Markets For 28-10-2008

RESULTS - DT.29/10/08:

DIVIS LABS,EICHER MOTOR,JINDAL STAINLES,MATRIX LABS,RASHTRIYA CHANAL,M&M,CAIRN IND,BRITANIA IND,3M INDIA LTD.

Price to book value nos could help you in crisis

What is a good yardstick for an undervalued stocks in times of crisis such as the current one? The answer to that, many market watchers say, is price to book value(P/BV). Book value is the measure that each shareholder stands to get, were the company to be liquidated.

Conventional wisdom suggests that there is very little chance of going wrong if an investor were to put his money in a stock with a P/BV of less than one. Already 21 stocks in the BSE-100 index have seen their price to book value fall below one, as a result of the unprecedented erosion in their stock prices.

Stocks that fall into this category include PSU oil marketing companies like HPCL and IOC, and metal stocks like Tata Steel, Hindalco and JSW Steel.

In the case of oil marketing companies, the recent softening of crude oil prices has not helped much. For one, they are still holding inventory purchased at very high prices. Also, these companies also have refining divisions, which are the major contributors to their profitability. Gross refining margins have fallen sharply in line with the slide in regional refining margins, and is likely to weigh on earnings.

In the case of metal stocks, investors are concerned that a global economic slowdown over the next few quarters could adversely hit demand for commodities in general.

Similarly, investor concerns for the growth prospects of the real estate, cement and construction sector over the medium term has resulted in scrips like Grasim Industries and IVRCL Infrastructure & Projects quoting at a price to book value of less than one. At Monday’s close of 4343.2, the broader BSE-100 index trades at a P/BV of 2.06 times.

Says Ramdeo Aggrawal, managing director, Motilal Oswal Financial Services, “Investors would need to look at the fundamentals of each sector over the medium term where stocks are trading at a price to book value of less than one, and decide if there are growth possibilities at the current stock prices.”

Adds Anuj Choksey, co-head, institutional equities, KR Choksey Shares and Securities, “Valuations of metals shares and those connected to the construction sector are trading at ridiculously low levels as investors are assigning pessimistic valuations at the first signs of a slowdown.”

Meanwhile, the Sensex went below 8,000 intra-day on Monday, as there was no let-up in the selling fury that has gripped Dalal Street over the last couple of weeks. This has been a hallmark of emerging markets in general. So how does India compare with them? At Monday's close, the Sensex is trading about 9.5 times trailing 12-month earnings.

In contrast, other indices like the Shanghai Composite Index ended at 1,723 on Monday trade at a P/E of 13.35 times, while the Brazilian Bovespa at Friday's close of 31,481 is trading about 7.5 times. Of course, the Russian stock market index, the Russian RTS Index which has lost nearly 70% since its peak over the last few weeks, trades at an abysmal P/E of 3 times.

source:-www.economictimes.com

MKT COMMENTS

NIFTY FUT OI (both series) up with increasing volumes indicating short covering in current series, and forming of long positions in next series.

We expect NIFTY FUT to trade positive with high volatility.

State Bank, Infosys, Oracle Financial Software, Biocon are good buys on decline for long-term investment.

Even in the current sentiment, Info Edge India & Educomp are trading at very high valuations. Sooner than later both will witness aggressive selling from the FIIs.Promoters of Man Industries are constantly buying shares from the open market. The scrip seems to have bottomed out and may shoot up sharply in the near future. Keep a close watch.
Diamond Power seems to be much confident and least bothered about the anticipated slowdown in power. It is moving ahead full throttle with its expansion plans. Accumulate at sharp declines.

US markets were volatile yesterday.
Europe is trading mixed DAX is having a good time around.
Asia had a good day. Heng Seng is up more than 12%.

MARKET VIEW ON 28TH OCT. 2008

MKT SHUD OPEN GAP UP ON BACK OF HUGE UPSURGE IN ASIAN BOURSES.

MKTS ARE LOWER LEVELS PLS DONT AWAY FROM MKTS.TODAY MKT LIKELY OPEN OVER 3% TO 4% UP

NIFTY

Supports : 2485/2425/2325/2375/2310/2290/2120/2095

Resistance : 2560/2610/2660/2735/2785/2815

SENSEX

SUPPORT : 8700-8345-8045-7890-7275

RESISTENCE : 9360-8980-8935-8825-8675-9200

For today trading in nse nifty October future trend level exists at 2490-2550 levels.

On Tuesday & Wednesday if Nifty Future trade above the level of 2515 then it can go up to the level of 2590/2660/2715/2790/3145( Sl : Below 2500) but if Nifty Future go to break the level of 2485 & after this 2440//2410/2380/2305 then it can go below the level of 2280/2085/1735( Sl : Above 2500 ) . Monday’s lower level of Sensex 7697.39 & Nifty 2252.75 will be the very crucial, after break these levels more fall will be in the market.

Stock to watch for are :

LNT,Unitech,IndiaBulls Realestates,Godrej,HDFC Bank,SBI Bank,Ambuja Cement,Reliance,Satyam,Bhel,GOLDBEES & NIFTYBEES

Intraday

Buy ACC Above @ 415 target 445/470/485.

Buy BAJAJAUTO Above @ 470 Target 490/510/515.

Buy BHARTI Above @ 565 Target 610/655/680.

Buy BHEL Above @ 1090 Target 1145/1210/1235.

Buy CIPLA Above @ 165 Target 175/180/185.

Buy GAIL Above @ 195 target 210/224/235.

Buy GRASIM Above @ 965 Target 1034/1115/1150.

Buy HEROHONDA Above @ 710 Target 730/765/775.

Buy HLL Above @ 215 target 230/250/255.

Buy INFOSYS Above @ 1260 target 1310/1370/1395.

Buy RELIANCE COMMUNICATIONS 203 - 204,Target: 210/215,Sl:190

Buy SUZLON ENERGY 47-48, Target: 50/ 55,Sl: 43

Buy IFCI 17- 17.3,Target:18/19,Sl:15.85

Sell JETAIRWAYS Below @ 140 target 130/110/105.

Sell PATNI Below @135 Target 130/125/120.

Sell SBI Below @ 1035 target 965/870/830.

Sell TATAPOWER Below @ 550 target 525/475/380.

Sell CORPBANK Below @ 185 Target 175/155/150.

Sell ICICIBANK below:310, tgt:306,300 sl:315.

Sell MRPL below:32, tgt:30,29 sl:32.50.

Scrip	Trigger	Price	Stop Loss	Target 1	Target 2
RELINFRA	BUY ABOVE	400.45	396.85	404.45	409.90
	SELL BELOW	392.50	396.05	388.60	383.35
STERLINBIO	BUY ABOVE	158.65	157.20	160.25	162.40
	SELL BELOW	155.50	156.90	153.95	151.85

NIFTY NOV CALL 3200 BUY @ 50-55 TAR - 104 SL-- 23
( 13-14 TRADING SESSIONS)