Wednesday, May 25, 2011

Open with a negative gap down

Market Outlook: Indian markets are expected to open with a negative gap down mainly on the back of global unconstructive sentiments. On the global space Wall Street ends with moderate loss after a choppy session and Asian markets trading lower: Nikkei, Seoul Composite slip. Overall outlook for the markets today is that of cautious optimism with 5325 levels as a major support and key resistance near 5450.

Results Today:PTC India, Cairn India, Tata Steel, Bank of India, JM financial, Jk Lakshmi Cement, Kalyani Steel, Ramco Industries, ABG Shipyard, Kanoria Chemicals, KRBL ltd, Excel Crop Care, Camlin, BF Investment, ZEE News, Sujana Tower, Gujarat Alkalies, Motherson Sumi, Gulf Oil Corp, Archies, Ind-Swift Labs, Madras Cement, Shriram EPC Ltd, Aarti drugs, Axis IT &T, Hi-Tech Gears, Nissan Copper, DCM Ltd, Hindustan Composites ltd, Creative Eye, Archidply Industries, Golden Tobacco, Kalyani Investment co, Trent ltd, IFGL Refractories, Gokaldas Exports, Rama Newsprint, Tecpro Systems, Shreyas Shipping & logistics, AGC Networks ltd.

Global events to watch:

Þ Durable Goods Orders.

Þ FHFA House Price Index.

Global indices Update @ 8:

Dow Jones : 12356 (-25.05)

NASDAQ : 2746 (-12.74)

Nikkei 225 : 9443 (-34.13)

Hang seng : 22608 (-122.4)

SGX CNX Nifty : 5351 (-42.50)

Gold (USD/t oz.) : 1523.6 (+00.30)

Nymex Crude (F) : 98.80 (-00.79)

INR / 1 USD : 45.25

TECHNICAL OUTLOOK: Mild signs of recovery....

In yesterday's letter we had mentioned that the real signal would come from the Bank Nifty and hence had asked readers to pay a greater attention to that and take cues for the NF from there. The intra day low of the NF was broken towards the later stage of day but in that dip the BNF actually put in a higher bottom. Market picked up slightly towards the end of the day. So, has the market behaved in a manner that suggests a reversal? Well, finding and identifying bottoms is a tricky endeavor. One has to be prepared for the possibility of being wrong. But it is worth making that effort when the risks are low. That is the current situation. We keep our wrong point of the analysis at 5360/10300 on the two indices and surrender the attempt at finding the low if these are lost in trade today. But one would have certainly liked to see better price action than the one we got yesterday. It still leaves us in tentative territory as far as finding the bottom is concerned. We do have to take a stance somewhere though. With the TCD and price match of Monday, this is a good time to take a stance. We shall continue to keep track of the Bank Nifty and one can breathe easier once this index is past 10580.

Chart attached today is NF 60 min with various indicators added. Foremost is the fact that the prices have dropped down to the price band and rallied a bit. Next, the low is made on a Pitchfork parallel. Third, prices have moved up towards the ending of yesterday and closed near the daily pivot (green arrow). The magenta arrow is the weekly pivot and this shows that there is sufficient room upward if rise occurs. Since this is expiry week, it is possible that we could have such a move. The orange arrow is the running monthly pivot for June. The chart also shows the RSI where divergences have begun to set in.

June options show some large positions at 5100/5000 Puts. This is not something created now but much earlier and hence the size is to be disregarded for now. As of now 5200-5400 is where the Put OI has added while calls are being added in small patches in 5400 thru 5800 strikes. IN the May series, 5300P is the big OI strike yet. So that is where the market players are standing, while we are punting here for a rise past 5400 levels. We did see some demand for 5400C yesterday and that also suggests some people perhaps aiming for higher.

STRATEGY FOR THE DAY: We maintain a slight bullish bias but carry caveats of the Nifty as well as the Bank Nifty showing us some strengths. We should also be looking for leader stocks to start ticking up. Another element to check is the May-June spread and here the difference should move from negative (current) to positive. These will all indicate buying coming back. Turn aggressive only then. Stocks will continue to follow news so keep track of news breaks as well.

Stocks to buy if market is strong:

HATHWAY CABLE: This counter has been witnessing a string of declining moves in the last one month. Recent sessions were seen taking support at valuation region around 106-05 levels and moving sideways above it. Yesterday we finally saw some confirmation as they moved up smartly and closed well. Look to buy.




Buy above 111

1.5 points

113.5 / 115

or Dips near 109.5

1.5 points


GUJ NRE COKE: Yesterdays heavy decline in this counter made a decisive move away from the recent sideways congestion. In doing so prices even broke below the valuation support around 48 and have closed below it. Momentum readings have taken a hit as well. Consider selling here.




Sell below 47.7

1 point


Or rally to 48.5

1 point


Stocks to sell if market is weak:

GAMMON INDIA: Last week prices breached a crucial support line around 104 levels and were trading below it. In the last few sessions we have seen them moving in a range bound manner, attempting to move back above the valuation region, but failing each time. Yesterday we saw yet another failed attempt and RSI too has turned down afresh from 40. Go short here.




Sell below 102

1.5 points

99.5 / 98.5

Rally Near 103

1.5 points

101.5 / 100.5


Buy Nifty above 5420 stop 5390 for rise to 5470.

Sell Nifty if 5360 is broken with 25 pt stop and 60 pts tgt


Buy LIC Housing above 218 stop 215 target 224

Sell Mcleod Russel below 250 stop 252.50 tgt 245

Stocks in Action for the day: Tata Steel, Rain Comm, United Phosp, L&T

Indian Hotels Says Will Open 16 Hotels In FY12; Will Add 2,143 Rooms Adding 1,546 Rooms In 2013 Occupancy & AAR Back At 2008 Levels Have Brought Down Cons Debt To Rs 3,600 Cr; Lowest In 2 Years Have Retired `600 Cr Debt In May 2011 Current Debt On Books Stand At Rs 1,700 Cr Capex For FY12 Is Approx Rs 300 Cr Looking At Entering Mid Size Segment Mkt With A New BrandNo Plans Of Fund Raising In This FY12

Infosys Says US Court Asks For Documents, Records Of Co's Sponsorships US Court Asks For Records Of Uses Of B1 Business Visas Intend To Comply With US Court Directive

Govt Official Says May Hike FDI In Entertainment Channels To 74% Vs 49% To Send Note On FM Radio Policy To Cabinet By June

REC Says Cost Of Borrowing At 7.25% Loan Growth At 25% FY12 Disbursements Likely Around `28,000 Cr Expect Loan Growth Of About 25% In FY12 Expect 18-20% Growth In Topline & Bottomline In FY12 Expect RBI Approval For Raising $750 m Via ECBs

SKS CFO Says To Pay 19% Of FY10-11 :: Salary In September, 2011 19% Accounts To Be About 19 Cr Salary Related To 20% Of :: Employees About 1,200 People Left In :: Last 2 Months Not Hiring Since Last 6 Months :: No Hiring In AP;Hiring In Non- :: MFI Segments In Other States

Rain Commodities: Stock Split from Existing value of Rs 10/sh to Rs 2/sh.

United Phosphorus: Board meet to approve merger & acquisition of its overseas subsidiary with itself.

L&T Shareholders Okay Hiving Off Electrical Automation Ops.

Rel MediaWorks To Mull Rights Issue On Saturday.

F&O Ban: Deccan Chronicle, Orchid Chemicals, Power Finance Corp, Punj Lloyd.

Bank of India: To discuss various capital raising options for the bank.

KPIT Cummins Infosystems board has approved the proposal to acquire 50% stake in Systime Global Solutions ltd for 103 crs & will acquire the remaining 50% in the next 3 years.

NHPC has signed a MOU with Russia's largest power generatin co JSC Rushydro for co-operation on case to case basis in Hydropower projects in India & other countries.

Indian Hotels Co Ltd board has approved an investment not exceeding Rs 51 cr to acquire an incremental equity stake in Piem hotels Ltd an unlisted associate co of the Indian hotels.

Abbott Capital India sold 2.24 lakh shares of 94 lakh shares held by it in Abbott India through market transaction resulting to the promoter's shareholding of 74.98% Novartis board recommends dividend of Rs 10/sh.

NMDC to acquire up to 50% stake in Australian mineral exploration co Legacy Iron Ore with an undisclosed amount .

Indian Oil Corp is hunting for a third partner apart from Chennai petro for the proposed LNG terminal at Ennore with a project cost of around Rs 4320 cr (ET).

PNB to acquire up to 33% stake in MetLife India with an undisclosed value which will boost the bank’s fee income (ET).

Sugar Cos seeks an extension of the deadline to export the sweetener as mills could obtain release orders for just 30% of the permitted quota (ET).

MOIL is planning to increase its sales by 30% in the current fiscal to offset the impact of declining prices (DNA).

VMS Industries IPO opens on May 30 with a price band of Rs 36-40/sh & closes on June 02.

Timbor Home Ltd IPO of 36.9 lakh shares with a price band of Rs 54-63/sh opens on May 30 7 closes on June 02.

DLF Bottomline below expectation due to one time escalation in raw material costs. Margins fall below 29%. Missed sales target of 12msf in FY11 as it sold 10 msf. Outlook tentative. Debt continues to be high. Has increased overall target for asset divestments to Rs 10000 cr from Rs 4500 cr previously (Rs 6000–Rs 7000 cr to be divested over next 2-3 years). This target seems ambitious. The Co has appointed advisors to evaluate strategic alternatives for the hospitality businesses .

DLF Q4FY11(QoQ) Sold 3.8 msf vs 2.5 msf * Leased 1.4 msf office space * Sales: Rs 2683 cr vs Rs 2594 cr (expectation was Rs 2400 cr) * EBIDTA: Rs 853 cr vs 1292 cr(after adjusting for one time cost reset due to input price inflation of Rs 475 cr) * EBIDTA margin: 29% vs 50% * Net Profit: Rs 345 cr vs Rs 466 cr(expectation of Rs 484 cr) * Delivered approx. 3.4 msf of residential and commercial office space combined * Two new residential projects launched in the quarter in Delhi & Chandigarh totaling ~ 2.8 msf * Realized approx. Rs 160 crore through non-core asset divestments
DLF - FY11 Sales: Rs 9561 cr vs Rs 7422.87 cr * EBIDTA: Rs 4337 cr vs Rs 3511 cr * EBIDTA margin: 42% vs 47.3% * Net Profit: Rs 1640 cr vs Rs 1719.84 cr..

Orbit Corp - Q4FY11(QoQ) * Sold 11249 sft in Q4FY11 vs 62000 sft in Q3FY11 * Revenue: Rs 68.12 cr vs Rs 113.8 cr * EBIDTA: Rs 34.4 cr vs Rs 44.49 cr * EBIDTA margin: 50.5% vs 39.09% Net Profit: Rs 19 cr vs Rs 23.1 cr * Order book stands at Rs 851.2 cr.

Orbit Corp - FY11 * Sold 285416 sft vs 384363 sft * Revenue: Rs 399.14 cr vs Rs 487.11 cr EBIDTA: Rs 149.5 cr vs Rs 147.6 cr * EBIDTA margin: 54.12% vs 30% * Net Profit: Rs 78.26 cr vs Rs 95.45 cr * EPS: Rs 7.02 vs Rs 9.98

Orbit Corp * Net worth as on March 31, 2011 stands at Rs 954.6 cr * Debt excluding CCDs is at Rs 812.8 cr implying Debt/Equity ratio of 0.85x

Indian Hotel Co Q4 FY 11 Net sales up 21% at Rs.530.87cr vs Rs.438.35cr PAT almost doubled at 5.33cr vs Rs.2.69cr EBITDA up 29% at Rs.185.62cr vs Rs.143.5cr EBITDA margin at 35% vs 32% Other Operating Income at NIL vs 4.99cr (Insurance Claims recd)

IPCA Labs FY 11 Consolidated Revenue up 21% at Rs 1899 Cr vs Rs 1567 Cr PAT up 28% at Rs 263 Cr vs Rs 205 Cr Total Exp up 23% at Rs 1579 Cr vs Rs 1283 Cr EBITDA up 14% at Rs 376 Cr vs Rs 331 Cr EBITDA Margin at 19.8% vs 21.1%

Gujarat Industries Power FY 11: Revenue up 14.6% at Rs 1089 Cr vs Rs 950 Cr PAT up 52% at Rs 163 Cr vs Rs 107 Cr Total Exp up 12% at Rs 902 Cr vs Rs 808 Cr EBITDA up 36% at Rs 312 Cr vs Rs 230 Cr EBITDA Margin at 28.7 % vs 24.2%

Goenka Diamonds and Jewels FY11 Consolidated Net Sales up 4.3% at Rs 561 Cr vs Rs 538 Cr PAT at Rs 44 Cr unchanged Total Exp up 4.9% at Rs 513 Cr vs Rs 489 Cr EBITDA dn 2% at Rs 49 Cr vs RS 50 Cr EBITDA Margin at 8.7% vs 9.3%

J K Tyres FY 11 Consolidated Revenue up 31% at Rs 5983 Cr vs Rs 4585 Cr PAT dn 71% at Rs 66 Cr vs Rs 224 Cr Total Exp up 39% at Rs 5770 Cr vs Rs 4168 Cr EBITDA dn 38% at Rs 322 Cr vs Rs 517 Cr EBITDA Margin at 5.4% vs 11.3%

Novartis India Q4 FY 11 Revenue up 15% at Rs 181 Cr vs Rs 157 Cr PAT up 21% at Rs 34 Cr vs Rs 28 Cr Total Exp up 17% at Rs 147 Cr vs Rs 126 Cr EBITDA up 9.4% at Rs 34 Cr vs Rs 28 Cr EBITDA Margin at 19.3% vs 20.4%

Technofab Engineering Q4 FY 11 Net Sales up 39% at Rs 124 Cr vs Rs 89 Cr PAT up 22% at Rs 11 Cr vs Rs 9 Cr Total Exp up 49% at Rs 110 Cr vs Rs 74 Cr EBITDA dn 13% at Rs 14 Cr vs Rs 16 Cr 'EBITDA Margin at 11.3% vs 18%

Indian Hume Pipe Co Q4 FY 11 Revenue dn 21% at Rs 173 Cr vs Rs 219 Cr PAT dn 25% at Rs 4.2 Cr vs Rs 5.6 Cr Total Exp dn 18% at Rs 162 Cr vs Rs 198 Cr EBITDA dn 44% at Rs 13 Cr vs Rs 23 Cr EBITDA Margin at 7.5% vs 10.5%

Cosmo Films Q4 FY 11 Revenue up 25% at Rs 260 Cr vs Rs 208 Cr PAT up 46% at Rs 16 Cr vs Rs 11 Cr Total Exp up 23% at Rs 235 Cr vs Rs 191 Cr EBITDA up 33% at Rs 32 Cr vs Rs 24 Cr EBITDA Margin at 12.3% vs 11.5%

Elecon Q4 FY 11 Revenue up 6.6% at Rs 354 Cr vs Rs 332 Cr PAT dn 11% at Rs 24 Cr vs Rs 27 Cr Total Exp up 4.4% at Rs 308 Cr vs Rs 295 Cr EBITDA up 19% at Rs 56 Cr vs Rs 47 Cr EBITDA Margin at 15.8% vs 14.2%

ABC Papers Q4 FY 11 Revenue up 40% at Rs 94 Cr vs Rs 67 Cr Net Profit at Rs 14 Cr vs Net Loss at Rs 19 Cr Total Exp up 47% at Rs 85 Cr vs Rs 58 Cr EBITDA up 8.3% at Rs 13 Cr vs Rs 12 Cr EBITDA Margin at 13.8% vs 17.9%

Mandhana Inds Q4 FY 11 Net Sales up 57% at Rs 294 Cr vs Rs 187 Cr PAT up 13.3 % at Rs 17 Cr vs RS 15 cr Total Exp up 62% at Rs 255 Cr vs Rs 157 Cr EBITDA up 29.4% at Rs 44 Cr vs Rs 34 Cr EBITDA Margin at 15% vs 18.2%

Dharani Sugars and Chemicals Ltd Q4 FY 11 Revenue up 1.4 Times at Rs 261 Cr vs Rs 109 Cr Net Profit at Rs 32 Cr vs Net Loss at Rs 16 Cr Total Exp up 78% at Rs 206 Cr vs Rs 116 Cr EBITDA at Rs 60 Cr

Ratnamani Metal and Tubes Q4 FY 11: Revenue dn 20% at Rs 257 Cr vs Rs 322 Cr PAT up 17% at Rs 28 Cr vs Rs 24 Cr Total Exp dn 24% at Rs 204 Cr vs Rs 268 Cr EBITDA dn 2% at Rs 53 Cr vs Rs 54 Cr EBITDA Margin at 20.6% vs 16.8%

Praj Inds FY 11 Revenue dn 8% at Rs 555 Cr vs Rs 602 Cr PAT dn 54% at Rs 53 Cr vs Rs 114 Cr Total Exp up 2.4% at Rs 518 Cr vs Rs 506 Cr EBITDA dn 55% at Rs 48 Cr vs Rs 107 Cr EBITDA Margin 8.6% vs 17.8%

Blues Star reported standalone net profit of Rs 56.85 crores for quarter ended March 2011 against Rs 78.54 crores in the corresponding quarter last fiscal. Total income was at Rs 915.56 crores as against Rs 862.52 crores a year ago.

Apollo Hospitals Enterprise reported standalone net profit of Rs 181.72 crores for the year ended March 2011 against Rs 151.97 crores in the same period a year ago. Net sales were at Rs 2331.96 crore for the year as compared to Rs 1825.78 crores last fiscal.

Bharat Forge reported standalone net profit of Rs 310.57 crores for the year ended March 2011 against Rs 127.04 crores a year ago. Net sales stood at Rs 2858.92 crores as compared to Rs 1814.01 crores last fiscal.

Power Grid Corporation posted net profit of Rs 2696.89 crores for the year ended March 31 2011 as compared to Rs 2040.94 crores in the same period a year ago. Total income increased to Rs 9099.80 crores from Rs 7503.58 crores last fiscal.

GEI Industrial Systems has made allotment of 5,00,000 warrants of Rs 250 each to promoter C E Fernandez with the option of converting them into equity share of Rs 10 each at a premium of Rs 240 per share against each warrant.

Aurobindo Pharma has received final approval from the US Food & Drug Administration to manufacture and market Piperacillin and Tazobactam for injection 2.25g, 3.375g and 4.5g, packaged in single use vials. The strengths has a market size of approximately $ 635 million for the twelve months ending September 2010 according to IMS and will be launched soon.

Birla Cotsyn reported net profit of Rs 4.72 crore for quarter ended March 2011 as compared to Rs 29.06 lakhs in the corresponding quarter last fiscal. Total sales were at Rs 141.92 crores as against Rs 102.48 crores in the same period a year ago.


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