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Thursday, January 04, 2007
PowerYourTrade Trading Calls
Ashwani Gujral
Buy Reliance Capital with a stop loss of Rs 600 for a target of Rs 730.
Buy NDTV with a stop loss of Rs 244 for a target of Rs 320.
Deepak Mohoni
Buy Mphasis BFL below Rs 316. Stop Loss at Rs 312. This is a day-trading recommendation.
Short Sell ITC above Rs 260.5. Stop Loss at Rs 264.5. This is a day-trading recommendation
Rajat K Bose
Buy L&T with stop loss below Rs 1460 for a target of Rs 1515
Buy IPCL with stop loss below Rs 291.80 for a target of Rs 302
5 Intra-day Stock Ideas
NIFTY (4024) SUP 4046 RES 4000
Buy BALAJITELE (132.25)
SL 129 T 141, 143
Buy UTIBANK (474.65)
SL 471 T 484, 486
Buy CIPLA (257.85)
SL 254 T 265, 267
SELL HCLTECH (632)
@ 636 SL 640 T 626, 624
SELL TATATEA (716.4)
@ 720 SL 724 T 709, 707
STRATEGY INPUTS FOR THE DAY
Enjoy the ride…safely
Nothing is worse than active ignorance.
A joyride is good as long as you land safely. But for the markets there is no end to gains and pains. The results are yet to come in, and the bulls seem already excited. The first two days of the new year have been pretty good for the market. The Sensex is above 14k and the Nifty is quoting above 4k. The undertone remains upbeat owing to the strong momentum in the economy and corporate earnings. FII inflows continue, albeit at a slower pace.
Globally too, things appear fine from our market’s point of view. Everyone's waiting for the Fed to take a call on the US economy and interest rates. Other factor to keep an eye will be fund flows, especially into the emerging markets and particularly India within that pack. It will take some time before we get a clear picture on all these.
Locally too, some questions remain. How much more can the main indices rise from here? Will we see a correction? If yes, how long and how sharp will it be? And, most importantly when it will come? The timing of a fall is quite unpredictable. All one can do is be a little cautious when the trend is bullish. After nearly 47% returns last year from the Sensex, it may not be all that easy to make money this year. But it is definitely possible.
For today, we expect another positive start, but the current momentum may just taper off after a two-day rally. In the US, the Dow and the Nasdaq rose marginally. One good news is that oil fell sharply yesterday in New York trading to settle at $58.32 a barrel. Asian markets were mixed this morning. The Nikkei 225 Stock Average climbed 0.7% to an eight-month high while the Hang Seng dropped 50 points to 20,363.
FIIs were net buyers of Rs1.68bn in the cash segment yesterday on a provisional basis. In the F&O segment, they pumped in Rs1.57bn. Mutual Funds were net sellers of Rs79.8mn on Tuesday.
US stocks erased an initial rally in 2007's first trading day after minutes from the Dec. 12 meeting of Federal Reserve policy makers suggested that the central bank was still concerned about slowing economic growth and accelerating inflation.
Copper plunged 7.7% in New York to a seven-month low after US construction spending dropped in November. A measure of six metals traded on the London Metal Exchange (LME) dropped 1.9% following a 2.4% slide a day earlier. Copper slid 4.2% in London.
Among the Indian ADRs, VSNL surged 5.5%, Infy was up 2.3%, Wipro gained 1.4%, Satyam rose 2.3%, Tata Motors shot up 6.2%, MTNL climbed 4.4% and ICICI Bank added 1.2%.
In the emerging markets, the Bovespa slumped over 2% to 44,445 while the RTS index rose 0.6% to 1921 and the IPC index in Mexico fell 0.2% to 26,619.
Global Vectra Helicorp is likely to rise after signing an agreement to provide helicopter services to Transocean Offshore International Ventures and its affiliate for three years. The total value of contract works out to Rs430mn.
Air Deccan is expected to gain amid reports that the low-cost carrier may fly into the profit zone in the October to December quarter. Videocon Industries could be under pressure as reports say its proposed takeover of Daewoo Electronics has hit a roadblock.
NTPC is another stock to keep an eye on. The state-run power generation major is reportedly planning to sign an agreement with Nigerian Government to set up a gas-based power plant there in lieu of 3mn tons of LNG per year.
GNFC might attract some attention amid reports that it will pump in Rs11bn on setting up a TDI plant in Gujarat.
Major Bulk Deals:
Lehman Bros has picked up Asian Electronics and IOL Broadband and sold Pioneer Embroideries; ABN AMRO Bank has bought DCB; Reliance Capital has purchased EIH Associates; Lotus Global has sold GV Films; Kotak Mahindra Bank has sold NK Industries; Franklin Templeton MF has picked up Polaris.
Insider Trades:
Hexaware Technologies Limited: Goldman Sachs Investments (Mauritius) I Limited ("GSIMI") has purchased from open market 250000 equity shares of Hexaware Technologies Limited on 29th December, 2006.
Market Volumes:
The turnover on NSE was up by 37% to Rs81.54bn. The BSE Consumer Durable index was the major gainer and gained 1.61%. BSE Pharma index (up 1.42%), BSE Technology index (up 1.30%) and BSE Auto index (up 0.46%) were among the other major gainers. However, BSE FMCG index lost 0.71%.
Volume Toppers:
IFCI, DCB, Polaris, SAIL, Unitech, Hindalco, GTL, R Com, HCC, Indiabulls, IVRCL Infrastructure, Satyam Computer, Parsvnath, NTPC, GTL Infrastructure, Ashok Leyland, Triveni Engineering and Tata Motors.
Upper Circuit Filters:
Shaw Wallace, Flex Industries, Ganesh Housing, IOL Broadband and McNally Bharat.
Brokers Recommendations:
Maruti – Buy from Citigroup with price target of Rs1107
Long Term Investment:
IGL
Major News Headlines:
i-flex to buy Singapore consulting unit of Capco
Reliance Comm Board meet on Jan 10 to mull fund raising plans
RPG Transmission gets orders worth Rs1.93bn
AV Birla Group Cement sales fall 3.2% in December
Diamond Cable gets orders totaling Rs216.7mn
Tata Steel Apr-Dec sales up 11.7% yoy
IOL Broadband ties up with BSNL
ITD Cementation to sell Rs2.5bn shares to big investors
L&T secures $94mn order from Abu Dhabi
ACC Dec cement shipments up 3% yoy
Bharat Electronics Board to consider interim dividend on Jan 23
BHEL is set to bag a Rs4bn contract from Bangladesh: reports
From Research Desk- Indraprastha Gas Ltd. (IGL)
Indraprastha Gas Ltd (IGL) was setup in 1998 to supply CNG and PNG in the city of Delhi. Since then all DTC buses, taxis and auto rickshaws running on the street of Delhi have been converted to CNG and around 40,000 households have been connected with PNG. Going ahead with increased conversions of private vehicles and disallowance of registration of new diesel run LGVs (only CNG run LGVs to be registered) will drive growth for CNG. In the PNG segment the penetration is only at 4% and with real estate growth in Delhi PNG revenues are expected to clock a CAGR of 51.9%. Operating margins are expected to sustain over the current levels of above 40%. The company is also in initial stages of setting up city gas distribution infrastructure in the NCR region which are expected to contribute to revenue in FY09. These factors will drive CAGR of 17.3% and 21.4% in revenues and PAT respectively. We believe that low business risk and growth prospects of the company will drive valuations for the stock and hence we recommend a BUY on the stock with a target price of Rs162.
Momentum likely to continue
The bulls recorded second straight day of gains in first week of New Year. After piercing 14k mark at open the key indices lost ground as the heavy weights like ABB, M&M, Tisco, ONGC and ICICI Bank witnessed selling pressure, further disappointing set of dispatch numbers by heavy weight ACC aided the down fall. However, after hitting an intra-day low of 13897.42 the benchmark index recovered from lower levels in the later half of the session as buying momentum in the Technology, Auto and Pharma stocks lifted benchmark BSE Sensex to close over the 14k mark for the first time. The Pharma index rose 1.42% followed by Technology index, which added 1.30%. The Auto and Bank index followed suit. Finally, the BSE benchmark Sensex surged 72 points to close at 14014. NSE Nifty was up 16 points to close at 4024.
Tata steel slipped 1.5% to Rs471. The company registered its April-December sales at 3.53mn tons, up 11.7% from year ago. The scrip touched an intra-day high of Rs481 and a low of Rs470 and recorded volumes of over 14,00,000 shares on NSE.
L&T advanced 0.8% to Rs1471 after the company secured $94mn order from the Abu Dhabi Water & Electricity Authority for the construction of six major electrical substations. The scrip touched an intra-day high of Rs1486 and a low of Rs1420 and recorded volumes of over 6,00,000 shares on NSE.
IOL Broadband surged 3.8% to Rs277 after the company announced that they have tied up with BSNL for IPTV. The scrip touched an intra-day high of Rs277 and a low of Rs265 and recorded volumes of over 7,00,000 shares on NSE.
The Technology stocks were in the limelight. Mid-Cap technology stocks led from front Polaris, Moser Baer and Mphasis BFL were among the major gainers. Index heavy weights Infosys rose 1.9% to Rs2314, Satyam Computer was up 1.5% to Rs516 and Wipro added 1% to Rs617.
Pharma stocks recorded healthy gains. Ranbaxy, Sun Pharma, Glaxo and Cipla were among the major gainers.
Cement stocks were a mixed bag. Index heavy weights ACC lost 1.7% to Rs1073 on back of disappointing set of numbers. The company sold 1.65mn tons cement in December against 1.6mn. However, Grasim was up 0.2% to Rs2838, Gujarat Ambuja gained 0.3% to Rs145 and Mangalam Cement rose 1.4% to Rs212.
Metal stocks pared their intra-day gains. Tisco lost 1.55 to Rs471, Sterlite industries dropped 1.4% to Rs546, Hindustan Zinc fell 2.7% to Rs810 and National Aluminum was down 0.2% to Rs214.
WOW - Polaris Software - JP Morgan
Significant organizational changes & robust business pipeline will fuel growth ahead
In its report dated 2nd Januaryr, 2007 J.P. Morgan India Private Limited (JP Morgan) upgrades Polaris Software Lab Ltd. (Polaris) to Overweight with CMP of Rs 174 and a target price of Rs 225.
J.P. Morgan India Private Limited (JP Morgan) mentions that Polaris Software Lab Ltd. (Polaris) has streamlined its sales function increasing accountability for client revenues and offering geography focused services. On the delivery front, Polaris has eliminated overlaps in the solutions delivery process and integrated all existing MIS systems to improve monitoring of projects. JP Morgan also enlightens that the Quality systems have been updated inline with industry and several key personnel have been changed and new performance management systems have been implemented.
JP Morgan points out that the changes in organization structure and people are beginning to show results and Management is seeing a healthy pipeline in both products and services with positive outlook on existing clients which would lead to good revenue traction in our view with 5-7% Q/Q growth over the coming 4-6 quarters. Further, JP Morgan expects margins to increase due to scale leverage, productivity improvements and better price realization. Overall, JP Morgan expects 27% revenue and 41% EPS CAGR over FY07-09E.
JP Morgan states that Polaris is trading at P/E of 11x FY08E which is cheap compared to peers. JP Morgan expects the current strong financial performance to be sustained over the coming 12-15 months and upgrades Polaris to Overweight from Neutral with a Dec-07 Target Price of Rs 225/share with potential upside of 29% from current levels.
Thanks HK
Market may score further gains
The market may open on a firm note following reports that the centre and states have agreed to phase out central sales tax (CST) over the next four years. According to the agreement, CST, currently levied at 4% will be cut by one percentage point every year over the next four years.
According to derivatives dealers, the derivative segment gives bullish signals and the uptrend on the bourses may continue in the near term.
The next major trigger for the market is Q3 December 2006 results. While strong Q3 results are already factored in share prices, market players will be closely watching what the company managements have to say about outlook for Q4 March 2007 and FY 2008 (year ending 31 March 2008). Infosys kickstarts Q3 earnings season on 11 January.
After Q3 results, the market will be eyeing the Union Budget 2007-08. A build up of long positions is likely on expectations of favourable policy announcements in the budget, according to dealers.
As per provisional data, FIIs were net buyers to the tune of Rs 168 crore on Wednesday 3 January, the day when Sensex had gained 73 points and settled above 14,000 level for the first time. They were net buyers to the tune of Rs 128 crore in index-based futures and they net bought Rs 43 crore of individual stock futures on that day.
Asian markets were mixed on Thursday (4 January 2007). Key benchmark indices in Japan, and Taiwan were up by between 0.4% to 0.7%. Key benchmark indices in Hong Kong, South Korea and Singapore were down by between 0.08% to 1.2%.
US stocks ended little changed in their 2007 debut session on Wednesday, as minutes from the Federal Reserve's latest meeting renewed concerns about the strength of the economy and corporate profits and halted an early rally. The Dow Jones industrial average rose 11.37 points, or 0.09 percent, to end at 12,474.52. The Standard & Poor's 500 Index slipped 1.67 points, or 0.12 percent, to finish at 1,416.63. The Nasdaq Composite Index advanced 7.87 points, or 0.33 percent, to close at 2,423.16.
Oil price declined sharply on Wednesday. US crude oil for February delivery fell $2.73, or 4.5 percent, to settle at $58.32 a barrel.
Upmove may continue
The market crossed the psychological 14000 level in yesterday's trades and is likely to take further lead as buying interest continues in large-caps and several other sectoral counters. Gains in overnight US markets and in the Asian indices there was mix trend in current trades may augur well for the markets. Among the key local indices, the Nifty could test higher levels around 4050 and has supports at 3985 and 3960. The Sensex has a likely support at 13900 and may face resistance at 14035.
US indices post the marginal gains on Wednesday. While the Dow Jones scaled above the 12470 levels to close at 12475, 11 points up, the Nasdaq ended 8 points higher at 2423.
Indian floats, too, were upbeat on strong domestic and US markets. Except Dr Reddys, HDFC Bank, Rediff and Patni Computers, other Indian ADRs ended at higher levels. Tata Motors led the upmove and surged 6.17% while VSNL gained 5.47%, MTNL advanced 4.4% and Infosys, Satyam, Wipro and ICICI Bank gained over 1-2% each.
The Nymex light crude oil for February series declined by $2.73 cents at $58.32 per barrel. In the commodity space, the Comex gold for February delivery tumbled up $8.20 to settle at $629.80 a troy ounce
Brokers bullish on Bharti, SpiceJet, Aventis Pharma
Angel Broking has maintained buy rating on Bharti; with a target of Rs 790.
Edelweiss has maintained buy rating on SpiceJet.
Kotak PCR has kept buy rating on Aventis Pharma; with a target of Rs 1643.
Citigroup has maintained buy rating on Aban Offshore; with a target of Rs 1700.
Citigroup has kept buy rating on Maruti; with a target of Rs 1107.
ICICI Securities has reiterated buy rating on Spicejet.
ICICI Securities has maintained buy rating on MphasiS.
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