Mid and Small Caps to Sizzle in the bourses: But the
overall sentiment should be positive
Yesterday Indian markets closed in the green in a last minute effort. The US markets also managed a razor-thin gain on Thursday as investors sifted through data that pointed to stable interest rates but also suggested the economy has moderated more than expected.
Like the Indian Bourses, the US markets were down for much of the day after reports of sluggish home sales and durable goods orders, but stocks then turned higher at mid-afternoon. Investors have been struggling to rebound after losses this week on concerns that the Federal Reserve's campaign of rate hikes has hurt the economy and that a soft landing might be harder to achieve.
The data reinforced the views, that the Fed will remain on the sidelines for the time being. However, slowing economic parameters also mean consumer spending is softening -- a key factor that drives the economy and corporate earnings. Some Economist are worried as to, whether the US economy is cooling down too fast and in too less time!!
The US Commerce Department reported that new homes sales fell by 4.3% in July, the biggest drop since February, 2006. The report came one day after the National Association of Realtors reported sales of previously owned homes had a bigger than expected drop, prompting a market selloff.
Meanwhile, the department said orders to the U.S. factories for big-ticket manufactured goods fell 2.4 % in July,2006, as demand for aircraft and automobiles weakened. And the Labor Department said the number of Americans filing claims for unemployment benefits last week slipped by 1,000 to 313,000.
The Dow Jones industrial average gained 6.56 points , or 0.06 % , to close at 11,304.46.
Broader stock indicators were slightly higher. The Standard & Poor's 500 index added 3.07 points, or 0.24 %, to close at 1,296.06, and the Nasdaq composite index rose 2.45 points, or 0.11 %, to 2,137.11.
Today Indian markets are expected to be range bound with a positive bias; but its movement will somewhat depend on the movement of the Asian Markets. However, weighing all options I do not think there are too much chance for the markets to dip too low with this scenario.
Today's Recommendations:
1. Monnet Ispat and Power Ltd at Rs.170 with a SL of Rs.163.
The company is from the Jindal group. It came up with very good results for the June, 2006 quarter, inspite of the downturn in the steel sector.
The steel prices are expected to go up, as Posco raised prices of steel products. The company is also into power with 60 Mw of installed capacity. Total Installed capacity is expted to double by 2007. With the coal prices falling, this company will be bring down the cost of production of both the Steel and Power companies.
Immediate Short termTarget---> Rs.196 and Rs.250
2. Buy Essar Shipping Ltd at Rs.25 with a SL of Rs.22
Lof of developments are taking place in the company, some of which have been mentioned in the earlier article. Since the fright rates are norht-bound and hene this will help the company to increase its bottomlines.
The shares of the company got badly beaten down during the last mid-cap meltdown and hence this an opportunity to purchase at dirt cheap price.
Immediate short term Targets--> Rs.35 and Rs.54.
Essar Group announced last Thursday that it had consolidated its shipping and logistics business under Essar Global, its overseas investment arm. Essar Global’s Cyprus-based subsidiary, Essar Shipping and Logistics will manage the business. Essar Shipping and Logistics would have three operating companies -- Essar Shipping, Essar Logistics and Vadinar Oil Terminal.
Essar Shipping said in June that it had sold Vadinar Oil and Essar Logistics to Essar Shipping and Logistics for $ 215 million. Essar Shipping is 77% owned by Essar Shipping and Logistics.Last month, the Essar Group was paid around Rs 3,825 crore to ramp up its holding in two group companies, Essar Shipping and Essar Oil, by buying out global depository receipts from international investors.In March, Essar Shipping acquired a very large crude carrier (VLCC) with a cargo capacity of 2,81,396 dead weight tonne (DWT) for Rs 550 crore. With this acquisition, Essar Shipping's fleet size increased to 27, with the total tonnage rising to 1.3 million DWT. Industry sources estimated the deal between Rs 525-550 crore.Essar Shipping plans to acquire more vessels, including Suemax, Panamax, mini bulk carriers, handymax, bulk carriers and barges. The company targets a young fleet with a mix of medium and large-sized tankers with sufficient bulk tonnage too. A good stock to hold on for the short to medium term.
3. Samkrg Piston & Rings Ltd.
Buy at Rs82 with a SL of Rs.79. Target of Rs.150 and Rs.275.
The company is doing extremely well and the June, 2006 quarter results are excellent, which should take the scrip to beyond Rs.150. This is one of the Finest Auto Ancilliary Companies in India. The company is gaining from the exports initiatives it started couple of years back. It has huge order book position. A pure delivery stock for the short to medium term perspective...it is also being recommended by http://www.10paisa.com.
4. Sarda Plywood Industries Ltd.
Buy at Rs.24 with a SL of Rs.22 and Rs.19.
This is one of the finest companies in the sector. The company is also into tea business, which is expected to do well due to buoyancy in the tea sector.
The company is expected to come up with good result in the quarters ahead. The company went for acquisition in the last year......A good company to hold and invest. The research report of this company is already available in this blog. Please Search this blog to find out more reports.
Three of my recommended stocks, viz. PBA Infrastrucutre Ltd, Hazoor Media and Power Ltd and Southern Online Bio-Technology Ltd hits the buyers freezes yesterday.
The next two Scrips will be made available in the blog in the following postings.....
Best wishes,
Suman Mukherjee
India.
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