euro zone or US remains mixed,” he said.

The market looked a little expensive at Nifty 5,000 levels, Sriram said. “To our mind, either there is a time value where corporate earnings catch up or there is a pullback in the index, which will tempt investors to come back and buy into the market.”

“A lot of people are still convinced that market is just not yet a buy on rallies or aggressively buy on dips,” said Sajiv Dhawan of JV Capital Services. “There are a lot of people looking to short and they are expecting the markets to fall further in month of November-December.”

“Personally speaking we are on the long side as we do follow strict levels, there is no reason as of now to short, I think that time is obviously gone but sentiment remains skittish,” he added.

Dhawan’s advice is to keep buying but with strict stop-losses.

View on stocks/sectors

Banks: “It’s an investment call; you buy the dips,” Dhawan said. “The stocks corrected maybe 10-15% plus from their highs. The negative news in the form of higher interest rates ahead if factored in into the prices to an extent. It’s still full of potential of mergers and acquisitions, you have seen ministers discuss their state banks saying they would like bring their down holding into that stock. You have seen private sector banks like ICICI Bank, HDFC Bank having several ‘buy’ recommendations,” he added. “Across the board whether it’s a PSU, private banks for us it’s an investment call and you buy on any sharp decline.”

Aviation: “From a near-term perspective there are various triggers,” said Sriram. “One is you are entering the busy season in terms of tourist arrivals, generally the monsoon quarter tends to be little weak and you are entering a phase where load factors will go up,” he said, adding that air tariffs were also showing some kind of strength. “These are the two factors, which are driving up space.”

Sugar: Sriram said he was positive on the sector, adding that the fair and remunerative price (FRP) the nation introduced recently was a plus for the long term. “It brings down the impact of the vagaries of local state level regulations on the space.”

Upto exchanges to extend trading hours: SEBI

2009-11-09T22:29:00.000+05:30

In the wake of brokers raising objections to the extension of trading hours, market regulator Sebi today said it is entirely upto the exchanges to increase the market timings.

"There is perhaps a misconception in the market that we extended the market hours, we have told the exchanges that they can choose any hours between nine am to five pm for trading. Now the exchanges have to decide what is practical for them. We don't have any regulatory concerns," Sebi Chairman C B Bhave told reporters here.

Bhave was replying to a query about some brokers raising objection against the extension of trading hours.

Asked whether Securities and Exchange Board of India (Sebi) was in talks with RBI for extending banking
hours to align with extended trading session, Bhave said, "If the exchanges ask us for help to approach any institution, we will help them."

Country's two prime bourses, the National Stock Exchange and the Bombay Stock Exchange, are likely to extend trading time by two and half hours from next month and a formal notification to this effect is expected shortly.

"Both the exchanges (BSE and NSE) have discussed the issue (extension of trade timings) and a formal notification is expected shortly," a senior exchange official has said.

Last month, Sebi approved extension of trade timings by up to two-and-a-half hours from 9 am to 5 pm. The current market hours stand from 9.55 am to 3.30 pm.

RIL investors get richer by Rs 11,000 cr

2009-11-09T22:12:00.002+05:30

MUMBAI: Investors of Reliance Industries on Monday got richer by more than Rs 11,000 crore as the country's largest private sector company closed with a gain of over 3 per cent on the bourses.

Shares of the company continued their northward journey for the fourth consecutive day, settling at Rs 2,024.55 on the Bombay Stock Exchange, up 3.46 per cent over the previous close.

On the National Stock Exchange, RIL closed higher by 3.45 per cent at Rs 2,025.05.

At close, RIL added Rs 11,140.37 crore in market cap in a single day. The valuation of the company stood at Rs 3.32 lakh crore, up from Rs 3.21 lakh crore on Friday last week.

The surge came amid reports that RIL is likely to acquire a part of the assets of troubled LyondellBasell. Reliance Industries today said that "RIL is reviewing a number of global opportunities for growth in its core business."

Equities Head of brokerage firm
SMC Capital, J Thunuguntla, said, "Positive sentiments helped in boosting the trading activity in RIL. Besides, the news about foreign acquisition would start showing some impact on the stock when the details of the transactions would be disclosed."

On the volume front, over 32.78 lakh shares exchanged hands on NSE and over 7.65 lakh shares got traded on BSE.

The Sensex closed at 16,498.72 points, a gain of 340.44 points or 2.11 per cent.

Mahindra Satyam restarts hirings, recalls bench

2009-11-09T07:49:00.000+05:30

Mahindra Satyam is back to hiring once again. It is set to hire 120 employees and recall its employees who were on the bench, reports CNBC-TV18’s Kritika Saxena.

Mahindra Satyam has lifted its hiring freeze and is set to hire 120 employees in the next one month. And that's not all. It has also called back 1,400 of its 6,000 employees who are on the bench. CNBC-TV18 learns that this hiring comes after new deals being signed this quarter especially in the emerging markets.

Says CP Gurnani, CEO, Mahindra Satyam, “For our business strategy and growth, we started working with Bain & Company, a high-end consulting. With them, we have come out with a new value proposition for our clients. We are definitely engaging and trying to get some additional leverages from opening new markets like defence and providing new service offerings like ICT.”

Gurnani believes that this quarter has been better than expected and is confident that Mahindra Satyam will meet the deadline of June 2010 to submit its re-stated accounts.

“As of date, KPMG is confident that they will be able to declare the accounts and give it within the stipulated period. It’s not about one day. It is going to take one step at a time. If one step I take everyday like this, I will be in good shape,” Gurnani adds.

Clearly Mahindra Satyam has fast-tracked its plans to acquire customers. This move also comes after some clients have increased their IT spends. Going forward, Mahindra Satyam expects to hire a larger number of employees and call back more from the bench.

Sell : Tata Power Company

2009-11-09T07:43:00.000+05:30

We recommend a sell in the stock of Tata Power Company from a short-term perspective. It is evident from the charts of the stock that its intermediate-term uptrend that commenced in March low of Rs 602 was arrested at Rs 1,487 in late October. The stock has a significant long-term resistance in the band between Rs 1,450 and Rs 1,500 level. Triggered by the negative divergence in the weekly relative strength index and moving average convergence and divergence indicator the stock reversed its direction. Since late October, it has been on a short-term downtrend. On October 30, the counter tumbled 4 per cent penetrating its intermediate-term up trendline. Moreover, it declined 4 per cent with good volume on November 6, reinforcing the downtrend. The stock is trading well below its 21- and 50-day moving averages. The daily momentum indicator has entered the bearish zone. Our short-term outlook on the stock is bearish. We anticipate its decline to continue until it hits our price target of Rs 1,145. Traders with a short-term perception can sell the stock while maintaining stop-loss at Rs 1335.

Buy : Bharat Forge

2009-11-06T09:32:00.000+05:30

We recommend a buy in Bharat Forge stock from a short-term perspective. It is perceptible from the charts of the stock that after recording a multi-year low of Rs 69 in January, it began to trend upwards. Since then it has been on an intermediate-term uptrend, forming higher peaks and troughs. While trending up, the stock conclusively broke through key resistance levels at Rs 195 and Rs 240 which subsequently turned in to key support levels. Following a short-term pull-back from Rs 307, the stock found support around Rs 240 and resumed its uptrend. On November 4, the stock gained 7 per cent with above average volume, reinforcing the uptrend. The daily relative strength index (RSI) bounced up from 40 level and is heading towards the bullish zone. Moreover, weekly RSI has entering in to the bullish zone. Our short-term forecast for the stock is bullish. We anticipate it to rally further until it hits our price target of Rs 293 in the approaching trading sessions. Traders with a short-term perspective can buy the stock while maintaining stop-loss at Rs 252.

Today's Pick

2009-11-05T09:24:00.003+05:30

Recommendation: Buy

Last Close: Rs 243

Last Close: Rs 270/80

Stop Loss: Rs 218

GE Shipping has a very good support around Rs 220-25 levels; these levels would act as support if the stock corrects from current levels. Keep stop loss below Rs 218 for a possible target of Rs 270/80.

Recommendation: Buy

Last Close: Rs 47.70

Last Close: Rs 52

Stop Loss: Rs 45

Truck major Ashok Leyland is in uptrend in the short-term period; the stock is moving up with good volume and has very good support around Rs 45. Keep stop loss below Rs 45 for a possible target of Rs 52/53.

Recommendation: Sell

Last Close: Rs 288

Last Close: Rs 260

Stop Loss: Rs 300

HCL Tech has hit high of Rs 352 and then started moving down after making lower top of Rs 335. Currently trading below Rs 297, it can lead to further downside up to Rs 260. Keep stop loss above Rs 300 for a possible target of Rs 260.

Recommendation: Buy

Last Close: Rs 544

Last Close: Rs 605

Stop Loss: Rs 518

Divi’s Labs has very good support at Rs 518-30; these levels would act as support if the stock corrects from current levels. Keep stop loss below Rs 518. It has a resistance at Rs 570 at which upgrade trailing stop loss to Rs 540.

Recommendation: Buy

Last Close: Rs 700

Last Close: Rs 740

Stop Loss: Rs 680

FMCG major Colgate-Palmolive is in uptrend for short term and is moving up with good volume. The stock has a very good support around Rs 680. Keep stop loss below Rs 680 for a possible target of Rs 740.

GMR Infrastructure : Buy

2009-11-05T09:11:00.000+05:30

We recommend a buy in GMR Infrastructure from a short-term perspective. It is apparent from the charts the stock has been on a long-term uptrend from its October 2008 low of Rs 22.75. However, after encountering resistance around Rs 90 in June it was on a medium-term decline till the July support level at Rs 60. With in the long-term uptrend, the stock has been consolidating sideways in the range of Rs 60 and Rs 75 since July. The key support at Rs 60 along with the positive divergence in the daily relative strength index (RSI) backed the stock’s 7 per cent jump on November 4. The daily RSI is on the verge of entering the neutral region from the bearish zone and the weekly RSI is hovering over the neutral region. Considering that the stock’s long-term uptrend-line is in tact we are bullish on it from a short-term perspective. We expect the stock to move up until it hits our price target Rs 69.5. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 60.

JSW Steel : Sell

2009-11-04T09:37:00.000+05:30

We recommend a sell in the stock of JSW Steel from a short-term horizon. It is evident from the charts that the stock’s intermediate-term rally from March low of Rs 161 had ended in late October high of Rs 935. Triggered by the negative divergence displayed in the daily relative strength index, the stock changed its trend. It has been on a short-term downtrend since October high. While declining, the stock breached it 21-day and 50-day moving average as well as intermediate-term uptrend-line. On November 3, the stock plummeted 10 per cent breaking through its significant long-term support level of Rs 700. The daily RSI is featuring in the bearish zone and weekly RSI is falling in the neutral region towards this zone. Moreover, the daily moving average convergence and divergence indicator has entered the negative territory. Our short-term outlook on the stock is bearish. We anticipate it to tumble until it hits our price target of Rs 610. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 715.

Gas row: RIL, RNRL oppose shareholder plea

2009-11-04T09:35:00.000+05:30

NEW DELHI: Mukesh Ambani Group firm RIL and Anil Ambani's RNRL on Tuesday joined hands to oppose the plea of a shareholder in both the companies to be made party in their ongoing dispute in the Supreme Court (SC) over the gas price to be supplied from th e KG basin.

“For a change we are on the same side,” RIL and RNRL's counsel Mr Harish Salve and Mr Mukul Rohatgi, who have been attacking each other over the dispute, told a Bench headed by the Chief Justice, Mr K G Balakrishnan which refused the plea of the sharehol der to be impleaded as the party in the high-voltage legal battle, the hearing of which will resume tomorrow for the seventh day.

Mr Vishweshwar Madhavrao Raste, claiming himself to be the shareholder of RIL and RNRL, had also sought tabling of the family MoU of 2005.

“We are not allowing anybody to intervene. In this way this court will have to hear three million shareholders,” the Bench, also comprising Justices Mr V S Sirpurkar and Mr P Sathasiva, said.

The apex court said it will not issue notice and simply post the application along with the main matters. It is hearing the dispute between RIL and RNRL relating to pricing of gas from KG basin for which the two brothers Mukesh Ambani and Anil Ambani are engaged in a bitter fight.

RNRL is seeking gas from his brother's group RIL at rates 44 per cent lower than Government-approved price. RIL says it cannot honour the commitment made in the 2005 family agreement due to Government's pricing and gas policies. – PTI

Mkt won't correct below 4500

2009-11-03T09:29:00.001+05:30

Experts Nilesh Shah, Ashwini Agarwal feel:

Nilesh Shah, MD and CEO, Envision Capital, does not rule out another 5% correction from here. "The Nifty can go to 4,500. Also, valuations look reasonable at those levels. The market is likely to consolidate at lower levels."

He sees the Nifty trading in a 4,500-4,800 range next quarter. He says valuations are challenging above the 5,000 Nifty. "We see significant resistance at 5000-5200 levels. But implementation of reforms can take the range higher."

Ashwini Agarwal of Demeter Advisors too sees Nifty finding support at 4500 in this correction. He rules out a fall below 4,000 Nifty and 14,000 Sensex. But was quick to add that India can fall further if global markets correct. "A deeper correction is likely if liquidity reverses."

Agarwal says investors can invest 5% lower for a 12-month perspective.

Sell : Reliance Power

2009-11-03T09:22:00.000+05:30

We recommend a sell in the stock of Reliance Power from a short-term perspective. It is apparent from the charts that the stock was on an intermediate-term uptrend from March low of Rs 89 to its June high of Rs 210. Triggered by negative divergence and presence of significant long-term resistance around Rs 200, the stock resumed its long-term downtrend which has been in place since February 2008 high of Rs 374. Moreover, since June it has been on an intermediate-term downt rend. In early October, the stock breached its 21-day and 50-day moving averages and is hovering way below them. Both the daily relative strength index (RSI) and moving average convergence and divergence (MACD) indicators are featuring in the bearish territory. The weekly indicators are on the verge of entering in to the bearish territory. Our short-term forecast on the stock is bearish. We expect the stock’s downtrend to prolong until it hits our price target of Rs 124 in the approaching trading sessions. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 146.

Parameters to look at before exiting from any stock

2009-11-01T10:39:00.001+05:30

When to sell? What are the parameters to look at before selling a stock? These are the questions that Sujan Rao, working in an Indian
company, asked after seeing a sharp rise in the equity markets. With over 90% appreciation in the Sensex since March this year, a large segment of the investor community is in a fix on whether to sell or hold.

While the views are divided as far as the direction of the market is concerned, SundayET has some insights on the parameters to look at before exiting from any stock.

SundayET has been telling its reader that they should have a return estimation before buying any stock and hence the best time to exit is when your target is achieved. However, if one expects further upside due to any development, it makes sense to go for partial profit booking.

Also, according to Anil Chopra, group CEO, Bajaj Capital, if the target return fixed for a particular stock has been achieved one should exit. For example, if you have invested in a stock at Rs 100 per share with a target return of 20% in one year and in case stock appreciates to Rs 120 in two months then it is wise to exit that stock and book profit.

Since it is difficult to buy stocks at the bottom, experts suggest opting for systematic investment plan (SIP), where investors make periodic investments rather than putting a lump sum amount. Similarly, it is impractical to sell at the top and hence one should go for systematic selling plan (SSP) and at every level of the upward rally investors should book some profit.

However, it is not advisable for investors to decide on selling triggers right at the beginning.
Valuation of the company is another parameter to look at for deciding whether to hold or sell the stock. Although, it may be possible that a stock goes up further even after reaching the fair valuation, experts suggest that investors should sell once the stock price goes beyond the fair value.

Also, one has to look at the options available. If you find any other investment option more attractive compared to your current investment in a particular stock, you may consider switching. The market trend, which is mostly driven by sentiments, is crucial. According to Kapur, frontline stocks are usually less volatile than mid caps. They may offer less return than mid caps but have a relatively higher safety level.

Mid caps generally do well only in very firm and positive markets. Some of the large cap stocks like realty majors also have a high beta and are very volatile. The moment the sentiment in the market changes or uncertainty starts creeping in, it is better to exit all mid-cap and high beta stocks regardless of whether the target one has in mind while investing has been achieved or not.

In addition, according to Vineeta Jain, head research & index management at Eastwind Capital Advisors, when one notices that insiders are
BSE
Why realty is good investment
Key to maximising returns
How to gauge market movements
What moves the stock markets?
selling stocks substantially, it is better to exit from that stock. Also, one should exit from companies which do not react positively to good news coming in or do not fetch higher valuation even after showing impressive quarterly results.

When it comes to investors of mutual funds, parameters to take a sell call may differ a bit. Investors need to evaluate the performance of the invested schemes on a regular basis. The moment there is any major discrepancy from the benchmark indices and peers, one can consider an exit.

The performance of a mutual fund is dependent on the capability of the management team. Hence, any change in the ownership or fund management team may impact the fund performance. It is advisable to avoid schemes where the management team has been changed recently even if the schemes of that company were performing well because the past performance and track record is no longer relevant.

Mutual funds are managed by fund managers and logically a buy or sell call should be taken only by them, however, partial profit booking may be done in case of extraordinary returns even if the scheme is doing much better than peers and the benchmark. This is just to be cautious and safe as usually very high performing schemes in bull markets take a lot of risk and suffer in a big way when the market sentiment reverses.

Unit-linked insurance policies (ULIPs) are for long-term products, but with the sharp rise in the stock market, the net asset value of ULIPs also goes up. And as part of balancing the portfolio one may consider a switch to conservative portfolio, whereby a part of the equity exposure is shifted towards debt instruments.

Given the current market condition, Kapur says, "It makes a lot of sense to switch to a conservative portfolio and reduce your equity exposure. Insurance anyway is a conservative investment option where safety scores over return."

Six remarkable unknown PSUs

2009-11-01T10:20:00.003+05:30

Till recently, not many people had heard of Satluj Jal Vidyut Nigam. Then the government announced that the company would a candidate for divestment in the coming months and now everyone is suddenly interested in knowing more about Satluj Jal Vidyut Nigam.

With the government preparing for another round of divestment, a fresh new set of public sector undertakings (PSUs) are preparing to capture the limelight. They’re not the big ticket ‘navratnas’ like ONGC, SAIL and GAIL which the public has come to recognise. Instead, they are hitherto unknown companies and nobody is quite sure what they do. The companies picked by the Government for divestment are all set to become familiar names for investors in the months to come.

Meanwhile, Corporate Dossier decided to pre-empt matters by taking a close look at six little-known PSUs that have executed remarkable turnarounds in recent years.

EDCIL

Under Banerjee’s leadership, EDCIL’s turnover has grown from just Rs 25 crore to over Rs 54 crore and its grading by the Department of Public Enterprises has moved up from ‘fair’ to ‘excellent’. In educational projects, typically, the gestation is long but Banerjee seems to be happy with the 10-16% margins her business bears.

Also, she has sketched out high-value areas for her company, quality certification and school accreditation, technical audit for institutional construction, IT education, educational fairs and online testing facilities. Categorised as a ‘Mini Ratna’ by the government, EDCIL provides placement to international students from over 30 countries and sends expert faculty to more than 15 countries.

Today, 65% of the work comes from the government and the remaining 35% from the private sector. Banerjee wants a 50:50 ratio. “I want to get more private and international clients. I’d like to add more professionals and specialists to add value to our client base,” she says.

Heavy Engineering Corporation

People do move from the public to the private sector, but Pillai’s reverse swing from the Sanmar Group in Chennai to HEC at nearly one-tenth the annual remuneration was an eye-opener.

Pillai takes pride in the fact that for the first time in the company’s 50-year-history, it has booked a profit for three consecutive years. The turnover per employee has improved from Rs 4.41 lakh in 2004-05 to Rs 15.73 lakh today.

In 2007-08, sales spiked to Rs 413 crore from Rs 297 crore in the previous year. And in 2008-09, the sales have touched Rs 454 crore with a profit of Rs 18 crore against a targeted profit of only Rs 6 crore. In 1958, the company was created to serve the steel and coal sectors. But Pillai chose a strategic shift. “I want HEC to serve strategic sectors like defence, space and the nuclear.”

In other words, he realised it was time to de-commoditise the company, away from market fluctuations, toward the sweet spot of exclusivity. In line with the new thinking, HEC has developed a very special material for nuclear-grade steel and also supplied the heaviest (810 tonnes) launchpad for India’s space mission.

WAPCOS

At times, a name change can have profound implications. Until 2003, WAPCOS used to be Water & Power Consultancy Services Ltd. That year, the success rate of proposals dipped and the company’s turnover slipped from Rs 45 crore to Rs 42 crore.

Today, the diversified space accounts for 25% of WAPCOS’ business. And though 50% of its revenue comes from turnkey projects, RK Gupta, CMD of WAPCOS, wants to focus on pure-play consulting since turnkeys are typically bogged by long gestation.

Now in the corner room, Gupta is confident of achieving a turnover of Rs 325 crore this financial year and taking the leap beyond the Rs 500-crore mark next fiscal, amid fierce competition from the likes of Tata Consultancy Services, Tahal Engineering, Matt McDonald, Feedback Ventures and RITES.

Gupta should know for he has worked directly with four CMDs in his 20 years at WAPCOS. Having said that, over the last month, there has been a significant shift in the management style of the company. Gupta now works from the Gurgaon office, closer to the 400-odd workforce, instead of the more centrally-located registered office at KG Marg in Delhi. “It’s a more inclusive management system,” he says.

Bharat Pumps & Compressors Ltd

When Abhay Kumar Jain took up the reins of Chairman-cum-Managing Director (CMD) four years ago, Bharat Pumps & Compressors Ltd (BPCL) was down and out. He inherited a net loss of Rs 10.86 crore, a demotivated workforce with wages frozen since 1992, run-down machinery, and more.

Three months into his new job, Jain clocked a turnover of Rs 37 crore for the company through process re-engineering and customer orientation. This translated into BPCL bagging “very good” orders from the subsequent year. Capacity utilisation increased from 26% in 2005-06 to 78% today.

Spurred by diversification to high-pressure and CNG cylinders, the demand from clients such as Oil India, ONGC, Mittal Group and Reliance have peaked. This year, the company has bagged its first overseas export order from Iran for the supply of compressors worth Rs 45 crore.

In 2008-09, BPCL clocked Rs 236 crore, a figure that Jain wants to better by about Rs 50 crore this financial year. Will he get there? Going by Jain’s just-in-time interventions, it certainly looks par for the course.

Projects & Development India Ltd

When the 52-year-old RG Rajan arrived on the scene as CMD of the Rs 73 crore Projects & Development India Ltd (PDIL), the company clearly needed to refine itself. There were about 1,000 people on the rolls and the books showed patchy progress.

Apart from rationalising the workforce to 600, Rajan ensured the churn rate fell below 1%. Within 12 months of taking charge, Rajan directed 20 of his departmental heads to draw up a corporate plan. The refineries started taking notice and the company received fresh orders from IOC, OBGC, CPCL and HPCL.

For the first time in its 31-year history, PDIL paid dividend to the government to the tune of Rs 1.75 crore in 2007-08 and Rs 3.46 crore in 2008-09.

Rajan put the foreign contracts to good use as bait for recruitment. “People got the opportunity to go abroad on deputation, always a major lure,” he says. Alongside, the recommendations of the government pay commission kicked in and salaries improved to such an extent that the overall economic downturn proved to be a blessing in disguise. Last fiscal, for 35 positions, the company received 16,000 applications.

Rajan has been on a hiring spree over the last three years, picking up 200 people, mostly engineers. Beating the recession and turning the corner, PDIL bagged the prestigious Scope Award from Prime Minister Manmohan Singh earlier this month.

Hospital Services Consultancy Corporation

With a turnover of Rs 32.73 crore for 2008-09, HSCC offers single window project management services, from concept to commissioning, setting up hospitals, medical colleges, diagnostic centres, research facilities, clinical facilities and manages procurement of high value medical equipment. On the consulting side, it offers expertise on how to manage large-scale medical infrastructure. The company has moved up the PSU rating order from ‘good’ in 2004-05 to ‘excellent’.

Sharma joined HSCC in 2006 and was with infrastructure major RITES prior to his new assignment. For him, the driving force remains the pool of toppers the organisation maintains. He personally checks his people power every three months. “We are careful we don’t get overstaffed. I carry out a manpower review with regard to the business scale and the skills available to us every three months, we go to the market to hire and create a panel for skills that are in short supply (like architects and structural engineers) for large and complex structures,” he says.

Impressive was the number of desktops in Sharma’s office, too many to take in at one glance. “I brought in e-culture to the organisation,” he says with a certain pride. That explains the lack of PA’s and secretaries in the building, so typical of a government or public sector undertaking. Sharma knows the value of self-reliance. Along with empowering his workforce, he’s following autonomy to the ‘T’.

State Bank of India Q2 net up 10.2 pc

2009-11-01T10:14:00.002+05:30

The bank, which along with its associates controls almost a quarter of Indian bank loans and deposits, said on Saturday its July-September net profit rose to Rs 24.9 billion($530.2 million) from 22.6 billion rupees a year earlier.

That met a poll of brokers who forecast a profit of Rs 24.6 billion for the period.

Closest rival ICICI Bank said on Friday its quarterly net profit rose 2.6 per cent, beating forecasts.

Shares in State Bank, valued at $31.5 billion, rose 26 percent in July-September, beating a 20 per cent rise in the sector index and an 18 per cent gain on the benchmark index.

Safe havens to protect your money in a falling mkt

2009-10-28T09:16:00.002+05:30

It was a very disappointing day for markets as things took a turn for the worse. The cuts deepened through the day and key technical levels got breached. A more than 100 points shave-off on the Sensex and more than 350 points gash on the Nifty resulted in the Nifty close below 4,850 and the Sensex slip below 16,500 levels today. The markets witnessed their biggest single-day fall since August 17.

Hawkish statements from the credit policy created nervousness in the interest rate sensitives. The real estate space got badgered today with Unitech and DLF down 7-8% post hiking of real estate provisions, while banks went home with biggest loses with State Bank of India and ICICI Bank down 4-6% post the tightening of non-performing asset norms.

Is the correction in markets over?

Dipan Mehta, Member, BSE, sees markets correction for a few more trading sessions. "The result season has been hanging a little bit of a cloud on the market. Actually all the results that we have seen so far are pretty ordinary and hardly exciting. There is nothing to make you excited and run to buy stock. The RBI policy has just been the trigger where now the reality of interest rate hikes is in a matter of months, not years. The market is just factoring it. The RBI policy has just been a trigger in a situation where anywhere the trends were quite weak."

Sudarshan Sukhani of Technical Trends is the most bearish. He feels the intermediate trend has broken which means that we are already in a correction. "The correction could be deeper, it is not necessarily going to stop in a day or two.

Rajat Bose, Technical Analyst, rajatkbose.com, says the markets might go down to sub-4,800 levels. "Sub-4,800 levels have been the place where there has been some support in the past. When the rally happened from July to early October, this was the place when the market consolidated when it was moving up, so between 4,800 and 4,743 there would be some support. But looking at the market picture what I find is that the trend line that you could actually draw from that low of 2539 on March 6, and 3918 on July 13 has been broken. Today, is the third day of the break. When you break a long-term trendline or at least an intermediate-term trendline which lasts for more than six months, a three-day fall should not be considered as too much of a damage because you require at least a couple of weeks to spend below that level."

Bose sees a pullback in market. "Generally, we find a pullback happening towards the trendline, although the trendline currently is above 5,000 levels. It is far cry at the moment, but there would be a pullback. The pullback might well happen from a level between 4,800 and 4,743. Still there is some downside left."

However, Technical Analyst Ashwani Gujral does not read too much into today's market fall. "In a couple of months, the market comes back and retests its 50 DMA (daily moving average). The last time it was around 4,400 and the market turned from there. The 50 DMA is important because a lot of institutions tend to buy at those levels."

Satish Betadpur of Independent International Investment Research too does not see the markets correcting further from these levels. "The market was priced for perfection from an earnings and inflation-interest rate perspective. There are inflation expectations in the system and also earnings were not as good as expected. We wanted a perfect earning scenario where the topline grew, but here we have got better bottomline but the topline has not been very good in many sectors. Even if there is a correction, it won't be very deep because fundamentals on a medium-term are very strong in the economy. But we have to reset ourselves to lower earnings expectations going forward. So, maybe another 100-200 points on the Nifty."

Should you buy on dips?

Gujral advises investors not to panic and buy at these levels. "Investors should look at getting into the market around 4,730 to about 4,800, which was the breakout kind of zone. Right now, people should be looking at buying instead of trying to short the market. Those you short from higher levels should now be actually looking at covering those shorts. The next 50, 80 points is a good buying zone for most stocks. Even interest rates sensitive stock because the rates really haven’t been raised."

Like Gujral, Betadpur too advises investors to buy if the markets correct 100-200 points on the Nifty. He says IT, fast moving consumer goods (FMCG), and pharmaceuticals seems to be a safe haven in this market.

However, Sukhani says the next significant support for the Nifty is at 4,550. He advises investors not to buy in a hurry. "It is very difficult to say what’s going to happen between 4,900 and 4,550."

On earnings:

Ajit Dayal, Director, Quantum Advisors, expects the December quarter profits to be one of the better ones in this financial year. "A lot of upgrades will continue to come through from analysts. Even the CMIE data that I looked at a few weeks ago indicated that the profit of a larger base of Indian companies will grow by some 24%. Assuming there are dilutions through QIPs, rights offerings and everything else, the EPS number will be in 18-22% range depending on how much dilution has happened across a corporate India. So, while the September quarter may have disappointed for some companies, the December quarter will be even better."

Sell : Canara Bank

2009-10-28T09:08:00.000+05:30

We recommend a sell in the stock of Canara Bank from a short-term perspective. It is evident from the charts the stock has been on an intermediate-term uptrend from its March low of Rs 144. However, the stock’s medium-term uptrend that commenced from August low of Rs 252 accelerated and the stock encountered resistance at Rs 395 in the second week of October. Subsequently, the stock reversed direction triggered by the negative divergence displayed in the daily relative strength index (RSI) and the momentum indicator hitting over-bought territory. On October 27, the stock tumbled 6 per cent breaching the 21-day moving average and reinforcing the short-term downtrend. The daily RSI has slipped in to the neutral region from the bullish zone and weekly RSI is on the verge on slipping. Besides, the daily moving average convergence and divergence has signalled a sell. We are bearish on the stock from a short-term perspective. We anticipate it to dive until it hits our price target of Rs 305. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 356.

Mid-term picks

2009-10-28T08:43:00.002+05:30

BUY

MARKET PRICE: Rs 2,203

TARGET PRICE: Rs 2,900

On the back of strong profitability in 2QFY09 and 1QFY10, SBI had raised NPA provisions. Strong traction in fee income is likely to continue in 2QFY10. In 1QFY10, fee income grew 45% y-o-y. Trading profits will remain strong in 2QFY10, non-interest income growth of is seen at around 30% y-o-y.

BUY

MARKET PRICE: Rs 296

TARGET PRICE: Rs 360

Over the past three years, Cipla has invested around Rs 2,000 crore in manufacturing assets. The company has made aggressive plans to expand its manufacturing capacities. In the US, Cipla has entered into partnership for 118 products with 21 partners. Its number of partners have increased to 21.

BUY

MARKET PRICE: Rs 48

TARGET PRICE: Rs 65

During 2QFY10, GVK Power has witnessed momentum in terms of domestic passenger traffic at Mumbai airport (up 10% y-o-y) and higher operating rates for power projects (at 85%+). We expect earnings for GVK to grow at a compounded annual rate of 80% over FY09-11.

BUY

MARKET PRICE: Rs 283

TARGET PRICE: Rs 384

Birla Corp’s second quarter operational performance was better than estimated with reported revenue of Rs 530 crore (up 38% y-o-y) and profit of Rs 150 crore (up 155% y-o-y). Higher realisations and stable cost led to highest ever EBITDA margins at 38.3% (730 basis point y-o-y improvement).

BUY

MARKET PRICE: Rs 276

TARGET PRICE: Rs 375

Sesa Goa has raised $500 million through FCCB, the proceeds of which will be used to finance the company’s growth plans. During September 2009, iron-ore imports increased by about 30% month-on-month to 64.55 million tonnes. It is likely to benefit from strong prices and volume growth in 2HFY10.

RBI keeps key rates unchanged

2009-10-27T22:57:00.000+05:30

The Reserve Bank of India in its second quarter review has left key rates unchanged, but signaled a move toward a tighter monetary policy by hiking the statutory liquidity ratio and increasing the provisioning norms for advances to commercial real estate sector.

The central bank has increased its statutory liquidity ratio to 25 per cent from 24 per cent.

The central bank has kept its reverse repo rates and repo rate unchanged at 3.25 per cent and at 4.75 per cent respectively. Reverse repo rate is the rate at which the RBI borrows money from banks while repo rate is the rate at which our banks borrow rupees from the central bank.

The hike in SLR will not impact liquidity, the RBI said. SLR is the minimum percentage of deposits that banks have to park in assets like government bonds.

Keki Mistry, MD of HDFC, said that hike in SLR signals that some degree of monetary tightening may happen in the future but for now the central bank would focus on supporting the growth process. SLR has historically been at 25 per cent and banks are currently holding bonds beyond this limit, he said. So the SLR hike will not impact liquidity but is a signal that the tightening process might happen in the future, he added.

However, the RBI has raised FY10 inflation forecast to 6.5 per cent vs earlier estimate of 6 per cent.

Surjit S Bhalla, managing director of Oxus Research and Investments, said, the RBI is recognising correctly that rate hike could not combat food inflation. He expects the RBI to continue this policy stance for a while.

In a move that could have a bearing on the realty sector, the RBI increased the provisioning requirement for advances to the commercial real estate sector classified as standard assets, from the present level of 0.40 per cent to 1 per cent. “In view of large increase in credit to the commercial real estate sector over the last one year and the extent of restructured advances in this sector, it would be prudent to build cushion against likely non-performing assets,” the central bank said.

The bank also tightened the non-performing assets norms for banks. The RBI said, it would “advise banks to augment their provisioning cushions consisting of specific provisions against NPAs as well as floating provisions, and ensure that their total provisioning coverage ratio, including floating provisions, is not less than 70 per cent. Banks should achieve this norm not later than end-September 2010.”
But the central bank has cut its FY10 credit growth forecast to 18 per cent vs earlier estimate of 20 per cent. The non-food credit growth estimate has been cut to 18 per cent from 20 per cent.

It has also cut its money supply growth estimate to 17 per cent from 18 per cent. In addition, the central bank has cut its export credit finance to 15 per cent from 50 per cent.

The central bank noted that there is a critical need to downsize government borrowing plan to ward off upward pressure on interest rates. In its FY10 GDP forecast, it has kept its forecast unchanged at 6 per cent, with an upside bias.

Sensex tumbles as RBI signals tighter policy

2009-10-27T22:39:00.001+05:30

The Indian markets tumbled on Tuesday after the Reserve Bank of India took its first step toward tightening of the monetary policy. Banking and realty stocks were among the worst hit after the central bank tightened norms for these sectors. The Sensex fell 387 points to 16,353 while Nifty slipped 124 points to finish at 4,846. Market watchers said the correction was long due. Bharat Sheth, president of institutional sales at Techno Shares and Stock Broking, said, “The expectations that were built-up for second quarter results have been disappointing. The reaction was long due.” Upendra Kulkarni, director & CEO of Fortress Financial Services, said investors with a long-term view can take advantage of these corrections which were long due to pick up good quality stocks. The Reserve Bank of India in its second quarter review has left key rates unchanged. But it signaled a move toward a tighter monetary policy by hiking the statutory liquidity ratio and increasing the provisioning norms for advances to commercial real estate sector and tightening non-performing asset norms for banks. The RBI also withdrew some refinance facilities provided to banks with immediate effect. The central bank also discontinued banks’ special financing to mutual funds, NBFCs and housing finance companies. Realty, metal and banking stocks were hammered in today’s trade. The realty index on the BSE plunged 6.3 per cent. Omaxe, HDIL and Unitech plummeted over 7-9 per cent each. The BSE metal index fell 5.8 per cent amid a correction in commodity prices across the globe. The banking index lost 3.5 per cent. In the metal space, Sesa Goa dropped 12 per cent while Tata Steel and Hindalco lost over 7 per cent each. Among the banking stocks, ICICI Bank fell 4.4 per cent while SBI felll over 6 per cent. In global markets, Asian stocks retreated on Tuesday, following losses on Wall Street amid rising concerns the markets have gotten ahead of economic realities. European markets gained modestly. Major Asian markets dropped by around 2 per cent or more, with shares in resource companies hit after a steep fall in commodity prices overnight. Oil recovered only modestly to trade near $79 a barrel, while the dollar was slightly weaker against the yen and euro following a sharp rise.

Sell : Reliance Natural Resources Ltd

2009-10-27T08:57:00.000+05:30

We recommend a sell in the stock of Reliance Natural Resources Ltd from a short-term perspective. It was on a medium-term uptrend from March low of Rs 34 to its June high of Rs 112. However, the stock reversed direction after encountering significant resistance around Rs 110 in mid-June. Since then the stock has been on a medium-term downtrend. This downtrend got reinforced as the stock failed to breakthrough the resistance Rs 90 after multiple attempts and continued to decline. On October 26, the stock tumbled 5 per cent penetrating 21- and 50-day moving averages. With this the daily relative strength index (RSI) has entered the bearish zone and the weekly RSI is slipping in the neutral region towards this zone. The daily moving average convergence and divergence indicator has signalled a sell and is on the verge of entering the negative territory. Our short-term outlook is bearish. We expect the stock’s decline to continue until it hits our price target of Rs 72. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 84.5.

Maruti Q2 net up 99.3%, sees FY10 capex at Rs 2,100 cr

2009-10-26T09:18:00.001+05:30

Maruti Suzuki has come out with its second quarter FY10 results. Its net profit shot up 99.3% to Rs 570 crore versus Rs 286 crore, on year-on-year basis (YoY).

The company's net sales increased 45.94% to Rs 7,049 crore as against Rs 4,830 crore (YoY).

The topline as well as the bottomline numbers were below expectations. CNBC-TV18 was expecting net profit at Rs 597 crore and net sales at Rs 7,091 crore.

Raw material cost went up 46.9% to Rs 5,255 crore versus Rs 3,578 crore (YoY).

In a press conference, Maruti said buoyant exports helped strong growth in second quarter. However, the company said they would be cautiously optimistic on volumes in near future and margins will be seen under pressure going forward. "High commodity prices and strong Yen will tighten margins."

The company's Q2 domestic passenger car market share stood at 54.9%, it added.

Maruti Says

-Development of new models on track
-Concerned that input costs could go up
-Target 1.3 lakh units exports in FY10
-Remain watchful of interest rates, inflation
-Domestic demand broadly good
-See good market potential for CNG vehicles
-Expect higher steel prices in October-March
-FY10 capex seen at Rs 2,100 crore
-FY11 capex seen around Rs 2,000 cr
-Company has cash reserves of Rs 5,300 cr
-Not sure strong demand to continue after October

Buy : Wanbury

2009-10-26T09:12:00.000+05:30

We recommend a buy in Wanbury from a short-term horizon. The stock has been on an intermediate-term uptrend, forming higher peaks and higher troughs, since March low of Rs 24. Following a corrective decline from August high of Rs 96, the stock found twin support around Rs 65. Subsequently the resumed the uptrend. It is trading well above 21-day and 50-day moving averages. On October 23, the stock gained 5 per cent. The daily relative strength index has entered the bullish zone and weekly RSI is also featuring in this zone. Daily and weekly moving average convergence and divergence indicators are in the positive territory. Considering that the stock’s intermediate-term uptrend-line is intact, we are bullish on a short-term perspective. We expect it to hit our price target of Rs 91. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 79.

Hardy Oil to abandon 1 well in KG D9 block; RIL stock down

2009-10-23T18:07:00.000+05:30

UK-based Hardy Oil and Gas, which has 10% stake in Krishna-Godavari D9 block on the east coast of India, will abandon exploration of one well. The Hardy Oil stock was down 36% on the London Stock Exchange on the announcement.

India’s Reliance Industries (RIL), the field's operator, holds 90% in KG D9. RIL’s stock was seen under pressure after the news came out and was down about 4% on the National Stock Exchange at 14.35.

In response, RIL said it would comment only after informing the Directorate General of Hydrocarbons (DGH), the government body that overlooks the management of oil and natural gas resources in India.

The DGH in June had complained to market regulator Securities and Exchange Board of India (SEBI) when Hardy had “prematurely” announced its assessment of reserves in the KG blocks.

Changes in Nifty: JP Assoc, IDFC in; Nalco Tata Comm out

2009-10-22T09:12:00.000+05:30

The benchmark index, the National Stock Exchange's CNX Nifty 50, has undergone a re-composition that comes into effect from October 22. Nalco and Tata Communication will be excluded from the index and Jaiprakash Associates and IDFC will be added.

Among the new entrants, Nalco has a free-float weight of 0.21 while Tata Communication has free-float weight of 0.22.

Jaiprakash Associates trades with free-float weight of 1.24 and IDFC with free-float weight of 1.4, which will have FFF (free float factor) of 0.49 and 1, respectively.

Trailing 12 months profit (TTM) for Nalco was at Rs 873 crore while Tata Communication’s TTM stood at Rs 448 crore. IDFC reported TTM of Rs 643 crore and JP Associates of Rs 1,144 crore. The Nifty's net profit thus adds about Rs 466 crore, as a result of the change.

Free-float market cap also increases significantly. The market cap of Nalco and Tata Communication stood at Rs 6,179 crore (Rs 2,968 crore + Rs 3,211 crore) while the ones on the way out — IDFC and JP Associates — have Rs 38,691 crore (Rs 20,475 crore + Rs 18,216 crore) in market cap: an increase of Rs 32,512 crore.

Price-to-earning ratio also increases 7% while EPS drops by Rs 0.50.

Govt plans 20% stake sale in SAIL this fiscal

2009-10-22T09:10:00.000+05:30

The government on Wednesday said the disinvestment process in steel giant SAIL will start in the current fiscal.
"The first phase of disinvestment will happen in the current fiscal," Steel Minister Virbhadra Singh said in New Delhi after a conference wherein trading firm MSTC presented a dividend of Rs 15.31 crore to the minister.
Singh has already approved a proposal for 20 per cent two-phase Follow-on-Public Offer (FPO) of SAIL. The next phase is likely the next fiscal, the minister said.
Giving details of divestment plans, Steel Secretary P K Rastogi said that the FPO will be a combination of five per cent dilution of government's equity and five per cent issue of additional shares by the company.
The government will mobilise around Rs 8,000 crore through the FPO at current share prices The amount may vary depending on the share price of SAIL, he added. Rastogi further said the proposal has got in-principle approval from the Disinvestment Department of the Finance Ministry and SAIL's board is now finalising the proposal.
SAIL would be informing market regulator SEBI about the planned FPO. Once the regulator approval is obtained, the ministry will prepare a note to be sent to the Cabinet for its approval, which is likely by December.
SAIL, which will also raise about Rs 8,000 crore through two-pahse FPO, will use fund part finance its Rs 70,000-crore expansion projects.

Sell : Indian Overseas Bank

2009-10-22T08:57:00.000+05:30

Sell in the stock of Indian Overseas Bank from a short-term perspective. It is evident from the charts the stock has been on an intermediate-term uptrend from its March low of Rs 37. After taking support at Rs 80 in August, the stock resumed its uptrend move. Subsequently, the stock’s uptrend accelerated but with decreasing volume. It encountered resistance at Rs 141 early this week and began to decline triggered by negative divergence displayed in the daily relative strength index (RSI) and weekly RSI reaching the overbought region. On October 21, the stock declined 3 per cent, with very low volume. The daily moving average convergence and divergence indicator (MACD) has signalled a sell. Both daily and weekly RSI are correcting from the overbought territory. We take a contrarian view on the stock and we are bearish from a short-term perspective. We expect the stock to decline until it hits our price target of Rs 120. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 139.

Sell : Grasim Industries

2009-10-21T09:05:00.000+05:30

Sell in the stock of Grasim Industries from a short-term perspective. It is evident from the charts that the stock was on an intermediate-term uptrend from December 2008 low of Rs 872 to July 2009 high of Rs 2,938. However, after encountering key resistance around Rs 2,900, the stock reversed direction triggered by negative divergence in the weekly relative strength index (RSI). It formed a double top, a top reversal pattern spanning between mid-July and early October with baseline at Rs 2,465. On October 9, the stock conclusively broke through this pattern by tumbling almost 3 per cent. Subsequently, it penetrated the intermediate-term uptrend-line and continued its decline. The stock is currently trading well below its 21-day and 50-day moving averages. The daily RSI is featuring in the bearish zone and weekly RSI is slipping towards this zone in the neutral region. We are bearish on the stock from a short-term perspective. We anticipate the stock’s decline to continue until it hits our price target of Rs 2,140. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 2,450.

Ambani gas row: Final Apex Court hearing from today

2009-10-20T09:16:00.001+05:30

Oct. 19 The corporate battle between the Ambani brothers will reach the last stage of a legal face-off on Tuesday. The Supreme Court will begin the final hearing on the case. At stake is revenue close to $28 billion.

The dispute started due to a demerger pact between Mukesh and Anil on natural gas supply from Mukesh Ambani-led Reliance Industries Ltd (RIL) to Anil Ambani group company, Reliance Natural Resources Ltd (RNRL).

RNRL is suing RIL for not honouring its commitment of 2005 for supplying 28 mscmd of natural gas from the Krishna-Godavari Basin D6 block at $2.34/mBtu.

RIL’s stance

RIL is maintaining that it neither has the marketing freedom nor the authority to supply gas to RNRL at subsidised rate, as the Government has determined a price of $4.2/mBtu and also allocated the gas according to the utilisation policy.

If the valuation and selling price of gas is taken at $4.2/mBtu then the Government earns $14.9 billion and the contractors (RIL and Niko) make $11.5 billion through the life of the field. But, if the valuation and selling price of gas is taken at $2.34/mBtu then both the Government’s and the contractors’ earnings will fall to $4.2 billion and $5.3 billion, respectively.

However, if the price of the gas is taken at $4.2/mBtu for valuation purpose and the selling price is taken at $2.34/mBtu then the Government earnings stand at $14.9 billion and the contractors make a loss of $5.4 billion.

Issues

Some of the issues likely to be argued before the Apex Court include the question whether a family MoU can be given priority over the production sharing contract (PSC) and if a contractor has marketing freedom for sale of gas?

In June, a Division Bench of the Bombay High Court upheld RNRL’s position on the gas issue with RIL, and ordered that the dispute be resolved in a month through a fresh arrangement.

Timeline

RIL on July 4 moved the Apex Court challenging the Bombay High Court judgment asking it to supply gas to RNRL at 44 per cent lower price than fixed by the Government. On July 19, the Government stepped in and filed a petition in the Supreme Court saying gas is national property. The matter is posted for hearing on October 20.

In another development, the Government told the Apex Court on Monday that its legal rights were affected by the Bombay High Court order in the matter.

The Government said this in its rejoinder to an affidavit filed by RNRL in the RIL-RNRL case.

Keep keen watch on both the stocks as soon the decision will out the favoured stock will rock 2de...

NTPC stake sale to boost market sentiment: analysts

2009-10-20T09:13:00.000+05:30

Government's nod for stake sale in state-run power utilities - NTPC and Satluj Jal Vidyut Nigam (SJVNL) - is expected to bolster investor sentiment and propel the stock markets in days to come, analysts said.

The Cabinet Committee on Economic Affairs (CCEA) said on Monday approved five and 10 per cent disinvestments in NTPC and SJVNL respectively. “The government is confident about the recovery in market and the economy that is why it is going ahead with its divestment plans. The market is expected to react positively to the news and it indicates a rally in the days ahead,” Geojit BNP Paribas Financial Services Research Head Alex Mathew said.

Kotak Mahindra Mutual Fund Equities Head Mr Krishna Sanghvi said, “The government has reaffirmed that it is prone to adopt a more liberalised economic policy and is committed to increase investors' wealth. However, the move would not add any value to the company's financial position.”

Marketmen believe a follow-on public offer (FPO) of NTPC, the second most valued public sector unit with a market capitalisation of over Rs 1.77 lakh crore, would help increase trading volumes at the counter.

“PSU stocks generally have less volume and low volatility. The market would now look at the issue price of the FPO and an increase in demand would help to shore up supply,” SMC Global Vice President Rajesh Jain said. - PTI

Buy : Rei Agro

2009-10-20T09:02:00.001+05:30

Buy in Rei Agro from a short-term perspective. It is apparent from the charts of the stock that from June high of Rs 103 it was on a medium-term downtrend till its late August low of Rs 45. Subsequently, the stock began to consolidate sideways. It breached the medium-term down trend-line in early September. The stock took support around Rs 45 for the second time last week. It has key medium-term support around Rs 45. On October 16, the stock crossed over its 21-day moving average by jumping almost 6 per cent with good volume. The daily relative strength index (RSI) is heading towards the bullish zone in the neutral region. Besides, the daily, moving average convergence and divergence (MACD) indicator has signalled a buy and is inching towards the positive territory. We are bullish on the stock from a short-term perspective. We expect the stock to move up further until it hits our price target of Rs 55 in the approaching trading sessions. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 47.5.

Best 5 mid-cap stocks

2009-10-19T11:44:00.002+05:30

Tata Teleservices (Maharashtra) Ltd

TTML, which has recently joined hands with Japan’s NTT Docomo, is the Rs 2,000-crore Tata Group company that provides telecom services in the circles of Mumbai and Maharashtra, including Goa. TTML has reported net loss in each of the past six years. However, the picture is likely to change soon.

The company is aggressively adding new subscribers and has topped the 10-million mark, following its innovative pricing methods. Higher users would improve network efficiency, thereby reducing cost per user. The company has undertaken necessary capex in the last few years.

TTML has reduced the level of net loss in the last three quarters. It is likely to post quarterly profit by the March 2010 quarter.

Indian Hotels Company Ltd

Indian Hotels (IHCL), which has underperformed the markets, is currently trading below its book value. This appears pretty cheap as it has always traded between 1.4 and 5 times the book value in the last five years. The last few bad quarters indicate that the scrip is trading 28 times its past 12 months earnings.

The hospitality industry is now going through a tough phase. However, being the industry leader, IHCL could well be the first one to move up once the tide turns. The Commonwealth Games being held in Delhi next year can be one major trigger for the industry, apart from the global economic revival.

Supreme Industries Ltd

Supreme Industries, India’s leading plastic goods manufacturers, has always enjoyed a healthy history of profit growth, cashflows and dividends. Its decision to exit unprofitable businesses, coupled with rising domestic demand for plastics and a likely glut situation in polymers, are likely to keep its profit growth strong in the coming quarters.

At the same time, the company has constructed a commercial complex at Andheri with 2.5-lakh square feet of saleable area at a cost of Rs 115 crore. The sale proceeds from this property will boost the company’s bottomline for the next few quarters. The scrip at Rs 363 values the company just 8.6 times its earnings for trailing 12 months, much cheaper compared to its peers.

IndusInd Bank Ltd

IndusInd Bank has made a huge turnaround in the past one year, reporting a dramatic improvement on key parameters such as non-performing assets (NPAs), net interest margin (NIM) and business per employee. Its gross NPAs or bad loans as a percentage to gross advances have halved in the quarter ended September 2009 against the year-ago period, with NIM rising to 2.86% from 1.68%.

The bank has cleaned up its balance sheet and has more than doubled its profit in the September quarter. The next growth driver will be expansion of its loan book beating the industry growth and continued improvement in its NIM, which can transform it into one of the fastest growing banks.

Dalmia Cement (Bharat) Ltd.

Dalmia Cement (Bharat) (DCBL) is aggressively expanding its cement capacity and is shortly bringing on stream 38% additional cement capacity, taking its total capacity to 9 million tonnes. It is also well positioned in the booming sugar business with a combined capacity of 22,500 TCD (tonnes of cane per day) at three locations in UP. These two businesses should help the company grow its net sales aggressively in the next two years.

In the past four years, the company has quadrupled its revenues and is expected to maintain its growth trajectory in the next few years. Dalmia Cements recently announced plans to raise nearly Rs 3,000 crore to fund its expansion plans. The company plans to add a further 10 million tonnes capacity across the country in a phased manner over the next three years. At Rs 169.3, Dalmia Cement (Bharat) trades at a P/E of 8.2 and looks cheap.

8 stks that were buzzing last week & how to trade them now: Expert's view

2009-10-19T11:17:00.003+05:30

The market closed at a new 17-month high. This week the Bank Index advanced 8.3%, SBI zoomed 17.8%, ICICI Bank gained 6.5%. The Metal index surged 8%, Jindal Steel & Power rallied 16%, SAIL and Tata Steel surged 6.8% and 6.5% respectively. The top index gainers this week were Cairn India up 11.8%, TCS up 6.3% and RIL up 5.3%. However, telecom stocks like Reliance Comm and Bharti lost 6% and 5.3% this week respectively. Mehraboon Irani, VP-PMS, Centrum Broking, Technical Analyst, Sudarshan Sukhani and Dipan Mehta, Member, BSE/NSE discussed various stocks. They were bullish on Unitech, Torrent Power, Hindustan Unilever (HUL), Jindal Steel & Power, LIC Housing Finance and SBI while were bearish on Bharti Airtel. However, they had mixed views on Larsen and Toubro.

Bharti Airtel

Mehta told CNBC-TV18, "Telecom has been on underperformer over the past two-weeks or so since the news came out that Reliance itself was offering at very competitive rates for outgoing and on the whole we are seeing that there could be regulatory change as far as shifting from per minute to per second billing takes place. That could impact the profitability in the short to medium-term quite drastically and therefore my sense is that one should remain underweight on the sector. My specific advice would be to look at exiting out of Bharti Airtel and the other telecom stocks. But then again it could be at a trading bounce and need not necessarily be at this price.”

Irani told CNBC-TV18, "The one space we are advising investors really exit is the telcom. It is not fair to state that Bharti is a great company – no doubt about it – but buy this stock if it gives you an opportunity. It has come down so sharply because this is not the way you look at stocks. The fact of the case is as far as telcom goes, according to me the story for the time being is certainly over. So, a bounce back here and there of 5-10% not ruling out but for an investor I don’t think this is the way one should be looking at stocks. One can definitely wait for a bounce back but learn to exit at higher levels. There are better opportunities elsewhere.”

Sukhani told CNBC-TV18, "My sense is that telecom stocks are on the verge of bottoming out, which means Bharti Airtel may not be Rs 330 but it could be Rs 300 or Rs 290. That’s a different issue. For a long-term investor, this is the right time to go and invest in telecom stocks; I would say that on the basis of long-term views on the charts.”

Unitech

Sukhani told CNBC-TV18, "I don’t think Unitech is going to outperform the market. What we saw was a bounce in what is essentially a downtrend and my assumption is that if the market were to remain cheerful we could see Rs 140 or Rs 150. But at this point it looks very unlikely that Unitech would touch Rs 200 again.”

Irani told CNBC-TV18, "I feel that when Unitech managed to raise funds for itself some month’s ago – the problems for Unitech were behind it. At that time we started liking the stock and we had a target of Rs 125 for it. At the present level it is more of a trading play but we don’t enter a stock for a 10-15% return at this particular level of the indices. For the last seven months the company has made bookings of nearly Rs 40 billion (Rs 4,000 crore) which is ahead of most estimates. They are also concentrating more on the affordable homes, which could bring down the rate per square feet with the company books it had. But all said and done according to me the stock could possibly definitely move at least 10-15% up from here. The problems for the entire real estate are going to continue for some more time to come.”

Torrent Power

Sukhani told CNBC-TV18, "In a bull market everything goes up and so will Torrent Power. So, I am looking at a level of around Rs 370 as a price target. My stoploss is Rs 260 so if the price comes close to that and in a correction it could then you average because you know that at Rs 260 you might as well get out of the averaged quantity.”

HUL

Irani told CNBC-TV18, "In Hindustan Unilever (HUL) we have a price target of slightly over Rs 300 for the stock and I personally feel that in this market conditions, which have been very buoyant over the last couple of months FMCG normally has taken a back seat. Normally as and when possibly this shows signs of petering out as FMCG is going to come back into focus and Lever is going to be a decent player in that particular segment as far as the stock price performance goes. I think it is taken a back seat as a stock right now but sooner or later it will attract attention. The management has done wonders over the last 7-8 months as far as taking measure to improve sales volumes goes and those types of measures is going to offset the possible loss because of rural consumptions slightly coming down because of the kharif crop failure. On the whole we are quite positive on HUL and I would advise the investor to hold on to it.”

Sukhani told CNBC-TV18, "Hindustan Unilever (HUL) has been in the trading range for almost 5 years now. It is just coming out of that range but it has been a clear under performer. As it comes out of that range it promises higher levels, somewhere around Rs 350 and that is assuming the market does what it is already doing now but I do not see it going more than that, then that could be a painful ride up. So unless you are fascinated by the stock you might as well move to some other momentum shares.”

LIC Housing Finance

Sukhani told CNBC-TV18, "LIC Housing Finance charts are excellent. The stock built a base for 5-7 or 10 years then has broken out of it. I see it crossing Rs 1,000 very easily. It is a very good quality stock. One shouldn’t worry about the high price – don’t worry about correction – stick to it.”

Mehta told CNBC-TV18, "What we have observed over the past year or so is the valuation gap in LIC Housing and HDFC has narrowed and a large part of it is on account of there being some amount of stability coming into the earnings. Also, past 2-3 quarters earnings have surprised the street and our sense is that now it is getting into a nice rhythm as far as its performance goes and it is gradually building on its market share and in an environment at present were interest rates are benign and companies like LIC Housing and HDFC would find fund raising easier – at the same time with real estate prices the way there would be good appetite for real estate loans as well. Investor could remain invested – in fact look at aggregating or adding to the stock at every correction.”

SBI

Irani told CNBC-TV18, "We need to look at the overall market and if we are positive on the market – one cannot ignore SBI. I think 27% of personal loans in this country are from this largest PSU bank. Even at the present level which has gone up too sharply the fact that this stock is available just around 1.6 times its book value for 2010-11 as per our estimate. SBI has gone up too sharply. One should buy it. It should be in the portfolio and therefore as one cannot afford to ignore the market, you definitely need have SBI in one’s portfolio.”

JSPL

Sukhani told CNBC-TV18, "JSPL is a dream now that we know what it is done but I think the stock that moves up relentlessly is telling us that it is much more steam ahead we can look towards Rs 950-1000 and I would not be surprised if this is a conservative target."

Larsen and Toubro

Mehta told CNBC-TV18, "L&T is one of the few stocks which can classify to be as a part of the core holding of any portfolio. My advice would be to remain invested for the next 2-3 years or so. There could be corrections as the market corrects but by and large the company has gone from strength-to-strength and we are seeing decent pick up in the order book position as well. There is decent visibility as we go ahead.”

He further added, “The only problem is that valuation is bit on the higher side, so there could be a disappointment on that count and if the results are slightly below expectation one could see it correcting. Considering the stock has outperformed the market over the past few months one could expect sideways movement or mild underperformance but that should not deter long-term investors who should remain invested in L&T. I don’t think one should try and trade the stock – just keep it and the stock will give fantastic returns over the next 24-36 months.”

Irani told CNBC-TV18, "At the present level I personally feel that L&T as a stock definitely looks a little bit expensive for the time being. We have been very positive on the stock. We rank it as one of the best managements in the country. It is definitely the best play as far as the Indian growth story goes. But all said and done a lot will depend on the E&C order inflows. If we have an E&C order inflow of around 30-35% for 2010-11 then possibly the stock in a very bullish scenario can even go up another 15-20%. But at the present level valuation-wise the stock looks a little bit stretched. Investors can continue to hold on to it but I don’t think it is going to be an outperformer in the 3-6 months.”

Stock market predictions for Samvat 2066

2009-10-19T10:23:00.003+05:30

After 17 October 2009: Correction
- 05-01-2010 to 21-01-2010: Correction
- 02/04/2010 TO 16/04/2010: Very Crucial
- 02/05/2010 TO 19/05/2010: Market breadth negative
- 30/09/2010 TO 01/11/2010: Negative trend
- 07/12/2010 TO 31/12/2010: Panic amongst investor

Do the stars suggest that global economy is out of recession?

The global economy is not completely out of recession. The recession started in January 2008 and now we can safely say that the the worst is over. However the recovery will still take a long time and there are a few patches of turbulent times before the economy will fully recovers. I presume that the world economy will be out of the blues by 2011.

How does the current financial year look like?

There will be a correction around the second half of October, 2009 after which the market will be somewhat afloat. I foresee a correction once again in the second and third week of January, 2010 (around the period of Makar Shankaranti) and the markets position will be very crucial during the first half of April 2010. During the first 20 days of May, 2010 the market breadth will be negative wherein the market will seem healthy however these may be false sentiments. The market will show a negative trend during the last quarter of 2010 creating a panic amongst the investors. In short if we are to summarise:

What is the maximum level you see the Sensex and Nifty touching this financial year?

Sensex: Maximum 18500 and Minimum 13200
Nifty: Maximum 5500 and Minimum 3900

And where do you see the indices 5 years from now?

Sensex will touch 50,000 mark

Which sectors according to you would be among the best performers?

Pharmaceutical
Energy
Banking
FMCG
Media

What is your take on sectors like realty and retail that have taken a beating?

Mars, the karaka planet for realty was is in Gemini till 5th October which is an inimical house and then transits to Cancer on 06th October which is its fall sign. Similarly Venus, the karaka planet for Retail is in Leo till 10th October
2009 which is its inimical house after which it will transit to Virgo, which is its fall sign. Hence these two sectors have been afflicted and are bound to remain so in the next year.

Since equity markets are improving do you think commodity markets will maintain their upward trend?

Yes

What is the future of gold and crude oil?

The future of Gold is bright and the range that I foresee would be between Rs 14500/- to Rs 17500/- per 10 grams while that of Crude will be highly fluctuating but range bound. Both will bear good returns over long range investments.

Do you foresee the recurrence of another financial crisis?

Refer my answer for question 1

Do you see India as a super power among global economies?

( Bejan Daruwala's view on market )

See Nifty in 4200-6200 range next year: Rakesh Jhunjhunwala

2009-10-19T10:00:00.002+05:30

It is the homecoming of the victorious, and this is truly the story of the victory the market has struck out from last Diwali till now. Will the New Year usher in another bull run? Which sectors will shine? Kick start the New Year with strategies from Rakesh Jhunjhunwala, Samir Arora, and Ramesh Damani.

Investment Guru Rakesh Jhunjhunwala sees the Nifty trading in a 4,200-4,400 to 5,800-6,200 range next year. "It will be somewhere near its pervious top." However, he was quick to caution that breaking 6,100-6,200 on the Nifty and holding on to it is not going to be an easy task. "If you price in 2011-12 index earnings, which you would do by December 2010, then it could."

Samir Arora, Fund Manager, Helios Capital, says the new highs, if reached, will not be sustained in the next 5-6 months. "If all of us agree that we will not get to new highs, then theory would say that it might!"

Ramesh Damani. Member, BSE, says the bull run in markets is still on. "I would argue that what we saw from October to March or earlier was just a break in a bull market. The theory working in America now is that the falling dollar equals to a higher Dow. At some point it will stop, one cannot debase a currency and expect the market to keep going up."

When are markets likely to correct?

A number of market experts have been saying that the markets are currently overvalued and ripe for a correction. However, Jhunjhunwala sees the markets trending upwards. "They are not going to correct easily. Without that burst of a rise that correction is not going to set in."

How should you trade gold?

Damani advises investors to buy gold as it provides a safe haven if there is a global turmoil. "If there is a global turmoil, it is going to hit the Indian markets. The long-term trend lines are still intact, but it will hit the Indian market. So, gold gives you that insurance. I would keep a very close eye on gold over the next year or so."

Jhunjhunwala too is bullish on gold. He says it is the only asset class which has gone up for the last seven years and is now ready to go up for the eighth year. But he was quick to add that the investments in the stock market would give better returns. "We were in a kind of financial crisis in January and nobody knew when it will end. I don’t think there is that kind of crisis this year. Where you are going to store and keep the gold you buy. So, I guess it is better invested in equity."

The yellow metal also finds favour with Arora. However, he advises investors to stay away from the yellow metal. "It is like an alternative currency. But it may not be as interesting for Indians as you are already going to be in a strong currency."

Buy midcaps:

Damani sees panic buying in smallcap and midcap stocks: "If you see the first few midcap results, and if it is an indication of what is to come, there would be panic buying in smallcap and midcap stocks. One should by all means do bottoms up stock picking."

On power:

Arora says power is the most ridiculously priced sector now. "There is no question that utility companies are in an absolute bubble."

Best 5 mid-cap stocks

2009-10-19T09:44:00.002+05:30

It’s that time of the year again when many investors rejig their portfolio and take position on their favourite stocks. With most of the blue chips having turned expensive, the only option for most investors is the mid-cap sector.

We at ET Intelligence Group bring you a list of 5 mid-cap stocks that could make your next Diwali brighter. But, as always, make sure you’ve done the due diligence before placing your bets on these.

Tata Teleservices (Maharashtra) Ltd

TTML, which has recently joined hands with Japan’s NTT Docomo, is the Rs 2,000-crore Tata Group company that provides telecom services in the circles of Mumbai and Maharashtra, including Goa. TTML has reported net loss in each of the past six years. However, the picture is likely to change soon.

The company is aggressively adding new subscribers and has topped the 10-million mark, following its innovative pricing methods. Higher users would improve network efficiency, thereby reducing cost per user. The company has undertaken necessary capex in the last few years.

TTML has reduced the level of net loss in the last three quarters. It is likely to post quarterly profit by the March 2010 quarter.

Indian Hotels Company Ltd

Indian Hotels (IHCL), which has underperformed the markets, is currently trading below its book value. This appears pretty cheap as it has always traded between 1.4 and 5 times the book value in the last five years. The last few bad quarters indicate that the scrip is trading 28 times its past 12 months earnings.

The hospitality industry is now going through a tough phase. However, being the industry leader, IHCL could well be the first one to move up once the tide turns. The Commonwealth Games being held in Delhi next year can be one major trigger for the industry, apart from the global economic revival.

Supreme Industries Ltd

Supreme Industries, India’s leading plastic goods manufacturers, has always enjoyed a healthy history of profit growth, cashflows and dividends. Its decision to exit unprofitable businesses, coupled with rising domestic demand for plastics and a likely glut situation in polymers, are likely to keep its profit growth strong in the coming quarters.

At the same time, the company has constructed a commercial complex at Andheri with 2.5-lakh square feet of saleable area at a cost of Rs 115 crore. The sale proceeds from this property will boost the company’s bottomline for the next few quarters. The scrip at Rs 363 values the company just 8.6 times its earnings for trailing 12 months, much cheaper compared to its peers.

IndusInd Bank Ltd

IndusInd Bank has made a huge turnaround in the past one year, reporting a dramatic improvement on key parameters such as non-performing assets (NPAs), net interest margin (NIM) and business per employee. Its gross NPAs or bad loans as a percentage to gross advances have halved in the quarter ended September 2009 against the year-ago period, with NIM rising to 2.86% from 1.68%.

The bank has cleaned up its balance sheet and has more than doubled its profit in the September quarter. The next growth driver will be expansion of its loan book beating the industry growth and continued improvement in its NIM, which can transform it into one of the fastest growing banks.

Dalmia Cement (Bharat) Ltd.

Dalmia Cement (Bharat) (DCBL) is aggressively expanding its cement capacity and is shortly bringing on stream 38% additional cement capacity, taking its total capacity to 9 million tonnes. It is also well positioned in the booming sugar business with a combined capacity of 22,500 TCD (tonnes of cane per day) at three locations in UP. These two businesses should help the company grow its net sales aggressively in the next two years.

In the past four years, the company has quadrupled its revenues and is expected to maintain its growth trajectory in the next few years. Dalmia Cements recently announced plans to raise nearly Rs 3,000 crore to fund its expansion plans. The company plans to add a further 10 million tonnes capacity across the country in a phased manner over the next three years. At Rs 169.3, Dalmia Cement (Bharat) trades at a P/E of 8.2 and looks cheap.

Chart focus - Elecon Engineering (Rs 101.2): Buy

2009-10-19T09:42:00.000+05:30

Investors with medium-term perspective can considering buying the stock of Elecon Engineering Company. Since March low of Rs 24, the stock has been on an intermediate-term uptrend. Moreover, it has been on a medium-term uptrend too since July low of Rs 60. After taking support at Rs 90, the stock resumed its uptrend with a weekly gain of almost 13 per cent. It is trading way above the 21-day and 50-day moving averages.

There is an increase in weekly volumes over the past three weeks. Bullish signs are noticed in both the daily and weekly momentum indicators. We believe that the counter has the potential move up to Rs 133 in the medium-term. Investors can buy while maintaining Rs 85 as the stop-loss. Short-term traders can buy with a target of Rs 112 and Rs 96 as stop.

TTK Prestige: Buy

2009-10-19T09:40:00.000+05:30

The demographic shift in favour of the young and a higher floating population in urban areas translate into higher demand for pressure cookers in India.

The company is roping in new customers through its retail chain, ‘Prestige Smart Kitchen’ .

Demand for pressure cookers in growing consumer markets never runs out of steam. This augurs well for TTK Prestige, the company which owns the single largest pressure cooker brand in the country. Against the 8 per cent growth reported by the industry last year, TTK Prestige reported a 17 per cent growth in its sales volumes. With the company roping in new customers through its retail chain — ‘Prestige Smart Kitchen’ — its auxiliary products (kitchen electrical appliances, cookware) are also doing well in the market with a growth of over 25 per cent in the last five years. The stock trades at 14 times its trailing one-year earnings. Investors can add this small-cap stock to their portfolio.

The industry

Pressure cookers are a fast growing segment in the Indian consumer durables market. The demographic shift in favour of the young, an expanding working population and a higher floating population in urban areas are trends that translate into higher demand for pressure cookers in India. Makers of branded cookers are also benefiting from a shift from unbranded to branded products, as safety issues prompt consumers to opt for tried and tested products.

After starting out as a manufacturer of pressure cookers, TTK Prestige now offers complete kitchen solutions with a product range comprising non-stick cookware, rice cookers, gas stoves, kitchen hoods, kettles, sandwich toasters and many other small electrical appliances. The company is also into the modular kitchen segment.

The single largest brand

The average annual production of pressure cookers over the last five years was 40 lakh units. In 2008-09, TTK Prestige, which sold 23.7 lakh units of pressure cookers, accounted for over half this number. The company has been seeing a sharp increase in sales year after year, suggesting that it has managed to gain market share.

TTK Prestige’s sales have grown at an average 21 per cent in the last five years, while industry growth rates were in single-digits.

Hawkins Cookers, the only other listed player, is the company’s major rival with a presence mainly in North India. However, Hawkins is much smaller, with just about half TTK Prestige’s revenues. Apart from TTK Prestige, several smaller regional players such as Premier, Pigeon, Butterfly also compete in the Southern market.

However, the safety aspect does lead to strong brand preferences in the pressure cooker market, giving an edge to established players such as TTK Prestige. TTK Prestige pressure cookers are certified for safety under the Indian (ISI), German and US standards.

TTK Prestige’s cookware and kitchen electrical appliances are also making headway. Their contributions to revenue rose to 15 per cent and 18 per cent in the last year from a little over 12 per cent five years ago.

The company sees considerable opportunity for expansion in these segments, with revenues set to increase sharply once these products are marketed more aggressively.

Unlike the pressure cooker market, competition in the kitchen electrical appliances segment is tough with a number of branded and large regional players in the fray as well. TTK Prestige’s export sales have also been on the rise. Though the last year was challenging due to recession, exports grew over 10 per cent in 2008-09.

Expansion plans

The company’s current installed capacity in pressure cookers is 40 lakh units. But as it is running only at 50 per cent of its capacity, there is room for scaling up production with demand expected to rise in the coming years. The company will enjoy higher revenues as the market grows in size with no additional capex/interest.

The company’s new gas stove and kitchen electrical appliances manufacturing unit in Uttarakhand, which is to begin production by March 2010, may lift margins due to excise duty and tax savings. The company has been importing a few kitchen electrical appliances for selling in the domestic market, the initiative of producing those appliances domestically now will be an advantage for the company.

Further, the company will see almost nil interest outgo from the current year (last year’s interest outgo Rs 5.65 crore) as it has repaid all outstanding loans. In 2008-09, the company repaid Rs 26 crore of outstanding loans and another Rs 20.7 crore since April this year.

Supplementing its core business, TTK Prestige has 6.5 acres of surplus land in Bangalore, having shifted its pressure cooker unit from this location. This area is now being developed into a residential and office space, rentals from which will start flowing from 2012. Cash flows could be furthered strengthened from these rental incomes in the coming years.

Margins strong

In the last five years TTK Prestige has reported a solid 56 per cent growth in profits after tax (as revenues rose 21 per cent). Operating margins too have improved from 6 per cent to 9 per cent in this period. Net profit margins grew from 2 per cent in 2005 to 5 per cent in the last year. There was an increase in tax outgo in the last year as the company moved to normal tax regime from MAT (minimum alternative tax).

The company enjoys pricing power to pass on raw material (aluminium and stainless steel) price increases to consumers, given its strong market position. So any steep price rise in inputs from here on may not dent profit margins. As the demand for pressure cookers is price in-elastic, price hikes will not impact off-take.

TTK Prestige has also been quite generous in declaring dividends. A minimum of 30 per cent dividend has been declared every year in the last three years.

Clutch Auto: Buy

2009-10-19T09:36:00.000+05:30

Commercial vehicles demand is revving up.

Given the signs of gradual recovery in the commercial vehicles segment investors with a long-term horizon can consider buying the stock of Clutch Auto at Rs 39.30.

Factors such as improving industrial production numbers, thrust on highway and infrastructure projects and orders for new buses under the JNNURM programme, suggest that the recovery in commercial vehicle (CV) sales may sustain over the medium term. Trading at a price-earnings ratio of 11 times, Clutch Auto appears well-placed to ride on the CV revival, given its significant exposure to this segment.

Product offering

Clutch Auto is India’s largest manufacturer and exporter of clutches. Its product portfolio comprises clutch cover assemblies, clutch plates and discs, clutch repair kits, and other related components. With a well-diversified product portfolio, the company caters to CVs, passenger vehicles, tractors and earth movers. Clutch Auto derives about 35 per cent of its revenues from sales to original equipment manufacturers (OEMs), 45 per cent from aftermarket sales and the balance 20 per cent from exports.

The clutch is the most critical auto component that needs to be replaced frequently in a CV and has a replacement cycle of around 10-12 months, while the clutch cover assembly can be replaced once in four years. Clutch Auto has entered into co-branding agreements with some key customers to strengthen its foothold in the replacement market.

Betting on CV

The company focuses primarily on heavy-duty clutches for CVs and tractors. This forms 95 per cent of its sales with the balance 5 per cent coming from the passenger car segment. Tata Motors, Ashok Leyland, Escorts, Eicher, TAFE and Bajaj Auto are some of the major customers in this segment. Apart from slow revival in medium and heavy commercial vehicle (M&HCV) demand, visible growth in the light commercial vehicles (LCV) segment and tractors may help the company manage growth over the medium term.

While M&HCVs registered a decline of nearly 19 per cent between April and September 2009 compared to the corresponding previous period, LCVs have grown by 19.5 per cent. Tractor sales too have risen despite a poor monsoon. Mahindra and Mahindra, a key customer for Clutch Auto that commands a market share of 41 per cent in tractors, saw its tractor sales rise 42 per cent in this period. In the passenger vehicles segment, Maruti Suzuki is the major customer for the company.

Replacement demand

The replacement market’s contribution to the company’s total revenues has increased from 25 per cent in 2005-06 to 45 per cent now since they offer better margins compared to the OEM market.

Clutch Auto has a strong R&D expertise and technology knowhow which has helped it not only retain and expand its client base but also build a large replacement market. In FY-09, higher sales from replacement demand have helped the company offset the decline in offtake from the OEMs.

Reaching out to over 40 destinations, 85 per cent of Clutch Auto’s export revenues come from Latin and North America. The acquisition of the clutch division of Pioneer Inc Automotive Products in the US has enabled Clutch Auto expand its presence in the country. The export market is driven mainly by the replacement demand, with Navistar being the major OEM customer. The company plans to increase revenues from exports by 30 per cent by the next fiscal.

Financials

From 2003-04 to 2006-07 (the boom period for CVs), Clutch Auto registered a compounded annual sales growth of 25.6 per cent. Sales began to slide from the December quarter of 2007, and due to unfavourable market conditions that prevailed the whole of last fiscal, the company’s net sales fell by about 10 per cent, operating profits by 20 per cent and net profits plunged by 63 per cent on the back of higher interest cost and depreciation charges.

However, as demand for CVs picked up from the last quarter of 2008-09, Clutch Auto has been posting better numbers. In the first quarter of this fiscal, the company posted a sales growth of 17 per cent, boosting its operating profit by 31 per cent and net profits by 11 per cent.

Clutch Auto has improved its product mix to its operating profit margins by about 2 per cent to 15.5 per cent in June 2009. With prices of steel (primary production input) appearing relatively stable for the medium term, the company may not suffer the high input costs that prevailed in the first two quarters of last fiscal.

However, the biggest risk to the company’s outlook is any delay in the revival of the M&HCV segment. With a market cap of about Rs 62.9 crore, the stock’s micro cap status makes it quite vulnerable to market swings.

Jindal Steel and Power: Hold

2009-10-19T09:21:00.001+05:30

Driven by sound operating margins for steel and higher realisations for power.

Any one can consider holding on to the stock of Jindal Steel and Power, now trading at 15 times trailing 12-month earnings, despite the run-up in stock price.

While this is at a stiff premium to peers in the steel sector, it is at a discount to power majors such as NTPC and Tata Power, which are at 20 and 19 times trailing earnings respectively.

The premium valuations can be justified by the company’s major expansion plans for both its steel and power holdings, backed by a solid execution track record.

The company’s raw material linkages and high operating margins for its steel business and high realisations and captive fuel for the power business, make the stock a good exposure to both the sectors.

Conditional promise

Jindal Steel and Power (JSPL) has gradually added capacity over the past three years to produce three million tonnes of steel at its Chhattisgarh plant, with the product line comprised mainly of ‘long’ products.

These products cater mainly to the infrastructure segment, including Railways and structural products for real estate, bridges, and so on.

JSPL’s raw materials and power requirements for steel are largely met by captive sources. The company’s operating margins, averaging an impressive 38 per cent since 2005 and at 33.4 per cent for FY-09, are higher than peers such as SAIL and JSW, mainly due to this backward integration.

Sales have grown at a compounded average of 44 per cent annually during the same period. The company has plans to add 2.2 million tonnes of capacity at Jharkhand and Chhattisgarh by 2010 and another 7.8 million tonnes at Orissa and existing locations by 2012-13, quadrupling its output over three-four years.

Sober estimates point to a total domestic capacity of 80-85 million tonnes by 2014, of which JSPL’s share is small. Keeping in mind the long overdue push in infrastructure development, these volumes should be easily absorbed by the market. .

With lower debt on its balance sheet than peers giving it a debt:equity ratio of 0.95:1; JSPL enjoys a comfortable interest cover of eight times, with a healthy net profit margin of 28 per cent in 2008-09.

Excluding the value of JSPL’s power subsidiary (valued at about Rs 28,000 crore), the residual market capitalisation for JSPL’s steel business is about Rs 23,700 crore.

That suggests that the steel business is valued at 15 times the 2008-09 earnings. Assuming the company produces 5.2-5.5 million tonnes of steel by 2010-11, the PE multiple would amount to 10 times on forward earnings. However, it is the power business with its high margins and increased capacity that is the company’s trump card.

The power business contributed to a third of the company’s sales and slightly more than half the operating profits in 2008-09.

POWERFUL SUBSIDIARY

Despite being an early mover in the private sector power generation, JSPL has conservative capacity-addition targets compared to many new entrants. The company now has a total capacity of 340 MW on its books and 1,000 MW in its subsidiary, Jindal Power (JPL). JPL plans to add 2,400 MW (brownfield expansion) in Tamnar, Chhattisgarh and JSPL targets 2690 MW captive addition for its steel requirement over the next four years.

In addition, JSPL has entered into an MoU with the Arunachal Pradesh Government to set up 4500 MW of hydro projects. Captive coal mines allotted to the company for the 1000 MW power project minimise fuel risks and reduce input and transportation costs. The fact that JSPL’s sales are pegged entirely to merchant power tariffs offers scope for higher realisations than other power generation companies that are subject to regulated tariffs.

The company’s costs are also low, thanks to its fuel linkages. Captive transmission lines (400 KV, 254 km line) connected to the national grid put the company at an advantage to wheel its power for merchant use.

The company will continue to enjoy high realisations, helped by merchant power, given that the demand-supply mismatch is likely to persist over the next three-four years. Surplus capacity from the captive power plant with JSPL is currently being sold on a merchant basis.

With the company adding to captive capacity, surplus generation from these projects may also contribute to revenues over the next couple of years.

Last year, 1125 million units (MU) were sold on a merchant basis from the captive power plant, besides the 6369 MU sold by the power subsidiary. Revenue contributions from the Tamnar project are likely to increase in the current year as the project operates at its full capacity.

JSPL has plans to unlock value in its power subsidiary by listing it early next year. Investors can expect higher earnings growth from the company’s power segment even if average realisations moderate with the demand-supply gap narrowing.

With a good portion of the upcoming power capacity to reflect in JSPL’s own books, the listing of the power subsidiary may only unlock partial value from the power business. Of the total 5090 MW thermal capacity to be added in the next four years, only 2400 MW is being developed by Jindal Power.

Assuming a conservative PE multiple of 15 times the 2010-11 earnings for the power subsidiary, the market capitalisation for this business works out to about Rs 28,000 crore (Rs 363 per share).

We have assumed revenues from the present power capacity of 1000 MW project alone. A proven track record in executing and operating power projects and assured fuel and distribution linkages may make Jindal Power a preferred exposure to the power generation sector.

At Rs 16,200, gold is up 34% over last Dhanteras

2009-10-16T09:14:00.000+05:30

Gold prices have jumped 34 per cent to Rs 16,200 per ten gram since the last Dhanteras, a day considered auspicious for buying the precious metal. The prices of gold last year on the Dhanteras day ruled at Rs 12,070 per ten gram.

"Gold prices have risen sharply from last Diwali. If you look at gold prices on the Dhanteras day since 2000, prices have not retreated," Delhi Bullion Market (DBM) President Surender Jain said.

For the first time in the last eight years, people would be buying gold at above Rs 16,000 per ten gram level on the Dhanteras day, he noted, adding that silver has also become costlier at Rs 27,500 per kg now from Rs 16,600 per kg in the corresponding period 2008.

An analysis of the price trend of the precious metal, especially on the Dhanteras day, showed that gold has become expensive by more than three-fold since 2000. The price of gold in 2000 were at around Rs 4,500 per ten gram.

"High prices are deterring buyers' spirit and sales are seen to be down by 50 per cent on Thursday," Jain said. Bombay Bullion Association President Suresh Hundia said, "Sales are seen to be down. We get to know the full picture by the end of the day."

P P Jewellers Director Pawan Gupta said people are purchasing gold anticipating that prices are not going to come down in the near future, adding that most of them are buying gold and silver coins as against jewellery.

According to bullion experts, gold rates in the domestic market are rising taking cues from the global market, where prices are up due to a weaker dollar.

'No meaningful correction before another rapid rise' : Rakesh Jhunjhunwala

2009-10-16T09:01:00.002+05:30

Rakesh Jhunjhulwala

The flood of money waiting on the sidelines means that the market is unlikely to see a meaningful correction anytime soon, says Rakesh Jhunjhunwala, leading stock investor
, and partner, Rare Enterprises. In an interview with ET, he says a delayed recovery in the world economy is not a bad thing for India, as we stand to gain from moderate commodity prices.

Further he said,

This kind of systematic rise in the market, where the market goes up, then corrects briefly — both price and time wise — and then once again resumes its gain, cannot even have a meaningful correction without a burst of a rise, which means a very, very rapid rise.

I surely feel that in terms of commitment and belief, the market is not heated at all. There is disbelief all around and huge money on the sidelines. This is a reason why we don’t get any meaningful correction, and this is also the reason why we could still have a sharp rise ahead of us.

Markets by their very nature will naturally correct at some point of time. The markets, as I see them, are not as of the moment indicating any signs of meaningful correction.

Whenever markets correct, I do not expect the correction to be anywhere near what we saw last year, and I expect the markets to remain far, far, far above the lows of October and March.

I am bullish on all sectors which are domestic economy dependent and under-penetrated. Banking
, retailing, infrastructure, pharma are among the key ones.

I do not expect that the western and the developed economies can make any meaningful recovery and sustain it. Mr Bernanke is well known for his views of having a loose monetary and fiscal policy in times of difficult economic conditions. Thus, I believe interest rate worldwide in general, and in the western world in particular, are not going to go up in a hurry. Even if the western and developed world do not make any meaningful recovery, I see no reason why the Indian economy and the Indian markets cannot continue to sail alone smoothly. If the world does not recover, commodity prices will remain moderate, which is a big plus for India. What is vital is what happens to Indian software exports.

My personal view is that there is more than a fair chance that India will grow well and outperform, even if the world does not recover.

I think that the western and developed economies are set for sub-par/negative growth for a good period of time. There has to be a transition of both consumption and power from the developed world to the developing world. What effect this will have both economically and geopolitically is a matter of uncertainty and no one can definitely predict the smooth course of this transition.

This, I surely think, is a matter that could unsettle markets if the transition is unruly and geopolitically destabilising. Be that so be, I have no doubt in my mind that this transition has to and will take place.

Why the weakening dollar may be good for India

2009-10-15T09:14:00.002+05:30

Tushar Pradhan, CIO, HSBC AMC, is cautious on markets despite liquidity remaining robust.

Speaking on earnings, Pradhan sees better earnings in H2 FY10.

The dollar has been trading weak for the last few weeks. Commenting on which countries and asset classes will benefit from the weakness in the greenback, he says commodities will gain as the dollar weakens further. "The dollar weakness will also be positive for India".

There is fundamental reason for valuing markets and there is technical reason built up on flows, expectations and sentiments. Clearly, I think the global view is that the recession behind them. However, there is enough people on both sides of this fence to figure out whether this is short-term blip or should 2010, then again show us towards the later half struggle going back to growth. The fact is there is fairly distributed economic stimulus all over the place, there is lot of liquidity and people are trying to find bargains in a market, which is not showing too many.

So when there is too much money chasing too few assets, there is some sort of overpriced momentum, which continues and this not something that can be explained by way of fundamentals. I think even globally, markets have moved up pretty significantly and very quickly. The fundamental view would be to be cautious, however, the fact remains that there is just too much money sloshing around in the system.

in fact, in earnings there is a very different story building up and one of the data points that the Q2 of last year was good for Indian companies, especially, if you look at metals, it was almost a blow out quarter, compared to that this year, maybe just there or a little lower than that. So there might be post the results as we see them in September, some sort of temperance to the mood.

But as we go along in the second half, especially in the last quarter of this financial year, the year on year (YoY) comparison is going to be tremendously attractive because the fourth quarter is when a lot of the companies came in and reported a lot of extra ordinaries, lot of reported earnings were very subdued in Q4. On top of it, the base effect on economic numbers and the base effect of the earnings numbers for the second half, you are going to see some significant fundamental numbers, which are very positive going in the second half.

My only issue is that one has to take these numbers with a bit of pinch of salt because it is just not reflecting the fundamental story as we work around. But the point is that reported numbers are reported numbers and that might be another reason for liquidity to continue to flow in.

We can all be very logical about this. But from my view point where we look at actual fundamentals of companies that doesn’t give me comfort. But is it a possibility?- Yes, it’s a possibility as much as we would like to deny it for the simple reason that these numbers are going to be pretty strong. The fact is that dollar if it continues its weakness; the international investors will try to look at non-dollar assets for diversification. One could be commodities, and the other class which drives non-dollar asset investors also is regional markets, as well as emerging markets. And if that trend continues, it is conceivable that we may see pretty strong markets in the near future.

Buy : Nilkamal

2009-10-15T09:10:00.001+05:30

Buy in the stock of Nilkamal from a short-term perspective. It is evident from the charts that the stock took support around Rs 43 that is a significant long-term support level in March and has been in an intermediate-term uptrend since then. The stock broke through key resistance at Rs 110 with good volume in late August and continued to trend upward. However, following a short-term sideways movement in the range of Rs 132 and Rs 154, the stock broke out of this range by gaining almost 7 per cent on October 14. It also surpassed the long-term resistance at Rs 150. The stock is trading well above its 21-day and 50-day moving averages. There is an increase in volume over the past two trading sessions. Both the daily and weekly relative strength indices (RSI) are featuring in the bullish zone. We are bullish on the stock from a short-term perspective. We expect it to rally until it hits our price target of Rs 180. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 155.

Tata Motors launches Manza at Rs 5 lakh

2009-10-15T09:04:00.001+05:30

Tata Motors launched its new generation sedan, Indigo Manza, here on Wednesday.

The car is priced at Rs 4.95 lakh for the base petrol version and Rs 6.85 lakh for the top-end diesel option (ex-showroom Mumbai).

It will be available nationwide through Tata Motors’ 224 dealerships and 493 sales points from Friday.

The Manza will compete with the Swift DZire, the Accent, the Ikon and the Logan in the entry mid-size segment.

The car debuts six years after the Indigo range was first launched. Tata Motors has sold nearly 2.75 lakh units of Indigo so far.

“The Indigo Manza is a contemporary sedan on a new car platform that has the potential to emerge as a class leader,” said Mr Ratan Tata, Chairman, Tata Motors, in a statement.

The Manza is built on the same platform as the new generation Indica Vista.

Mr Rajiv Dube, President, Passenger Car Business Unit, said the company had invested Rs 2,000 crore to develop the platform.

The car is being produced at the Tata-Fiat plant at Ranjangaon near Pune.

As the entry-level midsize sedan range of Tata Motors, the Indigo family does sales of 3,000 units a month, which is expected to increase with the Manza, he said. The Manza range will replace the base version of the Indigo, which has been in the market since 2003. However, Indigo CS (compact sedan) and the station-wagon Marina will still be retailed.

The company officials did not give any projections on Manza sales.

“We have enough capacity at our plants in Ranjangaon, Pune and Pantnagar. However, there will be constraints in the initial months since we are ramping up production,” said Mr Dube.

On the Nano, he said Tata Motors would increase production with each month. It sold nearly 7,500 units in the last three months and this could increase to 3,000 units a month.

“We will see volumes going up by 20 per cent in October,” Mr Dube said. Trial production at the Sanand plant in Gujarat would begin in December-January.

He added that the Indicruz, the crossover between sedan and SUV, will be launched in 2010. Officials said it will be on a new SUV platform and be pitched against the Honda CR-V.

RBI may hold rates steady: PM panel

2009-10-15T08:30:00.001+05:30

The RBI is not likely to hike interest rates in its monetary policy review on October 27 even as inflation is expected to rise to 6 per cent this fiscal-end from 0.7 per cent at present, the Prime Minister's Economic Panel said on Wednesday.
"I don't think the RBI will revise interest rates in the policy review... As far as the monetary policy is concerned, it has followed an accommodative policy, and unless inflation pressures are very strong, there may not be any change in the stance," Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan told reporters.
He said the RBI might wait to make any change in the policy rates.
The former RBI Governor further said prices will begin to rise from now on, mainly due to the low base of last year and rising food prices.
"By the end of the year, you will get an inflation rate even on wholesale price index of about 6 per cent," he added.
Inflation has been on the rise on the back of rising food prices and stood at 0.70 per cent for the week ending September 26.
Rangarajan said there is always a seasonal decline in prices in November and December, adding that "one might want to wait and see whether the seasonal decline occurs or not, and take action after the behaviour of prices."

Top 15 fastest growing small companies

2009-10-14T08:41:00.002+05:30

The economy is on a recovery mode and the bulls in stock market have once again taken the centre stage. The pundits in market have started predicting Sensex to reach 20K and beyond. Is this the beginning of another bull run? In last bull run which started in 2003, many small- and midcap companies broke into the large-cap club by the time rally came into an abrupt end in early 2008. While no one can guarantee about the future performance of current companies, the past performance is an essential tool to predict the future.

For a successful investor it is thrilling to catch a potential multibagger before others spot it. Here are the top 15 fastest growing companies:

Sulzer India

Total Income: Rs 196 cr

Op. Profit: Rs 56 cr

Net Profit: Rs 34 cr

Return on Capital Employed (3 yr average): 61%

Mcap (Monthly avg): Rs 300 cr

CMP: Rs 895

Industry: Capital Goods

Oil Country Tubular

Total Income: Rs 433 cr

Op. Profit: Rs 101 cr

Net Profit: Rs 68 cr

Return on Capital Employed (3 yr average): 76%

Mcap (Monthly avg): Rs 384 cr

CMP: Rs 83

Industry: Steel

Tata Sponge Iron

Total Income: Rs 636 cr

Op. Profit: Rs 172 cr

Net Profit: Rs 108 cr

Return on Capital Employed (3 yr average): 38%

Mcap (Monthly avg): Rs 361 cr

CMP: Rs 250

Industry: Steel

Zydus Wellness

Total Income: Rs 245 cr

Op. Profit: Rs 41 cr

Net Profit: Rs 27 cr

Return on Capital Employed (3 yr average): 48%

Mcap (Monthly avg): Rs 98 cr

CMP: Rs 174

Industry: FMCG

Liberty Phosphate

Total Income: Rs 337 cr

Op. Profit: Rs 33 cr

Net Profit: Rs 18 cr

Return on Capital Employed (3 yr average): 31%

Mcap (Monthly avg): Rs 35 cr

CMP: Rs 24

Industry: Fertilizers

Rain Commodities

Total Income: Rs 1,153 cr

Op. Profit: Rs 224 cr

Net Profit: Rs 105 cr

Return on Capital Employed (3 yr average): 21%

Mcap (Monthly avg): Rs 1,276 cr

CMP: Rs 172

Industry: Cement & cement products

Engineers India

Total Income: Rs 1,903 cr

Op. Profit: Rs 368 cr

Net Profit: Rs 388 cr

Return on Capital Employed (3 yr average): 32%

Mcap (Monthly avg): Rs 6,034 cr

CMP: Rs 1157

Industry: Capital Goods

India Infoline

Total Income: Rs 591 cr

Op. Profit: Rs 173 cr

Net Profit: Rs 109 cr

Return on Capital Employed (3 yr average): 25%

Mcap (Monthly avg): Rs 4,036 cr

CMP: Rs 141

Industry: Finance

Crisil Ltd.

Total Income: Rs 442 cr

Op. Profit: Rs 177 cr

Net Profit: Rs 149 cr

Return on Capital Employed (3 yr average): 45%

Mcap (Monthly avg): Rs 2,795 cr

CMP: Rs 4063

Industry: Miscellaneous

Praj Industries

Total Income: Rs 777 cr

Op. Profit: Rs 140 cr

Net Profit: Rs 130 cr

Return on Capital Employed (3 yr average): 73%

Mcap (Monthly avg): Rs 1,876 cr

CMP: Rs 97

Industry: Capital Goods

Tide Water Oil

Total Income: Rs 573 cr

Op. Profit: Rs 56 cr

Net Profit: Rs 35 cr

Return on Capital Employed (3 yr average): 26%

Mcap (Monthly avg): Rs 434 cr

CMP: Rs 4840

Industry: Oil & Gas

KS Oils

Total Income: Rs 3,397 cr

Op. Profit: Rs 374 cr

Net Profit: Rs 183 cr

Return on Capital Employed (3 yr average): 35%

Mcap (Monthly avg): Rs 2,162 cr

CMP: Rs 68

Industry: Solvent Extraction

Relaxo Footwears

Total Income: Rs 441 cr

Op. Profit: Rs 52 cr

Net Profit: Rs 20 cr

Return on Capital Employed (3 yr average): 24%

Mcap (Monthly avg): Rs 114 cr

CMP: Rs 154

Industry: Leather and leather products

Vinati Organics

Total Income: Rs 207 cr

Op. Profit: Rs 39 cr

Net Profit: Rs 30 cr

Return on Capital Employed (3 yr average): 30%

Mcap (Monthly avg): Rs 197 cr

CMP: Rs 197

Industry: Pharmaceuticals

Bajaj Electricals

Total Income: Rs 1,824 cr

Op. Profit: Rs 190 cr

Net Profit: Rs 96 cr

Return on Capital Employed (3 yr average): 37%

Mcap (Monthly avg): Rs 1,089 cr

CMP: Rs 714

Industry: Consumer Durables

Wipro plans to buy Yardley and Tura

2009-10-14T08:38:00.001+05:30

Azim Premji is known to be a wealth creator. No wonder, he was very active during the IT boom.
Now he betting on his consumer business and acquisitions could be something that will drive most of its growth.
A UK based company could literally add value this time to Wipro Consumer, a division of Wipro.
India's fourth largest software services provider has emerged as a frontrunner to buy one of Lornamead's flagship brand Yardley of London along with its Nigerian subsidiary Tura. These are brands that even Godrej, Dabur and Emami were actively pursuing.
NDTV Profit learns from sources that Wipro plans to buy both Yardley and Tura as a packaged deal.
While Yardley has sales of over $75 million and Tura around 40 million, the deal size could be anywhere between Rs 500-Rs 600 crore.
Wipro bought Unza two years back to strengthen its presence in South Asian markets. Yardley could give easy access to Africa, Middle East and Asia, where so far, Wipro is present only through exports.
Experts feel that with many of these brands competing in similar segments, brand positioning will be the key.
Alpana Parida, president of Alia Group, said, “The key is how far the Wipro brand and the Santoor brand extends itself and what can come under its fold?
How will be the brand architecture and how all these brands fit into the entire portfolio?
That's the key to how successful these brands become.”
Meanwhile according to sources, Wipro Consumer wants to double its sales every three years primarily through acquisitions. With Unza buy it more than doubled its sales to over Rs 2000 crore and Yardley could now help Wipro do just that once again.

Auto sales zoom up in September

2009-10-14T08:36:00.001+05:30

The society of Indian automobile manufactures (Siam) on Tuesday released its production, sales and export report. While the passenger vehicles and two and three-wheelers segment registered a positive growth, the commercial vehicle segment seems to be lagging behind.

It’s been a better-than-expected performance by India's automobile industry in the first half of the fiscal year.
Passenger vehicle sales have jumped 13.5 per cent, while two- wheelers grew at more than 15.5 per cent.
But commercial vehicle sales are down and this is the real worry area for Motown.
Dilip Chenoy, president of Siam, said, “Growth in the CV segment reflects the economic condition. When there is a downturn, the first to fall are the CVs and in the upturn the last to grow are the CVs. What we are seeing now is slow and steady growth, which reflects that the Indian economy is improving.
But to come back to its full growth potential will take some time because the last year’s numbers are very low. We might see numerical growth in November-December and hopefully by the end of the financial year, we will see some positive growth."
It is the return of financing to the auto space that is starting to help the CV makers too.
The problem though is of large inventory that remains to be cleared from the pipeline.
However, for the rest of the industry the availability of loans and the massive festive demand is surely pushing them towards achieving double-digit growth for the full year.

Thinksoft fixes IPO price at Rs 125

2009-10-14T08:31:00.000+05:30

IT solutions provider Thinksoft Global Services has fixed the issue price of its initial public offer (IPO) at Rs 125 a share.

The issue price is 12.5 times of the face value, the company said in a public announcement.

The Chennai-based firm has raised Rs 45.57 crore through the initial share sale of 36.46 lakh equities at the upper end of the price band of Rs 115-125 a piece.

The share sale witnessed a revision in the issue price as well as extension of the closing date after the IPO received lukewarm response from investors.

The price band, which was initially fixed at Rs 120-130 per share, was later revised to Rs 115-125 a share. The offer was subscribed over two times on the final day on October 1.

The company intends to use the IPO proceeds to fund its expansion plans. Equity shares offered through the issue are proposed to be listed on the National Stock Exchange and the Bombay Stock Exchange.

Geojit BNP Paribas Q2 net up 150%

2009-10-14T08:29:00.000+05:30

KOCHI: Brokerage firm Geojit BNP Paribas Financial Services has clocked a net profit of Rs 13.06 crore in the second quarter of this fiscal, registering a 150 per cent growth over Rs 5.22 crore in the same period last year.

The Geojit Managing Director, Mr C.K. George, attributed the positive results to favourable market conditions and renewed investor confidence that have led to the growth of the company.

Revenue in the same period stood at Rs 80.95 crore, witnessing a growth of 60 per cent over Rs 50.61 crore in the corresponding period last year, he said.

The company’s profit before tax rose 110 per cent to Rs 22.11 crore from Rs 10.54 crore in the same period last year.

For the six months ended September, the company’s consolidated income rose 61 per cent to Rs 157.63 crore from Rs 97.96 crore during the same period last year.

Its consolidated profit before tax went up by 107 per cent to Rs 43.28 crore from Rs 20.88 crore, while consolidated net profit rose 113 per cent to Rs 26.31 crore from Rs 12.33 crore.

The company has added about 68,000 clients over the past year and is confident that these numbers will grow in this financial year, he added.

Geojit has opened new branches in North India, Gujarat, West Bengal and Orissa to reach out to local investors, he said. — PTI

Buy : Mercator Lines

2009-10-14T08:19:00.001+05:30

Buy in Mercator Lines from a short-term horizon. It is perceptible from the charts of the stock that since its March low of Rs 21 the stock has been on an intermediate-term uptrend. However, after encountering resistance at Rs 76 in June, the stock went through a medium-term correction till the July low of Rs 42. Later, the stock resumed its uptrend, taking support in the Rs 42-45 band. In mid-September, it crossed the 21-day and 50-day moving averages and is currently trading way above them. On October 8, the stock jumped 9 per cent, accompanied by high volumes and began to shape a flag pattern. The daily relative strength index (RSI) is featuring in the bullish zone and the weekly RSI is on the brink of entering this zone. Both the daily and weekly moving average convergence and divergence indicators are hovering in positive territory. Taking into consideration that the stock’s intermediate-term uptrend-line is intact we are bullish from a short-term perspective. We expect it to move up until it hits our price target of Rs 72. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 61.5.

Alcoa Q3 reports surprise profit; sales beat expectations

2009-10-08T09:11:00.001+05:30

The earnings season officially kicked off in US, with aluminium giant, Alcoa reporting after the bell. The Dow component bettered street expectations on both earnings and revenue. The company reported profit of 4 cents a share in the third quarter, excluding one-time items; analysts were expecting a loss.

Alcoa’s sales reached USD 4.62 billion, ahead of analysts' USD 4.55 billion dollar forecast. Its stock jumped more than 5% in after hours trading.

Climbing rupee worries IT sector

2009-10-08T08:43:00.001+05:30

The fate of the Indian IT sector is somewhat at the mercy of the rupee. However, the sharp run up of the currency is starting to worry the sector, as they fear that the strengthening rupee is something they will have to contend with for a while.

The rupee is galloping again and has appreciated 2.5 per cent in less than a week—a cause of worry for the Indian IT pack as it logs into the earning season.

Typically, every per cent of rupee appreciation has a negative impact of 40-50 basis points on margins for the Indian IT companies.
While short-term impact may be neutralised through gains in hedge positions, the cost structures for these companies will inflate as majority of their expenditure is in rupee and earnings, almost 70 per cent, in dollars.
N Chandrasekaran, CEO of TCS, said, "It’s a problem and we are evaluating the situation. Cross currency fluctuation is a worry."

While short-term rupee appreciation will not be difficult for the IT sector to defend, the markets are clearly expecting it to be a long-term trend.
Beating down the IT pack almost three per cent in trade on Wednesday, the climbing rupee, compounded with a lackluster quarter ahead with less billing days thanks to the holiday season, will certainly put hurdles on the road to recovery for the IT sector.

Dollar weakness drives gold

2009-10-08T08:39:00.001+05:30

The surge in prices of the yellow metal is likely to put a dampener on festive buying, especially in a country where gold is the favoured metal of value.

Among all that glitters, gold glows stronger. The yellow metal hit a new high of $1048.43 per ounce in spot trade on Wednesday, even as the futures scaled up to the $1050 per ounce mark.
Weakness in the US dollar and rising inflation have stoked fears of value erosion and driven investors to the perceived safety of the glowing metal.

Alan Heap, Managing Director, Global Commodity Analyst at Citi Investment Research, said, “Weakness in US dollar caused gold prices to break through. Gold prices could go high as $2000 from here. From fundamental point of view, I am nowhere near that bullish.”
Rising gold values might, however, dampen some of the festive season demand in India fear traders, as gold has gained 20 per cent already in 2009.
But there are some who believe the appetite will revive once conviction returns on the sustainability of the uptrend.
Mehul Choksi, MD of Gitanjali Gems, said, “I believe that gold will go up to $1200. Inflation, which is still to come, will be a major driver for gold. Gold has only one way to go according to me.”

Optimism on the outlook for gold is shared by most bullion trackers, who see the high dollar liquidity on the back of continued stimulus measures in the US, nudging the yellow metal higher.
So, expect your stash of gold to grow in value in the coming days.

Sell : HCL Technologies

2009-10-08T08:36:00.000+05:30

We recommend a sell in HCL Technologies from a short-term perspective. It is apparent from the charts of the stock that after recording a multi-year low of Rs 89 in early-March, it has been on an intermediate-term uptrend. However, the stock encountered significant long-term resistance at Rs 350 in late September and reversed its direction.

The stock’s reversal was triggered by factors such as negative divergence displayed in its daily relative strength index (RSI) as well as moving the average convergence and divergence (MACD) indicator and long-term resistance. Besides, both weekly RSI and MACD were hovering in the overbought territory.

Since then, the stock has been on a short-term downtrend. On October 6, it fell 5 per cent, penetrating the medium-term up trendline that has been in place from a July low of Rs 163. The daily RSI is slipping in the neutral region towards the bearish zone. The daily MACD has signalled a sell. Our short-term forecast on the stock is bearish. We anticipate it to decline until it hits our price target of Rs 280 in the approaching sessions. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 324.

Expected Q2 results of India's top four IT companies

2009-10-07T22:52:00.004+05:30

Top tier IT companies are expected to post better sequential growth in revenue in the September 2009 quarter compared with the previous quarter. The expectation of an improved performance rides on the possibility of moderate growth in business volumes and stable pricing.

Analysts are also expecting companies to provide guidance on a better outlook for the third quarter and for FY10, following higher deal closures and receding pressure on billing rates.

Here are the expected results of the top four IT companies:

TCS

Sales: 7355.1 cr
QoQ Change: 2.1%
YoY Change: 5.8%

PAT: 1524.2 cr
QoQ Change: 0.3%
YoY Change: 20.8%

Infosys

Sales: 5593.2 cr
QoQ Change: 2.2%
YoY Change: 3.2%

PAT: 1531.0 cr
QoQ Change: 0.3%
YoY Change: 6.9%

Wipro

Sales: 6,603.6 cr
QoQ Change: 3.5%
YoY Change: -0.1%

PAT: 1043.7 cr
QoQ Change: 2.8%
YoY Change: 6.7%

HCL Technologies

Sales: 2,987.8 cr
QoQ Change: 2.7%
YoY Change: 26.1%

PAT: 317.8 cr
QoQ Change: 1.0%
YoY Change: 13.1%

Total for top 4

Total expected earnings for top 4

Sales: 22,539.7 cr
QoQ Change: 2.6%
YoY Change: 5.6%

PAT: 4,416.8 cr
QoQ Change: 0.9%
YoY Change: 11.7%

RIL net profit at Rs 15,296 cr for FY'09

2009-10-07T22:49:00.000+05:30

Ambani group firm Reliance Industries today reported a consolidated net profit of Rs 15,296 crore for the year ended March 31,
2009.

The company had registered a net profit of Rs 15,324 crore (from ordinary activities) in the FY'08, the company stated in a filing to the Bombay Stock Exchange.

The announcement of audited financial results for 2008-09 came late as the merger of Reliance Petroleum with RIL was awaiting regulatory and court approvals.

The figures include those of Reliance Petroleum Ltd (RPL), which amalgamated with the company with effect from April 1, 2008 and are therefore, not comparable with those of previous year, the company said in the filing.

The net turnover of the company stood at Rs 1,51,224 crore for the year ended March 31, 2009, whereas it was Rs 1,37,147 crore a year-ago.

RIL has also proposed a dividend of Rs 13 per fully paid-up equity shares of Rs 10 each aggregating to Rs 2,219 crore, including the dividend distribution tax, the filing added.

The board has considered dividend on the shares issued to the shareholders erstwhile RPL as well.

The RIL board also approved a bonus issue of one share for each share held in the company, subject to the approval of the shareholders.

Rising rupee a big worry for exporters

2009-10-07T22:46:00.001+05:30

Over 10 per cent rise of rupee against the US dollar has become a "big worry" for exporters at a time when they saw arrest in sharp decline in the country's exports amidst a hope of recovery.
The dollar is trading at below Rs 47, weakening by over 10 per cent from Rs 52.17 in the first week of March 2009.
"The appreciating rupee will have negative effect on exporters, who are already facing lack of orders," Federation of Indian Export Organisations President A Sakthivel said.
He said weak dollar results in falling margins for exporters as their rupee realisations drop, which in turn affects their negotiating power with the global buyers.
"Appreciating rupee is a big worry. We were getting help from strong dollar," Chairman of Council for Leather Exports Habib Hussain said.
Though dollar has seen a sharp decline against major currencies of the world, bulk of India's trade is done through the US currency.
Exports have been declining since October 2008 under the impact of recession in the world's major economies. However, the contraction in exports, which dipped by 30 per cent in March and April, reduced to 19.4 per cent in August this year.
The government has announced several sops for exporters who contribute about 17 per cent to the country's gross domestic product. The sops included interest subsidy of two per cent on bank finance.

RIL board approves 1:1 bonus issue

2009-10-07T22:41:00.001+05:30

The Reliance Industries board on Wednesday approved bonus issue in the ratio 1:1. The issue is subject to approval from shareholders. The RIL bonus issue is applicable for RPL shareholders.
RIL had announced a bonus issue in the ratio 1:1 in 1997. Prior to that, the company had announced a bonus issue in the ratio 3:5 in 1980 and 1983.
“The proposal for bonus is as per RIL’s policy of rewarding shareholders,” said Alok Agarwal, CFO of RIL.
He said that the company has been able to ramp up capacity despite significant challenges in costs and availability of rigs.
RIL has started production at 16 of 18 oil wells at KG D6 block and ramp-up of output from the block is on track, he said. And the benefits of KG D6 gas has lead to substantial savings in terms of imports, Agarwal added.
Gas price at $4.2/mmbtu leads to annual savings of Rs 25,000 crore to consumers, he said. He pegged the value of RIL’s treasury stock at Rs.40,000 crore

Thoughts

2009-10-07T22:29:00.002+05:30

"When you truly care for someone, you don't find faults, & mistakes;
Instead you correct their mistakes & accept their faults.
Thats true affection"

The bigger loss in life:
Tears in someone's eyes because of " U "
& Biggest achievement of life;
Tears in someone's eyes for "U".

The secret recipe 4 success in stock market is simple.
30% in market analysis skills,
30% in risk management,
30% in emotion control,
10% in luck.

I met money one day.
I said U are just a piece of paper.
Money smiled & said Of course but I haven't seen a dustbin yet in my life.

Are heady days over for telecom?

2009-10-07T08:06:00.000+05:30

The telecom sector has been in the limelight now for the past few days, but for investors it has not been the kind of good news that made the sector their darling a few years ago.
First Tata DOCOMO flagged off a price war which was taken further by RCom. And in the meantime, the MTN-Bharti merger fell through.
To tackle competition, RCom has offered a new 50-paise-per-minute tariff plan for local, STD calls, and SMSes to its customers—a move that can deliver monthly savings of 46 per cent to its customers but one that can cause a near 600 basis points dent in its margins. What's more, the increased competition is likely to see revenue growth for operators coming under pressure but customer acquisition seems top of mind now. Inder Bajaj, president of RCom, said the move is expected to increase its customer base.
In an industry already crowded with 12 operators, Trai's new plan on making per-second pulse mandatory for all operators will only add fuel to the competitive fire.
Trai chairman JS Sharma said, it will examine whether we can make it mandatory but there are no questions of making it mandatory for operators to offer tariff only on per-second tariff.
But industry players are putting up a brave front expecting the consultation process with the regulator to yield a more pragmatic policy decision, even as some opine that given the talking habits of Indians the concerns are overstated.
Manoj Kohli, CEO, Bharti Airtel, said, “Fortunately, the Trai has always provided forbearance— India has seen all kinds of methodology of payment - whether its 1sec, 10 sec or 20 sec pulse. We are very clear that the Indian customer does not want to talk fast. It does not want to talk short; it wants to talk long and in a relaxed fashion.”
RCOM's new tariff scheme is seen as a reaction to the aggressive pricing adopted by Tata Docomo and is a sign of the times to come. The stock prices of leading telecom stocks saw a sharp decline of between 8-10 per cent in acknowledgement of this reality.

Buy : ITC

2009-10-07T07:57:00.000+05:30

We recommend a buy in the stock of ITC from a short-term perspective. It is perceptible from the charts of ITC that the stock has been on a long-term uptrend since its October 2008 low of Rs 132, forming higher peaks and bottoms. After recording a life-time high of Rs 153 in late July, it saw a medium-term downtrend till late September. Taking support in the band of Rs 220 and Rs 225, the stock resumed its long-term uptrend recently. It gained 6 per cent accompanied with good volume in the last two sessions and is trading well above the 21-day and 50-day moving averages. The daily and weekly Relative Strength Indices are featuring in the bullish zone. The daily moving average convergence and divergence indicator is signalled a buy and is hovering in the positive territory. Considering that the stock’s intermediate-term up trendline is intact, we are bullish. We expect it to surpass its all-time high and rally until it hits our price target of Rs 270. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 235.

s:BL

Why India does not need the World Bank loan

2009-10-07T07:54:00.000+05:30

The World Bank loan to public sector banks seems unnecessary for three reasons. First, these banks have accessed funds on better terms from global and domestic sources; they are hardly undercapitalised; and, the loan may lead to the opening up of India’s financial sector on unfavourable terms,

An institutional loan must meet three requirements: It should come cheap; it should meet a genuine requirement; and its conditionalities, if any, should be acceptable. On September 22, the World Bank signed a $4.3-billion loan for capitalisation of India’s public sector banks, capitalisation of the India Infrastructure Company Ltd and debt support for the Power Grid Corporation of India. It is necessary to assess the loan from these three standpoints.

The $2-billion capital support loan for public sector banks is meant to support the stimulus package. The Finance Ministry has not revealed the terms of the loan. The loan has a 30-year tenor, with a five-year grace period. The Bank’s loan support does not come cheap. Its rates are not very different from commercial capital accessed by public sector banks from the global financial markets.

The IBRD Flexible Loan is 1.05 per cent over the London Interbank offered Rate (Libor) for tenors over 14 years. Some banks have already obtained better terms from the global financial markets. In December 2004, the State Bank of India raised a $400-million medium term note to international investors at 0.74 percentage points over Libor. In 2006, Canara Bank had raised 15-year medium term notes at 1.20 percentage points over Libor. This was the pricing when the US Federal Reserve Board was hiking fund rates.

SOVEREIGN GUARANTEE

Unlike investors in the public sector medium term note programme, who have only the comfort of an implicit sovereign guarantee, the World Bank loan is fully covered. It has an explicit sovereign guarantee — the Government will service the loan. In that event, the World Bank loan should have been much cheaper.

Domestic banks have also raised funds through Innovative Perpetual Debt instruments in the domestic markets. Coupons on the issues ranged between 8.5 and 9.5 per cent. The costs are as competitive as the World Bank’s if swap and hedging costs are factored in. The guarantee also translates into a fiscal cost. In the past, when the Government extended capital support to the public sector banks it was done through two steps. Equity was infused into the banks. An equivalent amount was invested in Government of India recapitalisation bonds — 7-8 per cent perpetual and 10 per cent close-ended bonds.

However, in making these investments there were no fiscal costs involved. Instead, the Government actually made money between 2003 and 2004 when bank equity was divested. It allowed public sector banks to buy back equities ahead of an initial public offering.

The equity buybacks from the Government were made at the then prevailing market value. The bonds were also redeemed at market value, implying a premium to face value. This was because interest rates at that point of time were low. The 10-year yield to maturity (YTM) on Government securities had dropped below 6 per cent.

However, the World Bank capital support is not fiscally neutral. Instead, it actually contributes to an increase in the fiscal deficit, through an increase in Government external liabilities. This is happening at a time when the Government is talking of fiscal consolidation.

But do the public sector banks actually need the World Bank’s capital support, especially at none-too-attractive rates? At the current juncture, there is little evidence to prove that the capital is required. Banks are already compliant with Basel I capital requirements. Under this regime, the minimum Tier one capital prescribed is 6 per cent and tier two capital is 3 per cent. But in 2007, even before the sub-prime crisis unfolded in the rest of the world, the Reserve Bank of India had pushed domestic banks for a Capital to Risk-weighted Assets Ratio (CRAR) of 12 per cent. As a result all the public sector banks currently have a capital to risk weighted ratio of close to 13 per cent.

CAPITAL ADEQUACY

In addition this year, banks have also been feverishly raising capital, mostly tier one, taking advantage of the liquidity overflow. This is because banks are permitted to raise up to 15 per cent of their net worth through perpetual bonds/preference shares that form part of tier one debt. Further, 50 per cent of tier one is allowed to be raised through subordinated bonds. After such capital raising efforts, it is possible that the domestic banks would become overcapitalised.

This is especially after migration to the Basel II regime from this financial year. The Basel II regime prescribes lower risk weights on retail loans. As a result, banks will actually see some risk capital being released. This is likely to push up their capital closer to 14 per cent. A classic instance is that of the State Bank of India that has a Basel I CRAR of 13 per cent and Basel II CRAR of 14.25 per cent.

The possibility of overcapitalisation, given the sluggish growth in credit, is no virtue, as it opens up the possibility of misuse of funds.Credit-deposit ratio this year is down to 68 per cent, the lowest level since the 1990s. The credit to GDP ratio is barely 50 per cent. In the US it is an astounding 375 per cent. So who is undercapitalised?

The 2008 annual report of the International Bank for Reconstruction and Development (IBRD) says that its activities “preclude lending to members who may have access to international credit markets”. Then, why is it interested in lending to India? Are there other policy objectives that are being pursued?

It would appear that the World Bank is not in a position to impose direct lending terms on borrowers — disbursements of the bank between 2007 and 2008 were down $565 million.

But ruling out conditionalities altogether would be a simplistic assumption. As the IBRD annual report says, “Decisions to make loans are based upon among other things, studies by IBRD of a member country’s economic structure...”

LATENT CONDITIONALITIES

To be sure, it will no longer be easy to flog the rhetoric of “financial sector reforms”, at a time when the global consensus has shifted considerably in favour of regulation, with India’s public-sector-dominated banking sector being an exemplar.

In this scenario, an equity dilution of Government stake in public sector banks to 33 per cent cannot be regarded as an immediate consequence of the loan. However, the opening up of the financial sector could take a more subtle form, in the garb of reciprocity.

So, does India need the World Bank loan?

Tariff war may pressure telecom operators’ revenues

2009-10-07T07:53:00.001+05:30

The ongoing tariff war in the cellular segment could bring down the average revenue per minute for operators, but it would also lead to consolidation in the industry, according to analysts.

The latest round of tariff war was triggered by Tata DoCoMo when it announced per second calling rates.

On Monday, Reliance Communications raised the pitch by introducing a new plan whereby customers can make all calls at 50 paise a minute.

To top it all, the telecom regulator announced at the sidelines of an industry event in Geneva that seconds-based tariff may be made mandatory for all operators.

“We had assumed the industry average revenue per minute to fall to 50 paise in FY 2011, a CAGR decline of 7 per cent per annum from the current levels. We now believe that with this latest RCom tariff, the average revenue per minute (ARPMs) could decline by another 10 per cent. This short-term pain could lead to faster consolidation of the industry,” said a report from Morgan Stanley.

Telecom stocks took a beating on the Bombay Stock Exchange as a result of these concerns.

Reliance Communications lost 10.64 per cent to close at Rs 268.25. Bharti Airtel dipped 10.22 per cent and ended at Rs 359.40. Idea Cellular went down 8.29 per cent to close at Rs 64.75 and MTNL tanked 5 per cent at Rs 82.90.

Analysts also said that while some of the new schemes announced may not be sustainable in the long run, consumers also stand to lose out partly.

“Operators offer a lot of free talk time in the minute-based tariff, but I don’t think users will be given free usage in the per-second billing plan. This could in fact neutralise the impact of seconds-based calling on operators,” said Mr Prashant Singhal, Partner, Ernst & Young.

IT cos expected to post sequential growth in Q2

2009-10-07T07:50:00.000+05:30

Bangalore, Oct. 6 The worst seems to be over for the Indian IT industry as analysts predict a return of sequential growth in the second quarter of fiscal 2010 helped by improvement in business sentiments and favourable cross currency movements.

Also, the faster-than-expected turnaround could prompt Infosys Technologies to upgrade its fiscal 2010 revenue forecast to a flattish year-on-year growth, compared with the company’s earlier negative projections, analysts said. Infosys, which will announce its numbers on Friday, would beat its own projections for the September quarter, they said.

Positive commentary

The recent positive commentary from the managements of top tier vendors coupled with a robust deal flows throughout the September quarter has lifted sentiments in the sector. In the previous two quarters, the industry had for the first time since 2001 witnessed a sequential negative growth, reeling under the impact of the global economic crisis that caused volumes to drop and induced pricing pressures.

Analysts said client decision making was turning orderly with improvement across verticals (especially BFSI and Telecom). Signs of recovery, including volume based utilisation improvement, stable pricing and abatement of leakages at key clients, are also visible.

“We believe pick-up in discretionary demand, faster rebound in BFSI and telecom and contribution from new business channels could lead to upgrades,” brokerage firm Motilal Oswal said in a note to clients.

The rupee has remained largely flat against the US dollar during the September quarter, as a result of which the rupee-term growth would be largely in line with the dollar-term revenue growth during the quarter.

A BL poll of five brokerages reveal that Infosys would post an average revenue Rs 5,576 crore for the quarter ahead of its guidance of Rs 5,318 crore to Rs 5,413 crore. Net profits were expected to be marginally lower at Rs 1,523 crore from Rs 1,527 crore in the June quarter.

TCS is expected to post a revenue of Rs 7,312 crore ahead of its June quarter’s Rs 7,207 crore. Profits could increase marginally to Rs 1,523 crore due to higher tax rate as against Rs 1,520 crore in the previous quarter.

Wipro’s consolidated revenues were expected to grow to Rs 6,621 crore as against Rs 6,318 crore in the previous quarter, while net profits were likely to decline marginally to Rs 1,065 crore.

Analysts also expect an improvement in utilisation for the September quarter. “This coupled with favourable cross currency movement (a positive impact of 1.5-2 per cent on dollar-term revenues), we expect front-line IT companies to easily exceed their Q2 dollar-term revenue guidance,” an analyst at Sharekhan said.

Operating margins

Operating margins of the top tier companies will remain resilient with a year-on-year improvements of 50-120 basis points. Headcount cuts and hiring postponement could provide further upsides to margins, analysts added.

Companies such as Infosys and Wipro are giving out pay hikes and promotions to their employees, which is a sign of improved business prospects. Infosys, which had not raised salaries in April, is considering a hike in October, while Wipro has also given out hikes, albeit more selectively, to top performers, said an analyst at Angel Broking.

The ongoing vendor consolidation exercises have also benefited companies like TCS, Infosys and Wipro, helping them not only retain the customer, but also giving them the scope to increase their engagement with the clients.

During the quarter, TCS, Infosys and Wipro were retained by energy giant BP, which in a major exercise cut its vendors from as many as 40 to just five.

Markets on a bull run but most companies in bear grip

2009-10-06T22:40:00.000+05:30

Markets might have returned to the same level of valuation as in early 2008, but a majority of companies are still in a bear grip

Top 5 gainers and losers
Experts' take on Sensex | 30 stocks @ 17K | M-cap gain: Laggards | M-cap gain: Front runners
indicating that the recent rally was mainly driven by a smaller number of companies. In fact, out of every 10 companies in BSE 500, seven are still in the red if stock prices are compared with early 2008, a SundayET analysis finds out. According to the SundayET analysis of share price movement of BSE 500 companies between February 21, 2008 and September 30, 2009, two dates when the price to earning ratio (P/E) of the Sensex was exactly the same at 22.19, as many as 326 companies are still trading lower.

Experts agree with the theory that the rally over the said period has been mainly fuelled by selective stocks. According to Aseem Dhru, MD & CEO of HDFC Securities, only a selective set of stocks went up during the current rally. During the last bear-run, many stocks were hit hard.

Only 160 companies have been able to post positive returns for their shareholders. Out of 500 companies of the index, the share price data of 14 companies are not available for February 21 last year and hence are not a part of the analysis.

Significantly, investors of those 160 companies which gained, became richer by around Rs 6 lakh crore, whereas those who had shares of the rest, lost around Rs 7.4 lakh crore during the same period. Among the losers, 87 companies are trading at over 50% discount to their price as on February 21 last year.

Also Read
→ High borrowings may weigh heavy on real estate cos
→ Bank stocks shine on bourses, hit 52-week high
→ Seven sectoral indices outperform Sensex in Q3
→ Investors locked in ELSS lose out in Sensex's 17000 run-up

Top five losers are Vishal Retail, Indage Vintners, Prajay Engineers Syndicate, Country Club (India) and Cals Refineries.

Vishal Retail and Indage Vintners are down by over 90%, whereas, Prajay Engineers Syndicate and Country Club (India) declined by 85% and 89% respectively.

Top five gainers of this period are Mcleod Russel India, Hindustan Oil Exploration, Mphasis, Dhanalakshmi Bank and Aurobindo Pharma. All of them have given more than 100% of return. Mcleod Russel India is the largest gainer and it posted a return of over 230%. Hindustan Oil Exploration and Mphasis appreciated by 190% and 172%, respectively.

Those in banking, financial services and real estate sector were badly impacted and, therefore, they appreciated much faster, Mr Dhru said.

Motilal Oswal, CMD of Motilal Oswal Financial Services has an agreement. According to him, in the first leg of recovery, large caps companies are the preferred buy from institutional investors.

Only after that retail investors join the bandwagon and buy both mid cap and small cap companies, he said.

Since the rally is driven by less number of stocks it raises concerns about the longevity of the current trend.

According to Dhru, markets will go up as there is a lot of liquidity in the system but the downside is high with limited upside. The Sensex went up from 16K to 17K during a week. Such rallies are never good for the market, he said. While commenting on current P/E, Oswal said that, in short term, markets might touch any exorbitant P/E multiple, but, in long run, it should settle at 16 to 19 multiples.

Currently, the Sensex is trading at a P/E of around 16 based on the estimated earnings of 2011, which is a fair valuation.

8 top cos add Rs 53k cr in market cap

2009-10-05T09:03:00.000+05:30

MUMBAI: Country's eight of the top 10 firms together added over Rs 53,000 crore to their market capitalisation last week, while two state-run firms - NTPC and NMDC - saw erosion in their valuation.

State-run trading firm MMTC gained the most and climbed to third slot from fourth. The firm added Rs 10,971.25 crore taking its total market valuation to Rs 1,79,822.5 crore. Shares of the company surged 6.67 per cent on the Bombay Stock Exchange to clo se at Rs 35,964.50 on Thursday.

There were only three trading sessions last as Monday was a holiday on account of Dusshera and Friday on Gandhi Jayanti. The market cap of Reliance Industries, swelled by Rs 6,397.78 crore taking the total to Rs 3,41,600.61 crore. Mukesh Ambani Group co mpany RIL had a market cap of Rs 3,35,202.83 crore as of September 26.

The total market cap of oil firm, ONGC rose by Rs 5,272.31 crore to reach Rs 2,52,803.74 crore. State power utility NTPC slipped to the fourth slot from third after losing Rs 1,814 crore from its market cap. The total market valuation of the company sto od at Rs 1,73,443.25 crore.

State-run NMDC lost Rs 475.77 crore from its market cap taking its total market valuation to Rs 1,40,925.26 crore. Meanwhile, private sector telecom services provider Bharti Airtel and SBI together added Rs 12,465.13 crore.

The total market valuation of Bharti Airtel stood at Rs 1,65,295.43 crore and SBI at Rs 1,40,302.13 crore. IT bellwether Infosys Technologies' total market capitalisation rose by Rs 4,670.74 crore to Rs 1,33,339.9 crore and leading outsourcing firm TCS a dded Rs 8,787.82 crore to its market cap taking its total market valuation to Rs 1,23,685.25 crore.

Power equipment maker BHEL added Rs 5,108.14 crore to its market cap taking the total to Rs 1,15,034.75 crore at the end of the week. Apart from top-10 coveted firms, private sector lender ICICI Bank and HDFC Bank together added Rs 11,106.89 crore to the ir market valuation.

At the end of week, total market cap of ICICI Bank stood at Rs 1,02,943.05 crore and HDFC Bank at Rs 70,217.38 crore. In the top-10 club, RIL is followed by ONGC (Rs 2,52,803.74 crore), MMTC (Rs 1,79,822.5 crore), NTPC (Rs 1,73,443.25 crore), Bharti Airt el (Rs 1,65,295.43 crore), NMDC (Rs 1,40,925.26 crore), SBI (Rs 1,40,302.13 crore), Infosys (Rs 1,33,339.9 crore), TCS (Rs 1,23,685.25 crore) and BHEL (Rs 1,15,034.75 crore), in that order. - PTI

s:BL

Sell : Venus Remedies

2009-10-05T09:00:00.000+05:30

We recommend a sell in the stock of Venus Remedies from a short-term perspective. It is perceptible from the charts of the stock that it was on an intermediate-term uptrend between April and early September, from Rs 145 to Rs 312. Encountering long-term resistance in the band of Rs 300 to Rs 310, the stock changed it trend. Since then, it has been on a medium-term downtrend. On September 10, the stock tumbled 8 per cent with a downward gap, reinforcing this trend. Subsequently, it continued to trend south, penetrating intermediate-term up trendline as well as support at Rs 250. The stock is trading well below its 21-and 50-day moving averages. The daily relative strength index has entered in the bearish zone and weekly RSI is slipping in the neutral region. Besides, the daily moving average convergence and divergence indicator has entered the negative territory. We are bearish on the stock from a short-term perspective. We expect it to decline until it hits our price target of Rs 216. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 252.

s:BL

Stay away from Bharti Airtel, Punj Lloyd futures trading

2009-10-05T08:56:00.001+05:30

I’ve a Unitech 120 call at Rs 3.25 last Friday. Please suggest if I should trigger stop-loss now or buy at the current level to average – Mr K.L.N.Murthy, Bangalore

Your 120 call is now quoting at Rs 1.7. You can consider the following strategies.

a) The underlying is in a medium-term downtrend and is unlikely to reach Rs 120 in near term. So you can book your loss and exit from the counter straight away.

b) The other strategy is to sell Rs 110 call, which is quoting at a premium of Rs 4.40. This will turn your position in-the-money. If Unitech falls further, the short position would curtail the loss. A maximum loss of Rs 10 per contract would occur if Unitech moves above 120. We expect the stock to move in Rs 95-115 range and it might touch the lower band of Rs 95.

Please advice if I can buy Punj Lloyd and Bharti Airtel (October series) at current levels. – Ms Vidya Anandakrishnan, Palakkad

Bharti Airtel (Rs 437)

You can stay away from Bharti Airtel. The counter is currently witnessing a range-bound movement with plenty of whipsaws that are difficult to trade. Wait for the stock to move out of its current range between Rs 395 and Rs 440 before taking any position in this counter.

Punj Lloyd (Rs 261)

You can stay away from this counter also as it is currently grappling with the key resistance in the Rs 260 zone. A break-out beyond this zone can make the stock rally to Rs 290 or Rs 355 while a reversal from here can cause a decline to Rs 185 or Rs 205. As sharp moves are possible in either direction, it is wise not to venture into Punj Lloyd futures.

I have a futures position in Bharat Forge. Can I hold this position for some more time or is the stock expected to come down? - Pratiksha Thakore

You have not specified the rate at which you have purchased the Bharat Forge futures. That makes it difficult for us to advise you on your position. If we consider the clues provided by the F&O market in this stock, the accumulations of open interest were quite low. Client-wide positions stood at just 5 per cent as against overall market wide position. Option trading on this stock is also not active.

As long as the stock (underlying equity) stays above Rs 270 there is no problem for the counter. In that event, the chance of it heading towards Rs 300 is bright. On the other hand, if it fails to sustain 270, the stock could test 230 and then to 190-200 level. The annualised volatility at 77.54 suggests it could swing sharply. You can hold on this futures with a stop loss at 270 (spot price).

s:BL

JP Morgan reiterates 'Overweight' rating on Pantaloon

2009-10-05T08:42:00.000+05:30

PANTALOON RETAIL

RESEARCH: JP MORGAN
RATING: OVERWEIGHT
CMP: Rs 331

JP Morgan reiterates `Overweight' rating on Pantaloon Retail (PRIL). Pantaloon reported net sales of Rs 1,660 crore (+20% y-o-y), EBITDA of Rs 180 crore (+30% y-o-y) and PAT of Rs 36.5 crore (+12% y-o-y) for Q4 FY '09 on a standalone basis. PRIL reported FY09 consolidated sales of Rs 7,670 crore (+31% y-o-y), EBITDA of Rs 500 crore (+71% y-o-y) and PAT of Rs 11.7 crore.

Earnings were depressed primarily due to insurance and telecom business related losses. Most of the subsidiaries have achieved significant scale and are expected to break even next year. Incremental funding requirements for subsidiaries will be largely met by an equity stake sale with reduced investments by the parent company.

Catalysts that could affect stock performance in the near term are: 1) Operating performance of subsidiaries and extent of investments being made by parent company in them, 2) Extent of equity dilution and de-leveraging, and 3) Any strategic alliances/partnerships.

JP Morgan believes PRIL, with its multi-format and multi-category strategy, reliable supply chain infrastructure and significant location advantage is a key beneficiary of the improving economic climate. We anticipate standalone earnings growth for Pantaloon to accelerate driven by improving sales growth trends, cost containment focus and benign competitive environment.

s:ET

BofA initiates coverage on KS Oils with a 'Buy' rating

2009-10-05T08:40:00.000+05:30

KS OIL

RESEARCH: BANK OF AMERICA
RATING: BUY
CMP: Rs 67.70

Bank of America initiates coverage on KS Oils with a `Buy' rating and target price of Rs 90, which implies 41% upside.

KS Oils is India's largest mustard oil producer and has quadrupled its market share to 11% since FY06.

BofA believes the company will grow through consolidation in the fragmented mustard oil market.

Since FY06, KS Oils has focused on the mustard oil segment and ramped up capacity 6x by building efficient plants. Its mustard oil brands, Kalash and Double Sher, have a strong presence in North and North East India with over 30% market share.

BofA expects the company to nearly double market share to 19% by FY12 led by efficient procurement and capacity utilisation and estimates 28% EPS CAGR over FY09-12 E as increased capacity contributes to revenue and margin improves 140 bps.

While capex to sales ratio is expected to halve to 6% versus ~13% in FY09 as high capex in oil business is behind, ~60% of its capex going ahead will be for palm plantations in Indonesia. The stock trades at 8x FY11E P/E and 5.2x FY11E EV/EBITDA.

s:ET

17 stks that were buzzing last week & how to trade them now

2009-10-05T08:39:00.000+05:30

Deven Choksey: Gujarat State Petronet, GSPL is a company which is riding more on the oil and gas boom in this country. They have already laid down in 12 districts the pipeline network in Gujarat and they are expanding it to 25 districts in Gujarat. The total amount of capacity would be 40mmscmd from 30mmscmd which would be carried by this company in the next 1½ - 2 years time with Rs 120-150 crore capex. It is providing a growth visibility of 40% in the next 2-3 years. From that perspective I find Gujarat State Petronet can be retained in the portfolio and for short term advantage if one wants to sell one can book profit at Rs 100 level and re-enter at lower levels."

Sudarshan Sukhani: I think GSPL continues to be in an uptrend and that means we should see higher levels as time goes by but the easy money has been made not just in this stock but in most of the stocks. I expect a modest target of Rs 115 for GSPL in the next one year or so but there is going to be volatile movement in between that all investors would have to accept. If at all something goes wrong keep a stop around Rs 70, below that we will know that we are in a big correction. "

s:MC

Parsvnath Developers

Sudarshan Sukhani: The stock has shown a remarkable chart patterns suggesting that a target of Rs 240 is possible. I am not making any comments on the viability of the targets or the possibility or the workings of the company but the charts tell us that it has broken out of a large consolidation pattern and it is heading up. In case things go wrong and realty is one volatile sector keep a stop which should be around Rs 115 for Parsvnath, but there are higher targets."

IDBI Bank

Deven Choksey: IDBI Bank has seen a good performance. Last quarter the NIMs have stabilized and probably they are showing signs to going to about 2.5 NIMs in coming two quarters and after. The company is already is going to write back Rs 500 crore provision which they have made for the Dabhol project once the project get started. With the higher increase in the deposits the kind of bank would get re-rated. It is quoting at a price to book value of around 1 which would get re-rated to about 1.5 so IDBI Bank would be buy on dips and sell on rise if one wants to trade in this particular counter."

Sudarshan Sukhani: Banks are going to outperform the broad market. Now if there is a correction banks will also correct and among the banks I feel IDBI Bank is an out performer inside that sector. I would expect IDBI to cross its all time highs recorded earlier which was at Rs 180 and move higher which means I am looking at a target beyond Rs 200 for IDBI. This is not going to be easy, there will be volatile movements, corrections ups and downs but the trend is up so investors really need to buy on every dip. Just to ensure that they do not get caught keep a stop around Rs 96 and this stock goes up and I hope IDBI moves up. The stock is a buying opportunity for traders and investors and probably needs to be put in your portfolio.

Dishman Pharma

Deven Choksey: Dishman Pharma basically was driven by Abbott stake over of Solvay and as we know 150% of the turnover of Dishman comes out of Solvay. Solvay was troubled because of the cash crunch and with this particular takeover of Abbott. About 14 APIs would definitely find good amount of market due to Abbott sell which Dishman would be supplying to Solvay so from that perspective I find that Dishman Pharma is definitely sitting on a very high prospects. One negative with a larger debt component but in the next two years time it is sufficient amount of cash transaction taking place even Dishman should get addressed. Maybe time being it is quoting at 10 kind of a PE on FY10 earnings estimates. If one gets it at around a little lower 10% it would be a good buy in the portfolio.”

Sudarshan Sukhani: I like Dr Reddy and Cipla. Dr Reddy has been life time highs and Cipla is on the verge of doing so. Clearly those two stocks remain favourites. Third is Ranbaxy which is recovering from a very sharp bear market. So as far as Dishman Pharma is concerned I think there is significant resistance between Rs 280-330 and that is what the targets are for the stock. Since we are very close to targets either the investors buys on a significant correction and that will come about. Keep a stop of about Rs 190 or shift to the three stocks I have named. Dr Reddy, Cipla and Ranbaxy in any order or all three of them are worth buying on every correction.

Sterlite Industries

Deven Choksey: Sterlite Industries is a story which is now emerging very fast with the power business coming up in the next fold as 100% subsidiary. As we know that 10,000 mega watts power plant will get commissioned in 2012-2013 in a gradual manner. This year they will be having 600 mega watt in subsequently next year around 3,000 mega watt total capacity of operations so if one wants to buy and invest for three years 30% plus kind of a return can be easily expected. Over and above that I think all other metal spaces be it aluminium, copper and zinc in all the three spaces they are expected to grow at around 35-40% in the FY10-11 period. So I think we definitely recommend this stock for investment portfolio with a yearly target of around Rs 925 levels.

Sudarshan Sukhani: My charts are suggesting that most non-ferrous metals are going to face heavy weather from now on. If the market continues its rally then Sterlite won’t actually go in decline but that Rs 800-1100 zone in Sterlite is again strong resistance. The maximum targets for the stock in the next one year or one or a half years as of now appears to be Rs 1100. The investor if he wishes to take advantage of that move 300 point move from current levels is going to require a strong stoploss because things can go wrong and for Sterlite the stop loss is somewhere around Rs 720 so keep a stop and look at the metal non-ferrous sector but it is likely to be an underperformer.”

Parsvnath Developers

Deven Choksey: Parsvnath is a stock which one would have to hold on and accumulate at lower levels once again. More because out of 190 plus million sq feet of land bank that they have, they have commissioned about 80 million sq feet of land bank and that is where I think the company is likely to deliver about 30 million sq feet of land bank in the next two years time. Here the company is talking of growing at about 40-50% in the next 2 years so maybe around Rs 200 levels a short term trader can book some profit but a long term investor can wait for a higher price target in the next 2-3 years.

Sudarshan Sukhani: The stock has shown a remarkable chart patterns suggesting that a target of Rs 240 is possible. I am not making any comments on the viability of the targets or the possibility or the workings of the company but the charts tell us that it has broken out of a large consolidation pattern and it is heading up. In case things go wrong and realty is one volatile sector keep a stop which should be around Rs 115 for Parsvnath, but there are higher targets."

Mindtree

Deven Choksey: After Mindtree took over the control of Aztec, the company has two main streams in IT services and R&D services in the IT side so I think from that perspective the business model is quite good. The valuation of this company is close to around 13-14 times on a FY10 forward basis. So, from that perspective the company looks quite interestingly placed. Maybe one will have to see how much growth it is bringing in two years time but my recommendation is that those investors who are looking at this company for short term they may take an exit around Rs 750 odd levels and those are holding it for long term they may end up getting around 20% average growth in the next two years."

Sudarshan Sukhani: NIIT appears to have good chart but Mindtree itself has some very good charts which is very surprising after significant rallies Mindtree has again broke out of a consolidation pattern and it is suggesting that it is likely to go to its earlier highs between Rs 800-900. That means there is some money to be made from current prices. Keep a stop somewhere around Rs 520 because a stop loss is necessary to prevent large losses. If a sudden correction starts you do not want to hold stocks when a deep correction is going on. But beyond that Mindtree is one of the outperformers in the midcap IT space and is likely to be so in the near term."

Sesa Goa

Deven Choksey: Sesa Goa completely transformed since Vedanta Group took over, from about 10-12 million production capacity. The company is expanding and this year they should be having a kind of a production around 16-17 million tonne of iron ore and next year it would be around 25 million tonne of iron ore. They are expanding to bring it up to 50 million tonne of iron ore production in 2012-2013 so they are putting in good amount of money about Rs 6000 crore worth of capex for organic as well as inorganic growth is being planned. So, in my view I think the company is available also at a valuation which is quite attractive so from that prospective one can definitely hold on to this company. Since it is a cyclical play any down cycle should be used to accumulate this stock further and stay invested for three years."

Sudarshan Sukhani: Sesa Goa gives an impression of forming a major top. The charts suggest that the stock prices are looking tired. Ten weeks ago it was at Rs 255 now it is at Rs 267. The Nifty has done a lot in this period so my impression is that the volatile movements that we are seeing in this stock it fell down 20% then rallied almost 50% these volatile movements are signs of a large top formation. It has move up 6 times in the last 6 months. So there are trading opportunities in Sesa Goa but I would not advice any investor to enter now. For a trader look to buy, keep a stop at Rs 255 and then you could look at Rs 300 or 300 plus but that is not enough for an investor."

Oil India

Deven Choksey: Oil India is clearly a buy on dips as recommendation. The company is quoting at a discount to ONGC even though I think the size of the company is just 10% of ONGC. The next 2-3 years growth programme is quite stupendous. Rs 4500 crore worth of capex is being executed and that is going to result in to higher oil and gas supply from the Oil India side. I see a continued growth in absence of a major subsidy burden. I see a continued growth coming from Oil India in excess of 30% on the bottomline basis so from that prospective one can buy Oil India at lower levels."

Arvind

Sudarshan Sukhani: I think there is good news on the charts for Arvind. First the worst seems to be over and that saying a lot because Arvind had seen highs of Rs 150 earlier and fell down to Rs 15 but those bad days are probably finished for the stock. We can see a target of Rs 55-60 that means there is a lot of headroom even currently at current prices. There is a stop which is roughly around Rs 30. The stop is wide because the stock has rallied a lot an the stock needs time to catch up. But in either case whether you are in investor or a trader you might like to look at the stock, a buy on dips and you could expect a very significant gain over the next one year."

Bharti Airtel

Sudarshan Sukhani: Bharti was in a very narrow zone for four months so the upside targets are also limited. We are looking at a value of somewhere around Rs 500 at which point we would say okay Bharti has met its targets. But that is about all for Bharti. Beyond that it will move with the broad market."

Top Auto Performers

2009-10-05T08:26:00.002+05:30

Here are the top 10 auto/auto parts stocks on BSE:

Kinetic Engineering

3-month returns (%): 203.21

Ceekay Daikin Ltd

3-month returns (%): 169.69

Ucal Fuel Systems

3-month returns (%): 132.92

Kinetic Motor Co

3-month returns (%): 126.57

Federal-Mogul Goetze (India)

3-month returns (%): 124.15

Jamna Auto Industries

3-month returns (%): 119.47

Simmonds Marshall Ltd

3-month returns (%): 109.75

Spectra Industries

3-month returns (%): 106.16

Hinduja Foundries

3-month returns (%): 103.86

Majestic Auto

3-month returns (%): 96.84

Cautiousness, uncertainty to prevail in markets this week

2009-10-05T08:24:00.000+05:30

MUMBAI: Dalal Street is likely to witness some uncertainty this week, as investors
are expected to trade cautiously at higher levels and take
Markets
What moves the stock markets?
Points to remember in investing
Interest rate futures trading
Tips to build an equity portfolio
guidance from IT major Infosys Technologies, which is scheduled to announce its second quarter results this Friday.

Analysts believe the market sentiment would remain positive but investors may exercise caution ahead of the second quarter results of corporate India, starting with Infosys Technologies.

"The market is expected to trade cautiously ahead of the earnings season and the second quarter results of IT giant Infosys Technologies on October 9, may decide the market movement," SMC Global vice-president Rajesh Jain said.

Stock market across the world are trading under pressure at higher levels and at this point of time some consolidation is expected coupled with selling pressure.

Over the week, the BSE Sensex gained 281.64 points, or nearly 1.67 per cent and closed at 17,134.55 points, thanks to strong Foreign Institutional inflow.

During the last week, foreign institutional investors have put in over Rs 4,820.8 crore into Indian equities.

s:ET

PDI Ltd plans to divest 26.62% stake

2009-10-05T08:21:00.000+05:30

NEW DELHI: Power equipment maker PCI today said it has filed a draft red herring prospectus with the market regulator SEBI for divesting 26.62
per cent of its stake and raise an unspecified amount through an IPO.

The company plans to offer 50 lakh shares of Rs 10 each for the issue, which will be carried out through a 100 per cent book building process, PCI Ltd said in a statement.

"The issue constitutes 26.62 per cent of the fully diluted post issue paid-up capital of the company," it added.

The exact price band of the shares to be offloaded would be decided later with SPA Merchant Bankers Ltd, who would be acting as book running lead managers.

PCI's major business activities include manufacturing, assembling and marketing of a range of equipment, instruments and systems relating to power, energy, telecom, railways, aviation and other sectors.

Its major clients include state sector firms like BHEL, NTPC and IRSO.

s:ET

HCC forays in nuke power, ties up with UK's AMEC

2009-10-01T08:17:00.001+05:30

Nuclear power is the next new frontier for India's ambitious companies following in the heels of Punj Lloyd and L&T.
The Hindustan Construction Company (HCC) on Wednesday announced its plans to enter into this uncharted sector.
Things seem to have started moving in the nuclear power front.
HCC has entered the nuclear power sector and has tied up with UK based AMEC for the same.
The Indo-US civil nuclear treaty signed last year has opened up a multi-billion dollar opportunity not just for global majors like Westinghouse, Areva and GE, but also for Indian companies like HCC, which is eyeing orders worth Rs 5-6,000 crore per year over a period of next five years.
Ajit Gulabchand, CMD of HCC, said, “The total opportunity is of about Rs 1 lakh- 50,000 crore, out of which Rs 60,000 crore order will be for implementation and HCC is eying about Rs 20-30,000 crore order in five years time.”
Nuclear power is at a nascent stage right now. But with the government ready to invite bids for about 15 nuclear reactors over the next 3-4 months, nuclear power capacity is poised to double to 10,000 megawatts.
Meanwhile, the government is likely invite bids for 15 nuclear reactor projects in next few months. India's present nuclear power capacity is little over 5000 MW.
But its nuclear power capacity will be about 10000 MW by 2012-13 and opportunities for nuclear power players in India is more than Rs 60,000 crore.
But how HCC takes on competition such as L&T-Westinghouse combine or other big firms with its tie-up with UK-based AMEC, a consultancy services expert that has little exposure to project execution?
“It will be a competition and we have our own competence. We will focus more on project execution and not on equipment manufacturing. So the other companies would be competition at some point but the same companies will be our supplier at some point,” said Gulabchand.
Bigger opportunity means bigger competition and it is not just HCC that surely will try and consolidate its position in the nuclear power field. But other players like L&T, Punj Lloyd, BHEL and Bharat Forge will move beyond the framework of the memorandum of understanding.
Over all, it will be India as a country that will be benefiting from the government's nuclear power programme in terms of cheaper and cleaner fuel.

Today's Pick

2009-10-01T08:07:00.003+05:30

Grab BhartiARTL in opening bell only, so that u can book huge profit today irrespective of market trend...:)

Buy : Atul

We recommend a buy in the stock of Atul from a short-term perspective. It is evident from the charts that it took support around Rs 35 in March and began to trend up. Since then, it has been on an intermediate-term uptrend, shaping higher peaks and bottoms. In late August, the stock conclusively broke through a significant resistance level of Rs 70 with good volume. The stock is trading well above its 21- and 50-day moving averages. It gained almost 6 per cent accompanied with high volume on September 30, reinforcing the uptrend. The daily relative strength index (RSI) bounced back into the bullish zone and the weekly RSI is already featuring in this zone. The daily moving average convergence and divergence (MACD) indicator has signalled a buy. Given that the stock’s medium-term uptrend is intact, we are bullish from a short-term perspective. We anticipate its up-move to continue until it hits our price target of Rs 95 in the approaching trading sessions. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 81.

Time to exit fundamentally weak stocks :Experts

2009-10-01T08:02:00.002+05:30

MUMBAI: It may well be tempting to be carried away by the upswing in stock prices over the past few months but increasingly, investment advisors and financial planners are advising retail investors to exit from fundamentally weak stocks as well as mutual fund schemes.

Says financial planner Gaurav Mashruwala: “In fact, you can use this opportunity to rid your portfolio of stocks that do not add value. If you are stuck in stocks and mutual funds that are not fundamentally strong and have been looking for the right time to exit, this is the time.”

His views are echoed by Alok Ranjan, head — PMS, Way2Wealth who says investors could consider booking profits in mid-cap and small-cap stocks that have run up without fundamentals while holding on to large-cap stocks and mutual funds. “One could be in cash of 15%, and any sharp correction could be used to buy into fundamentally strong companies. With results season around the corner, investors should exit fundamentally weak companies,” is what he is advising investors.

Ideally, for retail investors with a long-term view, sticking to a fixed asset allocation — devised after taking into account their goals and risk profile — could be the best approach to adopt. “If our clients are overweight in equities due to the market rally at this point of time, they may reduce the exposure in equities in accordance with their asset allocation,” according to Pankaj Narain, head — private clients, banking and investments at Deutsche Bank India.

Mr Mashruwalla says, if an investor has decided on an asset allocation ratio of 60:40 (equity: debt), and the equity component has swelled to 75% due to the market surge, they could look at liquidating part of their equity portfolio. However, if the deviation is merely 5-10%, there may not be any need to rebalance the portfolio.

On the other hand, if investors are underweight on equities, financial planners say they could invest in the market in a phased manner. And for those investing in mutual funds, opting for the SIP route is the ideal method to adopt, they opine. “The current rally in market is due to excess liquidity, though it is supplemented by the strong economic fundamentals. Investors should be cautious hereafter, and with every 100 point rise in Nifty, there should be gradual profit booking,” suggests RL Narayanan, vice-president, equity institutional sales, Bonanza Portfolio.

Also, keeping an eye on the evolving scenario and taking decisions accordingly could be the key to building a healthy portfolio. “At current levels, valuations definitely are looking stretched, though liquidity can drive it further up. Investors clearly need to take 15-20% off the table. The biggest risk is rising inflation, due to which at some point in time, RBI will be forced to raise interest rates. If that happens, markets will take a closer look at valuations and correct,” cautions AV Srikanth, executive director of Anand Rathi Private Wealth Management.

Sensex back above 17K after 16 months

2009-09-30T22:21:00.002+05:30

Fund-buying in frontline stocks in anticipation of strong quarterly earnings helped the Sensex to cross the 17K mark easily. The benchmark index advanced 273 points to close at 17,126—its highest close since 21 May 2008.

On the NSE, Nifty gained 77 points to end at 5,083.
“The fund flow has helped fuel the upward movement of the Indian market,” said Parag Shah, senior manager advisory, Sharekhan.

Prashanth Y Narayan, vice president & head for PMS, ING Investment Management, said that he feels the Indian markets are fairly valued currently and apart from liquidity, the strength in the earnings would drive the markets.

Investor sentiment was boosted after Oil India listed at a strong premium. It jumped 8.6 per cent to end at 1,140.

“The Oil India IPO will help the other IPOs in the pipeline and will also spark retail interest in public issues,” said Parag Shah of Sharekhan.

Banking, auto, metal and cap goods stocks led the markets higher. Among the Sensex stocks, SBI and ICICI Bank led the gainers, advancing 5 per cent and 4.6 per cent respectively. Auto stocks M&M and Maruti advanced over 3 per cent each. Sterlite India also gained over 3 per cent. On the losing side, ITC and ONGC ended over 1 per cent lower. The Bharti stock was little changed at 418. The deadline for exclusive talks between Bharti and MTN ends today.

Asian stock markets were mixed on Wednesday as a surprise drop in US consumer confidence sowed new doubts about the pace of economic recovery. European shares gained modestly in early trade.

Caution over an appreciating yen and a slew of key economic indicators damped gains in Japanese stocks while China posted a solid rise on the last day of trading before a weeklong holiday. Wall Street fell on Tuesday after the Conference Board said its consumer confidence index fell in September. Economists had been expecting a reading of 57; instead it came in at 53.1.
The private research group said consumers are still worried about losing their jobs. Many analysts warn a turnaround in the economy won't hold unless consumer spending picks up and employers add jobs.

Oil India surges 8.5%

2009-09-30T22:18:00.001+05:30

Oil India opened at Rs 1,019 on the BSE as against the issue price of Rs 1,050. The company had come out with an initial public offering (IPO) of 26.45 million equity shares of face value Rs 10 each and raised around $570 million at an issue price of Rs 1,050 per share.

The IPO was subscribed 31 times with the QIB portion being subscribed 54 times, HNI 10 times and retail 1.8 times.

The scrip ended up 8.5% at Rs 1,140 from its issue price of Rs 1,050.

The counter witnessed trades of 8.3 million shares on the BSE today.

ATF prices slashed by 2.1%

2009-09-30T21:00:00.001+05:30

For the second time this month, the state owned oil firms on Wednesday slashed jet fuel prices by 2.1 per cent in line with softening international rates.

The Aviation Turbine Fuel or ATF price in Delhi has been cut by Rs 812.33 per kilolitre to Rs 37,084.50 per kl, with effect from midnight tonight, an official of the Indian Oil Corp (IOC), the nation's largest fuel retailer, said.

IOC along with its sister PSUs, Bharat Petroleum Corp and Hindustan Petroleum Corp had from September 16 cut jet fuel rates by as much as 3.2 per cent to Rs 37,896.83 per kl.

Jet fuel will cost Rs 38,246.60 per kl in Mumbai, the home to the nation's busiest airport, from Rs 39,098.99.

The reduction in rates will help cash-strapped airlines cut fuel cost, which constitutes roughly 40 per cent of their operational cost.

No comments could be immediately obtained from any of the airlines on the possible impact of the cut on fares.

ATF will cost Rs 45,235.94 per kl in Kolkata as against Rs 46,101.86 per kl currently and Rs 40,956.89 per kl in Chennai (Rs 41,850.52 per kl currently).

Tomorrow watch Aviation stocks

Hidden Gems: IFGL and Vipul Ltd

2009-09-30T20:53:00.003+05:30

About IFGL :

"IFGL is a Kolkata-based company belonging to the BP Bajoria Group. This company manufactures refractors catering mainly to the steel industry. It has two subsidiaries––Monocon International and Hofmann International. Through these subsidiaries, this company has to undertake manufacturing operations in seven countries including Europe and

China

FY09 was a tough year for the company, primarily due to the meltdown witnessed in various commodities and metals and the operations of IFGL were greatly affected too.

In spite of that, the company was able to register higher revenues of about Rs 410 crore as against Rs 393 crore for FY08 but the profits took a dive and dropped from Rs 28 crore to Rs 6 crore.

The situation after that has improved significantly and the situation in the metal space has also stabilized. If the financials for the Q1 are any indication, then the worst maybe over for the company. In Q1, the company achieved profit after tax (PAT) of about Rs 7 crore which is higher than full year profit of last year. Besides that, this company also put up a bio-ceramic plant which manufacturers substitute for human limbs. This plant manufactures products like hip joint, bone substitute, orbital implants which are used for artificial eyes and also dental implants. This is typically a business with high margin but low volume. In future, the company has plans to scale up this business. The bread and butter for the company still remains the refractory business but this could be a business where as volumes grow more profits would start coming from it. So all in all, you have a company that has got reasonable market share in the refractory business and operations in seven countries with revenues more than Rs 400 crore and a market cap of Rs 100 crore. This company had been doing operating profit of about Rs 50 crore a year and in 2009 they did about Rs 30.

So you have a business which is available at two–three years of operating profits. So given all these factors at the current price of Rs 28–29 this stock could be a value buy for investors.

About Vipul Ltd :

Vipul Limited is an ignored stock in the real estate sector. This company has its operations primarily in Gurgaon. Over the last few years this company has expanded to other cities also. They are currently executing projections in Ludhiana, Bhuvneshwar, Kolkata, Faridabad and Hyderabad besides Gurgaon. What we like about this company is that it has got a land bank of about 1,400 acres out of which the economic interest of Vipul in the land bank is more than 1,000 acres. This land bank is situated at Gurgaon where they have about 425 acres of land, in Hyderabad they have 400 acres, in Ludhiana 130 acres, and about 95 acres in Faridabad. Besides they have small pockets of land at other places also.

The company in 2007 had given 15% stake to Wachovia at a price of about Rs 1,300 per share which when adjusted for the stock split translates into price of about Rs 260 per share as against that the stock is available between Rs 55 and Rs 60 and its been consolidating for a while in that range. If you look at a recent deal which has happened in Gurgaon, DLF has bought about 350 acres in Gurgaon from Haryana State Industrial Development Corporation (HSIDC) for a total consideration of Rs 1,750 crore. This deal is significant in two ways. One, it talks about the valuation of the land bank in Gurgaon and second it also talks about the change in the attitude of real estate developers. They were earlier risk averse and they were shying away from buying any fresh land bank. Now real estate developers have started buying land bank at places where they see good sales potential.

Vipul owns about 425 acres of land in Gurgaon. This land is close to Sohna Road in Gurgaon and this land also has good sales potential and with Commonwealth Games coming up. The new toll road Delhi-Gurgaon has also come up nicely. All these factors augur well for companies like Vipul and with 425 acres in Gurgaon where the sales potential maybe high and land banks at other places also at marketcap of about Rs 350 crore, the stock looks undervalued.

s: MC

BREAKING NEWS : BHARTI - MTN DEAL TERMINATED

2009-09-30T20:44:00.002+05:30

The much-anticipated deal between India's Bharti and South Africa's MTN that aimed to merge the two telecom giant has failed yet again. The contentious issue of dual listing proved to be the deal breaker.

MTN has said that it would send out a statement later on. The company has requested the SA exchanges to suspend trading till tomorrow.Consequently, the company’s share trading has been suspended.

Bharti, in a statement, said, the company has decided to disengage itself from the deal. “We hope the South African government will review its position in the future and allow both the companies an opportunity to re-engage.” The statement further said that the South African government had expressed its inability to accept it in the current form. Also, it stated, Bharti would continue to explore international expansion opportunity and could also re-look at the deal if the SA government changes position.

s: MC, Alliesfin

DLF garners Rs 100 cr from bookings of Delhi flats‎

2009-09-28T15:09:00.002+05:30

The country's largest realty firm, DLF, has mopped up about Rs 100 crore as booking amount for flats it had offered in the second phase of its housing project in the heart of the National Capital.

The company had launched 1,250 apartments in the second phase of its housing project – Capital Greens – at Shivaji Marg, near Moti Nagar in New Delhi. It sold all the apartments within just two hours of opening the bookings last week.

The selling prices of the housing units were increased by up to 26 per cent compared to that in the first phase and were offered at Rs 1.86 crore.

According to sources, DLF raised about Rs 100 crore from booking amount of the 2-, 3- and 4-BHK apartments.

The company had kept the booking amount at Rs 7.5 lakh for 2- and 3-BHK units and Rs 10 lakh for the 4-BHK flats. When contacted, DLF Managing Director T C Goyal said: "If you have quality product, right pricing, good location and credibility of the builder, then there is no dearth of buyers in the market."

To keep away the speculators, against one PAN card the company allowed booking for only a single flat.

The second phase of Capital Greens was launched at Rs 6,750, Rs 7,500 and Rs 8,000 per sq ft depending upon the location of the dwelling units within the complex.

However, the effective rate would come down to Rs 5,677, Rs 6,363 and Rs 6,820 per sq ft respectively as DLF would offer a discount of Rs 500 a sq ft for timely payment and 8.5 per cent rebate on down payments. The company plans to deliver the project within next three years.

The sizes of the apartments would be from 1,210 sq ft 2,720 sq ft and would carry effective price tags between Rs 68.69 lakh and Rs 1.86 crore.

The price announced by DLF was higher than the rates at which the company had sold its flats in the first phase. It had launched about 1,400 units in Phase-I at a price of Rs 4,500 (2-BHK) and Rs 5,500 (3-BHK).

The 38-acre project site at Shivaji Marg, near Moti Nagar, was acquired by DLF in 2007 from DCM Shriram and Lohia Group for Rs 1,675 crore.

Another realty player Parsvnath has two residential projects in Delhi. The selling price of Subhash Nagar project is Rs 7,500 per sq ft and that of Civil Lines project is Rs 10,000 a sq ft.

Emaar MGF is selling apartments at Rs 12,700 per sq ft in its Commonwealth Games project.

Tomorrow watch this stock...!!!

s:NP

Kingfisher Airlines' Q1 result under lens

2009-09-27T08:31:00.004+05:30

Vijay Mallya, Chairman, KFA

The limited review of the first quarter results of Kingfisher Airlines has raised questions about the accounting standards being followed by the airline. The review report says that besides other irregularities, tax expense and employee cost were reported 27 per cent and 21 per cent less, respectively.

A limited review of financial results is conducted at the end of each quarter in accordance with the Institute of Chartered Accountants of India norms.

According to the report, the company incurred a re-delivery cost of Rs 39.77 crore on account of premature termination of agreements for taking aircraft on operating lease and recognised this amount in the profit and loss account in the current quarter and the balance three quarters. “This is against the recognition and measurement principles laid down in Accounting Standards 25 and the entire amount should have been recognised in the profit and loss account,” said the report.

The airline’s quarterly report showed the tax expense — which includes current tax, deferred tax and fringe benefit tax — at Rs 809 crore. The review found that the amount was Rs 1,028 crore, 27 per cent more than what was reported.

Also, the reported employee cost was 21 per cent less (at Rs 156 crore) than the figure reached by the review while loss from ordinary activities was 40 per cent less at Rs 242 crore.

The airline also incurred a loss of Rs 136.29 crore on account of leasing aircraft from the same party with whom it had earlier novated (substitution of a new contract for an old one) its rights in aircraft purchase agreements.

“The company novated its rights in aircraft purchase agreements during the year ended March 31, 2009, in favour of a certain lessor and took such aircraft on operating lease from the same person, incurring a loss of Rs 136.29 crore on the same,” said the report.

An emailed query on sent to the airline spokesperson did not elicit any response.

In the first quarter, Kingfisher had reported a net loss of Rs 240 crore. The revenue was at Rs 1,314 crore, which according to the review was 2 per cent less at Rs 1,283 crore.

Keep eye on this stock tuesday on...

s:BS

Buy Asahi India Glass

2009-09-27T08:28:00.001+05:30

Investors with medium-term perspective can consider buying Asahi India Glass. Its long-term downtrend that began at the January 2008 high of Rs 137 halted in the range between Rs 33 and Rs 35 this March.

Since then, the counter has been on an intermediate-term uptrend. Trend reversal was triggered by the positive divergence in the weekly moving average convergence and divergence indicator and monthly relative strength index reaching the oversold levels.

The stock made a weekly gain of 20 per cent breaking through a significant resistance at Rs 60 and is currently trading above its 21- and 50-day moving averages.

The momentum indicators are showing signs of optimism. We believe that the stock has potential to rally to Rs 90 in the medium-term. Investors can buy while maintaining Rs 51 as stop-loss. Short-term traders can buy with a target of Rs 71 and Rs 61 as stop.

Buy B L Kashyap and Sons

2009-09-27T08:26:00.001+05:30

Construction projects on the rise.

Investors with a long-term perspective can consider buying the stock of construction contractor, BL Kashyap & Sons (BLK), currently trading at Rs 427, at a multiple of 17.6 times its standalone trailing four-quarter earnings.

Increasing signs of a revival in the real-estate segment and diversification into other business streams could augur well for the company’s revenue growth after a lacklustre performance in FY-09.

The company’s sound track record of quality and timely construction in industrial, commercial and residential real-estate has enabled it bag projects from some of the leading developers in the country.

Bright spots

BLK suffered heavily as a result of the realty slump that started in 2008, when construction contracts dwindled as a result of lower off-take across various user segments.

Note that the company still leans heavily towards realty developments — residential, retail, commercial and IT projects constitute 46 per cent of the order book .

Post-March 2009, these segments have shown a slow uptick in off take. Increase in demand in the residential real-estate now appears evident what with some developers hiking the price of their new projects.

Further, according to a Cushman & Wakefield report, even while the office market is expected to witness a fall in demand in 2009, a 19 per cent compounded annual growth is expected between 2009-13.

Both these developments, if sustained, would bode well for BLK’s earnings growth.

The re-rating being witnessed by realty developers in the stock market could also offer some clues on the prospects in store for BLK.

Hotels, where the company has a 19 per cent concentration, however, remains a grey area, as the segment is yet to demonstrate clear signs of pick-up.

Revenue streams

After the slump in its core business provider — real estate — last year, BLK diversified into the promising infrastructure segment in early 2009.

Of its March 31 ‘09 order book size of Rs 2000 crore, about 6 per cent (Rs 125 crore) is for infrastructure and PSU contracts, and the company is the lowest bidder for a further Rs 200 crore. BLK goes in for joint bids where it cannot qualify for projects on its own.

That apart, almost 30 per cent of the order-book comes from industrial projects and projects from corporate end-users such as HCL and Tech Mahindra and order book, thus, does not depend entirely on the fortunes of the real estate sector.

Affordable housing is another area which the company will focus on. Total order book stands at 1.37 times its FY-09 sales, lower than some peers, but a quick execution schedule of 12-18 months could serve it well.

BLK will also generate revenues from monetising land parcels held in its wholly-owned realty subsidiary, Soul Space Projects, as well as selling developed space to its clients.

About Rs 110 crore is expected to flow in by the end of FY10, with a further Rs 60 crore in the pipeline, according to company estimates.

Financials

Sales fell 5 per cent in FY-09, while net profits slid far more by 32 per cent due to high labour costs and interest.

However, the company managed a three-year CAGR of 46 per cent and a net profit growth of 39 per cent.

Though the company has not seen cancellation of projects, it has slowed down execution on a few where it has foreseen payment delays. Working capital turnover has been affected, dropping from 4.8 times in FY-08 to 2.4 times in FY 09.

Operating margins have slipped 2.8 percentage points in FY 09 from the previous year, but have held at 10.6 per cent, improving further to 12 per cent in the June 2009 quarter. However, interest and depreciation costs have dragged net profit margins.

That said, debt-equity ratio is low at 0.26 times, and the company will use proceeds derived through Soul Space to meet debt obligations.

Go short on IFCI futures

2009-09-27T08:24:00.001+05:30

The overall market-wide rollover stood higher at 84 per cent while the open interest position at the start of the October series is the highest since January 2008.

Several individual stock futures such as Kingfisher Airlines, Bajaj Hindustan, Balrampur Chini, Cairn India, Essar Oil, Dish TV, GTL Infra and UltraTech Cement saw higher rollovers.

IFCI futures (56.7)

This is one of the momentum counters that has been very active in recent times.

The outlook for IFCI (market lot 7880) appears negative.

It faces a strong resistance at 59 and has support at 50, though in between 53.5 could also act as a minor support zone.

It appears the stock may be headed for the support level of Rs 50 in the near-term.

F&O pointers

Among the options, IFCI 60 and 65 calls and 55 put were the most active.

Open interest for calls stood higher at 56.02 lakh shares and 26.24 lakh shares respectively while put saw an accumulation of 20.05 lakh shares.

This clearly indicates the strong emergence of call writers, suggesting that the stock may have limited upside.

Trading strategies

Consider going short on IFCI futures, keeping the stop-loss at 58.75 (underlying), if it opens flat on Tuesday. Traders can book profit at 53 and 50 levels.

Consider buying IFCI 55 put which is trading at a premium of Rs 2.5. (Don’t buy if the premium shoots above Rs 3.5).

Unitech (110)

The near-term outlook for the stock is neutral. Unitech (market lot 4500) is likely to move in a range of 115-95 in the short-term. A break on either of the side could swing the stock wildly in that direction in the medium-term.

Even at the start of the fresh series, the futures shed open interest. Among the options, 110 and 115 calls and 110 puts were active.

Strategy

Traders could consider short straddle on Unitech. This can be initiated by selling110-strikes of call and put; they closed at around Rs 6.5 each.

While the maximum profit is premium collected, the loss could be unlimited. This strategy is valid for a maximum of two days only and for high-risk traders as it involves a higher margin outgo.