Monday, January 16, 2012

WINNING STROKES: THINK DIFFERENT
Suzlon Ltd touched Rs.23.10 before closing flat at Rs.22.50. The company which was conceived in 1995 with just 20 people, is now a leading wind power company with:
  • Over 13,000 people of 32 nationalities,
  • Operations across 6 continents and 32 countries,
  • Fully integrated supply chain with manufacturing facilities on three continents,
  • Sophisticated R&D capabilities in Denmark, Germany, India and The Netherlands.
It is a market leader in India and it is the 5th largest wind turbine manufacturing groups in the world. The company announced today that it has signed an MOU with the Andhra Pradesh government for the development of 3000 Mw in the state, between 2012 and 2016. 
My call on buy Mini_Nifty at 4847, T--4910, SL--4820, almost reached its target as the Nifty touched 4899.70 intra-day. I  had also mentioned in the "Market Mantra" to exit all shorts (and be long) as the Nifty is expected to move higher in the coming days. Now India will move on its own fundamentals, as we have already DE-coupled from the rest of world; since we were the worst performing market.
Chart of B F Utilities Ltd
B F Utility Ltd touched Rs.347.65, before closing at Rs.343.55 up 1.34%. Since, I am asking all to focus on the Infrastructure/Real Estate and Renewal energy sector, hence the recommendation of this scrip. BF Utilities Ltd. (BFUL) is a part of USD 2.4 billion Kalyani Group (~Rs.12, 200 Cr). Due to better wind conditions, the windmill projects of the company have shown an increase in the generation during FY11. The trend is similar to other such projects in the state. The generation of wind power from the Company's projects increased by 15% in FY11 as compared to the previous year. The projects of the company have been successfully registered under the REC mechanism. The RECs issued would be traded on power exchanges and would be eligible for additional revenue. The windmill generators of the Company are undergoing thorough overhaul in phases to ensure that the life of the windmills is enhanced and are able to perform better.
Country Club India Ltd moved up 4% today and closed at Rs.8.85--intra-day, the scrip touched Rs.9.09. This is another scrip which give you superb returns going forward.
I  had a couple of days back, asked all to book profits and exit DCB Ltd at around Rs.42--42.95 to those who averaged the scrip on y suggestions. Yesterday,  the news came in a pink daily: Sloppy market conditions have forced Development Credit Bank (DCB) to defer its QIP issue to next fiscal and the small private lender is now hoping to raise up to Rs 120 crore in the first quarter of FY 13. It is interesting to note that while I gave sell call, the Brokerage house Nirmal Bang gave a buy call on the scrip. This is akin to my call on J P Associates, where I gave a buy call at Rs.53, while many brokerage houses gave a sell call at the same price. Therefore, please read this blog or take my Paid Service/s, to stay ahead of others. 
The Price of the Paid Services is going to increase from 1st February, 2012. Hence, those who want to renew or take fresh subscriptions, should do it before  this stipulated date. Also, some seats are open for Profit PMS; if anyone has a portfolio size of more than Rs.5 lakhs (for NRIs it is 15 lakhs), they can send me a mail at: suman2005s@rediffmail.com or sumanm2007s@gmail.com. Those who have sent me mails for fresh subscription, should give me a couple of days to respond. 
Key benchmark indices registered small gains to reach 5-1/2-week closing highs as the headline inflation hit 2-year low, which reinforced expectations that the central bank will start cutting interest rates in the coming months to revive slowing economic growth. The barometer index, BSE Sensex, advanced 34.74 points or 0.22%, up about 150 points from the day's low and off close to 25 points from the day's high. The market breadth turned positive from negative late trade.

Data showing buying by foreign funds recently underpinned sentiment. Foreign institutional investors (FIIs) bought shares worth Rs 293.51 crore on Friday, 13 January 2012, as per provisional data from the stock exchanges. FII inflow totaled Rs 1555.94 crore in four trading sessions from 10 to 13 January 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 2183.19 crore so far in January 2012, as per provisional data from the stock exchanges.

The Sensex has jumped 734.44 points or 4.75% so far in this month. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 3,621.78 points or 18.28%. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,053.50 points or 6.96%.

Coming back to today's trade, State Bank of India (SBI) bounced back in late trade on reports that the bank has received Finance Ministry's approval for a capital infusion of Rs 6000 crore to Rs 8000 crore. Index heavyweight Reliance Industries (RIL) declined over 2%. IT pivotals rose ahead of results of IT giant TCS tomorrow, 17 January 2012.

The Sensex cut losses after an initial decline triggered by weak Asian shares. The intraday recovery proved short lived. Key benchmark indices hit fresh intraday lows in morning trade. The market once again cut losses in mid-morning trade. Key benchmark indices were off the day's lows amid a bout of volatility in afternoon trade after the latest data showed cooling of wholesale price inflation in December 2011. The market weakened once again after recovering sharply to cut almost the entire intraday losses to hit fresh intraday highs in early afternoon trade. The market moved into positive zone in mid-afternoon trade. The market hit a fresh i ntraday high in late trade.

The BSE Sensex advanced 34.74 points or 0.22% to settle at 16,189.36, its highest closing level since 9 December 2011. The Sensex gained 59.74 points at the day's high of 16,214.36 in mid-afternoon trade. The index fell 117.02 points at the day's low of 16,037.60 in morning trade, its lowest level since 12 January 2012.

The S&P CNX Nifty was up 7 points or 0.16% to 4,973.90, its highest closing level since 8 December 2011. The index hit a high of 4,880.80 in intraday trade. The index hit a low of 4,827.05 in intraday trade, its lowest level since 12 January 2012.

The BSE Mid-Cap index fell 0.03% and underperformed the Sensex. The BSE Small-Cap index rose 0.33% and outperformed the Sensex.

The market breadth, indicating the overall health of the market, turned positive from negative in late trade. On BSE, 1,406 shares gained and 1,348 shares declined. A total of 109 shares were unchanged. The breadth alternatively moved positive and negative zone during the last one hour or so of trade.

The total turnover on BSE amounted to Rs 2082 crore, lower than Friday's (13 January 2012) turnover of Rs 2742.45 crore.

Among the 30-member Sensex pack, 15 gained and an equal number of shares declined.

Index heavyweight Reliance Industries (RIL) lost 2.55% to Rs 713.40 and was the top loser from the Sensex pack. As per reports, the market regulator Securities & Exchange Board of India (Sebi) is examining whether RIL had made proper disclosure about the acquisition of significant stakes in ETV channels. RIL early this month announced sale of part of its stake in Eenadu Group's ETV channels to Network18 Group. RIL announces Q3 December 2011 results on Friday, 20 January 2012.

Den Networks gained 6.25%. The company denied media reports of RIL planning to pick 26% stake in it.

Hathway Cable & Datacom surged 12.11%. The company termed media report of RIL planning to pick 26% stake in it as baseless and untrue.

Essar Oil rose 1.94% after company announced during market hours today the successful commissioning of the Hydrogen Manufacturing Unit (HMU), the third unit to be commissioned as part of the Phase I expansion at its Vadinar refinery. The company will commission six additional units by March 2012, thus completing a Rs 8310 crore expansion project that will increase the Vadinar refinery's capacity and enhance its complexity almost twofold.

Interest rate sensitive banking stocks were mixed. India's largest bank by net profit and branch network State Bank of India (SBI) gained 2.22% to Rs 1816.65, rebounding sharply from day's low of Rs 1748.60. SBI has received Finance Ministry's approval for a capital infusion of Rs 6000 crore to Rs 8000 crore, a television channel reported, citing the bank's chairman. The capital infusion will be made by 31 March 2012, Pratip Chaudhuri was reported as saying.

India's largest private sector bank by branch network ICICI Bank rose 0.24%, extending five-day 5.92% gain. The bank unveils Q3 results on 31 January 2012.

India's second largest private sector bank by branch network HDFC Bank lost 1.74% on profit booking after gaining 4.03% in prior five trading sessions. The bank unveils Q3 results on 19 January 2012.

Global ratings firm Standard and Poor's on Friday, 13 January 2012, said that the Reserve Bank of India's guidelines on Basel III norms, if implemented, could strengthen the capital and credit profiles of banks in the country. The draft guidelines, which the RBI recently announced, may negatively affect the credit growth of a few banks. But overall, the guidelines--if implemented--will benefit Indian banks' stand-alone credit profiles, S&P said.

In its draft guidelines on Basel III capital regulation norms for banks unveiled recently, the RBI has suggested that Common Equity Tier 1 (CET1) capital must be at least 5.5% of risk-weighted assets (RWAs). Tier 1 capital must be at least 7% of RWAs and total capital must be at least 9% of RWAs, according to the draft guidelines. RBI has suggested capital conservation buffer in the form of Common Equity of 2.5% of RWAs.

The RBI said the implementation period of minimum capital requirements and deductions from Common Equity will begin from January 1, 2013 and be fully implemented as on March 31, 2017. Capital conservation buffer requirement is proposed to be implemented between March 31, 2014 and March 31, 2017. Instruments which no longer qualify as regulatory capital instruments will be phased-out during the period beginning from January 1, 2013 to March 31, 2022.

For OTC derivatives, in addition to the capital charge for counterparty default risk under Current Exposure Method, banks will be required to compute an additional credit value adjustments (CVA) risk capital charge. The parallel run for the leverage ratio will be from January 1, 2013 to January 1, 2017, during which banks would be expected to strive to operate at a minimum Tier 1 leverage ratio of 5%. The leverage ratio requirement will be finalized taking into account the final proposal of the Basel Committee.

The Reserve Bank of India (RBI) on Friday, 13 January 2012, issued guidelines that seek to limit variable pay and stop guaranteed bonuses to senior staff of private sector banks. Variable pay, either in the form of cash or stock-linked instruments, shouldn't exceed 70% of the fixed pay in a year, the Reserve Bank of India said in a press release. Under the guidelines, stock options plans to employees won't be counted as part of variable pay. In cases where the variable pay is in excess of 50% of the fixed pay, 40%-60% of the variable pay must be deferred for at least three years, it said.

The RBI has barred banks from offering guaranteed bonuses, which it said were not consistent with sound risk management or the pay-for-performance principles. Foreign banks operating in India will have to declare that their executive compensation conforms with the Financial Stability Board principles, RBI said.

Auto stocks were mixed. Tata Motors gained 2.2%, extending recent strong rally. Tata Motors' global sales rose 33% to 99,853 units in December 2011 over December 2010. Its UK-based Jaguar Land Rover unit sold 30,981 vehicles in December, up 45% from a year earlier. Sales of Jaguar sedans grew 9% to 4,726 autos while those of Land Rover sport-utility vehicles surged 54% to 26,255 units.Tata Motors said it sold 48,099 trucks and buses globally in December, up 28% from a year earlier.

Mahindra & Mahindra (M&M) shed 0.44%. SsangYong Motor Co. will start assembling sport-utility vehicles in India late this year to avoid high import tariffs imposed on completely built units, the company's chief executive Lee Yoo-il said in a media interview on Thursday, 12 January 2012. M&M's president for automotive and farm equipment Pawan Goenka Thursday, 5 January 2012, said that the company plans to start assembling SsangYong vehicles in China, Brazil and Russia in the next two years. M&M last year picked up a 70.03% stake in South Korean auto maker SsangYong Motor Co. for 522.5 billion Korean won.

Maruti Suzuki India jumped 2.89%. Maruti on Friday, 6 January 2012, unveiled India's first compact multi purpose vehicle Ertiga at the auto expo. Ertiga's compact dimensions make it easy to park ad maneuver, Maruti said. Maruti had on Thursday, 5 January 2012 unveiled XA Alpha -- a concept for a compact sports utility vehicle (SUV).

Bajaj Auto declined 0.41%. The firm recently unveiled an ultra-low-cost car, its first foray into the four-wheel market. The compact RE60 boasts of high fuel efficiency and low carbon dioxide emissions, but the firm did not release a price tag.

India's largest two-wheeler maker Hero MotoCorp rose 0.25%. Hero MotoCorp expects double-digit percentage growth in sales for the fiscal year starting in April, Managing Director Pawan Munjal said at recently concluded New Delhi Auto Expo. The company on Friday, 6 January 2012 unveiled its first concept hybrid scooter.

Software pivotals rose ahead of results of IT giant TCS tomorrow, 17 January 2012. TCS was up 1.91%.

India's second largest software services exporter by revenue Infosys rose 1.88%. The company has given a muted guidance for Q4 March 2012. The company has projected a marginal 1.25% growth in non-annualised earnings per American Depositary Share at $0.81 in Q4 March 2012 over Q3 December 2011. The company has projected a flat to 0.22% growth in consolidated revenue in dollar terms at $1.806 billion to $1.81 billion in Q4 March 2012 over Q3 December 2011. The IT major issued its outlook for the quarter ending March 2012 at the time of announcing Q3 December 2011 results last week.

India's third largest software services exporter by revenues Wipro rose 1.57%. The company unveils Q3 December 2011 results on 20 January 2012.

CMC rose 0.73% after consolidated net profit rose 26.79% to Rs 41.37 crore on 10.83% rise in net sales to Rs 395.84 crore in Q3 December 2011 over Q2 September 2011. The result was announced after market hours on Friday, 13 January 2011.

Metal stocks were mixed. Sterlite Industries (up 2.56%), JSW Steel (up 0.74%), Tata Steel (up 1.44%), and Sesa Goa (up 1.9%) gained. Hindalco Industries (down 0.56%), Jindal Steel & Power (down 0.56%), Hindustan Zinc (down 1.57%), Nalco (down 2.15%), Sail (down 1.19%), declined.

Shares of gas distribution firms extended Friday's, 13 January 2012, losses triggered by reports that the petroleum regulator will determine marketing margins for natural gas. Indraprastha Gas (down 6.21%), GAIL (India) (down 0.42%), Gujarat State Petronet (down 0.57%), and Petronet LNG (down 0.16%), edged lower.

Reports suggested that until now, marketing margins, the difference between the purchase and resale prices of a product, were negotiated between buyers and sellers. This rule, if comes into existence, will be applicable to all marketers like GAIL (India), Indraprashta Gas and Petronet LNG who currently do not share any profits with the government, added reports.

Capital goods stocks edged higher on bargain hunting after a steep decline last month. L&T, Bhel, ABB and Praj Industries rose by between 0.06% to 2.67%.

Realty stocks fell on expectations of weak Q3 results. Realty firms are seen reporting weak Q3 results due to sluggish sales volume and higher interest costs. Unitech, DLF, HDIL and Sunteck Realty dropped by between 0.41% to 3.9%.

From the recent low of 1,388.61 on 6 January 2012, BSE Realty index had jumped 13.91% in six trading sessions to settle at 1,581.78 on 13 January 2012.

Some fertiliser shares gained on reports the government plans to raise prices of urea, the most widely consumed fertiliser in India, by a steep 40%. Coromandel International (up 4.58%), Rashtriya Chemicals and Fertilizers (up 3.76%), National Fertilizers (up 3.76%), Deepak Fertilisers and Petrochemicals Corporation (up 0.8%), Chambal Fertlisers (up 0.12%), and Zuari Industries (up 0.79%), edged higher.

Reports suggested that a proposal is being formulated and a formal cabinet note will be circulated by next week. If approved, the price hike will reduce fertiliser companies' dependency on government subsidy, reports added. Urea, which accounts for over half of country's total fertiliser consumption, is the only soil nutrient, whose price is controlled by the government

Prraneta Industries clocked highest volume of 8.34 crore shares on BSE. Cals Refineries (1.68 crore shares), Lanco Infratech (87.80 lakh shares), Suzlon Energy (70.01 lakh shares) and Yantra Natural Resources (52.91 lakh shares) were the other volume toppers in that order.

Everonn Education clocked highest turnover of Rs 121.36 crore on BSE. SBI (Rs 90.71 crore), Tata Steel (Rs 83.13 crore), Infosys (Rs 58.36 crore) and RIL (Rs 57.92 crore) were the other turnover toppers in that order.

The stock market regulator Securities & Exchange Board of India (Sebi) has issued rules on direct investment in stocks by foreign investors, including individuals. Sebi said entities having opaque structures, where details of the ultimate beneficiary are not accessible or where the beneficial owners are ring fenced from each other, will not be allowed to open demat account as qualified foreign investor, or QFI. The regulator has also said that these investors will need to take delivery of shares they purchase on the local bourses. The onus of carrying out full due diligence on an overseas investor is now on depository participants, which includes banks, with other obligations also cast on them.

Sebi said foreign investors, who wish to invest directly in Indian shares, will also have to obtain a separate permanent account number or PAN. QFIs have also been barred from issuing offshore derivatives instruments or participatory notes and will also have to give a declaration to this effect to the DP.

On 1 January 2012, the government decided to allow foreign resident investors to invest directly in the Indian equities market, in a move aimed at boosting capital inflows, reducing market volatility and deepening the markets. Qualified Foreign Investors (QFIs) can buy individually up to 5% of the capital of an Indian company. Cumulatively, QFIs can invest up to 10% of the capital of the company being invested in. These limits are over and above the FII and NRI investment ceilings prescribed under the PIS route for foreign investment in India.

The results season has begun on a weak note, with IT bellwether Infosys cutting its earnings and revenue growth guidance in dollar terms for the year ending March 2012 (FY 2012). Analysts expect weak Q3 December 2011 results due to lower volume growth in a slowing economy, higher raw material costs and higher interest charges. The focus will be on guidance from the company managements on outlook for the remaining part of the year and for the next year.

TCS and HCL Tech unveil quarterly results on 17 January 2012. Jindal Steel & Power announces Q3 results on 18 January 2012. HDFC Bank, Hero MotoCorp and Bajaj Auto unveil Q3 results on 19 January 2012. Reliance Industries, Wipro, ITC, Axis Bank, Jet Airways (India) and Hindustan Zinc unveil Q3 results on 20 January 2012. JSW Steel reports its Q3 standalone results on 20 January 2012. UltraTech Cement, Asian Paints, Zee Entertainment Enterprises and Godrej Consumer Products unveil Q3 results on 21 January 2012. L&T, Maruti Suzuki, Sterlite Industries (India), Idea Cellular, GAIL (India) and Kotak Mahindra Bank unveil Q3 results on 23 January 2012.

Cairn India, Grasim and Biocon unveil Q3 results on 24 January 2012. Bank of Baroda, Sesa Goa, Union Bank of India, Rural Electrification Corporation and Tata Communications unveil Q3 results on 25 January 2012. NTPC and Bank of India unveil Q3 results on 27 January 2012. ICICI Bank, Punjab National Bank, Dabur India and Siemens unveil quarterly results on 31 January 2012. ONGC announces Q3 results on 2 February 2012. Dr. Reddy's Laboratories reports Q3 results on 3 February 2012. India Cements announces Q3 results on 6 February 2012. Mahindra & Mahindra unveils Q3 results on 7 February 2012. Hindalco unveils Q3 results on 9 February 2012. BPCL unveils Q3 results on 10 February 2012. Aditya Birla Nuvo announces Q3 results on 11 February 2012.

Inflation based on the wholesale price index cooled off to 7.47% in December 2011, compared to 9.11% rise in November 2011, government data released today, 16 January 2012, showed. Inflation in December 2011 was the lowest since December 2009. However, prices of manufactured products--a gauge the RBI uses to assess core inflationary pressures--rose 7.41% in December 2011 from a year earlier, and 0.57% from November 2011. Moreover, December's lower inflation print is partly due to a high statistical base a year earlier. That means inflationary pressures could again emerge when the base effect fades in the next few months.

Meanwhile, October 2011 inflation was revised upward to 9.87% from 9.73% reported earlier

At its mid-quarterly monetary policy review meet on 16 December 2011, the RBI left its main lending rate unchanged in order to support faltering economic growth as inflation shows signs of cooling. While inflation remains on its projected trajectory, downside risks to growth have clearly increased, RBI had said in a statement on 16 December 2011. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth, RBI had said.

RBI had said inflation risks remain high and inflation could quickly recur as a result of both supply and demand forces. RBI also said that the rupee remains under stress. The timing and magnitude of further actions will depend on a continuing assessment of how these factors shape up in the months ahead, RBI said. The RBI has raised rates 13 times since March 2010.

Stronger-than-expected growth in industrial production in November 2011 has raised doubts about the timing and pace at which the Reserve Bank of India would likely ease its monetary policy. Industrial output rose 5.9% in November 2011, compared with a revised contraction of 4.74% in October 2011, data released by the government on Thursday, 12 January 2012, showed. Manufacturing output, which constitutes about 76% of the industrial production, grew an annual 6.6% in November 2011. Industrial production had contracted in October 2011, snapping consistent growth for the preceding 29 months in a row.

The budget for 2012/13 ending March will be presented after elections scheduled in five states, Finance Minister Pranab Mukherjee said on 2 January 2012. State elections are scheduled between the end of January and early March 2012. The annual budget is usually presented on the last working day of February. The Election Commission on 24 December 2011 announced the dates for the assembly polls in Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. Uttar Pradesh will have polling on February 4, 8, 11, 15, 19, 23 and 28, while Uttarakhand and Punjab will go to polls on January 30. Manipur will have polls on January 28 and Goa on March 3.

India's December exports rose an estimated annual 6.7% to $25 billion, while imports for the month were at $37.8 billion, leaving a trade deficit of $12.8 billion, Trade Secretary Rahul Khullar said on Monday.

European stocks were trading mixed Monday, 16 January 2012, as France prepared to sell bonds after Standard & Poor's stripped the country of its top credit rating and downgraded eight other euro-area nations. Key benchmark indices in UK and France were down 0.2% to 0.24%. Germany's DAX rose 0.38%

Ratings agency Standard & Poor's cut France and Austria's triple-A credit ratings by one notch late on Friday, 13 January 2012, and also lowered the ratings of Italy, Spain, Malta, Slovenia, Slovakia, Portugal and Cyprus. While the downgrades were widely anticipated, Standard & Poor's also put France -- the region's second largest economy -- and 13 other euro-zone nations on negative outlook.

Greece, however, remains the more immediate concern after talks with private sector creditors broke down on Friday. Crucial negotiations to restructure the nation's debt are expected to resume on Wednesday, 18 January 2012.

Ratings agency Moody's said on Monday that France's debt metrics and potential contingent liabilities were putting pressure on the stable outlook for the country's triple-A credit rating and said it would update its position on France later this quarter. The deterioration in debt metrics and the potential for further contingent liabilities to emerge are exerting pressure on the stable outlook of the French government's triple-A debt rating, Moody's said in a credit opinion on France.

Asian markets declined on Monday, 16 January 2012, after a string of downgrades from Standard & Poor's and stalled debt talks in Greece thrust Europe's ongoing debt crisis back into the spotlight. The key benchmark indices in Japan, Taiwan, China, Hong Kong, Singapore, Indonesia, and South Korea rose by between 0.65% to 1.71%.

US stocks edged lower on Friday, 13 January 2012, as fears of a credit downgrade of several euro-zone countries added to disappointing results from J.P. Morgan Chase. The Dow Jones Industrial Average finished down 48.96 points, or 0.39%, to 12422.06. The Standard & Poor's 500-stock index dropped 6.41 points, or 0.49%, to 1289.09, while the Nasdaq Composite index declined 14.03 points, or 0.51%, to 2710.67.

In economic data, the Commerce Department said Friday that the US trade deficit widened for the first time in five months in November, as exports to the euro area slumped. The US deficit jumped 10.4%, the biggest gain since May, to $47.75 billion.

US markets remain closed today, 16 January 2012, for the Martin Luther King day holiday.

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