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Market Pulse Nov Issue


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Monthly Newsletter of VCK-- 3i & Sterlite technology were my reco, Economy column joint effort

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Market Pulse Nov Issue

  1. 1. My Dear Clients / Friends On the Up Trend By Abhisek & Nikita From VCK, our Endeavour has always been for our Clients to take the full advantage of our experience of being in the Stock Global Update: The recession is officially over, with USA Market over the years. An experience cannot and should not be restricted to ourselves, but, requires to be shared by us with all logging a 3.5% growth in Jul-Sep 09 quarter. The World out- of you. It is because in everybody’s life, good investing means “Profit is the Answer” and that is what we always strive for. put, as per IMF estimates, has expanded by 3% in the second quarter (quarter-on-quarter, annualized) IMF has also reduced In our earlier communications, which use to come out bi-monthly, my commentary on the market was more or less in line with what happened. My Endeavour is not to be scrip specific in my letter to you, but, to give you an overall view of the market which will give you the guideline on how to act. The same guidelines is also applicable to my dealers, who accordingly advise Projected GDP growth (%) our Clients. Country/Region 2009 2010 To be more specific, in my commentary, I felt that “News and Views” is a more generalistic name, but what we seriously in- US -2.7 1.5 tend to talk and the best name, which came to my mind, if we have to talk about the market, is “Pulse” and that is the culmina- UK -4.4 0.9 tion of over 60 years of our being in the Stock Market, hence the name is “Market Pulse”. Euro Area -4.2 0.3 Friends, I’ll earnestly try to put in the best of ourselves in reading the market and also would like to welcome all of your sug- Japan -5.4 1.7 gestions to improve the “VCK Market Pulse” to a point that you can also feel it to be a part of yourself. China 8.5 9 With kind personal regards India 5.4 6.4 World -1.1 3.1 Source: World Eco Outlook, IMF, October the projected rate of economic contraction for 2009 from 1.4% Hemal Kampani made in July to 1.1 in Oct 09. Given above are IMF projections for GDP growth rates of various countries in 2009 and 2010. However on the negative side, unemployment rate is expected to increase further to 10% in both US and Euro area. Hence the easy money policy with various economic stimulus packages NIFTY: The Party to Continue By Dibyendu Ghosh Hazra would continue across the world. India: India despite falling ex- ports and the worst drought since 1972, is showing strength. Per- formance of the industrial sector has improved markedly in recent months. Both domestic and ex- ternal financing conditions are on the uptrend. Liquidity conditions have remained easy and inter- est rates have softened in the money and credit markets. The Indian economy posted a growth of 6.1 per cent for Q1 of 2009-10. This is higher than the expansion of 5.8 per cent in Q4 of 2008-09, but lower than the expansion of 7.8 per cent in the corresponding first quarter of 2008-09. The Reserve Bank has revised the growth outlook from 6.5 per cent to 6.0 per cent in 2009-10. The RBI has maintained it policy rates for now, but has sig- naled the end of east money regime, as the inflation has started to run up. Interestingly the rest of the world is still grappling with a deflationary scenario compared to India where high food prices are leading to an inflationary situation. The Recovery Begins "The economy is recovering, great. But we have to remain cautious ... and not give the impression that the crisis is Nifty after a severe correction in 2008-2009, rebounded from 2550 levels on closing basis behind us,.." and created a classical bullish pattern. It broke out its major resistance area of 4550 levels - Dominique Strauss-Khan IMF Managing Director. on 4th attempt and successfully maintained above that. This indicates a major upmove on cards which we will try to elaborate here. “ We simply attempt to be fearful when others are Nifty had created a classical Inverted Head & Shoulder pattern in long term chart as greedy and greedy when oth- shown in the above figure. After completion of the pattern it had successfully broken out the upside resistance line (the blue ers are fearful.” -Warren Buf- coloured neckline) at 4550 levels. According to the classical Dow theory if an inverted head and shoulder pattern breaks its fet, Investment Guru upside neckline with high volume ,normally it goes the same distance between neckline and the lowest bottom above the neck- line level. “China and India, Brazil and Indonesia will replace US. Over a period of time, this is As nifty made a closing basis bottom of 2600 and then broke out the neckline level of 4550 hence we can set a target of 1900 going to be Asia’s century.” points above neckline which is equal to 6400 levels by March 2010. - Rakesh Jhunjhunwal, Partner, Rare Enterprises If we take this as the long term view on Nifty then all dips /corrections in Nifty can be taken as an opportunity to re-enter the ‘‘I think in India we are in a recovery phase. Europe and market. US will take longer,'' - Ratan Tata, Chairman Tata Group Page :- 1 :-
  2. 2. Stocks to Stock Up 3i Infotech (BUY, Target 95 ) — 3i Infotech has three different kinds of offerings — software products, regular IT services and transaction processing. IT products contribute 32% of the revenues, while services and transaction processing contribute 31% and 37% respectively. We believe the key differentiator in the case of 3i is that their product portfolio is supported by a layer of service offerings which enable them to capture a larger wallet share of their clients. 3i is sitting on a Rs 479.3 Crs of cash which we believe can be used to pay some of the 825 Crs other debt (which has the highest interest cost and mostly short term in nature). This we believe has a positive impact on the bot- tomline and can act as a trigger in quarters to come. The stock is currently trading at a PE 4.4x based on the FY10 expected financials. Sterlite Technologies Ltd (BUY, Target 370 ) — Sterlite Technologies is among the top three power conductor producers and among the top ten op- tic fiber manufacturers in the world. STL is going for a significant capacity expansion across both its verticals over the next couple of years to capture the growing broadband market & huge opportunity in the power T&D sector. The legacy, optic fiber business is seeing an incremental demand from China & India, with the global demand reaching an all time high of 126 mn kms in FY09. This demand has come on the back of increasing global demand for bandwidth. With capacity expansion and focus on ‘Debottlenecking’ at current facilities we expect a top line CAGR growth of 23% and CAGR earnings growth of 37% between FY08-11. We maintain our target price keeping in mind the margin pressure STL would have in coming quarters for higher raw-material cost and recent rupee appreciation. Nonetheless, we are still confi- dent of STL’s volume growth on the back of increased capex plan for fiber optic cables by the telecom companies and huge demand for the power conductors from its main client PGCIL. The stock is currently trading at a PE 8.11x based on the FY’10 expected financials. Welspun Gujarat (BUY, Target 345 ) — In the pipe space Welspun Gujarat is best poised to gain from opportunities arising in the oil and gas and water sector. To participate in this op- portunity, Welspun Gujarat is ramping up its production capacity for SAW pipes where the company enjoys an EBITDA/tonne above Rs 10000, which is much higher than it’s peers (Jindal SAW: Rs 8500-9000/tonne, PSL: Rs 6800-7500/tonne, Man Industries: Rs 4800-5500/tonne). It is augmenting production capacity by 40% over the next 15 months, which would take its production capacity to 2.1 mtpa. Secondly, with more than 50 accreditations from major oil and gas companies, Welspun’s current order book stands at Rs 78 bn and in Q2FY10 alone, Welspun received orders worth Rs 38 bn from domestic and international oil and gas majors. Thirdly, Welspun has set up capacity for1.5 mtpa for plate mills, which will enable the company to source high cost plates used for LSAW internally. We expect plate mill will be one of the key triggers to boost EBITDA margin. Fourthly, over the last few years with its niche products Welspun has moved up the value chain and there are no competitors in the Indian market for 70-75% of its total order book. Hence, we are bullish on the growth prospects of Welspun driven by steady order flow and timely execution. We recommend a buy with a target price of Rs 345 (for 12 months, potential upside 30%) based on 1Yr forward PE of 13x. Gujarat NRE Coke (BUY, Target 75 ) — Coke prices are showing the signs of revival and we believe that Gujarat NRE Coke is the best stock to invest to take the advantage of the up- turn in the coking coal cycle. Gujarat NRE minerals Ltd, the Australian subsidiary of Gujarat NRE coke is in the final stage of commissioning long wall panel at NRE Wongailli hard cok- ing coal mines near New South Wales. It is also expected that after the successful implementation of this unique technology the cost of mining will be lowered by almost 30%. Gujarat NRE Coke is planning to introduce longwall panel at Gujarat NRE No.1 coal mine at New South Wales in 2012, which has an estimated reserve of 300mt hard coking coal. This will increase the production at this mine to 3 mt/ annum from the current level of 670000 tonnes/annum. The company is also planning to increase its coke making capacity to 4 mt/ annum in the next three to five years, from the current level of 1.2 mt. We strongly believe that all these initiatives coupled with steady coking coal prices in the international front will help Gujarat NRE Coke to post better numbers in the quarters ahead and recommend the stock to BUY at the current level with a target price of Rs 75 with a short to mid-term perspective of two- three quarters. Dishman Pharmaceuticals (BUY, Target 265 ) — In Q2FY10 Dishman has reported a net profit of Rs 23.98 crore versus Rs 2.8 crore in the corresponding period last year. But mainly on account of dismal performance from the Carbogen Amics during the quarter Dishman’s consolidated revenue has declined by nearly 12% to Rs 223.2 crore. But operating profit margin grew at 24.91% versus 8.76%. The company is expecting to post Rs 250 crore on a standalone basis in the coming two quarters. We expect that Solvay will definitely contribute around Rs 100 crore in the second half and marketable molecules will add another Rs 50 crore. In API space the company is also looking for prospective partnership with pharma giants like Abbott. The company has a strong dispatch pipeline of contract research projects from the companies like Astrazeneca, Novartis, Solvay and Johnson & Johnson. All these initiatives will definitely lead to a surge in Dishman’s valuation in the quarters ahead and in the light of expected improvement in order flows from the MNCs we recommend the stock to buy at the current level with a target price of Rs 265 (based on 11x FY11E). Biocon (BUY, Target 310 ) — We recommended the stock at a CMP of Rs 210 with a target price of Rs 270. It has already achieved our target price and we strongly believe that some upside is still left in the stock. Biocon’s overall performance for the Q2FY10 was in line with our expectation and we reckon that that P/BV multiple of 3.25 can be assigned to FY11(E) book value per share of 99.53.Thus on an P/BV basis we arrive at a target price of Rs 323. And P/E(x) 19 can be assigned to the FY11(E) EPS of Rs16.21.This results in a target price of Rs 307.We prefer to take the average of both the above and arrive at a target price of Rs 310. In the light of steady domestic growth and taking into account the recently introduced drugs, agree- ment with Amylin and IDL, better performance from the Contract Research segment as well as the continued strong uptake of BioMab and other Biopharmaceuticals, we reiterate our buy rat- ings on the stock with mid-long term perspective with a target price of Rs 310. Ranbaxy (BUY, Target 445 ) — Ranbaxy is slowly but surely in the recovery path. The worst seems to be over for the Ranbaxy Laboratories. Though still uncertainties remain regarding the clearance of Dewas and Paonta Sahib Lab, management is quite optimistic about the clearance and USFDA’s acceptance for the re-inspection of Dewas Lab also supports the same. The Dewas facility is expected to receive FDA clearance by November’09. This facility contributes around 20-25% of the total US sales. Though regaining market share in US will be difficult one for the company, management expects that the clearance of Dewas will lead to an incremental sales of around USD 30-35 million in the short run. But the future of Paonta Sahib still re- mains gloomy and management is expecting the clearance not before the end of CY10. We recommend the stock to buy at current level with a target price of Rs 445. South Indian Bank (BUY, Target 193 ) — South Indian Bank one of the oldest Kerela based banks is clocking robust loan growth accompanied with improving margins which are much better than the industry. The bank has a distinct cost advantage compared to its peers due to CASA base of 24% and high NRI deposit proportion of about 20%. Re-pricing of bulk deposits and loans is leading to higher margins. On the operational side, SIB is planning for aggressive branch and ATM expansion of 40% over the next 4 years to improve its Pan-India coverage. We expect the bank’s NII and profits to grow at a CAGR of 30% and 38% between FY09 and FY11. We find the bank attractive at current valuations and recommend a BUY with a one year tar- get of Rs193. Dhanalakshmi Bank (BUY, Target 200 ) — Dhanalakshmi Bank has clocked very strong credit -deposit growth in H1FY10, at 59% and 23% respectively. However this growth was lopsided in H1 with corporate loans contributing to majority of this growth, and thus leading to fall in NIMs. We expect the margins to improve once proportion of high yielding retail loans in the portfolio goes up alongwith CASA deposits over the next 4 quarters and as new branches start contributing positively. The bank is adding 66 branches in FY10 and plans to add 125 in FY11. We remain bullish on the stock, and maintain our BUY recommendation with a price target of Rs200 (2x FY11 ABV) McNally Bharat (BUY, Target 250 ) — McNally Bharat Engineering Company one of the leading Engineering Companies of India, is see- ing strong traction in order book and topline. The company has consolidated order book of over Rs3100cr which is 2.8xFY09 turnover with margins around 9%. Mcnally’s subsidiary McNally Sayaji is doing very well, post the re-structuring and is expected to grow at 30% CAGR for the next few years. McNally Bharat has recently bought CMT (coal t& mineral technology) of KHD Humboldt Wedag International with business based in Germany, India South Africa, Russia and China. With this acquisition McNally, shall increase its presence considerably in Coal washery business in India and abroad. The company is expected to grow at a CAGR of 30% for the next four years to clock a turnover of Rs5000cr in FY13. We recommend a Buy with a target of Rs250. Punj Lloyd (BUY, Target 255 ) — Punj Lloyd has reported a dip in PAT to the extent of 64% on YoY basis mainly because of cost overrun Simon Carves is incurring in one of its bio-ethanol project with its client Ensus. Revenue has gone down by 2% on a YoY basis along with registering a decent orderbook position at Rs. 26808 crs. We maintained a buy rating on the company with our SOTP based target price of Rs. 255. We have valued their consolidated business along with Simon Carves and Sembawang at Rs. 220 with a PEx of 20 and 14 to its FY10 (E) and FY11(E) earnings as per our estimates. Along with this we believe ~20% stake is Pipavav Shipyard is expected to contribute Rs. 35-40 (at a discount to its cmp) to the overall valuation of the company. We recommend our investors to accumulate the stock at any dips with an invest- ment horizon of six months. We remain bullish on the long term prospects of the company. IVRCL (BUY, Target 410 ) — The company is mainly into executing infrastructure projects including water and environment, roads and Power. Despite any positive signs on margin expansion in the 2nd half of FY10 we believe management guidance of 9.75% at ebidta level will be sustainable and our bullish call is mostly based on the huge orderbook the company is having and visible revenue growth. We believe the restructuring initiatives recently taken by the company will also help it to undertake and execute projects in the BOT space. We are also bullish upon prospects of HDOL in the years to come. However the concern still remains on its realestate subsidiary IVR Prime side. We recommend a buy rating on the stock however, re- duced our target price to Rs. 410 vs our last recommended price of Rs. 410 mainly due to our concerns on IVR Prime and value attributable from this subsidiary. Tata Power (BUY, Target 1450 ) — The company operates in the area of generation, transmission and distribution of power and is also currently executing the Mundra UMPP of 4000 Mw. The company is having significant expansion plans both in generation and distribution space. Mumbai distribution area is also showing good prospects with customer switchover happening in both industrial and retail space. Merchant power business is also adding significant value to the bottom line of the company with average realization of Rs. 5.5 – 6. We remain positive on this company in the power space and recommend a ‘hold’ rating on the stock with a target price of Rs. 1450. Investors can consider accumulating the stock at lower levels also. GVK Power (BUY, Target NA ) — The company is having development assets in roads, airport and power segment. We are very bullish upon their power business with secured flow of gas from KG basin. Along with this merchant sale from its power plants are also expected to contribute significantly to its bottom line. Revival in airport business is also bringing visibility in the topline of the company. We recommend a ‘buy’ rating on the company and categorize the stock as an ideal structural investment buy. We have not assigned any target price to the stock and it is under review. Continued at Page : 4 Page :- 2 :-
  3. 3. Levels to Fish in By Dibyendu Ghosh Hazra Attached are some stocks which are in uptrend. The basic strategy behind these stocks is to It has been heard , that: enter on corrections. Hence we are giving some low risk entry points for these stocks. We have given two entry points and a specific level below which the stocks will became bearish. - Ambani Brothers are look- Readers are requested to follow those levels to go long. ing to settle issues. The deal is reported to be brokered by Sl.No Stocks Trend Mode Entry 1 Entry 2 Remarks several big investment bank- 1 LIC HOUSNG UP BUY ON DIPS 705 680 BEARISH <680 ers of Mumbai. It is rumored 2 NTPC UP BUY ON DIPS 209 198 BEARISH <195 that the settlement would involve payout of USD3.6bn 3 ACC UP BUY ON DIPS 800 769 BEARISH<755 cash, some amount of equity 4 AXIS BANK UP BUY ON DIPS 970 940 BEARISH <935 swap and assets transfer too. 5 BOB UP BUY ON DIPS 465 445 BEARISH <440 - JP Morgan’s fund JF look- 6 BIOCON UP BUY ON DIPS 251 245 BEARISH<237 ing at buying stake in Mahin- 7 CAIRN UP BUY ON DIPS 258 251 BEARISH<249 dra Satyam post L&T’s exit. 8 CANARA BANK UP BUY ON DIPS 288 277 BEARISH<275 Reportedly Rakesh Jhun- jhunwala is also buying stake 9 CUMMINS (I) UP BUY ON DIPS 350 332 BEARISH<330 in the company. 10 GAIL UP BUY ON DIPS 354 348 BEARISH<345 11 GMR INFRA UP BUY ON DIPS 66 61 BEARISH<55 - Sensex will reach all time high by year end and com- 12 HDFC BANK UP BUY ON DIPS 1590 1560 BEARISH<1500 plete the biggest turn around Bull vs Bear: Will markets 13 HINDALCO UP BUY ON DIPS 119 115 BEARISH<108 in history. touch a new high in next 3 14 IDBI UP BUY ON DIPS 122 118 BEARISH<109 months? - Extended working hours 15 IDFC UP BUY ON DIPS 150 143 BEARISH<140 for the market to be imple- SMS your CLN YES or 16 INFOSYS UP BUY ON DIPS 2150 2050 BEARISH <2000 mented from December. CLN NO to 9831151909, 17 ITC UP BUY ON DIPS 227 220 BEARISH<220 and get a chance to WIN an assured gift. 18 JP ASSOCIATE UP BUY ON DIPS 237 231 BEARISH<227 19 L&T UP BUY ON DIPS 1625 1590 BEARISH<1540 20 ONGC UP BUY ON DIPS 1160 1130 BEARISH <1120 21 RANBAXY UP BUY ON DIPS 398 378 BEARISH<320 22 SESA GOA UP BUY ON DIPS 320 290 BEARISH<284 23 SIEMENS UP BUY ON DIPS 530 505 BEARISH<475 24 SBI UP BUY ON DIPS 2099 2040 BEARISH<1970 MF Industry hit record High By Amit Basu. 25 TATA MOTORS UP BUY ON DIPS 540 515 BEARISH<475 26 TISCO UP BUY ON DIPS 480 460 BEARISH<455 The industry’s average AUM grew by Rs19,391 crore, or 2.61%, in October which analysts believe was mainly on the back of in- creased inflows in fixed income plans Move Over Big Brother By Manish Bothra. Assets of the mutual fund industry have touched an all time high of Rs7.62 trillion, while country’s largest fund house Reliance MF witnessed a decline of over Rs1,400 crore in its average assets un- The unemployment rate in the US soared to a 26-year high of 10.2% in October, which economist predicted at the very der management (AUM) at the end of October. starting of US recession more than an year ago that double digit unemployment rate is going to happen. Although the The industry’s average AUM grew by Rs19,391 crore, or 2.61%, in double digit rate was expected in the upcoming November-December data, but it came a bit earlier and our focus directly October which analysts believe was mainly on the back of in- got shifted to the US indices as how they will fare after this disappointing data. Whether, they will be able to survive this creased inflows in fixed income plans. jolt. It was heartening to see that after initial little gap down Dowjones, Nasdaq & S&P all managed to close in the green last Friday. The combined average AUM of the 36 fund houses hit the historic Rs7,62,301.82 crore mark at the end of October, the data by Asso- We have seen worse kind of market condition in the recent times. And when things gets on the roll to go towards the ciation of Mutual Funds in India (AMFI) showed. better we get the last of the worst results before finally things turn around. “Fund houses have witnessed a decline in the assets of their equity Lets talk about some indices portfolio. But inflows into fixed income schemes have helped the Dowjones Transportation Average is also one of the key indices of US market, but many of us do not track it. Its a key industry to record a growth in their assets,” Taurus MF managing economy indicator of the US economy. Its also performing well and still on an uptrend. director R K Gupta said. The CBOE Volatility index also trading in the range of 20-30 right now. VIX has been considered by many to be the Reliance MF maintained its position as the country’s largest fund world's premier barometer of investor sentiment and market volatility. VIX values greater than 30 are generally associ- house despite a decline of Rs1,469.51 crore in its AUM during the ated with a large amount of volatility as a result of investor fear or uncertainty, while values below 20 generally signal month. At the end of October, the AUM of Reliance MF stood at less volatile times for the market. Rs. 1,16,781.92 crore.“Reliance MF has increased equity exposure than other portfolios. Since all the investments in equities need to Dowjones Industrial Average is also on an uptrend and could see levels of upto 10365-10600 as long as it doesn’t go be mark-to-market at the end of the month, the AUM of the fund below 9625 region, which is a very strong support zone. house suffered a decline during October,” Gupta noted. Well, why are we discussing about other foreign markets when we have nothing to do with it??? That is because we are The assets of the country’s second largest fund house HDFC MF still very much dependant on the foreign cues, it’s the FII money inflow of $5-6 billion which took sensex from 8k to inched closer to the Rs1 trillion mark with an addition of Rs. 2,888 17k. In nutshell we can say that we having Breakfast with the Asian Market, Lunch with the Indian market, Tea with the crore during October. European market and Dinner with the US market. So how to make money in this volatile market….All you need is highly greedy people around you to make money. Only What's a mutual fund SIP? one or two of them are going to make the big money out of the every hundred of greedy investors. A smart investor re- joices every moment of stock market irrespective of Ups and Downs. Periodic investment into Mutual Funds is referred to as a SIP. That means that, every month, you commit to investing, say, Rs 1,000 in With the recent correction 3 levels of Nifty comes in mind and these are 4500-4700, 4700-4900 & 4900-5200 and as your fund. At the end of a year, you would have invested Rs 12,000 long Nifty does not go below the 4573-4529 the uptrend is likely to continue. in your fund. The world is looking at us...US n Europe had there bigger problems...which ultimately created a mess all around the world. But its well known that if they are fine, we all will be fine also. The economic engine which was out of fuel sud- Let's say the NAV on the day you invest in the first month is Rs 20; denly started Its the FII inflow which started in March 2009....few billion dollar of inflow...and you will get 50 units. The next month, the NAV is Rs 25. You will sensex got doubled....the sentiments and confidence got better...that is what is very important for any market to survive. get 40 units. The clear mandate for the Congress government was also a positive sign for further upward movement. The following month, the NAV is Rs 18. You will get 55.56 units. And why everyone looking at India n china?? Its because here we have the consumption growth story by which it can bail out countries out of recession. Ultimately someone has to bail out somebody. So for this reason if we get a Premium, So, after three months, you would have 145.56 units. On an aver- which is good only. age, you would have paid around Rs 21 per unit. This is because, I have a concern on the rising prices of essential commodities….I believe any economy which is growing should have a when the NAV is high, definite control on the rising prices of eatables items which is currently rising like anything. Its going to take the inflation you get fewer units per to a much higher level, which somehow will be disturbing in nature. As of now many of us not complaining for the same Rs 1,000. When the NAV as money is flowing like anything into the system and people having enough to spend, but not everyone is lucky enough falls, you get more units so am expecting some sort of strict regulations or measures from the govt. on part of commodities in order to control the per Rs 1,000. rise in prices. Page :- 3 :-
  4. 4. BUY/ DATE STOCK NATURE MP STP TARGET REMARK Q: I have invested in the post SELL 8.10.09 ADHUNIK METALIKS BUY INTRA DAY 110.5 107.5 116 TARGET ACHIEVED office monthly income scheme 8.10.09 ASHOK LEYLAND BUY INTRA DAY 39.9 39 43 EXIT AT 41.70 (MIS) for a monthly income. 8.10.09 ICSA BUY BTST 202 199 211 TARGET ACHIEVED Can monthly income plans 8.10.09 KFA BUY BTST 59.2 57 63 CALL LOST (MIP) in mutual funds give me In the month of Oc- 9.10.09 PUNJ LLOYD BUY INTRA DAY 276 272 283 SL TRIGGERED tober we recom- higher guaranteed returns 9.10.09 SESA GOA BUY INTRA DAY 285 278 293 TARGET ACHIEVED mended the following than the MIS along with 9.10.09 INFOSYS BUY INTRA DAY 2205 2190 2230 SL TRIGGERED scripts through fun- capital appreciation? damental and techni- 9.10.09 RIL BUY BTST 2110 2090 2155 TARGET ACHIEVED cal research. The few 9.10.09 GUJ ALKALI BUY BTST 125 121 131 TARGET ACHIEVED - Suchit , Kolkata VCK: Do not invest in MIPs if a of the calls provided 12.10.09 BALRAMPUR CHINI BUY POSITIONAL 129 125.5 134 TARGET ACHIEVED has been given for 12.10.09 DISH TV BUY POSITIONAL 46 45.5 48 TARGET ACHIEVED guaranteed income is your priority. your reference. 12.10.09 RELCAP BUY BTST 946 938 965 TARGET ACHIEVED MIPs will invest about 10 – 20 per 13.10.09 ICSA BUY BTST 203 199.5 210 TARGET ACHIEVED cent of their portfolios in equities, 13.10.09 RCOM BUY POSITIONAL 241 237.5 251 SL TRIGGERED TOTAL CALLS 32 and are like conservatively 13.10.09 RELCAP BUY INTRA DAY 944 935 965 SL TRIGGERED BULL'S EYE 17 positioned funds. Despite a 13.10.09 ASHOK LEYLAND BUY BTST 42 41.25 44.3 TARGET ACHIEVED MISSED 8 portfolio primarily in fixed income 13.10.09 ACC BUY BTST 786 778 805 TARGET ACHIEVED HIGH SCORE 4 instruments, there may be 14.10.09 REC LTD BUY INTRA DAY 207 203.5 214 TARGET ACHIEVED STILL OPEN 2 15.10.09 CIPLA BUY POSITIONAL 294 290.5 302 TARGET ACHIEVED intermittent declines in the value of CALL LOST 1 15.10.09 UNITECH BUY BTST 103 101.5 106 EXIT AT 105 their investments. STRIKE RATE 71.875 15.10.09 ICSA BUY BTST 216 210.5 227 HIGH OF 225 Their equity portion helps them 16.10.09 GE SHPPING BUY INTRA DAY 286 282 294 TARGET ACHIEVED better the performance of pure debt Index: 16.10.09 PARSVNATH BUY INTRA DAY 131 128.5 137 TARGET ACHIEVED funds in rising equity markets. In a 16.10.09 ACC BUY INTRA DAY 786 781 802 EXIT AT 784 time frame of more than 3 years, MP—Market Price on the 16.10.09 BHARAT FORGE BUY INTRA DAY 289 284.9 299 SL TRIGGERED day of the call they can give you better returns STP— Stop Loss Price 20.10.09 APIL BUY INTRA DAY 575 570 586 TARGET ACHIEVED than other debt investments and Call Lost — No substan- 20.10.09 3I INFO BUY POSITIONAL 95 92.9 100 OPEN tial movement in the stock 20.10.09 NOIDA TOLL BRIDGE BUY POSITIONAL 45 43 48` SL TRIGGERED help beat inflation in a relatively BTST—Buy today Sell 21.10.09 HAVELLS BUY INTRA DAY 337 331 348 TARGET ACHIEVED stable manner. Tomorrow Intraday— Buy & Sell on 21.10.09 FED BANK BUY INTRA DAY 263 259.5 275 SL TRIGGERED the same day 21.10.09 GATI BUY POSITIONAL 62 60 68 OPEN SL— Stop Loss 21.10.09 JP ASSOCIATE BUY INTRA DAY 256.5 256 263 SL TRIGGERED Mail Queries: Stocks to Stock Up Continued from Pg.2 VCK PUBLISING TEAM Patel Engineering (BUY, Target 510 ) — The company is into EPC business and having technical expertise to execute projects in the hydropower segment. It is also having subsidiaries in US executing projects in dam construction. They are Editor-in-Chief also venturing into power business with possibilities of coal mine acquisition in Indonesia. The real estate business of the Hemal Kampani company is also some revival with huge land bank in the books of the company. We recommend a ‘buy’ on dips in the stock Editor with a target price of Rs. 510 based on SOTP valuation. With more visibility in the coming quarters we believe it to be an Samir Kothari ideal long term investment stock. Senior Sub-Editor Crompton Greaves (BUY, Target 415 ) — The company is into capital goods segment with power equipments being the leading products of the Varun Singh company. Industrial segment capex in India is expected to go up leading to double digit growth for this segment. The company is also expected to sus- Art Director tain the margins driven by better engineering and design capabilities that reduce consumption usage and also better material management through global Evolve Communication sourcing rather local sourcing. The management is also confident of sustained topline growth on the back of increased competition from global peers like Dongfang of China. Listing of Avantha power and value unlocking of the company’s stake could be the key trigger for the stock. We recommend a buy on Research Team the stock with a target price of Rs. 415 and an investment horizon of 6-9 months. Investors can consider accumulating the stock at current levels also. Nikita Khilani Ujjal Deb Roy Electrosteel Castings Ltd (BUY, Target NA ) — In the DI pipe segment Electrosteel being the largest manufacturer with integrated coking coal and Dibyendu Hazra iron ore mines will be in the best position to reap up the huge opportunity from the domestic water infrastructure projects and shift in demand from the Debanshu Patra CI to high corrosion resistant, high tensile Ductile Iron (DI) pipes. Due to this steady growth in DI segment Electrosteel has increased its production ca- Abhisek Sasmal pacity by almost 12% in the last year in expense of capacity contraction in the CI segment from 165600 MT in FY08 to 120000 MT in FY09. Secondly, to Ratish Nair insulate itself from the surging iron ore and coking coal prices, ECL is perusing a backward integration programme. The company has been allotted cok- ing coal mine block at Parbatpur and one iron ore mine at Kodolibad. Thirdly, the company is setting up an integrated steel plant with a capacity of 2.2 million tonnes in Bokaro Jharkhand. The plant will produce 1.2 MTPA long product of steel, 0.27 MTPA commercial billets, 0.4 MTPA pig iron & 0.33 MTPA Ductile Iron Pipe and is expected to be operation by H1 FY11. We strongly believe that after effective commissioning, these integrated iron ore and coking coal mines and integrated steel plant (EIL) will be the long term growth drivers for the company and will definitely lead to a surge in Electros- teel’s valuation in the years ahead. We recommend a buy rating on the stock and investors can consider accumulating the stock for investment with a hori- zon if 1 - 1.5 years. We have not assigned any target price to the stock as it is under review and will follow once more visibility comes on its operation side. 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