Hindalco Industries Ltd: Buy

CMP: Rs.83.65

The stock  is showing strong  bullish trends after crossing Rs.79 on the upside. Today the scrip tried to cross the resistance zone of Rs.84.50-84.60.......

Moreover, when Vedanta Ltd, a peer group company,  closed at Rs.103.60, up more than 10%, then Hindalco Industries Ltd (Rs.83.65) shouldn't (or cannot) be far behind. 

A weak rupee will benefit the company. Also, any hike in import duty (from 5-10 per cent) as demanded by the industry should help. 

Long-term positives

Hindalco’s long-term prospects, however, remain strong. Its copper segment, which contributes about 15% of operating profits, faced revenue pressure from falling metal prices. However, thanks to better smelting margins, profits improved Y-o-Y in the June quarter by 8%.

This segment should see consistent growth as refining margins are expected to be robust.

Its Utkal alumina refinery plant — among the low-cost plants globally — is operating at nearly full capacity utilisation.

The Aditya smelter’s utilisation is expected to improve from about 55% levels currently to full capacity by the end of the financial year.

Also, margins should improve in the long term as captive coal output ramps up.

Uptick in aluminium demand from the automotive segment to meet stricter global emission standards should boost revenue and profits for Novelis. The company has debt of about Rs.60,000 crore and it may remain at these levels with the capex cycle nearing an end. The company's net debt to equity is about 1.7 times. 

Therefore, Fresh Positions can be taken in the counter at the CMP of Rs.83.65 (BSE), for short term targets of Rs.93-97. Moreover, those who are already holding the scrip, can remain invested as the near-term negatives seem to be priced in and the company’s long-term prospects remain strong. The book value of the shares of the company is Rs.182.36, which is much lower than the CMP of Rs.83.65.

HINDALCO Industries Ltd: Buy

CMP: Rs.156.30

Goldman Sachs has a buy rating on the stock hoping for it to touch Rs.215 per share in a year. 

Initiating coverage on the stock, Goldman Sachs believes Hindalco will benefit from a change in product mix at Novelis and ramp-up of its domestic Aluminum capacity (by 150 percent to 1.3 metric tonnes currently). 

“While it underperformed Sensex by 25 percent in the past three months due to de-allocation of its Mahan coal block, we think the focus will shift back to growth. If Hindalco were to secure any coal block in the upcoming auctions by 1HCY15E at an attractive price, it could be a potential catalyst,” the brokerage says in a note. However, lower aluminum prices, higher coal costs, delays in capacity ramp-ups may poise risk to the stock. Net profit of the 

Aditya Birla group's flagship company fell 78 percent to Rs 79 crore. The decline was despite a Rs 361 crore forex gain and 36 percent rise in revenue. Revenue of the company rose 35.6 per cent during the quarter to Rs 8,554 crore from Rs 6,304.85 crore a year ago. 

Meanwhile, the Coal Ministry is likely to issue draft rules for e-auction for 74 coal blocks today and these rules will be put up for public consultation as well as stakeholder consultation too. This has also boosted sentiment around the stock as draft rules are expected to provide clarity on compensation for the coal blocks and is being done to be fair to all the parties involved. The draft rules include the point that the assets on coal blocks are to be bilaterally managed by the buyer-seller. The rules further pave way for a cap on tariffs levied and says the revenue maximization is not aimed for regulated sectors like power. 

Courtesy: www.moneycontrol.com

My Very Recently (on Thursday & Friday mornings) recommended picks to the Paid Groups like Reliance Energy Ltd, Hindustan Oil Exploration Ltd, Dena Bank, Indian Bank, etc. did well Yesterday: Most of my earlier recommended picks like Hindustan Dorr Olive, Tips Industries Ltd, Noida Toll Bridge, Kamanwala Housing Construction Ltd, Goldiam International (Quickie Call),Paramount Communications, Southern Ispat (It was recommended at Rs.9 in 2006 with a target of Rs.35 in 18 months--24 months), Ansal Buildwell, MSK Projects, KEW Industries Ltd, BSEL Infrastructure Realty, SPL Industries Ltd, Sree Rayalaseema Alkalies, Pondy Oxides and Chemicals, Walchandnagar Industries, GTL Infrastructure, Stone India (Quickie Call), NCL Industries Ltd, W S Industries Ltd, Pritish Nandy, Gandhi Special Tubes, KRBL Ltd, Gayatri Projects, GMDC Ltd (Quickie Call), Rasoi Ltd, Rohit Ferro Tech, H B Portfolio Ltd, Assam Company etc. did well: Also NEPC India Ltd, Premier Explosives Ltd, BNK Capital Markets Ltd, etc. came out of the sellers freeze, which is encouraging:

Foreign institutional investors (FIIs) were net buyers of Rs 208.48 crore (provisional) on Friday, according to data released by BSE. While FIIs made gross purchases of Rs 4,689.63 crore, gross sales totalled Rs 4,481.15 crore. Domestic institutional investors (DIIs) were net buyers of Rs 248.35 crore on Friday. While DIIs made gross purchases of Rs 1,475.88 crore, gross sales totalled Rs 1,227.53 crore.FIIs were net sellers of Rs 1351.20 crore on Thursday, January 24, according to data released by SEBI on Friday. While FIIs made gross purchases of Rs 5,347.20 crore, gross sales totalled Rs 6,698.40 crore.Mutual funds (MFs) were net buyers of Rs 346.50 crore on Thursday. MFs made purchases of Rs 1,298 crore and sales of Rs 951.50 crore: But what will be the strategy from Monday? How will be the markets on Monday? What are sector one should watch from the next? Is the market on a uptrend or a corrective uptrend? What are the next Target? How long will Sanguine Media rise? What will be the Monday's recommended scrip in this extreme Volatile situation: What is the real story of behind my extreme bullishness in Kohinoor Broadcasting Corporation Ltd, Clutch Auto Ltd, Ennore Coke Ltd or Madhav Marbles & Granites Ltd? These questions will be answered in the Paid (Premium and Quickie) Groups:

Sensex soars 1,140 points in record-breaking rally:

In what has been a dramatic recovery, the market spurted today with the Sensex recording its biggest ever-single day rise in absolute terms on a closing basis. The rebound was solid coming in the backdrop of carnage on the street witnessed earlier in the week. Rally in global markets aided the sharp surge. Stocks across the globe were buoyed today by several factors including strong corporate sentiment in Germany and a return of some confidence in the US economy after solid employment data and a congressional fiscal package. The Bush administration's fiscal package includes $150 billion of tax rebates and business incentives meant to prevent a slowdown in the country's economy. Hindalco, Reliance Energy and ICICI Bank spurted. All the sectoral indices in BSE were in green. Realty stocks surged. Market breadth was strong. However, volumes were low. India's wholesale price index rose 3.83% in the 12 months to 12 January 2008 marginally higher than the previous week's rise of 3.79%, government data showed on Friday, 25 January 2008. The annual inflation rate was 6.15% during the corresponding week of the previous year. Meanwhile, all-India bank strike has prompted stock exchanges, BSE and NSE, to cancel clearing and settlement of trades, scheduled to be held today. Settlement of trades done on Wednesday, 23 January 2008, will be now done on Monday, 28 January 2008. The 30-share BSE Sensex soared 1,139.92 points or 6.62% to 18,361.66, its biggest ever singe day rise in absolute terms on a closing basis. It is also the first-ever, four-digit single day gain for the index. The Sensex had opened with a positive gap of 262.26 points. Continual buying in index pivotals led the index gain 1184.51 points at the day's high of 18,406.25 touched at the fag end of the trading session. The broader CNX S&P Nifty jumped 349.90 points or 6.95% to 5383.35. The BSE Mid-Cap index rose 6.41% to 8,021.12, while the BSE Small-Cap index rose 4.06% to 10,420.90. Both these indices underperformed the Sensex. BSE clocked a turnover of Rs 5199 crore compared to Rs 6,379.33 crore on 24 January 2008. Nifty January 2008 futures were at 5405, at premium of 21.65 points compared with spot closing of 5383.35. The NSE futures & options (F&O) segment turnover was Rs 39,007.70 crore, which was lower than Rs 39,442 crore on Thursday, 24 January 2008. The market breadth, which was weak till the mid-afternoon, turned strong in the last one hour of the trading session. On BSE, 1558 shares advanced as compared to 1164 that declined. 36 remained unchanged. India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) rose 4.78% to Rs 2609.55. Among the Sensex gainers, Hindalco Industries surged 14.01% to Rs 173.35, Reliance Energy soared 11.81% to Rs 2030.25, Larsen & Toubro jumped 9.95% to Rs 3890.40, NTPC spurted 9.11% to Rs 222.25, Bajaj Auto sprout 9.02% to Rs 2300 and Mahindra & Mahindra jumped 7.76% to Rs 674.20. Banking stocks were in demand as sharp cut in US interest rates this week has reportely increased the possibility of a 25 basis points repo rate cut by Reserve Bank of India. The BSE Bankex rose 7.53% to 11,379.77. It outperform the Sensex. India’s largest private sector bank by assets ICICI Bank rose 11.16% to Rs 1259.25. Axis Bank soared 9.20% to Rs 1098.30, Andhra Bank moved up 8.94% to Rs 95.05, Bank of India spurted 8.44% to Rs 395.20, Oriental Bank of Commerce jumped 8.38% to Rs 272.80 and Allahabad Bank gained 7.76% to Rs 119.40. The Indian central bank will unveil quarterly review of its monetary policy on Tuesday, 29 January 2008. The BSE Bankex was up 7.87% at 11,416.03. India’s largest commercial bank State Bank of India rose 2.52% to Rs 2405. The bank on 24 January 2008 reported 69.82% rise in net profit to Rs 1808.64 crore 33.10% increase in operating income to Rs 15364 crore in Q3 December 2007 over Q3 December 2006. The BSE Realty index rose 10.41% to 11,198.06. It outperform the Sensex. Unitech surged 17.79% to Rs 439, Indiabulls Real Estate soared 13.75% to Rs 661.15, Parsvnath Developers spurted 8.95% to Rs 296.50, Omaxe jumped 6.53% to Rs 322 and DLF rose 5.89% to Rs 945.10. The BSE Metal index jumped 9.73% to 15,603.79. It outperform the Sensex. Steel Authority of India surged 15.03% to Rs 230.30, Hindalco Industries soared 14.01% to Rs 173.35, National Aluminum Company (Nalco) jumped 13.75% to Rs 436.40, Tata Steel moved up 6.37% to Rs 714.10 and Sterlite Industries rose 4.87% to Rs 786.75. FMCG stocks lagged behind in today’s rally. The BSE FMCG index rose merely 4.73% to 2,160.03. It underperform the Sensex. Tata Tea soared 10.24% to Rs 793.40, United Breweries spurted 6.82% to Rs 309.25, Hindustan Unilever jumped 6.24% to Rs 199.30, ITC gained 5.15% to Rs 198.20 and Rei Agro moved up 5% to Rs 985.65. Engineering & construction firm GMR Infrastructure soared 19.34% to Rs 194.40. The firm on 24 January 2008 reported 2750.91% surge in net profit to Rs 15.68 crore. Software services firm Patni Computer Systems rose 15.68% to Rs 268.60 after it said its board would consider a share buyback next month. Liquor maker United Spirits jumped 1.70% to Rs 1719.15. The company reportedly plans to acquire three more distilleries as well as enter into third-party contracts with six more as it aims to increase its volumes 33% to 100 million cases between two-three years. The company currently has a total of 67 distilleries, which includes 29 owned, 24 on contract and 14 associates. Offshore logistics provider Sical Logistics was locked at upper limit of 5% at Rs 214.75. The company is reportedly close to acquiring a freight forwarding company. According to reports, three companies are being evaluated for taking over and a talk with one of them is at an advanced stage. While not disclosing the name of this company, reports suggested that the target firm was a 25-year-old freight forwarding company, with a good clientele. Reliance Capital clocked the highest turnover of Rs 255.68 crore on BSE. Reliance Energy (Rs 207.85 crore), Reliance Natural Resources (Rs 199.77 crore), GMR Infrastructure (Rs 179.20 crore) and Reliance Industries (Rs 158.78 crore), were the other turnover toppers on BSE in that order. Ispat Industries reported the highest volume of 1.41 crore shares on BSE. GMR Infrastructure (99.65 lakh shares), Reliance Petroleum (90.56 lakh shares), Indusind Bank (69.90 lakh shares) and NTPC (34.25 lakh shares), were the other volume toppers on BSE inthat order. In Europe, key indices in UK, France and Germany were up by 1.01% to 1.60%. In Asia, key indices in Hong Kong, South Korea, Taiwan, Singapore, and Japan were up by 0.93% to 6.73%. The US stocks finished higher overnight after the Bush administration and lawmakers announced details of an economic stimulus plan aimed at stemming mortgage market losses. Dow closed up 108.44 points or 0.88% at 12,378.61, the Nasdaq climbed 44.51 points or 1.92% to 2,360.92 and the S&P 500 added 13.47 points or 1.01% to 1,352.07. Crude oil prices rose in Asian trade Friday as stock markets around the world firmed, China revealed strong growth and on expectations that OPEC will not increase crude output next week. In Asian deals Thursday, crude was trading at $89.77 a barrel. Light, sweet crude for March delivery jumped $2.42 to settle at $89.41 a barrel on the New York Mercantile Exchange on Thursday. It was a dramatic recovery on the bourses today coming in the backdrop of carnage on the street witnessed earlier in the week. Sensex had plummeted 2,283.76 points in just two days on Monday, 21 January 2008 and Tuesday, 22 January 2008. Market wide circuit filters were applied after an intra-day 10% fall occurred in key benchmark indices in minutes of commencement of trade on Tuesday, 22 January 2008. Margin calls created havoc on the bourses in causing the steep decline in share prices that was initially triggered by a setback in global markets and selling by foreign institutional investors. Credit crisis in the United State and fears of a US recession has hit global markets hard earlier in the week.

Note: The new enrollments to the Premium and Quickie Groups have started from this month. Those who want to enroll should do that before the enrollment closes for a couple of months. The date for the close of fresh enrollments has not been decided but it could be at anytime. For the Paid Services they should send a request at: suman2005s@rediffmail.com / sumanm2007s@gmail.com / suman2007s@sify.com.

Sensex, Nifty in uncharted terrain fuelled by the news of FIIs buying to the tune of Rs 546 crore in index-based futures and to the tune of Rs 19 crore in individual stock futures on 2nd February as Pre-budget Rally continued. I had mentioned about the probable commencement of a Pre-budget rally from the 1st week of February and this is what is happening now: All my recommended picks in the last couple of days hits the respective buyer freezes: Nagpur Power & Industries Ltd, Bhagyanagar India Ltd, Agro Dutch Industries Ltd, NR International Ltd, Premier Explosives Ltd, PSTL(Pyramid Saimira) & Zigma Software Company Ltd, Kiss the circuits levels, as relentless buying continued on good prospects ahead:BSEL Infrastructure Realty Ltd nearly hits the circuits after the Scrip was Recommended by www.5paisa.com for a target over Rs.115. I have placed a target of Rs.200--Rs.250 in the next 6 months time frame: My earlier recommended Media Counters, Balaji Telefims Ltd(Up 10%) & Pritish Nandy Communications (Up 5%) closed with gains: Surprisingly Tata Steel Ltd was not influenced bythe sell off in other metal counters: Sterlite Industries, Hindalco, & Hindalco joins the losers list: Oil falls further: Metal Stocks loses sheen:Dow Jones Industrial Average & tech heavy Nasdaq closed almost flat on one hand on lingering concerns about the economy & on the other, better-than-expected sales from Wal-Mart Stores Inc. and a flurry of acquisition activities:

The markets to remain buoyant in the Next Few Days:

The Sensex and Nifty achieved another milestone buoyed by robust results of India Inc. The Sensex touched 14,500, while the Nifty hit 4,200 for the first time. Telecom shares extended thier gains, as auto shares rose on renewed buying. Metal shares, however, retreated. The rally on the domestic bourses materialised amid a mixed trend in Asian and European shares. The 30-share BSE Sensex gained 112.13 points (0.78%), to settle at a lifetime closing high of 14,515.90. It also struck a lifetime high of 14,526.51, surpassing its earlier all-time high of 14,462.77 from Friday (2 February 2007). The S&P CNX Nifty gained 31.85 points (0.76%), to settle at a lifetime closing high of 4215.35. The Nifty hit an all-time high of 4,219. The market-breadth was strong. For 1,529 shares rising on BSE, 1,135 declined. As many as 60 shares were unchanged. Gainers outpaced losers by a ratio of 1.34:1. The BSE clocked a turnover of Rs 4694 crore, much lower than Friday’s Rs 5630 crore. Barring IT and metal sector indices, the rest of the sectoral indices ended in the green. The BSE Auto index gained 114.73 points (2%), to settle at 5,712.79. The BSE’s Capital Goods index rose 97.16 points (1%), to end at 9,920.97. The BSE Metal index lost 111.55 points (1.1%), to 9,345.74. The BSE IT index shed 5.24 points, to 5,387.05. The BSE Small-Cap gained 94.93 points (1.2%), to 7,655.65. The BSE Mid-Cap index advanced 37.04 points (0.61%), to end at 6,155.24. With yesterday's rise, the Sensex, gained 424.98 points (3%) in the past three trading sessions from 14,090.92 on 31 January 2007. The market sentiment is firm due to US Federal Reserve keeping interest rates steady at its 31 Jan 2007 meeting. Sentiment was also boosted by the RBI, on the same day, raising fiscal 2006-07 GDP growth forecast upwards to 8.5% to 9% from earlier 8%. The barometer index is up 5.2% in calendar 2007 thus far. Market men feel that a pre-budget rally has started. Market men expect the finance ministry to give a big impetus to agriculture and infrastructure in the budget. There are also expectations that a surcharge on corporate tax will be abolished. Auto shares rose on renewed buying. Car major Maruti Udyog rose 2% to Rs 965, while Tata Motors gained 1% to Rs 920. Bajaj Auto rose 1.7% to Rs 2827 and Horo Honda gained 1.2% to Rs 724.90. There are hopes that auto industry may get tax sops in the budget. Expectations are that the excise duty on small cars may be cut further from 16% to 8%. Last week, top automakers reported good vehicle sales numbers for January 2007. Telecom Shares were in great demand. Reliance Communications surged 5% to Rs 515.75. The scrip hit a lifetime high of Rs 518.40. As many as 33.2 lakh shares changed hands in the counter on BSE. Bharti Airtel was up 1% to Rs 779.40, off an all-time high of Rs 797, struck earlier during the day.

Bhagyanagar India Ltd (My morning call) hit the buyer Freeze on real Estate Buzz. The company has ventured into real estate and infrastructure development to unlock the value of its existing land bank of 3 Mn sq ft. The company is also into copper & allied products and telecom cables business. The company owns commercial and office space and earns rental from these properties. The new development projects include integrated residential townships, IT parks, and hardware parks. The present value of the undeveloped land bank and tenanted property of the company is Rs.6,160 mn. The real estate business will be the key driver for the company moving forward. The revenues are expected to increase to Rs. 3,591 mn in FY08 and Rs 5,021 mn in FY09 and net profits to grow at a CAGR of 53.34% to Rs. 936 mn by FY09. The company's share price can reach Rs.75--Rs.80 an upside of more than 50% from the current stock price of Rs50.[ Full Report on the next mail] Mobile service majors continued in Friday's buoyant vein. The Telecom Regulatory Authority of India (TRAI) decided to lower port charges, allowing cellular operators to connect to BSNL and MTNL lines by up to 29%, a move which is expected to result in tariff cuts on Friday. A race for India's fourth-largest mobile firm, Hutchison Essar, is also expected to boost the valuation of telecom stocks. Suitors for Hutch also include Britain's Vodafone. Housing finance major, HDFC, gained 4% to Rs 1818, extending Friday’s surge. The stock also hit an all-time high of Rs 1821.95. The company continues to benefit from a strong demand for housing loans. Reliance Energy rose 2.8% to Rs 549.50, amid reports that the company will bid for the global power assets of a British power investment company, Globeleq, by mid-February. Tata Steel gained 1.7% to Rs 471.05. The stock plunged last week after winning Anglo-Dutch steel maker, Corus Group, in an auction held in London. The Tatas will pay $12.1 billion for Europe's leading steel producer. The price is said to be expensive and may put under strain Tata Steel's finances, at least in the short term. Index heavyweight Reliance Industries (RIL) 1.3% to Rs 1390. In January, the company reported robust Q3 December 2006 results. The State Bank of India (SBI) was up 1.2% to Rs 1196, after the bank's chief said domestic interest rates have peaked for the fiscal year ending March 2007. Metal shares lost, responding to a fall in base metal prices, on the London Metal Exchange (LME) on Friday. Hindustan Zinc lost 5.7% to Rs 653.50, Sterlite Industries shed 6.6% to Rs 485.50 and Hindalco lost nearly 3% to Rs 177.80. Fund-liquidation, triggered by a report of heavy losses at a hedge fund, had caused the fall of metal prices on LME. Media shares were in demand. Shree Ashtavinayak Cine Vision jumped 19.5% to Rs 370.70, UTV Software gained 12% to Rs 321.50, Balaji Telefilms rose 10% to Rs 140.20, Pritish Nandy Communications gained 5% to Rs 55.10, Pyramid Saimira Theatre rose 5% to Rs 421.35, and Adlabs Films gained 4% to Rs 487. Real estate developer Ansal Properties & Infrastructure jumped 5% to Rs 799.60, after it said its board will meet on 12 February 2007 to consider a bonus issue of shares. Oil and gas services company, Deep Industries, dropped 4.4% to Rs 57.50 despite the firm winning two contracts of total worth Rs 26.07 crore. Federal-Mogul Goetze (India) lost 2.6% to Rs 364. The company informed on Monday that ABN Amro Bank N.V. had acquired an additional 2.53%, taking its holding in the company to 5.18%. Eicher Motors rose nearly 3% to Rs 382.65, after the company said on Monday that its sales rose 7% to 2,713 units in January 2007. Domestic sales rose 8% to 2,612 vehicles, while exports fell 14% to 101 units. Gujarat Gas Company lost 1.2% to Rs 1332. The company said on Friday its board will meet on 23 February 2007 to consider a sub-division of equity shares. Global Vectra Helicorp was up nearly 12% to Rs 317. The stock recovered after losing as much as 4.8% to Rs 270 earlier during the day. Volumes in the stock were substantial at 20.2 lakh shares on BSE. Indiabulls Financial Services (IBFSL) jumped 8% to Rs 453.95, after the company said it was considering various restructuring options, including the transfer of its stock-broking business, in favour of a separate company. The new company will then be listed on the stock exchanges. IBFSL has three businesses: stock-broking, consumer finance and housing finance. The real estate venture, Indiabulls Real Estate (IBREL), was demerged in December 2006. Rain Commodities jumped 9% to Rs 183.25, after the company said its US subsidiary will buy the assets of Great Lakes Carbon Income Fund, giving the cement maker an indirect control over GLC Carbon USA. Rain will acquire the fund's wholly-owned Canadian subsidiary, Carbon Canada, which has 73.56% stake in GLC Carbon USA. Rain already owns 20.23% in GLC Carbon, the world's largest producer of anode and industrial grade calcined petroleum coke. ABB rose 1.2% to Rs 3799. The company announced Q4 December 2006 results on 16 February 2007. Jain Irrigation gained 6% to Rs 425, after it said Citigroup Global Markets acquired an additional 13.3 lakh shares on 31 January 2007 from the secondary market, raising its holding in the company to 5.83%. Battery maker Eveready Industries rose 5.4% to Rs 79.25 after prices of zinc, a major raw material for batteries, fell. As per provisional data, FIIs were net buyers to the tune of a huge Rs 947 crore on Friday (2 February 2007), the day when the Sensex gained 137 points, settling at a lifetime closing high of 14,403.77. The Nifty also struck a lifetime high the same day. FIIs were net buyers to the tune of Rs 546 crore in index-based futures on 2 February. They were net buyers to the tune of Rs 19 crore in individual stock futures the same day. Finance Minister P Chidambaram said earlier on Monday that last week's upgrade to investment grade of the country's credit rating by Standard & Poor's will lead to increased foreign investment. "Thanks to the upgrading of our ratings to investment grade, I am confident more investments will come to India," the finance minister told a conference. Last Tuesday, S&P raised India's rating, citing the country's strong economic prospects and external balance sheet. Prime Minister Manmohan Singh said on Saturday that inflation reduction, which spiked over 6% last week, remains a top priority for his government. [With Inputs from the Internet]

More in the following postings including a report on Bhagyanagar Industries Ltd.....

Best wishes,

Suman Mukherjee

India.

www.sumanspeaks.blogspot.com

www.eindiabrokers.com

http://finance.groups.yahoo.com/group/SumanSpeaks/

WINNING STROKES: THINK DIFFERENT:

Glory Polyfilms Ltd recommended to the Paid Groups at Rs.3.22-3.30, hit the buyer freeze as it closed at Rs.3.97 today. The stock was recommended repeatedly in this blog for the benefits of all. 

Raymonds Ltd recommended to the Paid Groups around Rs.378 last week touched Rs.390.60 today, as it closed around Rs.384. The stock could again be purchased for a target of Rs.460, SL--Rs.348.

The morning call on Allied Digital Services Ltd to the Paid Groups, today, saw it hit the buyer freeze in the mid-afternoon trade. I  have been asking all to buy the scrip and keep holding as like Glory Polyfilms Ltd it is a sure shot counter to make quick money. 

Indian stock markets largely demonstrated choppy mood on the first trading session of a new week as investors remained on sidelines ahead of the WPI inflation data for May scheduled to be announced on Tuesday. Even as the benchmarks failed to negotiate a close in the green for the fourth straight session, they still managed to pare almost all the intraday losses, incurred in the early part of the session tracking weak global markets. Investors are keenly awaiting the monthly inflation figures and a reading that is a level higher than April's figure will compel Indian policy makers to hike interest rates for the 10th time in just 16 months, despite the pace of economic activity showing signs of easing. Expectations are rife that the RBI will take a calibrated approach and hike rates by 25 bps at its mid-quarter monetary policy meeting on Thursday. While apprehensions over the cooling global economic recovery too pummeled local sentiments as the storm of fiscal woe in the US, a slowdown in China, European debt restructuring and stagnation in Japan combined together, providing enough evidence of an economic slowdown in the major economies across the globe. Stock markets in Asia yet again failed to show any kind of fervor and settled on a somber note while the European counterparts are exhibiting mixed trends after getting off to a flat start. The spurt in international crude oil prices in the recent past also pulverized domestic sentiments by augmenting rate hike fears. The only positive for the local bourses was that the finance ministry has agreed to extend the Duty Entitlement Pass Book (DEPB) scheme beyond the June 30 deadline on the condition that this would be the last extension and a new scheme would replace DEPB scheme by that period. In another development, the CAG's first ever audit of oil companies has once again embarrassed the Congress-led UPA government as it opined that the government favored private oil explorers including the Mukesh Ambani-led firm and allowed it to violate terms of contract for exploration in the Krishna-Godavari basin.

The NSE's 50-share broadly followed index Nifty, was little changed and remained below the crucial 5,500 support level while Bombay Stock Exchange's Sensitive Index, Sensex took a single digit cut and closed above the psychological 18,250 mark. The broader markets, which remained weak in early trade showed some resilience and recuperated all the losses to end with moderate gains. The midcap index ended with 0.28% gains while the smallcap index rose by 0.30% point. On the sectoral front, it was the Metal counter which languished at the bottom of the table with 1% as majors like Hindalco and Bhushan Steel plunged by 2.22% and 3.27% respectively. While Oil and Gas sector too settled weak since Index heavyweight Reliance Industries got clobbered out of shape in the session after oil regulator Directorate General of Hydrocarbons refused to accredit three natural gas discoveries made by the company at its KG-D 6 block. On the other hand, Consumer Durables pocket remained the top gainer in the BSE sectoral space for the second straight session after majors like Gitanjali Gems and Titan zoomed by 1.81% and 2.26% respectively. The markets receded on lower volumes of over Rs 0.93 lakh crore while the turnover for NSE F&O segment also remained on the lower side compared to Friday at over 0.82 lakh crore. Market breadth remained positive as there were 1438 shares on the gaining side against 1379 shares on the losing side while 122 shares remained unchanged.

Finally, the BSE Sensex declined by 2.51points or 0.01% to settle at 18,266.03 while the S&P CNX Nifty lost 3.00 points or 0.05% to settle at 5,482.80.

The BSE Sensex touched a high and a low of 18,313.21 and 18,120.76, respectively. The BSE Mid cap and Small cap index were up by 0.28% and 0.30% respectively. The only gainers on the Sensex were Jaiprakash Associates up 3.18%, NTPC up 2.27%, Cipla up 2.05%, Reliance Communication up 1.78% and Bajaj Auto up 1.25%.

On the flip side, Hindalco Industries down 2.22%, RIL down 1.84%, Tata Steel down 1.12%, TCS down 1.10% and SBI down 1.02% were the top losers on the index.

Meanwhile, the indirect tax collection registered a healthy growth in the first two month of the present financial year and if the trend continues it will help government to meet the fiscal deficit target of 4.6% of the GDP, for the current financial year. The development also shows that the Reserve Bank of India's tight monetary policy is not impeding the industrial growth much.

The excise duty collection increased by 38.4% to Rs 11,586 crore, revenue from Customs jumped 37% to Rs 25,176 crore and service tax increased by 27.6% in April-May at Rs 7,722 crore. The rise of 38.4% in excise duty collection shows strong growth of factory production. The excise duty is taxed on production of goods at a median rate of 10%.  Growth in custom duty too remained in line with the increase in Import, which registered a 33% growth in first two months.

S D Majumder, chairman, Central Board of Excise and Customs (CBEC) said, 'Indirect taxes collections have been robust in the first two months of the current fiscal, but there could have been some spillover in excise in April from the previous fiscal'.

Earlier, government had raised it concerns over meeting the revenue target because of slow economic expansion. According to latest figures, Indian economy's expansion is falling, due to elevated inflation and interest rate. Industrial output saw a seven month low growth, whereas car sale for month of May where two year low. An increased international crude oil price is viewed as the main reason for the revenue concerns and almost 50% rise in crude oil price from last June had made government to reconsider its revenue targets.

The major gainers on the BSE sectoral space were Consumer Durables (CD) up 1.39%, Power up 0.74%, Capital Goods (CG) up 0.71%, Health Care (HC) up 0.32% and Auto up 0.21%.

The major losers in the BSE sectoral space were Metal down 0.99%, Oil & Gas down 0.74%, Realty down 0.30%, FMCG down 0.23% and IT down 0.02%.

The S&P CNX Nifty touched high and low of 5,496.70 and 5,436.95, respectively.

The top gainers of the Nifty were JP Associate up 3.68%, Cipla up 2.27%, NTPC up 2.13%, Sun Pharma up 1.97% and BPCL up 1.86%.

On the flip side, Hindalco down 2.38%, Reliance down 2.11%, Sesa Goa down 2.02%, Dr Reddy down 1.73% and Tata Steel down 1.15% were the major losers on the index.

European markets were trading mixed. France's CAC 40 gained by 0.27%, Britain's FTSE 100 plunged 1.21% and Germany's DAX was up by 0.03%.

Asian equity indices finished the day's trade mostly in the negative terrain on Monday as investors remained worried over recoveries in the world's major economies are sputtering while, the US markets also witnessed a sharp decline on Friday and the Dow slipped below 12000 mark too weighed on sentiments in the region. Chinese Shanghai Composite edged lower in the trade as investors remained cautious over further monetary policy tightening ahead of Tuesday's inflation data. Japanese Nikkei dropped more than half a percent after the government reported that core machinery orders fell unexpectedly in April by 3.3 percent from the previous month. The drop came as companies canceled orders amid fears of a slowdown following a devastating March 11 earthquake and tsunami in northeastern Japan that threw scores of factories offline.

Global jitters it is! By Fakhri H. Sabuwala

1st August 2007 may go down in the history of world stock exchanges as the day of global jitters. A marked withdrawal of funds from emerging markets initiated by crisis of mortgage funding in USA sent every market into a tailspin. Beginning from the previous night’s flight of fright on the Dow Jones & the Nasdaq, the tremors spread to the Nikkei, Hang Seng, Kospi, Shanghai, Taiwan, Sensex and Nifty. The third largest single day fall in BSE’s history, heightened volatility and a market ratio of 13 scrips falling against a single advance sums up the global jitters that prevailed last week. The crisis seems to be emanating from the subprime mortgage troubles in USA. The crisis has assumed such a dimension that it could engulf some big names in this fire. The crisis is now percolating to credit markets, exchange markets, hedge funds and also to equity markets. We are in for a very rough ride and may be at the tail end of a cycle. The current concerns will spill over to real economic issues and which will be a painful process to pass through. The subprime mortgage defaults seem to be initiating larger troubles both for the US and emerging markets. A lot of bankers, investment banks and hedge funds shall face this queer music. A feeling of risk aversion is building up and it shall result in huge withdrawal of funds from emerging markets. Although the figures of FIIs withdrawals from India could not be logged in by the time of this dispatch, the figures of Taiwan are fatal. A single day FII sell off to the tune of $1.5 bn. and totalling to $4.5 bn. in the last four sessions leave no room for doubt as to what risk aversion can bring about. A school of thought promoted by never say die optimists feel that the Indian growth story and sense of great resilience might save us from the great doom. It may be wishful thinking, based on previous experiences. But the reasons this time are far away from the reasons of yesteryears. Also, the momentum of India’s growth and the levels of price:equity multiples calls for great caution. Even if nothing worse happens at home, growth compression may put India’s dream run to test. One silverlining in this dark cloud is the rising equity cult and consciousness, which shall provide large inputs to local mutual funds to put into the secondary market. This may keep the show going but it will surely be a lacklustre show at least for now and the near future. What does an investor do at times like this? For one, being caught unawares in the middle of a great show is bad news and partial divestment of one’s portfolio aimed only at covering the crisis may be prudent. Selling in a falling market is always a painful decision but selling around 14.5K to 15K Sensex level is a great consolation for the insatiable human greed, which we all nurse in our hearts. So just control your jitters before global jitters control you.

Market is consolidating By G. S. Roongta

The stock market has turned weak beyond expectation. It gave a clear signal of weakness in the previous week (week before last) itself when the BSE Sensex plunged from a high of 15,868.85 to a low of 15,159.68 on Friday, 27th July 2007 while closing a bit higher at 15,234.57. Thus just when the Sensex was speeding up to the 16K mark and had only 131 points to cover, there emerged a need for some consolidation. This was not very surprising as the Sensex had risen too fast and too early after it touched the 15K level. It appears that the bulls, in their frenzy, had totally forgotten about the presence of the bears in the market and were in a tearing hurry to push the Sensex to the 16K level. Such a sharp rise called for an equally sharp correction and which is most desirable for a healthy market. The bulls should never overlook the presence of the bears and should let the market consolidate after every significant rise before the next upward move. As a result, the whole of last week witnessed volatile trading as the Sensex moved up by 300 points and went down further by 200 points during intra-day while closing prices reflected only a marginal change on both the BSE Sensex and the CNX Nifty. For example, the Sensex went up to a high of 15,481.51 on Monday and fell to a low of 15,135.25 while closing slightly up by 26 points at 15,260.91. On Tuesday, 31st July, the market was very volatile and stock prices fluctuated heavily on both sides by nearly 350 points and the Sensex shot up in the last leg of 15 minutes to close at 15,550 recovering 200 points from its low level of the day in mid-session. This, however, led to a crash on the next day, which was the beginning of a new month i.e. 1st August 2007. The market opened with a downward gap of 200 points and kept on losing ground to close the day with a sharp fall of 615 points. This was the sharpest fall of calendar 2007 and it pierced the psychological level Sensex 15,000, which the market was able to establish after several months of struggle. This sudden and heavy meltdown was on account of global cues especially the crash in the US sub-prime market wherein a leading mortgage lender is reported to have run out of cash to pay off its creditors. As a result, a leading US hedge fund may turn loss making and add to the growing trouble in US financial markets. The Indian growth story, which is good by all accounts, we are marginally insulated as the Rupee is not fully convertibleagainst all currencies. But with FIIs holding a huge stake in our market capitalization, it should not surprise anyone that these funds liquidate Indian stocks to save their skin from default in their home markets. Any such move on their part is bound to affect the Indian bourses. In case this malaise is confined to a single fund, it may not be so terrible. But if it spreads to other players, it could be disastrous. Hence we must remain cool till the clouds of uncertainty disappear. In view of this grave situation, the stockmarket may turn choppy and uncertain for the time being. But it now appears quite certain that the US economy has started showing some kind of weakness and if a crisis like situation does not develop, we may be saved from an immediate trouble or any panic in the markets. But if a crisis starts ballooning then real bad days may lie ahead of us too and we must remain cautious. It is therefore advisable to lighten one’s outstanding position because in a crisis there is no classification of good or bad stocks. Even good stocks fall and that too with greater speed and force as against their other counterparts. No specific sector or stock is safe in such a crisis. In company focus last week, we had written on Hindalco, which is facing a takeover crisis as per market reports for quite some time. The company management, however, dismissed such reports and were equally dismissive about the stingy attitude of the management in sharing the fortunes of the company with its shareholders as raised at its AGM on Tuesday, 31st July in Mumbai. Several speakers lamented the company’s distribution policy citing the examples of the Tatas, Reliance, Sterlite, Infosys etc. but the management took it lightly maintaining that the funds were needed to meet the needs of expansion. One, speaker even cited the example how the Hindalco stock was quoting at Rs.250 when the BSE Sensex was nearly 8,000 and the stock had fallen even though the Sensex has doubled since then! Listening to the shareholders and the mood of the attendees, this writer feels that the article published last week was both timely and topical. But the management continues to display an unfriendly attitude which will keep the stock subdued and help the promoters enhance their holding as indicated by news reports. The Q1 results of most companies were good showing 35% - 40% growth in their bottomline on an average. This was higher than market expectation and as such there should not be any cause of worry about the prevailing market sentiment. The distribution has also been quite good in line with the growth in the bottomlines except very few like Hindalco, which have opted to conserve resources. This plea, however, is very specious as how can the dividend payout, which is akin to a mug of water, be considered enough to meet the requirements when funds are required by tankers! Cement stocks once again fell as the government tried hard to soften the price of cement bags through some hard measures. In the recent fall of 1st August, cement stocks were hit the hardest. ACC tumbled by Rs.100, Grasim by Rs.150. India Cement, Ultratech and B group cement stocks like Shree Cement, Kesoram, Jaiprakash, too, were hit hard. But I still believe that so long as the country’s economy is on the fast track, no government action can force cement companies to occupy the back seat or deny them reasonable profit. It has once again been proved that cement is in short supply even though all cement plants are operating above their rated capacities but are unable to meet the robust demand. Under such circumstances, any government move to soften cement prices by its rigid policy measures rather than market mechanism will prove disastrous both for the government and the cement manufacturers.

NOTE: THE INTRODUCTORY OFFER FOR THE PREMIUM (PAID) GROUP MEMBERSHIP ENDS ON OR BEFORE 15 the AUGUST, 2007; AFTER WHICH THERE WILL BE SERIOUS PRICE REVISION OF THE PACKAGE. HENCE THOSE WHO ARE INTERESTED TO KNOW THE DETAILS OF THE PAID SUBSCRIPTION, PLEASE RUSH IN A MAIL AT: suman2005s@rediffmail.com.

WINNING STROKES: THINK DIFFERENT:

Glory Polyfilms Ltd hit another buyer freeze today in the opening trade before cooling down a bit at the end due to profit booking. The company has come up with better than expected results---a scum, had fore-casted in MMB that it would come up with a huge loss of Rs.19.10 Cr which lead to the crash of the share price. The fools started selling seeing this stray news now many of these are probably entering the counter. 

Satyam Computer Services Ltd recommended at Rs.77-78, touched Rs.93.40 today, before cooling down a bit due to a slightly negative news that the company has sought more time to build IT/ITES special zone in Hyderabad.
In the Sunday Report, sent to the Paid Groups, I asked all to start accumulating Vision Corporation Ltd at Rs.1.80, for some specific targets--the stock hit 2nd consecutive buyer freeze today. Vision Technology Ltd  has been hitting the circuits since the last few days. 

After trading on a feeble note for most part of the session, domestic benchmarks managed to negotiate a close in the green terrain, breaking the two session downtrend, as investors showed renewed buying interests in information technology, healthcare and capital goods counters. Despite settling with only a quarter percent gains, the frontline indices managed to outclass all the peers in Asia and Europe by quite a margin. The global markets continued to exhibit somber trends as investors at large remained cautious on worries over global economic recovery prospects and also ahead of the Fed chief Ben Bernanke's speech later in the day. Back home, domestic concerns such as a possible hike in fuel prices in the near term and the ongoing agitation against corruption launched by yoga guru Baba Ramdev also weighed on sentiment to some extent. The marketmen too lacked conviction to open fresh long positions amid the gloomy global picture but bulls came out of their shelter in the dying hours and opted to fish for bottomed stocks. The banking shares too witnessed some position build up in the session amid the Reserve Bank of India deputy governor KC Chakrabarty's statement that banks may use the newly introduced marginal standing facility (MSF) in mid-June when liquidity is expected to tighten sharply owing to advance tax payments. Back home, the NSE's 50-share broadly followed index Nifty, added around a quarter percent point and settled just below the crucial 5,550 support level while Bombay Stock Exchange's Sensitive Index, Sensex gained around fifty points and closed above the psychological 18,400 mark. By the end of trade, the broader markets settled on a flat note and were comfortably outclassed by their larger peers. The midcap index eased 0.25% while the smallcap index added 0.17%. On the sectoral front, the IT counter remained the top gainer in the space as it went home with 0.81% as bellwethers like TCS and Infosys climbed by 1.01% and 0.89% respectively. Another counter that remained amid the thick of things was Healthcare which rose by 0.71% as Cipla and Ranbaxy rose by 2.25% and 1.18% respectively. On the other hand, the metal pack languished at the bottom of the table with 0.68% losses after majors like Hindalco Inds and Jindal Steel deposed 1.61%, and 0.97% respectively.

On the global front, most of the Asian markets remained closed today and those which were open settled with notable losses. The Japanese benchmark remained top laggard in the session plunging by a percent point jittered by the buzz that Tokyo Electric Power Co could go through a court-led rehabilitation, fanned bearish sentiment in the wake of soft US data. The European equities too traded with a negative bias as France's CAC declined 0.61%, and Germany's DAX eased 0.03% and London's FTSE 100 edged down 0.02%. On the other hand, the screen trading for US index futures indicated that the Dow could open on a flat note.

Earlier on Dalal Street, the benchmark got off to a negative opening in line to the Asian peers that largely remained influenced by Wall Street's sharp cut following the release of US May nonfarm payrolls data which showed the weakest reading since September coupled with the unexpected rise in US jobless rate to 9.1 percent. The frontline indices soon slipped below the psychological 5,500 and 18,350 levels on profit booking in rate sensitive counters. After gyrating in a tight range for around an hour, the indices soon drifted to lowest levels in the session. However, the short covering rally led by IT, healthcare and capital goods stocks in the early afternoon session brought the key indices in close proximity with previous closing levels. Thereafter the buying interests gathered further momentum in dying hours, helping the benchmarks to claw back into the green terrain by the end of trade and snap the two session downtrend, though with marginal gains around the psychological 5,550 and 18,400 levels. The markets consolidated on lower market volumes of over Rs 0.84 lakh crore on the initial day of the new week while the turnover for NSE F&O segment also remained on the lower side compared to Friday at over 0.74 lakh crore. Market breadth remained negative as there were 1326 shares on the gaining side against 1461 shares on the losing side while 116 shares remained unchanged.

Finally, the BSE Sensex rose by 43.63 points or 0.24% to settle at 18,420.11 while the S&P CNX Nifty gained 15.30 points or 0.28% to settle at 5,532.05.

The BSE Sensex touched a high and a low of 18,458.63 and 18,258.42, respectively. The BSE Mid cap index was down by 0.25% and Small cap index was up by 0.17%.

The top gainers on the Sensex were Cipla up 2.25%, HDFC up 1.74%, HDFC Bank up 1.09%, TCS up 1.01% and Infosys up 0.89%.

On the flip side, Jaiprakash Associate down 2.54%, Hindalco Industries down 1.61%, Bajaj Auto down 1.53%, Mahindra & Mahindra down 1.51% and ONGC down 1.38% were the top losers on the index.

Meanwhile, the raising international food and oil prices are posing greater risk to growth of Indian Economy in comparison to other Asian economies like China, Indonesia or Malaysia. According to Asian Development Bank (ADB) estimate, the inflationary pressure caused by increase in global oil and food prices will take off over three quarters of a percentage point from India's growth and another 1.25% points in 2012. The ADB estimates that Indian growth will hit the highest in 2012 in comparison to other major Asian economies included in the study. 

The ADB had used the Oxford Economics Global Model to study the impact of increased food and oil prices, according to which, from August 2010, the crude oil prices have increased by 45% and food prices by 10 to 35% in various countries. The model generates projections of key economic variables based on the assumption that monetary authorities in the region will adopt a gradual tightening stance in the next years as recovery takes firm hold. The ADB's key hypothesis is that the international food and crude oil prices raised by 30% and moderately falls in 2012. According to ADB estimates, the expected oil and food price increase this year is likely to hammer Indian economy more vis-à-vis China for 2011 and 2012. Other indicators also indicate, inflation is affecting the Indian growth story.

Indian economy registered 7.8% growth rate in the 4th quarter of the FY11. This was the slowest in the last five quarters. However, for the 2010-11, the Indian economic grew by 8.5%, which was marginally lower than the government's forecast of 8.6%. According to Financial service firm Moody, the Indian economy's growth outlook over the next few years remains strong and the economy is likely to grow by 8.5 to 9.5% annually despite the slowdown in last quarter of FY 11. Financial firm also see inflation as biggest challenge for India's growth. As per Moody's report, RBI's stand on controlling inflation should also consider maintaining the balance between growth and inflation, though firm see this task challenging for the government and central bank.

The major gainers on the BSE sectoral space were IT up 0.81%, Health Care (HC) up 0.71%, TECk up 0.65%, Capital Goods up 0.60%, and Bankex up 0.55%.

The top losers in the BSE sectoral space were Metal down 0.68%, Auto down 0.55%, Oil & Gas down 0.36%, FMCG down 0.31% and Public Sector Unit (PSU) down 0.25%.

The S&P CNX Nifty touched high and low of 5,542.65 and 5,479.85, respectively.

The top gainers of the Nifty were Dr Reddy up 2.36%, Cipla up 2.28%, Sun Pharma up 2.00%, HDFC up 1.66% and Kotak Bank up 1.48%.

On the flip side, JP Associate down 2.48%, M&M down 1.75%, BPCL down 1.71%, Hindalco down 1.56% and ONGC down 1.54% were the major losers on the index.

European markets were trading in mix. France's CAC 40 down by 0.72%, Britain's FTSE 100 up 0.01%, and Germany's DAX lower by 0.08%.

All the Asian equity indices which were opened today has closed the day's trade in the negative terrain on Monday, pressured by last week's disappointing US economic data, which witnessed the weakest reading since September coupled with the unexpected rise in US jobless rate to 9.1 percent. Moreover, Nikkei benchmark edged lower to an 11-week closing low on Monday on speculation that Tokyo Electric Power Co (TEPCO) could go through a court-led rehabilitation fanned bearish sentiment in the wake of soft US data. TEPCO lost more than a quarter of their value. However, financial markets in China, Hong Kong, South Korea and Taiwan are shut for the trade today on the back of public holiday.

WINNING STROKES: THINK DIFFERENT:

Glory Polyfilms Ltd hit the buyer freeze in the opening trade, with good volumes. The company been manufacturing 3-Layer (Co extruded films), 5 / 7 Nylon Poly and EVOH Based Films with a capacity of over 18000 Tones per year with State of the art manufacturing machines from Germany. We have a total integrated system to manufacture High quality laminates and multilayer films under one roof.

Satyam Computers Services Ltd touched Rs.91.40 today, the call was initiated at Rs.77-78, last month. The scrip gave good returns over a short term. 

Allied Digital Services Ltd should be accumulated above Rs.50, for a target of Rs.75. Wait for the scrip to stabilize before taking fresh positions. Those who have taken fresh positions, should wait for the scrip to stabilize if they want to add further to their kitty. I have spoken with the sources and they have said there is as such nothing wrong in the company, however, in the short term, the company might not show too much growth as is expected, due to lot of internal structuring. I feel that the current price already factors such negativity.  Good delivery based buying was also seen in the counter today. 

Indian equity markets extended their downtrend for second straight session, lacking any significant upside triggers that kept the investors uninterested ahead of the weekend. The major disappointment in the session remained index heavyweight Reliance Industries as it failed to surprise the marketmen who had built a lot of expectations around the company's annual general meeting anticipating some big announcements by Chairman Mukesh Ambani. After trading with gains of around one and half a percent before the AGM, the  stock settled with over one and half a percent loss as marketmen showed a knee-jerk reaction to reports that RIL has shelved plans to enter power sector. The frontline indices too drifted into the red terrain in tandem with RIL as investors indulged only in stock specific activities amid thin trading volumes. Leads from markets across the globe too remained subdued as the Asian equity indices exhibited mixed trends while the European counterparts traded in an extremely tight range with a positive bias. Back home, the NSE's 50-share broadly followed index Nifty, shaved off another around half a percent point and settled just above the crucial 5,500 support level while Bombay Stock Exchange's Sensitive Index, Sensex took another hundred point blow and closed below the psychological 18,400 mark. By the end of trade, the broader markets which showed some resilience for most part of the session slipped into the negative region but outclassed their larger peers comfortably. The midcap index eased 0.34% while the smallcap index shed with 0.05%. On the sectoral front, the Oil and Gas stocks languished at the bottom of the table with 1.34% losses after majors like RIL and ONGC deposed 1.64%, and 0.44% respectively. The Metal pocket too witnessed hefty bouts of profit booking and slipped by 1.05% after majors like Hindalco and Jindal Steel sank by 2.55% and 1.57% respectively. On the other hand only Capital Goods and Consumer Durables counters managed to shut shops in the green terrain as bellwethers like L&T and Rajesh Exports surged by 2.18% and 2.13% by the end of trade. The fact that Anil Ambani won't be directly involved, came as a big relief for all ADA group stocks which sharply rallied on the back of short-coverings with RCom and RInfra surging 3.95% and 0.85% respectively.

On the global front, Asian equity indices settled on a mixed note as investors in the region remained on the sidelines ahead of US jobs report. The Hong Kong Shares remained top laggard in the session after plunging by over one and a quarter percent points. The European equities too traded on a positive note as France's CAC gained 0.15%, and Germany's DAX added 0.14% and London's FTSE 100 rose 0.20%. On the other hand, the screen trading for US index futures indicated that the Dow could open on a flat note.

Earlier on Dalal Street, the benchmark got off to a sanguine opening shrugging weak leads from the Asian stock markets that largely remained influenced by the overnight Wall Street which settled on a sluggish note on the back of weaker than expected sales reports from retailers and another rise in claims for unemployment benefits. Soon after the positive opening the frontline indices went on to test the psychological 5,600 and 18,650 levels but lack of support at higher levels pulled the indices to lower levels. Thereafter, the benchmarks sank into the red terrain as RIL annual general meeting turned out to be a low key affair, not giving out any notable upside triggers to the markets. The bourses continued to tread under the water throughout the session thereon as investors appeared reluctant to pile up long positions amid the growing uncertainties and challenging macro-economic backdrop that prevailed in the local markets. Eventually the key indices snapped yet another session with losses of over half a percent and settle around psychological 5,500 and 18,400 levels. Market breadth remained negative as there were 1306 shares on the gaining side against 1485 shares on the losing side while 141 shares remained unchanged.

Finally, the BSE Sensex declined by 117.70 points or 0.64% to settle at 18,376.48 while the S&P CNX Nifty slipped 33.60 points or 0.61% to settle at  5,516.75.

The BSE Sensex touched a high and a low of 18,672.65 and 18,345.85, respectively. The BSE Mid cap and Small cap index were down by 0.34% and 0.05% respectively.

The top gainers on the Sensex were Reliance Communication up 3.95%, L&T up 2.18%, Mahindra & Mahindra up 0.96%, Reliance Infrastructure up 0.85% and Maruti Suzuki up 0.82%.

On the flip side, HDFC down 2.99%, Hindalco Industries down 2.55%, Jaiprakash Associate down 2.36%, Tata Motors down 2.29% and Reliance Industries down 1.65% were the top losers on the index.

Meanwhile, India, which already has comprehensive Double Taxation Avoidance Agreements (DTAA) with around 80 countries, has notified the DTAA with the Government of Mozambique for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income on May 31, 2011.

Double taxation is the imposition of two or more taxes on the same income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes). Such double tax liabilities are mitigated by tax treaties like DTAA between countries.

Besides facilitating economic cooperation, the DTAA between India and Mozambique provides that business profits will be taxable in the source state if the activities of an enterprise constitute a permanent establishment in the source state. Examples of permanent establishment include a branch, factory, office, place of management, etc. Profits of a construction, assembly or installation projects will be taxed in the state of source if the project continues in that state for more than 12 months, according to the official statement issued by the finance ministry.

Under the agreement, the profits derived by an enterprise from the operation of ships or aircraft in international traffic shall be taxable in the country of residence of the enterprise. Moreover, dividends, interest and royalties income will be taxed both in the country of residence and in the country of source. However, the maximum rate of tax to be charged in the country of source will not exceed 7.5% in the case of dividends and 10% in the case of interest and royalties. Capital gains from the sale of shares will be taxable in the country of source, the release stated.

According to the statement, the nations will also engage in effective exchange of information and assistance in collection of taxes between tax authorities of the two countries in line with internationally accepted standards including exchange of banking information and incorporates anti-abuse provisions to ensure that the benefits of the Agreement are availed of by the genuine residents of the two countries.

The pact will also provide tax stability to the residents of India and Mozambique and facilitate mutual economic cooperation, besides stimulating the flow of investment, technology and services between India and Mozambique.

The only gainers on the BSE sectoral space were Capital Goods (CG) up 0.75% and Consumer Durables (CD) up 0.46%.

The top losers in the BSE sectoral space were and Oil & Gas down 1.34%, Metal down 1.05%, Public Sector Unit (PSU) down 1.03%, Health Care down 0.94% and FMCG down 0.77%.

The S&P CNX Nifty touched high and low of 5,604.95 and 5,507.20, respectively.

The top gainers of the Nifty were Reliance Communication up 4.50%, L&T up 2.53%, Reliance Capital up 2.51%, Sesa Goa up 2.17% and Powergrid up 1.96%.

On the flip side, HDFC down 3.07%, Axis Bank down 2.41%, SAIL down 2.28%, Tata Motors down 2.25% and Hindalco down 2.16% were the major losers on the index.

European markets were trading in mix. France's CAC 40 down by 0.20%, Britain's FTSE 100 up 0.04%, and Germany's DAX rose by 0.27%.

Asian equity indices finished the day's trade on a mixed note on the last trading day of the week as investors in the region remained on the safer side ahead of US jobs report. Japanese shares closed with a cut of over half a percent amid caution before key US jobs data and amid ongoing political uncertainty in Japan while, Seoul shares edged marginally lower, with falls in technology stocks like LG Electronics weighing, but modest foreign investor buying and firm gains in shipyards gave some support to the market. However, Chinese benchmark rebounded from a four-month low and snapped the day's trade with a gain of over 0.80 percent as market players scooped up beaten-down shares, in particular those of industrial companies while, Taiwan stocks rose more than half a percent on Friday, led by smartphone maker HTC amid optimism it is among the few companies in the tech industry that have bright prospects this year.

Jaiprakash Power Ventures Ltd: Accumulate on declines

CMP: Rs.13.85

Jaiprakash Power Venture Ltd might utilize around Rs.8000 Cr, from the sale proceeds of its assets, for retiring debts; the rest would probably be used for fulfilling the commitments towards the upcoming projects. Earlier, there were media reports that JSW Energy had agreed to acquire 100 percent stake in Himachal Baspa Power Company from Jaiprakash Power Ventures for a base enterprise value of approximately Rs.9,700 crore. The board of directors of JP Power Ventures has approved the transfer of the 300 MW Baspa II hydro electric project located at Himachal Pradesh, and the 1091 MW Karcham Wangtoo hydro electric project located at Himachal Pradesh into a separate company. 

Therefore, the worst seems to be over for the Jaiprakash Group and with the interest rate cut on the offing, the stocks are likely to give good returns in the short term. 

Meanwhile, HINDALCO Industries Ltd recommended some days back around Rs.157, reached its first short term target of Rs.163--intra-day it touched Rs.167.80 and is now trading at Rs.166.90. The traders are suggested to book profits in HINDALCO Industries Ltd. 

On the other hand today Marg Ltd (Rs.16.56) came out of the Upper Circuits Ltd at Rs.17.86 and is now trading near the Lower Circuits. The investors are suggested to get out of the scrip, after the company came out with dismal Q2FY15 results. Moreover, I am no longer taking interest in the scrip and is out of my research basket, as of now. If you want to  hold the scrip of Marg Ltd for the long term, then you should do that at your own risk.

ARSS Infrastructure Ltd (Rs.40.80) is consolidating around the current ranges of Rs.40.70-43 and is preparing for the next round of upmoves. The company has been coming up with good set of the numbers since the last few quarters. The investors should accumulate the counter in every decline. 

Today, Jindal Steel and Power Ltd is on fire as the scrip touched Rs.151.50, intra-day and is now trading at Rs.149.90, up 4.90%. Incidentally, most of the chartists, including Hitendra Vasudeo and a well known Gujarat based weekly gave a SELL call on the scrip on their recent weekly updates.....Huh!!

In another development, the scrip of SKM Egg Products Ltd which was being repeatedly recommended by a blog, hit another lower circuits today in the NSE at Rs.97.35. I have been very vocal about the scrip since it started hitting upper circuits, with very little fundamental backing. The share touched Rs.80, plus hitting UCs and then when the said gentlemen wrote something in the blog, it again started hitting UCs, till it crossed Rs.120. However, it has been hitting lower  circuits since around Rs.120, after my inputs in some forums regarding share price manipulation. I would therefore, suggest you to not to touch it, even with a stick as it is still a good SELL. Also, kindly don't invest in these kinds of operators driven counters--stay in the front-line stocks or at best in Nifty--500 scrips. The irony is that in this market, only the counters, like Ashok Leyland Ltd (Rs.53), Eicher Motors Ltd (Rs.14571.90), Rico Auto Ltd (Rs.41.60) etc which are being rigged by the TV (and Print Media)-Analysts are moving up without much fundamentals, while the good companies are remaining stagnant. Ashok Leyland Ltd (Bool value-Rs.15.69) has a P/E of 55.59 and is now trading at Rs.53-does it make any sense? In fact the whole of Auto and Breweries (P/E--52.90) sector is over-valued, but surprisingly still investors put their funds into it. If you do not understand what is the hidden meaning of P/E of a share, kindly speak with a Financial Expert--then you will probably understand what I am trying to say!! 

HINDALCO INDUSTRIES: LOOKING EXPLOSIVE ON THE CHART

Hindalco Industries Ltd, one of whose plants is expected to go on steam in this quarter, is looking explosive on the charts and could outperform both the Sensex and Nifty in the coming days. 

The stock has been beaten down too much in the last few days, and now a short covering is expected to take it past Rs.122-123 in the coming days. My bullishness is based on both the Chartical and Fundamental Factors. Some of the fundamental factors which could affect positively are: 

(i) Base metals finished sharply higher on Thursday, as the lingering after-effects of Chairman Bernanke’s comments continued to pressure the dollar, forcing it to slide to $1.3263 against the euro – a three-week low.

(ii) "Growing deregulation will lead to an explosion of interest in global commodity markets from small and medium-sized companies in China and will facilitate western companies’ access to liquidity from the country that is the world's largest consumer of metals". This is the view of John Browning and Tiger Shi, the two senior metal brokers in Newedge Hong Kong. Shi formerly worked for the State Reserve Bureau of the National Development & Reform Commission, then Sempra, before founding the Citic Newedge joint venture in China. “We expect the China market to grow at an even faster pace in the near future. As regulation is removed we will see more companies emerging from China requiring access to international markets,” he said.

Meanwhile, Shanghai Futures Exchange copper prices gained 1.3% this week, albeit widening a discount with its London counterpart as Chinese traders showed reluctance in chasing overseas gains. SHFE August copper settled at 58,470 yuan ($9,259) per tonne on Friday April 27, up from 57,960 yuan per tonne on Thursday, and last Friday’s settlement of 57,710 yuan per tonne. “The widening gap between LME and SHFE copper prices combined with the increasing number of cancelled warrants will constrain any downside risk,” an analyst at Shanghai CIFCO...

This is a massive company and it is strange how the shares are trading near its 52-week low price of Rs.111.25. The long term investors should use this opportunity to corner this scrip, before the real short covering starts and pulls the scrip up to around Rs.135-139, in the coming days.

-:Promoters take advantage of Rights Issues:-

Do you Remember what I said a couple of weeks back, in case of English Indian Clay Ltd; where there are strong Rumours that the promoters of the company could increase their stake.

English Indian Clay Ltd, is expected to come up with Rights Issue at Rs.1000 per share. The current market price of the scrip is only Rs.300.30!! The company had purchased the land for its upcoming Starch Project in Shimogha (Karnataka)--hence it can be said that the project is on stream......

KEC International Ltd, Reliance Industrial Infrastructure Ltd, Ennore Coke Ltd, ASM Technologies Ltd (mini-Infosys) and BGR Energy Ltd should be multi-baggers going forward--mark my words....

What to do with my recommended Suzlon Energy Ltd and VBC Ferro Alloys Ltd at the CMPs??!! Kohinoor Broadcasting Corporation Ltd could also be accumulated at the CMP of Rs.3.5. There is nothing to lose from here.........

In the Power Sector those who have invested in my strongly recommended Indo-Tech Transformers Ltd (BSE Code-->532717) at around Rs.173, should now keep a SL of Rs.187.4 and Rs.169.8 (exit stop loss) and keep holding the rest.

The problem with the investors world wide is that, they buy shares when the market rises up and sell when the market goes down....which is not the correct strategy all the time.

The discount scheme to the Paid Packages (Premium Services, Quickie Service and Portfolio Management Service) expires on 25th November, 2008.

Chennai: Investors have accorded a lukewarm response to rights offers from companies seeking to fund their expansion plans. But promoters appear to hold a more optimistic view.

They have used the rights route to hike their stake in companies at the current rock-bottom valuations.

The high borrowing cost of debt and shortage of funds have prompted many a company to resort to rights offers in recent months. The market, clearly, did not take to this kindly as concerns about equity dilution led to the stocks being beaten down to levels that made the rights offer price quite unattractive.

Shares of companies ranging from Tata Motors and Hindalco to Dish TV and Suzlon Energy were beaten to new lows, after rights announcements. While investors have shied away from their rights entitlements, promoters have stepped in to take up the unsubscribed portions.

Take the case of Hindalco — the promoter and promoter group companies along with other underwriters have fully subscribed to the offer after it received only about 43 per cent subscription from non-promoter shareholders. As a result, the promoter group’s stake in the company has risen from 31.9 per cent to 35.1 per cent post offer. The rights issue of Tata Motors also remained undersubscribed, providing an opportunity for the promoters to take up the rights portion. Their stake stood at 42 per cent post-offer from 33 per cent before it, bringing in a little over Rs 3,000 crore.

More lined up: Despite these offers struggling for subscription, more companies such as Jaiprakash Associates and Religare Enterprise have recently announced rights issues. The former plans to raise about Rs 1,800 crore to fund its capex plans. Interestingly, the company’s announcement to the exchange states that it plans to raise funds through the rights issue “instead of issuing further warrants to promoters on preferential basis”. The promoters have also given a firm commitment to subscribe to the unsubscribed portion, if any.

Religare Enterprises plans a rights issue priced at Rs 355, a premium over the current market price of Rs 330. Earlier, Religare said that it planned a 2:3 (Two:Three) Rights Issue where the Promoters would pick up unsubscribed portion----GREAT NEWS. Religare Enterprise Ltd will use the proceeds from the rights issue to “propel its future growth plans both international and domestic,” said a company official.

The broking firm, which got listed in last November, said it will file the draft letter of offer with SEBI in the first week of December 2008. The net worth of the company is expected to go up to Rs 2,400 crore after the Rights Issue.

The company recently acquired Hichens, Harrison and company, the oldest broking and investment firm in London.

The promoter’s stake as of September 2008 stood at 54 per cent. Promoters typically raise their stake in a company, through preferential allotments or creeping acquisitions of shares, both of which are subject to Securities and Exchange Board of India regulations. Picking up the unsubscribed portion of a rights issue may well be a relatively hassle-free route to increase stake.

Incidentally, recent weeks have also seen promoters and top management in some companies such as L&T, IVRCL, Edelweiss Capital etc take advantage of the current market conditions to pick up shares.

This proves the fact that even the Seasoned Promoters of Companies believe that the world is not coming to an end; which a section of the Media is trying to make us believe....