Winning Strokes

Benchmark indices settled with modest gains as Government promulgating the ordinance to amend the Insolvency and Bankruptcy Code, 2016 perked up sentiment. The barometer index, the S&P BSE Sensex, advanced 91.16 points or 0.27% to settle at 33,679.24. The Nifty 50 index rose 40.95 points or 0.4% to settle at 10,389.70. Gains in global stocks also underpinned sentiment. The Sensex and the Nifty, both, hit highest closing level in 2-1/2 weeks. IT and power stocks gained.

The market gained for the seventh straight day. The Sensex jumped 918.80 points or 2.8% in seven sessions, from a close of 32,760.44 on 15 November 2017.

The market opened higher and held firm in the positive terrain throughout the session.

The Sensex advanced 91.16 points or 0.27% to settle at 33,679.24, its highest closing level since 6 November 2017. The index gained 150.45 points, or 0.45%, at the day's high of 33,738.53. The index rose 51.90 points, or 0.15%, at the day's low of 33,639.98.

The Nifty 50 index rose 40.95 points or 0.4% to settle at 10,389.70, its highest closing level since 6 November 2017. The index gained 55.75 points, or 0.53%, at the day's high of 10,404.50. The index rose 13.50 points, or 0.13%, at the day's low of 10,362.25.

The S&P BSE Mid-Cap index rose 0.58%. The S&P BSE Small-Cap index advanced 0.45%. Both these indices outperformed the Sensex.

The breadth indicating the health of the market, was positive. On BSE, 1,551 shares rose and 1,225 shares declined. A total of 159 shares were unchanged.

The total turnover on BSE amounted to Rs 4485.71 crore, slightly higher than turnover of Rs 4422.42 crore registered during the previous trading session.

On the macro front, the Government of India promulgated yesterday, 23 November 2017, the ordinance to amend the Insolvency and Bankruptcy Code, 2016. Earlier, the President of India had given his assent to the ordinance to amend the code.

The ordinance aims at putting in place safeguards to prevent unscrupulous, undesirable persons from misusing or vitiating the provisions of the code. The amendments aim to keep-out such persons who have wilfully defaulted, are associated with non-performing assets, or are habitually non-compliant and, therefore, are likely to be a risk to successful resolution of insolvency of a company.

In addition to putting in place restrictions for such persons to participate in the resolution or liquidation process, the amendment also provides such check by specifying that the committee of creditors ensure the viability and feasibility of the resolution plan before approving it. The Insolvency and Bankruptcy Board of India (IBBI) has also been given additional powers.

Meanwhile, the Cabinet Committee on Parliamentary Affairs today, 24 November 2017, recommended that the winter session of Parliament be held from 15 December 2017 to 5 January 2018. The ensuing winter session will have a total of 14 sittings over a duration of 22 days. Three bills are to be taken up in the coming winter session to replace three ordinances namely, the Goods & Services Tax (Compensation to States) Ordinance, 2017 (promulgated on 2 September 17); Insolvency & Bankruptcy Code (Amendment) Ordinance, 2017 and Indian Forest (Amendment) Ordinance, 2017.

Overseas, European stocks edged higher in sluggish post-Thanksgiving trading. Asian stocks gained after volatile trade. Japanese manufacturing activity expanded at the fastest pace in more than three years in November, a preliminary survey showed. The Markit/Nikkei Japan Manufacturing flash Purchasing Managers Index (PMI) rose to 53.8 in November on a seasonally adjusted basis from a final reading of 52.8 in October.

For complete guidance on stock market, you can either join my Premium Service or you can trade through my recommended brokerage house: BMA Wealth Creators Ltd, with a minimum portfolio size of Rs.1 lakh.

A2Z Infrastructure Ltd recommended yesterday reached its 2nd  target of Rs.42, as it made an intraday high of Rs.43.70. Those who are still holding some quantity of the shares, are requested to hold the same, with a SL at Rs.41.

Suzlon Energy Ltd recommended around Rs.13.50-14, today gave a break out on daily charts and is heading towards Rs.17-17.50 mark in the coming days. The company's fundamentals have improved a bit and a spike of crude oil prices is likely to give a forward kick to the shares of Energy Companies. Accumulate the scrip on intraday declines.

Jai Balaji Industries Ltd (Rs.13.80) today closed with slight gain in the NSE as the Steel Minister Chaudhary Birender Singh, assured of all possible support to secondary steel sector, which uses eco-friendly electric furnace to produce the commodity. Regarding, shortage of scrap which is required for making steel through electric furnace route and Duty on import of the commodity, Mr.Singh said that his ministry will take steps to address all issues of the sector which has the potential to create employment for 3 crore people.
Being an Integrated Steel Plant Jai Balaji Industries Ltd has both Blast Furnace and Electric Arc Furnace facilities. Moreover, as an integrated steel manufacturer its operations are sufficiently flexible to enable it to alter its product mix and position in order to minimize adverse effects in its business; in the highly cyclical steel industry. Besides, the government is also pushing investment through sectors like housing and railways, which will help boost demand for steel. 

This week, the NDA government through an amendment to the Insolvency and Bankruptcy Code, essentially barred a majority of the defaulting promoters from buying back their assets. However, if promoters can regularise the account by paying the overdue amount before the resolution process begins, they may be able participate in the bidding process. The steel assets are being bid out at a time when the steel price cycle has turned. While economic growth isn’t at its peak, it is expected to pick up from here.If at this stage in the cycle, a steel asset comes up for bidding, investors will probably not look away. Indeed that appears to be the case. As BloombergQuint has reported, both international and domestic steel firms have expressed interest in the steel assets that are being resolved through insolvency. 

Meanwhile, belying the earlier apprehension, the alloy and SS industry has started looking up. A part of it may be due to a mid-year revision of the availability figures in the official statistics that has made the finished steel availability in this segment to grow by 15.5% in October 2017 itself and by 14.5% during the first 7 months of the current fiscal. As a result, the apparent steel consumption in the country is maintaining its average growth rate of 4.5% in April-October period. Whatever may be the explanation, it looks pretty odd that during the last month, while consumption of non-alloy steel grew by 3.7% only, the alloy and SS consumption went up by a hefty 22.1%.
Raw materials consumed by the Jai Balaji Group includes: coking coal, non-coking coal, iron ore, scrap metal, manganese ore, high manganese slag, quartzite and dolomite among others. Steel Secretary Aruna Sharma recently informed the members of the industry that the duty on nickel has already been removed and the ministry has requested the Revenue Department to remove the duty on ferro-nickel and stainless steel scrap.

The shares of Reliance Communications Ltd today tanked to Rs.13.55, after a sell on rise call was suggested in this blog yesterday. 

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Market Pulse

Today the S&P BSE Mid-Cap index rose 0.33%. The S&P BSE Small-Cap index advanced 0.37%. Both these indices outperformed the Sensex. The Sensex is now trading at  33,689.44 up 101.36  points (+0.30%) and Nifty is now at 10,387.20 up 38.45 points (+0.37%).

The breadth, indicating the overall health of the market, was strong, till writing this report. On BSE, 976 shares rose and 448 shares declined. A total of 50 shares were unchanged.

Reliance Industries gained 0.89% after Reliance Marcellus II, LLC, a subsidiary of Reliance Holding USA, Inc., and Reliance Industries announced the closing of recently announced sale of its interest in certain upstream assets; which were operated by Carrizo Oil & Gas, Inc to BKV Chelsea LLC, an affiliate of Kalnin Ventures.

On the macro front, the Government of India promulgated yesterday, 23 November 2017, the ordinance to amend the Insolvency and Bankruptcy Code, 2016 (the Code). Earlier the President of India had given his assent to the ordinance to amend the code.

The ordinance aims at putting in place safeguards to prevent unscrupulous, undesirable persons from misusing or vitiating the provisions of the code. The amendments aim to keep-out such persons who have wilfully defaulted, are associated with non-performing assets, or are habitually non-compliant and, therefore, are likely to be a risk to successful resolution of insolvency of a company.

In addition to putting in place restrictions for such persons to participate in the resolution or liquidation process, the amendment also provides such check by specifying that the committee of creditors ensure the viability and feasibility of the resolution plan before approving it. The Insolvency and Bankruptcy Board of India (IBBI) has also been given additional powers.

Overseas, Asian stocks were mixed while investors viewed Chinese shares with caution after their big fall the previous day. Japanese manufacturing activity expanded at the fastest pace in more than three years in November, a preliminary survey showed. The Markit/Nikkei Japan Manufacturing flash Purchasing Managers Index (PMI) rose to 53.8 in November on a seasonally adjusted basis from a final reading of 52.8 in October.

US stock markets remained closed yesterday, 23 November 2017 on account of Thanksgiving holiday.

#The 1st target of A2Z Infrastructure Ltd has been reached as the stock touched Rs.41.40, intraday. Those who have not booked intra-day profit yesterday, are suggested to book some profit and keep holding the rest with a SL of Rs.37, for the next target of Rs.42.

#Shilpi Cable Technologies Ltd recommended some days back around Rs..14.45, is up ~2% today and is now trading at around Rs.15. The investors are suggested to accumulate the scrip on all declines.

#BF Utility Ltd (Rs.521.40) which was recommended around Rs.129--130, fell from around Rs.149 yesterday, after profit booking was suggested in the counter. The investors are suggested to hold the stock with a SL of Rs.111.

#TVS Motors (CMP: Rs.740) was recommended to buy on declines at around Rs.731-732 with a target of Rs.746-752. It reached Rs.730.50 intra-day, after recommendation. Hope you have entered the scrip. Yesterday Full Intraday profit at Rs.737.40 was suggested. The stock touched an intraday high of Rs.743.95 today, which is very near the short term target of Rs.746. The investors can hold the scrip with appropriate stop losses, if they are not willing to book profit at the current market price; however raise the SL to Rs.737 today.

For complete guidance on stock market, you can either join my Premium Service or you can trade through my recommended brokerage house: BMA Wealth Creators Ltd, with a minimum portfolio size of Rs.1 lakh.

Today's Calls:

1. Buy Suzlon Energy Ltd at around Rs.13.90 - 14, for targets of Rs.17-17.5, in the short term. U.S. crude hit a two-year high in thin trade on Thursday as the shutdown of a major crude pipeline from Canada and a draw on fuel inventories pointed to a tightening market, despite rising output from U.S. producers. This is likely to give an upward kick to all the energy stocks in the near term.
Suzlon Energy, promoted by Tulsi Tanti, is a fully integrated wind power solutions provider. It provides services such as wind resource mapping, land and infrastructure development, creation of power evacuation facilities, component manufacturing, and wind turbine installation in both domestic and international markets.

Suzlon Energy also undertakes the manufacturing and machining of large forging and casting products through its various subsidiaries.

Suzlon Energy entered a corporate debt restructuring (CDR) exercise in 2013 after defaulting on foreign currency convertible debt (FCCB) repayments in 2012 as overall debt peaked close to Rs12,000 crore. The firm had debt of Rs6,198 crore in FY17.

The company has since then tried to cut debt by monetizing assets. In 2015, Suzlon sold its German subsidiary REpower Systems (now known as Senvion) to US private equity firm Centrebridge for Euro 1 billion (about Rs7,000 crore). The sale was followed by an investment of Rs1,800 crore in Suzlon Energy by Sun Pharmaceutical Industries Ltd chairman Dilip Shanghvi and his family for a 23% stake. According to recent report by credit rating agency Care Ratings, the financial position of Suzlon Energy has improved.

2.  Intraday SELL NIIT Tech at around Rs.662, SL: Rs.668,  T: Rs.655-650.

3. Buy (T+2) Hindustan Petroleum Corporation Ltd at around Rs.429, SL: Rs.418, T: Rs.445.

4. Intraday SHORT NICKEL at around Rs.777, SL above Rs.787, T: Rs.765.

~~ with inputs from Capital Market - Live News

Market Pulse

The Key indices trading with tiny gains in morning trade. The BSE  Sensex is now trading at 33,579.66 up 18.11 points (+0.05%), while the NSE  is now trading at 10,351.75 up 9.45 (+0.09%) points amid mixed Asian cues.

On the macro front, in order to review the Income-tax Act, 1961 (the Act) and to draft a new Direct Tax Law in consonance with economic needs of the country, the Government yesterday, 22 November 2017, has constituted a task force with Arbind Modi, Member (Legislation), CBDT-Convener. Dr. Arvind Subramanian, Chief Economic Adviser (CEA) will be a permanent special invitee in the task force. The terms of reference of the task force is to draft an appropriate Direct Tax Legislation keeping in view; the direct tax system prevalent in various countries, the international best practices, the economic needs of the country and any other matter connected thereto.

Overseas, Asian stocks were mixed. In US, the S&P 500 index and the Dow Jones Industrials Average ended slightly lower yesterday, 22 November 2017, maintaining a soft tone after the Federal Reserve minutes indicated that an interest-rate hike is likely but the pace of future tightening could be more moderate than expected given muted inflation. The Nasdaq Composite Index bucked the broader trend to finish at a record, logging its third gain in a row.

The Fed viewed a “near-term” increase in interest rates as possible but central bank officials also expressed concerns about persistently low inflation, hinting that the bank may dial back its rate increases in 2018. The minutes also showed that several members worried that keeping interest rates too low could create a financial bubble.

US durable-goods orders fell 1.2% in October. Excluding transportation orders increased 0.4%. Initial jobless claims a tool to measure US layoffs, fell by 13,000 to 239,000 in the week ended 18 November. The University of Michigan's latest read on consumer sentiment came in at 98.5, topping expectations.

#Today RCom Ltd touched Rs.14.10, intra-day, which is an excellent opportunity to exit the counter. I still maintain sell on rise strategy on Reliance Communications Ltd, with no visible sign of takeover by the giants in the industry, at least in the short term.

#Today Jai Balaji Industries Ltd touched Rs.14.25. It is now a takeover candidate, after Bhusan Steel Ltd (Rs.74). I am looking for a medium term target of Rs.31-32, as the steel sector gathers momentum.

#B F Utilities Ltd today touched Rs.546,95, intra-day. You can book 75% of profits and hold the rest with a SL of Rs.522. The stock has a strong resistance around Rs.545-553 band.

#SKM Egg Products Ltd today touched Rs.106.45 and is now trading at around Rs.102.40. You can keep holding as long as Rs.96 is not broken on the downside. The egg prices have maintained their uptrend, and this positive effect will be seen in Q3FY18 results.

#Gitanjali Gems Ltd recommended around Rs.66-67, last month today touched Rs.86.45 and is now trading near the days high. You can hold the stock, with a SL of Rs.81, for targets of Rs.87-91. 3rd and 4th targets of Rs.87 & Rs.91 respectively, has been achieved in case of Gitanjali Gems Ltd as it made an Intraday high: of Rs.92.35. Book complete profit and wait for dips  to enter again.

#Yesterday, a buy call was given on Shilpi Cable Technologies Ltd (Rs.14.90) at around Rs.14.45, mentioning that the correction might be over. Today the stock touched Rs.15.15, intra-day. You can still add on declines with short term targets of Rs.17-19.

Today's Calls:

1. Buy GSFC Futures on declines around Rs.142- 142.50, SL below Rs.139.50, T: Rs.146. Book Profit around Rs.144.

2. TATA ELXSI recommended yesterday around Rs.947 has touched Rs.965 -- Book Part Profit.

3. Buy Chennai Petro around Rs.426, SL: Rs.417, T: Rs.441 on T+2 basis.

4. Buy A2Z Infrastructure Ltd at around Rs.37.50-38, for short term targets of Rs.41-42. Book Partial Profits at around Rs.39.50 and hold the rest with a SL of Rs.37.

5. Intraday SHORT COPPER at around Rs.448.80, SL above Rs.451,  T: Rs.445.30 [Risky Call].  Book Partial Profit in Intra-day SELL call on Copper, CMP 447.20. Trailing SL above Rs.448.80.

6. Buy TVS Motors (CMP: Rs.734.55) on declines around Rs.731-732, SL below Rs.723, T: Rs.746-752. It reached Rs.730.50 intra-day, after recommendation. Hope you have entered the scrip. Book Full Intraday profit at Rs.737.40.

7.  BTST/T+1: Buy ZEE Limted at around Rs.564.50, SL: Rs.554, T: Rs.578-584.

-- with inputs from Capital Market - Live News

Market Pulse

Indian market opened higher on firm Asian cues and is still maintaining that trend. Sensex is now trading in the green, though in between the stocks pared gains and slipped into the red. Overseas, Asian shares joined the global rally as strong world growth and rising corporate profits lured hordes of investors into equities. US stock-market indexes ended at records and near session highs yesterday, 21 November 2017, finding support on another round of strong earnings, with technology shares leading the way. The Chicago Fed national activity index rose to 0.65 in October from 0.36 in September. Sales of previously-owned homes jumped to a seasonally adjusted annual pace of 5.48 million in October. Meanwhile, Steel-dependent metal nickel posted early gains on Tuesday in both Shanghai and London markets in step with a stronger showing in Chinese steel futures.Nickel is chiefly used in making stainless steel.
I am of the belief that Moody's rally would continue for some more days, as the NDA government continues with its reform agenda. The the BSE Sensex is now at 33,523.23 up 44.88 points (+0.13%) and NSE is at 10,330.50 up 3.60 points. (+0.03%).

Today's Calls:

• Intra-day: Sell Chennai Petro at around Rs.411.50, SL: Rs.418, T: Rs.402-399.
• Buy Tata Motor Futures at around Rs.432-433, SL below Rs.428, T: Rs.438.
• Buy Cummins at around Rs.855, SL: Rs.846, T: Rs.872-879, on T+1 basis. Book part profit at Rs.867...
• Buy Tata Elsxi at around Rs.946-947, SL: Rs.920, T: Rs.975-985, on T+4 basis.

The stock of SKM Egg Products Ltd (Rs.100.40), which rose from the recommended price of around Rs.78-79 to more than Rs.115 in just 2 days, is currently consolidating. In the last one month, egg prices in the country recorded a huge jump, soaring as much as 40%. Every year, egg prices moves north due to increase in demand, during the winters; however, the rise has been phenomenal.Those who are still holding the shares should put a strict SL at Rs.96. I had asked for profit booking at around Rs.115.

The investors can buy the shares of Jai Balaji Industies Ltd at around Rs.13.50 (BSE) for targets of Rs.29-31, in the medium term. It is now a takeover candidate by established players. Moreover, with June quarter revenue of Rs.538.65 crore, Market Cap of only Rs.130.60 crore and loss trimming down to Rs.38.04 crore against Rs.55.14 in Q2FY17, I feel the stock is a good investment play on the Indian infrastructure sector.

The stock of B F Utilities Ltd, which I recommended on 23 August, 2013 at around Rs.129-130, today touched Rs.527. Congratulations to the long term investors, who are still holding the scrip.

The stock of HDIL, which was recommended few weeks back at around Rs.52-53, is now consolidating above Rs.62, for the next round of upmove. The share recently touched Rs.66, before  correcting a bit. The next targets for the scrip is Rs.72, if it manages to close above Rs.67.50.

Buy the shares of Shilpi Cable Technologies Ltd at around Rs.14.45, for targets of around Rs.17-19. Since some days, the telecom stocks are doing well. The short term correction in the scrip seems to be over.

The scrip of Gammon Infrastructure Ltd, which was recommended around Rs.2.90 is doing well today and is now trading at around Rs.3.15. Gammon Infrastructure is a subsidiary of the infrastructure major Gammon India Ltd (Rs.6.87). If you are not comfortable with Gammon Infrastructure Ltd, then you can opt for the the shares of parent company, Gammon India Ltd -- Buy on market dips.

Crude Oil prices rose on Wednesday as ongoing cuts of piped Canadian crude to the United States added to falling U.S. crude inventories, while expectations of a prolonged OPEC-led production cut also offered support. Those who have invested in the shares of shares of Aban Offshore Ltd at around Rs.191 (CMP: Rs.202), can keep holding  for short term targets of Rs.207-209. SL: Rs.96.

Gitanjali Gems Ltd (Rs.80.50) recently recommended around Rs.67, today touched Rs.84.55. Those who are still holding the scrip can book 80% profit and hold the rest with a SL of Rs.78, for the next logical target of Rs.87. Gitanjali Gems Ltd was recommended many times earlier too, below Rs.50. You can search my blog, for previous recommended prices of Gitanjali Gems Ltd.

You can buy the shares of J P Associates Ltd at around Rs.19, for short term target of Rs.21. If it manages to close above Rs.22, in the next couple of days, then we can look for target of Rs.25-26.

Pre-Session: Indices may advance on firm Asian cues

22-Nov-17: Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could gain 30.85 points at the opening bell on firm Asian stocks.

Overseas, Asian stocks gained on record close for US stocks overnight. US stock-market indexes ended at records and near session highs yesterday, 21 November 2017, finding support on another round of strong earnings, with technology shares leading the way. The Chicago Fed national activity index rose to 0.65 in October from 0.36 in September. Sales of previously-owned homes jumped to a seasonally adjusted annual pace of 5.48 million in October.

Among corporate news back home, Bank of Baroda announced that the finance committee of the board approved the proposal of raising additional equity capital aggregating upto Rs 6000 crore by way of rights issue or qualified institutions placements (QIP), subject to applicable statutory/regulatory approvals. The announcement was made after market hours yesterday, 21 November 2017.

Key benchmark indices settled with modest gains yesterday, 21 November 2017, as firmness in global stocks underpinned sentiment. The Sensex advanced 118.45 points or 0.36% to settle at 33,478.35, its highest closing level since 6 November 2017. Stocks had gained for the fourth straight day.

Foreign portfolio investors (FPIs) sold shares worth a net Rs 727.01 crore yesterday, 21 November 2017, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 825.50 crore yesterday, 21 November 2017, as per provisional data.

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Opportunity for Investors

Photo: Audacity Capital

There is an opportunity for those investors, who want to get a fixed monthly on their investments, away from the hustle and bustle of share market. The schemes, which are from a more than 30 year old company, are as follows:

(i) Invest Rs.5 lakhs and get Rs.49,000 per month for the next 12 months, through EMIs. That is you get Rs.(12*49,000) = Rs.5,88,000 in total, on your investment of Rs.5 lakhs; in 12 months.

(ii) Invest Rs.5 lakhs and get Rs.10,000 per month as Interest (2% per month or 24% in a year) on your investment, for the next 12 months. You will get 12 PDCs of 1 year & Promissory Note  on your investment of Rs.5 lakhs. In this case you are getting Rs.(5+1.2) lakhs = Rs.6.2 lakhs in 12 months.

This offer is initially available only for the first 200 individuals and is open till 31st December, 2017.

For more on this, please contact  me at: 

#suman2005s@rediffmail.com or 

#sumanm2007s@gmail.com on behalf of:

Mr.J Dcrus

Financial Consultant,

New Delhi, India.

Jai Balaji Industries: Some Illuminating Facts

According to the Annual Report of FY17

Jai Balaji Group presently generates Power for captive use in three locations, viz Raniganj and Durgapur in West Bengal and Durg in Chhattisgarh, with an installed Power generation capacity of 101.10 MW. It produced 319.69  MU in FY17.

According to the annul report of FY17 , the Company has three wholly owned subsidiaries namely Nilachal Iron & Power Limited, Jai Balaji Steels (Purulia) Limited & Jai Balaji Energy (Purulia) Limited.

Regarding Join Ventures, Jai Balaji Industries Ltd (Rs.13.90) writes in its 2016-17, Annual Report: 

Your Company continues to have two joint venture (JV) companies namely, Andal East Coal Company Private Limited and Rohne Coal Company Private Limited.

#Andal East Coal Company Private Limited:

‘Andal East Coal Company Private Limited’ was formed in 2009-10, in which your Company along with Bhushan Steel Limited and Rashmi Cement Limited are venture partners. The said Joint Venture Company was formed in terms of allocation of Andal Non-Coking Coal Block in the State of West Bengal by Ministry of Coal, Government of India.

#Rohne Coal Company Private Limited:

‘Rohne Coal Company Private Limited’ was formed in 2008-09, in which your Company along with

JSW Steel Limited & Bhushan Power & Steel Limited are venture partners. The said Joint Venture Company was formed in terms of allocation of Rohne-Coking Coal Block in the State of Jharkhand by Ministry of Coal, Government of India.

None of the Companies have become or ceased to be the Subsidiaries, Joint Ventures and Associate Company during the year under review.

Now, at the CMP of Rs.13.90, the MARKET CAP of the Jai Balaji Industries Ld is only around Rs.133.01 Cr, against June 2017 quarter revenue of Rs.538.65 Cr and FY17 revenue of Rs.1,584.70 Cr. 

The cost of making a 1 MT capacity steel plant is around Rs.5500 - 6000 crore. This is a ready made steel plant, available for buyers, away from the initial hassles of all forms (Red - tapeism like licence, environmental clearances, etc).

I reiterate, at the CMP of Rs.13.90, Face Value of Rs.10 and with a debt of around Rs.2768 Cr, the market cap of the company stands at only Rs.133.01 Cr,  

In comparison to this Bhushan Steel’s (which was recently recommended as a buy in front of TV cameras, by a Bombay based operator) total debt stood at around Rs.42,355 crore as of 31 March. At the CMP of Rs.70.25, Bhusan Steel Ltd, has a Market Cap of Rs.1,593.53 Cr and Face Value Rs.2; which means at Rs.10, FV, its share price is Rs.351.

Moreover, the lagging indicators like EMAs more or less  confirm the uptrend in the stock of Jai Balaji Industries Ltd. The share of Jai Balaji  Industries Ltd, one of the largest steel producers in Eastern India, managed to close above its 21D, 50D, and 100D EMAs.  MACD and short term oscillators are also in BUY mode. 

Conclusion: When the Sensex is at 33,478.35 and the future prospects of the Indian Steel sector looks bright (especially with "Make in India" campaign), I don't think there is much risk associated in buying the shares of Jai Balaji Industries Ltd at Rs.13.90; for short term targets of around Rs.21-22 and medium term targets of around Rs.29-31.

Market Pulse

1. Bank NIFTY FUTURES recommended yesterday to  BUY around 25830: Book Profit at 25926. 

2. Golden Cross is in the offing in the shares of Jai Balaji Industries Ltd (Rs.13.65) - next target is Rs.17. Rise in input costs and an improvement in demand, especially from segments like housing, railways and automobiles, led to the firming up of steel prices in the past few months. Moody's Investor Services expects China's steel production capacity to continue to decline. Environmental protection measures in China have forced the closure of inefficient mills and prompted consolidation in the industry, leading to a decline in Chinese exports. This has supported regional steel prices which have firmed up subsequently.
In another significant development, earlier this month, Business Standard reported that JSW Steel was in discussion with Piramal Enterprises for a partnership that could result in a joint bidding for assets currently going through the insolvency process. According to the contours of the arrangement, Piramal Enterprises would provide the funding and JSW Steel the management to the assets once they come up for bidding, the report added. Assets that JSW Steel is jointly evaluating with investors includes Bhushan Steel Ltd, which is currently under bankruptcy proceedings.
The National Steel Policy 2017 aims to increase domestic production of steel to 300 million tonnes by 2030. Given the thrust on increasing domestic steel production and estimates of a rise in demand, National Company Law Tribunal (NCLT)-listed firms are attractive purchases at this juncture where setting up greenfield capacities could mean unending approvals. The NCLT has begun processing cases involving other steel companies like Bhushan Steel and Electrosteel Steels. The three steel companies have a total installed capacity of 18.11 million tonnes. With a debt of around Rs.2,678 crore, Jai Balaji Industries Ltd, is also a potential takeover candidate. Meanwhile, the Ministry of Steel has urged Indian Railways not to violate the "Make in India" policy that requires all infrastructure projects worth more than Rs.500 million to use locally-made steel.

3. Intraday SELL Tata Elxsi Ltd at around Rs.940, SL: Rs.947,  T: Rs.929. Book PART PROFIT around Rs.933.50.

4.  NIFTY Futures recommended yesterday at around 10310: Gradually Book PROFIT at 10360.

5.  SELL Ambuja Cement Futures at around Rs.267, SL above Rs.270, T: Rs.262..

6. The derivative contracts (FUTURE & OPTION..BOTH) for DHFL, DLF, HDIL, ICIL, INFIBEAM, JETAIRWAYS, JPASSOCIAT, JSWENERGY, KSCL, RCOM, RELCAPITAL, JUSTDIAL, TV18BRDCST, have crossed 95% of the market-wide position limit and are currently in the ban period.

7. SKM Egg Products Ltd book profit at around Rs.115 (Intraday high Rs.115.90). The stock which was recommended yesterday at around Rs.77-78, has given around 35% return in just two days, as egg prices sky rocketed in the Indian markets.

8. Buy Titan at around Rs.803-404, SL: Rs.790, T: Rs.823 on T+2 basis.

9. Bajaj Auto Futures recommended yesterday at around Rs.3255-3260: Traders may exit with minor profit at Rs.3267.

10. Gitanjali Gems Ltd recommended at around Rs.67, today made an intraday high of Rs.76.30 and is near the 2nd target of Rs.77. The traders can book some profits and hold the rest with a SL of Rs.72.
2nd target achieved in Gitanjali Gems Ltd as the stock made an intra-day high of Rs.77.40.

11.  Buy Wockhardt Pharma at around Rs.742, SL: Rs.725, T: Rs. 765-774 on  T+2 basis. 

Pre-Session: Market may extend recent gains on firm Asia

21-Nov-17:  Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could gain 29 points at the opening bell on firm Asian stocks.

Overseas, Asian stocks gained as investors took heart from further evidence of strength in the global economy. US stock market closed higher yesterday, 20 November 2017, as investors continued to focus on corporate earnings and prospects for tax cuts. The leading economic index surged 1.2% in October and suggested no letup in a steadily growing US economy with the end of the year fast approaching.

Back home, key benchmark indices settled with tiny gains after a range-bound and lackluster session of trade yesterday, 20 November 2017, amid mostly lower global stocks. The Sensex rose 17.10 points or 0.05% to settle at 33,359.90, its highest closing level since 6 November 2017. Indices extended gains for third straight day.

Foreign portfolio investors (FPIs) sold shares worth a net Rs 358.74 crore yesterday, 20 November 2017, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 613 crore yesterday, 20 November 2017, as per provisional data.

Among corporate news, shares of NBCC (India) and Simplex Infrastructures will be in focus. NBCC (India) said it has awarded the contract for construction of various buildings for IIT Bhubaneswar at Bhubaneswar and its extended campus to Simplex Infrastructures, Kolkata for about Rs 524.12 crore with completion period of 15 months. NBCC will get project management consultancy fee on the same. The announcement was made after market hours yesterday, 20 November 2017.

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Today's Calls

1. Buy Nifty Futures on declines around 10290, SL: 10255,  T: 10332.....Book PARTIAL PROFIT around 10320. Book PARTIAL PROFIT around 10333. Target Achieved!!  

2. Intraday SELL Ambuja Cement at around Rs.268-268.50, SL: Rs.272, T: Rs.265-264. Book PARTIAL PROFIT at around Rs.265.80. 2nd target almost achieved at Rs.264.

3. Buy SKM Egg Products Ltd at around Rs.77--78, for short term target of Rs.87-91. Started in 1995 in collaboration with Belovo- Belgium, SKM produces Whole Egg powder, Egg Yolk powder, Egg Albumen (Egg White) powder and liquid eggs. Its customers are mainly Bakeries and FCMG companies. SKM combined the technical know-how obtained from Belovo with its own three decade long experience in the poultry industry to build the SKM brand. SKM products are exported to Europe, Japan, Middle East, Russia, Africa and Southeast Asia. SKM has sales offices in Netherlands, Japan and Russia. 

Only 3 (three) players exist in India, who are into this business with high entry barrier ie; SKM, Venky’s and Ovobel. The stock has hit the 20% upper circuits at Rs.97.80 in the NSE.

4. Moody's Investors Service has withdrawn debt-laden Reliance Communications Ltd's corporate family rating, citing a missed scheduled payment related to the company s dollar bond. "Moody's has today withdrawn Reliance Communications' (RCom) Ca corporate family rating (CFR) and its negative outlook. At the same time, Moody's has also withdrawn the Ca rating on RCom's senior secured notes," a Moody's statement said. I have asking all to stay away from this scrip since Rs.17-21. I feel after this downgrade the scrip of RCom Ltd (Rs.11.65) can go below Rs.9; unless some companies come and takes stake in it.

5. Net Loss of Mandhana Industries came as Rs.118.90 crore in the quarter ended September 2017 as against net loss of Rs.193.93 crore during the previous quarter ended September 2016. Long term investors can buy the shares of the company at around Rs.7.45, for targets of Rs.11-14.

6. Shilpi Cable Technologies Ltd could hit the upper circuits today. Today morning, it came out of the Upper Circuits and is now trading around Rs.15.45. Don't sell in a hurry.

7. Medium term investors can buy the shares of Jai Balaji Industries Ltd at around Rs.13.30, for targets of Rs.21-22. The company is making lot of efforts to come out of the debt. Meanwhile, the steel ministry has notified that preference will be given to locally made steel for procurement by the government and public sector undertakings. Rise in input costs and an improvement in demand, especially from segments like housing, railways and automobiles, led to the firming up of steel prices in the past few months. Moody's Investor Servies expects China's steel production capacity to continue to decline. Environmental protection measures in China have forced the closure of inefficient mills and prompted consolidation in the industry, leading to a decline in Chinese exports. This has supported regional steel prices which have firmed up subsequently.

8. Aggressive Traders can BUY Bajaj  Auto- FUT at around Rs.3255-3260, SL: Rs.3230, T: Rs.3292.

9. Intraday BUY ZINC around Rs.207,  SL below Rs.206.30,  T: Rs.208.  Book PROFIT in ZINC at CMP 207.75.

10. Intraday BUY NATURAL GAS at around Rs.198, SL below Rs.196, T: Rs.201.50.

11. Buy Bank Nifty  FUTURES on declines at around 25830, SL below 25760, T: 25950.

Indices may edge lower on weak Asia

20-Nov-17: Key indices may edge lower in early trade tracking weakness in Asian stocks. Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could fall 7.50 points at the opening bell.

Overseas, most Asian stocks declined pressured by a retreat on Wall Street on Friday, 17 November 2017, amid tax reform uncertainty. Japan's export growth held steady in October. Ministry of Finance (MOF) data showed that exports rose 14% year-on-year in October.

US stocks finished the week on Friday, 17 November 2017 on a subdued note, as worries over US tax reform and a delay of the promises cut in corporate taxation, weighed on investors' minds.The US House of Representatives passed their version of a tax overhaul bill that would cut corporate taxes last week, but the Senate continued to wrangle over its rival tax bill, with investors uncertain about whether Congress will be able to reach a compromise.

Among corporate news back home, engineering and construction major Larsen & Toubro (L&T) will be watched after winning an order. The heavy civil infrastructure business vertical of L&T Construction bagged a major order worth Rs 8650 crore from Mumbai Metropolitan Region Development Authority (MMRDA) for the construction of Mumbai Trans Harbour Link (MTHL), packages 01 and 03. The project involves construction of a 21.80 Km bridge connecting Mumbai mainland with Navi Mumbai. The project has been bagged against stiff competition from renowned international and domestic companies. The announcement was made on Saturday, 18 November 2017.

IndusInd Bank and Yes Bank will be included in the S&P BSE Sensex, while Cipla and Lupin will be excluded from the benchmark index. The changes are effective at the open of Monday, 18 December 2017.

IT major Infosys said its Rs 13000 crore buyback offer will open on 30 November 2017 and end on 14 December 2017. The offer will see the company buying back over 11.30 crore shares at Rs 1150 each. The announcement was made after market hours on Friday, 17 November 2017.

IT major Wipro said its Rs 11000 crore buyback offer will open on 29 November 2017 and end on 13 December 2017. The offer will see the company buying back over 34.37 crore shares at Rs 320 each. The announcement was made after market hours on Friday, 17 November 2017.

Meanwhile, the stock market registered modest gains, extending previous session's gains on Friday, 17 November 2017, after rating agency Moody's Investors Service upgraded sovereign rating of India a notch above investment grade after a long gap of 14 years. The Sensex advanced 235.98 points or 0.71% to settle at 33,342.80, its highest closing level since 7 November 2017.

Foreign portfolio investors (FPIs) bought shares worth a net Rs 1276.62 crore on Friday, 17 November 2017, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) also bought shares worth a net Rs 1466.94 crore on Friday, 17 November 2017, as per provisional data.

Oil rebounded more than 2% on Friday after falling for five straight session as a major US crude pipeline was shut and traders anticipated an OPEC deal to extend curbs on production.

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Opportunity for Investors

Photo: Audacity Capital

There is an opportunity for those investors, who want to get a fixed monthly on their investments, away from the hustle and bustle of share market. The schemes, which are from a more than 30 year old company, are as follows:

(i) Invest Rs.5 lakhs and get Rs.49,000 per month for the next 12 months, through EMIs. That is you get Rs.(12*49,000) = Rs.5,88,000 in total, on your investment of Rs.5 lakhs; in 12 months.

(ii) Invest Rs.5 lakhs and get Rs.10,000 per month as Interest (2% per month or 24% in a year) on your investment, for the next 12 months. You will get 12 PDCs of 1 year & Promissory Note  on your investment of Rs.5 lakhs. In this case you are getting Rs.(5+1.2) lakhs = Rs.6.2 lakhs in 12 months.

This offer is initially available only for the first 200 individuals and is open till 31st December, 2017.

For more on this, please contact  me at: 

#suman2005s@rediffmail.com or 

#sumanm2007s@gmail.com on behalf of:

Mr.J Dcrus

Financial Consultant,

New Delhi, India.

Today's Calls

1. Buy Gammon Infrastructure Ltd at around Rs.2.95, for a target of Rs.5.
2. Intra-day SELL Rajesh Exports Ltd at around Rs.755, SL: Rs.763, T: Rs.746-741

Jai Balaji Industries Ltd: Buy

CMP: Rs.13

Market Cap: Rs.126.27 crore

Jai Balaji Industries Ltd, the flagship company of Jai Balaji Group is one of the largest steel producers in the private sector in Eastern India. The company is an integrated steel manufacturer. Their products includes sponge iron, pig iron, reinforcement steel TMT bars, alloy and mild steel ingots & wire rod and carbon, alloy & mild steel heavy rounds. They are having five manufacturing facilities located at Durgapur and Raniganj in West Bengal and Durg in Chhattisgarh.

The company also manufactures Thermex TMT Bars, under the brand name Balaji Shakti, which is a respected name among civil contractors and real estate developers for quality steel. In addition, they have supplied steel to various projects of National importance undertaken by National Hydro-Electric Power Corporation Ltd., National Highway Authorities of India, etc.

Jai Balaji Industries Ltd was incorporated in the year 1999 as Jai Balaji Sponge Ltd. The company set up their first Mini DRI Plant in West Bengal. In the year 2000, they established their first sponge iron plant with the initial capacity of 50 tonnes per day. 

In September 2005, the company commissioned a power plant with installed capacity of 12 MW per annum and a ferro alloy plant with installed capacity of 30,000 MT per annum at Ranigunj in West Bengal.

During the year 2006-07, the company increased the capacity of steel bars/rods by 180,000 tonne per annum and billet/MS ingots by 58,806 tonne per annum. 

In addition, they commissioned a 40 MW captive power plant during the year. Shri Ramrupai Balaji Steels Ltd amalgamated with the company with effect from April 1, 2006, which had a sponge iron plant with the capacity 120,000 tonne per annum, blast furnace with the capacity 80,500 tonne per annum, steel bars/rods with the capacity 80,000 tonne per annum and billet/MS ingots with the capacity 176,418 tonne per annum.

In March 2007, the company commissioned the blast furnace with the installed capacity of 28,750 MT per annum to produce pig iron. They changed the name of the company from Jai Balaji Sponge Ltd to Jai Balaji Industries Ltd with effect from June 22, 2007.

During the year 2007-08, the company acquired the steel division of HEG Ltd in Chhattisgarh having a sponge iron plant with the capacity of 120,000 MT per annum, steel-melting shop with the capacity of 100,000 MT per annum and a 12.8 MW captive power plant.

In October 2007, the company acquired 100% shareholding of Nilachal Iron & Power Ltd in Jharkhand having a sponge iron plant with the capacity of 100,000 MT per annum.

In September 15, 2008, the sinter plant at Durgapur with the installed capacity of 6.08 lakh MTPA commenced its production and in March 18, 2008, the electric arc furnace plant at Durgapur with the installed capacity of 4.33 lakh MTPA commenced its production. 

The company commissioned ferro alloy plant with a capacity of 0.25 lakh MTPA and started trial production with effect June 02, 2009.

Source: India  Infoline

Market likely to see tepid opening

16-Nov-17: Market is likely to see a tepid opening amid mixed global cues. Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could gain 8 points at the opening bell.

Overseas, Asian stocks edged higher, shrugging off the softer lead from Wall Street. US stocks closed lower yesterday, 15 November 2017 as the current bull market showed signs of slowing down. The International Energy Agency (IEA) slashed its outlook for oil demand growth by 100,000 barrels per day for 2017 and 2018.

Closer home, foreign portfolio investors (FPIs) sold shares worth a net Rs 381.42 crore yesterday, 15 November 2017, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 869.09 crore yesterday, 15 November 2017, as per provisional data.

Among corporate news, ONGC will be watched. With reference to media report titled Venezuela likely to go bankrupt in a day, ONGC clarified that its wholly-owned subsidiary, ONGC Videsh (OVL), is implementing the 'San Cristobal Oil Field Project' in Venezuela. Consequent to the agreements signed in November 2016, Petröleos de Venezuela, S.A. (PDVSA) has paid $88 million out of $537 million and the outstanding amount of dividend as of now is about $449 million.

A high level delegation from OVL held meetings with HE Eulogio Del Pino, Minister of Petroleum, Venezuela and Nelson Martinez, President, PdVSA on 9th and 10th November 2017 for compliance with the agreements signed in November 2016. OVL has been assured that PdVSA is committed to these agreements and payments will be made through existing offtaker channels or through new agreements with the Government owned refineries and accordingly the investment in Venezuela will be protected. ONGC issued the clarification after trading hours yesterday, 15 November 2017.

Market dropped for the third straight session yesterday, 15 November 2017 on weak global cues. The Sensex had fallen 181.43 points or 0.55% to settle at 32,760.44, its lowest closing level since 24 October 2017.

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Market Pulse

Weakness continued on the  Indian bourses in early afternoon trade, as both the benchmark indices fell.  On the macro front, data released by the government after market hours yesterday, 14 November 2017 showed that India's trade deficit widened to $14.01 billion in October 2017 as against the deficit of $11.13 billion during October 2016. Exports fell 1.1% in October while imports grew by 7.6%.

Meanwhile, as expected Shilpi Cable Technologies Ltd hit the buyer freeze today at Rs.14.05. Hope you have taken position in the scrip either yesterday or today morning!!

Today's Calls:

1. Buy Nifty Futures around 10175, keeping a SL below 10135; T: 10220.
2. Intraday sell PFC around Rs.122.50, SL: Rs.124.5, T: Rs.119.50.
3. Buy BANK NIFTY FUTURES on declines around 25340, SL below 25270, T: 25450.
    EXIT around 25360.

Videocon Industries Ltd hit another buyer freeze today at Rs.14.80. The stock was trading around Rs.230-240 during the end of 2012. The fall in the price of the stock started from the beginning of 2013.  You can look for short term targets of Rs.18-21.  

RCom Ltd today made a low of Rs.10.70 and is now trading around Rs.11. An exit was prescribed at around Rs.17-21 and the stock could be heading towards Rs.9.

HDIL today made a low of Rs.56.10 and a high of Rs.59.75. Hope you booked complete profit and exited the counter.

J P Associates Ltd made a high of Rs.20.65 today, which is near Rs.21. So, applying my formula you should book complete profits and wait for the dips to enter again.. 

WINNING STROKES

Videocon Industries Ltd hit the buyer freeze today, with reasonably good volumes at Rs.14.15. Recently, there were media reports that Everstone is all set to acquire the Kenstar home appliances brand from the company.  Moreover, one of its subsidiaries, Videocon Telecommunications Ltd (VTL) is falling back on its old skill as electronic hardware maker to climb out of its debt trap. It now wants to manufacture and market surveillance equipment like webcams and is targeting a revenue of Rs.1,050 crore by 2021. The parent company Videocon Industries had invested Rs 7,500 crore in Videocon Telecommunication Ltd (VTL) by the end of FY17. I am expecting few more upper circuits in the coming days.

Jai Balaji Industries Ltd closed at Rs.13.65, up 1.87% in the NSE. The steel sector is all set to do well, due to NDA government's stress on infrastructure projects.

Shilpi Cable Technologies Ltd (Rs.13.40) is in the highly  oversold zone and a bounce is expected very soon. The company is functioning as usual, and perhaps it is the work of the operators. I think the regulators should take note of the same and take effective measures to stop stock manipulation by vested groups.

Today, Gitanjali Gems Ltd (Rs.71.25) reached its first target of Rs.72 (intra-day high Rs.72.90). 3rd and 4th quarters are generally good for the gems and jewelry sector. 

Anil Ambani's flagship telecom venture, RCom Ltd today closed below a key support level at Rs.11.55. I have already  prescribed an exit from the stock at around Rs.17-21, when it rose due to some spot news. I feel it is heading towards Rs.9, in the coming days.

HDIL today closed at Rs.59.55 after moving to Rs.60.80, intra-day. The stock is finding difficulty to closed above Rs.63. The short term traders can book profits and wait for a close above Rs.62.

On the macro front, data released by the NDA government during market hours today, 14 November 2017 showed that the annual rate of inflation, based on monthly wholesale price index (WPI), jumped to 3.59% (provisional) for the month of October 2017 as compared to 2.6% (provisional) for the previous month and 1.27% during the corresponding month of the previous year.

Data released by the government after market hours yesterday, 13 November 2017 showed that India's inflation based on consumer price index (CPI) has accelerated to 3.58% in October 2017, mainly driven by higher prices of food and fuel. In September, the CPI inflation was 3.28%.

Market may rise on positive global cues

7 November, 2017: Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could rise 40 points at the opening bell on positive global cues.

Overseas, most Asian shares were trading higher. US stocks rose moderately Monday, helping the three main stock benchmarks to close at all-time highs. Healthy corporate earnings and merger talks between chip makers Broadcom and Qualcomm kept stocks in positive territory despite unsettling political developments in Saudi Arabia. The S&P 500 index rose 0.13%, the Dow Jones Industrial Average rose 0.04% and the Nasdaq Composite Index advanced 0.33%.

Closer home, foreign portfolio investors (FPIs) bought shares worth a net Rs 576.27 crore yesterday, 6 November 2017, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 263.84 crore yesterday, 6 November 2017, as per provisional data.

On macro front, the government announced on Monday, 6 November 2017, a multi-agency investigation headed by the Central Board of Direct Taxes (CBDT) chairman, after media reports leaked financial documents called the Paradise papers that show alleged offshore dealings of 714 Indian individuals and entities. The government said the multi-agency group would also have representatives from the Enforcement Directorate, the Reserve Bank of India and the Financial Intelligence Unit.

A collective of international journalists obtained the Paradise Papers from Bermuda-based offshore law firm Appleby and Singapore's business consulting company Asiaciti. The Finance Ministry said that the investigation units of the Income Tax Department have been alerted to take note of revelations for immediate appropriate action.

Among corporate news, Just Dial's net profit rose 26.47% to Rs 37.46 crore on 3.97% rise in total income to Rs 214.52 crore in Q2 September 2017 over Q2 September 2016. The announcement was made after market hours yesterday, 6 November 2017.

Bank of Maharashtra reviewed its marginal cost of funds based lending rates (MCLR) with effect from 7 November 2017. The bank's MCLR for overnight loans is 8.1%, the rate for one month is 8.15% and for three months is 8.2%. The MCLR for 6-month loans is 8.55% and for one-year loans the rate is 8.65%, the bank said. The base rate was kept unchanged at 9.6%. The announcement was made after market hours yesterday, 6 November 2017.

A divergent trend was witnessed yesterday, 6 November 2017, as the barometer index, the S&P BSE Sensex, settled with small gains while the Nifty 50 index finished a tad lower. The barometer index, the S&P BSE Sensex, rose 45.63 points or 0.14% to settle at 33,731.19. The Nifty 50 index fell 0.70 points or 0.01% to settle at 10,451.80. The Sensex hit record high on intraday as well as closing basis. Global cues were mixed.

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Winnning Stokes: Think Different

Jai Balaji Industries Ltd today went up by 4.69% in the NSE with good volumes on better prospects of Gray Iron Pipe sector. Japanese trading house Mitsubishi Corp expects coking coal p9rices to fall towards $150 a tonne in the October to March half as Chinese steel mills are set to reduce output over the winter period. Meanwhile, the Steel mills across China, particularly in the country’s biggest steel producing city of Tangshan, were expected to begin cutting production to meet air pollution reduction targets. However, Tangshan has ordered different levels of capacity cuts leading to speculation that the output may not be curtailed as much as expected earlier. After facing headwinds that slowed consumption in recent years, world steel demand growth is beginning to face a cyclical upturn. Consumption demand is expected to pick up on the back of the momentum in global economic growth.
Based on the demand conditions so far this year, the World Steel Association, in its short-range outlook, has forecast that global steel demand will reach 1,622 million tonnes (mt) in 2017 and will improve to 1,648 mt in 2018. In other words, the industry has by and large been able to ride out this year’s political risks, including Fed rate hikes, European elections, rising crude oil prices and Trump-induced market volatility. Admittedly, China is the mover and shaker of the world steel market by virtue of being the largest producer and consumer of the industrial metal. The positive correlation between global economic growth and steel consumption is well-recognised. From less than 3 per cent in 2016, there has been a modest pick-up in global growth to 3.3 per cent this year and a further increase to 3.6 per cent in 2018 is seen. For the world market, at present, risks factors include geopolitical tension (friction between the US and North Korea), protectionist tendencies and China’s debt problem. I am expecting the share price to touch Rs.21-22 in the short term.

Shilpi Cable Technologies Ltd (Rs.18.10) is being hammered by operators, after the company's share got shifted to the BZ category. However, according to my close sources, there is as such no problem in the company - it is functioning in a normal way. I will speak.4 with a highly placed source tomorrow to get full details of the situation. Meanwhile, the company is shifting its Hosur plant to Bhiwadi, Rajasthan for better management and control -- the share is likely to bounce back, after testing the earlier low.

Aban Offshore Ltd (Rs.220) which was recommended around Rs.178 last month, today touched Rs.224.40 on higher crude oil prices. Chennai-based Aban Offshore, the country’s largest offshore drilling service provider to oil companies having a debt of around Rs.14,000 crore on its books, is trying to come out of choppy waters by working closely with bankers to moderate debt cost on the one hand and extend debt repayment tenure on the other. Meanwhile, there were media reports that the company had entered into a contract with Brunei Shell Petroleum Company Sdn Bhd. The objective of the contract is deployment of a jack-up rig Deep Driller 5 (DD5) offshore Brunei Darussalam. The contract is for a firm period of five years, followed by three optional periods of one year each. The deployment is likely to commence during the last quarter of calendar year 2017 or from this quarter. Currently, the 14-day ADX for Aban Offshore Limited (ABAN.NS) is sitting above 50. The 14-day RSI is currently at 73.83, the 7-day stands at 84.61, and the 3-day is sitting at 95.51. Aban Offshore Limited (ABAN.NS) presently has a 14-day Commodity Channel Index (CCI) of 238.13, which means the stock is in the overbought side of the territory. The traders who entered around Rs.178-179 can book some profits and hold the rest with a SL of Rs.212.

HDIL which was recommended around Rs.52,  today  touched Rs.62.45 intra-day before closing at Rs.61.50. A Meeting of Board of Directors of Housing Development & Infrastructure Ltd will be held on Tuesday, November 14, 2017, to consider and approve Unaudited Financial Results of the Company for the Quarter and six-months ended September 30, 2017 for the Financial Year 2016-17 ('Unaudited Financial Results'); and to consider and approve Issue of Warrants on Preferential Basis to Promoter of the Company. Meanwhile, the Money Flow Indicator for Housing Development and Infrastructure Limited has touched above 60.  The traders are suggested to hold the scrip with a SL of Rs.57 for the next set of targets of Rs.69--71.

November Effect: Buy beaten - down Micro-caps

Advances in Behavioural Finance over the last several decades appeared to have shifted the paradigm away from the theory of  Efficient Market Hypothesis as proposed by Fama (1970).

According to this hypothesis, securities are priced efficiently hence, they fully reflect all the relevant information. This implies that, the future path of asset prices in stock markets around the world is merely a series of random numbers, i.e. prices follow the random walk hypothesis. This normative statement came increasingly under fire with the discovery of a series of persistent anomalies that seem to defy rational, logical thinking. 

Anomalies has always been challenge to the dominating efficient market theory which suggest that nobody can outperform in market as the market follows a random walk and is unpredictable. Anomalies, on the other hand, are systematic patterns recognized in the movements of the asset prices, which can be exploited by smart investors to earn profit. Existence of anomalies is an indicator of either market inefficiency or inadequacies in the underlying asset-pricing model. The theory of random walk hypothesis was first postulated by Bachelier (1900).

After all, we are human, and we are not always rational in the way equilibrium models would like us to be…. Financial markets are a real game. They are the arena of fear and greed. Our apprehensions and aspirations are acted out every day in the marketplace…. So, perhaps prices are not always rational and efficiency may be a textbook hoax. (Wood 1995, p. 1).

Numerous researchers have challenged the EMH in the US securities market as well as in many international securities market. There are a large number of anomalies documented by researchers as size effect, calendar effect, low beta firm effect, neglected firm effect, the value effect, and momentum effect etc. However, this essay mainly takes into the account the calendar anomalies, experienced by Indian stock markets.

In the context of financial markets, calendar effects, that contradict the Efficient Market Hypothesis (EMH), have been documented over several years. These calendar effects are trends seen in stock returns, where the returns tend to rise or fall on a particular day or month as compared to the mean. 

They are called anomalies because they cannot be explained by traditional asset pricing models and they violate the weak-form of market efficiency (i.e. asset prices fully reflect all past information). Examples of such patterns include the Month-of-the-year effect, Day-of-the-week effect, Intra-month effect, Turn-of-the-month effect, Holiday effect, Halloween effect, and Daylight savings effect.

 As the name suggests, the month-of-the-year effect is a seasonal phenomenon where exchange traded equities tend to produce abnormal returns during particular months of the year. This effect is sometimes identified as the 'January effect' since most developed countries tend to produce abnormal returns in January. January effect was first introduced by Watchel (1942) and further developed by Rozeff and Kinney (1976). The existence of  a January Effect means that returns for the month of January are statistically significantly greater than those during the remaining months of the year.

The question of efficiency of the Indian stock markets is not a novel undertaking. Sharma and Kennedy (1977) found that the Indian markets obeyed the theory of random walk and concluded that markets were efficient.

Kulkarni (1978) rejected the random walk hypothesis and confirmed the presence of seasonality in monthly prices.

Ignatius (1998) gave evidence for the December Effect. Pandey (2002)confirmed a tax-loss-selling hypothesis in the Indian market explaining the presence of abnormal returns in April only to be contradicted later by various other studies. Chakrabathi and Sen (2007)found evidence of the November Effect at the market level.

The above reflect a somewhat controversial picture of the Indian stock market over the years, maybe

due to statistical misgivings. Or perhaps we could presume the disappearance of these anomalies over

time as in Schwert (2002), on the basis that rational traders exploit the documented anomalous behaviour, hence leading to more efficient markets. In other words, the anomalies are arbitraged away. 

The December Effect was first reported by Ignatius (1998) while studying the Indian market during the period 1979-1990, albeit in a different fashion. Ignatius found that December generated the highest mean returns, and that April and June generated high returns in the Indian stock index.

There are a number of reasons as to why December produces abnormal returns compared to any other

month in the Indian market. A number of festivals fall in the second quarter namely, 'Ganesh Chaturthi', 'Durga Pooja', 'Dussera', 'Kali Pooja', 'Laxmi Pooja' and 'Diwali'. However, of all the festivals, Diwali is the one festival that is celebrated across the country in a significant way. Though the Hindu calendar determines when Diwali is celebrated each year, it usually falls in November (or sometimes at the end of October). The festival is considered to bring with it good luck and is therefore, 'auspicious.' Most people buy new homes, new cars and expensive durables during this period. Also, the festival calls for the old tradition of distributing gifts. Even the poorest people in the country save their meagre earnings all year to celebrate this festival.

Another point to mention here is that all jobs in India pay a 'bonus' to employees in the months of November or December depending on the company. These jobs include government jobs, company jobs, and even domestic or labour intensive jobs. This means that consumers have extra cash in hand during this period.

Due to high cash in hand and the festive season, buying by consumers shoots up in a significant way. As the selling of consumer durables increases, it gives impetus to the industry production after clearing out the backlogs from the previous period. Thus, the entire economy is reinvigorated. By December the markets look interesting again, and investors are bullish about the next period returns, making the stock market the right place to invest in during December.

Another possible interpretation for the December Effect in the Indian market could be found in the optimism of the Indian stock market in the recent years. The significant growth rate in the country has probably increased optimism in anticipation of the Government's announcement of its budget with the expectation of good news that will further accelerate the country's economy. Therefore, the investors tend to indulge themselves in the pre-budget rally. Information leakages about the budget begin in the months of December and January which tend to fuel trading of a speculative nature.

Lastly, the growth of foreign mutual funds in the country also supports the December effect. There has been a significant growth in the foreign mutual funds in India during the last few decades. Foreign Fund Managers are paid a performance bonus before they leave for their Christmas holidays that is evaluated on the basis of their portfolios. Therefore, they tend to aggressively trade in December, 'window dressing' their portfolios before the end of the year. This reduces the chances of redemption and also, makes their portfolios look profitable, helping fund managers cash in on a good performance bonus. 

In case of November-December Effect the mean returns for November and December are significantly greater than those of the other ten months. There is also March-to-May effect in which mean returns for the months March to May are significantly less than those during the other nine months. These are two distinct effects, which are independent of each other.

Published studies  that have examined  calendar  effects in the  Indian  stock market appear to be limited.  Kaur (2004) reports  that  few studies  have examined the  day-of-the-week effect in the Indian stock market, and further notes the absence of studies that examine monthly seasonality in the Indian stock market.  Kaur utilized two Indian stock indexes, the Bombay Stock Exchange (BSE) 30 index and the National Stock Exchange (NSE) S&P CNX Nifty stock index, to examine the day-of-the-week effect and the monthly effect.

Yakob,  Beal  and  Delpachitra  (2005)  examined  seasonal  effects  in  ten  Asian  Pacific  stock  markets, including the Indian stock market, for the period January 2000 to March 2005.  They state that this is a period of stability and is therefore ideal for examining seasonality as it was not influenced by the Asian financial crisis of the late nineties.

Yakob, et al., concluded that the Indian stock market exhibited a month-of-the-year effect  in that statistically significant  negative  returns  were  found  in March and  April  whereas  statistically significant positive returns  were  found  in  May,  November  and  December. Of  these  five  statistically  significant  monthly  returns, November generated the highest positive returns whereas April generated the lowest negative return.

Kaur did not find a January Effect in the Indian stock market, but  did find that March and September  generated substantially lower returns, whereas February and December generated substantial positive returns.  

Calendar effect thus connotes the changes in security prices in stock market following certain trends based on seasonal effects. Such trends or consistent patterns occur at a regular interval or at a specific time in a calendar year. Presence of such anomalies in any stock market is the biggest threat to the concept of market efficiency as these anomalies may enable stock market participants beat the market by observing these patterns. Existence of these anomalies in Bombay Stock Exchange National Stock Exchange is against the principle of market efficiency as it may offer abnormal economic rewards to the investors tracking these anomalies.

I myself have observed a phenomenal rally in the small and micro-cap counters during the mid-November to end December period. Therefore, the investors and traders are suggested to accumulate the stocks of this space, from next week.

Bibliography: 

i) The December Phenomenon: Month-of-year-effect by Anokhi Parikh.

ii) Calendar Effects  In The Indian Stock Market  by Jayen B. Patel, (Email: jpatel@adelphi.edu), Adelphi University.
iii) The thesis entitled “Calendar Anomalies in Indian Stock Market” by Neha Bankoti.

iv) Stock Market Anomalies: A Survey of Calendar Effect in BSE-Sensex by Abhijeet Chandra, IIT Kharagpur, West Bengal.