Thursday, February 08, 2018

The stock market registered modest gains as bargain hunting emerged on the bourses after seven straight sessions of losses. The barometer index, the S&P BSE Sensex, rose 330.45 points or 0.97% at 34,413.16. The Nifty 50 index advanced 100.15 points or 0.96% at 10,576.85. Pharma stocks advanced. Cement major ACC surged after reporting strong Q4 results. Bhel advanced after strong Q3 earnings.

Key indices opened higher and extended gains in mid-morning trade. Later, indices traded within a narrow range with strong gains till afternoon trade. Indices trimmed some gains in mid-afternoon trade and closed with modest gains with a bit of volatility seen in the last hour of trading.

Stocks advanced as bargain hunting emerged after seven straight sessions of sell-off in the domestic equities in the wake of a combination of domestic and global factors. Lesser hawkish tone of the Reserve Bank of India (RBI) in its monetary policy meeting concluded yesterday, 7 February 2018, also supported the gains on the bourses. The central bank had kept key policy rates on hold, reiterating its intention to keep an eye on the inflation figures going forward and to support growth.

Earlier, the key indices had declined for seven sessions in a row after the Government announced re-introduction of long term capital gains (LTCG) tax on equities exceeding Rs 1 lakh at 10% in Budget 2018, surging interest rates on sovereign debt in US, and amid rising global crude oil and commodity prices.

Overseas, European stocks edged lower as investors waded through the latest batch of corporate earnings, ahead of a central bank decision in the UK. Asian stocks ended on a mixed note. China's trade surplus shrank in January on huge imports surge, data released today, 8 February 2018 showed. Trade surplus for January, in Yuan terms, came in at CNY 135.80 billion.

US stocks declined yesterday, 7 February 2018, after trading in a wide range again, as interest rates climbed back toward multi-year highs.

Among secondary indices, the S&P BSE Mid-Cap index rose 1.82%. The S&P BSE Small-Cap index advanced 2.25%. Both these indices outperformed the Sensex.

The breadth, indicating the overall health of the market, was quite strong. There were more than three gainers for every loser on BSE. 2,172 shares advanced and 640 shares declined. A total of 118 shares were unchanged.

The total turnover on BSE amounted to Rs 5547.07 crore, compared with the turnover of Rs 4395.53 crore registered during the previous trading session.

Among the sectoral indices on BSE, the S&P BSE Healthcare index (up 2.91%), the S&P BSE Realty index (up 2.51%), the S&P BSE Basic Materials index (up 2.48%), the S&P BSE Consumer Discretionary Goods & Services index (up 1.63%), the S&P BSE Industrials index (up 1.45%), the S&P BSE Telecom index (up 1.45%), the S&P BSE Capital Goods index (up 1.44%), the S&P BSE Teck index (up 1.41%), the S&P BSE IT index (up 1.40%), the S&P BSE Metal index (up 1.35%), the S&P BSE Consumer Durables index (up 1.32%), the S&P BSE Finance index (up 1.28%), the S&P BSE Auto index (up 1.17%) and the S&P BSE Bankex (up 1.12%), outperformed the Sensex. The S&P BSE Energy index (up 0.45%), the S&P BSE FMCG index (up 0.36%), the S&P BSE Power index (up 0.31%), the S&P BSE Utilities index (up 0.30%) and the S&P BSE Oil & Gas index (down 0.25%), underperformed the Sensex.

Banks stocks advanced. Among public sector banks, IDBI Bank (up 6.31%), Indian Bank (up 3.18%), State Bank of India (up 2.97%), Canara Bank (up 2.96%), Allahabad Bank (up 2.42%), Andhra Bank (up 2.27%), Syndicate Bank (up 2.19%), Corporation Bank (up 2.12%), Bank of Baroda (up 1.56%), Punjab National Bank (up 1.50%), Union Bank of India (up 1.50%), Bank of India (up 1.21%), United Bank of India (up 0.98%), Bank of Maharashtra (up 0.79%) and Dena Bank (up 0.66%), edged higher. UCO Bank (down 0.17%), Central Bank of India (down 0.52%), Vijaya Bank (down 1.15%) and Punjab & Sind Bank (down 2.01%), edged lower.

Among private banks, City Union Bank (up 3.95%), Axis Bank (up 1.75%), Federal Bank (up 1.39%), Kotak Mahindra Bank (up 1.33%), RBL Bank (up 1.08%), ICICI Bank (up 0.69%), IndusInd Bank (up 0.68%), Yes Bank (up 0.56%) and HDFC Bank (up 0.46%), edged higher.

Pharma stocks advanced. Cipla (up 7.83%), Sun Pharmaceutical Industries (up 6.32%), Dr Reddy's Laboratories (up 3.18%), Wockhardt (up 2.93%), Strides Shasun (up 2.80%), IPCA Laboratories (up 2.59%), Piramal Enterprises (up 2.49%), Divi's Laboratories (up 2.19%), Cadila Healthcare (up 2.13%), Glenmark Pharmaceuticals (up 1.47%), Alkem Laboratories (up 1.41%) and GlaxoSmithKline Pharmaceuticals (up 0.49%), edged higher.

On the macro front, the Reserve Bank of India (RBI), in a notification dated 7 February 2018, announced relief measures for micro, small and medium enterprises (MSMEs) registered under Goods and Services Tax (GST). Presently, banks and non-banking finance companies (NBFCs) in India generally classify a loan account as non-performing asset (NPA) based on 90 day and 120 day delinquency norms, respectively. The formalisation of business through registration under GST had adversely impacted the cash flows of the smaller entities during the transition phase with consequent difficulties in meeting their repayment obligations to banks and NBFCs.

As a measure of support to these entities in their transition to a formalised business environment, it has been decided that the exposure of banks and NBFCs to a borrower classified as MSME under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, shall continue to be classified as a standard asset in the books of banks and NBFCs, subject to a set of conditions, the central bank said.

#As expected the Indian markets bounced back, after a long hiatus. Nifty did got support around 10400 througout the day. The next targets for the Nifty spot comes around 10630 and 107286 on the upside. However, I feel the action will now be seen in the badly beaten small and mid cap sectors. Remain invested and average wherever necessary; but don't average every scrip.

#NDTV Ltd today hit the BUYER FREEZE in the mid afternoon trade at Rs.45. Yesterday, the traders and investors were suggested a buy on the counter on view of increasing chances of UPA returning  to power in 2019. However, the stock has some resistance around Rs.45-46.5 ranges which it needs to cross with good volume for the next target of Rs.51.

#The stock of 3i Infotech Ltd (Rs.6.35) today moved up with good volume, with rising RSI, indicating further bullishness in the counter. The investors should do well to accumulate the scrip in every decline and buy with long term targets of Rs.50 and Rs.100. You need to just buy and hold, like your fixed deposits. 

#The scrip of HDIL today moved up from the oversold positions with reasonable volume to close just below the resistance zone of Rs.52.60-52.70. The next targets for the scrip are Rs.59 and Rs.65, which it will easily reach during the next few trading sessions. HDIL is not a company but a Real Estate Empire, with a land bank of around 20 crore sq.ft in Mumbai Metropolitan Region, where the land cost is a major part of the total cost of construction. Even if we take a modest value of Rs.1500 per sq.ft of land in MMR, the land bank valuation comes to around Rs.30,000 crore, which will always give some cushion against debt. 

#The share of Urja Global Ltd today hit another lower circuits to close at Rs.7.45 in the BSE. The stock has been hitting the Lower Circuits, since my sell call at around Rs.11.30. I feel any price of this Re.1 face value scrip, above Rs.2-3 is unjustifiable. 

#The stock of GVK Power & Infrastructure Ltd today hit the buyer freeze at Rs.196.50 (on Rs.10 face value), probably due to "Hero Worship" formula, when the company has over the years amassed ~Rs.25,000 crore debt, raising its debt-to-market cap to as high as 13. I am not understanding the reasons to buy this Re.1 face value scrip at around Rs.19.6, when there are 100s of stocks, which  are looking screaming buys. 
Anyway good luck to those who buys JUNKS at such a high price because a fund manager has bought the same. Will the fund manager tell you when he exits the scrip, distributing the shares of the company on to your hands? 
Did Rakesh Jhunjhunwala ever whisper into your ears......before EXITING the companies like Orchid Chemicals and Pharmaceutical Ltd (now Orchid Pharma Ltd; CMP: Rs.17.85) or Hindustan Oil Exploration Ltd (Rs.121.30)
Moreover, the Financial/Business TV  Channels will never inform you why Rakesh Jhunjhunwala's Viceroy Hotels Ltd (Rs.16.15) failed to perform in the bourses, but will generally shout, about his investments in Prakash Industries Ltd (Rs.205.60) or Titan Company Ltd (Rs.800.65)....
This is how the whole system of stock market works, in collusion with media......Huh!! As a parting note, I would  like to point out that: I also recommended Prakash Industries Ltd at around Rs.41-42, but the media will always attribute the gains in the scrip price to RJ only......LOL!!

#My recommended Energy Development Ltd, an Amar Singh-Jaya Prada venture, at around Rs,17-18, today hit the upper circuits at around Rs.24.55.  The immediate targets for the scrip are Rs.27-29, which I feel will be achieved very shortly. 

#I have few scrips which could give good returns over a period. These are the scrips which are infront of your eyes but you might not find the reasons to invest in them, till they start hitting the upper circuits, due to hidden valuations. If anyone is willing to invest around Rs.3-5 lakhs in those scrips please do let me know. You will get the 1st mover advantage and naturally the gains will be higher. This is different from the Premium Service, which I run..
Also, small investors/traders can join my information service at a discounted rate or my associated brokerage house: BMA Wealth Creators Ltd to stay ahead of others. Exiting a stock is always very difficult than buying a scrip and hence expert opinion matters.

~~with inputs from Capital Market - Live News..

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