Monday, November 06, 2017

Winnning Stokes: Think Different
Jai Balaji Industries Ltd today went up by 4.69% in the NSE with good volumes on better prospects of Gray Iron Pipe sector. Japanese trading house Mitsubishi Corp expects coking coal p9rices to fall towards $150 a tonne in the October to March half as Chinese steel mills are set to reduce output over the winter period. Meanwhile, the Steel mills across China, particularly in the country’s biggest steel producing city of Tangshan, were expected to begin cutting production to meet air pollution reduction targets. However, Tangshan has ordered different levels of capacity cuts leading to speculation that the output may not be curtailed as much as expected earlier. After facing headwinds that slowed consumption in recent years, world steel demand growth is beginning to face a cyclical upturn. Consumption demand is expected to pick up on the back of the momentum in global economic growth.
Based on the demand conditions so far this year, the World Steel Association, in its short-range outlook, has forecast that global steel demand will reach 1,622 million tonnes (mt) in 2017 and will improve to 1,648 mt in 2018. In other words, the industry has by and large been able to ride out this year’s political risks, including Fed rate hikes, European elections, rising crude oil prices and Trump-induced market volatility. Admittedly, China is the mover and shaker of the world steel market by virtue of being the largest producer and consumer of the industrial metal. The positive correlation between global economic growth and steel consumption is well-recognised. From less than 3 per cent in 2016, there has been a modest pick-up in global growth to 3.3 per cent this year and a further increase to 3.6 per cent in 2018 is seen. For the world market, at present, risks factors include geopolitical tension (friction between the US and North Korea), protectionist tendencies and China’s debt problem. I am expecting the share price to touch Rs.21-22 in the short term.

Shilpi Cable Technologies Ltd (Rs.18.10) is being hammered by operators, after the company's share got shifted to the BZ category. However, according to my close sources, there is as such no problem in the company - it is functioning in a normal way. I will speak.4 with a highly placed source tomorrow to get full details of the situation. Meanwhile, the company is shifting its Hosur plant to Bhiwadi, Rajasthan for better management and control -- the share is likely to bounce back, after testing the earlier low.

Aban Offshore Ltd (Rs.220) which was recommended around Rs.178 last month, today touched Rs.224.40 on higher crude oil prices. Chennai-based Aban Offshore, the country’s largest offshore drilling service provider to oil companies having a debt of around Rs.14,000 crore on its books, is trying to come out of choppy waters by working closely with bankers to moderate debt cost on the one hand and extend debt repayment tenure on the other. Meanwhile, there were media reports that the company had entered into a contract with Brunei Shell Petroleum Company Sdn Bhd. The objective of the contract is deployment of a jack-up rig Deep Driller 5 (DD5) offshore Brunei Darussalam. The contract is for a firm period of five years, followed by three optional periods of one year each. The deployment is likely to commence during the last quarter of calendar year 2017 or from this quarter. Currently, the 14-day ADX for Aban Offshore Limited (ABAN.NS) is sitting above 50. The 14-day RSI is currently at 73.83, the 7-day stands at 84.61, and the 3-day is sitting at 95.51. Aban Offshore Limited (ABAN.NS) presently has a 14-day Commodity Channel Index (CCI) of 238.13, which means the stock is in the overbought side of the territory. The traders who entered around Rs.178-179 can book some profits and hold the rest with a SL of Rs.212.

HDIL which was recommended around Rs.52,  today  touched Rs.62.45 intra-day before closing at Rs.61.50. A Meeting of Board of Directors of Housing Development & Infrastructure Ltd will be held on Tuesday, November 14, 2017, to consider and approve Unaudited Financial Results of the Company for the Quarter and six-months ended September 30, 2017 for the Financial Year 2016-17 ('Unaudited Financial Results'); and to consider and approve Issue of Warrants on Preferential Basis to Promoter of the Company. Meanwhile, the Money Flow Indicator for Housing Development and Infrastructure Limited has touched above 60.  The traders are suggested to hold the scrip with a SL of Rs.57 for the next set of targets of Rs.69--71.

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