Market Outlook 9th Apr 2010

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

Market Outlook 8th April 2010

Derivatives EOD http://www.indiabulls.com/securities/mailermis/derivative-strategy/derivative-EOD-07-Apr-2010.htm

Today Market Update on http://www.indiabulls.com/securities/mailermis/morning-brief/morning-brief-08Apr2010.htm 

Monthly Market Mantra on http://www.indiabulls.com/securities/mailermis/monthly-market-report/monthly-market-report-Apr-10-2010.htm

Corporate News Headline
•	Punj Lloyd bagged India's largest solar based EPC contract of Rs. 2.32 bn from Government of Bihar. The scope of work includes design, construction and commissioning of 850 solar powered water treatment plants across the state of Bihar. (BS)
•	JSW Steel earmarked a capex of Rs. 70.00 bn for the current financial year and plans to increase capacity of its Bellary plant in Karnataka from 7 million tonne per annum (mtpa) to 10 mtpa by the end of this year. (BS)
•	Reliance Industries has allotted 43,533 equity shares of Rs. 10 each to its employees under employee's stock option scheme. (BS)
Economic and Political Headline
•	Continuing the trajectory of growth, government has earned more than Rs. 55 bn as foreign exchange from tourists in March this year. The total foreign exchange earnings in March this year were Rs. 55.07 bn as compared to Rs. 44.37 bn in the corresponding period last year and Rs. 50.35 bn in March 2008. (BS)
•	Europe's economy unexpectedly stagnated in the fourth quarter as companies cut spending more than previously estimated. Gross domestic product in the 16-nation euro region remained unchanged compared with the third quarter, when it rose 0.4%, the European Union's statistics office said. It had previously reported a fourth- quarter expansion of 0.1%. Corporate investment dropped 1.3% instead of the 0.8% estimated earlier. (Bloomberg)
•	Consumer credit in the US declined in February more than anticipated, indicating Americans are reluctant to take on more debt without further improvement in the labor market. Borrowing fell by USD 11.5 bn, the most in three months, after a revised USD 10.6 bn January gain that was twice as much as initially estimated, the Federal Reserve said in Washington. (Bloomberg)

Strong & Weak Stocks

This is list of 10 strong Stocks: 

Allahabad Bank, Andhra Bank, Sintex, Ansal Infra, Pir Health, Nagarjuna Const, Concor, Orient Bank Indian Bank & GE Shiping. 

And this is list of 10 Weak Stocks: 

Renuka, BEL, Balrampur Chini, Bajaj Hind, Tech Mahindra, HCL Tech, Hind Petro, BPCL, Mphasis, Hind Uni Lvr.

The daily trend of nifty is in Up trend  since 16th February

SPOT /CASH INDEX LEVELS TODAY

	5374.65	( 0.16 %)	8.65
		1	2	3
Resistance		5401.18	5427.72	5455.78
Support		5346.58	5318.52	5291.98

	17970.02		( 0.16 %)	28.65
			1	2	3
Resistance			18052.48	18134.95	18222.03
Support			17882.93	17795.85	17713.38

NIFTY FUTURES (F & O):

Below 5361 level, expect profit booking up to 5338-5340 zone and thereafter slide may continue up to 5324-5326 zone by non-stop. 

Hurdles at 5389 & 5394 levels. Above these levels, rally may continue up to 5401-5403 zone and thereafter expect a jump up to 5415-5417 zone by non-stop. 

Cross above 5422-5424 zone, can take it up to 5435-5437 zone by non-stop. Supply expected at around this zone and have caution. 

On Negative Side, rebound expected at around 5318-5320 zone. Stop Loss at 5304-5306 zone.

Short-Term Investors: 

Bullish Trend. 

Up Side Target at 5429.95. 

Stop Loss at 5106.55. 

We are trading near Target level. We should assume that, Target level won't be crossed. If crosses & closes this level by consecutive 3 days then it can zoom up to 5591.65 level by non-stop.

STOCK FUTURES (NSE):

BHARATFORG FUTURES: 

Real Buying taken place on yesterday. If rally continues, then it can zoom up to 288.10 level by non-stop. Unexpectedly, if profit booking starts, then it can slide up to 264.05 level and have caution.

5 Day's Holding: 

EKC FUTURES (NSE): Real Buying taken place in last 5 trading days. If rally continues, then it can zoom up to 141.90 level by non-stop. Unexpectedly, if profit booking starts, then it can slide up to 121.40 level and have caution.

OPTIONS (NSE):

NIFTY 5400 CALL OPTION: 

Yesterday's rally was a surprise. But speculative too. If rally continues, then it can zoom up to 85.40 level by non-stop. Unexpectedly, if profit booking starts, then it can slide

up to 38.60 level and have caution.

IDFC 180 CALL OPTION: 

Real Buying taken place on yesterday. If rally continues, then it can zoom up to 3.35 level by non-stop. Unexpectedly, if profit booking starts, then it can slide up to 0.85 level and have caution.

Equity:

TATAMOTORS (NSE Cash): 

Yesterday's rally was a surprise. Real Buying too. If rally continues, then it can zoom up to 823.95 level by non-stop. Unexpectedly, if profit booking starts, then it can slide

up to 774.50 level and have caution.

APOLLOTYRE (NSE Cash): 

Yesterday's rally was a surprise. Real Buying too. If rally continues, then it can zoom up to 83.05 level by non-stop. Unexpectedly, if profit booking starts, then it can slide up to 73.40 level and have caution.

ICICIBANK (NSE Cash): 

Yesterday's fall was a surprise. Speculative Selling too. If fall continues, then it can tumble up to 949.20 level by non-stop. Unexpectedly, if short covering starts, then it can zoom up to 1009.00 level by non-stop.

EDUCOMP (NSE Cash): 

Speculative Selling taken place on yesterday. If fall continues, then it can tumble up to 712.20 level by non-stop. Unexpectedly, if short covering starts, then it can zoom up to 765.80 level by non-stop.

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	07-Apr-2010	3415.45	3076.67	338.78

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	07-Apr-2010	1412.69	1436.12	-23.43

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

Market Outlook 7th April 2010

Derivatives EOD Report on http://www.indiabulls.com/securities/mailermis/derivative-strategy/derivative-EOD-06-Apr-2010.htm

Today Market Update on http://www.indiabulls.com/securities/mailermis/morning-brief/morning-brief-07Apr2010.htm

Corporate News Headline
•	Punj Lloyd has bagged two orders worth Rs. 2.35 bn for a processing unit and setting up offsite facilities at Mangalore Refinery. (BS)
•	Suzlon Energy has bagged a contract from Gujarat State Fertilisers & Chemicals (GSFC) for setting up a wind energy project in Gujarat. (BS)
•	RIL is unable to hit peak gas production at its D6 block off the east coast due to customers not buying allocated volumes and a lack of pipeline infrastructure, a top official at the energy major said. (BS)
Economic and Political Headline
•	India asked US investors to participate in its USD 600 bn-infrastructure programme in the next five years. Deepening our ties with India is critical to the broader global effort to develop a framework for strong and balanced growth and will facilitate more trade, investment and job creation in our two countries," US Treasury Secretary Timothy Geithner said after meeting Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee. (BS)
•	Job openings in the US fell in February for the first time in three months, a sign employers will be slow to expand staff even as firings subside. Openings decreased by 131,000 to 2.72 million, the Labor Department said in Washington. Fewer people were hired and the number of workers fired also decreased, the report also showed. (Bloomberg)
•	Japan's broadest indicator of economic health rose for an 11th month, extending the longest streak since 1997, as the nation sustained an economic recovery amid deflation. The coincident index, a composite of 11 indicators including factory production and retail sales, climbed to 100.7 in February from 100.3 a month earlier, the Cabinet Office said in Tokyo. (Bloomberg)

Strong & Weak  futures, 

This is list of 10 strong future: 

Andhra Bank, Allahabad Bank, Sintex, Tata Steel, GE Shiping, IOB, Concor, Ispat Industries, Pir Health & Orient Bank. 

And this is list of 10 Weak futures: 

Bajaj Hind, Balrampur Chini, BEL, Hind Petro, HCL Tech, Tech Mahindra, BPCL, Mphasis, KFA & Maruti., 

The daily trend of nifty is in Up trend  since 16th February

CASH/SPOT INDEX LEVELS TODAY

	5366.00	( -0.04 %)	-2.40
		1	2	3
Resistance		5400.17	5431.93	5486.32
Support		5314.02	5259.63	5227.87

	17941.37		( 0.03 %)	5.69
			1	2	3
Resistance			18024.93	18114.17	18279.81
Support			17770.05	17604.41	17515.17

NIFTY FUTURES (F & O):

Below 5351 level, expect profit booking up to 5345-5347 zone and thereafter slide may continue up to 5336-5338 zone by non-stop. 

Hurdles at 5377 & 5380 levels. Above these levels, rally may continue up to 5393-5395 zone and thereafter expect a jump up to 5401-5403 zone by non-stop. 

Cross above 5406-5408 zone, can take it up to 5414-5416 zone by non-stop. Supply expected at around this zone and have caution. 

On Negative Side, break below 5332-5334 zone can create panic up to 5323-5325 zone by non-stop.

Short-Term Investors:

Bullish Trend. 

Up Side Target at 5429.95. 

Stop Loss at 5106.55.

INVESTMENT VIEW

Swaraj Engines-BUY, Tgt Rs 500

Swaraj Engines Ltd. (SEL) is now part of the M&M group (33.2% stake). SEL's principal activity is to manufacture and supply of engines and hitech engine components for tractors and other commercial vehicles. The products include internal combustion diesel engines, diesel engine components and spare parts.

Though SEL was originally set up to manufacture engines for PTL, in recent years SEL has also been a supplier of hi-tech engine components to Swaraj Mazda Ltd. (SML). Since start of commercial operations in 1989-90, SEL has supplied around ~320,000 engines for fitment into "Swaraj" tractors.

SEL has only two customers; (i) PTL to whom they supply tractor engines (supplies 5 types of engines from 20 horse power (HP) to 50 HP) and (ii) SML to whom they supply hi-tech engine components for their commercial vehicles. The resultant positive outcome is low levels of marketing expenses which otherwise the company would have to incur. The management also benefits from lower inventory costs.

SEL's engine business currently constitutes ~93% of company's product revenue and balance ~7% represents value of hi-tech engine components being supplied to SML for assembly of commercial vehicle engines.

'Swaraj Division' of M&M helped SEL to record its highest ever despatches of 28,539 engines in FY'09 as compared to 16,408 engines despatched in FY'08. We expect the company to sell ~38000 units this fiscal. By undergoing debottlenecking, rebalancing and capital infusion, SEL can increase its installed capacity which is currently at 36000 engines (on double shift basis) to achieve the projected volume targets.

SEL is a zero debt company with cash and investments of about Rs.61 per share as on March'09. We expect the debt-free status quo likely to be maintained as capital expenditure to be funded through internal accruals.

Investors with a long-term perspective can BUY the stock as the prospects of both tractor and commercial vehicle industry are upgraded. The improving economic outlook and rising farm income is a positive for the tractor industry. Most agricultural crops have seen substantial hike in support and market prices over the last two years which will boost agricultural incomes.

The government is also focused on improving credit supplies to the rural sector at reasonable rates. We expect the company to register a CAGR of 28.4% in sales and 45.4% in profits for FY'09-11e.

At the CMP Rs.315.10, the scrip trades at 10x FY'2010e EPS of Rs.30.2 and 8.5x FY'2011e EPS of Rs.36.3. 

 (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.)

Fedders LLoyd-BUY

Fedders Lloyd Corporation Ltd. promoted by Punj Family started the trading business of AC Units and subsequently commenced the manufacturing of AC Units in India. The company has posted a phenomenal increase in net profit for the period Q3 (ending Dec 09) of the current fiscal (FY10). During the said quarter, net profit zooms 6.13 times to Rs 7.54 crores in comparison to the Rs 1.23 crores of Q3 (ending Dec 08) of previous year (FY09).

 

The company informed the market (BSE) that the net sales too surged 99.26% to Rs 140.42 crores in Q3 FY10 when compared with the same quarter Q3 FY09 of previous year. Net sales was Rs 69.49 crores in last year's quarter. 

(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	06-Apr-2010	2361.15	2099.45	261.7

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	06-Apr-2010	1400.46	1319.39	81.07

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

Market Outlook 6th April 2010

Derivatives EOD Report on http://www.indiabulls.com/securities/mailermis/derivative-strategy/derivative-EOD-05-Apr-2010.htm

Today Market Update on http://www.indiabulls.com/securities/mailermis/morning-brief/morning-brief-06Apr2010.htm

Corporate News Headline
•	Larsen & Toubro said it has received an order worth Rs. 10.60 bn from Gujarat State Petroleum Corporation (GSPC) to build an offshore oil platform. (BS)
•	Indian Oil Corp and its partners Marubeni Corp and Taiwan's TSRC Corp will invest Rs. 9.00 bn in setting up a unit to manufacture synthetic rubber for tyres. (BS)
•	Central Bank of India announced that it's majority shareholder, the Government of India, had subscribed to perpetual non-cumulative preference shares worth Rs. 4.50 bn on March 31, 2010. (BS)
Economic and Political Headline
•	Indian bank chiefs have told the Reserve Bank of India that credit growth will be over 20% in FY11 and they don't expect interest rates to go up soon, a senior banker said. (BS)
•	Service industries expanded in March at the fastest pace since in more than three years, a sign the US recovery is extending beyond manufacturing and starting to create jobs. The Institute for Supply Management's index of non- manufacturing businesses, which make up almost 90% of the economy, rose to 55.4, the highest level since May 2006, from 53 in the prior month. (Bloomberg)
•	Toyota Motor Corp. "knowingly hid a dangerous defect" that caused sudden acceleration and should be fined USD 16.4 mn, the biggest US penalty imposed on a carmaker, Transportation Secretary Ray LaHood said. (Bloomberg) CASH/SPOT INDEX LEVELS TODAY    5368.40 ( 1.47 %) 77.90          1 2 3 Resistance 5400.17 5431.93   5486.32   Support 5314.02 5259.63 5227.87 17935.68 ( 1.37 %) 243.06         1 2 3 Resistance 18024.93 18114.17 18279.81 Support 17770.05 17604.41 17515.17

Strong & Weak Stocks

This is list of 10 strong stocks: 

Andhra Bank, Sintex, Bajaj Auto, Orient Bank, Hindalco, Tata Steel, Nagarjuna Const, Concor, Cairn India & Sun Pharma. 

And this is list of 10 Weak Stocks: 

Balrampur Chini, Bajaj Hind, KFA, Hind Petro, Tech Mahindra, BPCL, Tulip, Mphasis, Colpal &  Neyveli Lignite.

The daily trend of nifty is in Up trend  since 16th February

NIFTY FUTURES (F & O): 

Rally may continue up to 5382 level for time being. 

Support at 5349 & 5356 levels. Below these levels, expect profit booking up to 5329-5331 zone and thereafter slide may continue up to 5310-5312 zone by non-stop. 

Buy if touches 5267-5269 zone. Stop Loss at 5249-5251 zone. 

On Positive Side, cross above 5400-5402 zone can take it up to 5418-5420 zone by non-stop. If crosses & sustains this zone then uptrend may continue.

Short-Term Investors:

Bullish Trend. 

Up Side Target at 5429.95. 

Stop Loss at 5106.55.

STOCK FUTURES (NSE):

ALBK FUTURES 

Real Buying taken place on yesterday. Bulls should not get panic at lower levels. 

If rally continues, then it can zoom up to 175.50 level by non-stop. 

If profit booking starts, then expect slide up to 144.50 level by non-stop.

ANDHRABANK FUTURES (4 Days Holding) 

Real Buying taken place in last 4 days. Bulls should not get panic at lower levels. 

If rally continues, then it can zoom up to 118.15 level by non-stop. 

If profit booking starts, then expect slide up to 104.05 level by non-stop.

OPTIONS (NSE):

NIFTY 5400 CALL OPTION 

Real Buying taken place on yesterday. Bulls should not get panic at lower levels. 

If rally continues, then it can zoom up to 78.80 level by non-stop. 

If profit booking starts, then expect slide up to 48.80 level by non-stop.

RELINFRA 1060 CALL OPTION 

Real Buying taken place on yesterday. Bulls should not get panic at lower levels. 

If rally continues, then it can zoom up to 80.10 level by non-stop. 

If profit booking starts, then expect slide up to 14.65 level by non-stop.

Equity:

MARICO (NSE Cash) 

Yesterday's rally was surprising. Real Buying too. Bulls should not get panic at lower levels. 

If rally continues, then it can zoom up to 135.05 level by non-stop. 

If profit booking starts, then expect slide up to 99.35 level by non-stop.

BAJAJ-AUTO (NSE Cash) 

Yesterday's rally was surprising. Real Buying too. Bulls should not get panic at lower levels. 

If rally continues, then it can zoom up to 135.05 level by non-stop. 

If profit booking starts, then expect slide up to 99.35 level by non-stop.

TCS (NSE Cash) 

Yesterday's fall was surprising. Speculative Selling & Do not worry about this fall. 

If continue to fall, then slide may continue up to 765.85 level by non-stop. 

If start recovers, then expect short covering up to 821.10 level by non-stop.

HINDPETRO (NSE Cash) 

Speculative Selling taken place on yesterday. Do not worry about this fall.

If continue to fall, then slide may continue up to 296.20 level by non-stop. 

If start recovers, then expect short covering up to 318.00 level by non-stop.

 

BSE Sensex at 25-mth closing high. 

Highest close since February 2008. 

Sensex nears 18k.

Andhra Bank-Buy (FY10 EPS Rs 21; ABV-1, Dividend Yield 5%)

 

We expect net interest income (NII) to grow 25% YoY (~10% QoQ) to Rs5.7b due to improved margins backed by falling cost of deposits. On a low base, we expect loan growth to remain strong at 20%+ YoY.

We expect lower other income, led by both lower trading gains (~50% sequential decline) and muted fee income growth. Fees growth will stay dismal (QoQ and YoY) considering the high base.

Provisions were lower in 2QFY10 due to depreciation write back of Rs165m on investments. We have modeled higher provisions for NPAs conservatively for 3QFY10.

Operating expenses are expected to remain flat YoY and QoQ. 3QFY09 and 2QFY10 had a provision for wage revisions at ~Rs200m.

The stock trades at 1x FY11E BV and 0.9x FY12E BV. The stock also offers an attractive dividend yield of ~4.9%.

Maintain Buy. 

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

INVESTMENT VIEW

Religare Puts A Buy On Anantraj..Tgt Rs 198

We recently visited Anant Raj Industries' (ARIL) hotel sites, IT parks and a few of its residential plots which are scheduled for launch shortly. Construction work at the Manesar and Rai IT parks is proceeding apace – the former being in the fit-out stage and the latter to conclude phase I by April – while three hotel properties are nearing completion. Considering the swift pace of project execution, we expect ARIL's lease revenue to surge from Rs 450mn in FY10 to Rs 1.5bn in FY11. We thus revise our NAV-based target price for the stock from Rs 188 to Rs 198 and reiterate a Buy.  

Three more hotels to be ready by April:  

We visited all of ARIL's hotel sites, numbering eight in all, in Delhi. Three hotels (Grand, Papilon and Tricolor) are expected to earn lease revenues starting April '10, while three others (Parkland, Retreat and Hilton) have already been rented out, and the remaining two (located near the Delhi International Airport) are still in the planning stage. We believe hotel rentals are likely to rise sharply from FY11 onwards and expect the company to earn Rs 465mn from its properties.  

Maneswar and Rai IT parks fast approaching completion:  

The Manesar IT park comprises five towers, of which two have been handed over for fit-outs while construction of the others is complete. Rental revenue from the project has started flowing in from Q1FY10. We estimate revenues to the tune of Rs 90mn and Rs 287mn in FY10 and FY11 respectively. Construction at the Rai IT park is also well underway, with phase I (1.6msf) to be completed by April. The company has secured an IT major as anchor client for 0.6msf.  

Rental income to exceed Rs 1.5bn in FY11:  

With project execution ramping up, we expect income from lease rentals to triple to Rs 1.5bn in FY11 and rise further to Rs 2bn in FY12. We are revising our NAV-based target price for the company to Rs 198 from Rs 188, factoring in a stronger annuity business based on the robust pace of execution at the IT parks and near-completion status of the hotel properties. We reiterate a Buy on the stock. 

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

 

INVESTMENT VIEW

Goldman Sachs Puts A Buy On Anantraj

Source of opportunity 

We initiate on Anant Raj with Buy and a 12-m TP of Rs185. We believe Anant Raj's strategy of focusing on the Delhi-NCR region rather than a pan-India footprint is prudent as it has a long track record in these markets. Further, its balance sheet has net cash of Rs4.2 bn (as of FY09), unlike most peers which are leveraged, and majority of its land bank is fully paid for. In our view, the market is not fully valuing its commercial business probably on the grounds that leasing has been subdued. We believe it should re-rate as market gets evidence of rental income rising substantially through FY11. In addition, we believe its prime Delhi residential assets should boost revenue in FY10E/11E.

Catalyst 

We expect newsflow on the Hauz Khas (Delhi) residential launch in 4QFY10, followed by the Bhagwandas Road (Delhi) launch later in 2010. We recently visited its Manesar IT Park where fit-outs were in progress and we believe that tenants moving in over the next six months could likely reassure the market. Likewise, we also expect leasing to pick-up in the Kirti Nagar (Delhi) retail mall over the next 12 months.

Valuation 

Our 12-month TP of Rs185 is set at a 30% discount to FY11E RNAV of Rs264, in line with the range for other stocks in our India real estate coverage. Office/ retail (including IT Parks) accounts for about 35% of our RNAV projection followed by residential which accounts for about 32%. Anant Raj currently trades at a 44% discount to our FY11E RNAV.

 Key risks

 (1) Significant delays in office/retail leasing and tenants moving in as well as in Delhi residential launches; (2) slowdown in Delhi-NCR market; (3) low visibility on percentage of completion revenue recognition, which could make earnings volatile; and (4) policy tightening. 

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

INVESTMENT VIEW

Edelweiss Puts A Buy On Anantraj

Manesar IT park: Rent stream to get a boost as tenants start moving in ARIL is working on an IT park project in Manesar with total leasable area of 1.1 mn sq ft across five towers, of which 0.65 mn sq ft has already been leased out.

While the company is receiving rent for 0.58 mn sq ft, the balance area is under lease grant period from which rent is expected during the current quarter.

Currently, fit outs are in progress for 0.15 mn sq ft, more than 50% of which has been let out to a single client. Other tenants are expected to start fit outs soon as their existing lease agreements are expected to expire by the current quarter end. 

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Hauz Khas residential project: Launch likely by January end

The company plans to develop a 0.26 mn sq ft residential project at Hauz Khas in South Central Delhi. This prime location commands capital value of ~ INR 20,000 per sq ft. We expect launch of project for sale by January end. 

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Kirti Nagar mall: To be delivered by Q1FY11 end

ARIL is constructing a retail mall at Kirti Nagar, close to the Patel Nagar metro station. Of the total 0.75 mn sq ft leasable area, ~0.3 mn sq ft has been leased out already. We expect 50% of the leased out space to be handed over by Q4FY10 end and the balance of the 0.75 mn sq ft by Q1FY11 end. 

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Outlook and valuations: Attractive; maintain 'BUY' 

We were expecting commencement of rents from the Kirti Nagar mall and launch of residential project at Bhagwandas road during FY10, which have been deferred to FY11. We will release our revised revenue estimates along with Q3FY10 result update.

The stock is currently trading at a 43% discount to its fair valuation of INR 263 per share. We expect investors to react positively to launch of Hauz Khas project and additional leasing at Kirti Nagar mall and IT park at Manesar which will reduce the discount to fair valuation.

We maintain our 'BUY' recommendation. On a relative return basis, we rate the stock as 'Sector Outperformer'. 

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	05-Apr-2010	2374.53	1608.46	766.07

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	05-Apr-2010	1392.47	989.14	403.33

Disclosure: I don't have any positions in the above said scrips & NIFTY FUTURES.

Disclaimer:

"I do not make any warranties, express or implied, as to results to be obtained from using the information in this e-letter.  Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report."

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Arvind Parekh
+ 91 98432 32381