Weekly Close: Is 20k here to stay??

Week started ranged with New Year eve with less participation but midcaps and small caps had their charms but heavy weights traded sluggish at the start of the week. Party mood in the initial 2 days kept the trading activity muted and that limited the support from the Global front as well. Third day of the week saw indices end in red as global market also witnessed profit booking as crude touched $100 per barrel which weighed across but Indian oil companies rallied. Oil marketing companies rejoiced as Oil ministry declared to hike price of Petrol by 4 Rs and Diesel by Rs 2. Adding to this was Gold which also touched it?s all time high of $879 an ounce. Indian Power stocks also rallied with the largest IPO in the history of Indian Capital Markets by Reliance Power Ltd. As mentioned Mid Caps and Small caps have outperformed this week too. Market rallied on the last day of the week with over 300 points with optimism across, oil and power stocks are the winners for the week. Next week we enter the results season which will decide the market direction.



US markets had weak trade so far with economic data was somewhat positive offsetting the worries of recession a bit. US markets have sustained at below 200 DMA and that clearly is a confirmation that life will be tough for them. Global cues are something to worry about.

Sensex gained 2.14% for the week and Nifty gained 3% for the week. Sensex was supported by REL +15.99%, NTPC +12.05%, Ongc +9.23%, Tata motors +7.26%, HDFC +7.05%, ITC +6.74%, Hind Unilver +5.81%, DLF +5%, ICICI Bank +4.23%, Rcom +3.77% while Sensex was dragged by Wipro -6.80%, TCS -6.58%, Satyam -5.69%, Infosys -5.61%, Ambuja cement -3.75%.

old-Tek Technologies Limited (Mold Tek) is one of the leaders in packaging and an emerging player in the Structural Engineering KPO Services. Though the revenue from the IT business is less but there has been continuous growth and its KPO part would be one of the multi bagger in next few years. The company has been able to maintain similar profit margins despite rupee appreciation as higher productivity came into play. It managed to achieve almost 90% growth in sales and net profit for its KPO Division in a challenging US environment. The company is also in the process of demerging its KPO business from its Plastic packaging business by April?08. The de-merger would result in better focused business and valuations. The demerger would unlock value as well. The stock hit its all time high today and has just started to deliver. Do read the detailed note on our site.

Karuturi. Com is the largest manufacturer of flowers post the Kenyan acquisition. The numbers would flow in top line and bottom line from this quarter. Flowers is really localised and fragmented business. But, Karuturi has really done great job and is now a global company. We tracked the stock 2 years back and the stock has delivered exceptionally well. Our note in the site should give you good idea about the company.

Adhunik supplies specialized steel & value added steel components to industries such as Automobiles, Power, Defence and Engg companies. Adhunik Metaliks was on lime light for the week after the news that expansion plan is getting completed in next quarter itself and from next quarter Adhunik will have 4.5-lakh tonne capacity available. As far as power is concerned 17 MW is running and another 17 MW is coming by next quarter itself so combining will fiche about 34 mega watt of captive power plant in the steel business. The valuation looks attractive considering its transformation to a fully integrated steel player. We believe primarily growth will be driven by higher realization as a result of rolled products ( rolled from outside rolling companies, as its own rolling mill is likely to come in FY08). We had a Wow call here which was booked after it delivered gains of more than 15% in a week.

Paramount Communication (Paramount) is one of the leading manufacturers of Power Cables, Railway Cables and Telecom Cables. It supplies large variety of specialized cables and wires for diversified range of industries. Paramount is expanding the capacity in three phases with an investment of Rs 120 cr. Paramount recently acquired, a company called AEI cables in UK which is one of the oldest cables manufacturing company with a good reputation. This company has major presence in UK and presence in the industrial and construction cables; also has comparable presence in Defense and Railways. Valuations are certainly attractive. The company is growing organically and inorganically. The future seems to be promising; the capacities are coming at the right time. The recent acquisition should give a big jump to the top line but margins are where the risk lies. The margins of the UK unit may take its time and the valuation would be thus dependent on this turnaround. The turnaround of the acquired entity will be a major trigger for Paramount. We are positive on the business and Paramount?s prospects. One can accumulate at dips for long term investment prospect.

Sensex traded well above the 20k for the entire week. Bullishness was seen across the sectors. Recently the Pharma and FMCG stocks have picked up and fresh money seems to ge getting into these stocks. These are defensive stocks and hence what we can derive is money is that big money is moving into safer sectors. Traders should trade with caution in midcaps and small cap stocks which have risen very smartly for a last few weeks. Sensex resistance is seen at 20750--20950. Fresh bullishness will trigger in if this range is crossed and we might move upto 22000. On the lower side, Sensex has support at 20k and 19500