Urja Global  Ltd: A case of Unbridled Stock Manipulation or too much Euphoria.....?

Photo: BCG Attorney Search

The stock of Urja Global Ltd (Rs.9.72 on Re.1 Face Value and Rs.97.2 on Rs.10 face value) has been hitting the upper circuits since sometime. This Re.1 face value stock has been hitting the buyer freezes since some videos surfaced in the YouTube, claiming its growth story in the solar power sector, when majority of its established peers are not doing that well.

On reviewing its financials and other crucial parameters, what I find is:

#The net profit for Q2FY18 is only Rs.41 lakhs against a revenue of Rs.28.92 crore, giving an EPS of Re.0.01 or only 1 paise on its Re.1 face value share. 

#The depreciation shown is Re.1 lakh which does not make any sense, considering its product pipeline and its solar power business. 

#Interestingly its NPMs and OPMs are almost same. It has OPM at 1.45% while NPM at 1.43%, which looks quite bizarre. 

#If we look at its FY17 results, we find that it has a total income of Rs.118.15 crore, while its net profit is only Rs.1.03 core, which is less than even 1% of its turnover. This leaves many unanswered questions about its business model.

#In early November, 2017, the company announced the signing of Memorandum. Urja Batteries Limited, a subsidiary of Urja Global Limited, signed the Memorandum of Understanding (MOU) with Micromax Energy Limited. As per the MOU, the company will manufacture and supply batteries on OEM basis to Micromax. But singing of such documents does not mean much unless actual ground work begins. At that time scrip price was ruling around Rs.2.23, against the CMP of Rs.9.72 or more than 4 times. Or in other words the scrip price has become around 4 times in just 3-4  months.

#Urja Batteries, a part of Urja global, is a leading battery manufacturer in India that specializes in lead acid battery for Industrial, Solar, and Standby power solutions. However, there are huge number of me too lead acetate battery manufacturers in India, leaving it in the face of immense competition which is already seen in its very low margin business. 

#The Live Mint wrote today: India’s quest for low clean energy tariffs “possibly contributed” to the demands for renegotiation of the already signed power purchase agreements (PPAs), the Economic Survey said on Monday.

This in turn may result in legal battles and bring uncertainty for the sector, with the banks becoming wary to lend to such projects, the Survey cautioned.

This comes in the backdrop of India’s wind power tariffs plummeting to Rs.2.43 per kilowatt-hour (kWh) at an auction conducted by state-run Gujarat Urja Vikas Nigam Ltd last month, beating the record low solar tariff of Rs.2.44 per unit registered in May.

While solar power tariffs rose to Rs.2.65 per kWh at an auction conducted by the Gujarat government in September, last month’s auctions conducted by state-run Solar Energy Corp. of India threw up winning bids of Rs.2.47 and Rs.2.48 per unit.  

If this is the condition of renewable energy sector, then what is the growth story people are talking about in this space?

#It has a market cap of Rs.493 crore against its FY17 turnover of Rs.118.15, showing that the share price is already highly over valued, at the current set of financials. And, hence its future price as against its fundamentals and its highly touted growth story remains skeptical. 

#Its promoter holding is 33.52%, which means they do not have full control over management decisions. 

#Its book value according to Moneycontrol.com is Rs.3.23 against the CMP of Rs.9.72. Or  it is trading at around 3 x Book Value. However, the ET gives its book value at Rs.30.45.

Moreover, its P/E is at whooping 447.5 against the industry P/E of 38.98. Even if we discount, the extraneous factors, its PE of 447.5 does not give much justification of a buy at the CMP.

Besides, a renewable energy share with ordinary product portfolio is trading at Rs.97.20 (of Rs.10 book value) -- doesn't that look strange? However, the stock markets all over the world is guided more by sentimental play rather than fundamentals in the short term. Or according to my analysis, Mr.Market is never perfect in the short term and is guided by the cycles of too much euphoria and pessimism.....

The above factors, gives some signs of stock manipulation by the vested groups. I hope the regulators will swing into action and take pains to find out the unnamed entities behind making such videos in YouTube; before the horse actually bolts the door.  

The point is if money finds place in such highly overvalued scrips, then from where the money will flow in real turnaround stories like 3i Infotech Ltd (Rs.6.40) or Hindustan Zinc Ltd (Rs.310.75)?

Note: I am having severe teeth problems with excruciating pain in the Jaws. I am likely to be operated tomorrow -- if the situation turns more teething then by today night. Hence, the updates of the blog is likely to get affected in the near future. Please bear with me.

Pre-Session: Market may open higher on positive global cues

29-Jan-18: Market is seen opening higher, tracking positive leads from Asian markets and overnight rally on the Wall Street. Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could rise 26 points at the opening bell.

Overseas, Asian shares were trading higher, mirroring sharp gains seen in the last session on Wall Street. US stocks surged on Friday, 26 January 2018. A reading of fourth-quarter gross domestic product came in slightly softer than expected but was viewed by investors as healthy enough to perceive that the economy is on firm footing. The Dow Jones Industrial Average rose 0.85%. The S&P 500 index climbed 1.18%. The Nasdaq Composite Index surged 1.28%.

US gross domestic product (GDP) for the fourth quarter rose 2.6% as consumption and business activity picked up.

The Federal Open Market Committee (FOMC) of the US Federal Reserve holds its next two-day monetary policy meet on Tuesday, 30 January and Wednesday, 31 January 2018. The Federal Reserve will announce its interest rates decision on Wednesday. The Fed, in a widely expected move, had raised interest rates by 25 basis points (bps) to a range of 1.25-1.5% in its December monetary policy meeting.

Closer home, foreign portfolio investors (FPIs) bought shares worth a net Rs 937.31 crore on Thursday, 25 January 2018, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 965.67 crore on Thursday, 25 January 2018, as per provisional data.

Among corporate earnings of prominent companies, HDFC, IDFC and Tech Mahindra will announce Q3 results today, 29 January 2018.

Among corporate news, net profit of Maruti Suzuki India rose 3% to Rs 1799 crore on 13.93% rise in net sales to Rs 18940 crore in Q3 December 2017 over Q3 December 2016. The result was announced after market hours on Thursday, 25 January 2018.

Key benchmark indices corrected on profit booking on Thursday, 25 January 2018, after scaling record high levels in the past few sessions. The barometer index, the S&P BSE Sensex, fell 111.20 points or 0.31% to settle at 36,050.44. The Nifty 50 index fell 16.35 points or 0.15% to settle at 11,069.65. The Sensex ended above the psychological 36,000-mark after falling below that level in intraday trade. India's stock market was closed on Friday, 26 January 2018, for Republic Day holiday.

The next major trigger for the market is Union Budget 2018-19, which will be presented by the finance minister Arun Jaitley in the parliament on Thursday, 1 February 2018.

President Ram Nath Kovind will address the joint sitting of the two Houses today, 29 January 2018, and the Economic Survey will be tabled on the same day. The first phase of the budget session of the parliament will be held from 29 January 2018 to 9 February 2018. After a recess, Parliament will meet again from 5 March 2018 to 6 April 2018, as per reports.

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REMINISCENCE

I have been in the blogosphere since more than a decade, after trying my hand in Yahoo and Google groups; though many of my contemporaries have perished in the warp of time. I feel I don't have to remind you of their names; as you perhaps know many of them....and my historical conflict with one from my home state, Assam. 

I maintain an open-book-style, where the performance of my calls are etched on my blog pages or in other words, one can judge me through my blog-post. Needless to say, those who are with me since a long-long-time, are already privy to my fact-sheet. Your good wishes, innuendos, whispers and murmurs have often helped to improve my style of speaking with you directly, through this mechanism. 

Hope in future too, I would be able to disseminate information to the you in the same way and with passion like I did hereto, especially to the small investor community; keeping the delivery frank, intimate, professional, adventurous and sometimes even romantic. I believe that although the contents of this blog may not be viewed as an investment manual, however those seeking perspective from an expert mind in equity investing will find a great deal in its pages.

But, before, I pen my thoughts further, let me say that even I'm NOT infallible in equity investing space; though the quantum of mistakes may be less than the novices and/or new entrants. 

Also, my hints, tips and suggestions presented here are colour blind-- to say precisely, I don't look into the caste or creed or religion or linguistic orientation or political background of the investor/trader, when I share my views here in this blog. In other words, I am like a doctor, who attends to patients of any colour or caste or any community, when the investments (Equity, Film Financing, Real Estate, Metal Scrap, etc etc) are highlighted -- I am absolutely rigid and crystal clear in this vertical. I don't think anyone has any complaint, as far this part of me, is concerned. May be because of this, I have clients and well-wishers scattered across the globe.

Now switching topic, it is pertinent to mention here that surreal financial killings have always been a part of the stock market euphoria since 1920s. The present condition of India economy can be termed as a "BUBBLE IN SLOW MOTION", especially in the context of recapitalizing of private sector banks (PSBs -- I don't like the Media-Coinage, PSU Bank in the way, I have avoided using two terms: Technical Analysis and Penny Stock, in my writings) with enormous gaping holes in their balance sheets, post ballooning of their NPAs. 

On the flip side, Indian economy is also slowly limping back to normalcy, after the stupidities like Demonetization and a hurriedly implemented GST, rocking the nerves of the investing and trading communities. 

Experience with GST, a Consumption TAX (CT) has shown that products originating from informal and semi-formal sectors are hard to be taxed. Even in the formal sector, CT can be avoided by under-invoicing the sale receipt at the last leg of the value chain, sounding death-knell to those theorists, who had vouched GST as the ultimate device to block TAX-THEFT. That is why the tax rates under GST have been a story of one foot forward, two steps backward.

Indian monetary policy is like a bottle of tomato-ketchup, once gene starts to have effect, it is already too late to moderate it or wind it back. The Intellectual sub-current indicates that bank recapitalization is likely to release a huge quantum of money into the system. This money will be sloshing around, chasing finite resources and hey, the markets are likely to become more crazy in the coming days, before the RBI and other regulators slam the brakes hard.

My gut feeling is that Indian bourses are still not ripe enough to blow up in the near future - the momentum is likely to continue for at least another six months, before we can think of a major correction or perhaps a soft landing (mild crash) of sorts.

Having said this there is another aspect which needs a closer look: while the markets have roared parabolically-up, paradoxically defying the GDP figures and other negative clues, in technicolor and style; the INR-USD ratio, is working some hoodoo in the other rings of this psychedelic circus. But the TV financial shows still haven’t raised shrill alarm bells of dollar tanking in the past several months or the likelihood of interest rates creeping up in the bond markets.

In fact, this could be a crowning comic moment in human history when the world would be interested to buy bucket-loads of sovereign bonds backed by a falling currency. Meanwhile, the US Treasury’s partner-in-crime, the Federal Reserve, is getting ready to dump an additional $600 billion bonds in the market out of its over-stuffed balance sheet. Well let's stop ricocheting from hashtag to hashtag now and focus on other aspects of markets.

With this thought in mind, I would like to share a few things I gathered over the years:
#Sometimes investing can be incredibly simplified and profitable using common sense techniques. The reason that use of this technique works is that for some unexplained reasons there is a lack of it in the annals of stock market. As such, you can use common sense to somewhat predict/anticipate future stock market moves.

#Try to avoid investing through MUTUAL FUND route -- I have never liked the concept and these dangerous instruments perform mostly during a raging bull market. According to a report published in Financial Times, almost all US, global and EM funds have failed to beat their benchmark since 2006 or 99% of actively managed US equity funds underperformed.

So, unless you are a LAZY GUY or have no time to take a look on your investment profile on a regular basis, except your domain of work, always try to invest directly in stock market, albeit with the help of experts (if any). 

It is interesting to note that the total assets under management (AuM) of the world’s largest 500 managers grew to US$ 81.2 trillion in 2016, representing a rise of only 5.8% on the previous year, according to latest figures from Willis Towers Watson’s Global 500 research. Although the majority of total assets (78.4%) are still managed actively, its share has declined from 79.7% from end of last year as passive management continues to make inroads. 

In India, the mutual funds have added over Rs.6 trillion to their asset base in 2017 and the uptrend is likely to continue in the new year, helped by a spirited promotion campaign by the industry and post-demonetisation resurgence of financial investment products. The industry is looking at an increase of nearly 40% to the total asset under management (AUM) ......... after attaining a record level of Rs.23 trillion at November-end itself—up from Rs16.46 trillion at the end of December 2016.

In any case even if you are a die - hard Mutual Fund fan, always prefer open ended schemes, against closed ended ones. 

#Don't invest in more than 2-4 stocks at a time in spite of all the temptations from external sources; so that you can keep a constant track of them -- your portfolio should look sleek and elegant. If a stock is not performing and its sector has started to give negative signals, trim it out of the portfolio, even at a slight loss and ride on the sector which is in trend or will be in long term trend from here. Asset allocation and constant churning of portfolio is what will give the creams of return. Always book profits in the way, because Indian markets are immature and your small profit might soon evaporate to land you in losses. 

#Avoid too much trading in your account. Buy a scrip based on a story and keep holding it with a target in mind. Once the share reaches near the target, book profit and exit. Don't become too much greedy and hold a share for years and months, unless and until there are compelling reasons to stick on that formula. However, occasional try in BTST/STBT or Daily Jobbing is also fine to some extent. Authenticity of source based information should be checked  on regular basis.

#Search for turnaround stories across the financial mosaic, pivoted on company and sector specific outlooks.  Once found then do a bit of research and try to get source based information on the scrip. In the past I have mentioned a lot of turnaround stories in this blog including, Premier Explosives, Suzlon Ltd, etc the latest being 3i Infotech Ltd and the Banking sector. 

#Whatever be your age, always keep at least 30% of your investment in equities. Market crashes are generally not “manufactured” rather they are an emergent side effect of market dynamics. Therefore, to lose extraordinary money in equity market, calls for commensurately extraordinary events. In Bombay, it is said: Everyday 9 people lose their lives while commuting through local trains, considered life line of this metropolis. But does it stop people from using this instrument of communication? No, isn't?

Bull markets often piggyback on Fantasy or/and Euphoria and hence politically loaded, expositions carry little meaning during this period. Moreover, books have been written on timing markets and it's generally accepted that it cannot be done reliably. To get out before a crash then buy cheap would require you to predict three different moments accurately: 

(i) When to get in, 

(ii) When to get out, and then 

(ii) When to buy on the "cheap". 

Timing even one reliably requires luck or clairvoyance or miraculous financial acumen. Therefore, postulating entry and exit theories are really very tough, if not impossible.  

In India active management industry is adding value, as compared to other parts of the world,  where the markets get more institutionalized, i.e more ownership lies in the hands of the institutions. I think passive management will grow in the years ahead and gain market share but the absolute equity asset class allocation will also rise substantially. As regards returns from the asset class like equities, given current valuations and projected figures, expectations should be palliated; till there is a sizable tectonic shift in the macroeconomic parameters accompanied by more pro-corporate government policies.

Lastly, always prefer a full fledged brokerage house instead of budget brokers like Zerodha, who not only provides stock research reports but also have a good trading platform. Safe is a very strong word, hence your choice of brokers may have a direct fall out on many future investing coordinates.

In this information age the outlook of people, who saw equity as a purely speculative, volatile asset class, almost a form of legalized gambling is slowly changing. Statistically, equity still remains the best asset class for wealth creation over the long term. 

The risks inherent in equity can be mitigated by diversification,  finding an expert for guidance and cutting down on hubris and excessive urges. 

And even after several tries if you have failed in Equity market, then try investing in recession-proof Comic books.... 

All the best and good luck!!

WINNING STROKES

Today the scrip of Hindustan Zinc Ltd was recommended  around Rs.297-298, during the dying moments of the market. The stock zoomed to Rs.301 in the NSE. Buoyancy in the Zinc prices, will give an upward push to the stock price, going forward.

Among the recommended PSBs, the stock of Punjab National Bank Ltd today made an intraday high of Rs.197, before closing at Rs.180.90 on profit booking. Similarly, Dena Bank Ltd, which made an intraday high of Rs.27.85, also closed at Rs.26.60, after profit booking was suggested in the counter. Recent announcement by India's Finance Minister, of a Rs.2.11 trillion ($33.2 billion) bank recapitalisation package will give new life line to the PSBs. 

Today news appeared in the media that Bank NPAs eased by 0.4% from three months earlier to Rs.9.46 trillion at the end of September, signalling that banking reforms and the insolvency and bankruptcy code may be starting to show results. If you remember, I had already mentioned that in my earlier blog posts

The stock of Housing Development & Infrastructure Ltd. today closed flat at Rs.59.35, after making an intraday high of Rs.60.65 in the NSE. In the past 12 years (2006-2017) India has seen investments of USD 42 billion in the real estate sector, while in the next 10 years (2017-2026) it is expected to see inflows to the tune of USD 58 billion according to a report published in Moneycontrol.com. Moreover, the introduction of Real Estate Regulation and Development Act (RERA), which makes it mandatory for builders to register a property with the regulatory authority before marketing it, is expected to boost buyer's confidence. It is bad news for small builders in the unorganised sector. The big is expected to gain marketshare as the small vacate the market. Prices, going ahead, is therefore expected to firm up. As long as Rs.59, is not broken on the downside, the Bulls do not have to worry much.

The stock of 3i Infotech Ltd closed at Rs.6.80 in both the bourses. ORION ERP, an integrated, cost-effective and cloud-enabled industry solution for growing and mid-sized enterprises, from 3i Infotech Limited, a global information technology company, continues its growth trajectory and is delivering industry-beating performance. The company recently posted a strong overall 32% growth result in Q3FY18 from the ERP vertical, over the same quarter in FY17. The 9 month FY18 license revenues grew 90% over similar quarters in FY17. The regions that have contributed maximum to the growth in revenue for ORION ERP this quarter are APAC and Middle East. 

Backed by robust service support, ORION ERP is a globally trusted partner to more than 800 customers with over 1,000 installations and 50,000+ users across various verticals, and aims to be one of the prominent ERP solutions available globally. Built on future-ready technology stack, ORION ERP empowers organizations to optimize business processes and make informed decisions through anytime access to dashboards and analytics. Meanwhile, CRISIL Limited has upgraded 3I Infotech Ltd's credit rating from 'CRISIL D' to 'CRISIL BB/Stable' in respect of its bank loan facilities. The rating rationale is available on the website of CRISIL Limited. So, what to do with this scrip?

Market Pulse

A bout of volatility was witnessed as key benchmark indices trimmed losses in early afternoon trade. At 01.20 pm the Sensex was trading at 35,982.96 down 178.68 point or 0.49%, while the CNX Nifty was trading at 11,034.70 down 51.30 points or 0.46%.

Trading was volatile as traders roll over positions in the futures & options (F&O) segment from the near month January 2018 series to February 2018 series. The January 2018 derivatives contract expires today, 25 January 2018.

Key indices opened almost flat and declined as the session progressed. After hitting a fresh intraday low in mid-morning trade, key indices trimmed losses in early afternoon trade.

The Sensex rose 85.38 points, or 0.24% at the day's high of 36,247.02 in early trade. The index fell 144.16 points, or 0.40% at the day's low of 36,017.48 in mid-morning trade, its lowest intraday level since 23 January 2018. The Nifty rose 9.60 points, or 0.09% at the day's high of 11,095.60 in early trade. The index fell 38.40 points, or 0.35% at the day's low of 11,047.60 in mid-morning trade.

Among secondary barometers, the BSE Mid-Cap index was down 0.20%. The BSE Small-Cap index was down 0.11%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,417 shares fell and 1,171 shares rose. A total of 150 shares were unchanged.

IT shares were mixed. Oracle Financial Services Software (down 1.95%), HCL Technologies (down 1.76%), Infosys (down 1.55%) and Hexaware Technologies (down 1.26%), edged lower. Tech Mahindra (up 0.42%), Wipro (up 0.59%), Persistent Systems (up 0.68%), MindTree (up 0.85%) and MphasiS (up 3.30%), edged higher.

TCS was down 1.19%. The company said that the company and Mesosphere, the creators of DC/OS, the premier platform for building and running data-intensive, containerized applications announced a partnership aimed at helping customers utilize data services and cloud platforms more efficiently. The announcement was made after market hours yesterday, 24 January 2018.

Pharmaceutical shares were mixed. Divi's Laboratories (up 1.65%), Glenmark Pharmaceuticals (up 0.54%), Piramal Enterprises (up 0.46%), Cipla (up 0.39%), GlaxoSmithKline Pharmaceuticals (up 0.36%), Lupin (up 0.29%), Sun Pharmaceutical Industries (up 0.24%), Cadila Healthcare (up 0.16%) and Strides Shasun (up 0.07%), edged higher. Dr Reddy's Laboratories (down 0.32%), Alkem Laboratories (down 0.42%), Wockhardt (down 0.5%), Aurobindo Pharma (down 0.65%) and IPCA Laboratories (down 1.08%), edged lower.

Orient Green Power Company advanced 1.86% after the company reported consolidated net loss of Rs 51.08 crore in Q3 December 2017, lower than net loss of Rs 69.66 crore in Q3 December 2016. Consolidated net sales rose 1.4% to Rs 56.09 crore in Q3 December 2017 over Q3 December 2016. The result was announced after market hours yesterday, 24 January 2018.

Overseas, Asian shares declined after stocks wobbled on Wall Street. US stocks closed mixed on Wednesday as markets focused on a mix of corporate earnings, trade war concerns and the broad decline in the US currency. The Dow Jones Industrial Average rose 0.16%. The S&P 500 index shed 1.59 points, while the Nasdaq Composite Index fell 0.6%.

Today's Calls: 

#Those who are holding the shares of Housing Development & Infrastructure Ltd (Rs.59.25), can continue to add to lower the average price for short term targets of Rs.62-65-69. The scrip could give good returns in the short term, as today is F&O expiry. The new F&O series could bring in joy for the shareholders, as there is nothing fundamentally wrong in the company. 

#Buy the shares of Hindustan Zinc Ltd at around Rs.297-298, for short term targets of Rs.322. Keep a SL of Rs.291. The management of the company recently said linkage coal has begun to land and it expects to meet around 20% of its requirement from this source, and then increase this level further in FY19.
Moreover, according to a report in Live Mint, on 23 January, '17: In the fourth quarter, refined zinc and lead output are projected to be nearly the same as the third quarter. That means realizations and costs will determine which way the profitability scale will tilt. While realizations are expected to hold steady, the expectation is that costs will trend lower due to higher coal linkage availability. If this happens, it may bring some solace to investors, as zinc prices continues to remain firm in the international markets. The company continues to invest in its expansion projects with capacity expected to increase annually in the next couple of years. If zinc prices hold up, then it would further add to the top and bottomlines of the company. 

#Buy the shares of NDTV Ltd at around Rs.46, T: Rs.51,SL: Rs.42. There are lot of restructuring going on in the company. 

#The short term traders who are holding the shares of Central Bank Ltd (Rs.74.70), should exit on rise - the share is not performing according to the expectations. However, long term investors can hold with a SL at Rs.71, for Rs.83 and Rs.89.

#Those who are holding the shares of Dena Bank Ltd can book full profits at around Rs.27 (intraday high Rs.27.70) and wait for the scrip to close above Rs.27.50.

~~ with inputs from Capital Market - Live News....

Pre-Session: Market may open lower

24-Jan-18: Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could fall 25.50 points at the opening bell. Investors could book profits today, 24 January 2018, after recent rally.

Overseas, Asian shares were trading lower on profit booking after recent gains. US stocks closed mixed on Tuesday, with market focus shifting from politics to corporate earnings after a government shutdown came to an end on Monday. The Dow Jones Industrial Average slipped 0.1%. The S&P 500 index climbed 0.2%. The Nasdaq Composite Index rose 0.7%.

Closer home, foreign portfolio investors (FPIs) bought shares worth a net Rs 1229.35 crore yesterday, 23 January 2018, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 169.03 crore yesterday, 23 January 2018, as per provisional data.

Key benchmark indices extended recent gains to hit fresh record high levels yesterday, 23 January 2018. The barometer index, the S&P BSE Sensex, jumped 341.97 points or 0.96% to settle at 36,139.98. The Nifty 50 index rose 117.50 points or 1.07% to settle at 11,083.70. Key indices crossed new milestones, with the Sensex mounting 36,000 mark and the Nifty settling above the 11,000-mark for the first time in history. The market gained for the fifth straight day.

~Powered by Capital Market - Live News....

Market Pulse

Buying continued unabated as key benchmark indices extended intraday gains and hit fresh intraday high in early afternoon trade. At 12:23 IST, the barometer index, the S&P BSE Sensex, was up 295.06 points or 0.82% at 36,093.07. The Nifty 50 index was up 103.20 points or 0.94% at 11,069.40.

Shares opened higher as positive leads from Asian markets and overnight gains on the Wall Street boosted investors sentiment. Both, the Sensex and the Nifty hit record high level in early afternoon trade. The Sensex crossed the 36,000 mark and the Nifty crossed the 11,000 mark.

The Sensex rose 309.06 points, or 0.86% at the day's high of 36,107.07 in early afternoon trade, its record high level. The index rose 65.97 points, or 0.18% at the day's low of 35,863.98. The Nifty rose 107 points, or 0.98% at the day's high of 11,073.20 in early afternoon trade, its record high level. The index rose 28.35 points, or 0.26% at the day's low of 10,994.55.

Among secondary barometers, the BSE Mid-Cap index was up 1.24%, outperforming the Sensex. The BSE Small-Cap index was up 0.63%, underperforming the Sensex. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,556 shares rose and 1,177 shares fell. A total of 119 shares were unchanged. Breadth was quite strong in early trade.

Cement shares declined. Ambuja Cements (down 1.79%), ACC (down 1.25%) and UltraTech Cement (down 0.19%), edged lower.

Grasim Industries was down 0.82%. Grasim has exposure to cement sector through its holding in UltraTech Cement.

Telecom shares rose. Reliance Communications (up 5.57%), MTNL (up 2.11%), Idea Cellular (up 1.76%), Bharti Airtel (up 1.07%) and Tata Teleservices (Maharashtra) (up 0.14%), edged higher.

Telecom tower infrastructure provider Bharti Infratel was down 0.66%.

Rallis India fell 5.22% after consolidated net profit fell 1.6% to Rs 24.94 crore on 18.6% growth in net sales to Rs 390.16 crore in Q3 December 2017 over Q3 December 2016. The result was announced after market hours yesterday, 22 January 2018.

V Shankar, Managing Director and CEO, Rallis India said that the company's broad based portfolio of solutions and robust farmer relationship have been instrumental in driving its revenue growth during the quarter. The company's performance in the international business continues to be better than last year due to improving situation in key markets such as Brazil and strong demand for herbicides.

Overseas, Asian shares were trading higher following the stronger lead from Wall Street after US lawmakers reached a deal to end a government shutdown.

Japan's central bank kept monetary settings unchanged on Tuesday and offered a more upbeat view on inflation expectations than three months ago. The Bank of Japan (BOJ) maintained a pledge to guide short-term interest rates at minus 0.1% and 10-year bond yields around zero percent at its two-day rate review that ended on Tuesday. It also kept intact a loose pledge to buy government bonds so its holdings increase roughly at an annual pace of 80 trillion yen ($722 billion). The nine-member board also kept its price forecasts that project inflation to hit 2% around the fiscal year ending in March 2020.

US stocks ended higher after the Senate reached a short-term compromise to end a government shutdown that began last week. The stopgap bill approved by the Senate on Monday will keep the US government open through 8 February 2018. The House of Representatives subsequently voted and passed the bill to reopen the government, sending it to President Donald Trump for a signature. The Dow Jones Industrial Average gained 0.6%. The S&P 500 rose 0.8%. The Nasdaq Composite Index rose 1%.

Today's Calls  (given to my various clients): 

#Positional Buy ABB Ltd in the range of Rs.1570-1590, for  a target of Rs.1730-1770, with a SL below Rs.1515. Book Partial PROFIT at around Rs.1641.

#Intraday Sell Tata Motor DVR around Rs.238.5, SL 241, TGT; Rs. 235-232.

#Sell DHFL at around Rs.623, T: Rs.604, SL: Rs.627. 

#Sell Aluminium at around Rs.142.50, SL above Rs.144, T: Rs.140 on  T+3 basis. Book Partial PROFIT and keep a trailing SL to cost price.

#Short Term buy Chambal Fertilizer at around Rs.157-158, SL below Rs.151; T:Rs.168- 172.

#Buy HDIL at around Rs.60.70, for short term targets of Rs.65-72. The budget is likely to bring some goodies for the Real Estate space. In the last budget, the Affordable Segment was a huge beneficiary, with it being granted Infrastructure status, along with other incentives, such as lower interest rate for loans up to Rs.12 lakh, area being increased and an increased time for construction. Land acquisition is one of the single highest cost contributors to a real estate project. Moreover, since margins in affordable housing are thin, it becomes increasingly difficult for affordable housing developers to buy land at prevailing cost of capital. The Government should make land available at a cheaper cost of capital to promote the affordable housing sector -- one of the expectations of the upcoming budget.

Over and above the high cost of land, GST and other taxes, the end consumer also pays about 5% - 6% Stamp Duty on its purchases in a state like Maharashtra. This varies across different states as a result of which, the consumer pays an additional 18% approximately only in taxes to the government (including GST and Stamp Duty). The government must look at reducing this cost and rationalising and uniforming stamp duty rates across the country. The taxes and stamp duty are a major hindrance to development today.

Now coming to the GST alone, despite input credit being passed on to the customer, with GST @ 12%, there is a marginal increase in the overall cost impact to the consumer. This needs to be revised downwards, to benefit the consumer, leading to a further push in sales volumes. These are some of the measures which is needed to kick start the growth of the now moribund real estate sector.

#The call of NDTV Ltd was given to various clients at around Rs.45-46, banking on the better prospects of the company in the next couple of years. However, I am looking for a short term target of Rs.51-57, for the stock.

#One thing, I would like to mention here is that: wealth will be created in the long term only, provided you follow some basic protocols of equity market, among them is the disciplined use of Stop Losses. I mean if you buy a share based on certain theory and keep on holding with daily or weekly reviews on the same, you will gain more than these daily tit-bits,which most of the stock market participants are interested. Therefore, I always suggest less of daily or short term trading but more of investment based play in the market. 
However, what I find is that most of my clients (and friends) barring say 20% from the group, are more interested in this short term game of buying and selling, which are very risky and in the process they lose wealth at the end of day instead of gaining. 
Yes, short term trading is also necessary and an earning of Rs.1200-1500 on daily basis on a seed capital of Rs.2 lakhs is not bad, however this should not eclipse your main objective of making good profit from your investments through delivery based medium to long term play only. Therefore:
1. Buy a stock based on a story - turnaround stories gives best returns.
2. Check the sector outlook on a regular basis.
3. Keep eye on the changing fundamentals of the sector and of the company (if any).
4. Review your investment decision on this stock, at the end of each day or week. 
5. Exit at the Stop Loss, if the SECTOR OUTLOOK turn SOUR and the stock does not show much improvement in price actions. 
Eg: 
a) The scrip of MCX Ltd at around Rs.844, is likely to face stiff competition from its peers and has more chance of going down or stay range bound, than some giving some meaningful positive returns on the upside. Hence, it is no use of buying the share of Multi Commodity Exchange of India Ltd  (Rs.844.20) for the long term, unless and until there is marked improved in the future SECTOR outlook.
b) The stock of 3i Infotech Ltd (Rs.7.35) is currently in a sector, whose outlook has turned positive according to some brokerage houses. I mean the sector outlook has changed towards better, which means the shares in this sector would show marked improvement in fundamentals going forward; if we follow the standard protocols of equity investing. 
Moreover, this company which is in the CDR scheme, is also showing positive developments in the fundamentals. Hence, what should you do? You should buy the scrip of 3i Infotech Ltd on everyday declines with a SL at Rs.6.70 and keep holding. I am sure you would thank me after a couple of years.
c) The stock of Federal Bank Ltd (Rs.103), should be accumulated. Why? Because after implementation of the new Insolvency and Bankruptcy Code, 2016 (IBC), the outlook of banking sector has turned positive. 
You can see this from the share price of Punjab National Bank Ltd, which is ruling at Rs.186, having made an intraday high of Rs.187.8. Its share price came up from around Rs.162 to the current market price within a few days --- you can check this from the historical prices. Therefore, any concern with asset quality of banks, is likely to come down in future, due to strict implementation of the IBC by the authorities. Hence, you need to accumulate the scrip  of most banks and hold. 
Moreover, if the stock of ICICI Bank Ltd can jump from ~Rs.305 to Rs.364, within a couple of week, the same can happen in this reasonably well managed private sector bank, known as Federal Bank Ltd, which additionally has come out with good set of Q3FY18 numbers. Similar is the case for Central Bank Ltd (Rs.74.5) and Dena Bank Ltd (Rs.26.40).

Market Pulse

Key benchmark indices hovered in positive zone in early afternoon trade on sustained buying demand in index pivotals. At 13.12 IST, the barometer index, the S&P BSE Sensex was at 35,643.57 up 131.99 points or 0.37%, while the Nifty was seen at 10,918.10 up 23.40 points or 0.21%. Most capital goods stocks rose. Realty stocks saw mixed trend.

Trading for the week began on a positive note led by gains in Reliance Industries and HDFC Bank. A bout of volatility was seen in morning trade as the Sensex and the Nifty trimmed gains after scaling a fresh record highs. Volatility continued in mid-morning trade as stocks regained strength soon after trimming gains from higher levels.

The S&P BSE Mid-Cap index was up 0.03%, underperforming the Sensex. The S&P BSE Small-Cap index was up 0.44%, outperforming the Sensex.

The market breadth, indicating the overall health of the market, was positive. On the BSE, 1,458 shares rose and 1,250 shares fell. A total of 144 shares were unchanged.

Most capital goods stocks rose. GE Power India (up 5.39%), Bharat Heavy Electricals (Bhel) (up 0.62%), BEML (up 0.15%), Bharat Electronics (up 0.87%), Punj Lloyd (up 0.03%) and Siemens (up 0.16%) rose. Thermax (down 1.09%) and ABB India (down 0.47%) fell.

L&T fell 0.09% to Rs 1,370.70. L&T launched the second Offshore Patrol Vessel (OPV) of a series of seven OPVs for the Indian Coast Guard at the company's greenfield defence shipyard at Kattupalli, near Chennai on Saturday, 20 January 2018. L&T had received the order valued at Rs 1432 crore for design and construction of seven OPVs from the Ministry of Defence in March 2015. The announcement was made during market hours today, 22 January 2018.

The first OPV was launched in October 2017 and is presently undergoing trials. OPVs are long-range surface ships with helicopter operation capabilities, and their roles include coastal and offshore patrolling, policing maritime zones of India, control & surveillance, anti-smuggling & anti-piracy with limited wartime roles.

Realty stocks saw mixed trend. Sobha (up 5.21%), Godrej Properties (up 4.9%), Indiabulls Real Estate (up 0.62%), Unitech (up 0.55%) and Oberoi Realty (up 0.7%) rose. DLF (down 0.72%), Housing Development and Infrastructure (down 0.16%), D B Realty (down 2.87%) and Prestige Estates Projects (down 1.9%) fell.

GRUH Finance lost 8.19% to Rs 634.75 on profit booking after a recent rally. Shares of GRUH Finance witnessed a run-up ahead of Q3 results. The stock had surged 38.28% in seven trading sessions to settle at Rs 691.35 on Friday, 19 January 2018, from its close of Rs 499.95 on 10 January 2018. GRUH Finance's net profit rose 28.29% to Rs 82.16 crore on 12.45% rise in total income to Rs 428.47 crore in Q3 December 2017 over Q3 December 2016. The result was announced on Saturday, 20 January 2018.

Apollo Micro Systems was trading at Rs 454.10, at a premium of 65.12% over its initial public offer issue price of Rs 275. The stock opened at Rs 478, a premium of 73.82% over issue price. The stock had hit a high of Rs 479.95 and a low of Rs 454.10 so far during the day. The IPO of Apollo Micro Systems was subscribed 248.51 times. The company had fixed the price band of Rs 270-275 per equity share. Apollo Micro Systems is an electronic, electro-mechanical, engineering designs, manufacturing and supplies company.

J Kumar Infraprojects rose 5.9% after the company said it received letter of acceptance (LoA) from Delhi Metro Rail Corporation for line 2A architectural station finishing tenders. The first contract is for architectural finishing works of four stations viz. Don Bosco, Shimpoli, Mahavir Nagar and Kamraj Nagar of Line 2A on Dahisar (East) to DN Nagar corridor of Mumbai Metro Rail Project. The contract is worth Rs 28.10 crore. The second order is for architectural finishing works of four stations viz. Charkop, Malad, Kasturi Park and Bangur Nagar of Line 2A on Dahisar (East) to DN Nagar Corridor of Mumbai Metro Rail Project. The contract is worth Rs 28.86 crore. The announcement was made on Saturday, 20 January 2018.

Overseas, most Asian stocks were trading higher as investors kept an eye on political developments in the US after a government shutdown began last week. US stocks on Friday, 19 January 2018 finished higher, with both the S&P 500 and the Nasdaq ending at records as optimism over corporate earnings outweighed the US government shutdown.

Republican and Democratic leaders of the US Senate failed to secure a deal on Sunday night seeking to break the impasse that has kept the US government shut down for two days.

Today's Call:

#As expected the shares of 3i Infotech Ltd (Rs.7.35) got the support around Rs.7 and is now about to hit the buyer freeze. Considering the fundamentals of the  company, the investors should accumulate the scrip in every dip from now, for short to medium term targets of Rs.50 and long term target of Rs.100-plus.

#Those who are holding the shares of HDIL (Rs.61) and have averaged yesterday around Rs.60, should now look for targets of Rs.66 -72-84-91.

#Those who are holding the shares of Federal Bank Ltd (Rs.102) can continue to add on every declines. The company came out with good set of numbers for the Q3FY18. SL: Rs.97.

~~with inputs from Capital Market - Live News

Pre-Session:Market may open higher

22-Jan-18: Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could rise 19 points at the opening bell.

Overseas, Asian stocks were trading on a mixed note. US stocks shrugged off the government shutdown drama in Washington and rose to all-time highs on Friday, 19 January 2018 following a report that regulators are close to further easing banking rules.

Back home, trading for the week ended on a buoyant note on Friday, 19 January 2018, with key benchmark indices settling with decent gains and extending their record high hitting streak. The Sensex rose 251.29 points or 0.71% to settle at 35,511.58, its record closing high.

The trading activity on that day showed that the foreign portfolio investors (FPIs) bought shares worth a net Rs 988.25 crore on Friday, 19 January 2018, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 209.86 crore on Friday, 19 January 2018, as per provisional data.

Among corporate news,  Asian Paints and Axis Bank will declare their Q3 earnings today, 22 January 2018.

Reliance Industries' (RIL) consolidated net profit rose 25.5% to Rs 9445 crore on 25.7% growth in net sales to Rs 99810 crore in Q3 December 2017 over Q3 December 2016. The result was announced after market hours on Friday, 19 January 2018.

Mukesh D. Ambani, Chairman and Managing Director, RIL said that the quarter marks the culmination of its petrochemical expansion projects and the first positive net profit contribution from its newest business line - Digital Services (Jio). Jio's strong financial result reflects the fundamental strength of its business, significant efficiencies and right strategic initiatives, he said. Ambani further added that the company is excited about the prospects of its energy and consumer businesses due to strong growth in Indian markets and constructive macro environment.

Shares of Tata Steel will be focus after the company's board approved to raise Rs 12800 crore through a rights issue of equity shares. The announcement was made after market hours on Friday, 19 January 2018.

Wipro's consolidated net profit fell 11.85% to Rs 1930.10 crore on 1.82% growth in net sales to Rs 13669 crore in Q3 December 2017 over Q2 September 2017. The result was announced after market hours on Friday, 19 January 2018.

The company's revenue from IT services in dollar terms in Q3 December 2017 remained flat sequentially and increased by 5.8% YoY. The company expects revenue from IT Services business to be in the range of $2,033 million to $2,073 million for Q4 March 2018.

Abidali Z. Neemuchwala, CEO and member of the board said, the company continued to improve its growth trajectory driven by strong momentum in BFSI and uptick in Healthcare. This is also reflected in its outlook for Q4 March 2018. Wipro's leadership in Digital continues to strengthen with over 25% of its revenues now coming from Digital, Neemuchwala added.

Jatin Dalal, Chief Financial Officer said, the company has made strong progress in its client mining with number of clients contributing revenues over $50 million increasing from 33 to 41 in the last 1 year. In the first 9 months of FY 2018, Wipro generated robust operating cash flows over the same period last year, Dalal added.

ONGC and HPCL will be in spotlight. ONGC on Friday, 19 January 2018, approved acquisition of the entire 51.11% shareholding of Government of India (GoI) in HPCL, at a cash purchase consideration of Rs 473.97 per share with a total acquisition cost of Rs 36915 crore. The parties expect to complete the transaction before end of January 2018. The announcement was made on Saturday, 20 January 2018.

Cipla said it has completed the divestment of entire equity stake held by its wholly owned subsidiary Cipla Holdings B.V., Netherlands in Cipla Croatia d.o.o, Croatia. Consequently, Cipla Croatia d.o.o has ceased to be a subsidiary of Cipla Holding B.V. with effect from 19 January 2018. The announcement was made after market hours on Friday, 19 January 2018.

~~Powered by Capital Market - Live News

WINNING STROKES

Trading for the week ended on a buoyant note as dream run on the Dalal street continued, with key benchmark indices settling with decent gains and extending their record high hitting streak. The barometer index, the S&P BSE Sensex rose 251.29 points or 0.71% to settle at 35,511.58. The Nifty 50 index advanced 77.70 points or 0.72% to settle at 10,894.70. The Nifty crossed the psychological 10,900-mark for the first time in its history. Both the Sensex, and the Nifty, hit record high levels in intraday as well as on closing basis.

Firmness in global stocks and GST council in its latest meet slashing the tax rate on 54 services and 29 items and also simplifying return filing process for businesses boosted sentiment. The market gained for the third straight day.

The S&P BSE Mid-Cap index gained 0.77%. The S&P BSE Small-Cap index rose 0.88%. Both these indices outperformed the Sensex.

The breadth, indicating the overall health of the market, was negative. On the BSE, 1,464 shares fell and 1,422 shares rose. A total of 144 shares were unchanged.

The total turnover on BSE amounted to Rs 5494.83 crore, lower than turnover of Rs 6015.23 crore registered during the previous trading session.

Most realty stocks gained. D B Realty (up 4.97%), Indiabulls Real Estate (up 4.42%), Unitech (up 2.84%), NBCC (up 0.88%), Godrej Properties (up 3.49%), and Oberoi Realty (up 1.19%) edged higher. DLF (down 0.56%), Sobha (down 2.11%), and Housing Development & Infrastructure (HDIL) (down 1.3%) declined.

Severely impacted by various reforms like RERA, GST and demonetisation, the realty sector is reportedly pinning its hopes on Budget 2018-19 for relief measures like lower taxes and infrastructure status for the sector. Industry players are expecting rationalisation of the GST rates from the current 12% to 6% and bringing stamp duty under the ambit of GST. Single window clearances for all approvals and additional tax incentives for first time home buyers are also expected.

Bank stocks also gained. Among public sector banks, Punjab National Bank (up 3.22%), Union Bank of India (up 2.47%), State Bank of India (up 1.98%), Indian Bank (up 1.44%), IDBI Bank (up 0.5%) and Bank of Baroda (up 1.63%) edged higher. Corporation Bank declined 0.51%.

Meanwhile, the Union Finance Minister Arun Jaitley Chaired the 25th meeting of the GST Council in New Delhi on 18 January 2018. The Council has recommended certain changes in GST/IGST rate and clarifications in respect of GST rate on certain goods as per discussions in the 25th GST Council meeting. It slashed the tax rate on 54 services and 29 items, including old and used motor vehicles bio-diesel, while also simplifying return filing process for businesses. Certain policy changes have also been recommended by the GST Council.

Among the macro data in US, first-time weekly jobless claims fell to a 45-year low, dropping by 41,000 to 220,000. Meanwhile, construction of new houses fell 8.2% in December to a 1.19 million annual rate. Permits for future construction were basically flat at 1.30 million. Still, permits, housing starts and the number of new homes completed all hit the highest levels since 2007. A gauge of Philadelphia-area manufacturing fell to five-month low of 22.2 in January, the Philadelphia Fed said.

#The stock of Jain Irrigation Systems Ltd recommended around Rs.132.50, closed at Rs.135.80. Those who have not booked intraday profits yesterday can continue to hold, with the targets of Rs.137-142. 

#The stock of HDIL after breaking a crucial support closed at Rs.60.90 yesterday.  However, the candle stick chart analysis, accompanied by other other parameters do suggest that probably a bottom has been formed. I am looking for an upward target of Rs.65 in the coming days and upon closing above Rs.67.5, we can look for targets of Rs.84-87 in the coming days. Please keep a SL at Rs.59, if the share fails to perform as expected.

#The scrip of 3i Infotech Ltd yesterday closed at Rs.7.03 in the BSE. However, I feel that the stock will  not break the support zone of Rs.6.75-7. After the price stabilizes, the investors can accumulate. The company has been doing well during the last few quarter and it is a turnaround story, where prudent investors should park their funds. 

#Those who are holding the shares of the PRIVATE BANK, Federal Bank of India Ltd (Rs.103.15), can look for targets of Rs111-115 in the coming days. If the government tweaks with the FDI limit, then it will be one of the beneficiaries among the private banking space. The company came out with excellent set of Q3 number, but somehow the bear operators were able to invade the minds of the investors with asset quality argument, even though the management seems to be confident regarding its bright future. 

#Now, one thing I would like to mention here: the contents of this blog is for information purpose only and is also suitable for person who already have some experience in the market. This blog assumes that you are already a seasoned trader in the market with at least 5-6 years of experience. It is not for novices and fly  by night stock market traders, who think that making money from the market is as easy as buying vegetables from a local shop. Therefore, my suggestion for this band of traders, would be to not to follow this blog blindly in the hope of making big in the short term. We have spent decades here - if you are thinking that you will become Ashish Chugh or Porinju Veliyath, in matter of 2--3 years because you are an MBA Finance or a CA or an ICWAI or have done some courses on the stock market, then there cannot be a greater fool than you and all those who are rallying behind you. 

I have been writing in this blog, since more than a decade, before that I was writing in Yahoo and Google Groups and before that in the form of a Financial Journalists in Bombay and before as an investor in mutual fund and securities; even then I make mistakes. Therefore, the things are not that easy as it looks from a distance. Lot of hard work goes in the choice of stocks and more importantly taking split second decisions regarding them, based on chart patterns and available fundamental information; plus source based inputs. 

The point which I am trying to hammer is that: I give some frameworks here, based on some data which you should use to do your own research to come out successful in the market. Or else you should take the hep of experts to analyse the points mentioned here. Novices, should therefore, not send me personal messages in the Facebook or write silly questions on my timeline like why NDTV Ltd has fallen below the recommended price or why HDIL is not moving up -- without understanding that a stock cannot move up as soon as it is recommended here or it cannot move up daily; because there are so many factors at play which influences the prices of shares in the short to long term..... 

Moreover, if you have an equity capital of around Rs,2 lakhs, then come to me with demat account from any brokerage house, we will make money through daily and short term trading too - on profit sharing basis. This  is the best time, as the market has given some directions now and it is more predictable at present than it was 1 year down the line. 

If you are unable to pay the high yearly subscription charges for Premium Membership, then I feel this is the best alternative to make money, with joint effort. Lot of my clients have been making money, through daily and short term trading since sometime -- you can also join this group. I have eliminated the need to open a demat account with BMA Wealth Creators for this option, after lot of requests came from the blog readers in this front. Having said, this you need to keep a minimum deposit of Rs.25000 (negotiable) with me, to start trading on profit sharing basis. This money would be refunded once, you leave my service. I am forced to take this step, because of some dishonest traders/investors/punters who come make money with my 24x7 help but escape without paying for my hard work. 

~~ with inputs from Capital Market - Live News