Thursday, September 29, 2011

How to trade in JSW Steel, Rel Cap, Infosys now? Source: IRIS (28-SEP-11)

Market Outlook: Indian markets are expected to open in a flat but on negative note and trade volatile on the back of FNO expiry and mixed trend seen on Asian counters.

On the global space: The US accelerated their losses in the final hour trading to finish near session lows amid ongoing concerns over the global economy and as investors cautiously waited for further developments in the euro zone. The Dow skids 1.6% erasing a 126-point gain earlier in the session. GDP growth for the second quarter is expected to rise slightly to 1.2%. Meanwhile, weekly jobless claims are expected to dip to 420000 versus 423000. Also watch out for pending home sales data which may decline 2% in August.

Asian markets are trading lower; Nikkei, Straits Times down. A signal 8 typhoon warning continues to be in force in Hong Kong. As a result the morning session at the Hong Kong stock exchange has been cancelled.

Europe: European shares snapped a three-day winning streak as hopes for imminent political action to contain the region's debt crisis were capped by lack of details.

Back to Indian Markets are following global cues, so we continue to hold a cautious outlook with support 4880 and resistance at 5020.

Global events to watch for today:


Þ Jobless Claims.

Þ Pending Home Sales Index.

Global indices Update @ 8:

Dow Jones : 11010 (-179.7)

NASDAQ : 2491 (-55.25)

Nikkei 225 : 8531 (-84.63)

Hang seng : 18011 ( 00.00)

SGX CNX Nifty : 4921 (-20.00)

Gold (USD/t oz.) : 1610 (-07.50)

Nymex Crude (F) : 80.73 (-00.48)

INR / 1 USD : 48.91

TECHOUTLOOK : Support for the Nifty is at 4880 and resistance at 5020.

Call for the day :




Stocks in action for the day: JSW Steel, Sesa Goa, Motherson Sumi, Cairn, ITC, Sterling Holidays, Pipavav.

JSW Steel is in focus. The company's MD Sajjan Jindal says he is confident about iron ore supply eventually. He said that JSW Steel plant is not going to shut down or move out of Karnataka for now.

Sesa Goa too on the radar after the environment ministry did not give clearance to Pirna mines in Goa. The company says that it's an old issue and mining at Pirna was never part of its business plans. Company had voluntarily withdrawn EC application -No mining occurred at mine -Mining at Pirna Lease was never part of biz plans

Motherson Sumi is also in the spotlight as its flagship company, Samvardhana Motherson Finance filed DRHP to raise Rs 1,750 crore.

IPO Corner -Flexituff International IPO of 67.5 lakh shares with a price band of Rs 145-155/sh opens today -Taksheel Solutions IPO of 55 lakh shares with a price band of Rs 130-150/sh opens today.

Pipavav Shipyard in pact with SKIL Infra, Airbus for aircraft repair operations Pipavav Ship says
-JV to set up aircraft repair facilities in India -To hold 51% stake in aircraft maintenance JV’ -France's EADS to have 26-49% in aircraft repair JV -To invest USD 100 million in aircraft repair unit phase-I

Sajjan Jindal says -Supply of raw material to industry has been taken up -Steel industry supports SC's view -CEC has been formed to look into the problems of steel industry -CEC: Central Empowered Committee -Price discovery through e-auction is not best method -Feel E-auction could be a temporary process -Do not think there is any need for E-auction -State govt needs to expedite implementation process -Confident of iron ore supply & optimistic of JSW's survival -Not going to shut down or move out of Karnataka for now -Monitoring committee has assured on weekly E-auction -Have asked for allotment of captive mines, iron ore supply -Small scale industries facing most of the uncertainties

Karnataka Iron & Steel Manufacturing Association Says -To continue supply of iron ore to industry from NMDC -e-auction of stock to be done on daily/alternate day basis

Rakesh Jhunjhunwala & RK Damani pick up 14% stake in Sterling Holidays in last 2 months, both invested Rs 40 crore each. Management confirms the same in AGM - BS (CMP Rs 93)

Second round of iron ore auction in Karnataka to be held today (ET)

Tata Metaliks to divest its 3 lakh ton pig iron making facility in Maharashtra to Fomento resources for Rs 180 cr

Rane Holdings acquires 26% stake in Bangalore based SasMos HET Technologies with an undisclosed amount

ITC buys 26% stake in Logix’s 5-star Hotel property, to invest Rs 100 crore in the Noida based hotel (ET)

Oberoi Realty in talks to buy 50% stake held by ICICI Ventures in South Mumbai Project for around Rs 300 crore (ET)

Cairn ’s plans to start production at Rajasthan hits a road block, as Oil Ministry asks for more information to give a go ahead (ET)

Private sector bank promoters may be allowed to hold 15% stake instead of 10% stake (BS)

Bajaj Hindusthan ’s rights issue of 45.6 crore shares at Rs 36/sh open today

Govt may levy import duty on power equipments for mega projects (Mint)

Gallant Ispat to issue upto 25 lakhs fully convertible debentures at Rs 160/sh

Ex Bonus: Vaswani Industries 1:4

F&O Ban: ABG Shipyard, Gitanjali Gems, KS Oils, Ruchi Soya

Listing of Panama Petrochem on NSE w.e.f September 30

How to trade in JSW Steel, Rel Cap, Infosys now? Source: IRIS (28-SEP-11)

JSW Steel: It’s a long running saga for supply of Iron ore to JSW Steel. The stock is underperforming from last couple of day on the reports stating that it might have to shut down its Vijayanagar Plant in Bellary if the disruption of iron ore supplies continues in Karnataka. As per the data available the plant is operating at a minimum level of 30%. JSW Steel operates 10 million tons per annum capacity steel plant at Bellary. In July, the company had commissioned its fourth furnace of 3.2 mtpa. The iron ore supplies to the Vijayanagar. Plants have been disrupted since July after the Supreme Court imposed a ban on iron ore mining and transportation in Bellary on environmental grounds. The Court had subsequently directed state-run NMDC to supply one million tons of iron ore per month to the industry in the region, which hasn’t been fulfilled by the mining giant. JSW Steel is currently forced to operate its plant by procuring iron ore from States such as Orissa, Chattisgarh and Jharkhand, which has increased its operational costs.

Views: We believe this move could sharply push up the prices of steel which, in turn, will make most consumer goods costly as the metal is widely used in most products. Meanwhile, the steel ministry is taking precautionary measure to clear the issue, while we are neutral on the current scenario. Overall the stock is under pressure discounting the above news, and technically we have been advising from 670 -650 levels that the stock has probability to test 480-510 levels if the trend continues. One can also expect a short covering attempt at the current levels as it is in the oversold position. Hence we recommended investors to ``SELL.``

Reliance Capital: The stock is been in frontline news from last couple of weeks stating that RELCAP is looking for strategic partner in general insurance business and also consider selling a 26% stake in AMC unit. Reports also says that the company is in advanced talks to sell stake in its asset management company to Japan`s Nippon Life Insurance and will pursue a banking license which kept the counter in action. Banking is a new growth opportunity wherein Reliance Capital is evaluating the opportunities to enter into the same.

Views: We believe the stock is fairly valued considering the sale of fund unit while new banking license news can keep the counter in action for some more time. Technically the stock trades weak and can test 350 and consolidate at this level before taking fresh move.

Infosys: IT giant Infosys and other counter players were in action on the back of hopes that European leaders will be able to contain the regions debt crisis and make sure that everything is done to stabilise economy and resolve its debt crisis. Indian IT sector has major exposure in US and Infosys has the highest exposure in US while Infosys and other counterpart do have exposure European markets, but this will be insignificant for any downgrades. Hence we are positive on the long term story and cautious on the news flows which keeps counter under pressure.

Views: Technically the stock has tested 2,200 levels many times and which acts as a major support for the counter and hence we advise investor to accumulate the stock near to it support for a medium term target of 2,660.


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