FIIs sold USD 13 billion worth shares in 2008 as against buying worth USD 17 billion in 2007. In 2009 so far, FIIs have sold another 2.2 billion dollars worth Indian stocks. Hence, the premise that
The premise that long term Equity will generate the highest return is also getting challenged. S&P 500 total returns index has now under-performed long term treasury bonds for 5 year, 10 year & 25 year periods. Even in
Even the premise that one cannot go wrong with blue chip companies is also under scanner. Scripts like Hindalco, Tata Steel and Tata Motors are trading at levels of 1991-1992. In other words, excluding dividend income, investments in these blue-chips have earned zero return in past 17 years. Bottom line is that, in order to make money in stock market, an intelligent investor has to be a smart investor as well as he must book profits regularly. Sleeping over blue chips names and indices may not be the right strategy. Globally, so many events take place that one man's meat is another man's poison and vice-versa.
Weekly Trend (16-03-2009 to 20-03-2009) Volatile and Mix
2500 / 2570-80 / 2605 / 2640 / 2665 [NIFTY SPOT : 2719.25] 2765-80 / 2810 / 2840 / 2900
7850-70 / 8270 / 8310 / 8450 / 8550 [SENSEX : 8756.61] 8950 / 9000 / 9135 / 9240 / 9480
2565 / 2590 / 2650 [NIFTY FUT : 2716.2] 2785 / 2850
3155 / 3395 / 3535 [BANK NIFTY : 3636.05] 3770 / 3900
WEEKLY MARKET OUTLOOK
NIFTY FUTURE
Trend : Volatile
Total OI of NIFTY FUT flat, NIFTY FUT up 4.12% last week. OI of NIFTY 2700 CE is down 19.82%
prices up 82.11% showing profit booking. OI of NIFTY 2800 CE is up 16.59% prices up 85.10%
showing buying. OI of NIFTY 2500 PE is down 16.26% prices down 71.72% showing short covering
We expect NIFTY SPOT to face Resistance near 2740-50 levels,Strong Resistance at 2770-80 levels.
On down side, NIFTY SPOT Support at 2640-50 levels, Strong Support at 2570-80 levels.
SECTOR WATCH
AUTO
Trend : Bullish
Total OI of ASHOKLEY FUT up 8.62% prices up 11.46%, M&M FUT up 9.33% prices up 8.89%, MARUTI FUT up 4.86% prices up 8.22% and TATAMOTORS FUT up 7.71% prices up 16.35% last week showing long positions build up.
We expect positive move in coming week.
WEEKLY NIFTY FUTURE OBSERVATION
Observation:-
->Total OI of NIFTY FUT flat, NIFTY FUT up 4.12% last week.
->Out of NIFTY 50 Stock FUTS, 39 Stock FUTS closed positive, 8 Stock FUTs closed negative and 3 Stock FUTS closed flat last week.
->OI of NIFTY 2700 CE is down 19.82% prices up 82.11% showing profit booking. OI of NIFTY 2800 CE is up 16.59% prices up 85.10% showing call buying. OI of NIFTY 2800 CE is 55.54 LK, highest OI in CALLs.
->OI of NIFTY 2500 PE is down 16.26% prices down 71.72% showing short covering. OI of NIFTY 2600 PE is up 29.61% prices down 66.22%, NIFTY 2700 PE is up 34.26% prices down 57.01% last week showing put writing. OI of NIFTY 2500 PE is 85.69 LK, highest OI in PUTs.
->Total OI of MAR series CALLs is down by 15.73 LK to 2.61 CR. MAR series PUTs is up by 39.28 LK to 3.64 CR last week. MAR series NIFTY PCR (OI) at 1.39.
Conclusion :-
NIFTY SPOT will face Resistance near 2740-50 levels, profit booking expected here. NIFTY SPOT Strong Resistance at 2770-80 levels.
Failed to cross 2790 levels, fresh shorts will be initiated.
On down side, NIFTY SPOT Support at 2640-50 levels. Below 2630 levels, next target will be 2570-80 levels. Stock specific action expected next week.
Technical & Fundamental Positional Picks
Buy
Buy ENGINEERS
ELECON ENGINEERING CO. LTD. (RS. 26/-, RS. 2/- F.V.):
This
Although company has a strong order book, yet share price has come down sharply due to fears of slowdown in future. However, company will be least affected by general economic slowdown because, User Industry (of MHE) like power sector, mining sector, continues to witness big investments which will ensure regular inflow of new orders for Elecon. This mid-sized Engineering Company is available at attractive valuations and hence the recommendation:
Financial Performance:(Rs. in Crores)
| | Nine Month Ended | Year Ended | |
| | 31.12.2008 | 31.12.2007 | 31.03.2008 |
| Gross Sales | 723.00 | 562.00 | 927.00 |
| Interest | 32.54 | 18.90 | 27.43 |
| PBT | 60.88 | 64.57 | 98.60 |
| PAT | 40.47 | 44.22 | 67.20 |
| Equity | . | . | 18.57 |
| EPS (Rs.) | . | . | 7.25 |
For Year Ended March 2008, company had reported EPS of Rs. 7.25 and stock is trading at 3.58 x FY08 EPS.
Some of the major orders received by the company are as under:
1. Order worth Rs. 400 Crores from Bramhani Industries Limited for supply of Plant and Equipment for Raw Material Handling System.
2. Order worth Rs. 120 Crores from Mundra Port & Special Economic Zone Ltd., Ahmedabad for supply of Design, Supply, Erection, Testing and commissioning of Material Handling System for West Port, Mundra Project Adani.
3. Order worth Rs. 72.40 Crores from Bharat Heavy Electrical Limited, Commissioning & PG test of Mechanical Equipment for 2X250 MW SIKKA TPS Project.
4. Order worth Rs. 31.24 Crores from Tecpro Systems Limited for supply of equipment for integrated coal handling Plant Unit 3 & $ for 2X300 MW Rosa Thermal Power Project.
5. Order worth Rs. 21.99 Crores from Adani Power Ltd. Mundra Ahmedabad for supply of Erection, Commissioning & Material Handling Systems for Adani Power Ltd. Mundra Project.
Despite fears of industry slowdown, its Order Book as on Dec. '08 has grown by 66%:
Current Market cap of the company is just Rs. 245 crs. and stock is trading at:
1) 3.90 x FY09E EPS.
2) 3.10 X FY10E EPS.
Promoters are increasing their stake through open market purchase at regular intervals which indicates that promoters are hopeful of bright future for the company. In boom times, engineering stocks were having P.E. Ratio of 20 to 40 times which, of course, irrationally is high. However, P.E. Ratio of 3 to 4 for a well established company with proven track record is also irrationally low. Scrip is available so low due to bad market conditions and extreme fears in the minds of the investors. We feel that, worse is almost over for this scrip and it is worth bottom fishing now. There are very strong chances that investments in Elecon can deliver minimum 50% appreciation in 2009. If, markets come in bullish mood, Elecon can deliver even 100% appreciation.
World Indexes , Commodity and Stocks Outlook
Dow Jones
Margin : 0.5%(approxx 33$ at cmp)
Trade Direction : Buy @ 6620 sl 6510
Trade Qty : Buy in multiple of 5
Targets : Start booking at 1st->6850,2nd->7020,3rd->7220,4th->7380,5th->7550
Margin : 0.5%(approxx .37$ at cmp)
Trade Direction : Buy @ 7000 NO SL
Trade Qty : Buy in multiple of 3
Targets : Start booking at 1st->7600,2nd->8000,3rd->8400
Margin : 0.5%(approxx 40$ at cmp)
Trade Direction : Buy @ 3600 sl 3520
Trade Qty : Buy in multiple of 3
Targets : Start booking at 1st->3720,2nd->3840,3rd->3990
Margin : 5%
Trade Direction : Buy @3.75
Targets : 4.8-6.75-8
Margin : 1%
Trade Direction : Short in 2 parts :@ 938 and 952 SL 1014
Targets : 918-902-890-840-760(Sounds unbelievable but true)
1) Ed. Serve Ltd. Rs. 60/-: In few days, scrip has already crashed from Rs. 147/-. It is reliably learnt that operators had taken IPO shares at Rs. 40/-. Huge volumes are taking place but BSE not shifting the scrip to 'T' category. Operators can resort to any trick (breaking the lower circuit, then taking it up) to lure gullible investors and then dump their remaining holding. Hence, investors are advised not to buy this scrip.
2)
3) Winsome Yarn Rs. 8/-: Even though share price looks cheap, sell even now. Company has incurred loss of 10 crs. in Q3 and share price unlikely to go up.
4) Victory Projects Ltd. Rs. 15/-: Its name has been changed to TeleCanor Global Ltd. Some significant developments appear to be under way. Worth buying as downside appears very low.
5) Thermax Ltd. Rs. 150/-, Rs. 2/- F.V.: Despite slowdown, company has reported good results for Q3 with PAT of 72 crs. Last year, its share price had gone upto Rs. 900/-. Company has a strong and diversified basket of engineering products with enviable brand. Management is strong enough to withstand impact of ongoing recession. Investors looking for bottom fishing in Engineering sector can buy Thermax Ltd.
6) Eimco Elecon Rs. 105/-: After Q3, company has reported 83% rise in NP to 2.70 crs. So far, company is managing reasonable growth in its performance and should not be significantly affected by industry slowdown. Once economy takes a 'U' turn, this company can deliver strong results. Share price has almost bottomed out. Due to bad market, share price may not go up immediately but, worth buying for those who are doing bottom fishing of fundamentally sound companies.
7)
8) India Bulls Finance Rs. 87/-, Rs. 2/- F.V.: Company had been showing good profits as it was raising interest-free funds through Equity placement and lending the same at 15% - 20%. Now, company will find it very difficult to get more free funds. Scrip is overpriced. Sell and buy Thermax in its place.
9) Twilight Litaka Pharma Ltd. Rs. 24/-: Q3 profits had come down as company had made provision for forex losses. Now, Q4 should be much better. Company has purchased an unlisted partnership firm. Purchase of this firm will improve its profits in 09-10 by atleast Rs. 5 crs. Further, company has been registered with ESI and, ESI will purchase its entire requirement of 5 medicines from Litaka from 1st April 2009 onwards. Buy more.
10) Hester Bioscience Rs. 79/-: Company is in the business of Chicken Vaccines. 2 years ago, company had come out with Rights Issue to increase its manufacturing capacity 4 times which gave an impression that there is huge demand for company's products. However, its sales continue to languish. It achieved topline of 32 crs. in 07-08. For 9 months ended Dec. '08, sales are just 22 crs. Instead of increasing, sales are decreasing in current year which indicates that company may be barely using its old capacity. We had pointed out earlier also that many promoters raise funds and go for capacity expansion to make money for themselves through overpricing of Plant and Machinery.
11) Modern India Rs. 115/-, Rs. 2/- F.V.: Equity is 7.50 crs. Q3 profit is 1.50 crs. from trading activities. Company has some land in Mumbai and wanted to raise money for developing the same. Hence, share price was being rigged up. Looking at down turn in Real Estate Sector, company not able to raise money. Share price likely to fall steeply. Sell even now as it can be Rs. 40-50 in few months.
12) Victoria Mills Rs. 1100/-: Share price is so high as some investors have a misconception that company has big land bank in Mumbai. However, at present, company is in the business of textiles only. Sell.
13) Taneja Aero Space Rs. 15/-, Rs. 5/- F.V.: Share price had gone upto Rs. 250/- last year. As per reliable sources, company will report superb results for 09-10. A riskfree buy at CMP which may give decent appreciation in next few months.
14) Rolta Ltd. (Rs. 42/-): Looking at the results so far, scrip looks underpriced. However, investors are advised not to buy, as there are doubts about genuineness of profit figures of the company.
15) Edelweiss Securities Ltd. (Rs. 240/-, Rs. 5/- F.V.): There are some talks in the market that promoters have sold some land in Alibagh (held in some other personal names, Benaami) to Edelweiss Securities for a fancy price. It may be another case of looting treasury of listed companies for personal gains. If, such reports are true, share price may tumble sharply. Sell even now.
16) JVL Agro (Rs. 48/-): Share price has come down heavily due to some distress selling although, company is likely to report good results for Q4 also. Full year EPS can be Rs. 48/-. Hold.
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