MARKET VIEW AND STOCK

MARKET REVIEW IN BRIEF

After a steep rise in stock prices in last two weeks the market has preferred to remain sideways in first two trading session i.e. on 24^th and 25^th Sept 2012.Higher levels attracted profit booking by few investors ahead of expiry of F&O contract for the month of Sept 2012 but it does not mean that the euphoria has ended. The new series of contracts for Oct 2012 will start now which may scale the indices for highest closing of 2011-12 in next couple of days.

THE GREAT EASTERN SHIPPING CO.LTD

This is a blue chip company under shipping sector but has been sluggish for over at least 2 yrs on account of economic slowdown globally. The three year downward cycle in shipping industry is close to end soon if the rise in Baltic index is any fair indication in last fortnight.

          G.E.Shipping which had clocked revenue earning of 3200 & 3400 Cr in 2007-08 and 2008-09 the highest in last 10 yrs with net profit of Rs 1350 and 1400 Cr respectively. The revenue earnings in 2009-10,       2010-11, and 2011-12 fell constantly at 2245 Cr and 1662 Cr and 2016 Cr.

          Correspondingly the net profit was also impacted heavily at 395 Cr, 266 Cr & 143 Cr as against mentioned prior is 2009-10.

          G.E.Shipping with highly professionally managed & due to strong fundamentals escaped itself falling into red like other shipping companies and managed to pay higher dividend @ 80% and again        @ 80 % in 2010-11 & 65% in 2011-12 which speaks the investors’ friendly management policy. At equity capital of Rs 152 Cr the reserve & surplus is as high as Rs 5000 Cr i.e. over 30 times, currently the market price of Rs 250 is highly underpriced looking to its book value, Debit equity (ratio at 0.75 & price earnings ratio being discounted for future earnings as most attractive).Hurry up to add this share in your portfolio.

Nifty ekes out small gains; held 5,650 mark

S&P CNX Nifty snapped the session off the day’s high, eking out small gains after trading lackluster on Tuesday, holding its crucial 5,650 mark. The market witnessed consolidation for second consecutive trading session in the F&O expiry week, as market participants closely awaited the government’s market borrowing calendar for second half of current fiscal scheduled to be released within this week. On the global front, Asian markets made a mixed closing on Tuesday, though the mood in the region remain subdued since morning but few of the indices showed good efforts to close in green in the dying hours. Moreover, European counters traded flat in the early deals as investors remain concerned about global growth and waited for Spain to unveil plans to resolve its fiscal problems. Back home, investors sentiments remained higher on reports suggesting that the PMO is all set to unleash measures aimed at boosting sectors such as industry, energy, finance and infrastructure.

Earlier, market made a decent starts with Nifty recapturing 5,700 level in the morning after government approved a bailout plan for the cash-strapped power utilities, which sent shares exposed to state-owned electricity distributors soaring. But, market failed to hold on to early gains and entered the red terrain as selling intensified in metal stocks. Scrips like Sterlite Industries, Tata Steel, SAIL, Sesa Goa, NMDC and Jindal Steel & Power all edged lower after LMEX, a gauge of six metals traded on the London Metal Exchange, dropped 1.24% on September 24, 2012. Selling in sugar stocks also dampened the sentiments on news that the government deferred a decision on scrapping subsidy on levy sugar under the public distribution system (PDS) quota ahead of the upcoming festive season demand. However, the index gained strength in the second half supported by renewed buying witnessed in FMCG space. Realty stocks too supported the sentiments, extending recent gains as investors bet that retail real estate will get a boost from the entry of foreign supermarket chains in the country, with the government allowing up to 51% foreign direct investment in multi-brand retail sector. In late trade, investors again started booking their profits as cues from global markets remain subdued. Finally, Nifty managed to negotiate a positive close.

Meanwhile, most of the sectoral indices on the NSE were settled in the green, CNX Realty remained the major gainer, up 2.13% followed by CNX FMCG up 1.86% and CNX Media up by 1.39% while CNX Metal and CNX Auto declined 1.39% and 0.79% remained the top losers in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, tumbled 9.13% and reached 17.11.

The India VIX witnessed contraction of 9.13% at 17.11 as compared to its previous close of at 18.83 on Monday.

The 50-share S&P CNX Nifty gained 4.30 points or 0.08% to settle at 5,673.90.

Nifty September 2012 futures closed at 5683.00 on Tuesday at a premium of 9.10 points over spot closing of 5,673.90, while Nifty October 2012 futures were at 5708.70 at a premium of 34.80 points over spot closing. Nifty September futures saw contraction of 2.33 million (mn) units taking the total outstanding open interest (OI) to 19.20 mn units. The near month September 2012 derivatives contract will expire on Thursday i.e. September 27, 2012.

From the most active contracts, Tata Motors September 2012 futures were trading at a premium of 0.70 at 269.60 compared with spot closing of 268.90. The number of contracts traded was 21,899.

Cairn India September 2012 futures were trading at a discount of 2.90 at 332.20 compared with spot closing of 335.10. The number of contracts traded was 26,490.

BHEL September 2012 futures were at a discount of 0.15 point at 254.40 compared with spot closing of 254.55. The number of contracts traded was 29,757.

Tata Steel September 2012 futures were at a premium of 2.00 point at 401.10 compared with spot closing of 399.10. The number of contracts traded was 16,013.

ICICI Bank September 2012 futures were at a premium of 1.60 point at 1069.45 compared with spot closing of 1067.85. The number of contracts traded was 25,130. 

Among Nifty calls, 5800 SP from the September month expiry was the most active call with an addition of 1.31 million open interest.

Among Nifty puts, 5600 SP from the September month expiry was the most active put with  an addition of 0.16 million open interest.

The maximum OI outstanding for Calls was at 5800 SP (8.95 mn) and that for Puts was at 5600 SP (7.71mn).

The respective Support and Resistance levels are: Resistance 5700.25 -- Pivot Point 5676.35 --Support 5650.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.61 for September-month contract.

The top five scrips with highest PCR on OI were India Infoline 5.33, Mphasis 3.00, Bhusan Steel 3.00, CESC 2.50, and Jindal Steel 2.25.

Among the most active underlying, Suzlon witnessed an addition of 24.80 million of Open Interest in the September month futures contract followed by IFCI, which witnessed contraction of 9.83 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed contraction of 20.52 million in the September month futures. Also, Unitech witnessed contraction of 2.60 million in Open Interest in the September month contract. Finally, Shree Renuka Sugars witnessed contraction of 6.72 million of Open Interest in the near month futures contract.

MARKET REVIEW

The market during this week will have to face large scale squaring up of outstanding position built up in F&O segment both in Call/Put and open position in nifty and stock specific futures.

          In – view of this the market is going to remain highly volatile till F&O position for the month of Sept which will expire on 29^th

September either to be squared up or carried forward to next month for October 2012.

The market is bullish & Sept month expiries of F&O contracts are going to be in favor of bulls.

SHRI DINESH MILLS LTD

The Company is 75 yrs old dealing in woolen textile & felt backed by highly strong fundamentals paying uninterrupted dividend since last several decades.

          Its equity capital which is hardly Rs 528 lacs despite of its old age of 75 yrs out of these Rs 528 lacs, the company has issued liberal bonus issues every after 10 yrs or 50 latest of two bonus issue was in the ratio of 1 : 1 Total bonus issue comprises of 477.54 lacs that means original shareholders are having nearly 8.5 bonus share against one share.

Yet, the company has huge reserves of Rs 91 Cr i.e. 18 times of equity capital which speaks possibility of further issue of bonus share any time by now.

          The book value of the company is nearly Rs 185 with latest EPS of Rs 10 while market price of the share is Rs 80 available at 50% discount is indeed very astonishing. Long term view in the stock aim be highly profitable.

SENSEX AND STOCKS

The Stock market as observed consistently under our newly recommended column flared up to a 14 month high amid all bearish outlooks forecasted by technical experts on time to time.

          BSE sensex hitting a new high near to 19K in intraday session on 21^st Sept gaining atleast by 403 points at 18,752 giving a sense of relaxation to investors. CNX Nifty which is scheduled to hit 5,800 shortly closed higher by 136 points at 5,691.

          Small & medium term investors are still looking confused as stated last week with several of small caps stocks yet not joined the bullish trend but will follow soon no sooner BSE & CNX Nifty crosses 19K and 5.8K margin.

          Readers who have taken position in my recommended stocks such as HindalCo, Tata Steel, SAIL, and ARVIND; stand to have been benefitted by nearly 15% on week on week basis.

SARDA ENERGY & MINERAL the company is listed in both BSE & NSE under CodeNo.946886 & SEML

The company deals in steel – having various plants right from iron ore and coal mining, pellets, sponge iron, bullets, wire rods, ferrous alloy with sufficient power generation of its own to meet the requirements.

          The company’s turnover of all these is Rs 1100 Cr & EBIDTA Profit Rs 238 Cr. Higher interest cost of Rs 45 Cr, Depreciation and taxation    Rs 63 Cr the net profit for the financial year ended 31-3-12 is Rs 115 Cr giving excellent EPS of Rs 32 to Rs 10 pad up share on equity capital of Rs 36 Cr is backed by hefty reserves of Rs 772 Cr. Book value is over Rs 215. Yet the share is traded at Rs.120 but investors have no knowledge of such blue chip pearls.

The stock had hit high of Rs 430 two years back and slided below Rs 100 despite no merit in the stock was not lost during this period except sentiments turned bearish.

Debt despite huge Cap-ex plan is over 0.64 & P/E ratio is most negligible viewers may buy the stock without any hitch to gain nearly 50% in short and 100% on long term basis.

THANKS TO ALL VIEWERS

Nifty scales 14-month high on reforms push

After witnessing a steep fall of about a percent in previous session, Indian benchmark Nifty exhibited fabulous performance through the day’s trade on Friday snapping the session at its 14-month high near crucial 5,700 mark after the government notified FDI in retail, aviation, broadcasting and power exchanges. The sentiments also got boost after government approved the operational features of the Rajiv Gandhi Equity Savings Scheme, allowing an income-tax waiver of 50% on new equity investments of up to Rs 50,000 by retail investors who have annual income of less than Rs 10 lakh. The global cues too remained supportive as most of the Asian counters ended in the positive as investors remained comforted by recent central bank steps to support the global economy in the face of weak data while, European counters too traded with traction in the early deals, supported by speculation that Spain could soon request a bailout and optimism that central bank action will revive growth.

Earlier, the benchmark made a gap-up opening after government on Thursday notified its decision to allow FDI in multi-brand retail, aviation and broadcasting sectors. Market continued gaining strength during first half supported by retail and aviation stocks, which picked up pace after the government braved intense political opposition to notify rules for allowing foreign retailers such as Walmart and Carrefour to set up stores in India on Thursday. Moreover, market touched its intraday high conquering psychological 5,700 level on reports that Samajwadi Party has pledged to continue support to the government on a day when Mamata Banerjee-led Trinamool Congress pulled out of UPA. The sentiments also remained bullish after government slashed the withholding tax on overseas borrowing by local companies to 5% from 20% at present. The reduction in tax will encourage Indian companies to raise funds from the overseas markets. The withholding tax liability on Indian companies was also reduced to 5%, which will apply to funds borrowed between July 2012 and June 2015. Moreover, investors continued piling up hefty positions across the board till end on reports indicating that the Centre could announce further reform-centric measures in the near term to counter the lingering impression of policy paralysis. Finally, Nifty ended the terrific session near its crucial 5,700 mark with a gain of about two and half a percent.

Meanwhile, most of the sectoral indices on the NSE were settled in the green, CNX PSU Bank remained the major gainer, up 4.25% followed by CNX Infra up 4.22% and CNX Metal up by 4.02% while CNX IT and CNX Media declined 0.67% and 0.26% remained the top losers in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, rose 1.66% and reached 18.93.

The India VIX witnessed an addition of 1.66% at 18.93 as compared to its previous close of at 18.62 on Thursday.

The 50-share S&P CNX Nifty gained 136.90 points or 2.46% to settle at 5,691.15.

Nifty September 2012 futures closed at 5707.05 on Friday at a premium of 15.90 points over spot closing of 5,691.15, while Nifty October 2012 futures were at 5728.85 at a premium of 37.70 points over spot closing. Nifty September futures saw an addition of 0.26 million (mn) units taking the total outstanding open interest (OI) to 22.14 mn units. The near month September 2012 derivatives contract will expire on Thursday i.e. September 27, 2012.

From the most active contracts, Tata Motors September 2012 futures were trading at a premium of 0.65 at 275.75 compared with spot closing of 275.10. The number of contracts traded was 19,458.

BHEL September 2012 futures were trading flat compared with spot closing of 232.30. The number of contracts traded was 18,241.

Tata Steel September 2012 futures were at a premium of 0.80 point at 410.40 compared with spot closing of 409.60. The number of contracts traded was 17,651.

Reliance Industries September 2012 futures were at a discount of 0.50 point at 852.05 compared with spot closing of 852.55. The number of contracts traded was 16,423.

ICICI Bank September 2012 futures were at a premium of 2.35 point at 1068.90 compared with spot closing of 1066.55. The number of contracts traded was 28,834.

Among Nifty calls, 5700 SP from the September month expiry was the most active call with contraction of 0.68 million open interest.

Among Nifty puts, 5500 SP from the September month expiry was the most active put with  an addition of 0.84 million open interest.

The maximum OI outstanding for Calls was at 5700 SP (6.64 mn) and that for Puts was at 5400 SP (8.41 mn).

The respective Support and Resistance levels are: Resistance 5748.95 -- Pivot Point 5662.2 --Support 5604.4.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.71 for September-month contract.

The top five scrips with highest PCR on OI were India Info 5.33, Mphasis 3.00, CESC 2.89, Jindal Steel 2.26, and Grasim 2.00.

Among the most active underlying, IFCI witnessed contraction of 2.96 million of Open Interest in the September month futures contract followed by JP Associates, which witnessed an addition of 0.39 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed an addition of 1.30 million in the September month futures. Also, Unitech witnessed contraction of 6.22 million in Open Interest in the September month contract. Finally, Shree Renuka Sugar witnessed contraction of 0.56 million of Open Interest in the near month futures contract.

Nifty September 2012 futures closed at 5707.05 on Friday

Nifty September 2012 futures closed at 5707.05 on Friday at a premium of 15.90 points over spot closing of 5,691.15, while Nifty October 2012 futures were at 5728.85 at a premium of 37.70 points over spot closing. Nifty September futures saw an addition of 0.26 million (mn) units taking the total outstanding open interest (OI) to 22.14 mn units. The near month September 2012 derivatives contract will expire on Thursday i.e. September 27, 2012.

 

From the most active contracts, Tata Motors September 2012 futures were trading at a premium of 0.65 at 275.75 compared with spot closing of 275.10. The number of contracts traded was 19,458.

 

BHEL September 2012 futures were trading flat compared with spot closing of 232.30. The number of contracts traded was 18,241.

 

Tata Steel September 2012 futures were at a premium of 0.80 point at 410.40 compared with spot closing of 409.60. The number of contracts traded was 17,651.

 

Reliance Industries September 2012 futures were at a discount of 0.50 point at 852.05 compared with spot closing of 852.55. The number of contracts traded was 16,423.

ICICI Bank September 2012 futures were at a premium of 2.35 point at 1068.90 compared with spot closing of 1066.55. The number of contracts traded was 28,834.

MARKET VIEW AND STOCK

The market has reacted slightly on account of reverse political development against reform initiative taken by the government recently which is unlikely to sustain any longer because the parliament is not in session, which can upheaval govt.enstance.

Any impact of Mamta Banerjee withdrawing support may on the contrary help the UPA Govt. to think for an alternative strategy.

The Market in view of this will regain its strength after a short while.

ARVIND LTD : The stock of Arvind Ltd had made a high of Rs.114/- which was sharply corrected to a low of Rs.65/- on account of strike in one of its units in Ahmedabad for a short duration.

The stock is still highly under-priced looking its excellent future being the leader in denim and higher export. The company has started paying dividend after the break in last few years.

Arvind is also diversifying in real estate in collaboration with Tata on its vacant land which will further boost its bottom line. At current market price of Rs.72/- it is good to buy.

Ashok Leyland:- The company is a leader in manufacturing heavy vehicle sectors like bus and trucks which is in good demand.

The company has recently introduced light weight vehicle namelyDost which has received a good response.

The stock which had recently hit Rs.34/- was corrected by 40%. The stock @ Rs.21/- to Rs.22/- is a good buy for 50% gain in next few months.

 

FROM : G S Roongta (Senior Analyst)