Friday, January 28, 2011
Buy & hold Tata Steel at Rs651 with SL of Rs645 for target of Rs663, 667
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± Food inflation rose to 15.6% for the week ended January 15.
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Market Commentary ..
As expected, a late F&O related sell-off dragged the Nifty below the psychological 200-DMA mark. Looks like the start today could be on a subdued note. A lot of technical levels are doing the rounds – which tends to happen when the market is weak or even in a rally mode.
The near-term outlook for the Nifty is weak with the intermediate support seen at around 5565. The next important support level to watch out for is 5500. A few are even talking of 5300-5350. Though there is no immediate cause for alarm, the fact remains that the undertone is fragile after successive selloffs since Diwali - when the main indices almost hit new record highs. There are a few macro-economic headwinds confronting the Indian markets and things may take a while to stabilise.
The sentiment may continue to be undermined by persistent FII outflows, which in turn could hit the rupee. Inflation has to moderate substantially for any material turnaround to happen. The Government too needs to pull up its socks.
Corporate Snippets
± L&T may sell stake in its infotech subsidiary after failing to turn it into a bigger business. (ET)
± ONGC has discovered shale gas at the Barren Measure shale, at Icchapur, near Durgapur, West Bengal. (BL)
± SAIL proposed Rs80bn FPO likely to hit capital market in the current financial year. (BS)
± Reliance Power plans to expand four large coal-fired power projects by 50% to generate an additional 8,000MW of power, which may be sold at more attractive merchant rates. (ET)
± Ranbaxy Laboratories president and CFO Umesh Sethi has quit. (ET)
± PFC’s follow-on issue likely by April-May 2010. (ET)
± A joint venture firm between NTPC Ltd and Nuclear Power Corporation of India Ltd has been incorporated. (BL)
± Reliance Infra has commissioned the first line of a double-circuit, power transmission line connecting Solapur and Karad in Maharashtra under the Western Regional System Strengthening Scheme. (ET)
± M&M plans to launch a compact sport-utility vehicle on the Xylo platform in the first half of this year. (BL)
± M&M has launched in the Kerala market the Xylo D2 mDI CRDe variant in Diamond White colour. (BL)
Thursday, January 27, 2011
Buy and Hold,
BUY AND HOLD RIL AT 954
HOLD FOR TARGET 977 & 1005 ++save this message, buy on dips....
Major Results Today:
Arvind, HDFC Bank, Dena Bank, FT,
IRB Infra, JSW Steel, Kansai Nerolac, Marico,
Neyveli Lignite, Lupin, Jain Irrigation,
NHPC, SpiceJet, Thermax,
TTML and Tata Chemicals
Buy and Hold Hindustan Zinc at Rs1352 with SL of Rs1343 for target of Rs1375, 1380
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Market Commentary ..
We really have no choice but to worry about the future as well as the present. We expect calm in the local markets at least at start today, as most participants would have utilized the Republic Day holiday to mull over the latest RBI move. Since the central bank’s action was in line with consensus estimates and there weren’t any nasty surprises, the markets could retrieve some of the lost ground. The F&O expiry today might just lead to some intraday gyrations especially towards the close.
One needs to be a little bit careful amid continuing uncertainty over the near-term prospects for the Indian markets. While interest rates are set to harden further and could pose a challenge for the Indian economy, all eyes are on whether there will be any softening in inflation.
Despite strong global markets, especially in the US, the Nifty has been struggling to surpass 5800. Any recovery could be short-lived unless the Nifty sustains above 5850. Globally, the Dow flirted with 12,000. Wall Street gained after the Fed left rates and its QE2 programme unchanged. European markets advanced as well. Asian markets are not doing a whole lot this morning.
Corporate Snippets
± Adani Power plans US$500mn FCCB by mid-Feb and may use part of the proceeds to fund coal mine buy. (ET)
± Rishad Premji, Wipro’s new strategy chief, has been given additional responsibility of leading the company’s M&A pursuits as India’s thirdbiggest software exporter seeks to widen its gap with aggressive rivals by identifying the next big bets. (ET)
± Adani Enterprises to build rail, port project in Indonesia. (BL)
± JB Chemical promoters partner for Rs11.60bn pharma SEZ. (BL)
± SAIL to explore mineral deposits in Indonesia. (BL)
± iGate gets IT notice to pay tax on pure onsite software development and work that involves deputation of technical manpower, also referred to as ‘body-shopping’. (ET)
± Coal India plans to increase spending by 17% to Rs42.20bn in the year starting April 1 as the company seeks to expand production. (ET)
± Coal India’s ERP project valued at Rs7bn gets only 2 bids. (ET)
± RIL has roped in IL&FS as a strategic partner, holding 45%, to develop a model economic township and other infrastructure facilities at Jhajjar in Haryana. (ET)
Wednesday, January 26, 2011
Tuesday, January 25, 2011
Jindal Steel & Power (Q3 FY11) – Market Performer
CMP Rs699, Target price Rs660, Downside 5.6%
± Q3 FY11 standalone revenue of Rs24bn was marginally lower than our estimate of Rs25.4bn
± The underperformance in topline was due to lower pellet and iron ore fine sales
± Operating profit increased 9.3% qoq to Rs9.4bn due to higher sales volume and was inline with our estimate
± Average power realizations under JPL continued to decline, from Rs4.3/unit in Q2 FY11 to Rs3.9/unit
± JPL’s PAT of Rs4.8bn was higher by 6% qoq, but was lower than expectations
± Maintain Market Performer rating with a price target of Rs660
Sesa Goa (Q3 FY11) – Market Performer
CMP Rs330, Target price Rs356, Upside 7.9%
± Topline increased 19.1% yoy to Rs22.5, lower than our estimate of Rs24.2bn
± The underperformance in topline was due to lower iron ore realization and lower pig iron production
± Iron ore sales volume of 5.3mn tons was inline with our expectation and net realizations increased 10% qoq to Rs3,883/ton, lower than our estimate of Rs4,066/ton
± Net cash (excluding inter-corporate loan of Rs10bn) increased from Rs75.8bn by the end of previous quarter to Rs82.3bn
± Lack of volume growth visibility over the next two years to keep stock under pressure; maintain Market Performer
ICICI Bank (Q3 FY11) – Market Performer
CMP Rs1,084, Target price Rs1,148, Upside 5.9%
± Successive fourth quarter of sequential balance sheet growth; loan assets were up 6.4% qoq. Deposits however declined sequentially.
± Net profit grew 31% yoy aided by healthy NII growth and lower provision charges
± Significant traction in corporate segment; Operating expenses were up 26% yoy owing to one-off items
± The 5C’s strategy - CASA, C/Income, Credit quality, Capital and Customer service remain on track
± Asset quality improves sequentially, PCR remained >70% level
± Adequately capitalized; focus on improving profitability and return ratios over FY10-13E. MP
± India’s gross domestic product (GDP) is expected to grow 8.7% in the year, according to the Reserve Bank of India’s professional forecasters’ survey conducted in December. (BS)
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Buy and Hold....
|| Reliance Industries Jan Future in range of Rs972-974 for the target price of Rs1000 and stop loss placed at Rs958. || Lot size: 250 || Remarks: Net maximum profit of Rs7,000 and net maximum loss of Rs4,000.||
Market Commentary ..
That the RBI will resume monetary tightening after December’s pause is a no-brainer. Markets too have somewhat discounted a rate hike. But, there might still be an element of surprise that could hit the sentiment temporarily. Some are calling for an aggressive 50 bps hike to tame inflation. Whether D. Subbarao obliges or not we will know in a few hours.
The RBI is also likely to unveil fresh steps to tackle the tight liquidity situation. How the markets will react hinges on what the RBI finally chooses to do and also say. The start will be positive on the back of strong global cues. Volatility may inch up ahead of Thursday’s F&O expiry. Indian markets will be shut on Wednesday on account of the Republic Day.
The two-day FOMC meet begins today while President Obama will deliver his state of the union address. Dr. Reddy’s, HUL, Sterlite and UltraTech Cement are among the few top companies announcing their results today. Meanwhile, IOC and HPCL have deferred their results as they have not received compensation from the Government.
Monday, January 24, 2011
High risk traders buy & hold Union Bank at Rs337 with SL of Rs331 for target of Rs349, 354
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Buy and Hold....
Dear investors;
All below call given looking to company results numbers and charts.
Buy and hold for 2-3 months will earn health returns.
Northpole team
All below call given looking to company results numbers and charts.
Buy and hold for 2-3 months will earn health returns.
Northpole team
Wipro Ltd (Q3 FY11) – Market Performer
CMP Rs456, Target price Rs485, Upside 6.4%
± Muted volume growth was a key disappointment; sharp pricing improvement act as savior
± Patchy growth matrix across verticals and services; Europe displayed strong growth
± IT services operating margin was marginally below expectations; utilization corrects by 240bps qoq
± Management guidance for Q4 FY11 in-line with expectations
± Sustained underperformance and sudden management change lowers confidence; Maintain MP
ITC (Q3 FY11) – BUY
CMP Rs169, Target price Rs194, Upside 14.6%
± Revenues beat expectations, register 19% yoy growth at Rs54.5bn driven by strong 18% yoy rise in cigarettes and 24% yoy in FMCG-others segment
± Operating margin remained stable at 36.1%. Net profit above expectations, up 21.4% yoy at Rs13.9bn
± We expect the company to witness a 14.7% CAGR in revenues and 19.3% in net profit over FY10-12. Maintain BUY
Punjab National Bank (Q3 FY11) – BUY
CMP Rs1,125, Target price Rs1,400, Upside 24.4%
± Marginally better than expected loan growth; full–year growth target of 25%+
± NIM was resilient aided by faster re-pricing of loans; but margin to correct going ahead
± Fee income growth was strong; sequentially higher trading profits and recovery in written-off A/Cs drive improvement in C/I ratio
± Asset quality continues to deteriorate; capital adequacy comfortable for FY12 growth
± Retain BUY as valuation is reasonably attractive
State Bank of India (Q3 FY11) – BUY
CMP Rs2,597, Target price Rs3,232, Upside 24.5%
± Loan growth ahead of expectations; CASA and C/D ratios improve
± NIM improvement came as a positive surprise; improvement in C/D ratio, YoA and CASA drive margin expansion
± Core fee income decline substantially; however, C/I ratio improve on lower opex
± Improvement is asset quality was heartening; capital adequacy remains comfortable
± Upgrade to BUY; include SBI within our top picks in the sector
Reliance Industries Ltd (Q3 FY11) – BUY
CMP Rs987, Target price Rs1,175, Upside 19.1%
± Revenues at Rs598bn, higher by 5.2% yoy; much in line with our estimates
± OPM increase 217bps yoy driven by sharp improvement in GRMs from US$5.9/bbl in Q3 FY10 to US$9/bbl in Q3 FY11
± Petchem margins were better than our expectations but E&P segment disappointed with lower production of gas and oil from KG-D6 field
± PAT at Rs51.4bn in line with our expectations
± In the near term, key earnings driver for RIL would be further strength in GRMs and continued recovery in petchem spreads
± Uncertainty on future course of gas production at KG-D6 field is a cause of concern, but largely priced in
± We maintain our BUY rating with a price target of Rs1,175
Buy and Hold....
Bata India (BUY, above Rs359, Target Rs375): Based on daily line chart, the stock has broken past three weeks resistance line. The stock was stalling around the downward sloping resistance line since last two weeks. A close above the resistance zone accompanied with heavy volumes is likely to take the stock towards the levels of Rs380 and above in the near term. Similar breakout is observed on the daily RSI. Inverted Hammer candlestick was seen on Wednesday, which is likely to act as a strong support on any declines. Furthermore, the support also coincides with 100-DMA. We recommend traders to buy the stock above Rs359 with stop loss of Rs353 for target of Rs375.
Market Commentary ..
Nothing seems little or great in a market where we barely managed to avoid a third straight week of losses. Whether we can continue the recovery or not remains to be seen. This week is going to be an important one with the RBI set to review monetary policy on Tuesday. Consensus expectations are for a 25 bps hike in policy rates.
There are reports that the RBI could jack up rates by 50 bps. But that may not materialise given the moderation in IIP and tight liquidity. The markets will keenly listen to the RBI commentary for clues on outlook on the economy, inflation and rates.
The start today is likely to be a flat to sedate one with investors still jittery about the near-term prospects. The F&O expiry on Thursday and trading holiday on Wednesday could add to the volatility. Results will continue to hog the limelight and as will the global trend.
Overseas events to watch out for include interest rate decisions by the Federal Reserve and the BOJ and Q4 GDP data on the US and the UK.
Corporate Snippets
± L&T-Alstom JV wins Chennai Metro track work project. (BS)
± NMDC, Tatas in talks to set up steel plant. (BS)
± Natco Pharma plans to seek compulsory licence from the government to make and sell a low-cost version of Bayer’s patented liver and kidney cancer drug Nexavar in India. (ET)
± ONGC to repair in 4-5 days a pipeline that caused an oil spill some 80-km off the Mumbai coast. (ET)
± Thermax bags the contract for setting up the country’s first geothermal power plant in Maharashtra. (ET)
± Aditya Birla Group offers US$700mn to buy the carbon black business of German company Evonik Industries and US$800mn for US firm Columbian Chemicals. (ET)
± Jupiter Biosciences is in advanced discussions to buy privately-held Swiss pharma company SynphaBase for about US$10mn. (ET)
± Nalco plans to foray into making titanium and its allied products and has formed a joint venture with Indian Rare Earths. (ET)
± Tata Group is planning to set up three more units as a part of its aerospace manufacturing initiative in Hyderabad with an investment of Rs10bn. (BS)
± Karur Vysya Bank has got Foreign Investment Promotion Board approval to issue shares, worth Rs1.1bn to foreign investors. (BS)
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