MARKET BY G.S.ROONGTA

MARKET REVIEW IN BRIEF

BSE Sensex & CNX Nifty rises slowly and gradually inching up towards 19k and 5800 for the time being. There is a stock specific action.

Those stocks which have already rose substantially under cement, AUTO, FMCG, Pharmacy and Banking have sidelined now.

While other sectoral stocks are being fancied. Tata Global was star performer on 3^rd October to hit Rs 154.

          On 3^rd October I had recommended GULSHN POLYO as Rs 68 which hit Rs 78, yesterday gaining Rs 9 or 15% in a single day which speaks the liking & worthiness in my recommendation being viewed by the view of this site.

Cement stocks rally have slowed down after a good rise, yes India cement and keshoram stock going dirt cheap even at current market price.

STEEL AUTHORTIY OF INDIA LIMITED (S.A.I.L)

SAIL is a world class corporation and a leader of Indian Steel business boil in productivity & quality and inspiring to match in profitability too in year to come.

          SAIL is having several steel plants mainly in eastern parts of the country such as bhilai, IISCO, Rourkels, Bokaro, Durgapur and Jamshedpur with backward integration of ore & coal mining power etc. Its product profile is numerous which is used in construction/infrastructure/industry and in every walk of human life.

SAIL hit a life time higher sales target of over Rs.50, 000 Cr followed by with net Profit of Rs 3543 Cr slightly lower than its previous yr due to global and domestic recession in 2011-12.

          SAIL has ambitious CAP EX plan of over Rs 40, 000 Cr including Rs 14500 Cr already spent till 2011-12 and rest of which to be spent in next 2 yrs without much borrowing. Most of the funds is targeted to come out of internal accruals & equity route which is quite evident from its comfortable debt/equity ratio.

          Imagine what would be the SAIL outlook after 2 yrs once its  CAP EX plans will be completed. It would really be mind boggling which is difficult to express in words now.

          SAIL stock is currently traded at Rs 87 below its book value and is worth to buy and have this precious jewel in your cap from long term point of view.

          When, MRF the largest in tyre segment can hit over Rs 10, 000 Cr & Asian pain can be traded at Rs 4000 why SAIL should not cross 500 in 2 yrs and Rs 1000 in 5 yrs.

          Lastly, It may be recalled that SAIL stock had hit Rs 250 mark in 2009-10.

MARKET BY G.S.ROONGTA

MARKET REVIEW IN BRIEF

The Market continued to be quiet cautions on account of F&O expiry on 27^th Sept 2012. Bulls that are reported to have booked profit have carried forward small position to October expiry helping the market not to face much volatility.

          Global cues were seen positive with Asian, European & Dow Jones future continued to be in positive direction.

          Cement Stock have been out performer on 27/9/12 with almost majority of stocks gained between 10 – 20%.

          India Cement as observed by me in my yesterday recommendation also gained to high of Rs 98.

          The Market in general performed well as far as stock specific action was concerned.

KESHORAM INDUSTRIES LTD

The Company belongs to Mr. B.K.Birla group having large capacities in cement tyres & textile. The textile unit was demerged which is closed ever since a decade.

          Cement is doing well followed by Tyres unit the company’s cement & tyre performance in the year 2011-12 was not much impressive which resulted the stock price of keshoram Ind to fell from high of 400 two years back to below Rs 100 recently.

          Since cement companies are performing well and in-view of this keshoram Ind should also not lag behind as its share price is currently subdued as Rs 138 which looks highly underpriced and may spurt any time once investor’s attention is attracted towards this stock on it’s highly competition business in cement & tyres. 

Nifty snaps September F&O series with a massive gain of over 6%

S&P CNX Nifty finished the September F&O series with a massive gain of over 6%, though for the day, Nifty closed with a quarter percent of loss surrendering below 5,650 mark, as selling crept in the last hour of trade. The index started in green as the undertone was supported by steady inflow of overseas portfolio capital. However, the trade remained volatility throughout the session and caution sneaked in the last leg of trade where it drifted into red. The global cues too remained unsupportive as protests in Spain and Greece over euro zone austerity measures raised fresh concerns over Europe's ability to get its debt crisis under control. Besides, Asian markets ended mostly in red though decline in industrial profits in Chinese market has again raised speculation that its central bank will take measures to support economic growth.

Initially, market started the trade on a flat note and remained on the sidelines in early deals. The sentiments got some support after India made it mandatory for all foreigners to furnish a tax residency certificate of their home country to claim benefits under the double taxation avoidance agreement. The optimism started building up in the market in the late morning session with Benchmarks adding some gains after some sense of comfort was drawn by the investors pursuant to United Progressive Alliance (UPA) coordination committee extending its full support to Prime Minister Dr Manmohan Singh for taking bold initiatives to improve the economic situation in the country. However, investors started turning cautious as ratings agency Moody’s Investors Service anticipated that India’s fiscal deficit will exceed 5.1% despite the recent moves by the government to rein in deficit and has said that the recent reform measures won't improve India's credit profile and only serve as sentiment boosters, as the country is still constrained by its fiscal deficit. Finally the nervousness among traders ahead of the announcement of government’s borrowing calendar for the second-half of the fiscal year, a key indicator of its fiscal discipline, mainly led to the downturn of the bourses. Selling also got intensified in the final hours after the Supreme Court, delivering its opinion on the Presidential Reference moved by the Centre said that auction order must be restricted for the telecom spectrum only and opined that auction cannot be the only method for allocating natural resources.

Meanwhile, most of the sectoral indices on the NSE settled in the red, CNX Energy remained the major loser, down 1.39% followed by CNX PSE down 1.14% and CNX IT down by 1.00% while CNX Media and CNX FMCG rose 2.44% and 1.60% remained the top gainers in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 0.35% and reached 16.91.

The India VIX witnessed contraction of 0.35% at 16.91 as compared to its previous close of at 16.97 on Wednesday.

The 50-share S&P CNX Nifty lost 13.95 points or 0.25% to settle at 5,649.50.

Nifty October 2012 futures closed at 5684.30 on Thursday at a premium of 34.80 points over spot closing of 5,649.50, while Nifty November 2012 futures were at 5710.20 at a premium of 60.70 points over spot closing. Nifty October futures saw an addition of 5.45 million (mn) units taking the total outstanding open interest (OI) to 21.82 mn units. The near month October 2012 derivatives contract will expire on October 25, 2012.

From the most active contracts, Tata Motors October 2012 futures were trading at a premium of 1.15 at 261.55 compared with spot closing of 260.40. The number of contracts traded was 16,209.

Among Nifty calls, 5700 SP from the October month expiry was the most active call with an addition of 1.07 million open interest.

Among Nifty puts, 5300 SP from the October month expiry was the most active put with an addition of 2.33 million open interest.

The maximum OI outstanding for Calls was at 5700 SP (4.49 mn) and that for Puts was at 5300 SP (5.07 mn).

The respective Support and Resistance levels are: Resistance 5682.23 -- Pivot Point 5660.96 --Support 5628.23.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.09 for October -month contract.

The top five scrips with highest PCR on OI were PNB 1.78, Central Bank 1.50, ITC 1.43, Asian Paint 1.36, and Wipro 1.04.

Among the most active underlying, IFCI witnessed an addition of 11.22 million of Open Interest in the October month futures contract followed by JP Associates, which witnessed an addition of 8.50 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed an addition of 7.92 million in the October month futures. Also, Shree Renuka Sugars witnessed an addition of 8.88 million in Open Interest in the October month contract. Finally, Tata Motors witnessed an addition of 6.95 million of Open Interest in the near month futures contract.

MARKET BY G.S.ROONGTA

MARKET IN BRIEF

The market remained subdued on 26 Sept 2012 throughout the session because of F&O expiry on tomorrow as reported yesterday. European & Asian markets were also subdued after a steep rise in last fortnight. There was some stock specific action today specially in U.B group stocks on divestment of promoters stake to foreign based group entities. United breweries, kingfisher untied holding gained by 20 to 25% on stake sale. Aegis chemical shot up smartly from Rs 130 to Rs 152. Likewise there were several other stocks which gained between 10%-20% upper filter circuits.

CEMENT STOCKS RALLIED HIGHER

In our recently recommended stocks, ARVIND Ltd flared up from the level of Rs 68 – 70 to Rs 80. Similarly Elecon Engineering has also shot up to Rs 50.

          Cement stocks attracted renewed buying today. It was perhaps on account of monsoon season coming to end with which construction activities will start picking up.

          Almost all cement stocks rallied higher in all the segments like A – Group, Mid & Small Caps. ACC flared up, Gujarat Ambjua hit a new high so also India Cement, J.K.Laxmi cement also flared up to a new 52 weeks high.

          India Cement stock in mid cap category is still going cheap as Rs 90 compared to its peers because of its promoter group is reported to be entangled in 2G case as otherwise stock is rated to cross higher beyond Rs 100 mark.

          Investors may buy it either now or on a decline between Rs 80 – 85.

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.