News Flash For Weeks Ahead

HERE‘S A FLASH

Grasim Industries Buy Rs 2948.75
Larsen & Toubro Buy Rs 3680.35
India Cements Buy Rs 207.80

TECHNICAL RECOMMENDATIONS

Bihar Tubes Buy Rs 160.00
Northgate Tech Buy Rs 552.05
(Closing Prices of 31/01/2008)

Future Outlook:

Technical Levels
Resistance levels: 5400-5625-5785
Support levels: 4990-4850-4690

Despite the heavy selling in the month ended Jan 2008, Nifty got support at its 200-Daily Moving Average at 4894, closing barely above this level. Nifty is in long term up trend as long as it trades above its 200-DMA which is now at 4940. However, for short term, resistance at 5315-5400 will be crucial for deciding the trend. Volatility is likely to continue till the level of 5400 is
decisively crossed. Profit-booking is likely to continue at higher levels as investors who have
bought at lower levels during the fall, will book profits as good returns will be received in a short
time period. For the month of Feb 2008, if Nifty sustains above 5190 level, then likely target on the upsides is 5400-5625-5785. On the downside, support levels are 4990-4850-4690.

Street Talk
In the orbit With good Q3FY08 results and down by 32 per cent, sources say that there is lot of institutional interest in Orbit Corporation (BSE code: 532837) currently trading at Rs 725.15 . This should keep this counter buzzing.

Recommendation

Grasim Industries Face Value - Rs 10 Buy Rs 2948.75
Ticker: 500300 Equity: Rs 91.69 crore H/L: Rs 4074/1927
􀁺 Grasim Industries looks an attractive counter from a longterm perspective. The company declared its Q3FY08 results where it posted topline growth of 15 per cent to Rs
2629.93 crore (Rs 2279.39 crore), while the bottomline increased 35 per cent to Rs 553.79 crore (Rs 411.58 crore) during the same period.
􀁺 The company's core segments (cement and VSF) are doing quite well and to push this growth further it has envisaged a capex of Rs 10000 crore, of which Rs 9100 crore will be towards increasing its cement manufacturing capacity to 49 million tonnes from 32 million tonnes currently, while the balance will be towards augmenting the VSF capacity.
􀁺 On annualized basis, the company could post topline of Rs 10127 crore, while bottomline could be around Rs 2025 for FY08. At these estimates it gives an EPS of Rs 222,
thereby resulting in to a PE of just 13x, which looks very attractive. Besides, one has to also think about the embedded value in this company due its cross holding in
other Aditya Birla group of companies.

Larsen & Toubro Face Value - Rs 2 Buy Rs 3680.35
Ticker: 500510 Equity: Rs 58.37 crore H/L: Rs 4670/1374.9
􀁺 The company continues to stage fantastic performance quarter on quarter and December quarter was no different as L&T posted a topline growth of 54 per cent to Rs 6461.80 crore over Rs 4199.51 crore posted during the same quarter in the previous year. The bottomline increased 40 per cent to Rs 481.79 crore (Rs 343.90 crore) during the same period.
􀁺 The company's order book as on December 2007 stood at Rs 50000 crore. The order book inflow increased 40 per cent in the engineering and construction division, while
in the electrical and the machineries division it grew by 35 per cent and 45 per cent respectively.
􀁺 In fact, the company management brushed off reports of slowdown in its overall growth and they were quite bullish on the prospects of infrastructure growth in India. The
management said that it would continue with its aggressive capital expenditure even in this year, which augurs well for L&T.

India Cements Face Value - Rs 10 Buy Rs 207.80
Ticker: 530005 Equity:Rs 281.87 crore H/L: Rs 333/145
􀁺 This is one of the counters, since the recent bloodbath on Dalal Street, which is still available at 37 per cent discount to its peak price of Rs 333 it reached in December 2007.
􀁺 The company has come with fantastic results for 9MFY08, where topline grew by 52 per cent to Rs 2576.37 crore (Rs 1694.70 crore) and bottomline growing 72 per cent to Rs 533.10 crore (Rs 309.69 crore) makes it even more attractive for long term.
􀁺 Considering the fact that most of the capacity in the sector is expected to come on stream by the end of FY09, the price of cement is expected to remain firm or even increase further. This
augurs well as it means better realizations for the company.

􀁺 The company continues with its capex and it is now expanding its presence in the northern region with a capacity of 3.5-4 million tonnes, which will cost around Rs 1220 crore. For FY08, we expect India Cements to post an EPS of around Rs 26.42, thereby resulting in a PE of just 7.98x, which looks a grab at current levels.

Technicals

WAIT FOR SOME SUSTAINABLE STABILITY
The Sensex has staged a faltering and beleaguered comeback after taking support on the 55 week EMA and also the 200-day EMA to some extent while the rather low volume has put a question mark on the current ongoings. The outlook has remained slightly negative for the time being and while the near term comeback could be more in the form of a relief rally (read as a pullback) while levels seem to have lost their relevance for the time being while uncertainty doesn't seem to be in a mood to go away in a hurry. It would be prudent to stay away from the market till some sustainable stability returns.

Trend (Index): Down Last Index Closing: 17758.64
Support: 17494, 17361 Resistance: 17953, 18310
55-WEEK EMA: 16460.66 100-WEEK EMA: 14512.09
MACD: SELL MODE RMI: SELL MODE
ROC: SELL MODE RSI: SELL MODE STOCHASTIC: SELL MODE

BIHAR TUBES Buy Rs 160.00
1st Target: Rs 203 2nd Target: Rs 211 Stoploss: Rs 135

Trading Pointers

Indicators: MACD-Buy RMI-Buy Stochastic Buy ROC-Buy

RSI-Buy Support: 135, 085 Resistance: 168, 199

BSE code: 590059 55-day EMA: 167.92

Bihar Tubes bottomed out by posting an intra-day low of Rs 43.50 on 07.03.07, moved upwards for quite a few trading sessions while continuous resistance came in the form of the 61 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 50.10 on 03.04.07 and these levels have not been seen very
often since then. Bihar Tubes 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
162.40 on 13.07.07. 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 123.55
on 22.10.07, rebounded smartly from here, posted a good but unsustainable rally to post a high of Rs 222.50 on 08.01.08 only for the scrip to enter a sharp correction. Currently, Bihar Tubes
seems to be on the verge of entering a short-term uptrend (could commence a short-term uptrend), could overcome the 55-day EMA and with the oscillators looking positive indicating th
possibility of a further upside from here.

NORTHGATE TECH Buy Rs 552.05
1st Target: Rs 584 2nd Target: Rs 603 Stoploss: Rs 510

Trading Pointers
Indicators: MACD-Buy RMI-Sell Stochastic-Buy ROC-Buy RSI-Buy
Support: 510, 467 Resistance: 554, 610
BSE code: 590057 55-day EMA: 549.61

Northgate Tech. peaked by posting an intra-day high of Rs 597.32 on 25.01.07, but couldn't sustain these levels for long and finally declined to bottom out by posting an intra-day low of Rs
436.62 on 05.03.07 where strong support prevented further downside. The scrip finally posted an intra-day low of Rs 491.77 on 27.04.07 and these levels have rarely been seen since. Northgate Tech. 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 822.64 on 05.07.07. 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 495 on 21.11.07, recovered sharply from
here, posted a smart but slightly unsustainable upmove to post a high of Rs 695.80 on 24.12.07. Currently, Northgate Tech. is in process of starting a short-term downtrend, while it seems to have exhausted its weekly downmove (has not yet overcome the 55-day EMA) and with the mechanical indicators looking positive, a further upside from these levels cannot be ruled out.

LEGEND
● EMA: Exponential Moving Average ● MACD: Moving Average Convergence Divergence
● RMI: Relative Momentum Index ● ROC: Rate of Change ● RSI: Relative Strength Index

Street Talk Decent upside

The rumour is that a major broking firm is recommending its clients to buy Madhucon (BSE
code 531497; CMP: Rs 690) as there is an expectation of decent upside in the medium term.