 Corporate News Headline | |||||||||||||||||||||||||||||||||||||||||||||
| • | Larsen & Toubro has won an order worth Rs. 10.13 bn from state-run explorer Oil and Natural Gas Corp. (BS) | ||||||||||||||||||||||||||||||||||||||||||||
| • | GAIL India said it plans to transit 21% more natural gas through its pipelines at 114.8 million cubic meters per day in 2010-11 fiscal. (BS) | ||||||||||||||||||||||||||||||||||||||||||||
| • | Housing Development Finance Corporation raised Rs. 5.00 bn through a zero-coupon bond issue, two sources familiar with the transaction said. (BS) | ||||||||||||||||||||||||||||||||||||||||||||
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| Economic and Political Headline | |||||||||||||||||||||||||||||||||||||||||||||
| • | An Empowered Ministers' panel meeting is likely to take some decisions to tackle price rise and finalize the draft Food Security Bill, which seeks to give the poor the right to get rice and wheat at Rs 3 per kg. (BS) | ||||||||||||||||||||||||||||||||||||||||||||
| • | Wholesale prices in the US fell in February more than anticipated, led by a drop in fuel costs and signaling there are few inflation pressures building in the early stages of the economic recovery. The 0.6% decrease in prices paid to factories, farmers and other producers was the biggest since July and followed a 1.4% January increase, according to figures from the Labor Department in Washington. Excluding food and fuel, so-called core prices climbed 0.1%. (Bloomberg) | ||||||||||||||||||||||||||||||||||||||||||||
| • | UK jobless claims fell in February at the fastest pace since 1997, suggesting the economic recovery is strengthening as Britons prepare for a general election within weeks. The number of people receiving unemployment benefits dropped 32,300 from January to 1.59 million, the Office for National Statistics said in London. (Bloomberg)
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Strong & Weak stocks
This is list of 10 strong stocks:
JSW Steel, Educomp, TCS, Chennai Petro, Hindalco, Sesa Goa, Indusind Bank, LITL, Jindal Saw & Hero Honda.
And this is list of 10 Weak stocks:
Balrampur Chini, Bajaj Hind, Dish TV, ICSA, Nagarjuna Fertil, Chambal Fert, KS Oils, Hind Uni Lvr, KFA & IOB.
Nifty is in Up trend
NIFTY FUTURES (F & O):
Above 5240 level, rally may continue up to 5257-5259 zone by non-stop.
Support at 5225 & 5230 levels. Below these levels, expect profit booking up to 5204-5206 zone and thereafter slide may continue up to 5185-5187 zone by non-stop.
Buy if touches 5166-5168 zone. Stop Loss at 5148-5150 zone.
On Positive Side, cross above 5276-5278 zone can take it up to 5294-5296 zone by non-stop. If crosses & sustains this zone then uptrend may continue.
Short-Term Investors:
Bullish Trend.
Up Side Target at 5438.30.
Stop Loss at 5105.50.
Equity:
ARSSINFRA (NSE Cash)
Rallied on yesterday & Stunning performance too. Buying should continue today also & Bulls should not get panic at lower levels.
If rally continues, then it can touch 941.85 level during intra-day trades. It should close this level for further uptrend.
If profit booking starts, then expect a surprise fall up to 781.00 level and have caution.
RELIANCE (NSE Cash)
Rallied on yesterday & rally was disappointing. Bulls fell short of expectations. Buying should continue today also.
If rally continues, then it can touch 1093.50 level during intra-day trades. It should close this level for further uptrend.
If profit booking starts, then expect a surprise fall up to 1047.10 level and have caution.
AXISBANK (NSE Cash)
Rallied on yesterday & rally was disappointing. Bulls fell short of expectations. Buying should continue today also.
If rally continues, then it can touch 1175.40 level during intra-day trades. It should close this level for further uptrend.
If profit booking starts, then expect a surprise fall up to 1118.65 level and have caution.
UNITECH (NSE Cash)
Fallen on yesterday & Fall was surprising. Selling should continue today also & Bears should not get panic at higher levels.
If fall continues, then it can tumble up to 70.10 level by non-stop.
If short covering starts, then expect a surprise jump up to 76.10 level and have caution.
OPTIONS (NSE):
NIFTY 5200 CALL OPTION
Rallied on yesterday & Bulls beaten expectations. Uptrend should continue & Bulls should not get panic at lower levels.
If rally continues, then it can zoom up to 96.50 level by non-stop.
If profit booking starts, then it can tumble up to 28.30 level by non-stop and have caution.
TATASTEEL 640 CALL OPTION
Rallied on yesterday & Bulls beaten expectations during intra-day trades and thereafter profit booking pared gains. Rally should be considered as an intra-day rally.
If rally continues, then it can zoom up to 11.65 level by non-stop.
If profit booking starts, then it can tumble up to 1.65 level by non-stop and have caution.
STOCK FUTURES (NSE):
TRIVENI FUTURES
Rallied on yesterday & Bulls fell short of expectations. Uptrend should continue today also.
If rally continues, then it can touch 135.10 level during intra-day trades. It should close this level for further uptrend.
If profit booking starts, then expect a surprise fall up to 123.35 level and have caution.
CIPLA FUTURES (5 Days Holding)
Bullish Trend expected in next 5 trading days & Bulls should not get panic at lower levels. Uptrend should continue today & Bulls should not get panic today also.
Buy with a Stop Loss of 318.05 level with a Target of 351.30 level today. It may zoom even up to 356.90 level in next 5 trading days.
Stop Loss for next 5 trading days can be kept at 314.00 level.
INVESTMENT VIEW
Heidelberg Cement-Structural Shift
BSE 500292; CMP Rs 50.15
Equity Rs 226 crore
Cash In Hand-Rs 498 crore as of December 2009
Cash per share: Rs 22
Effective Cost per share- around Rs 28
(CMP-Cash In Hand)
Total Capacity Under Operation-3.01 Mn TPA
Capacity Utilisation-87 per cent
Capacity To Rise To-5.0 Mn TPA by March 2012, with little debt on books.
Ownership-69 per cent Heidelberg, Germany
FII/DII-9 per cent
Public Float-22 per cent
Structural Shift
Cement demand to enter new growth trajectory:
Driven by a structural shift in demand drivers, the cement industry is at an inflection point as growth trajectory is estimated to shift upwards from its historical average of 8% to 10-12% over 5 years.
Higher cement consumption (~1.5x from 1.25x of real GDP growth) is expected in the next trillion dollar (NTD) phase of GDP. We believe all ingredients are in place for the cement industry to move from a cyclical to a secular growth story.
Capacity utilization will surprise positively…:
With most of the capacity addition expected to be operational by FY11, we estimate the industry's capacity utilization will bottom out by 2HFY11. With strong demand growth, excess capacity is expected to be absorbed faster by FY12. This will lay a solid foundation for the next growth phase as no major capacity additions have been planned beyond FY12. We estimate capacity utilization will bottom-out at 75% in 2QFY11 against 71% in 2QFY02 (the previous cycle).
…leading to positive surprise on pricing, profitability…:
Given strong volume growth (10-12% v/s flat in FY01) and higher consolidation (the top 5 groups control 56% of capacity v/s 48% in FY01) will result in better operating parameters than in previous cycles. Hence, we anticipate the return of pricing power to the industry by 2HFY12 for a longer period, supported by strong secular demand growth and higher consolidation in the industry. A decline in average cement prices will be lower and operating margins (26% in FY11 v/s 13% in FY03) will be higher than the trough of the previous cycle.
…driving sector re-rating:
Strong secular growth, higher consolidation and a stronger balance sheet would act as a catalyst for re-rating of the cement sector. We estimate cement stocks will bottom-out at higher valuations (than pervious cycles) over the next 2-3 quarters as cement prices remain volatile due to the impact of new capacities.
However, a structural shift would be the key driver of premium valuations in the next
upcycle. Cement stock valuations are attractive and offer a good entry point for the next upcycle. We prefer companies offering strong volume growth, cost saving possibilities and a strong balance sheet.
(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.)
GOI targets Milk Price; Liberalises Imports
Foreseeing shortages in milk supplies to cities ahead of the summer season, the Centre has permitted duty-free imports of up to 30,000 tonnes of milk powder and 15,000 tonnes of butter oil.
TRQ regime
The imports are, however, subject to a tariff rate quota (TRQ) arrangement, allowing only certain designated agencies to bring in these goods at nil duty.
Milk powder imports ordinarily attract 60 per cent basic customs duty, while being 30 per cent for butter oil.
Till now, the TRQ regime permitted milk powder imports of up to 10,000 tonnes at a concessional five per cent duty during any financial year (April-March).
But through a recent tariff notification, the Central Board of Excise and Customs (CBEC) has liberalised the in-quota quantity, by trebling it to 30,000 tonnes and also slashing the duty on such imports from five to zero per cent.
Butter oil so far was not covered under TRQ, with all imports uniformly assessable at 30 per cent. But now, even this commodity (which includes white butter and anhydrous milk fat) has been brought under TRQ, with an in-quota duty-free import quantity of 15,000 tonnes.
The CBEC notification, dated March 12, has, however, clarified that the duty-free imports in both cases are subject to "Condition No. 1". That restricts the imports to those holding TRQ allocation certificates issued by the Directorate General of Foreign Trade (DGFT).
Elegible agencies
In the case of milk powder, the only entities eligible for allocation by the DGFT are the National Dairy Development Board (NDDB) and parastatals including STC, MMTC, PEC and Nafed.
The DGFT has not yet specified the eligible agencies for butter oil, but indications are that here too, only NDDB and the State-owned enterprises would be granted TRQ allocations.
Business Line had incidentally, on February 18, reported the Centre's proposed move to allow duty-free imports of up to 30,000 tonnes of milk powder and 15,000 tonnes of butter oil through NDDB and various cooperative dairies – a decision that has now been formally notified.
Shortfall in Milk procurement
The Centre's latest action come in the wake of dairies, particularly in the North (including NDDB's own subsidiary, Mother Dairy), experiencing shortfalls in milk procurement. The impact of this would be really felt during summer, when animals produce less milk in the natural course.
"They are looking to fill the gap through imported powder and butter oil that can be reconstituted into milk", sources noted. In other words, a significant proportion of the milk that consumers in and around Delhi would drink in the coming months might be reconstituted material, as opposed to fresh milk.
NDDB is learned to have already contracted, in advance, large quantities of imports of powder and butter oil from New Zealand's Fonterra Dairy and the Irish Dairy Board.
Comparable prices
Imported skimmed milk powder is currently available at about $2,800 a tonne, which is on par with domestic prices of Rs 130-plus a kg. Butter oil is quoting at $4,000 a tonne, which works out lower, at around Rs 210 a kg, compared to the Rs 200-225 that dairies here are realising on ghee.
NDDB had, earlier, sought a ban on export of all dairy products – including casein, which enjoys a nine per cent duty entitlement passbook benefit on top – with the matter even being discussed at a Cabinet meeting in January.
But with the Agriculture Ministry said to have opposed the move, the Centre has finally opted for import liberalisation instead of export restrictions.
(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 | 17-Mar-2010 | 2562.73 | 1746.79 | 815.94 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 17-Mar-2010 | 1350.53 | 1648.25 | -297.72 |
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
Arvind Parekh
+ 91 98432 32381
