Derivatives EOD Report on http://www.indiabulls.com/securities/mailermis/derivative-strategy/derivative-EOD-05-Apr-2010.htm
Today Market Update on http://www.indiabulls.com/securities/mailermis/morning-brief/morning-brief-06Apr2010.htm
 Corporate News Headline | |||||||||||||||||||||||||||||||||||||||||||||
| • | Larsen & Toubro said it has received an order worth Rs. 10.60 bn from Gujarat State Petroleum Corporation (GSPC) to build an offshore oil platform. (BS) | ||||||||||||||||||||||||||||||||||||||||||||
| • | Indian Oil Corp and its partners Marubeni Corp and Taiwan's TSRC Corp will invest Rs. 9.00 bn in setting up a unit to manufacture synthetic rubber for tyres. (BS) | ||||||||||||||||||||||||||||||||||||||||||||
| • | Central Bank of India announced that it's majority shareholder, the Government of India, had subscribed to perpetual non-cumulative preference shares worth Rs. 4.50 bn on March 31, 2010. (BS) | ||||||||||||||||||||||||||||||||||||||||||||
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| Economic and Political Headline | |||||||||||||||||||||||||||||||||||||||||||||
| • | Indian bank chiefs have told the Reserve Bank of India that credit growth will be over 20% in FY11 and they don't expect interest rates to go up soon, a senior banker said. (BS) | ||||||||||||||||||||||||||||||||||||||||||||
| • | Service industries expanded in March at the fastest pace since in more than three years, a sign the US recovery is extending beyond manufacturing and starting to create jobs. The Institute for Supply Management's index of non- manufacturing businesses, which make up almost 90% of the economy, rose to 55.4, the highest level since May 2006, from 53 in the prior month. (Bloomberg) | ||||||||||||||||||||||||||||||||||||||||||||
| • | Toyota Motor Corp. "knowingly hid a dangerous defect" that caused sudden acceleration and should be fined USD 16.4 mn, the biggest US penalty imposed on a carmaker, Transportation Secretary Ray LaHood said. (Bloomberg) CASH/SPOT INDEX LEVELS TODAY
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Strong & Weak Stocks
This is list of 10 strong stocks:
Andhra Bank, Sintex, Bajaj Auto, Orient Bank, Hindalco, Tata Steel, Nagarjuna Const, Concor, Cairn India & Sun Pharma.
And this is list of 10 Weak Stocks:
Balrampur Chini, Bajaj Hind, KFA, Hind Petro, Tech Mahindra, BPCL, Tulip, Mphasis, Colpal & Neyveli Lignite.
The daily trend of nifty is in Up trend since 16th February
NIFTY FUTURES (F & O):
Rally may continue up to 5382 level for time being.
Support at 5349 & 5356 levels. Below these levels, expect profit booking up to 5329-5331 zone and thereafter slide may continue up to 5310-5312 zone by non-stop.
Buy if touches 5267-5269 zone. Stop Loss at 5249-5251 zone.
On Positive Side, cross above 5400-5402 zone can take it up to 5418-5420 zone by non-stop. If crosses & sustains this zone then uptrend may continue.
Short-Term Investors:
Bullish Trend.
Up Side Target at 5429.95.
Stop Loss at 5106.55.
STOCK FUTURES (NSE):
ALBK FUTURES
Real Buying taken place on yesterday. Bulls should not get panic at lower levels.
If rally continues, then it can zoom up to 175.50 level by non-stop.
If profit booking starts, then expect slide up to 144.50 level by non-stop.
ANDHRABANK FUTURES (4 Days Holding)
Real Buying taken place in last 4 days. Bulls should not get panic at lower levels.
If rally continues, then it can zoom up to 118.15 level by non-stop.
If profit booking starts, then expect slide up to 104.05 level by non-stop.
OPTIONS (NSE):
NIFTY 5400 CALL OPTION
Real Buying taken place on yesterday. Bulls should not get panic at lower levels.
If rally continues, then it can zoom up to 78.80 level by non-stop.
If profit booking starts, then expect slide up to 48.80 level by non-stop.
RELINFRA 1060 CALL OPTION
Real Buying taken place on yesterday. Bulls should not get panic at lower levels.
If rally continues, then it can zoom up to 80.10 level by non-stop.
If profit booking starts, then expect slide up to 14.65 level by non-stop.
Equity:
MARICO (NSE Cash)
Yesterday's rally was surprising. Real Buying too. Bulls should not get panic at lower levels.
If rally continues, then it can zoom up to 135.05 level by non-stop.
If profit booking starts, then expect slide up to 99.35 level by non-stop.
BAJAJ-AUTO (NSE Cash)
Yesterday's rally was surprising. Real Buying too. Bulls should not get panic at lower levels.
If rally continues, then it can zoom up to 135.05 level by non-stop.
If profit booking starts, then expect slide up to 99.35 level by non-stop.
TCS (NSE Cash)
Yesterday's fall was surprising. Speculative Selling & Do not worry about this fall.
If continue to fall, then slide may continue up to 765.85 level by non-stop.
If start recovers, then expect short covering up to 821.10 level by non-stop.
HINDPETRO (NSE Cash)
Speculative Selling taken place on yesterday. Do not worry about this fall.
If continue to fall, then slide may continue up to 296.20 level by non-stop.
If start recovers, then expect short covering up to 318.00 level by non-stop.
BSE Sensex at 25-mth closing high.
Highest close since February 2008.
Sensex nears 18k.
Andhra Bank-Buy (FY10 EPS Rs 21; ABV-1, Dividend Yield 5%)
We expect net interest income (NII) to grow 25% YoY (~10% QoQ) to Rs5.7b due to improved margins backed by falling cost of deposits. On a low base, we expect loan growth to remain strong at 20%+ YoY.
We expect lower other income, led by both lower trading gains (~50% sequential decline) and muted fee income growth. Fees growth will stay dismal (QoQ and YoY) considering the high base.
Provisions were lower in 2QFY10 due to depreciation write back of Rs165m on investments. We have modeled higher provisions for NPAs conservatively for 3QFY10.
Operating expenses are expected to remain flat YoY and QoQ. 3QFY09 and 2QFY10 had a provision for wage revisions at ~Rs200m.
The stock trades at 1x FY11E BV and 0.9x FY12E BV. The stock also offers an attractive dividend yield of ~4.9%.
Maintain Buy.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
INVESTMENT VIEW
Religare Puts A Buy On Anantraj..Tgt Rs 198
We recently visited Anant Raj Industries' (ARIL) hotel sites, IT parks and a few of its residential plots which are scheduled for launch shortly. Construction work at the Manesar and Rai IT parks is proceeding apace – the former being in the fit-out stage and the latter to conclude phase I by April – while three hotel properties are nearing completion. Considering the swift pace of project execution, we expect ARIL's lease revenue to surge from Rs 450mn in FY10 to Rs 1.5bn in FY11. We thus revise our NAV-based target price for the stock from Rs 188 to Rs 198 and reiterate a Buy.
Three more hotels to be ready by April:
We visited all of ARIL's hotel sites, numbering eight in all, in Delhi. Three hotels (Grand, Papilon and Tricolor) are expected to earn lease revenues starting April '10, while three others (Parkland, Retreat and Hilton) have already been rented out, and the remaining two (located near the Delhi International Airport) are still in the planning stage. We believe hotel rentals are likely to rise sharply from FY11 onwards and expect the company to earn Rs 465mn from its properties.
Maneswar and Rai IT parks fast approaching completion:
The Manesar IT park comprises five towers, of which two have been handed over for fit-outs while construction of the others is complete. Rental revenue from the project has started flowing in from Q1FY10. We estimate revenues to the tune of Rs 90mn and Rs 287mn in FY10 and FY11 respectively. Construction at the Rai IT park is also well underway, with phase I (1.6msf) to be completed by April. The company has secured an IT major as anchor client for 0.6msf.
Rental income to exceed Rs 1.5bn in FY11:
With project execution ramping up, we expect income from lease rentals to triple to Rs 1.5bn in FY11 and rise further to Rs 2bn in FY12. We are revising our NAV-based target price for the company to Rs 198 from Rs 188, factoring in a stronger annuity business based on the robust pace of execution at the IT parks and near-completion status of the hotel properties. We reiterate a Buy on the stock.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
INVESTMENT VIEW
Goldman Sachs Puts A Buy On Anantraj
Source of opportunity
We initiate on Anant Raj with Buy and a 12-m TP of Rs185. We believe Anant Raj's strategy of focusing on the Delhi-NCR region rather than a pan-India footprint is prudent as it has a long track record in these markets. Further, its balance sheet has net cash of Rs4.2 bn (as of FY09), unlike most peers which are leveraged, and majority of its land bank is fully paid for. In our view, the market is not fully valuing its commercial business probably on the grounds that leasing has been subdued. We believe it should re-rate as market gets evidence of rental income rising substantially through FY11. In addition, we believe its prime Delhi residential assets should boost revenue in FY10E/11E.
Catalyst
We expect newsflow on the Hauz Khas (Delhi) residential launch in 4QFY10, followed by the Bhagwandas Road (Delhi) launch later in 2010. We recently visited its Manesar IT Park where fit-outs were in progress and we believe that tenants moving in over the next six months could likely reassure the market. Likewise, we also expect leasing to pick-up in the Kirti Nagar (Delhi) retail mall over the next 12 months.
Valuation
Our 12-month TP of Rs185 is set at a 30% discount to FY11E RNAV of Rs264, in line with the range for other stocks in our India real estate coverage. Office/ retail (including IT Parks) accounts for about 35% of our RNAV projection followed by residential which accounts for about 32%. Anant Raj currently trades at a 44% discount to our FY11E RNAV.
Key risks
(1) Significant delays in office/retail leasing and tenants moving in as well as in Delhi residential launches; (2) slowdown in Delhi-NCR market; (3) low visibility on percentage of completion revenue recognition, which could make earnings volatile; and (4) policy tightening.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
INVESTMENT VIEW
Edelweiss Puts A Buy On Anantraj
Manesar IT park: Rent stream to get a boost as tenants start moving in ARIL is working on an IT park project in Manesar with total leasable area of 1.1 mn sq ft across five towers, of which 0.65 mn sq ft has already been leased out.
While the company is receiving rent for 0.58 mn sq ft, the balance area is under lease grant period from which rent is expected during the current quarter.
Currently, fit outs are in progress for 0.15 mn sq ft, more than 50% of which has been let out to a single client. Other tenants are expected to start fit outs soon as their existing lease agreements are expected to expire by the current quarter end.
Hauz Khas residential project: Launch likely by January end
The company plans to develop a 0.26 mn sq ft residential project at Hauz Khas in South Central Delhi. This prime location commands capital value of ~ INR 20,000 per sq ft. We expect launch of project for sale by January end.
Kirti Nagar mall: To be delivered by Q1FY11 end
ARIL is constructing a retail mall at Kirti Nagar, close to the Patel Nagar metro station. Of the total 0.75 mn sq ft leasable area, ~0.3 mn sq ft has been leased out already. We expect 50% of the leased out space to be handed over by Q4FY10 end and the balance of the 0.75 mn sq ft by Q1FY11 end.
Outlook and valuations: Attractive; maintain 'BUY'
We were expecting commencement of rents from the Kirti Nagar mall and launch of residential project at Bhagwandas road during FY10, which have been deferred to FY11. We will release our revised revenue estimates along with Q3FY10 result update.
The stock is currently trading at a 43% discount to its fair valuation of INR 263 per share. We expect investors to react positively to launch of Hauz Khas project and additional leasing at Kirti Nagar mall and IT park at Manesar which will reduce the discount to fair valuation.
We maintain our 'BUY' recommendation. On a relative return basis, we rate the stock as 'Sector Outperformer'.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 05-Apr-2010 | 2374.53 | 1608.46 | 766.07 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 05-Apr-2010 | 1392.47 | 989.14 | 403.33 |
Disclosure: I don't have any positions in the above said scrips & NIFTY FUTURES.
Disclaimer:
"I do not make any warranties, express or implied, as to results to be obtained from using the information in this e-letter. Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report."
-- Arvind Parekh
+ 91 98432 32381
