The Indian market opened on gap down and drift lower on weak GDP growth number came 5.3% and saw U turn in final trading hour and close in marginally red zone .For coming session market are trading in narrow range 2807-2670 levels. On the larger scale nifty is trading in triangle closing below 2670 it can test 2560-2440 on upside 2840 -2902 will ac strong resistance zone .
BUY Cairn India Stop Loss 147 Target 185
BUY GVK Power & Infrastructure Stop Loss 18 Target 21
BUY Larsen and Toubro Stop Loss 582 Target 653
The triangle structure spanning the past 4 months has been lending support to nifty so far. Today might be the day it finally fails - A close below the line will confirm it. You can see how they stick saved the market past 4 sessions to avoid a meltdown. A daily close below 2730 will have me interested AND intraday move below 2650 will bring about a big move.
A gap down is also almost surely assured today. I think the selling climax I was looking for so long might finally be here :)
Position updates if any - I will state them in the intraday updates here itself.
Chart for now -
NIFTY DAILY
Nifty Weekly Comments - Stochastics on a FIRM sell. I trust this indicator a lot - people who used to visit my blog from the beginning would remember more on how I used to use this for trading.
We might be close to a selling climax. Not going to try to pick bottoms until I see some bullish confirmations or unless we get close to 2200-2000 NIFTY levels..
One other thing - One bullish looking stock that I think looks interesting is CAIRN. Nice volumes and a possible triangle breakout. After a long time, I am looking at a stock with a bullish perspective. Keep an eye on it. Not sure if its a good idea to start scaling into it now itself or wait a bit more...I am also bullish on OIL..So CAIRN is a good proxy play.
Can you find another market like this?
Where,
with your one rose
you can buy hundreds of rose gardens?
Where
For one seed
you get a whole wilderness?
For one weak breath,
the divine wind?
You have been fearful
of being absorbed in the ground,
or drawn up by the air.
Now, your waterbead lets go
and drops into the ocean,
where it came from.
It no longer has the form it had,
but it's still water.
The essence is the same.
This giving up is not a repenting.
It's a deep honoring of yourself.
When the ocean comes to you as a lover,
marry, at once, quickly,
for God's sake!
Don't postpone it!
Existence has no better gift.
No amount of searching
will find this.
A perfect falcon, for no reason,
has landed on your shoulder,
and become yours.
The Power of Infinite Patience:
"Those who are certain of the outcome can afford to wait, and without anxiety". When that certainty is manifested in you in the form of trust and a knowing, you can then turn away your thoughts away from the desired outcome. Your knowing and your infinite patience put you at ease.
When we become impatient, we literally devalue ourselves and our connection to the Divine.
One of the ways to develop patience is to contemplate how patient God has been with you. When you were in times of denial, or self-abuse or self-absorption or hatred, God was infinitely patient. This is the same kind of patience that you want to develop. When you let go off impatience, you align yourself with the God force and all the anxiety is gone. Anxiety produces fear, self-pity and attaches you to time. You become free when you relax your insistence to have it now.
This practice of patient detachment from outcome is a foreign concept to those of us who have been taught that goals, success symbols and the accumulation of merit badges are the ways to feel important and fit into our culture. You have achieved peace with your infinite patience, and peace is what enlightenment is all about.
Once you perfect the infinite patience you will demonstrate your trust in something other than your own limited body/mind, and you will peacefully allow your desires to manifest in their own good way, in their own good time.
You learn your EW in these intra moves which reappear in the larger time scales too.
So at day's low when the ending diagonal was ending, you just have to go long after a count of a clear "5". And that is an impulsive move down ( or is it an "(a)" of the "b" wave.??).
Nifty may again move in a narrow range on Monday..If 2690-2700 levels hold, then 2850-2860 is possible by Tuesday(As "d" leg of the ending diagonal). Low emas of week, Day & Hour are 2725-2735..
If 2678 & 2662 are broken, more severe fall is possible. Nifty has managed to withstand all negative cues by holding out this 2662-2709 area well sofar. It will be put to test in the coming week once again.
More time spent in this range, market may gain strength with weaker stocks shedding value and stronger ones consolidating well.
Keep those "intra icharts" & the Pivot table & the likely ranges...and trade light..Protect your capital for the big moves..Money saved is money earned too.
A likely range may be 2695/2715 to 2775/2785..(Fine tune it as per the cues)
There are so many fractal moves in this above "Hourly Chart".
Nifty :: Minor positive close in weekly chart with bullish candle pattern High Wave & Thrusting Line.. In Daily chart last Friday candle also made an Hammer & High Wave bullish pattern but from last three day’s constantly trade in between 2700 to 2800 level.. Bulls forcefully try to hold last low 2661 but Nifty face strong resistance near 2800 level.. In coming week may be we see major up or down swing of 200/300 points.. Watch breakout level for up swing 2800 and breakdown level for down swing 2661.. For next week hold short below 2661 and hold buying position above 2800 with strictly stop loss.. Till then our strategy for 2nd March sell at high (S.L 2800) buy in deep (S.L 2661).. In one level above 2776 momentum seems up below 2776 momentum down.. Resistance for up move at 2776/2804/2823/2858/2898.. Supports 2730/2718/268
Nifty over 14 yearsNIFTY (2763.65) : Remain Long Above 2665 Levels – Can Cross 2840-2880 Levels.
Resistance : 2800 / 2830 / 2845 / 2860 / 2880
Support : 2750 / 2720 / 2675 / 2650 / 2630
SENSEX (8891.61)
Resistance : 8980 / 9070
Support : 8850 / 8765 / 8640
NIFTY FUT (2733.5)
Resistance : 2775 / 2810 / 2835 / 2860 / 2945
Support : 2720 / 2685 / 2665 / 2635
BANK NIFTY (3875.05) : BANK NIFTY READY FOR EXPLOSIVE MOVE
Resistance : 3940 / 4000
Support : 3835 / 3770 / 3670
Full Moon on 10/3,the SATURN-URANUS Opposition could Coincide with Another Break of Support, Creating Sense of Panic & Hysteria.
MKT COMMENTS
NIFTY FUT OI up 8.38% with increasing volumes indicating forming of short positions.
We expect NIFTY FUT to trade volatile.
On Monday,Opening is Flat to Up,
Stay Long Above 2760,Sl Below 2745,Tgt 2780-2800-2835,
Sustain Below 2740,Sell with Sl Above 2755,Tgt 2725-2705-2675.
Buy SBI Above 1010,Tgt 1035/45/75/1100++ (Delivery)
Buy GLAXO Above 1200,Tgt 1230/55/90,Sl 1170
Buy TATAPOWER Above 730,Tgt 745-755-765,Sl 720
Buy HPCL Above 280,Tgt 290-295-310,Sl 275
Buy NALCO Above 210
Buy CIPLA Above 195,Tgt 200/05,SL 190
Sell BOMDYEING Below 145,Tgt 140-135-130,Sl 150
Sell CMC Below 285,Tgt 280-275-270,Sl 290
Sell ZEETELE Below 105,Tgt 100-95-85,Sl 110
Sell WIPRO Below 210,Tgt 200-195-185,Sl 215
Sell RPOWER Below 100,Tgt 98-96-94,Sl 103
ICICIBANK : CMP MARCH FUTURE 333
Buy 330-335,
Supports : 326 / 320 / 317
Resistance : 340 / 345 / 349 / 355
WEEKLY NIFTY FUTURE OBSERVATION
Observation:-
1) Total OI of NIFTY FUT down 13.45%, NIFTY FUT closed flat last week OI down due to expiry.
2) Out of NIFTY 50 Stock FUTS, 23 Stock FUTS closed negative, 18 Stock FUTs closed positive and 9 Stock FUTS closed flat last week.
3) OI of NIFTY 2700 CE is up 154.92% prices down 4.23% and NIFTY 2800 CE is up 73.09% prices down 7.60% and NIFTY 2900 CE is up 65.20% prices down 14.43% last week showing call buying. OI of NIFTY 2800 CE is 39.22 LK, highest OI in CALLs.
4) OI of NIFTY 2500 PE is up 67.28% prices down 33.97%, NIFTY 2600 PE is up 200.33% prices down 30.40% and NIFTY 2700 PE is up 91.43% prices down 25.06% last week showing aggressive put writing. OI of NIFTY 2700 PE is 67.07 LK, highest OI in PUTs.
5) Total OI of MAR series CALLs is up by 63 LK to 1.79 CR. MAR series PUTs is up by 1.22 CR to 3.00 CR last week. MAR series NIFTY PCR (OI) at 1.67.
Conclusion :-
I expect NIFTY SPOT to trade very volatile. Possibility of wild swings. Any bounce will be short lived. NIFTY SPOT will face resistance at 2800-2810, 2830-40 levels. Strong selling will emerge above 2850 levels. Fresh short will be initiated here. Fail to sustain above 2850 levels, NIFTY SPOT will show sudden down move. On down side, NIFTY SPOT support at 2660-2695-2700 levels. Strong support at 2660-2610 levels.
NIFTY (2763.65)
Resistance : 2815 / 2840 / 2870
Support : 2745 / 2695 / 2660 / 2610 / 2510
SENSEX (8891.61)
Resistance : 9055 / 9215
Support : 8835 / 8675 / 8455
NIFTY FUT (2735.5)
Resistance : 2790 / 2850
Support : 2730 / 2675 / 2610
BANK NIFTY (2875.05) : BANK NIFTY READY FOR EXPLOSIVE MOVE
Resistance : 4000 / 4115
Support : 3860 / 3740 / 3610
On Monday,Opening is Flat to Up,
Stay Long Above 2760,Sl Below 2745,Tgt 2780-2800-2835,
Sustain Below 2740,Sell with Sl Above 2755,Tgt 2725-2705-2675.
Okay – we had a major bad news last week where the GDP growth showed a sharp drop. Was it expected to be below 6%? Frankly I had not expected it and it came as a shocker. Did the market accept it? well the way the market showed resilience I might not be able to place a bet but somehow the markets seemed to show that they had catered for such a contraction otherwise the fall would have been much more severe. – That is what I feel. 5.3% growth is below the expectation and it should shake me up from the denial mode that we are well off with the world in recession. What still holds out is the only fact that this is still growth and there are sectors that were expected to be weak and have survived the so called onslaught of recession. Another thing that comes to my mind is that the DII’s have been constant buyers at these levels. Are they propping up the markets to keep it stable on someone’s dictum awaiting elections or they are buying because they see these as sustainable levels? A difficult question really with no simple answer but the way I see is is that the economic compulsions have become too big to be dancing on someone else’s tune – so I feel that they see these levels as fairly good entry levels. The second thing that I notice is that the buying is kept a little bit below the FIIs sale figures – who laps up the balance? We the retail? I would be grateful if someone could do some number crunching and share the thoughts. Leave that aside for some time and let us see the fireworks created by the news about the RPL and reliance merger. This will remain the eye of the storm for some time till the dust settles down but give it a due thought. This alone if taken in the correct light – can propel the markets up for some time. Next is the inflation numbers that are coming out as per the expectations of the govt. Lastly there is another controversy of sorts created by the govt claiming that the growth for 2009 should be 7% with the Moody’s putting it to below 5% for the first half of 2009. I side with the govt because of the only reason because our economists are actually world class and whatever their reasoning – should hold in good stead. In any case I have starting taking these US rating agencies with a pinch of salt. Their compulsions are too many and they too are in deep trouble themselves – let aside deciding the ratings for others.
As far as the candles are concerned – we had a black candle. The pattern is that of a hammer – but has appeared a few days too late to give a bullish reversal. All the same there was a tussle between the bulls and the bears. The body of the hammer is black but I still feel that the bulls won this round and that they will have an upper hand tomorrow when we open. The 5 EMA line is inching confidently towards the 20 EMA and 20 EMA and 50 EMA are so far running parallel to each other. We are definately not trailing the lower Bollinger band at the moment so There is a bright chance that we will go on to touch the upper edge of the Bollinger band at the 2950/3000 levels. The MACD is still negative and bearish but the divergence has reduced. Slow Stochastic red line is fast approaching the overbought zone – minimum two days worth of uprun we can have now. RSI is bearish.On ADX the bears seems to be loosing grip – but the indication per se is still bearish. TRIX is mildly bearish – draw whatever conclusions you want to. Overall though we have all bearish indications – the bears seems to have lost the momentum they would have liked to break to lower levels. See the next chart We are taking support at the lower trend line drawn and should now act as a good support. The volumes are still low – 79% of last 50 day average to be precise.
Let us see the Pivot levels.
R3 2866 was 2863 on Friday
R2 2831
R1 2797
Pivot 2752 was 2771 on Friday
S1 2718
S2 2673
S3 2639 was 2679 on Friday
Projected High Range 2775 to 2814
Projected Low Range 2759 to 2720
Fib Projected High 2808
Fib Projected Low 2686
I feel that we should see atleast the R1 to R2 levels once in the trading session atleast. There are some stimulus schemes in GOvt’s mind or so it seems that may be unveiled this coming week.
Before I end I am inserting the charts of ICICI bank 
Market may open down with hugh gap. Market may down between 9.59 and 10.20. Market may steady or up side between 12.20 and 12.47. Market may close at down to previous closing.
SHARE YOUR THOUGHTS! LEAVE A COMMENTS
Opening Bell Call
Buy
RELIANCE - Reliance Industries Ltd
RELCAPITAL - Reliance Capital Limited
NDTV - New Delhi Television Limited
IDEA - Idea Cellular Limited
RNRL - Reliance Natural Resources Limited
IFCI - IFCI Limited
RPOWER - Reliance Power Limited
SBIN - State Bank of India
On 27th February 2009 - The BSE Sensex closed at 8891 (Down 63 points) while the NSE Nifty closed at 2763 ( down 22 points).
Opening Bell Call
Sell
HDFCBANK - HDFC Bank Ltd
PARSVNATH - Parsvnath Developers Limited
NAGARCONST - Nagarjuna Construction Co. Ltd
APTECHT - Aptech Limited
DCB - Development Credit Bank Limited
BANKINDIA - Bank of India
Technical Analysis for 2nd March 2009
BSE-SENSEX - Major Resistance - 8854, 8918, 8981, 9026, 9070, 9134, 9197, 9260
BSE-SENSEX - Major Support - 8810, 8765, 8702, 8638, 8594, 8549, 8504, 8459
NSE-NIFTY - Major Resistance - 2753, 2775, 2797, 2815, 2832, 2854, 2876, 2899
NSE-NIFTY - Major Support - 2736, 2718, 2696, 2674, 2657, 2639, 2622, 2605
Nifty gains 0.99% on this weekly chart so there is nothing to be said here! It is as good as the last Friday's close and no analysis since there is nothing to analyze!
Our Bureau
Mumbai, Feb. 27 It was not entirely unexpected from Mr Mukesh Ambani, but its timing took the investment world unawares.
Soon after the close of market hours on Friday, Reliance Industries and its newly created refining behemoth, Reliance Petroleum threw a bombshell, saying their boards would meet on Monday to consider merger of RPL into the parent company.
This move is characteristic of the consolidation style of the group - spawning a new company for diversification purposes, and later taking it into the parent fold when it has reached a stage of robustness, said analysts.
The situation now is exactly that: RPL announced the commissioning of its refinery on December 25, 2008; and that said it expected its first despatch to happen in January 2009.
(The refinery will be fully commissioned only by April 2009, a report said citing an SEC filing by Chevron, RIL's 5 per cent partner in RPL).
According to sources close to the company, this practice "shields RIL shareholders from the risk that any new project faces till it reaches completion."
RPL is currently a 71 per cent subsidiary of RIL; it was created in 2005 as a 100 per cent export oriented petroleum refinery and polypropylene plant in the SEZ at Jamnagar in Gujarat.
When fully functional it will be the sixth largest refinery unit in the world.
In April 2006, RIL's stake fell to 75 per cent following both the sale of a 5 per cent stake to US oil major Chevron for Rs. 1,320 crore and its jumbo IPO which was subscribed more than 50 times for Rs 1,43,500 crore, a record broken only in January 2008 by the Reliance Power IPO of the rival Ambani group.
RIL's stake fell further to 71 per cent after the controversial open market sale of its own shares worth 4.01 per cent equity stake in RPL in late 2007.
The timing of the move to merge RPL into RIL is close to the expiry of the option that Chevron has – to pick up an additional 24 per cent stake in RPL or to exit from the company altogether. This deadline is July 2009.
This was the basis on which several investment houses, including DSP Merrill Lynch, predicted in late 2007 itself that a merger of RPL into RIL was almost inevitable. If Chevron increased its stake to 29 per cent, RIL would have a 47 per cent stake in the company, clearly a minority stake.
It would have cost Chevron almost $6 billion at late 2007 market prices to hike its stake in RPL; this was the cost of putting up the RPL refinery itself, noted DSP Merrill Lynch. "It, therefore, means that either RIL does not mind not holding majority stake in RPL or RIL believes the probability of Chevron hiking stake in RPL is low. We think the latter is more likely," said the report.
At current prices, a 24 per cent buy in RPL would cost Chevron only $ 1.6 billion.
WHAT IT WILL MAKE RILAccording to sources close to the company, such a merger would enhance its position as an integrated global energy major, fetching higher valuations.
The combined refining capacity would be 1.24 million barrels of crude a day (660,000 bpd from RIL and 580,000 bpd from RPL).
It would plug RIL in the list of the world's 50 most profitable companies, among the top 10 non-state owned refining companies globally; among the top 15 independent upstream companies and the top five producers of polypropylene.
Its scrip will have enhanced weightages in all the stock indices. Financially, it would give it more "strength and flexibility" and be earnings accretive from the first year itself, according to these sources.
WHAT ANALYSTS SAY
The share-swap ratio would summarise all that it would mean for shareholders, said analysts.
Those that Business Line spoke to pegged this at one share of RIL for anywhere between 16 and 24 shares of RPL.
"If you go by market price, the share swap ratio might be somewhere around 16.5; otherwise, the ratio could be anywhere between 16 and 19 taking other parameters," said Ms Priyank Chandra, analyst, Dolat Capital.
Operationally the Gross Refining margins (the profit from refining one barrel of crude) would rise for RIL, as RPL has a more complex refinery, she said. RIL has been reporting declining GRMs over the last few quarters, as global crude prices declined steeply during the period.
RIL reported a decline in its current Q3 net profit for the first time in 12 quarters, as its refining margins shrank.
Operational efficiencies and the continuation of some tax exemptions that RPL enjoys would also happen, said Ms. Chandra. The RPL refinery is located adjacent to RIL's existing refinery and petrochemicals complex.
Many analysts said the tax advantage resulting from such a merger would be considerable. Sales tax on inter-company sales (say on sale of crude by RIL to RPL) can be avoided. There could be considerable gains to be had from depreciation which RPL, being a new unit, would provide.
TREASURY SHARES
Some analysts said that the merger would impact earnings negatively if RIL's stake in RPL is not cancelled after the merger, as has happened in other mergers involving RIL which resulted in the creation of treasury shares.
Whether this merger would also result in the creation of treasury shares is too early to tell, said sources close to the company. RIL already has a considerable amount of treasury shares, he said.
Analysts and market players were completely taken by surprise at the announcement, though as one of them put it; "it was not totally unexpected as an eventualityMarket Musings
Market fell after the GDP numbers were announced. It was not unusual to see this kind of IIP numbers. In fact, it could be said that no one was expecting better IIP numbers this week esp. when every thing around is bad? But as per opinion market did not correct for IIP numbers.
First of all it was the first day of the new settlement that too where the lot size were made beyond reach of penny traders. No doubt some strong traders too now have been reduced to penny traders in the current scenario but the fact remains the action of NSE was really to the detriment to the retail traders. It could have been better if F&O is barred for all traders whose net worth is below Rs 25 lakh as the minimum lot size now is for Rs 3 to 4 lakh and given the fact that markets have lost depth require appetite to lose the major amount overnight.
The another reason was for S&P downgrading Janus bond rating to junk which has given leeway for traders to speak high about Janus bankruptcy plans in open. Immediately the download started from Bloomberg to check Janus holdings. HDFC deal of 12 lakh shares added fuel to the fire as Janus was holding an equal amount of shares in 3 schemes. Market then became active in NTPC and Power Grid where Janus was having huge holdings. In power grid the holding is 5 crore shares.
But the list seems pretty old at first place and hence the credibility is in doubt. Two that if somebody can buy 12 lakh HDFC then 5 crore Power grid can also be closed. There were other holdings too such as RIL, RCAPITAL, REL, RCOM, LARSEN, RENUKA, BAJAJ HINDUSTAN, ICICI BANK, BHARAT FORGE, SATYAM, AMBUJA CEMENT & PNB etc. I am disclosing the list to you simply because I am not sure what bears will do with these stocks and what their promoters take call on them and what Janus will do next? But these stocks could become volatile and traders fancy. Risk averse traders must stay away from these stocks.
ADAG Group has started accumulating CENTURY and other realty stocks where the land bank is almost free. Century could touch its lost glory in next 2 years for sure and so also BOMBAY DYEING. SHREE PRECOATED STEEL and RDB fall under these categories.
RIL has announced the board meeting for merger of its refining subsidiary RPL with itself. Late Dhirubhai Ambani will be satisfied on the Business acumen of his son Mukesh Ambani. Where else in world will you get an example of such fine business acumen? RIL had invested 2700 crore for 270 crore shares of RPL issued at par. It had invested another 5400 crore (20% equity) at 60 per share for 90 crore shares. Thus the total investment of RIL in RPL was approx 5400+2700=8100 crore for 360 crore shares. It is to be noted here that in January 2008, RIL had sold in open markets 18.04 crore shares for 4023 crore. Thus the Net investment of RIL till date in RPL is approx 4077 crore. Even if RIL buys the 5% Chevron stake at 60 per share there is no other example of such fine business acumen in recent history. Only a smart businessman can create a 28 mtpa refining capacity with an investment of 4023 crore. It is believed that the refinery is one of the most complex refineries in the world with a Nelson Complexity index of 14.0.
Trading
SENSEX: There will be very crucial support in the range of 8631-8619. A fall below it can take the SENSEX crashing down. Till the Sensex is above 8631, we will see up and down movements with volatility in the band of 9725-8600.
A pull-back of the fall from 9725 to 8619 is in existence. The pull-back levels are placed at 9045-9171-9302.
Weekly resistance will be at 9053 and 9433. The first resistance coincides with the retracement of 9045, which will act as an important resistance. On further fall and close below 8600, the slide can get sharper to 8295 at least to begin with. Traders can use the rise to the pull-back to exit long and to sell.
RPOWER: Short stop loss 102 targets 98-96
A fortnight back we had mentioned that JPY –USD might breakout above the 94 odd levels and might retrace the entire down move from the 110 to 88 odd levels. Last week JPY almost touched 99 odd levels. We need to know where the Yen carry trade is moving for the movement of the Hot Money in emerging markets.
The dollar is approaching a three-year high against the currencies of major U.S. trading partners as the plunge in the yen and Swiss franc leaves the world's reserve currency the only refuge from economic turmoil.
Japan's crumbling economy, combined with an end to the unwinding of the carry trade weakened the yen, last year's best performing currency, by 7.2 percent this year, even after a 0.9 percent gain today. The franc suffered from a deteriorating Swiss financial system and threats of intervention by the central bank to push the currency lower against the euro.
"There are no alternatives to the dollar right now," said Geoffrey Yu, London-based strategist at UBS AG, the world's second-biggest currency trader. "Investors see the rest of the world collapsing, and the yen is no longer a safe haven."
Feb. 27 (Bloomberg) — Hayman Advisors LP, the firm that earned $500 million betting on the U.S. subprime mortgage-market collapse, says Europe's monetary union is about to fall apart.
Currency prices are not driven by headline news; they are driven by global money flow.
And if money is flowing to the world's reserve currency in greater proportion than it is to competing major currencies, the dollar rises. What's more....if you factor in growing expectations of big trouble brewing in the European Monetary System, a system that was supposed to displace the U.S. dollar's world reserve currency status, it would be no surprise to see the dollar surge in a huge flight to quality in the weeks or months ahead. So, to any dollar bears out there: You have been warned by me — yet again!
Tit Bits
Marc Faber, publisher of the Gloom, Boom and Doom report has been a long time critic of the way the global financial system works. After the bust that he had projected long back, he now believes that the financial industry is in for an even bigger contraction. "Financial professionals have been in paradise for the past 25 years," he said at an event hosted by CLSA in Tokyo. Faber, incidentally, also believes that the safe haven of gold can be a mirage for investors as the yellow metal has reached extremely high waters and is expensive relative to other commodities.
The board meeting of Reliance Industries will be held on 02 March 2009 to consider and recommend the amalgamation of Reliance Petroleum with the company.
The Board of Directors of Gujarat NRE Coke decided to issue 4000000 Convertible Warrants to non-promoter entity(ies) subject to the approval of the shareholders and in accordance with the provisions of Chapter XIII to SEBI (Disclosure & Investor Protection) Guidelines, 2000. It would be at a price not less than Rs50 per Equity Share to be issued on conversion of each warrant.
LOK HOUSING Q3 FY09 results announcement - During the quarter under review the Company has entered in to 53 agreements for cancellation of sales made in the earlier financial years, the sale value of which is Rs 282.14 crore and the resulting loss / reversal of profit recognized earlier being Rs 225.01 crore.
This just goes to show once again that so that so many promoters treat listed entities as their private entity, go to any extent for preparing fake Balance Sheets, fake PL A/c. Most shocking is the attitude of regulatory authorities (SEBI, CLB, Finance Ministry, Income tax Department, ICAI, EOW etc.) who remain silent spectators to such brazen day light (and innovative) frauds of such promoters.
Investment Updates
Although we have discussed few stocks for investments, buying should be done only on dips in 4 to 5 stages with long-term view. In view of the slowdown conditions in private banks, which were very aggressive in extending loans and are likely to face recovery problems. Their NPAs may go up. The government is likely to announce interest cut along with reduction in petrol prices in the near future. Investors need to be very selective in buying. Investors should hunt down good stocks from sectors that are least affected by the global meltdown and assured gain almost as much when the market sentiments start picking up once again.
Pick up stocks from sectors that are not at all effected or which have been beaten down so badly that they are about to gain hereafter. These stocks will give 6% to 8% return y-o-y basis within 4 to 6 months by way of dividend yield and capital appreciation as and when the market changes track for the good.
According to me, investor should shed the fear psychosis and make use of the weak market sentiment to pick up good blue chip stocks from the sectors outlined above to get the maximum benefit. The market circus will continue but the wise investor is one who makes best use of the opportunities that rarely come after years of patience and should not be missed out hoping for a further downfall to buy shares at even lower prices, which is nothing but greed at work again.
Fertilizer stocks will also regain the lost charm as their bottom line gets bolstered and records impressive gains from fiscal FY09. GNFC, GSFC, RFC and Chambal fertilizers are good stocks that will pick up and rise by 40% to 50% in the next six months or so.
Almost a quarter ago we had mentioned that Tea might be just in the beginning of a Bull Run. One can visit the Tea Board of India website and take the figures which will complement the said observation. If one broadens the observation then a good number of Agri commodities are in beginning of a Bull Run. We have heard the right noises on Sugar for almost a year now. We might as well hear the same on a good number of more agro commodities.
As reported last week tea prices have gone up by Rs.22 to 25 per kg on failure of tea crop in Kenya. Both tea & breweries will report excellent results for FY09 as the exports are also fetching good results on account of the rupee parity at Rs.48–50 against the US dollar. This indirect gain of 8% to 10% will impact the future of stocks like TATA TEA, MC LEOD RUSSEL, JAYSHREE TEA and GOODRICKE, which are good stocks to pick up at current levels.
Sugar is entering a bullish phase standing by its seasonality, which usually lasts for 3-5 years. This commodity provides immense opportunity to generate returns with an investment perspective. Being the beginning of the cycle, we can expect same bull trend to continue for at least next 2 years.
Considering the kind of supply constraints that the industry is witnessing and is likely to witness in near future, the returns on investment in this commodity could be phenomenal.
The industry is trading on an average PE of 15x FY08 while one of the largest companies which is having huge capacity and comparatively lower debt i.e. SHREE RENUKA SUGAR is prevailing at PE of 29x for FY08 and 12x for FY09 (E) which makes it vulnerable for profit booking and even for selling.
We recommend our investors to wait for the necessary correction in prices for these sector scrips and invest at lower levels. Shree RENUKA SUGAR is our safest investment case with an investment prospect of one year.
UGAR SUGAR WORKS Rs.14.24, is engaged in manufacturing and selling sugar. It also manufactures spirit, industrial and potable alcohol and generates power by using non-conventional energy source. The company operates in four segments: sugar, electricity, potable alcohol and industrial alcohol and has been successfully operating its 44 MW bagasse based cogeneration power plant.
On 30 January 2009, it announced that the co-generation activity at its Jewargi unit had begun. The company may crush a small quantity of cane as there is shortage of supply. Due to the delay in setting up of towers and synchronization of lines, the company could not commence activities at the beginning of the season.
The net profit of the company shot up by 169.68% to Rs.32.2 crore in Q3FY09 as against Rs.11.94 crore in Q3FY08. Sales declined 2.21% to Rs.113.91 crore in Q3FY09 as against Rs.116.48 crore in Q3FY08.
For the first nine months of FY09, sales went up to Rs.321 crore from Rs.287 crore while net profit was Rs.38.94 crore against loss of Rs.6.55 crore in the previous corresponding period. Its equity capital is Rs.11.25 crore, which yields an attractive EPS of Rs.3.46 for the nine month period. During Q3FY09, the promoter holding has gone up from 43.66% to 48.6%.
The company is an integrated sugar mill facilitating optimum utilisation of by-products like molasses, bagasse etc. for production of alcohol, co-generation of power etc. At the same time, it has forward integrated its alcohol operations by venturing into IMFL/arrack production and bottling. It is very likely to benefit from the upturn in the sugar cycle. Investors can accumulate this stock on dips for good long-term growth.
SHREE RENUKA SUGAR is an integrated sugar manufacturing company with focus on sugar and its allied products in power and ethanol. It has manufacturing operations in Maharashtra and Karnataka, which is close to the western coast of India. Shree Renuka is the leader in fuel ethanol market with 20% market share. During Q1SY09, the company reported a top line growth of 77.5% to Rs 400.2 crore SY09 on the back of higher volume from new capacities and higher sugar realisations. It was unable to capitalise on the rising sugar price scenario as the company was carrying lower inventory at the end of September 2008. The EBITDA margins dipped to 16.8 in Q1SY09 from 18.4% in Q1SY08. Interest costs surged 158% to Rs 29.9 crore due increased working capital requirements and hedging costs incurred on the company’s foreign denominated loans. PAT adjusted for extra ordinary items fell by 63% from Rs 11.6 crore in Q1SY08 to Rs 10.1 crore in Q1SY09.
The plants of ANDHRA SUGAR Rs.63.75 are located in the rich Godavari basin at Taduvai, Kovvur and Venkatarayapuram. The surrounding areas are fertile suitable for harvesting kharif crops. Molasses, which is a by-product of sugar, is the raw material for its continuous process distillery located at Tanuku that produces Industrial Alcohol and Ethanol. This distillery has the capacity to produce 30 KL per day. Industrial Alcohol is the raw material for Ethanol and other organic chemicals manufactured at its chemical plants at Tanuku. Bagasse, which is a residue at the sugar plants after extraction of juice, is used to fuel the cogeneration operation. Carbon-dioxide, which is a by-product of fermentation at the distillery, is purified and used as a raw material to produce Salicylic Acid, which goes into the manufacture of Aspirin and Potassium Carbonate.
Cogeneration of power is another value added product for the sugar industry. At Sugar Unit-II, it has a cogeneration plant with a capacity to produce 7 MW of power. With the commissioning of the 70 tonnes boiler and 8.9 MW turbine at Tanuku, it would have around 3 MW surplus power to sell to the grid. Thus the company uses every by-product and benefits from the same.
The company also has an integrated Inorganic Chemical Complex at Kovvur and Saggonda, manufacturing a wide range of Chlor-alkali products and other inorganic chemicals. Hydrogen and Chlorine are the by-products of Caustic Soda that are used to produce Hydrochloric Acid while the by-products from Sulphuric Acid and Hydrochloric Acid plants are used for the production of Chlorosulphonic Acid. Caustic Soda is a power intensive industry as power constitutes a major part of the input cost.
For the first nine months of FY09, the company reported net profit of Rs.36 crore against Rs.10 crore on sales of Rs.437 crore against Rs.357 crore in the same period last year on a capital base of Rs.27 crore. Q4 results are expected to much better in view of firm sugar prices.
The book value of its share is around Rs.110 and the EPS for FY09 is likely to be between Rs.20-25. The company is likely to step up dividend from 50% to around 60% or 65% for FY09. At the current share price of Rs.63, the dividend yield also very attractive. Stock looks attractive around Rs.60 level for investment with a medium-term view and a target of around Rs.100 in the next 6-8 months.
HINDUSTAN DORR-OLIVER is an Indian EPC (engineering, procurement, and construction) company that provides engineered solutions, technologies and EPC installations in liquid-solid separation applications.
Recently, it bagged an order worth Rs.441 cr. from the Uranium Corporation of India for an uranium ore processing plant in Andhra Pradesh, which has be executed within 3 years.
Its current order book is over Rs.1200 crore with the uranium order being the largest. With this order, its exposure to public sector undertakings has increased to around 80, and its overall growth will be much more than what the management was planning.
It is targeting sales of around Rs.450 crore in FY09 and Rs.700 crore in 2010. The EBITDA margin that it has maintained in the past is around 11-12%. Going forward, it could be between 12-13%.
As per a recent interview indication, the management is hopeful of achieving net profit of over Rs.35 crore on its equity base of Rs.7.2 crore giving an attractive EPS of around Rs.5, while the book value of its share is Rs.35. The stock looks attractive for investment around Rs.30 level.
The order backlog of AREVA T&D Rs.177 is Rs.4097 crore, which is 49% higher compared to last year. The order intake at Rs.4013 crore for the year was higher by 37%. The order inflow for Q4CY08 was Rs.783 crore. Out of the 14 product lines of the company, it is a market leader in 8 of them. Its new manufacturing units at Baroda, Hosur and Padapai will begin commercial production from April 2009 onwards and are already under trial production. The company has reiterated that it is on course of achieving its stated objective of doubling its 2007 turnover by 2010 that is to Rs.4000 crore. Investors can keep watch on this stock for investment buying on dips as a portfolio choice with a long-term view.
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