Market Outlook 8th Dec 2009

Intraday calls for 8th Dec 2009

Buy BataIndia-188 for 193-195+ with sl 184

Buy Suzlon-83 for 89-91+ with sl 81

Buy IOC-315 for 329+ with sl 310

 

NIFTY FUTURE LEVELS

RESISTANCE

5082

5115

5147

5199

5231

SUPPORT

5060

5039

5008

4976

 

Strong & Weak  futures  
This is list of 10 strong futures:

Ranbaxy, Orchid Chem, McDowell-N, BPCL, Divi'S Lab, Dena Bank, Hind Zinc, Cipla, Suzlon & PFC.

And this is list of 10 Weak futures:

Aban Off shore, Tata Comm, Rel Infra, Purva, Bajaj Hind, Ansal Infra, Punj Lloyd, Triveni, Sterling Biotech & Brfl.
 Nifty is in Up trend   

NIFTY FUTURES (F & O):  
Above 5082 level, expect short covering up to 5113-5115 zone and thereafter expect a jump up to 5145-5147 zone by non-stop.

Support at 5060 level. Below this zone, selling may continue up to 5039-5041 zone by non-stop.

Below 5008-5010 zone, expect panic up to 4976-4978 zone by non-stop.

On Positive Side, short rallies up to 5197-5199 zone can be used to sell. Stop Loss at 5229-5231 zone.
 
Short-Term Investors:  
Bullish Trend. Stop Loss at 4801.00.
Up Side Target at 5477.00.
 
Today's Expectation:
SGX NIFTY is now trading at 5050.00. (08.31 AM IST)

This trend is on expected lines.

If this downtrend continues, then it may continue for 1 (or) 2 Days.

If short covering starts, then it may continue for 1 Day, 1 Month (or) even 1 Year.
 
CNX BANK INDEX (F&O):  
Above 9182 level, expect short covering up to 9245-9247 zone and thereafter expect a jump up to 9309-9311 zone by non-stop.
Support at 9139-9141 zone & at 9152 level. Below these levels, selling may continue up to 9120 level and thereafter it can tumble up to 9076-9078 zone by non-stop.

Below 9055-9057 zone, expect panic up to 8991-8993 zone by non-stop.

On Positive Side, short rallies up to 9330-9332 zone can be used to sell. Stop Loss at 9393-9395 zone.
 
Short-Term Investors:  
Bullish Trend. Stop Loss at 8550.00.
Up Side Target at 9996.00.
 
Equity: 
 ABAN OFFSHORE (NSE Cash)

Bears got a chance to dominate.

If breaks & sustains at below 1197 & 1225 levels, then selling may continue up to 1190 level and thereafter slide may continue up to 1160-1162 zone.

Risk is that, up side risk up to 1260 level also possible. SL at 1267 level.
 
 
HIND OIL EXPLORA (NSE Cash)

Not much upside, as per my calculations.

Will zoom up to 293 & 294 levels on upper side.

Downside risk up to 270 level also possible. Buy with a Stop Loss of 269 level.
 
BHARTI AIRTEL (NSE Cash)

Technically Bullish. 

Downside risk up to 309 level also possible. Buy with a Stop Loss of 304 level.

Target at 321 level & thereafter it can touch 328 level by non-stop.
 
OPTIONS (NSE):  
TATASTEEL CALL OPTION (580 Strike Price)

Expect further selling. Risk is too high.

If breaks & sustains at below 12 & 13 levels, then selling may continue up to 6 level and thereafter slide may continue up to 3-5 zone.

Risk is that, up side risk up to 20 & 21 levels also possible.
 
STOCK FUTURES (NSE):
JSWSTEEL FUTURES:

Expect further selling. But Stop Loss is too far on upper side & risk is too high.

If breaks & sustains at below 925 & 941 levels, then selling may continue up to 861 level and thereafter slide may continue up to 852-854 zone.

Risk is that, up side risk up to 1011 level also possible. SL at 1027 level.
 
DLF FUTURES:

Expect further selling. But Stop Loss is too far on upper side & risk is too high.

If breaks & sustains at below 362 & 366 levels, then selling may continue up to 351 level and thereafter slide may continue up to 346-348 zone.

Risk is that, up side risk up to 380 level also possible. SL at 384 level.
 
INVESTMENT BUYS:  
BOMBAY DYEING (NSE Cash)

Good looking scrip for 1 Month Holding. Target at 424 level (or) even up to 427-429 zone.

Negative Factors:
1 Day: Choppy Trading expected & will rebound from lower levels.

1 Week: Choppy Trading expected & will rebound from lower levels.
 
HOTEL LEELA VENT (NSE Cash)

Good looking scrip for 1 Month Holding. 

Negative Factors:

1 Day: Choppy Trading expected & will rebound from lower levels.

1 Week: Choppy Trading expected & will rebound from lower levels.
 

--
Arvind Parekh
+ 91 98432 32381

Market Outlook 7th Dec 2009

INTRADAY calls for 07th Dec 2009
+ve Sector, Scripts : Oil&Ref, Pharma, Neclife, Indiainfo, IOC, LITL,
NDTV, NTPC, Tatatea, TV18
Buy Jindalstel-724 for 737-744+ with sl 715
Buy Finantech-1418 for 1437-1440+ with sl 1410
Buy Optocircuit-221 for 228-230+ with sl 219

Positional
Buy EssorOil-145 for 165-169+ with sl 134
Buy 3I Info-84 for 98-105+ with sl 80

Breakout
Buy MRPL-81 for 94-98+ with sl 77
Buy HPCL-380 for 388-408+ with sl 375

 

NIFTY FUTURE LEVELS

RESISTANCE

5134

5148

5182

5193

5228

SUPPORT

5106

5091

5078

5043

5032

4998

JINDALSTEEL;RANBAXY;UNITEDSPRIT;ESSAROIL

 

NIFTY FUTURES (F & O):  
Above 5134 level, expect short covering up to 5146-5148 zone and thereafter expect a jump up to 5180-5182 zone by non-stop.

Support at 5091 & 5106 levels. Below these levels, selling may continue up to 5078-5080 zone and thereafter slide may continue up to 5043-5045 zone by non-stop.

Below 5032-5034 zone, expect panic up to 4998-5000 zone by non-stop.

On Positive Side, short rallies up to 5191-5193 zone can be used to sell. Stop Loss at 5226-5228 zone.
 
Short-Term Investors:  
Bullish Trend. Stop Loss at 4801.00.
Up Side Target at 5477.00.
 
Today's Expectation:
SGX NIFTY now trading at 5127.50.(08.36 AM IST)

This trend is surprising & Positive too.

If this uptrend continues, then it may continue for 1 (or) 2 Days, 1 Week, 1 Month, 3Months & even 1 Year.

If Profit Booking starts, then it may continue for 1 Day.
 
BSE SENSEX:  
Above 17172 level, expect short covering up to 17269-17271 zone and thereafter expect a jump up to 17334-17336 zone by non-stop.

Support at 17088 & 17092 levels. Below these levels, selling may continue up to 17053-17055 zone and thereafter slide may continue up to 16988-16990 zone by non-stop.

Below 16956-16958 zone, expect panic up to 16891-16893 zone by non-stop.

On Positive Side, short rallies 17367-17369 zone can be used to sell. Stop Loss at 17431-17433 zone.
 
Short-Term Investors:
 
Bullish Trend. Target at 18226.48.
Stop Loss at 16210.44.
 
CNX BANK INDEX (F&O):  
Above 9272 level, expect short covering up to 9330-9332 zone and thereafter expect a jump up to 9387-9389 zone by non-stop.
Support at 9231-9233 zone & 9235 levels. Below these levels, selling may continue up to 9214 level and thereafter slide may continue up to 9174-9176 zone by non-stop.

Below 9155-9157 zone, expect panic up to 9097-9099 zone by non-stop.

On Positive Side, short rallies up to 9406-9408 zone can be used to sell. Stop Loss at 9464-9466 zone.
 
Short-Term Investors:
 
Bullish Trend. Stop Loss at 8550.00.
Up Side Target at 9996.00.
 
INVESTMENT BUY:  
JINDAL STEEL POW (NSE Cash)

Buy. Buy.. Buy...

If crosses & sustains at above 731 & 733 levels, then it can zoom up to 753 level and thereafter expect a jump up to 759-761 zone by non-stop.

Risk is that, down side risk up to 705 level also possible. Stop Loss at 702 level.
 
 
RANBAXY (NSE Cash)

Sell. Sell.. Sell...

If breaks & sustains at below 496 & 502 levels, then it can fall up to 493 level and thereafter expect a slide up to 487-489 zone by non-stop.

Risk is that, up side risk up to 510 & 516 levels also possible. Above 520 level, expect a short covering up to 524-526 zone by non-stop.
 
UNITED SPIRITS (NSE Cash)

Technically Bearish. But down side is limited.

If breaks & sustains at below 1330 level, then it can fall up to 1312 level by non-stop. 

Risk is that, up side risk up to 1399 level also possible. Above 1399 level, expect a short covering up to 1417 level by non-stop.
 
ESSAR OIL (NSE Cash)

Buy. Buy.. Buy...

If crosses & sustains at above 146 & 147 levels, then it can zoom up to 158 level and thereafter expect a jump up to 159-161 zone by non-stop.

Risk is that, down side risk up to 134 level also possible. Stop Loss at 133 level.
 
OPTIONS (NSE):
RELIANCE PUT OPTION (1050 Strike Price)

Technically Bullish.

Above 21 level, it can zoom up to 25 level by non-stop. 

Support at 15 level. Below 15 level, expect unwinding up to 13 level by non-stop.
 
NIFTY CALL OPTION (5200 Strike Price)

Too much risk is there. If clicks, then unexpected gains also there.

Above 109 level, it can zoom up to 118 level by non-stop. 

If breaks & sustains at below 70 & 80 levels, then it can fall up to 46 level and thereafter expect a slide up to 39-41 zone by non-stop.
 
STOCK FUTURES (NSE):
TATAMOTORS FUTURES (NSE)
 

Technically Bullish. Too much risk also there.

Above 716 level, it can zoom up to 725 level by non-stop. 

If breaks & sustains at below 695 & 704 levels, then it can fall up to 686 level and thereafter expect a slide up to 681-683 zone by non-stop.

 
 
HDIL FUTURES (NSE)

Technically Bullish.

Above 360 level, it can zoom up to 363 level by non-stop. 

Support at 349 level. Below 349 level, expect unwinding up to 345 level by non-stop.
 

_____________________________________________________________ __
Strong Futures
This is list of 10 Strong Futures: Hind Zinc, Ranbaxy, Orchid Chem, Divi'S Lab, Jindal Saw, McDowell-N, Cipla, Dena Bank, Recltd & BPCL.
Weak Futures
This is the list of 10 Weak Futures: Punj Lloyd, Aban Off shore, EKC, Ivrcl Infra, Rel Infra, Balrampur Chini, Sterling Biotech, Purva, Great Offshore & Abb Ltd..
_________________________________________________________________

Daily trend of the market is up.
Market has strong resistance at current levels, so the uncertainty is still continuing. But as nifty is still in uptrend so the readers who are holding their longs in Nifty (bought on 26th November) may go on holding till the trend of nifty is in uptrend.

 

FUNDS DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	04-Dec-2009	2029.41	1831.27	198.14

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	04-Dec-2009	1036.44	1093.08	-56.64

 

SPOT INDEX LEVELS 7TH DEC

	5108.90	( -0.44 %)	-22.80
		1	2	3
Resistance		5153.18	5197.47	5233.13
Support		5073.23	5037.57	4993.28

	17101.54		( -0.49 %)	-84.14
			1	2	3
Resistance			17251.31	17401.08	17510.33
Support			16992.29	16883.04	16733.27

Index Outlook: Pausing at the threshold

Sensex (17,101.5)

Markets vroomed higher last week on strong November auto sales and a very bullish second quarter GDP reading. The spectre of another credit crisis following in the wake of Dubai debt trouble dissolved in the slew of positive data from economies across the globe.

Nifty stopped less that one point short of its previous 52-week high while Sensex closed with strong 470 points weekly gain.

Traders were, however, edgy and this air of caution is reflected in the low turnover especially in the derivatives segment.

According to data released by the BSE, FIIs were net buyers through the week while the domestic institutional investors were booking profits.

The series of one negative monthly close followed by a positive monthly close has been continued with Sensex ending 6 per cent higher in November.

Open interest has once again crossed Rs 1-lakh-crore mark with puts outnumbering calls. The 10-week rate of change oscillator has been moving just above the zero line and the 14-week relative strength index has been hovering between 55 and 70 since August implying that though the bias has been positive, the benchmark has been in a corrective mode over the past three months.

Though the Sensex crossed above the key Fibonacci retracement resistance of 16,200 two months ago, the BSE 500 has only just reached this level at 6,700. It needs to be seen if the broader index is able to climb above this significant hurdle.

The mid- and small-cap stocks are still under-performing their large-cap peers. While the BSE Midcap index has retraced only 50 per cent of last year's decline small-cap index has retraced only 43 per cent.

The mood among the investing fraternity is buoyant as is wont near the upper end of trading ranges. But the Sensex has been drooping over the last three trading sessions resulting in weakness in daily momentum indicators.

The index is likely to face stiff resistance between 17,400 and 17,500 that can result in a sideways move between 16,100 and 17,500 for a few more sessions.

But the medium and intermediate term trends stay positive. Formation of a higher trough at 16,210 on November 27 reinforces this view and short-term investors can buy in declines as long as this level holds.

If we extrapolate the move from the July trough, the first target occurs around 17,970.

Minor count of the up-move from the recent trough at 15,330 gives us the targets of 17,421 and 18,170.

In other words, the index has the potential to rally a little further to the zone between 17,800 and 18,200 over the medium-term. However, the confluence of targets in this region makes it a potent reversal point. We stick with the 16,000 level as the medium-term trend deciding point.

Sensex can attempt to rally to 17,421 or 17,493 in the days ahead. If the rally halts around 17,500, a decline to 16,820, 16,640 or 16,200 can ensue. Presence of both the 21 and 50 day moving averages around 16,800 makes it a very important short term support. Target above 17,500 is 17,723.

Nifty (5,108.9)

Nifty recorded an intra-week peak of 5,181 before meandering sideways.

This index is clearly facing resistance near the recent peak formed on October 17 but the short-term chart pattern is bullish and portends a break-out to 5,312 or 5,319 shortly. The positive short-term view will change only on a decline below 4,950.

Short term traders can therefore buy in declines as long as this level holds. Subsequent support is at 4,806.

The medium-term view for the index is also positive but convergence of many intermediate term count targets between 5,300 and 5,400 makes it a potential reversal point for the current intermediate term uptrend.

Close below 4,400 is needed to turn the medium term view negative.

Global Cues

The year-end mood appears to have set in already in global equity markets. They meandered sideways without any conclusive break in either direction. This lethargic move was reflected in the CBOE volatility index that declined from 25.5 to a low of 20.6 during the week.

The Dow moved between 10,200 and 10,500 last week and closed on a flat note. Strong rally beyond 10,500 will give the next target at 11,280 for the index. But as noted last week, the index might bide some time in a sideways range before attempting the next leg of the up-move. Medium term outlook will be roiled only on a close below 9,640. Asian benchmarks recouped almost all the ground they had lost in the previous week while some such as Philippines' PSE Composite and Straits Times Index recorded new 2009 highs.

Pivotals: Reliance Industries (Rs 1,089.1)

RIL moved past our second short-term resistance to an intra-week peak of Rs 1,120 and closed the week on a positive note, up Rs 40. Short-term trend in the stock is up since the November 3 trough of Rs 903. But the stock faces strong resistance in the region between Rs 1,100 and Rs 1,120. Inability to move above this region can result in the stock moving in a range between Rs 1,030 and Rs 1,120 for a few weeks before rallying higher. Subsequent short-term supports are at Rs 1,010 and Rs 985. As we have been reiterating, the area around Rs 1,100 is also a key medium-term resistance for the stock and unless it makes a strong move above it, it is expected to vacillate in the band between Rs 900 and Rs 1,100 for few more weeks. Medium term target above Rs 1,100 is Rs 1,200 and the stock could yet struggle to move above this level .

SBI (Rs 2,327.6)

SBI did a volte-face and moved contrary to our expectation to nullify the bearish evening star pattern that was beginning to develop in the weekly candlestick chart. The stock continues to face strong short-term hurdle at Rs 2,350. Fresh purchases are advised only on a decisive close above this level with the target of Rs 2,394 and Rs 2,479. Short-term supports for the stock are at Rs 2,273 and Rs 2,174. We change our medium-term view on the stock to neutral. Movement in the range between Rs 2,050 and Rs 2,500 would be conducive to the long-term outlook and could be a precursor to a break-out above Rs 2,500. Weekly close below Rs 1,900 is needed to turn the medium-term view negative.

Tata Steel (Rs 575.7)

Tata Steel did not challenge the support at Rs 490 and moved higher towards our first short-term target of Rs 572 instead. The stock will face strong resistance at the October 17 peak of Rs 600. A reversal from here can result in a sideways move between Rs 520 and Rs 600 for a few more sessions. However a break-out above Rs 600 will take the stock to Rs 660.

Investors with a short-term perspective can hold the stock with a stop at Rs 515. It however needs to be borne in mind that Tata Steel faces strong intermediate term resistance at Rs 660 and it is doubtful if the stock will be able to clear this level in the near future.

Infosys (Rs 2,382.5)

Infosys too was surprisingly resilient last week and ended with over 1 per cent gain. The stock is once more testing the resistance zone between Rs 2,400 and Rs 2,450. Inability to surpass this zone will result in the stock oscillating between Rs 2,100 and Rs 2,450 for a few more weeks. Such a move will be deemed positive from a medium-term view point and can usher in a rally to Rs 2,510 or Rs 2,637 over the medium term. Short-term investors can hold the stock with a stop at Rs 2,300. Medium term view for the stock also stays positive and a close below Rs 1,900 is required to negate this view.

ONGC (Rs 1,181)

ONGC moved in a very narrow range between Rs 1,170 and Rs 1,220 last week. The short-term quandary is unresolved by this move and the stock needs to record a sharp move above Rs 1,200 to signal an impending move higher towards the October high of Rs 1,273. Failure to move above this level can result in a decline to Rs 1,101 or Rs 1,039.

Maruti Suzuki (Rs 1,595.2)

Maruti too moved higher towards the intra-week peak of Rs 1,658 before giving up some ground on Friday. Short-term trend in the stock is up since the October 29 trough of Rs 1,368. But the stock needs to move past the key short-term resistance at Rs 1,620 to signal its intention to move towards a new peak.

NTPC, Maruti Suzuki outlook appears weak

NTPC (210): The outlook for this stock appears negative as long as it stays below 216. However, it finds immediate support at 205. A drop below that level (on a closing day basis) could weaken it to 190. On the other hand, only a close above 217 would negate the downtrend. In that event, it could reach 228-230.

F&O outlook

The 210 put saw unwinding of open position, while 210 call saw accumulation. This signals the emergence of call writers, expecting a further fall. The unwinding also suggests that put writers are covering their position.

The NTPC futures also shed open interest consistently during the week, pointing to lack of confidence among traders.

Strategy: Traders could consider going short on NTPC futures keeping the stop-loss at 216 and can book profits at 205 and 190 levels. Alternatively, they can also consider writing 215 call, which ended at 2.90 on Friday. Market lot is 1,625 per contract. This strategy is only for traders willing to take risk as loss could be heavy if the position turns against our expectation. One has to shell out higher margin also.

Maruti Suzuki (1,594): After recording its new high at 1,737, the stock has been on a downtrend. The downtrend persists in the stock as long it stays below 1,685. If the current trend sustains, the stock could reach 1,420 and even to 1,340. However, in between it finds strong support at 1,525.

Options are not active in Maruti Suzuki. Consider shorting Maruti keeping the stop-loss at 1,685. The stop-loss has been given high, as it could swing wildly. Traders with high risk appetite could consider this strategy. Market lot is 200/contract

Follow-up

We had advised traders to go short on L&T with a stop-loss 1,630. The stop-loss would have been triggered. However, the short strangle (using 1,560 put and 1,650 call) on L&T is slightly in the money,

We had also presented a short-straddle strategy on IFCI using 50-strike. The position currently rules at neutral. Consider holding it for a week.

Feedback or queries (on positions) may be sent to f&o@thehindu.co.in. Replies will be published in the Monday edition.

 

JSW Energy — IPO: Invest at cut-off

---

Investors seeking a good power exposure in their portfolios over the medium-term can invest.

---

The experience of running the 260 MW generating station at Vijayanagar, Karnataka,will be useful as the company commissions ongoing projects.

JSW Energy's initial public offer is for investors willing to wait for returns in the medium term. The company has been operating a small capacity generating station for the last few years but the bulk of its new projects will be commissioned in stages over the next one year and more. These projects, which will be part-funded from the proceeds of this public offer, will start contributing to the earnings in full measure from 2011-12.

In the near term, especially in the immediate period post-listing, the stock may not deliver major returns mainly because of the market's saturation with power IPOs in the last few months; the price performance of some these recent listings tell the tale.

Therefore, while investors looking for listing gains may not find this offer attractive, those seeking a good power exposure in their portfolios over the medium-term can invest.

Valuation

By conventional valuation parameters based on historical earnings such as price-earnings multiple (33 on fully diluted equity at Rs 115) or price-to-book-value (4.3 at Rs 115, compared to industry average of less than 3), the offer does appear expensive. Yet, it is important to note that earnings from almost the entire generating capacity to be part-funded by this offer will kick in only in the medium-term.

Current earnings are based on a capacity of 260 MW; against this, the company will have a generating capacity of 3,140 MW by 2011. By the end of this fiscal, JSW's capacity will have risen to 1,295 MW. What is important is that fuel supply and offtake of power have been fully tied up for the entire capacity that will go on stream by 2011 and the projects will be commissioned in stages gradually, adding to earnings.

The finances for the projects under implementation have been fully secured, including debt from banks. Transmission infrastructure for one of the major projects in Ratnagiri is being implemented by a joint venture with the State utility. With all major aspects of the projects taken care of, the uncertainties in implementation appear limited.

Project profile

JSW owns a 260 MW plant at Vijayanagar, Karnataka, part of whose generation is sold to group company, JSW Steel, and the remaining on short-term basis to other buyers. To this was added 600 MW in two stages in June and September this year. While half the power produced here is again being sold to JSW Steel, the other half, save a small 6 MW, will be sold on short-term basis through the power-trading subsidiary, JSW Power Trading Company.

The two big generation projects that are under construction now are the 1,200 MW plant at Ratnagiri, Maharashtra, and the 1,080 MW station at Barmer in Rajasthan. Both of these are being executed by wholly-owned subsidiaries.

The Ratnagiri project is based on imported coal for which JSW has signed contracts with an Indonesian company, PT Sungai Belati and an affiliate company of JSW Steel in Mozambique to supply coal. In fact, coal from the 25-year supply deal with the two companies will fuel some of JSW's other projects on the drawing board now.

The Rajasthan project will use lignite mined by a joint venture with a State government company and will also supply its entire electricity to the state utility. The first 135 MW unit of this project will be commercialised shortly with the remaining seven units to be commissioned in stages over the next one year.

The first of four units at Ratnagiri will be commissioned by January 2010 with the remaining ones scheduled to go on stream in stages over the next one year. Half the power produced here will be sold on long-term PPAs to the Maharashtra state utility (300 MW) and Adani Enterprises (270 MW); the other half will be sold on short-term basis through the power trading subsidiary.

Eventually when all the projects are commissioned by 2011, JSW's sales will be shared equally between long-term PPAs with State utilities and short-term merchant buyers. Even in the unlikely event of merchant power prices falling, as some fear, JSW's balanced exposure to that market will help the company.

JSW is also planning a 240 MW hydroelectric plant in Himachal Pradesh but several approvals are yet to be received for this project including the crucial environmental approval. The company has included this project among those that will be part-financed by the public offer though it is not set for commissioning till the end of 2015.

We have not considered this project, as also others adding up to 7,740 MW on the drawing board, while valuing the offer. These projects, all of them coal-based, are projected for commissioning in 2014-15.

Risks to our recommendation

All the projects under construction now will be equipped with Chinese boilers and turbines. There have been misgivings on Chinese equipment following the failure of a turbine installed by a state utility. Yet, a number of private power projects under implementation in the country now use Chinese equipment to save on cost and time.

Indeed, JSW's original 260 MW plant uses Chinese equipment and the company appears to have been encouraged by the experience to follow suit with its other projects. However, group company JSW Steel is in the process of setting up a boiler and turbine manufacturing plant in joint venture with Toshiba Corporation near Chennai. This venture should be able to supply to JSW's future projects.

With the company adopting a 75:25 debt:equity ratio for funding its projects, as much as Rs 9,979 crore of the total Rs 14,055 crore capital outlay for the ongoing projects will have to be funded by bank loans. While these have been tied up, they have not been fully disbursed yet. Some of these loans are also contracted on a variable rate basis. These, along with the undisbursed part of the loans which will take prevailing higher rates, could exert some pressure on the internal accruals of the company. A lot will depend on realisations from short-term power sales to cover up for higher debt servicing costs.

FAQs on new platform

Suresh Parthasarathy

The National Stock Exchange (NSE) has implemented a new system called Mutual Fund Service System (MFSS); the BSE has also launched a similar platform. Under the new set-up, investors wishing to buy and sell mutual fund units can do so through their share-brokers. At present though, investors can buy only 30 UTI schemes. But the NSE has said that many other fund houses, such as Reliance, Tata, Birla and ICICI, are in talks with them for participating in the new platform.

There are, of course, existing online systems for trading in MF schemes; investors can log in to the fund house Web site or can execute through online portals such as ICICIDirect.com, Funds India and Fundsupermart. Where the NSE system scores is that investors can hold their units in dematerialised form rather than as statements of account.

Here are the answers to some frequently asked questions on the new trading platform.

How does one buy units through share-brokers?

If you have a trading account and a demat account with any broker, then it is similar to buying shares through your broker. If you don't have trading and demat accounts, you must get one opened to buy and sell MF units.

Under the new platform am I allowed to buy only equity schemes?

No. You can also buy debt schemes, balanced funds, monthly income plans, income schemes and even gilt funds.

What is the advantage of the new system?

The process of buying is more simplified, with 1.5 lakh share broker terminals and the penetration of share-broking offices even in rural areas. Investors need not fill application forms for buying different schemes; all you have to do is to call your broker or log in to your online trading platform.

Will my NAV vary during the day, depending upon my purchase time?

No. Any order placed before the cut-off time of 3 p.m will have same NAV that is likely to be declared later in the day. Any order(s) placed after the cut-off time will have the next trading day's NAV.

How are payments settled?

You will have to issue a cheque to your broker. He, in turn, will settle the amount with the fund houses.

When are the units likely to be credited to my account?

In all probability, it would happen the morning after you put through your trade.

If I have demat account with CDSL and a trading account with a BSE member, is it possible to sell in the NSE?

It is only possible to deliver the units to the same exchange. Therefore, it is not possible to sell in the NSE without an NSDL account. However, the BSE allows both CDSL and NSDL members to trade on the BSE.

Will the broker charge a fee for the transaction?

Currently, the NSE has said it will not charge a transaction fee, but it could be introduced at a later date. For the transaction, your broker may receive upfront commission if that is allowed by the scheme and he may also receive the trial fees.

I am trader in the equity market. Is it possible to trade on the new platform?

In the new platform traders can take advantage of the market volatility and buy and sell mutual fund units at short intervals . But one has to pay exit load based on the terms and conditions of the scheme.

--
Arvind Parekh
+ 91 98432 32381

--
Arvind Parekh
+ 91 98432 32381

Weekly Market Update 7-11th Dec 2009

_____________________________________________________________ __
Strong Futures
This is list of 10 Strong Futures: Hind Zinc, Ranbaxy, Orchid Chem, Divi'S Lab, Jindal Saw, McDowell-N, Cipla, Dena Bank, Recltd & BPCL.
Weak Futures
This is the list of 10 Weak Futures: Punj Lloyd, Aban Off shore, EKC, Ivrcl Infra, Rel Infra, Balrampur Chini, Sterling Biotech, Purva, Great Offshore & Abb Ltd..
_________________________________________________________________

Daily trend of the market is up.
Market has strong resistance at current levels, so the uncertainty is still continuing. But as nifty is still in uptrend so the readers who are holding their longs in Nifty (bought on 26th November) may go on holding till the trend of nifty is in uptrend.

 

FUNDS DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	04-Dec-2009	2029.41	1831.27	198.14

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	04-Dec-2009	1036.44	1093.08	-56.64

 

SPOT INDEX LEVELS 7TH DEC

	5108.90	( -0.44 %)	-22.80
		1	2	3
Resistance		5153.18	5197.47	5233.13
Support		5073.23	5037.57	4993.28

	17101.54		( -0.49 %)	-84.14
			1	2	3
Resistance			17251.31	17401.08	17510.33
Support			16992.29	16883.04	16733.27

Index Outlook: Pausing at the threshold

Sensex (17,101.5)

Markets vroomed higher last week on strong November auto sales and a very bullish second quarter GDP reading. The spectre of another credit crisis following in the wake of Dubai debt trouble dissolved in the slew of positive data from economies across the globe.

Nifty stopped less that one point short of its previous 52-week high while Sensex closed with strong 470 points weekly gain.

Traders were, however, edgy and this air of caution is reflected in the low turnover especially in the derivatives segment.

According to data released by the BSE, FIIs were net buyers through the week while the domestic institutional investors were booking profits.

The series of one negative monthly close followed by a positive monthly close has been continued with Sensex ending 6 per cent higher in November.

Open interest has once again crossed Rs 1-lakh-crore mark with puts outnumbering calls. The 10-week rate of change oscillator has been moving just above the zero line and the 14-week relative strength index has been hovering between 55 and 70 since August implying that though the bias has been positive, the benchmark has been in a corrective mode over the past three months.

Though the Sensex crossed above the key Fibonacci retracement resistance of 16,200 two months ago, the BSE 500 has only just reached this level at 6,700. It needs to be seen if the broader index is able to climb above this significant hurdle.

The mid- and small-cap stocks are still under-performing their large-cap peers. While the BSE Midcap index has retraced only 50 per cent of last year's decline small-cap index has retraced only 43 per cent.

The mood among the investing fraternity is buoyant as is wont near the upper end of trading ranges. But the Sensex has been drooping over the last three trading sessions resulting in weakness in daily momentum indicators.

The index is likely to face stiff resistance between 17,400 and 17,500 that can result in a sideways move between 16,100 and 17,500 for a few more sessions.

But the medium and intermediate term trends stay positive. Formation of a higher trough at 16,210 on November 27 reinforces this view and short-term investors can buy in declines as long as this level holds.

If we extrapolate the move from the July trough, the first target occurs around 17,970.

Minor count of the up-move from the recent trough at 15,330 gives us the targets of 17,421 and 18,170.

In other words, the index has the potential to rally a little further to the zone between 17,800 and 18,200 over the medium-term. However, the confluence of targets in this region makes it a potent reversal point. We stick with the 16,000 level as the medium-term trend deciding point.

Sensex can attempt to rally to 17,421 or 17,493 in the days ahead. If the rally halts around 17,500, a decline to 16,820, 16,640 or 16,200 can ensue. Presence of both the 21 and 50 day moving averages around 16,800 makes it a very important short term support. Target above 17,500 is 17,723.

Nifty (5,108.9)

Nifty recorded an intra-week peak of 5,181 before meandering sideways.

This index is clearly facing resistance near the recent peak formed on October 17 but the short-term chart pattern is bullish and portends a break-out to 5,312 or 5,319 shortly. The positive short-term view will change only on a decline below 4,950.

Short term traders can therefore buy in declines as long as this level holds. Subsequent support is at 4,806.

The medium-term view for the index is also positive but convergence of many intermediate term count targets between 5,300 and 5,400 makes it a potential reversal point for the current intermediate term uptrend.

Close below 4,400 is needed to turn the medium term view negative.

Global Cues

The year-end mood appears to have set in already in global equity markets. They meandered sideways without any conclusive break in either direction. This lethargic move was reflected in the CBOE volatility index that declined from 25.5 to a low of 20.6 during the week.

The Dow moved between 10,200 and 10,500 last week and closed on a flat note. Strong rally beyond 10,500 will give the next target at 11,280 for the index. But as noted last week, the index might bide some time in a sideways range before attempting the next leg of the up-move. Medium term outlook will be roiled only on a close below 9,640. Asian benchmarks recouped almost all the ground they had lost in the previous week while some such as Philippines' PSE Composite and Straits Times Index recorded new 2009 highs.

Pivotals: Reliance Industries (Rs 1,089.1)

RIL moved past our second short-term resistance to an intra-week peak of Rs 1,120 and closed the week on a positive note, up Rs 40. Short-term trend in the stock is up since the November 3 trough of Rs 903. But the stock faces strong resistance in the region between Rs 1,100 and Rs 1,120. Inability to move above this region can result in the stock moving in a range between Rs 1,030 and Rs 1,120 for a few weeks before rallying higher. Subsequent short-term supports are at Rs 1,010 and Rs 985. As we have been reiterating, the area around Rs 1,100 is also a key medium-term resistance for the stock and unless it makes a strong move above it, it is expected to vacillate in the band between Rs 900 and Rs 1,100 for few more weeks. Medium term target above Rs 1,100 is Rs 1,200 and the stock could yet struggle to move above this level .

SBI (Rs 2,327.6)

SBI did a volte-face and moved contrary to our expectation to nullify the bearish evening star pattern that was beginning to develop in the weekly candlestick chart. The stock continues to face strong short-term hurdle at Rs 2,350. Fresh purchases are advised only on a decisive close above this level with the target of Rs 2,394 and Rs 2,479. Short-term supports for the stock are at Rs 2,273 and Rs 2,174. We change our medium-term view on the stock to neutral. Movement in the range between Rs 2,050 and Rs 2,500 would be conducive to the long-term outlook and could be a precursor to a break-out above Rs 2,500. Weekly close below Rs 1,900 is needed to turn the medium-term view negative.

Tata Steel (Rs 575.7)

Tata Steel did not challenge the support at Rs 490 and moved higher towards our first short-term target of Rs 572 instead. The stock will face strong resistance at the October 17 peak of Rs 600. A reversal from here can result in a sideways move between Rs 520 and Rs 600 for a few more sessions. However a break-out above Rs 600 will take the stock to Rs 660.

Investors with a short-term perspective can hold the stock with a stop at Rs 515. It however needs to be borne in mind that Tata Steel faces strong intermediate term resistance at Rs 660 and it is doubtful if the stock will be able to clear this level in the near future.

Infosys (Rs 2,382.5)

Infosys too was surprisingly resilient last week and ended with over 1 per cent gain. The stock is once more testing the resistance zone between Rs 2,400 and Rs 2,450. Inability to surpass this zone will result in the stock oscillating between Rs 2,100 and Rs 2,450 for a few more weeks. Such a move will be deemed positive from a medium-term view point and can usher in a rally to Rs 2,510 or Rs 2,637 over the medium term. Short-term investors can hold the stock with a stop at Rs 2,300. Medium term view for the stock also stays positive and a close below Rs 1,900 is required to negate this view.

ONGC (Rs 1,181)

ONGC moved in a very narrow range between Rs 1,170 and Rs 1,220 last week. The short-term quandary is unresolved by this move and the stock needs to record a sharp move above Rs 1,200 to signal an impending move higher towards the October high of Rs 1,273. Failure to move above this level can result in a decline to Rs 1,101 or Rs 1,039.

Maruti Suzuki (Rs 1,595.2)

Maruti too moved higher towards the intra-week peak of Rs 1,658 before giving up some ground on Friday. Short-term trend in the stock is up since the October 29 trough of Rs 1,368. But the stock needs to move past the key short-term resistance at Rs 1,620 to signal its intention to move towards a new peak.

NTPC, Maruti Suzuki outlook appears weak

NTPC (210): The outlook for this stock appears negative as long as it stays below 216. However, it finds immediate support at 205. A drop below that level (on a closing day basis) could weaken it to 190. On the other hand, only a close above 217 would negate the downtrend. In that event, it could reach 228-230.

F&O outlook

The 210 put saw unwinding of open position, while 210 call saw accumulation. This signals the emergence of call writers, expecting a further fall. The unwinding also suggests that put writers are covering their position.

The NTPC futures also shed open interest consistently during the week, pointing to lack of confidence among traders.

Strategy: Traders could consider going short on NTPC futures keeping the stop-loss at 216 and can book profits at 205 and 190 levels. Alternatively, they can also consider writing 215 call, which ended at 2.90 on Friday. Market lot is 1,625 per contract. This strategy is only for traders willing to take risk as loss could be heavy if the position turns against our expectation. One has to shell out higher margin also.

Maruti Suzuki (1,594): After recording its new high at 1,737, the stock has been on a downtrend. The downtrend persists in the stock as long it stays below 1,685. If the current trend sustains, the stock could reach 1,420 and even to 1,340. However, in between it finds strong support at 1,525.

Options are not active in Maruti Suzuki. Consider shorting Maruti keeping the stop-loss at 1,685. The stop-loss has been given high, as it could swing wildly. Traders with high risk appetite could consider this strategy. Market lot is 200/contract

Follow-up

We had advised traders to go short on L&T with a stop-loss 1,630. The stop-loss would have been triggered. However, the short strangle (using 1,560 put and 1,650 call) on L&T is slightly in the money,

We had also presented a short-straddle strategy on IFCI using 50-strike. The position currently rules at neutral. Consider holding it for a week.

Feedback or queries (on positions) may be sent to f&o@thehindu.co.in. Replies will be published in the Monday edition.

 

JSW Energy — IPO: Invest at cut-off

---

Investors seeking a good power exposure in their portfolios over the medium-term can invest.

---

The experience of running the 260 MW generating station at Vijayanagar, Karnataka,will be useful as the company commissions ongoing projects.

JSW Energy's initial public offer is for investors willing to wait for returns in the medium term. The company has been operating a small capacity generating station for the last few years but the bulk of its new projects will be commissioned in stages over the next one year and more. These projects, which will be part-funded from the proceeds of this public offer, will start contributing to the earnings in full measure from 2011-12.

In the near term, especially in the immediate period post-listing, the stock may not deliver major returns mainly because of the market's saturation with power IPOs in the last few months; the price performance of some these recent listings tell the tale.

Therefore, while investors looking for listing gains may not find this offer attractive, those seeking a good power exposure in their portfolios over the medium-term can invest.

Valuation

By conventional valuation parameters based on historical earnings such as price-earnings multiple (33 on fully diluted equity at Rs 115) or price-to-book-value (4.3 at Rs 115, compared to industry average of less than 3), the offer does appear expensive. Yet, it is important to note that earnings from almost the entire generating capacity to be part-funded by this offer will kick in only in the medium-term.

Current earnings are based on a capacity of 260 MW; against this, the company will have a generating capacity of 3,140 MW by 2011. By the end of this fiscal, JSW's capacity will have risen to 1,295 MW. What is important is that fuel supply and offtake of power have been fully tied up for the entire capacity that will go on stream by 2011 and the projects will be commissioned in stages gradually, adding to earnings.

The finances for the projects under implementation have been fully secured, including debt from banks. Transmission infrastructure for one of the major projects in Ratnagiri is being implemented by a joint venture with the State utility. With all major aspects of the projects taken care of, the uncertainties in implementation appear limited.

Project profile

JSW owns a 260 MW plant at Vijayanagar, Karnataka, part of whose generation is sold to group company, JSW Steel, and the remaining on short-term basis to other buyers. To this was added 600 MW in two stages in June and September this year. While half the power produced here is again being sold to JSW Steel, the other half, save a small 6 MW, will be sold on short-term basis through the power-trading subsidiary, JSW Power Trading Company.

The two big generation projects that are under construction now are the 1,200 MW plant at Ratnagiri, Maharashtra, and the 1,080 MW station at Barmer in Rajasthan. Both of these are being executed by wholly-owned subsidiaries.

The Ratnagiri project is based on imported coal for which JSW has signed contracts with an Indonesian company, PT Sungai Belati and an affiliate company of JSW Steel in Mozambique to supply coal. In fact, coal from the 25-year supply deal with the two companies will fuel some of JSW's other projects on the drawing board now.

The Rajasthan project will use lignite mined by a joint venture with a State government company and will also supply its entire electricity to the state utility. The first 135 MW unit of this project will be commercialised shortly with the remaining seven units to be commissioned in stages over the next one year.

The first of four units at Ratnagiri will be commissioned by January 2010 with the remaining ones scheduled to go on stream in stages over the next one year. Half the power produced here will be sold on long-term PPAs to the Maharashtra state utility (300 MW) and Adani Enterprises (270 MW); the other half will be sold on short-term basis through the power trading subsidiary.

Eventually when all the projects are commissioned by 2011, JSW's sales will be shared equally between long-term PPAs with State utilities and short-term merchant buyers. Even in the unlikely event of merchant power prices falling, as some fear, JSW's balanced exposure to that market will help the company.

JSW is also planning a 240 MW hydroelectric plant in Himachal Pradesh but several approvals are yet to be received for this project including the crucial environmental approval. The company has included this project among those that will be part-financed by the public offer though it is not set for commissioning till the end of 2015.

We have not considered this project, as also others adding up to 7,740 MW on the drawing board, while valuing the offer. These projects, all of them coal-based, are projected for commissioning in 2014-15.

Risks to our recommendation

All the projects under construction now will be equipped with Chinese boilers and turbines. There have been misgivings on Chinese equipment following the failure of a turbine installed by a state utility. Yet, a number of private power projects under implementation in the country now use Chinese equipment to save on cost and time.

Indeed, JSW's original 260 MW plant uses Chinese equipment and the company appears to have been encouraged by the experience to follow suit with its other projects. However, group company JSW Steel is in the process of setting up a boiler and turbine manufacturing plant in joint venture with Toshiba Corporation near Chennai. This venture should be able to supply to JSW's future projects.

With the company adopting a 75:25 debt:equity ratio for funding its projects, as much as Rs 9,979 crore of the total Rs 14,055 crore capital outlay for the ongoing projects will have to be funded by bank loans. While these have been tied up, they have not been fully disbursed yet. Some of these loans are also contracted on a variable rate basis. These, along with the undisbursed part of the loans which will take prevailing higher rates, could exert some pressure on the internal accruals of the company. A lot will depend on realisations from short-term power sales to cover up for higher debt servicing costs.

FAQs on new platform

Suresh Parthasarathy

The National Stock Exchange (NSE) has implemented a new system called Mutual Fund Service System (MFSS); the BSE has also launched a similar platform. Under the new set-up, investors wishing to buy and sell mutual fund units can do so through their share-brokers. At present though, investors can buy only 30 UTI schemes. But the NSE has said that many other fund houses, such as Reliance, Tata, Birla and ICICI, are in talks with them for participating in the new platform.

There are, of course, existing online systems for trading in MF schemes; investors can log in to the fund house Web site or can execute through online portals such as ICICIDirect.com, Funds India and Fundsupermart. Where the NSE system scores is that investors can hold their units in dematerialised form rather than as statements of account.

Here are the answers to some frequently asked questions on the new trading platform.

How does one buy units through share-brokers?

If you have a trading account and a demat account with any broker, then it is similar to buying shares through your broker. If you don't have trading and demat accounts, you must get one opened to buy and sell MF units.

Under the new platform am I allowed to buy only equity schemes?

No. You can also buy debt schemes, balanced funds, monthly income plans, income schemes and even gilt funds.

What is the advantage of the new system?

The process of buying is more simplified, with 1.5 lakh share broker terminals and the penetration of share-broking offices even in rural areas. Investors need not fill application forms for buying different schemes; all you have to do is to call your broker or log in to your online trading platform.

Will my NAV vary during the day, depending upon my purchase time?

No. Any order placed before the cut-off time of 3 p.m will have same NAV that is likely to be declared later in the day. Any order(s) placed after the cut-off time will have the next trading day's NAV.

How are payments settled?

You will have to issue a cheque to your broker. He, in turn, will settle the amount with the fund houses.

When are the units likely to be credited to my account?

In all probability, it would happen the morning after you put through your trade.

If I have demat account with CDSL and a trading account with a BSE member, is it possible to sell in the NSE?

It is only possible to deliver the units to the same exchange. Therefore, it is not possible to sell in the NSE without an NSDL account. However, the BSE allows both CDSL and NSDL members to trade on the BSE.

Will the broker charge a fee for the transaction?

Currently, the NSE has said it will not charge a transaction fee, but it could be introduced at a later date. For the transaction, your broker may receive upfront commission if that is allowed by the scheme and he may also receive the trial fees.

I am trader in the equity market. Is it possible to trade on the new platform?

In the new platform traders can take advantage of the market volatility and buy and sell mutual fund units at short intervals . But one has to pay exit load based on the terms and conditions of the scheme.

--
Arvind Parekh
+ 91 98432 32381

Market Outlook 4th Dec 2009

INTRADAY calls for 04th Dec 2009
Buy Polaris-191 for 196-198+ with sl 186
Buy Indiacem-116 for 124-126+ with sl 112
Buy Hexaware-96 for 102-106+ with sl 93
Buy JKPaper-44 for 50-52+ with sl 41[positional]

Strong & Weak futures
This is list of 10 strong futures:
McDowell-N, Hind Zinc, Ranbaxy, Orchid Chem, Dena Bank, Jindal Saw, Recltd, Polaris, Indusind Bank & Tata Motors.
And this is list of 10 Weak futures:
Rel Infra, Punj Lloyd, EKC, India Info, Abb Ltd, Hind Uni Lvr, Purva, Great Offshore, Aban Off shore & Sterling Biotech.
Nifty is in Up trend

NIFTY FUTURES (F & O):
Below 5105 level, expect profit booking up to 5093-5095 zone and thereafter slide may continue up to 5074-5076 zone by non-stop.

Hurdles at 5142 & 5144 levels. Above these levels, rally may continue up to 5173-5175 zone and thereafter expect a jump up to 5192-5194 zone by non-stop.

Cross above 5202-5204 zone, can take it up to 5221-5223 zone by non-stop. Supply expected at around this zone and have caution.

On Negative Side, rebound expected at around 5065-5067 zone. Stop Loss at 5046-5048 zone.

Short-Term Investors:
Bullish Trend. Stop Loss at 4801.00.
Up Side Target at 5477.00.

Today's Expectation:
SGX NIFTY trading at 5110.50 (08.17 AM) now.

This trend is surprising & Negative too. If this downtrend continues, then it may continue for 1 (or) 2 Days.

If short covering starts, then it may continue 1 Week, 1 Month, 3 Months (or) even 1 Year.

BSE SENSEX:
Below 17118 level, expect profit booking up to 17087-17089 zone and thereafter slide may continue up to 17029-17031 zone by non-stop.

Hurdles at 17196 & 17255 levels. Above these levels, rally may continue up to 17284-17286 zone and thereafter expect a jump up to 17342-17344 zone by non-stop.

Cross above 17371-17373 zone, can take it up to 17430-17432 zone by non-stop. Supply expected at around this zone and have caution.

On Negative Side, rebound expected at around 17000-17002 zone. Stop Loss at 16941-16943 zone.

Short-Term Investors:
Bullish Trend. Target at 18226.48.
Stop Loss at 16210.44.

CNX BANK INDEX (F&O):
Below 9315 level, expect profit booking up to 9254-9256 zone and thereafter slide may continue up to 9214-9216 zone by non-stop.
Hurdles at 9342 & 9375 levels. Above these levels, rally may continue up to 9395-9397 zone and thereafter expect a jump up to 9434-9436 zone by non-stop.

Cross above 9454-9456 zone, can take it up to 9494-9496 zone by non-stop. Supply expected at around this zone and have caution.

On Negative Side, rebound expected at around 9194-9196 zone. Stop Loss at 9155-9157 zone.

Short-Term Investors:
Bullish Trend. Stop Loss at 8550.00.
Up Side Target at 9996.00.

POSITIONAL BUY:
MPHASIS (NSE Cash)
Explosive scrip & any time it will take off.

If crosses & sustains above 706 & 710 levels, then rally may continue up to 740 level and thereafter expect a jump up to 746-748 zone by non-stop.

Support is too far at down side and at around 670 level. Below 670 level, expect profit booking up to 665 level.


MARUTI SUZUKI (NSE Cash)
Explosive scrip & it will take off any time.

If crosses & sustains above 1652 & 1662 levels, then rally may continue up to 1682 level and thereafter expect a jump up to 1691-1693 zone by non-stop.

Support is too far at down side and at around 1623 level. Below 1623 level, expect profit booking up to 1612 level.


JET AIRWAYS (NSE Cash)
Technically Bullish Scrip. Recommended to Book Profits.

If crosses & sustains above 606 level, then rally may continue up to 618 level by non-stop.

Support is too far at down side and at around 551 level. Below 551 level, expect profit booking up to 539 level.

EDUCOMP SOLUTIONS (NSE Cash)
Weak scrip & any time it wil fall any time.

If breaks & sustains below 737 & 740 levels, then fall may continue up to 727 level and thereafter expect a slide up to 720-722 zone by non-stop.

Hurdle is too far at upper side and at around 755 level. Above 755 level, expect short covering up to 758 level.

STOCK OPTIONS (NSE):
TATASTEEL CALL OPTION (580 Strike Price).
Technically Bullish. But bulls may lose control.

Above 32 level, it can zoom up to 33 level by non-stop.

Support at 24 level. Below 24 level, expect unwinding up to 18 level and thereafter panic may continue up to 14-16 zone by non-stop.

DLF CALL OPTION (400 Strike Price).
Technically Bullish. But bulls may lose control.

Above 16 level, it can zoom up to 18 level by non-stop.

Support at 13 level. Below 13 level, expect unwinding up to 11 level and thereafter panic may continue up to 7-9 zone by non-stop.

STOCK FUTURES (NSE):
SESAGOA FUTURES:

Technically Bullish.
Above 383 level, it can zoom up to 396 level by non-stop.

Support at 365 level. Below 365 level, expect unwinding up to 359 level.

HDIL FUTURES:
Technically Bullish.

Above 355 level, it can zoom up to 360 level by non-stop.

Support at 345 level. Below 345 level, expect unwinding up to 344 level.

Aban Offshore-Buy with a price objective of Rs 1740


With a forecast earnings of Rs 300 per share for FY11, Aban Offshore trades at 4.4 times just one year forward. Some of the most respected names in the industry are ready to give the stock another chance, and yet it is down 74 per cent from it's peak. So if we assume all research is a hoax, then why don't the shorts move in for the kill?

Here are some of the reasons:

Recovery in Crude
In dynamic conditions it is difficult to visualise crude will stick to $ 78 a bbl forever. If it can move to $ 30 this March, it had also moved to $ 147 in May 2008. Either possibility still exists, but if the World at large grows then higher crude will automatically translate into higher rig rates and higher fleet utilisation for Aban.

Visible Revenues

Aban is in that sweet spot of the crude industry where oil find or no oil-find, the rig owner draws in his rental. During Q2 FY10 Aban contracted 6 vessels on long term leases, leaving a mere 3 rigs that seek drillers. This implies strong revenue visibility for the near term. 100 per cent of H2FY10 and 75 per cent of FY11 projected revenues are from the existing contracts. More importantly, better business conditions will imply close to 95 per cent fleet utilisation in FY11.

A Part of the Funding is in place, more may come from a listing of Aban Singapore

Aban recently raised $ 150 mn through a QIP at Rs 1225 a share. In addition, it will earn close to Rs 2000 crore in cash profits for FY10. Add to this, the planned inflow of $ 400 mn through a listing of Aban Offshore's Singapore subsidiary. Cash inflows of roughly $ 1 bn will take care of operational needs as well as substantially lower the roughly $ 2 bn of debt that Aban carries.

Valuations are way off-benchmarks

Global deep sea drillers like Transocean Global fetch near term PEs of 10. Aban fetches near term PE of 4. If Aban begins to fetch even median PEs of 6 the stock will trade over Rs 1800 in no time and possibly regain it's previous high of Rs 5000 per share by early CY11.

The call for the shorts and conversely for the longs is what to believe. After all Aban had Sell reports at Rs 200 in March 2009 and has a huge number of BUY reports at Rs 1200-Rs 1300. If we trust the bulls, the bears in the Aban stock are likely to get crushed rather dramatically, if even for speculation sake, the remaining 3 Rigs get hired by Ongc, Cairn, Oil India or Reliance for NELP VIII blocks.

It is not inconceivable, but what we need to go long is simple conviction.

(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.)

--
Arvind Parekh
+ 91 98432 32381

Market Outlook for 3rd Dec 2009

 

INTRADAY calls for 03rd Dec 2009
Buy MundraPort - 569 for 588-594+ with sl 560
Buy Uniphos - 161 for 168-171+ with sl 157
Buy IFCI - 54 for 57.65-58.5 with sl 51.50
Buy IndusindBank - 133 for 139-141+ with sl 129
Buy IDBI - 132 for 145+ with sl 129 [positional]
Buy SyndicateBnk-98 above 101 for 112+ with sl 98 [positional]

 

 

stocks that are in news today:
-ABG Shipyard, Bharati Shipyard's open offers for Great Offshore open today
-Ashok Leyland November total sales at 4,695 units versus 2,307 units (YoY)
-REC sources say DHRP for REC FPO to be filed on December 4, FPO to hit markets between January 21– January 27
-Genus Power board meet on December 4 to approve convertible warrants to promoters (stock up 20%)
-Uninor to announce launch of operations; initially in 8 circles; Alert: Uninor is a JV between Telenor & Unitech Wireless
-Infosys CEO: To use part of $2.8 billion cash reserve for acquisitions 
-Still in NSE F&O curb: Kingfisher
-1.66 crore QIP shares of Welspun Gujarat hit the market today
-21.31 crore QIP shares of Hindalco available for trading today
-Long wait for NANO leads to cancellations
 

NIFTY FUTURE LEVELS
SUPPORT
5111
5106
5092
5085
5067
RESISTANCE
5129
5139
5160
5179
5185
5204

 

Strong & Weak  futures  
This is list of 10 strong futures:

Dena Bank, Tata Motors, Ranbaxy, Jindal Saw,  Orchid Chem, Canara Bank, Sail Ltd, Recltd, Hind Zinc & McDowell-N.

And this is list of 10 Weak futures:

Rel Infra, EKC, Punj Lloyd, Mphasis, Siemens, India Info, RCom, Great Offshore, MRPL & OFSS.
 Nifty is in Up trend  
 
NIFTY FUTURES (F & O): 
 Below 5111-5113 zone, selling may continue up to 5106 level and thereafter slide may continue up to 5092-5094 zone by non-stop.

Hurdles at 5129 & 5139 levels. Above these levels, expect short covering up to 5158-5160 zone and thereafter expect a jump up to 5177-5179 zone by non-stop.

Cross above 5183-5185 zone, can take it up to 5202-5204 zone by non-stop. Supply expected at around this zone and have caution.

On Negative Side, rebound expected at around 5085-5087 zone. Stop Loss at 5067-5069 zone.
 
Short-Term Investors: 
 Bullish Trend. Stop Loss at 4801.00.
Up Side Target at 5477.00.
 
Today's Expectation:
SGX NIFTY is trading at 5134.00 (08.41 AM IST).

This trend is on expected lines.

If this uptrend continues, then uptrend may continue for 1 (or) 2 Days, 1 Week, 1 Month, 3 Months (or) Even 1 Year.

If Profit Booking starts, then it may continue for 1 Day.
 

POSITIONAL BUY:
Buy TATA MOTORS (NSE Cash) 
If crosses & sustains above 744 level, then rally may continue up to 770 level by non-stop. Unbelievable too.

Support is too far at down side and at around 707 level. Below 707 level, selling may continue up to 696 level.
 
Buy DLF (NSE Cash) 
If crosses & sustains above 388 & 390 levels, then rally may continue up to 400 level and thereafter it can touch 403-405 zone.

Support is too far at down side and at around 375 level. Below 375 level, selling may continue up to 373 level.
 
Buy INDIABULLS REAL ESTATE (NSE Cash) 
If crosses & sustains above 227 level, then rally may continue up to 233 level by non-stop. 

Support is too far at down side and at around 220 level. Below 220 level, selling may continue up to 214 level.
 
Buy APTECH LTD (NSE Cash) 
If crosses & sustains above 196 level, then rally may continue up to 219 level by non-stop. Unbelievable too.

Support is too far at down side and at around 170 level. Below 170 level, selling may continue up to 169 level.
 
STOCK OPTIONS (NSE):
Buy ICICIBANK CALL OPTION (900 Strike Price).
Above 31 level, it can zoom up to 40 level by non-stop. Unbelievable too.

Support is too far on down side & at around 19 level. Below 19 level, expect unwinding up to 17 level.
 

Buy SBIN CALL OPTION (2310 Strike Price).
Above 84 level, it can zoom up to 100 & 104 levels by non-stop and thereafter expect a jump up to 120-122 zone. Unbelievable too.

Support is too far on down side & at around 64 level. Below 64 level, expect unwinding up to 60 level.
 
STOCK FUTURES (NSE):
Sell RELIANCE FUTURES:
Below 1093 level, selling may continue up to 1085 level by non-stop. If breaks 1070 level, then expect further panic up to 1066-1068 zone by non-stop.

Hurdle at 1110 level. Above this level, expect short covering up to 1118 level by non-stop.

Buy JSWSTEEL FUTURES:
Above 1035 level, it can zoom up to 1056 & 1075 levels by non-stop and thereafter expect a jump up to 1085-1087 zone. Unbelievable too.

Support is too far on down side & at around 1006 level. Below 1006 level, expect unwinding up to 985 level.

 

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	02-Dec-2009	3535.72	2650.07	885.65

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	02-Dec-2009	1560.79	1774.43	-213.64

 

SPOT INDEX LEVELS

	5123.25	( 0.02 %)	1.25
		1	2	3
Resistance		5152.75	5182.25	5202.75
Support		5102.75	5082.25	5052.75

	17169.91		( -0.16 %)	-28.36
			1	2	3
Resistance			17285.61	17401.30	17472.93
Support			17098.29	17026.66	16910.97

Interesting findings on web: 

      Source: Bloomberg

India's stocks fell, snapping a two- day 3.4 percent rally. Wipro Ltd. led software exporters lower after the rupee gained against the dollar for a third day, crimping the value of their exports in the local currency.

Wipro, the nation's third-largest software developer, fell 0.8 percent. Tata Motors Ltd. rose 4.3 percent as sales increased last month.

The Bombay Stock Exchange's Sensitive Index, or Sensex, slid 28.36, or 0.2 percent, to 17,169.91. The S&P CNX Nifty Index on the National Stock Exchange added 1.25, or less than 0.1 percent, to 5,123.25. The BSE 200 Index advanced 0.2 percent to 2,146.69. The Sensex has gained 78 percent this year, set for its best annual performance since 1991, as Asia's third-largest economy recovers at a faster pace than the U.S., Europe and Japan.

Wipro fell 0.8 percent to 633 rupees. Tata Consultancy Services Ltd., India's largest software developer, slid 0.2 percent to 684.30 rupees. India's rupee climbed to the highest level in a week gaining 0.2 percent to 46.2450 a dollar. Indian software developers get more than half their sales from the U.S., their largest export market.

Tata Motors rose 4.3 percent to 733 rupees. Sales of trucks and buses in the local market grew 81 percent in November to 29,408 units, the company said in a statement yesterday after the stock market closed. Sales of passenger vehicles added 55 percent.

Maruti, Bajaj Auto

Maruti Suzuki India Ltd., India's largest carmaker, increased 1.6 percent to 1,612.95 rupees after sales climbed 67 percent in November while Bajaj Auto Ltd. gained 3.2 percent to 1,690 rupees after sales last month surged 73 percent to 276,759 vehicles. 

"Auto sales came in slightly ahead of expectations," Ashwin Patil, an analyst at HDFC Securities Ltd. said in a note to clients. "We believe the recovery story remains intact, led by lower interest rates, steady rural incomes and a continuing interest in new models."

Ranbaxy Laboratories Ltd., the nation's largest drugmaker by sales, gained 3.3 percent to 484.65 rupees after its stock rating was raised to "buy" from "sell" at Citigroup Inc. as the company won approval for the sale of a generic version of the Valtrex drug in the U.S.

ABG Shipyard Ltd., India's biggest non-state yard, climbed after it sold its entire stake in Great Offshore Ltd., withdrawing from a bidding war after its rival Bharati Shipyard Ltd. raised its offer price. ABG surged 9 percent to 205.70 rupees. Bharati Shipyard soared 11 percent to 177.80 while Great Offshore sank 6 percent to 513.05 rupees.

Tata Elxsi Ltd., a software developer that's part of the Tata Group, jumped 20 percent to 203.65 rupees, its steepest climb in 12 years. Sales may reach $400 million within three years, the Economic Times reported, citing managing director Madhukar Dev. 

Source: Reuters

* Resistance emerges after 3.4 pct rally over two days * HDFC falls on concerns new product could hurt margins * Tata Motors hits 18-month-high on robust Nov sales

Indian shares ran out of steam after climbing to a near six-week high on Wednesday and shed 0.2 percent, with Housing Development Finance Corp (HDFC.BO) leading the drop. Traders said there was resistance after the market had risen 3.4 percent over two days, and with the year end coming up investors were becoming cautious.

Reliance Infrastructure (RLIN.BO) fell 1.9 percent to 1,060.55 rupees as investors took profits after the stock had jumped 4.5 percent over three sessions. Top vehicles maker Tata Motors (TAMO.BO) touched an 18-month high of 739.45 rupees, after its November sales rose 65 percent from a year earlier. [ID:nBOM421546] The stock closed up 4.1 percent at 729.75 rupees. Citigroup said in a note on Sunday Tata Motors would be a key beneficiary of a revival in the domestic investment cycle.

The 30-share BSE index .BSESN closed down 0.16 percent, or 28.36 points, at 17,169.91 after rising as much as 0.8 percent in early deals. The market had risen over the previous days on better-than-expected September quarter GDP growth and robust November auto sales. Eighteen of its components closed in the red. Foreign fund inflows of more than $15 billion have powered a rally of 78 percent in the benchmark so far this year. If the rally sustains momentum, the Sensex is poised to post its best yearly performance at least since 1991, according to data available with Thomson Reuters.

Analysts are mixed on the outlook for the new year. Rakesh Rawal, head of private wealth management at Anand Rathi Financial Services, said he expected the Sensex to gain around 15 percent in 2010. "The extent of negativities in the world markets may come off in 2010. If that happens, it could help the Sensex grow further. It can grow by ... maybe even 25 percent," he said. But Anand Shah, head of equities at Canara Robecco Mutual Fund, was skeptic. "Our market could be really choppy in 2010. Strong liquidity will keep pushing the market higher but weak global fundamentals will not support the idea. How much can printed money drive a market," he said.

Housing Development Finance dropped 1.9 percent to 2,748.80 rupees on investor worry a loan product it launched at a fixed rate of 8.25 percent a year up to March 2012 and the applicable floating rate for the remaining term would hit margins. "The dual rate product introduced by HDFC implies lower interest rates, and could pressurise its margins to an extent," said Vaibhav Agrawal, vice-president of research - banking at Angel Broking.

Leading lenders State Bank of India (SBI.BO) and ICICI Bank (ICBK.BO) climbed 0.7 percent each. "Banks look better than rest of the lot. The valuations are still reasonable. The outlook looks better, with the economy showing good growth," Shah said. India's central bank will not raise interest rates by the end of 2009, according to a new Reuters poll, and only one-third of economists surveyed predict a rate hike by the end of January despite unexpectedly strong growth during the September quarter.

Strong monthly sales also pushed Maruti Suzuki (MRTI.BO) and Bajaj Auto (BAJA.BO) up 1.5 percent and 3.3 percent respectively. Top engineering and construction firm Larsen & Toubro (LART.BO) shed 0.4 percent to 1,622.15 rupees, after the government rejected its proposed tie-up with Europe's EADS (EAD.PA) for defence equipment production. Tata Steel (TISC.BO), the world's eighth largest steel maker by output, dropped 1.1 percent to 575.40 rupees on concerns over its near-term outlook. "The short-term outlook for Tata Steel remains challenging, due to the presently lower demand in the European steel markets, subdued steel prices, and Corus' production cuts," First Global said in a note on Tuesday.

In the broader market, gainers led losers in a ratio of 1.2:1 on moderate volume of 442 million shares.  The 50-share NSE index  closed almost unchanged at 5,123.25.

STOCKS THAT MOVED * Gammon India (GAMM.BO) rose 1.7 percent to 242.90 rupees. The construction firm said it won two projects worth 4.59 billion rupees to construct two 600 MW thermal power projects in southern Tamil Nadu state.

ABG Shipyard (ABGS.BO) rose 9.4 percent to 206.50 rupees after the ship builder said it sold entire holding in offshore services firm Great Offshore (GOFS.BO) in the secondary market. The announcement came after rival Bharati Shipyard (BHAR.BO) raised the open offer price for Great Offshore to 590 rupees a share. Great Offshore fell 5.9 percent while Bharati Shipyard jumped 11.6 percent.

MAIN TOP 3 BY VOLUME * Unitech (UNTE.BO) on 17.9 million shares * Suzlon Energy (SUZL.BO) on 12 million shares * Dena Bank (DENA.BO) on 11.6 million shares
 

Source: India Infoline

Indian markets ended flat amid high volatility on Wednesday as bulls ran out of steam after a two day rally. Strong overnight cues from the US and the Asian markets aided the Nifty inch closer to the 5182 levels (52-week high). However, key indices were unable to hold on as traders and investors preferred to book some profits at higher levels.

The shipping sector was in demand given the takeover Saga between Bharati Shipyard and ABG Shipyard. However, shares of Great Offshore ended with losses.

The Auto and the Realty stocks also were among the top gainers however, the FMCG, select IT and Power stocks were among the major losers.

The BSE Sensex slipped 28 points at 17,169 after touching a high of 17,329 and a low of 17,142. The index opened at 17,254. The NSE Nifty ended flat to shut shop at 5,123.

In Asia, the Nikkei in Japan was up 0.4%, while Australia's S&P/ASX ended higher by 1%. Shanghai SE Composite in China gained 1% and Hang Seng index in Hong Kong was up 0.8%.

In Europe, stocks were mixed. The FTSE in the UK was down 0.2%, The DAX in Germany was flat and the CAC 40 index in France was up 0.2%.

Among the 30-components of Sensex, 19 stocks ended in the red and 11 ended in the positive terrain. HDFC, BHEL, ONGC, ITC and HUL ended in the negative terrain. Among the major gainers were Tata Motors, ICICI Bank, HDFC Bank, DLF and SBI.

Shares of Sun Pharma erased early gains and ended lower by 3% to end at Rs1497. The stock hit intra-day high of Rs1638 after the company announced that it received the support of Templeton Asset Management to acquire Israeli drugmaker Taro Pharmaceutical, Templeton Chairman Mark Mobius was quoted as saying.

He added, Supreme Court in Israel should pass a decision quickly so that Sun can take control of Taro. Templeton owns a 10% equity stake in Taro.

The scrip opened at Rs1564 it hit an intra-day low of Rs1486 and recorded volumes of over 0.46mn shares on NSE.

Shares of Tata Elxsi were locked at 20% upper circuit to end at Rs203.65 after reports stated that the company's sales may reach US$400mn within three years. The scrip opened at Rs172 it touched an intra-day high of Rs203 and a low of Rs172 and recorded volumes of over 2mn shares on NSE. The stock had hit its 52-week low of Rs75 on March 06, 2009.

ABG Shipyard and Eleventh Land Developers Pvt. Ltd. (ELDPL) (a wholly owned subsidiary of ABG), announced the sale of 3.078mn shares of Great Offshore (being approximately 8.27% of current paid up shareholding of Great Offshore Ltd.) through a stock market sale. Consequent to this Transaction, the cumulative shareholding of ABG and ELDPL in Great Offshore Ltd. is Rs571 shares.

Bharati Shipyard announced that the Board of Directors decided to revise the open offer price of equity shareholders of Great Offshore to Rs590 per share.

Thus, the offer price per equity share stands revised at Rs590 per share for the open offer for 78,26,788 equity share representing 20% of the emerging voting capital of Great Offshore Ltd.

Shares of ABG Shipyard shot up by over 9% to end at Rs205 and Bharti Shipyard also surged over 11% to end at Rs177.

Shares of LML have advanced by 4.4% to Rs9.55 after the company announced that it started legal proceedings against Piaggio & C. SpA, Italy for breach of Settlement & Clean Break Agreement dated November 15, 1999 by invoking arbitration under the Singapore International Arbitration Centre (SIAC), Arbitration Rules, Singapore.

The scrip opened at Rs9.25 it touched an intra-day high  of Rs10.50 and a low of Rs9.15 and has recorded volumes of over shares 2.3nm on NSE. 

Source: Kotak Securities

Markets closed the today's volatile session on a flat note after showing gains during the early session on the back of far end profit booking across the selective indices. Stocks managed to gain ground during opening and touched highest level in more than a month, on some buying sentiment. Bank and Auto stocks were positive contributors. However, market pared most of its gains along with slide in European markets after positive opening. Investors selected to tread a cautious path due to lack of prominent triggers. The BSE Sensex ended below17,200 level and NSE Nifty closed above 5,100 mark.

The market today extended its yesterday's gains and opened on positive note on the back of favorable cues from the global markets. The Asian markets were up today and the US markets closed significantly higher on Tuesday on sustained buying led by economic data that reinforced hopes for a sustainable recovery. A weak dollar advanced natural resource companies' shares. The Dollar Index returned to 52-week lows before paring losses to end with a 0.5% loss. Besides, sentiment also got a boost, as concerns retreated about the impact of Dubai's debt trouble after news that Dubai World planned to restructure about $26 billion in debt. Further, Indian benchmark indices suddenly turned volatile and shed most of gains as investors decided to book some profits after a sharp rally in the previous few sessions. Going ahead, stocks continued to swing up and down on continuous bouts of buying and selling. Finally, market closed on flat note on selling pressure emerged during afternoon. From the sectoral front, Power, FMCG, Capital Goods, Consumer Durable, Oil & Gas and Metal stocks witnessed most of the selling from these baskets. However, Realty, Auto and Bank stocks gained favour from the market. BSE Midcap and Smallcap stocks also gained favour during the trading.

Among the Sensex pack 19 stocks ended in red territory and 11 in green. The market breadth indicating the overall health of the market remained positive as 1518 stocks closed in green while 1214 stocks closed in red and 112 stocks remained unchanged in BSE.

The BSE Sensex closed marginally lower by 28.36 points at 17,169.91, whereas NSE Nifty ended slightly up by 1.25 points 5,123.25. BSE Midcap and Smallcap closed with gains of 58.92 and 66.89 points at 6,587.68 and 7,751.85 respectively. The BSE Sensex touched intraday high of 17,329.68 and intraday low of 17,142.36.

Indian government has drawn up 25 state firms for stake sales which include Nuclear Power Corporation of India, National Bank for Agriculture and Rural Development. It also includes Exim Bank of India, Punjab & Sind Bank, Indian Railways Finance Corporation and National Housing Bank.

Losers from the BSE Sensex pack are Sun Pharma (2.82%), HDFC (1.90%), Rel Infra (1.87%), HUL (1.39%), BHEL (1.37%), Tata steel (1.13%), M&M Ltd (1.09%), ACC Ltd (1.09%), RCom (1.07%), ONGC Ltd (1.02%) and Herohonda Motors (0.91%).

Gainers from the BSE Sensex pack are Tata Motors (4.14%), DLF Ltd (3.69%), Maruti Suzuki (1.54%), HDFC Bank (0.92%), JP Associates (0.70%) and ICICI Bank (0.58%).

On the global markets front, the Asian markets that opened before the Indian market, ended higher. Shanghai Composite, Hang Seng, Nikkei 225, Singapore's Straits Times and Seoul Composite ended up by 34.39, 176.42, 36.74, 25.39 and 21.91 points at 3,269.75, 22,289.57, 9,608.94, 2,796.34 and 1,591.63 respectively.

European markets, which opened after the Indian market, are trading mostly down after positive opening. In Paris the CAC 40 is trading with marginal gain of 7.17 points at 3,782.91. Whereas, in Frankfurt DAX index is trading down by 4.25 points at 5,772.36 and in London FTSE 100 is down by 3.66 points at 5,308.51.

The BSE Power index was at 2,992.74 down by 16.85 points or by (0.56%). The main losers were Rel Infra down by (1.87%) at Rs.1,060.55, Siemens down by (1.63%) at Rs.527.60, BHEL by (1.37%) at Rs.2,199.65, ABB by (0.93%) at Rs.736.55 and Tata Power by (0.90%) at Rs.1,347.25.

The BSE FMCG index was at 2,856.65 down by 15.60 points or by (0.54%). The main losers were Godrej Cons down by (2.35%) at Rs.282.6, HUL by (1.39%) at Rs.275.8, Dabur India by (1.32%) at Rs.164.05, Tata Tea by (0.98%) at Rs.894.90 and Ruchi Soya by (0.75%) at Rs.86.20.

The BSE Capital Goods index was at 13,391.83 lower by 47.48 points or by (0.35%). The main losers were Areva T&D down by (3.19%) at Rs.290, AIA Engineering by (2.41%) at Rs.354.3, Siemens down by (1.63%) at Rs.527.60, Havells India by (1.6%) at Rs.394.25 and BHEL by (1.37%) at Rs.2,199.65.

The BSE Realty index was at 3,959.18 up by 72.73 points or by (21.87%). The main gainers were Indiabull Real up by (4.52%) at Rs.223.15, DLF Ltd up by (3.69%) at Rs.384.50, Parsvnath up by (2.01%) at Rs.111.4, Ackruti City up by (1.36%) at Rs.545.2 and Ansal Prop up by (1.05%) at Rs.67.65.

The BSE Auto index was at 7,316.17 up by 95.93 points or by (1.33%). The main gainers were Amtek Auto up by (6.18%) at Rs.197.45, Tata Motors up by (4.14%) at Rs.729.75, Exide Indus up by (3.92%) at Rs.114, Bajaj Auto up by (3.25%) at Rs.16,90.80 and Ashok Leyland up by (2.83%) at Rs.54.45.

Shree Cements gained 0.43%, after the cement shipments grew 15.28% to 7.09 lakh tonnes in November 2009 (YoY).

Tata Motors jumped higher by 4.14% in the light of impressive November sales, which increased by 65% at 54,108 units (YoY). The company's ADR also leaped over 11%, which lend a hand to the stocks to rise.

Sun Pharmaceutical Industries Ltd lost 2.82%. There was a reports suggesting that Templeton Asset Management Ltd, an important investor in Israel's Taro Pharmaceutical Industries Ltd, doesn't have any objection to the Indian company buying Taro.

Flawless Diamond India Ltd moved down by 3.76% despite of bagging its first Gold Jewellery order worth Rs. 18 crore from Sidhh Jewellers, Dubai.

ACC Ltd fell 1.09% after cement shipments fell 4.04% to 1.66 million tonnes in November 2009 from 1.73 tonnes in November 2008.

Asahi Infrastructure and projects Ltd. moved up by 1% after the company received work order from Central and State Government for construction of Housing and Infrastructure (Scheme) worth Rs. 7.75 crore, for construction of 327 houses.

Fedders Lloyd Corporation Ltd zoomed 4.99%, after securing a contract of approx. Rs. 120 crore for the supply, installation, testing, commissioning and maintenance of High Voltage Distribution Systems (HVDS) in various districts of Madhya Pradesh, along with its JV partner.

RUPEE:

The partially convertible rupee INR=IN ended at 46.3450/3550 per dollar, slightly weaker than Tuesday's close of 46.31/32. In early deals it rose to 46.1375, its strongest since Nov. 26. (Source: Reuters)

Asia:

Source: Bloomberg

Asian Stocks Rise on Yen, U.S. Economy Optimism; Honda Gains

Asian stocks rose, sending the MSCI Asia Pacific Index toward its biggest weekly gain since May, as a weaker yen boosted Japanese makers of cars and electronics and the Federal Reserve said the U.S. economy improved.

Sony Corp., which gets 23 percent of its sales in the U.S., surged 4.9 percent in Tokyo, and Honda Motor Co. added 4 percent. James Hardie Industries NV, the top seller of home siding in the U.S., gained 2.7 percent in Sydney as the Fed's Beige Book showed the economy expanded or improved "modestly" across the U.S. from October to mid-November. Kawasaki Kisen Kaisha Ltd., Japan's third-largest shipping line, advanced 5.3 percent after freight rates snapped an eight-day streak of losses.

"Things are normalizing," said Prasad Patkar, who helps manage about $1.7 billion at Platypus Asset Management in Sydney. "The U.S. recovery might be more subdued than elsewhere, but it's still a recovery. As long as there are no systemic shocks, there is no underlying, fundamental reason for things to start going backwards."

The MSCI Asia Pacific Index rose 1 percent to 121.05 as of 11:05 a.m. in Tokyo. It has gained 6.3 percent this week, headed for its steepest weekly increase since the five days ended May 8. The gauge has climbed 71 percent from its lowest in more than five years on March 9 on signs government stimulus measures are reviving global growth.

Japan's Nikkei 225 Stock Average climbed 2.3 percent, today's biggest advance in the Asia-Pacific region. Mitsubishi Motors Corp. soared 18 percent on speculation PSA Peugeot Citroen may buy a stake in the carmaker.

S&P, MSCI Valuations

Australia's S&P/ASX 200 Index rose 0.3 percent, while South Korea's Kospi Index climbed 0.7 percent. Futures on the U.S. Standard & Poor's 500 Index added 0.2 percent. The gauge increased for a third day yesterday after the Fed's comments.

The MSCI Asia Pacific Index's rally from its March low has outpaced gains of 64 percent by the S&P 500 and 56 percent for Europe's Dow Jones Stoxx 600 Index. Stocks in the MSCI benchmark are valued at 22 times estimated earnings, compared with 18 times for the S&P and 16 times for the Stoxx 600.

Sony, an electronics maker, gained 4.9 percent to 2,450 yen. Pioneer Corp., a maker of car-navigation systems and audio equipment, added 4.7 percent to 265 yen. Honda, which is Japan's second-biggest carmaker and gets 42 percent of its revenue from North America, climbed 4 percent to 2,980 yen. Nissan Motor Co., a smaller rival, rose 5.6 percent to 698 yen.

Yen Gains

The yen weakened against all 16 of its major counterparts and traded as low as 87.78 against the dollar today, the lowest level since Nov. 25. Against the euro, it retreated for a third day to the weakest rate since Nov. 25. That boosts the value of overseas earnings at Japanese companies when converted into their home currency.

The yen climbed to a 14-year high against the dollar last week and has averaged 93.89 this year, the strongest since currencies began trading freely in 1971. That has weighed on the Topix, making its 2.4 percent gain in 2009 the lowest return among the world's 40 largest stock markets.

James Hardie gained 2.7 percent to A$8.46 in Sydney. In Seoul, LG Electronics Inc., Asia's second-largest handset maker and which gets the bulk of its revenue from North America, rose 4.3 percent to 108,500 won.

"The Beige Book confirmed that the economy is on an upward trend, spreading a sense of security," said Mitsushige Akino, who oversees the equivalent of $450 million in assets in Tokyo at Ichiyoshi Investment Management Co. "People are expecting fundamentals to improve."

Kawasaki Kisen, Japan's third-largest shipping line, advanced 5.3 percent to 260 yen. The Baltic Dry Index, a measure of rates for shipping commodities, rose 2.1 percent yesterday, its first gain in nine sessions. Nippon Yusen K.K., Japan's largest shipping line, added 1.6 percent to 258 yen. Mitsui O.S.K. Lines Ltd. gained 3.6 percent to 494 yen.

Mitsubishi Motors jumped 18 percent to 140 yen after a trading halt was lifted, the steepest increase in the Nikkei 225. The Nikkei newspaper reported, without saying where it obtained the information, that Paris-based Peugeot is negotiating to buy a stake of as much as 50 percent. 

Nikkei 225 9,828.41     +219.47 ( +2.28%). (08.17 AM IST)

HSI 22423.67 +134.1 +0.6%. (08.18 AM IST).

SSE Composite 3269.75 3266.33 3270.37 3243.75 -0.10. (08.19 AM IST)   
 

INVESTMENT VIEW
GSPL-Growing In The Shadow Of Gail
  
Gujarat State Petronet Limited (GSPL), a subsidiary of Gujarat State Petroleum Corporation Limited (GSPC) was incorporated in December 1998 for the purpose of constructing and managing a state-wide gas transmission network in Gujarat.   

GSPL, a Pure Natural Gas Transmission Company is a pioneer in developing energy transportation infrastructure and connecting major natural gas supply sources and demand markets. GSPL is the first company in India to transport natural gas on 'open access' basis i.e. it makes the gas transmission capacity available to any shipper on a non-discriminatory basis.   

Key Positives

Strong Volume growth to drive growth going forward. 

-Strategically located in the Industrial clusters of Gujarat 

-Gas deficit to continue going forward even after the improved supply situation 

- Network expansion in Gujarat to fulfill increasing gas demand

- Expansion outside Gujarat to capture increasing demand of gas in the country   

Valuation & Recommendation   

GSPL has registered a top line CAGR growth of 22.8% from FY2006 to FY 2009. Whereas net profit witnessed a CAGR growth of 38.3% along the same period. Going forward we expect the company to witness a top line CAGR growth of 39.8% between FY 2009 to FY 2012. 

 

Whereas we expect net profit to witness a CAGR growth of 58.2% over the same period. At the current market price of Rs 102.50 per share, GSPL is currently trading at a PE of 14x FY10E and 13.2x FY11E EPS estimates, which looks quite attractive.   

We recommend a BUY rating on the stock with a long term view.

(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.)
 

--
Arvind Parekh
+ 91 98432 32381