WINNING STROKES: THINK DIFFERENT:

Yesterday, I asked all in the Paid Groups and then to the Free Groups (Those in my Yahoo Messenger list) to buy good stocks at reasonable price as the market was looking attractive. Those who have done the same yesterday, would reap high benefits today,

AS THE MARKETS ARE EXPECTED TO SOAR UP TODAY AND WILL USHER ANOTHER ROUND OF RALLY FOLLOWING MR.BARRACK OBAMA'S PRESIDENCY.

The markets gives opportunites to all, but those who do not pay heed to all those indicators/triggers (and think they are the only smart guys in the street) always losers---this is an Universal Law.

I think those who have more or less folllowed my blog at least in the last few months have definitely gained, starting from English Indian Clays Ltd to KEC International Ltd, to Lok Housing Ltd to Srinivasa Shipping and Property Developments Ltd, to Birla Power Solutions Ltd, etc. I have mentioned many times in the past to follow only my blog to make money from the Indian markets---investors/traders do not have to go anywhere......

THIS TIME ALSO SMART INVESTORS ARE ACCUMULATING SELAN EXPLORATION TECHNOLOGIES LTD (Rs.119), MEGASOFT LTD (Rs.15.5), VIJAY SHANTI BUILDERS LTD (Rs.13), UNITECH LTD (Rs.29.3) , VIKASH METAL AND POWER LTD (Rs.7.95), ETC.

ONE OF THE POINTS WHICH MANY ANALYSTS ARE MISSING AT PRESENT IS THAT, India is saving huge amounts of Foreign Exchange, on buying Crude Oil from the international markets, than a year back. A year back the price of crude oil was more than $120 per barrel, while the price has now dropped down to some ridiculous levels of around $41--$42 per barrel. So this savings would be reflected in the India's Oil Pool Account sooner or later and this would be able to reduce the India's fiscal deficit to a large extent.

It is to be noted that India imports 70% of its oil needs---ditto is the case for USA (the world's largest consumer and importer of crude oil). Hence both Indian and the US markets are expected to zoom going forward, with occassional bouts of selling. This factor alone is able to push the SENSEX above 15, 000 in the next one year time frame (JUST REMEMBER A YEAR LATER WHAT I SAID NOW).

For those who may not be clear on the difference between WTI and Brent: Since the Eighties, WTI has ruled the global crude oil market. As it is produced and refined in the US, the world's largest consumer and importer of crude oil, it has been widely accepted as the best indicator of global demand-supply. Nymex WTI contract is the largest market for this crude oil.

Brent oil is pumped out from the North Sea and shipped to Europe, Russia and parts of Asia. Oil from Europe, Africa and the Middle East flowing to the West tends to be priced relative to this oil, i.e. it forms a benchmark. However, large parts of Europe now receive their oil from the former Soviet Union, especially through Russia. Traditionally, Brent traded at a discount to WTI because it is less light and less sweet.

In another development, both the Indian and US governments are coming up with another round fiscal packages which will push the bourses further up and up.....

Another positive news coming from the US is that Obama's pick for Treasury Secretary, Mr.Tim Geithner, testified before the Senate Finance Committee Wednesday. He said that bold action is needed to soften the blow of the economic downturn. Geithner also said that if confirmed, he would work to reform the Troubled Asset Relief Program (TARP), the government's much-maligned $700 billion bank rescue plan. The New York Federal Reserve Bank president also apologized for underpaying past taxes, but said that the error was unintentional. THIS IS EXPECTED TO HAVE A POSITIVE RUB OFF EFFECT IN THE MARKETS---Sometimes in difficult situations we need to take help from CROOKs to shore up Business Confidence and Tim Geitner could be an ideal candidate for this purpose.

HOWEVER WHAT IS FEARED IS HYPER INFLATION FOLLOWING TOO MUCH MONEY IN THE HANDS OF INDIVIDUAL BOTH IN THE US AND IN USE. HENCE I AM ALSO BULLISH ON THE COMMODITIES (Steel, Crude Oil, etc) GOING FOWARD.

It is to be remembered that in India also governments rationalised the income tax structure for this fiscal and had given a pay hike to the government employees. Moreover, the money from Rs.60, 000 Cr of farm loan waiver will soon find its place in the Indian markets. Rs.2 lakh crore is already floating on the hands of individuals waiting to enter the Indian bourses. As soon as the markets starts to rise, FIIs will start putting money in the Indian bourses.

Moreoer, since the US interest rate is almost near Zero, the NRIs in the US could plough back their money in the Indian Bond market to generate cash/money on the interest differential between the two countries (India and the US). Last time it happened (when the US cut interest rates) this time also this would happen, appreciating the Indian Rupee (INR) to around Rs..42--Rs.43 against dollar in the next 6 to 7 months time frame.

However, the present FALL in price of raw materials is already kicking up the price of the shares of FMCG Companies like Hindustan Unilever Ltd (recommended to the Paid Groups a couple of days back). The biggest beneficiaries due to the fall in the price of raw materials would be the companies in the Construction/ Real Estate, FMCG, Plastic, Steel, etc. sectors.

Therefore, just use these dips like Yesterday, to buy good stocks at reasonable valuations.

In the US the stocks rallied Wednesday, recovering most of the previous session's losses, as investors welcomed IBM's earnings and scooped up bank shares hit hard in the recent retreat.

Investors also seemed to welcome signs that Treasury Secretary nominee Tim Geithner is likely to be confirmed after his confirmation hearing on Capitol Hill. The Dow Jones industrial average rose 3.5%, again reclaiming the 8,000 level. The Standard & Poor's 500 index added 4.4% and the Nasdaq composite rose 4.6%.

After the close of markets in the US, Apple Computers Ltd reported higher fiscal first quarter sales and earnings that Topped Estimates. The tech leader also issued a fiscal second quarter sales and earnings forecast that was short of forecasts. But investors focused on the earnings and sent shares 9% higher in extended-hours trading.

"It was a very welcome rally after yesterday," said Dave Hinnenkamp, CEO at KDV Wealth Management. He said that IBM's earnings helped offset a mix of earnings from other companies. "IBM's earnings show us that there are some pockets of good news out there and financials are bouncing back after having their worst day ever," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.

HENCE IN ADDITION TO THE TECHNOLOGY SECTOR, WE WOULD ALSO HAVE A RALLY IN THE BANKING SECTOR (Yesterday I asked all to to buy banks as they were looking oversold on the charts) and OIL AND GAS EXPLORATION SECTOR as the price of Crude Oil is continuously rising in the international market. I have asked to buy the stocks of crude oil producing companies yesterday in this blog. I have already said that the price of Crude Oil below $72 per barrel is unviable and its price should sooner or later come to that levels, in the short term.

MOREOVER AS SEVERE WINTER HAS BEEN PREDICTED IN THE US, THE LARGEST CONSUMER OF CRUDE OIL, which will further drive up the price of crude oil going forward. We have already seen that in the US, a US Airways plane bound for Charlotte which just crashed into the Hudson River. The temperature of that of that river was around (-) 10 degree centrigrade (minus 10 degrees). So we can at least have some idea about the severity of winter in the US.

In addition to above we could look at the following points for today, in the Stock Markets:

1. Unitech Ltd is expected to move to Rs.37--Rs.42 range in the next few days due to "Positive-Ripple-Effect" created, as it Repaid or Rescheduled nearly three-fourths of its Rs.2,500-crore loans due by March 2009. The overall debt the company needs to repay by March 2009 is now reduced to just 20-25 per cent of the earlier amount of Rs 2,500 crore. So by March, it has to repay ONLY about Rs 600 crore, which is dramatic. Unitech Prepaid a substantial portion of the Rs.900 crore borrowed from 7-8 mutual funds, while the balance amount has been rolled-over and is not due this fiscal. Besides this, the company claims to have rescheduled debt of over Rs.1,000 crore.

In addition, following the pact with Telenor, the telecom arm (Unitech Wireless) would repay debt to the tune of Rs.800 crore to Unitech Ltd. And another Rs 1,200 crore worth of loans would get transferred from the erstwhile consolidated balance sheet of the Unitech Group, to Unitech Wireless’ new balance sheet. SO IT IS A WIN WIN SITUATION FOR UNITECH LTD and those who will not buy the stock now might have to suck their fingers in future. I think Unitech Ltd will reach my target of Rs.60--Rs.80, in the next 45 days time frame.

Moreover, there has been a dramatic fall in the price of raw materials like steel, cement, paint, etc. which would greatly help the company in reducing the operating costs. Just buy Unitech Ltd now around Rs.29.3 and keep holding for at least 45 days to get massive profits.

2). U.S. light crude oil for March delivery rose $2.71 to settle at $43.55 a barrel on the New York Mercantile Exchange. Gasoline prices rose one-half of a cent to a national average of $1.848 a gallon, according to a survey of credit-card swipes released Wednesday by motorist group AAA, USA. Hence we would see the shares of Oil Exploration Companies have positive rub-off effect today, which includes, Reliance Industries Ltd (coming up with results today), ONGC Ltd, Selan Exploration Technologies Ltd (will start buy back of the shares at a price not more than Rs.230 per piece, as compared to the CMP of Rs.119), etc. are expected to move up today.

Some positive features of Selan Exploration Technologies Ltd:

1. Has one of the lowest operating cost of around $14--$15 per barrel.

2. EPS (Earning per share) of Rs.32.99 ( EPS of Reliance Industries Ltd is Rs.128.5, CMP-->Rs.1119.4). Hence Selan Exploration Technologies Ltd should trade at a minimum price of Rs.280. The stock broker Sharekhan last year came out with a report on the company with a price target of Rs.345 in the next 12 months time frame. Last time also, Sharekhan's target of in 2007 was exceeded by miles. Sharekhan has been coming out with report on the company since the last few years and it is worth noting that everytime their targets has been exceeded by miles.

3. P/E of only 3.66

4. Market Cap: Rs.174 Cr only

5. Dividend: 15%....

The following article of mine appeared in a web-site some days back:

Selan Exploration Technologies Ltd–a stock poised for massive upsides ahead as company decides to go for buy back of its shares at a price upto Rs.230 per share…..

Selan Exploration Technology Ltd (BSE Code–>530075): Some additional Inputs (I think you have read my earlier inputs in this scrip): Following a move by the Government of India in 1992 in opening up the oil sector for private sector in exploration and production (E & P) of Hydrocarbons, SELAN Exploration Technology Ltd, was amongst the first private sector companies to have obtained rights to develop three discovered oilfields situated in the state of Gujarat namely Bakrol, Indrora and Lohar, all with Proven Oil and Gas Reserves. SELAN was subsequently awarded two more fields in Gujarat namely Ognaj Oilfield and Karjisan Gas field.

All the oil and gas blocks have a well laid out infrastructure. Hence these blocks are easily accessible and are in close proximity to the Government’s crude gathering station as well as are in close proximity to a large industrial town.

The various seismic and reserves assessment studies have established substantial amounts of oil and gas reserves in these blocks.

SELAN thus has significant oil and gas assets in its control which require developmental work and for the purposes it would require substantial amounts of Capital investment to augment its development and growth objectives.

SELAN has a Development Plan for drilling of additional wells in these blocks in the next 32 to 3 years. The Plan is intended to be executed in a phased manner and would involve large capital expenditures, to be funded through a combination of external borrowings and internal accruals.

SELAN has significant oil and gas reserves in its control that require developmental work. The Bakrol oil field has proven 2P reserves of 72 Million Barrels of oil equivalent.In addition to this, the company’s biggest oil field at Indrora (3.5 times the size of Bakrol field) is under assessment and is expected to have significant reserves.

Selan is expected to ramp up production from the present around 120,000 to 400,000 barrels in FY10. The company should be able to increase the annual production to 1 million barrels in the next 2 to 3 years.

Industry Outlook:

The present Crude Oil prices are ruling near all time lows and hence we can only expect higher oil price in the days ahead, especially in due to the prediction of a severe winter in USA and also due to the fact that below $72 per barrel, it become unviable to drill Crude Oil by the major players in this space. Hence we can expect that OPEC and other Oil Exporting Countries will only go on cutting the crude production in the coming months, boosting the price of crude oil in the international markets.A crude oil price of above $60 per barrel will only boost the bottomline of standalone E&P players like Selan Exploration Technologies Ltd. Thus, Crude Oil prices are expected to remain above $50 per barrel range for most of FY09. Low production costs: The company’s Oilfields are discovered oilfields, thus there are no exploration risks or too much overhead costs. The company however, incurs the seismic survey costs & drilling costs but the matter of concern is not whether there is oil but how much of it is there–this is the area which is unique to Selan Exploration Technology Ltd against other established players like ONGC Ltd or Reliance Industries Ltd.

Accordingly, the production costs are low and stand at USD 15 per barrel (including $4 royalty/cess paid to ONGC). THIS PROVES THAT AT EVEN AT $50 PER BARREL SELAN EXPLORATION TECHNOLOGIES LTD IS MAKING SIGNIFICANT PROFITS ON ITS OPERATING COSTS.

Further, the company’s capex costs for drilling a well is also comparatively lower and thus have a short payback period making drilling attractive.

Value unlocking through dilution of interest in Indrora oilfield: Selan is expected to dilute participating interest at Indrora field in 1-2 years. It is widely expected that the investor will be strategic in nature bringing in funds as well as the expertise to drill a large number of wells. Usually participatory stake in discoverable fields get a 3-4x premium to that of an explorable oil field.

MAY BE KEEPING THIS IN MIND, THE COMPANY HAS DECIDED TO COME UP WITH A BUY BACK OF ITS SHARES AT A PRICE NOT EXCEEDING RS.230 PER SHARE—implying that the company thinks that in the days ahead, the share price of the company could shoot above Rs.230 per share.

Attractive Valuation: On a forward P/E basis the company is trading at a very attractive multiple of around 3.8. This is significantly lower than the forward multiple of the broader market. The oil and gas industry’s downstream players generally trade at a premium to the broader market. FY09 is likely to turn out to be another year of massive growth for Selan Oil Exploration. At the end of FY09, the estimates are, that Selan will produce close to 150,000 barrels but the realisations in FY09 would exceed could exceed $50 per barrel. Crude Oil below $70 per barrel is an unviable proposition. Production and Development thrust: The promoters earlier made a preferential allotment of 18 lakh shares at Rs.165 per share bringing in Rs.30 crore into the company. These funds are now used to dig more wells over the previous year, in the existing Oil blocks, and leave some spare money to develop the Oil field at Ognaj and the Gas field at Karjisan, which are still to be leased out to Selan Exploration.

An agreement has already been signed with the Indian Oil Corporation to uplift the existing and additional production at the international rates for Crude Oil. The IOC and the State of Gujarat have also agreed to refund the levies on account of Sales Tax and surcharge on Sales Tax.

However, the most significant point is that Selan’s Crude Oil Production is set to rise to an estimated 150,000 barrels (128,000 barrels)during FY09. This quantity is double the figure recorded over the past three years and indicates that Selan Oil is ready to scale up its business operations.Assuming even 25 per cent of the Oil Reserves are recoverable, a market cap of only Rs. 180 Cr indicates a massive under-valuation of the Selan stock.

More importantly, private oil field operators are not subjected to subsidy sharing beyond the Oil equity due to the GOI, and hence stocks like Selan do not carry operative risks like other E & P operators like ONGC.

NOW WITH THE COMPANY COMING UP WIIH A BUY BACK OF THE SHARES AT A PRICE NOT EXCEEDING Rs.230 per share, we can only assume that the shares would move up in the coming days.

Hence I would not be surprised if Selan Exploration Technology Ltd gives significant appreciation from the CMP of Rs.125, in the next 6 to 7 months time frame. ONE SHOULD REMEMBER THAT CRUDE OIL BELOW $72 PER BARREL BECOMES UNVIABLE FOR MOST OF THE INTERNATIONAL PLAYERS IN THE OIL EXPLORATION SPACE.

But since the exploration cost of Selan Exploration Technologies Ltd is much less, it makes profit even when the Crude Oil is trading around $50 per barrel–this makes this company unique.