Market Outlook 26th March 2010

Corporate News Headline
•	L&T bagged six orders worth Rs. 11.81 bn for construction of power transmission line and sub-station works. Three of these six orders worth Rs. 7.41 bn have been secured from the Gulf markets and the other orders worth Rs. 4.40 bn are for domestic projects. (BS)
•	Essar Oil said it would seek shareholders' approval next month to raise up to USD 1.7 bn to finance the firm's expansion plans. (BS)
•	Oil & Natural Gas Corporation approved investing Rs. 32.40 bn for the first phase development of three marginal fields located in Mumbai offshore on the western coast. (BS)
Economic and Political Headline
•	India's food price index rose 16.22% in the 12 months to March 13, while the fuel index was up 12.68%, government data showed. The rise in the food price index was lower than an annual rise of 16.30% in the previous week. The primary articles index was up 13.88% year-on-year on March 13. (BS)
•	Initial jobless claims fell to the lowest level in six weeks as the rebound in the US economy encourages companies to make fewer cuts in payrolls. First-time jobless applications declined 14,000 in the week ended March 20 to 442,000, lower than anticipated, Labor Department figures showed in Washington. (Bloomberg)
•	The cost of goods leaving South African factories and mines rose at a faster pace in February than the previous month, increasing the likelihood the central bank will keep its benchmark interest rate unchanged today. Producer-price inflation accelerated to 3.5% from 2.7% in January, Pretoria-based Statistics South Africa said on its Web site. (Bloomberg)

	5260.40	( 0.67 %)	35.10
		1	2	3
Resistance		5284.15	5307.90	5348.50
Support		5219.80	5179.20	5155.45

	17558.85		( 0.62 %)	107.83
			1	2	3
Resistance			17628.32	17697.78	17820.34
Support			17436.30	17313.74	17244.28

Strong & Weak Stocks

This is list of 10 strong Stocks: 

Patni, Hero Honda, JSW Steel, Dr Reddy, India Cement, Hindalco, Cairn India, Cipla, Hdfc Bank & PNB.  

And this is list of 10 Weak Stocks: 

Bajaj Hind, Balrampur Chini, Tulip, Hind Petro, DCB, Nagarjuna Fertil, BPCL, KFA, KS Oils & ICSA.

Nifty is in Up trend  

 

NIFTY FUTURES (F & O): 

Rally may continue up to 5292-5294 zone for time being. 

Support at 5255 & 5263 levels. Below these levels, expect profit booking up to 5229-5231 zone and thereafter slide may continue up to 5204-5206 zone by non-stop. 

Buy if touches 5179-5181 zone. Stop Loss at 5154-5156 zone. 

On Positive Side, cross above 5317-5319 zone can take it up to 5341-5343 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.

Equity:

RELIANCE (NSE Cash) 

Yesterday's rally in line with expectations & Speculative too. 

If rally continues, then it can zoom up to 1117.60 level by non-stop. 

If profit booking starts, then it can tumble up to 1076.40 level and have

caution.

INFOSYSTCH (NSE Cash) 

Yesterday's rally in line with expectations & Speculative too. 

 

If rally continues, then it can zoom up to 2890.15 level by non-stop. 

If profit booking starts, then it can tumble up to 2750.85 level and have

caution.

HDFC (NSE Cash) 

Yesterday's selling could be considered as a speculative selling. 

If fall continues, then it can tumble up to 2497.50 level by non-stop. 

If short covering starts, then it can zoom up to 2674.20 level by non-stop

and have caution.

ICICIBANK (NSE Cash) 

Yesterday's rally was surprising & speculative buying too.  

If rally continues, then it can zoom up to 969.40 level by non-stop. 

If profit booking starts, then it can tumble up to 912.60 level and have

caution.

OPTIONS (NSE):

NIFTY 5300 CALL OPTION 

Yesterday's rally in line with expectations. But speculative rally too.  

If rally continues, then it can zoom up to 112.50 level by non-stop. 

If profit booking starts, then it can tumble up to 57.50 level and have

caution.

RPOWER 150 CALL OPTION 

Yesterday's rally in line with expectations. Real Buying too. 

If rally continues, then it can zoom up to 9.70 level by non-stop. 

If profit booking starts, then it can tumble up to 3.80 level and have

caution.

STOCK FUTURES (NSE):

GMRINFRA FUTURES 

Rallied on yesterday & in line with expectations. Bulls beaten expectations & Bulls should not get panic at lower levels. 

If rally continues, then it can zoom up to 62.90 level by non-stop. 

If profit booking starts, then it can tumble up to 56.85 level and have

caution.

HINDALCO FUTURES (5 Trading Days Holding) 

Bulls may fell short of expectations in next 5 trading days. Yesterday's rally was speculative in nature. 

Buy with a Stop Loss of 169.80 level with a Target of 190.70 level. This scrip may even touch 191.50 level in next 5 trading days. 

Stop Loss for next 5 trading days, can be kept at 169.00 level.

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	25-Mar-2010	5099.04	4445.82	653.22

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	25-Mar-2010	1633.81	1790	-156.19

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 25th March 2010

Corporate News Headline
•	Larsen & Toubro bagged orders worth Rs. 15.00 bn from various vendors for construction of hospitals, residential towers and factories. The company has received two orders worth Rs. 6.27 bn from HLL Lifecare Ltd for construction of hospital buildings and a Rs. 3.42 bn contract is secured from Shree Ahuja Properties & Realtors for residential buildings. (BS)
•	IVRCL Infrastructure & Projects has tied up Rs. 11.43 bn in debt for its road project on the Gujarat-Madhya Pradesh border. (BS)
•	ONGC has lost out on acquisition of Uganda oil fields to China's Cnooc, the latest instance Chinese firms outbidding the state-owned explorer in race for scarce oil properties. (BS)
Economic and Political Headline
•	India will need an investment of over USD 1 tn for infrastructure development in the 12th Five Year Plan (2012-17), twice the amount that is likely to be achieved in the current plan. (BS)
•	Orders for long-lasting goods rose in February for a third month, while inventories and backlogs climbed by the most in more than a year. The 0.5% increase in bookings for durable goods followed a 3.9% gain the prior month, the Commerce Department said. Excluding transportation equipment, orders advanced 0.9%. (Bloomberg)
•	Sales of new homes in the US unexpectedly fell in February to a record low as blizzards, unemployment and foreclosures depressed the market. Purchases decreased 2.2% to an annual pace of 308,000, figures from the Commerce Department showed in Washington. (Bloomberg)

	5225.30	( 0.39 %)	20.10
		1	2	3
Resistance		5248.13	5270.97	5298.33
Support		5197.93	5170.57	5147.73

	17451.02		( 0.23 %)	40.45
			1	2	3
Resistance			17535.66	17620.30	17709.81
Support			17361.51	17272.00	17187.36

NIFTY FUTURES (F & O):

Below 5208 level, expect profit booking up to 5200-5202 zone and thereafter slide may continue up to 5182-5184 zone by non-stop. 

Hurdles at 5237 & 5240 levels. Above these levels, buying may continue up to 5246-5248 zone and thereafter expect a jump up to 5264-5266 zone by non-stop. 

Cross above 5270-5272 zone, can take it up to 5288-5290 zone by non-stop. Supply expected at around this zone and have caution. 

On Negative Side, rebound expected at around 5176-5178 zone. Stop Loss at 5157-5159 zone.

Short-Term Investors:

Bullish Trend. 

Up Side Target at 5438.30. 

Stop Loss at 5105.50.

Strong & Weak Stocks

This is list of 10 strong Stocks: 

JSW Steel, Dr Reddy, Chennai Petro, India Cement, Triveni, India Hotels, LITL, DCHL, Cairn India & Biocon.  

And this is list of 10 Weak Stocks: 

Balrampur Chini, Bajaj Hind, Bank Of India, HDIL, Hind Petro, Tulip, KFA, Orchid Chem, BPCL & DCB.

Nifty is in Up trend  

Equity:

TATAMOTORS (NSE Cash) 

 Yesterday's selling could be considered as a speculative selling. 

If fall continues, then it can tumble up to 701.55 level by non-stop. 

If short covering starts, then it can zoom up to 768.45 level by non-stop

and have caution.

JSWSTEEL (NSE Cash)  

Yesterday's rally was surprising & real buying too. 

If rally continues, then it can zoom up to 1336.25 level by non-stop. 

If profit booking starts, then it can tumble up to 1233.75 level and have

caution.

SBIN (NSE Cash) 

 Yesterday's rally was surprising & speculative buying too. 

If rally continues, then it can zoom up to 2096.70 level by non-stop. 

If profit booking starts, then it can tumble up to 2001.95 level and have

caution.

ARSSINFRA (NSE Cash) 

 Yesterday's rally was surprising & speculative buying too. 

If rally continues, then it can zoom up to 952.75 level by non-stop. 

If profit booking starts, then it can tumble up to 912.00 level and have

caution.

OPTIONS (NSE):

NIFTY 5200 CALL OPTION 

Unwinding continued on Tuesday & in line with expectations. 

If selling continues, then it can tumble up to 20.10 level by non-stop. 

If short covering starts, then it can zoom up to 52.00 level by non-stop and have caution.

RELIANCE 1080 CALL OPTION  

Rallied on yesterday & it was a surprise. It was a speculative buying. 

If rally continues, then it can zoom up to 20.45 level by non-stop. 

If profit booking starts, then it can tumble up to 3.15 level and have

caution.

STOCK FUTURES (NSE):

LITL FUTURES 

Rallied on yesterday & it was a surprise. Bulls beaten expectations & Bulls should not get panic at lower levels. 

 

If rally continues, then it can zoom up to 59.30 level by non-stop. 

If profit booking starts, then it can tumble up to 51.40 level and have

caution.

APIL APRIL FUTURES (3 Days Holding) 

Rally may continue for next 3 trading days. Bulls should not get panic at lower levels. As for today's trend, rally

should continue & Bulls should not get panic at lower levels. 

Buy with a Stop Loss of 583.10 level with a Target of 645.80 level. These levels applicable for today & for next 3 trading days also.

INVESTMENT VIEW

Sugar: Down 43 Per Cent And Still Falling!

 

Sugar-Mills In UP Will See RED in The Sugar 10-11 Season 

The weeds of self destruction have been planted by the mill owners in the Sugar year 09-10 by accepting cane supplies at Rs 260 per quintal. This means, no mill can produce sugar below Rs 30 a kg.

With better plantation, higher expected price and bumper cane crop in Brazil, while wholesale price of Sugar will continue to drop for most of CY10, the farmers in the Northern State of UP will not agree to Sell Cane below the Sugar year 09-10 price. Balrampur, Dhampur and Bajaj Hindustan have yet to see the worst of times, and their stocks can fall even more significantly on the bourses.

Sugar prices are falling after reports indicate Brazil is harvesting a plentiful crop that could boost global supplies.

Tuesday's decline is the latest setback for sugar futures, which have retreated about 43 percent since it hitting a 29-year high in early February.

Analysts say the reversal is occurring as traders pull out of the market because of growing expectations that global supplies will improve on higher production.

Other commodities were mixed as the dollar rose against most other major currencies. Gold and most energy prices rose while grains fell. 

 (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

Jim Rogers: India Will Muddle Along Till The Next Debt Crisis Hits Them Hard!

Forbes: The finance minister has changed the direction of India's budget deficit by reducing the target for 2010-11 to 5.5%. 

Jim Rogers: You really believe it will happen? Go back over the years and see their previous claims.

He has got a lot of praise for that in India. Still you are not impressed. Why? 

Even if it happens, it is not being done by sound budgeting. It is from selling off the family jewels, if it happens.

Don't you think a high deficit was justified last year when the government had to spend and help the economy revive? 

No. They are just trying to push the problems out into the future rather than solving the underlying problems. Do you really think the solution for a problem of too much debt and too much consumption is more debt and more consumption?

Are we not living in extraordinary times when we have to follow such flexible policies? 

We are indeed. They are making the problems worse in extraordinary times which require tough measures to correct decades of abuse.

 The finance minister rolled back some of the economic-stimulus measures he had announced last year. Would you have preferred to see a complete rollback rather than a partial one? 

Yes. And more.

If you were to set an agenda for the government, what would it be? 

Cut spending and subsidies dramatically. Many studies have shown that countries start having serious growth problems when debt is 90% of GDP (gross domestic product). India is now [at] 80% and will be [at] 90% soon under this budget. The subsidies distort the economy in less-productive areas.

 Did you see any reform measure in the budget? 

I see some words for some small steps in retailing and energy. We will see.

 India doesn't have a convertible currency. Neither does China. You have backed China in the past but not India. Why? 

I have pointed out scores of times that China is mistaken having a blocked currency. What is wrong with you? 

No country has ever become a world player or even a significant economy with a blocked currency. 

Some specific global lessons or examples that India can adopt from other countries such as China? 

Open your borders to foreign capital and brains. For example, foreigners cannot enter retailing in India, but Wal-Mart, etc. are all over China. Your politicians close down free commodity markets every time prices rise as if the markets were making the prices rise! 

Farmers can own only very, very small farms, so India cannot compete on the world stage, yet India should be one of the great agriculture nations of the world.

What will it take to get you to invest in India? 

Some sense of 21st-century reality. Open the economy [in areas] such as retailing, energy, agriculture, etc. Make the currency fully convertible.

What are the lost opportunities in the budget, according to you? 

The same things I just mentioned. Likewise why not start reducing the gigantic debt if things really "are getting better," as he claims?

 You have watched India for a long time. Where do you think the country will go from here? 

Continue muddling along until the reality of the huge debt-to-GNP [ratio] hits home and stops things. 

(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	23-Mar-2010	2385.54	2025.79	359.75

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	23-Mar-2010	1078.06	1151.45	-73.39

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 23rd March 2010

Strong & Weak  stocks

This is list of 10 strong stocks

Idea, Triveni, Indusind Bank, Chennai Petro, India Hotels, JSW Steel, Wel Guj, BEL, DCHL & Sesa Goa. 

And this is list of 10 Weak stocks: 

Balrampur Chini, Bajaj Hind, Renuka, Hind Petro, Tulip, BPCL, KS Oils, Moser Bear, Dish TV & Nagarjuna Fertil.

Nifty is in Up trend  

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	22-Mar-2010	2069.09	1766.31	302.78

NIFTY FUTURES (F & O):

 Above 5230 level, expect short covering up to 5260-5262 zone and thereafter expect a jump up to 5290-5292 zone by non-stop. 

Support at 5203 level. Below this level, selling may continue up to 5188-5190 zone by non-stop. 

Break below 5138-5140 zone, can create panic up to 5108-5110 zone by non-stop and have caution. 

On Positive Side, cross above 5320-5322 zone can take it up to 5350-5352 zone by non-stop. Supply expected at around this zone and have caution. 

Short-Term Investors:

 

Bullish Trend. 

Up Side Target at 5438.30. 

Stop Loss at 5105.50.

Equity:

ICICIBANK (NSE Cash) 

Yesterday's selling could be considered as a speculative selling. 

 

If fall continues, then it can tumble up to 907.25 level by non-stop. 

If short covering starts, then it can zoom up to 963.25 level by non-stop

and have caution.

MANINFRA (NSE Cash) 

Bulls beaten expectations on yesterday. 

 

If rally continues, then it can zoom up to 410.15 level by non-stop. 

If profit booking starts, then it can tumble up to 359.10 level and have

caution.

HDFCBANK (NSE Cash) 

Yesterday's rally could be considered as a speculative buying. 

 

If rally continues, then it can zoom up to 1914.00 level by non-stop. 

If profit booking starts, then it can tumble up to 1798.00 level and have

caution.

HDIL (NSE Cash) 

Bears beaten expectations on yesterday. 

 

If fall continues, then it can tumble up to 262.40 level by non-stop. 

If short covering starts, then it can zoom up to 294.90 level by non-stop

and have caution.

OPTIONS (NSE):

NIFTY 5200 PUT OPTION 

Rallied on yesterday & it was a surprise. Uptrend should continue & Bulls should not get panic at lower levels. 

 

If rally continues, then it can zoom up to 35.00 level by non-stop. 

If profit booking starts, then it can tumble up to 11.50 level by non-stop and have caution.

RELIANCE 1080 PUT OPTION 

Rallied on yesterday & it was a surprise. Uptrend should continue & Rally should be considered as a speculative rally. 

 

If rally continues, then it can zoom up to 18.95 level by non-stop. 

If profit booking starts, then it can tumble up to 4.55 level by non-stop and have caution.

STOCK FUTURES (NSE):

IBREALEST FUTURES 

Fallen on yesterday & Bears beaten expectations. Fall should continue today also & Bears should not get panic at higher levels. 

If selling continues, then it can tumble up to 139.00 level by non-stop. 

If short covering starts, then it can zoom up to 157.00 level by non-stop and have caution.

JPASSOCIAT FUTURES (2 Days Holding) 

Fallen on yesterday. It was a surprise. Fall may continue for 2 days & Bears should not get panic at higher levels. At the same time, selling is doubtful for today's trading and have caution. 

Sell with a Stop Loss of 151 level with a Target of 138.80 level today. It may even tumble up to 134.60 level in next 2 trading days. 

Stop Loss for next 2 trading days can be kept at 155.20 level.

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."

INVESTMENT VIEW

Aventis Pharma-Outperformer  

BSE 500674; CMP Rs 1827.25; Cum Dividend-Rs 16.50 per share

Aventis Pharma Ltd. (APL) is the Indian subsidiary of the global pharmaceutical giant Sanofi-Aventis S.A. The parent ranks amongst the top 3 pharmaceutical companies of the world & holds about 50% in Aventis Pharma Ltd.

 

Sanofi-Aventis lends strong support to Aventis Pharma, in terms of new product introductions in the Indian domestic markets from its product basket & easy access to its strong & rich product pipeline. The parent has also looked at increasing its stake in the Indian subsidiary.

 

APL has transformed itself into a company catering to the chronic & critical-care therapeutic segments. It has several products that are market leaders within their respective segments & have grown at double digits over the years.

 

APL is also achieving better results on the exports front year after year. We believe these products to continue their growth momentum & help the company to achieve higher

profitability going forward.

 

With consistently growing brands in its product basket & new product launches every year, the company generates huge cash flows. As of December 2008, APL has net cash balance of Rs. 4,973.7 Mn. on its Balance Sheet, translating to Rs. 216.0 per share.

 

This free cash can be used by the company for suitable acquisitions within the Indian

Pharma space. Over the years, APL has maintained a constant dividend payout in the range of 20-25%.

 

Valuations 

We expect the company to achieve 8 - 10% CAGR growth in its top-line & bottom-line over the next couple of years. Besides, cash rich & debt free status adds to the defensive nature of 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.)

-- 

Arvind Parekh
+ 91 98432 32381

Market Outlook:22nd March 2010

Corporate News Headline
•	ONGC and partners walked away with more than half of the 33 oil and gas blocks awarded to successful bidders of the recently concluded eighth round of auction under the New Exploration Licensing Policy. (BS)
•	Bharti Airtel applied for broadband wireless access services spectrum for which government has kept the reserve price at Rs. 17.50 bn. (BS)
•	Larsen & Toubro has bagged a road project worth Rs. 14.00 bn from the National Highway Authority of India. (BS)
Economic and Political Headline
•	The RBI raised key policy rates by 25 bps to mark a reversal of its easy monetary policy regime to tame inflation and anchor inflationary expectations. The central bank said that the repo rate, or the rate at which banks borrow from the RBI, is being increased by 25 bps to 5%. Similarly, the reverse repo rate, which is the rate at which surplus cash is parked with the central bank, was also increased to 3.5%, from 3.25% earlier. (BS)
•	The Federal Reserve Board removed an exemption it had given to six banks at the start of the crisis in 2007 aimed at boosting liquidity in financing markets for securities backed by mortgage- and asset-backed securities. The so-called 23-A exemptions, named after a section of the Federal Reserve Act that limits such trades to protect bank depositors, were granted days after the Fed cut the discount rate by half a percentage point on Aug. 17, 2007. (Bloomberg)
•	President Nicolas Sarkozy opposes Germany's push for an International Monetary Fund loan to Greece, pitting the euro area's biggest members against one another over a rescue plan. (Bloomberg)

NIFTY FUTURES (F & O): 

Below 5263 level, expect profit booking up to 5249-5251 zone and thereafter slide may continue up to 5236-5238 zone by non-stop. 

Hurdle at 5279-5281 zone. Above this zone, rally may continue up to 5285 level and thereafter expect a jump up to 5292-5294 zone by non-stop. 

Cross above 5305-5307 zone, can take it up to 5317-5319 zone by non-stop. Supply expected at around this zone and have caution. 

On Negative Side, rebound expected at around 5223-5225 zone. Stop Loss at 5211-5213 zone.

Short-Term Investors:

Bullish Trend. 

Up Side Target at 5438.30. 

Stop Loss at 5105.50.

OPTIONS (NSE):

NIFTY 5200 CALL OPTION 

Rallied on Friday & Bulls fell short of expectations. Uptrend should continue & Rally should be considered as a speculative buying too. 

If rally continues, then it can zoom up to 112.50 level by non-stop. 

If profit booking starts, then it can tumble up to 69.50 level by non-stop and have caution.

RELIANCE 1080 CALL OPTION 

Rallied on Friday & Bulls fell short of expectations. Uptrend should continue & Rally should be considered as a speculative buying too. 

If rally continues, then it can zoom up to 24.80 level by non-stop. 

If profit booking starts, then it can tumble up to 10.05 level by non-stop and have caution.

STOCK FUTURES (NSE):

BEL FUTURES 

Rallied on Friday & that was a surprise and Bulls beaten expectations too. Uptrend should continue today also & Bulls should not get panic at lower levels. 

If rally continues, then it can touch 2470.90 level during intra-day trades. It should close this level for further uptrend. 

If profit booking starts, then expect a surprise fall up to 2105.45 level and have caution.

SESAGOA FUTURES (3 Day Holding) 

Bullish Trend expected in next 3 trading days. Bulls should not get panic in next 3 days. Rallied on Friday & Today's rally should be considered as a speculative rally. 

Buy with a Stop Loss of 434.50 level with a Target of 475.30 level today. It may zoom even up to 477.35 level in next 3 trading days. 

Stop Loss for next 3 trading days can be kept at 432.45 level.

Strong & Weak  Stocks for 22nd March

This is list of 10 strong stocks: 

Idea, Triveni, Indusind Bank, Chennai Petro, India Hotels, JSW Steel, Wel Guj, BEL, DCHL & Sesa Goa. 

And this is list of 10 Weak stocks: 

Balrampur Chini, Bajaj Hind, Renuka, Hind Petro, Tulip, BPCL, KS Oils, Moser Bear, Dish TV & Nagarjuna Fertil.

Nifty is in Up trend  

SPOT INDEX LEVELS 22nd MArch

	5262.80	( 0.32 %)	16.90
		1	2	3
Resistance		5276.13	5289.47	5308.98
Support		5243.28	5223.77	5210.43

	17578.23		( 0.34 %)	58.97
			1	2	3
Resistance			17618.69	17659.14	17717.42
Support			17519.96	17461.68	17421.23

Investment View

Heidelberg Cement-Investor Ignorance Cannot Continue For Too Long 

BSE 500292

 

Heidelberg Cement-Ignorance Cannot Be Bliss 

Three years ago, Heidelberg of Germany, bought out the stake of SK Birla group in the erstwhile Mysore Cement. Through a capital infusion of roughly Rs 500 crore, Heidelberg was made debt free.

 

Three years later, that is 2010, Heidelberg has returned to payment of full tax after recovering all accumulated losses and unabsorbed depreciation, and yet has Rs 490 crore of cash in hand.

 

If this is not serious cash flow generation then what?

 

Today, Heidelberg operates cement capacities of 3.01 mn tpa which the market is valuing at roughly USD 40 per tonne of installed capacity. Replacement cost for a new Cement plant is USD 100 per tonne. On this valuation benchmark alone Heidelberg stock should quote at 3 times today's price.

 

More importantly, with Rs 490 crore in cash and zero debt any further proposed expansion will cost about half the amount that any other competitor will have to fork out. Additional 3 mn tpa of capacity will cost only Rs 1000 crore on a net basis, while in CY12 operating capacity would be rising to 6 mn tpa, and on existing margins after tax profits of Heidelberg would have risen to Rs 300 crore per annum or an EPS of Rs 13 per share.

 

Heidelberg has aggressive growth and acquisition plans which include acquisitions of grinding capacities in the Western states, raising existing capacity to 6 mn tpa by 2012 March, and ultimately raising Cement capacity to 15 mn tpa by 2015.

 

Thus, Heidelberg would have raised it's installed capacity to double by 2012 and then more than double over the next three years ie 2015. In all total manufacturing capacity would have risen 5 times in the next 5 years.

 

Investors have long ignored the stock, but how long can a corporate with cash of Rs 490 crore on it's books and valuation at a mere $ 40 per tonne be ignored.

 

If Heidelberg is not a growth stock, then what else is?

 

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.)

Weekly Index Outlook: Volatility on the cards

Sensex (17,578.2)

It was another placid week in the Indian stock market. In the absence of any reaction-worthy news, market participants occupied themselves with more mundane developments such as advance tax numbers declared by companies. Although calm is prevailing on the surface, there are lurking undercurrents such as the unresolved Greece sovereign debt issue that can roil the situation.

The week ahead is expected to be livelier as stock prices give the customary knee-jerk reaction to the policy-rate hike on Monday morning. Expiry of the March derivative contracts on Thursday could add spice to the proceedings. Open interest surging to record levels is worrisome though the high put-call ratio denotes that the bears are beginning to outnumber bulls and it can help prevent a sharp decline.

March has been good for Indian equities. The Sensex has managed positive closes in all but four sessions and has gained about 7 per cent. This has resulted in the 14-day relative strength index moving to extremely overbought levels at 75. Last time the index reached this level was in June 2009. However, this oscillator can remain overbought for extended period without a corresponding reversal in the underlying. Weekly oscillators are still positioned in the neutral zone.

We had outlined the assumption of a flat formation from the November 2009 trough in our last column. The C wave of this formation, that is currently unfolding, has the targets of 17,074, 17,954 or 18,833. This wave is sub-dividing in to a five-wave formation with the next targets of the fifth minor at 17,653 or 17,911. The fifth minor could even have completed at Friday's peak of 17,600.

What follows next could be another X wave preceding another three or five wave formation. It is obvious that we are on the verge of a pull-back. The extent of this pull-back will determine if the Sensex will have a shy at 18,000 in the near term or will decline towards 16,000 instead. Here are a few guideposts for the week ahead:

A slight decline on Monday morning that results in the Sensex reversing higher from 17,267 or 17,061 will mean that the near term-trend remains positive and the index will attempt a new yearly high before a stronger decline.

Decline below 17,061 will take the index to the key support zone around 16,855. Presence of both 20 and 50-day moving averages in this area makes it a key short-term trend deciding zone.

Short-term investors should avoid fresh purchases on a decline below 16,850 as such a move will be a harbinger of a deeper decline to 16,527 or 16,395.

Nifty (5,262.8)

The Nifty moved past our first short-term target to the intra-week peak of 5,270. What is more important is that the index closed near its weekly high. But the fact that it had no opportunity to react to the RBI's move on Friday makes it possible that the index declines to 5,165 or 5,101 on Monday. Rebound from either of these levels will denote short-term strength and the possibility of a rally to 5,330 or 5,358 in the near-term. Medium-term target on a strong close above 5,350 is 5,450.

Traders can hold their long positions with stop at 5,000. Presence of both the 21 and 50-day moving averages in the band between 5,020 and 5,040 and Fibonacci retracement support at 5,040 makes this a strong support zone for the near-term.

Close below the 5,000 level will imply that the index is heading towards the lower boundary of its medium-term trading range at 4,700.

Global Cues

The theme in global markets last week was 'sideways'. Many global benchmarks including the FTSE 100, Dow and the S&P 500 recorded new 52-week highs but they could not build on the gains and closed on a relatively subdued note. CBOE Volatility Index, however, closed at 16.9; a 21-month low, implying that investor confidence is really high. Once the CBOE VIX declines below 15.6, it will reach the official bull-market zone for this index that is between 10 and 15.

DJ Euro SToXX 50 ended with a doji formation in the weekly chart denoting the indecisive trend prevailing over the last couple of weeks. CRB Index too ended with a down-tick implying that the down-trend from January peak could still be in force. Asian benchmarks continued to denote strength and indices such as Jakarta Composite, Karachi 100, KLSE Composite, Thailand's SET and so on recorded fresh yearly highs last week.

It was the Dow that was the show-stealer last week with 117 points gain, closing above its former peak at 10,730. Next week will be critical in ascertaining if this index will move above 10,800 to make a dash towards 11,300 or give way to move near 9800 once more.

Sizzling Stocks

Idea Cellular (Rs 68.7)

This idea clicked in a big way last week. The stock rose from the intra-week low of Rs 59.2 to finish almost 15 per cent higher. It has also closed above the seemingly insurmountable resistance at Rs 63 that had impeded the stock's progress repeatedly over the last three months. Last week's surge has also helped it close above the 200-day exponential moving average positioned around the same level.

Investors can hold the stock as long as it holds above Rs 59, its recent trough and the level at which the medium-term trend line is poised. Near-term targets for the stock are Rs 70 and Rs 75. Long-term trend in Idea Cellular however continues to be down. The stock needs to record an emphatic weekly close above Rs 85 to negate this view. Until that happens, it can remain choppy in the broad range between Rs 45 and Rs 85.

Long-term targets above Rs 85 are Rs 100 and Rs 113.

Reliance Industries (Rs 1,089.8)

Reliance Industries was the prime market mover last week. Higher advance tax paid by the company enthused market participants to push the stock price 4 per cent higher on Tuesday. Last week's surge has helped the stock move above its 50-day moving average. It is however halting below its short-term resistance at Rs 1,100. Reversal from here can drag the stock lower to Rs 940 or Rs 903 again over the upcoming weeks. The near-term view for this stock will turn positive only on a rise above Rs 1,100. Investors holding trading longs should tread cautiously as long as the stock trades below this level.

RIL is expected to move sideways over the medium term in the range between Rs 850 and Rs 1,200.

Piramal Life-Sciences (Rs 104.4)

The stock of Piramal Life-Sciences got a booster dose through the introduction of its new drug for Psoriasis, Tinefcon. It shot through the roof mid-week to end at Rs 105, more than 32 per cent higher for the week.

The stock was unfortunate in listing when one of the worst bear markets in recent times was only half-way through. It spiralled lower till February 2009 to bottom at Rs 30. A steady uptrend is underway since then and last week's spike helped it close above the medium-term resistance at Rs 95.

Immediate targets for the stock are Rs 136 and Rs 169. However, the stock has been quite volatile in the last two sessions and it can correct lower to Rs 100 or Rs 96. Investors with a short-term perspective can therefore cash out at current levels while the rest can hold with stop at Rs 96.

STC (India) (Rs 473.5)

This PSU stock dazzled the market last week by projecting a turnover of Rs 21,000 crore in the next fiscal and announcing its intention to enter new areas such as port development and overseas contract farming. The stock surged higher on Wednesday though it cooled a little towards weekend.

STC is in a corrective mode since February 10 and last week's rally has not yet reversed this down-trend. A strong close above Rs 500 is required to make the near-term view positive and pave the way for a rally to the previous peak of Rs 556. Short-term investors can hold the stock with the stop at Rs 440 while investors with a longer investment horizon can hold with the stop at Rs 380.

S Kumar Nationwide (Rs 64.6)

This trading favourite had an unbelievable run towards the weekend as the stock surged 36 per cent in just two trading sessions. Talk about the company trying to list its unit, Reid and Taylor within the next year was the ostensible reason behind this spike.

Following the surge from the March 2009 low of Rs 13, the stock has been moving sideways since June last year. An ascending triangle pattern is apparent in the chart over the last nine months with rising troughs and the upper boundary at Rs 54. The stock broke above this boundary on Friday and closed well above it. Investors with a short-term perspective can buy the stock as long as it holds above this level.

Next medium-term target for the stock is at Rs 74. Inability to close emphatically above this level will result in the stock fluctuating in a wide band between Rs 30 and Rs 70 over the medium term. Strong surge above Rs 74 is required to take the stock higher to Rs 93 or Rs 111 over the long-term. —

Stock Strategy: Consider selling DLF 310 March call

DLF India (Rs 312.75): We expect the stock to move in a narrow range with a negative bias. As long as it stays below Rs 405, the outlook for the stock is negative. Currently it faces an immediate resistance at Rs 340 and has a support at Rs 282. Only a breakfrom this range could set a clear trend for the stock.

A drop below Rs 282 could weaken it to Rs 233, while a close above Rs 340 could lift it Rs 441 though in between Rs 405 could act as tough resistance.

F&O pointers

DLF March (market lot 800) futures closed in same levels with respect to the spot's close of Rs 312.7, the April futures with a marginal premium at Rs 313.45. Open interest stood at 28 per cent with respect to the overall marketwide open interest positions. Besides, the rollover to April series is 11 per cent only.

Options signal neutral trend for the counter as both calls and puts saw moderate accumulations.

Strategy: Consider selling (writing) DLF 310 March call, which closed on Friday at Rs 7, as we expect the stock to weaken. While the maximum profit is the premium collected, the loss could be unlimited if DLF surges sharply. With this being the settlement week, the stock could be in for high volatility. This strategy therefore is suitable only for those who are willing to take risk. That said, since markets are closed on Wednesday, the curtailed trading in the current month derivative contracts may help capture time value favourably.

Follow-up: Last week, we had advised traders to consider shorting ICSA India with a stop-loss at Rs 142. The counter is hovering around our recommended price level; we still believe that the outlook for the stock appears negative only. As advised, traders can hold on to the strategy for one more week.

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	19-Mar-2010	2632.29	2348.04	284.25

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	19-Mar-2010	1416.8	1304.11	112.69

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

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Arvind Parekh
+ 91 98432 32381