WINNING STROKES: THINK DIFFERENT:

The benchmark Nifty closed at a 31-month high led by huge buying in private financial, cement and FMCG companies' shares and in stocks like Reliance Industries, L&T, JSPL and Hindalco. The index crossed another milestone of 5,500 and added more than 125 points in two days of trade. It had ended at 5705.30 on January 18, 2008. My target of 5500 on the Nifty has been achieved. Now what is the target of Nifty or where it is heading in the next few weeks?? This portion is reserved only for the Paid Groups.

Selan Exploration Ltd which was recommended around Rs.72-73, touched Rs.378 today. But came down after profit booking was advised in the counter. Profit booking was also advised in Oil India Ltd.

Kavveri Telecom Products Ltd made an intra-day high of Rs.128.95 before cooling down a bit. The company did not come up with too good results for the June, 2010 quarters. Also, its net and operating profit margins remained flat, indicating that the company is unable to bargain with the customers. Moreover the telecom sector is not going great. The company instead of trying to hike its share price through all the gimmicks, should focus on its fundamentals--it is a classic case of BSEL Infrastructure Realty Ltd of 2007. In these circumstances it is better to invest in some growth orient stories and exit the counter for the time being.

Sathavahana Ispat Ltd recommended many times in this blog touched Rs.50.20 before cooling down a bit. Investors are suggested to stay put in the counter or add on declines--it is an integrated steel company, which will benefit from recent developments in the steel sector. There is a report on the company at http://www.sumanspeaksplus.blogspot.com/.

Northgate Technologies Ltd touched Rs.21.70 before cooling down a bit. When I asked all to average the scrip around Rs.15-16, many were laughing at me. Now I cannot stop laughing at those morons...as the scrip is rising everyday, after positive outlook has been painted by the company....Now that fellow, who claims to be from Reserve Bank of India, should be shocked and traumatised--may be in Hospital.......I do not know how we have started getting morons (and novices) in India's premier institutions like the RBI, which was once adorned by the likes of Dr.M M Singh or Dr.Bimal Jalan or Dr.Y V Reddy.!! Another fellow named Amit Aurora from Delhi, who claims to be an engineer and doing business, should also be hiding his face in shame--this fellow along with that RBI guy, Rajib Ranjan, sent me a lot of hate mails as Northgate fell from Rs.32. The problem is that these days, everybody starts to become analysts and market pundits.

Now let me point out another irony in the Indian markets. First please go through the news below:

Wockhardt shares soar by 20% on CDR settlement expectation

Press Trust of India / Mumbai August 19, 2010

Shares of pharma major Wockhardt today climbed by about 20 per cent, on reports that the company might go for corporate debt restructuring settlement.

Reacting positively to the move, the stock soared by about 20 per cent to touch a year-high of Rs 223.95 on the Bombay Stock Exchange in the mid-session.

On the National Stock Exchange as well, the scrip shot-up by over 20 per cent and was trading at Rs 224.65.

In terms of volume, over 60 lakh shares of the pharma firm changed hands on the two exchanges in the afternoon trade.

According to reports, the company may replace the existing Foreign Currency Convertible Bonds (FCCBs) with the new ones. It may issue FCCBs worth $75.08 million and increase the authorised capital from Rs 925 crore to Rs 1,125 crore.

The need for a corporate debt restructuring often arises when a company is going through financial hardship and is having difficulty in meeting its debt payment obligations.

Now the point is why did Wockhardt Ltd hit the BUYER FREEZE on the news of corporate debt restructuring (CDR) news and why is XL Energy Ltd trading so low when it has already done CDR or finished it in last March, 2010??!! Isn't it contrasting??!!
Or why did it tank to near its 52-week low price, when the company has already done CRD and its business model is much than Wockhardt Ltd ??!! The answer is very Simple!! Lack of understanding of the markets by most of the investors who wants to buy XL Energy Ltd--that is why many FIIs say, Indian market is immature and hence too much volatile.

Ya, there are more of Rajeev Ranjans or Amit Auroras in the the markets, who are mostly guided by tips from experts/marketmen/operators/junks, than the intelligent ones who do individual research and invest. And you know market is governed by collective sentiments. Now let us examine the two companies and see if we can find out something.....

1. Wockhardt Ltd:

• CMP: Rs.223.95 (Rs.447.90 at Rs.10, FV)
• Book Value: (-) Rs.10.69 (Negative book value)
• Market Cap: Rs.2450 Cr
• Face Value: Rs.5

The stock hits the buyer freeze after the news of CDR proposals.

2. XL Energy Ltd (formerly XL Telecom and Energy Ltd):

• CMP: Rs.30.30
• 52-week high/low: Rs.61.35/Rs.27.10
• Book Value: Rs.13.05 (Positive book value)
• Market Cap: Rs.62.95 Cr (Even the value of its 100 acre of land is more than its market cap so the business of the company is free. Isn't it??)
• Face Value: Rs.10

The stock tanked on the news of CDR, as the company honestly mentioned that it would apply under "Section 23 of Sick Industrial Companies (Special Provisions) Act, 1985", to get interest waiver. This news was picked up by The Hindu Business Line, and was sent across masses as, "Has XL Tele become sick". Another marketmen picked up the news, twisted it and sent it as, "XL Energy Ltd" has turned sick to its clients.....Huh!! What an interpretation...??!!Those morons in order to sensalise the news killed the main news itself. Ask those fools: is CDR done only on SICK companies......??!! The moral of the story is that if the companies applies under provisions of this company's act, they get good interest waiver, which is very much positive for the shareholders--but the stock reacted just the opposite. THIS IS INDIAN STOCK MARKET.....where the best stories gets twisted to such an extent they generate opportunites for the operators to enter at lower price. Yesterday, when I saw two big deals around Rs.30.15 and Rs.30.20, I thought the operators might has pushed down the stock to the desired levels and now the stock would move up---exactly the same thing happened today and the stock closed in the positive territory.

The stock according to me has formed a temporary bottom on the daily charts and is looking good for investment with very little downside. Though the company has completed the CDR in last March, 2010 and is having an order book of more than Rs.154, the stock is trading near its 52-week low price...What an irony??!! But then these are aberrations, which gets corrected in due course. Watch out for the Q2FY10 results, which I am talking about since the last few weeks. The stock is heading towards Rs.70-72 in the next 6 months time frame.
Also stop investing in the markets looking at the Money Control Message Board, unless you are an expert.