SumanSpeaks: The Information Super Highway

-: The Indian Markets and Coronavirus: Fear Mongering without data backing:- The domestic bourses got spooked today due to Photo : The Street  twin effects of the fear mongering by the international media on the issue of coronavirus and Moody's cutting India's FY20 growth forecast to 5.40% (from 6.60% earlier). The coronavirus outbreak has been made a scapegoat to hide the wrong policy decisions of the government of India and the riots in Delhi, post  irresponsible - communally - charged -provocative - speeches by some elements of the  Indian political class.  Anyway,  if we go by the media reports then,  we will see that during the last SAARS attack,  the Chinese GDP growth shrank by a mere 0.50%. This data assumes significance as China contributes to around 16% of the GDP. However,  India contributes 7.45% and the US 15.20% of the world GDP,  which is a significant figure -- both the countries are almost unaffected by ...

Tit - bits Yesterday Nifty 50 closed below the 200-day exponential moving average (which was placed at 11,826) declining 119.40 points or 1.01% to 11,678.50, forming yet another bearish candle on daily charts. However, today Nifty is likely to give a bounce, from 11600 levels, which can be used to build long positions for targets of 11900/12000. I feel the new F&O trading should start with a positive note. Therefore, buy good mid and small cap counters for 3/4 months perspective.  # You can buy the shares of Ashoka Buildcon Ltd (Rs.92.90) near that Rs.89/90 during intraday dips for short term targets of Rs.102/105. Prabhudas Lilladher is bullish on Ashoka Buildcon has recommended buy rating on the stock with a target price of Rs 167 in its research report dated February 11, 2020. #Buy the shares of JHS Svendgaard Ltd (Rs.12.75) during intraday dips near Rs. 12/13, for short term targets of Rs.16/17. JHS, which has a manufacturing facility at tax-free zon...

Tit - bits #The Nifty is expected to see a gap down opening Photo : WSJ.com today and will test the support levels at 12020/12000 ranges. I'm not expecting too deep correction at this point of time. Try focussing on good small and mid caps, Nifty remains rangebound around 11800/12150 levels. While, Nifty will track global developments and the coronavirus epidemic, the action is likely to be seen in specific stocks. With Bumper Ravi sowing on the cards, post monsoon, focus on Agri chemicals related and construction scrips.  #You can buy the shares of Ashoka Buildcon Ltd near the support of Rs.97/99, for short term targets of Rs.117/121. SL: Rs.93. ICICI Direct has put a target of Rs.120. It has a P/E of 8.71 against the industry P/E of 23.02. I'm expecting a 50% rise in the morning scrip price from the CMP of Rs.99.35 in one year's time. #At a time when the GST collections are falling and the Indian economy is passing through a grave phase,  Narendra Modi ...

Tit - bits #On Monday (24 February, 2020), the Indian markets are likely to open gap down and the Nifty is expected to test 1200/11800 zone. The imports from China,  might get costly due to coronavirus epidemic. This will help the companies, who don't use Chinese raw materials to make finished good. However, we could see margin shrinkage in electronic items like TV,  unless their price is raised. But when there is a slowdown in demand, the rise in product prices may actually hit the sales.  Moreover,  it seems there is a structural breakdown of Indian economy as there is a rise of unemployment along with a raging inflation. Therefore, titillating it with more and more stimulus could lead to hyper inflation. It is pertinent to mention here that, while,  the US economy is booming, our current dispensation in Delhi, has creatively destroyed, through erroneous policy making. Narendra Modi went to the US at the end of last year ("Howdy Modi") and bluffed th...

Tit - bits #The Nifty closed at 11,992.50 down 53.30 points Photo : Hans India (-0.44%) taking cues from weak global markets and downgrade of India by the Moody's. Shares across the globe spooked after iPhone maker Apple Inc said it was unlikely to meet its sales projections because of the coronavirus epidemic in China. The Nifty would continue to get support around 11800/11900 levels and face resistance around 12100/12150 region. However, with UA economy doing well, the domestic indices would continue to rise due to inflation; even if the India economy is weak. So,  if you are holding the share of a right company at the right price, good ROI is guaranteed over a period. Tomorrow, Indian markets (Nifty) will open gap up of at least 20 points. So,  use intraday dips to buy good shares.  #Keep away from PSU Bank Stocks, as several media report suggest them having a significant exposures to the telecom operators. Acordoreports, bankers fear a possible collaps...

Tit - bits #The Nifty is now trading at  12102.10  down 11.40 points  (-0.09%) while the Sensex is seen trading at  41245.75 down 11.99 points  (-0.03%). The broader market also declined. The S&P BSE Mid-Cap index was down 0.3% while the S&P BSE Small-Cap index was down 0.47%. The market breadth is negative. On the BSE, 725 shares rose and 1104 shares fell. A total of 116 shares were unchanged. #The condition of Indian economy is not very well,  after five and half years of mismanagement by the team NaMo. This backward looking government has spoiled the economy which it inherited from UPA -- II. Instead of reviving it, it was thrown into even more darkness.  But the current FM,  Nirmala Sitaraman is all agog with her green shoot theory. What I mean to say is that, after ruling for 5 and half years,  she is trying to say that Indian economy is in a revival path, when the BJP should have actually presented us with a vi...

Tit - bits Photo : Ieefa.org Key benchmark indices ended with small losses on Thursday. While private banks dragged the indices lower, IT shares provided the necessary support; though the market was volatile due to expiry of weekly index options on the NSE. The S&P BSE Sensex, was down 106.11 points or 0.26% at 41,459.79. The Nifty 50 index lost 26.55 points or 0.22% at 12,174.65. The sentiment was affected by weak domestic economic data and equally poor global cues.   Meanwhile, the death toll from the coronavirus in mainland China spiked 23% on Wednesday amid new counting methods adopted by Chinese health officials. However, the BSE Mid-Cap index fell 0.01% and the BSE Small-Cap index rose 0.07%. The market breadth was negative. On the BSE, 1057 shares rose and 1432 shares fell. A total of 157 shares were unchanged. In an interesting development, the ratings agency S&P Global on Thursday reaffirmed India's long-term rating at ...

Tit - bits Yesterday, (Wednesday) the Indian markets were Photo : Moneycontrol.com totally under the control of the bulls.  The BSE Sensex closed at 41,565.90 up 349.76 points (+0.85%), while the Nifty ended at 12,201.20 up 93.30 points (+0.77%).  However, the market breadth was in favour of bears, indicating caution ahead of IIP and CPI data announced later in the day (Wednesday). The retail inflation in January rose to 7.59% against 7.35% in December, while industrial output contracted 0.30% in December, against a growth of 1.80% in November. This means, the unrealistic run which is continuing in some of the FMCG counters at ridiculous P/Es, is likely to end soon. And money, from these over valued FMCG stocks would soon enter,  the other beaten down counters from sundry sectors.  #Now coming back to the budget once again, we saw fiscal stimulus to our economy in the form of  allocating more funds towards rural India, reducing taxes, and abol...

Tit - bits   #The Indian markets as expected has once again Photo : Investor place became Bull Heavy.  The BSE Sensex is now trading at 41,302.86 up 323.24 points (+0.79%), while the Nifty is now seen at 12,131.80 up 100.30 points (+0.83%). As long as Nifty holds 12,000/12,100, the Bulls need not have to worry much. The action would now slowly shift towards small and mid cap counters.  #The scrip of National Fertilisers Ltd (NCL ) Source : www.bseindia.com today moved to Rs.25.15 after bouncing from Rs.24.80/24.90 ranges. It a mini Ratna PSU and has a dividend yield of around Rs.7.47% at the CMP of Rs.24.90 and cash EPS of around Rs.5.33 and FY20 Expected EPS of around Rs.6/7. Another thing, Yesterday,  the percentage of Deliverable Quantity to Traded Quantity was a whooping 83.97%. The medium and long term investors should have this scrip in their portfolios. I am sure over a term, patient investors would definitely get good returns.  #T...

Tit - bits #The Nifty went for a mild correction today, taking help of the global cues. Photo : Live Mint Though the Sensex closed below 41000 at 40,979.62 down 162.23 points (-0.39%), the Nifty managed to hold 12,000 levels, to close at 12,031.50 down 66.85 points (-0.55%) on the fear of the rise on death toll due to coronavirus. But China, which is actually the event HORIZON of Cornovirus, the indices there rose for the fifth day in a row as investors risk sentiments underpinned on reports that many people returned to work and businesses resumed operations. At close, the benchmark Shanghai Composite Index added 1.72%, or 48.42 points, to 2,866.51. The Shenzhen Composite Index, which tracks stocks on China's second exchange, also rose 2.9%, or 48.60 points, to 1,727.24. The blue-chip CSI300 index was up 1.86%, or 71.25 points, to 3,899.78. The death toll in mainland China rose to 908 as of Sunday, the National Health Commission (NHC) reported on Monday. Meanwhile Beij...

Tit - bits #The Nifty Futures were trading at a slight premium (12010) to the Nifty at around 1.30 pm. Nifty is now trading at 12,014.40 down 79.60 points (-0.69%). The markets were down taking overall global clues. However the Shanghai Composite is marginally up by 14.53 points to  2,890.49. I feel the Nifty is likely to take support at around 1200/11800 levels. Fundamentally,  strong counters should be accumulated in market dips. While the Nifty is likely to trade in between 11800/12500, the action is expected to shift to beaten down mid and small cap counters.  # Ashoka Buildcon Ltd (Rs.109 35) came out with satisfactory set of numbers for the Q3FY20. On consolidated basis, the construction major reported a consolidated net profit of Rs.32.41 crore in Q3 December 2019 as against a consolidated net loss of Rs.15.72 crore posted in Q3 December 2018. Net sales declined 6.3% YoY to Rs.1280.36 crore in Q3FY20. The stock can be accumulates near the support of Rs...

Tit - bits # Reliance Capital Ltd (Rs. 8.24) is now basically an insurance company which will face tough problem in securing business, after the withdrawal of exemptions. If you are still holding the shares of the company you should exit out of it in market rises,  as I see it falling below Rs.5. # National Fertiliser Company Ltd (Rs.25.55) is a Mni Ratna PSU and hence I believe there will not be much problem with working capital requirements. The government has spoken of doubling of farmers' income by 2022 and this is not possible without the use of both artificial and bio fertilizers. The FM has spoken of "Zero Budget Farming" in FY20 (last year) also.  If I may quote a report published in India Today,  on 5 July,  2019: The finance minister announced a proposal of zero budget farming, which she said is like "going back to basics." Sitharaman said zero budget farming will help doubling the farming income in days to come. Zero budget farming is a se...

Tit - bits The scrip of National Fertilisers Ltd (NFL) yesterday,  closed almost flat at Rs.25.55. The Budget is positive for the company as it is also into Bio Fertilizers. If we look at the past data then we will find that in case of Chemical Fertilisers, NPK Consumption per Hectare on all India basis stood at 128.020 kg/ha in Mar 2018. This records an increase from the previous number of 123.410 kg/ha for Mar 2017. Hence,  India's chemical fertiliser demand has been on rise. While the present requirement of urea is 320 lakh metric tonne per annum, the current production is 240 lakh metric tonne. Currently, India is importing 80 lakh metric tonne of urea -- hence there will be an import component, till 5 new plants get commissioned, when government is expecting the country to self reliant as far as urea production is concerned.   Also, to ensure balanced use of fertiliser and reduce the consumption of urea, the NDA government has made it mandatory for a...

Zero Budget Farming and NFL Photo : India Mart Synthetic Fertilizers enrich soil with nitrogen, phosphorous and potassium; the three primary nutrients necessary for plant growth. Post union budget for FY21, there has been a spate of copy cat versions of media reports that seemed to suggest that Zero budget farming is anti-fertilizer, anti-pesticides, and anti-chemical move; as it emphasizes largely on traditional methods of farming.  However,  the reality is different. It is actually a theory that calls for the attention of the farmers towards using natural farming practices to cultivate crops. Without pesticides, the crop yield would come down drastically. But that is actually not the issue here. We need to look at this from budget speech angle,  when  I believe the FM, Nirmala Sitaraman actually meant of a balanced use of fertilizers because a number of studies have shown that excess use of Urea is not only hindering crop yield but is also a c...

Disinvestment of better run companies The disinvestment department is learnt to have drawn up a list of relatively better performing CPSEs including bluechips like Nalco, NMDC, NTPC, and Coal India to go for offer for sale. The blue chip PSUs like National Aluminium Co Ltd, Coal India Ltd, NTPC Ltd, NMDC Ltd, NBCC (India) Ltd, Bharat Electronics Ltd,  National Fertilisers Ltd and Hindustan Copper Ltd, are also on the list of probables for OFS where the government's shareholding in these companies is in the range of 52-82%. The market offering will be subject to the nod from the Prime Minister's Office and good market conditions to fetch high value of stake sale, said sources. Photo : Business Standard In the current fiscal, the government had announced there could be strategic disinvestments where the undertaking is still to be retained in government control, to go below 51% to an appropriate level, on a case to case basis.  It has also decided to modify the ...

Abolition of Dividend Distribution Tax We know BHEL (Rs.40) and National Fertilisers Ltd (Rs.25.65) are high dividend paying companies of India Inc. The dividend yield of the shares of NFL at the CMP of Rs.25.65 is 7.22%. Hence, you should buy and pocket the dividend every year, and at the same time see some capital gains on the stock price.  Let us see what Moneycontrol.com wrote on it: Photo : Economic Times Foregoing Rs.25,000 crore, the FM accepted the industry’s ask to remove the tax on distributed dividends and to tax them in the hands of recipients at their applicable rate. To remove the cascading effect, a deduction will be allowed for the dividend received by holding company from its subsidiary.  Reverting to the classical system of taxing dividends will be particularly advantageous to foreign investors as they can claim treaty benefit of lower rate of tax, usually at 10 percent to 15 percent, instead of 20 percent.  Also, they can now claim...

Tit - bits #The key support level for Nifty is placed at 11,999 followed by 11,902. With most of world market trading in the green, the domestic indices are expected to open gap up, tomorrow. On the upside tbe important resistance levels are 12,141 and 12,192. #Yesterday,  the shares of Yes Bank Ltd moved to Rs. 39 70, before closing at Rs.37.60.  However,  there is a disturbing news report which goes as:  Former  Yes Bank  independent director Uttam Prakash Agarwal has demanded appropriate action against the lender's CEO and MD Ravneet Gill for allegedly violating various regulatory norms. I n a letter to RBI Governor Shaktikanta Das, Mr.Agarwal alleged breach of governance, non-compliance, undue influence and control on the majority members of the board by Gill through quid pro quo. The letter dated January 30, 2020, also alleged siphoning off funds through paymet of unreasonable fee of Rs.21.28 crore for raising capital of Rs.1,930 crore i...