Today Market Update on http://www.indiabulls.com/securities/mailermis/morning-brief/morning-brief-09Apr2010.htm
Derivatives EOD Report on http://www.indiabulls.com/securities/mailermis/derivative-strategy/derivative-EOD-08-Apr-2010.htm
 Corporate News Headline | |
| • | The government approved a 20% disinvestment in Steel Authority of India Ltd that would fetch a total of Rs 160 bn. The stake sale will take place in two tranches of 10% each, Home Minister P Chidambaram said, adding that each time 5% will be through further public offer and another 5% through sale of government equity. (BS) |
| • | Aban Offshore bagged a contract valued at USD 159 mn from Brunel Shell Petroleum Sendirian Berhad for the deployment of the jack-up rigs. (BS) |
| • | Suzlon Energy said its subsidiary REpower Systems AG has bagged a contract from an Italian company for supplying 18 wind turbines. (BS) |
 | |
| Economic and Political Headline | |
| • | Food prices accelerated for the second straight week in late-March, strengthening expectations of a hike in key policy rates. The food price index rose 17.70% in the 12 months to March 27, higher than an annual rise of 16.35% in the previous week, data showed on Thursday. The fuel price index rose an annual 12.71%, a tad below the previous week's reading of 12.75%, while the primary articles index was up 14.50% year-on-year. (ET) |
| • | European retail sales declined the most in nine months in February as rising unemployment prompted consumers to cut back spending. Sales in the 16-nation euro region fell 0.6% from January, when they decreased 0.2%, the European Union's statistics office said. (Bloomberg) |
| • | More Americans unexpectedly filed claims for jobless benefits last week, a jump that may in part reflect difficulty in seasonally adjusting the data ahead of the Easter holiday. Initial jobless applications increased by 18,000 to 460,000 in the week ended April 3, Labor Department figures showed in Washington. (Bloomberg) |
Strong & Weak Stocks
This is list of 10 strong Stocks
Allahabad Bank, Sintex, Andhra Bank, Sesa Goa, Concor, Pir Health, Ansal Infra, Nagarjuna Const, Purva & Aditya Birla.
And this is list of 10 Weak Stocks
Balrampur Chini, Bajaj Hind, BEL, Tech Mahindra, HCL Tech, Hind Uni Lvr, Hind Petro, BPCL, Tulip & KS Oils.
The daily trend of nifty is in Up trend since 16th February
SPOT/CASH INDEX LEVELS TODAY
 | 5304.45 | ( -1.31 %) | -70.20 |  |
| 1 | 2 | 3 | ||
| Resistance | 5361.98 | 5419.52 | 5455.38 | |
| Support | 5268.58 | 5232.72 | 5175.18 | |
 | 17714.40 | ( -1.42 %) | -255.62 | | |
| 1 | 2 | 3 | |||
| Resistance | 17890.43 | 18066.45 | 18172.00 | ||
| Support | 17608.86 | 17503.31 | 17327.29 | ||
NIFTY FUTURES (F & O):
Above 5320 level, expect short covering up to 5350-5352 zone and thereafter expect a jump up to 5380-5382 zone by non-stop.
Support at 5298-5300 zone. Below this zone, selling may continue up to 5292 level and thereafter slide may continue up to 5280 level by non-stop.
Below 5248-5250 zone, expect panic up to 5218-5220 zone by non-stop.
On Positive Side, cross above 5430-5432 zone can take it up to 5460-5462 zone by non-stop. Supply expected at around this zone and have caution.
Short-Term Investors:
Bullish Trend.
Up Side Target at 5429.95.
Stop Loss at 5106.55.
The 3G auction starts from April 9 and two days after it closes, the BWA spectrum auction will begin.
Kotak Advises Clients To Sell Reliance, Target Rs 950
More a play on global cycles than on India.
We suggest investors trim positions in RIL stock after its strong absolute performance over the past month. Chemical and refining margins have retreated from February highs led by weak fundamentals and start of new chemical plants; a stronger rupee poses additional risks to earnings.
4QFY10E results will likely be good but this is largely known. We do not see any other short-term triggers barring continued strong liquidity conditions.
A global play rather than India bellwether stock; margins have retreated of late
We note that RIL's performance would depend ultimately on the strength of global commodity cycles and not so much on its presence in India and/or liquidity. A large portion of RIL's earnings (~60% of EBIT in FY2012E) comes from its chemical and refining segments. We highlight that both chemical and refining margins have retreated from their February highs. We see weak fundamentals persisting for another 18-24 months in the case of both chemicals and refining.
4QFY10E results likely strong but stronger rupee, weak margins challenges for FY2011E earnings
We estimate RIL's 4QFY10E net income at Rs46.8 bn (+17% qoq and +21% yoy) led by strong chemical margins, US$8.
7/bbl refining margin and KG D-6 gas production of 60 mcm/d. We estimate 4QFY10E EBITDA to grow 11% qoq but a strong 60% yoy; however, higher DD&A charges will likely lead to more sedate growth in PBT on a yoy basis. We would watch for DD&A charges given the limited disclosures on information required to compute the same.
Weak fundamentals of chemicals and refining and lack of fundamental triggers constrain view
We are constrained to take a more positive view on RIL's FY2011E and FY2012E earnings given continued weakness in core chemical and refining businesses and known price/volume drivers for the E&P business. The recent strength in rupee poses additional risks to earnings. Also, we note that the stock is trading well above our fair valuation of Rs950 and 1,095 based on FY2011E and FY2012E estimates and we do not think that our assumptions are unduly conservative.
Use of cash, new E&P discoveries and balance sheet issues key imponderables
The key question would be the use of large cash flow generated over the next few years—we expect RIL to generate US$14 bn of gross cash flows in FY2011-12E. RIL has historically used its cash flows to fund new projects. However, its new initiatives in India haven't been very successful and it is looking at overseas acquisitions to drive future growth. Any large new E&P discovery will automatically consume some of the aforementioned gross cash flows and also create value.
(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 | 08-Apr-2010 | 2115.04 | 2052.84 | 62.2 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 08-Apr-2010 | 1200.84 | 1294.46 | -93.62 |
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
Arvind Parekh
+ 91 98432 32381
