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)

HINDALCO IND LTD.

Earlier I had strongly observed that the Market which made a bottom on 20th dec,2011 is now going up systematically making higher top and higher bottom ever since.

On Friday, the Market burned back to a 14 months high with BSE Sensex closed higher at 18465 and CNX Nifty to hit close to 5600 despite technical analysts remain confused guiding bearish view whenever market experienced correction of a rise.

Several stocks on Friday had hit to a new 52wk high with signals for further rise. Bold reforms initiated by the government boosted the market sentiment which was followed by positive global clues such as US fed’s new stimulus package to buy $40Billion of mortgage assets every month till the unemployment outlook improves.

The stock market has now entered into higher orbit and the stock which has been most sluggish will start attracting value buying. Among such stocks there is one stock namely HindalcoInd Ltd.

My earlier eye recommended Tata Steel stock  @ Rs 385/- which has already spurted to a high of Rs.405/- on Friday,14^th Sep.2012.

HindalcoInd Ltd is a giant company belongs to  Aditya Birla Group with its interest in aluminium in domestic and outside with large integrated facilities right from mining to value added products.

The financial performance in 2011-12 has been outstanding both at the stand alone and consoledatedturnoverl was Rs 80820 Cr. and net profit was Rs.3397 Cr. On equity capital of Rs 192 Cr. With an EPS of Rs.17.74 on Rs 1/- paid up share is highly commendable with extra ordinary reserves of Rs.31300 Cr. Which translate into higher book value of Rs.165/- which is highly under priced. The company has however better prospects with a future capex plan of nearly Rs 20,000/-Cr. In hand to be completed in next two years. To sumup the stock looking to the strong fundamentals with a merit of blue chip company should be traded double the book value that is to over Rs 300/-, but sadly speaking the stock is available @Rs118/- as on Friday 14^thsep 2012.In my view the stock can hit Rs 200/- gaining 70% on year on year basis from the current market price of RS 110/-.

From: G S ROONGTA (SENIOR ANALYST)

TATA STEEL AND ELECON

Among such blue chip stocks in “A” group the stock namely Tata Steel is currently at 52 weeks low and looks good candidate to spurt significantly higher. Investors in view of this may keep in mind that Tata Steel is the top most company under Steel sector and the leader of Steel in the country and abroad with combined highest capacity of nearly 20 million tons in coming years and have all chances to give 40% to 50% gains to those investors who will hold this stock in their portfolio on YOY basis.



           Another stock which is very under price in capital goods sector is Elecon Engineering which had hit 225 as all time high for rupees to paid up 5 years before and is currently available at Rs 45 which has capacity to double in a year no longer the government takes initiative to spur investment in trade and industry with higher allocation of funds. This price of Rs 45 is despite of the company delivered year after year good results and paying higher dividend as pay out.



From­:-  G.S.Roongta

       (Senior analyst)

VIEW ON MARKET

             The Indian stock market which has exhibited side-ways fluctuation in range bound trading ever since September 2010 making bottom on 20^th December 2012 in an ongoing bullish trade.

             The market experts an technical analysts has since been mostly bearish giving their guidelines mostly towards lower closing expecting the market to visit to a low of March 2009 with BSE Sensex at 9500 but it has proved extremely night mare as Sensex has keep on moving between 15 to 18000 range during this period with which traders have got ample opportunity to consolidate their portfolios.

              The Stock market ever since 20^th December 2011 has given enough opportunity to consolidate itself giving clear signal to make higher top and higher bottom.

              The BSE Sensex has now crossed at its rock resistance of 18000 giving clear signal that it is now in mood to cross all its upper resistances till it hits all time high of January 2008.

             Several stocks both in blue chip and mid cap have achieved much lower prices and they all are now set to spurt significantly higher.

From­:-  G.S.Roongta

             Senior analyst