Flash News For Markets

A NEWSLETTER TO MAKE YOU WEALTHY

HERE‘S A FLASH
Glenmark Pharma. Buy Rs 495.75
Omaxe Buy Rs 302.25
GMR Infrastructure Buy Rs 162.90

TECHNICAL RECOMMENDATIONS
Advani Hotels Buy Rs 70.00
Everest Kanto Sell Rs 291.90
(Closing Prices of 24/01/2008)

Strategies To Ride The Volatility

The market movement that we saw last week is one of the worst movements in the history of Indian stock market. The way the Sensex collapsed from the 20000+ level to just above 15000 sent panic wave among investors across the country. The scenario was worse for the players in F&O, where some investors lost 100 per cent of their investments and in some cases investors had to fork out more money to pay the losses. The situation right now looks so grim that investors are not willing to park fresh money in the market. But this is where most investors make mistakes. This is not the time to panic but face reality. We understand that it is a bit difficult to maintain composure when you have made substantial losses. But the idea is to have a strategy to make good those losses and that can happen only if you think in a mature manner and not in haste. We are outlining a few strategies to play this volatile time. We are of the opinion that the market will not be in a hurry to stage a smart rally in the near future. It will keep giving more than 500 points rise each day only to fall with equal pace the following day.
The scenario that we see is also the function of global volatility as many Asian indices have fallen equally bad in 2008. So this is more of a global phenomenon than something restricted only to
Indian markets. Hence, there will be more surprises; sometimes even unpleasant ones. So expect the worst and be prepared with any of the strategies we have devised to deal with the current market imbroglio.
Strategy One
Do not sell your blue chips in a hurry. Indian fundamental story has not changed yet. India will be the second fastest growing economy in the world after China in 2008 and hence Indian
companies are expected to do well financially. There could be some amount of slowdown in the Indian economy but that will not be big enough to create panic in the market.
Strategy Two
Sell stocks that you bought based on rumors without understanding the fundamentals of companies. These stocks will take their own sweet time to bounce back. It does not make sense to hold them when momentum play will not work in the present market sentiment. In some cases, if you need to book losses please do so and park the proceeds into blue chip stocks. This will allow you to recoup your losses, as blue chip will give you good returns in the longer time horizon. Remember, many of the good scrips have taken a huge beating in the market due to bad market sentiment and that has made their valuations quite attractive.
Strategy Three
Expand your investment horizon. Many investors in recent time thought that one can easily double the money in four to five months. This is unlikely to happen looking at the present scenario. The Sensex in last four months saw major Bull Runs and this kind of Bull Runs are not expected in the near future. So invest for longterm so that you do not get disappointed even if your scrips do not move in the next three to six months from your buy level.
Strategy Four
Resist the temptation to play in the F&O market, as this will ensure that you do not take position beyond your limits. Further,F&O is always for playing short-term. As we are expecting the market to remain volatile in the short-term all stop-losses will trigger in no time. Also, do not play the market for short-term irrespective of how strong is your source in the market.
Strategy Five
Buy in a staggered manner because this market is not going to run away in a hurry. You can make purchases in small lots;maybe divide the same in four installments so that the law of average can work in your favour. For example, if you are planning to invest Rs one lakh, divide the same in four installments of Rs 25000 each.
Strategy Six
Do not look at the stock prices on hourly or daily basis if we do not wish to park fresh funds. Looking at the market movement in such a manner, you may do something that you are not
supposed to do and this could make your life a bit uneasy in the short-term. Just ignore stock market pages in newspapers for a couple of weeks. Even temporarily stop watching TV
channels that cover stock market as this could create panic and you might do something that is not warranted. Remember, the Indian equity market will give you good returns provided you go in a systematic manner. We do not feel that the bear run is here to stay for long. So remain invested in good quality stocks. It is time to face the reality and not to panic. Panic does not pay.

Street Talk
Alive and kicking. There are rumours in the market that there is a possibility of private placement in LIC Housing (BSE code 500253),currently trading at Rs 298.00, in the coming period and hence likely to be in momentum.

RECOMMENDATIONS

Glenmark Pharma. Face Value - Rs 1 Buy Rs 495.75
Ticker: 532296 Equity: Rs 24.39 cr. H/L: Rs 623.9/247.5
􀁺 Glenmark Pharmaceuticals (GPL) looks very attractive atthe moment in the pharma pack considering that the counter has corrected substantially recently. Currently down around 20 per cent to its peak, this scrip can give good upside in the medium term, but the long-term outlook is
anyway better.
􀁺 We expect good unlocking of value in GPL as the company is reorganizing its business. It is separating its generics business into a new 100 per cent wholly subsidiary as Glenmark
Generics Limited by April 2008 with an IPO of the same expected in Q1FY09.
􀁺 Besides, GPL has a robust business model, a reason for the scrip to get re-rated on the bourses a couple of years back. The company has a robust molecule pipeline of around six
Novell Chemical Entity (NCEs) and five biologics at different stages of development. Considering the fact that the company is active on the out-licensing deals and with this pipeline of molecules, there is a good visibility of similar deals taking place in the coming period. Hence, investors
can take advantage of this opportunity for long-term.

Omaxe Face Value - Rs 10 Buy Rs 302.25
Ticker: 532880 Equity: Rs 173.57 crore H/L: Rs 613/195
􀁺 This Delhi based company has more than 3200 acres of land of which 82.50 per cent of land in its own name. The company has experience across areas and has executed projects in
integrated townships, group housing, and retail, commercial properties, hotels IT as well as bio-tech parks and SEZ.
􀁺 One of the attractive IPO offerings from the real estate pack was the Omaxe IPO and no wonder it did get a good response from investors. However, the recent bloodbath on Dalal Street saw this counter correcting sharply from its high of Rs 613 in December 2007 to a low of Rs 224.
However, the scrip has started to recoup from its lows and is currently trading at Rs 302.25, down around 50 per cent from its peak.
􀁺 Thus the valuations have corrected in this scrip and it is time for investors to get into this counter at the current level, where there is a good room for upward movement,
giving investors a chance for better returns in the long-term.

GMR Infrastructure Face Value - Rs 2 Buy Rs 162.90
Ticker: 532754 Equity:Rs 331.07 crore H/L: Rs 268.7/65.43
􀁺 GMR Infrastructure (GMR) appears to be a better counter in the infrastructure pack today as it has a fairly de-risked business model and its revenue streams come from across sectors such as roads, power and airport rather dependent on any single sector.
􀁺 GMR is quite aggressive and has good success ratio in grabbing good projects across sectors, which includes the Delhi and Hyderabad international airports. The focus of the company is more on airport projects, which has immense growth potential in future. This augurs well for GMR and with Hyderabad International Airport to be commissioned in 2008, we will see good amount of revenues for GMR from FY09 onward.
􀁺 Currently, this counter has brushed off from its peak of Rs 268 and it is trading at Rs 162.90. This, we believe, is the perfect time to enter as GMR has the potential to give investors better returns in the long-term.

Street Talk Grow your networth

There is a rumour that a big broking firm is recommending Kotak Bank (BSE code 500247),
currently trading at Rs 1050,to its HNI clients for decent upside in the medium-term.

Technicals

MARKETS TO REMAIN WEAK

The Sensex seems to have created history by collapsing 5975 pts in nine trading sessions while it had taken 92 trading sessions to gain the same amount of ground. The outlook has obviously turned negative for the time being and has declined deeply and sharply beyond any expectations and has breached a plethora of support levels with amazing alacrity indicating that the weakness doesn't seem to be in a mood to go away in a hurry. It has reflected medium term weakness to breach the 16000 level indicating the possibility of further weakness. It will be prudent to stay away from the market till some stability returns.

Trend (Index): Down Last / Index Closing: 17594.07
Support:17494, 17361 /Resistance:17953, 18310
55-WEEK EMA: 16385.18 / 100-WEEK EMA: 14431.31
MACD: SELL MODE / MI: SELL MODE
ROC: SELL MODE / RSI: SELL MODE

ADVANI HOTELS Buy Rs 70.00
1st Target: Rs 96 2nd Target: Rs 102 Stoploss: Rs 64
Advani Hotels bottomed out by posting an intra-day low of Rs 29.65 on 07.03.07, moved upwards for quite a few trading sessions while continuous resistance came in the form of the 36
level (congestion area) and continuous support came in the form of the 125-day EMA. The scrip finally posted an intra-day low of Rs 32.16 on 03.04.07 and these levels have not been seen very
often since then. Advani Hotels commenced a short-term uptrend from here (there was enough clarity on the medium-term front), struggled but overcame the 55-day EMA, posted a series of
progressively higher tops and bottoms, started moving within the confines of an upward sloping channel, almost gave a throwover from this channel and finally peaked at an intra-day high of Rs
66.25 on 03.07.07. The scrip almost gave a downward key reversal from here, couldn't sustain these levels for long, entered a corrective phase, declined to post an intra-day low of Rs 44.83
on 23.08.07, rebounded smartly from here, posted a good but unsustainable rally to post a high of Rs 106 on 20.12.07 only for the scrip to enter a sharp correction. Currently, Advani Hotels
seems to be on the verge of entering a short-term uptrend (could commence a medium-term uptrend), could overcome the 55-day EMA and with the oscillators looking positive indicating the possibility of a further upside from here.

EVEREST KANTO Sell Rs 291.90
1st Target: Rs 230 2nd Target: Rs 218 Stoploss: Rs 330
Ekc peaked by posting an intra-day high of Rs 240.40 on15.05.07, but couldn't sustain these levels for long and finally declined to bottom out by posting an intra-day low of Rs 186 on 13.06.07 where strong support prevented further downside. The scrip finally posted an intra-day low of Rs 188.20 on 10.08.07 and these levels have rarely been seen since. Ekc commenced
a short term downtrend from here (this time around there wasn enough clarity on the medium-term front), struggled but eventually could overcame the 55 -day EMA, posted a
series of progressively higher tops and bottoms, started moving within the confines of an upward sloping channel, almost gave a throwover from this channel and finally peaked by posting an
intra-day high of Rs 370 on 19.11.07. The scrip almost gave a downward key reversal from here, couldn't sustain these levels for long, entered a corrective downmove, declined to post an
intra-day low of Rs 305 on 17.12.07, recovered sharply from here, posted a smart but slightly unsustainable upmove to post a high of Rs 385.35 on 03.01.08. Currently, Ekc is in the midst
of a medium-term downtrend, while it seems to have exhausted its weekly upmove (has comfortably breached the 55-day EMA) and with the mechanical indicators looking negative,
further downside from these levels cannot be ruled out.