Monday, 22 October 2007
Nifty settles in the red even as Sensex gains
5:57 pm
The market saw a complete trend reversal today - it bounced back after an initial slump caused by on worries about the US economic outlook. Volatility was high due to alternate bouts of buying and selling. Sustained buying in blue-chip stocks at lower levels and short covering helped the market break its four-day loosing streak. European and Asian markets were trading lower today, 22 October 2007 on worries about the US economic outlook.
The BSE 30-share Sensex was up 84.70 points, or 0.48%, to 17,644.48, as per provisional closing. It opened 300.33 points lower at 17,259.65 and slipped to a low of 17171.45 within minutes after commencement of trade. At the day’s low of 17,171.45, the Sensex had lost 388.53 points for the day. From here it staged a solid rebound. Sensex hit a high of 17,704.83 in the day. At day's high of 17,704.83, Sensex had risen 144.85 points for the day. Sensex oscillated 533.38 points in the day.
However, the broader based S&P CNX Nifty lost 22.70 points, or 0.44%, to 5,192.60, as per provisional closing.
Of the 30 shares of the Sensex, 17 rose while the rest slipped. The market breadth was just about positive on BSE. 1341 scrips advanced as compared to 1314 that declined, while 70 remained unchanged.
The total turnover on BSE amounted to Rs 7486 crore as compared to Rs 6013 crore by 14:30 IST.
India’s largest private sector mortgage financer in terms of net profit Housing Development Finance Corporation (HDFC) vaulted 5.92% to Rs 2540 on 2.25 lakh shares. It was top gainers from Sensex pack.
ICICI Bank, the country’s largest private sector bank in terms of net profit rose 4.74% to Rs 1072.45. Its net profit rose 32.7% to Rs 1002.60 crore on 41% growth in total income to Rs 9588.41 crore in Q2 September 2007 over Q2 September 2006. The results hit the market after trading hours on Friday, 19 October 2007.
North India’s largest cement manufacturer, Ambuja Cements gained 4.48% to Rs 145.85 on 5.44 crore shares after three block deals of 1.57 crore shares each were executed on the counter on BSE in opening trade at an average price of Rs 144.42 per share. It was the top traded counter on BSE with total turnover of Rs 787.18 crore
Mahindra & Mahindra (up 3.96% to Rs 757), ACC (up 3.92% to Rs 1030) and ITC (up 2.35% to Rs 179), were the other gainers from Sensex pack.
Shares from capital goods space made a late comeback. India’s largest power equipment maker in terms of sales, Bharat Heavy Electricals (Bhel) gained 1.48% to Rs 2080. The company informed BSE that due to some unavoidable circumstances, its board meet to consider Q2 September 2007 results scheduled to be held on 25 October 2007 has been postponed to 29 October 2007. Itss day’s low was at Rs 1970
Larsen & Toubro(L&T), the nation's largest engineering and construction company by sales, gained 3.04% to Rs 3115. Its day’s low was at Rs 2912.
Reliance Energy, the country’s second largest power utility company in terms of sales, rose 2.38% to Rs 1370 on 39.97 lakh shares, off its day’s high of Rs 1465. The stock surged sharply from early lows of Rs 1255, on value buying. The stock had plunged 18.52% in past one week to Rs 1333.25 on 19 October 2007.
India’s largest oil exploration company in terms of market capitalisation Oil and Natural Gas Corporation declined 1.38% to Rs 1090. As per reports that its joint venture firm ONGC-Mittal Energy had acquired a 30% participating interest in an exploration block in Turkmenistan. The report did not disclose the deal value.
India’s largest private sector entity by market capitalisation and oil refiner Reliance Industries (RIL) was down 1.98% to Rs 2420.20 on 19.74 lakh shares. It recovered sharply from early lows of Rs 2395. As a part of a restructuring exercise, RIL has reportedly decided to hive off Reliance Fresh into a separate company, Ranger Farm, for single point accountability. Reliance Fresh sells food, fruits and vegetables and consumer products.
IT stocks stayed under selling pressure throughout the day and dominated the list of top losers, on worries about a downturn in the United States, where the firms earn more than half their revenue. India’s fourth largest sofftware services exporter Satyam Computers lost 3.14% to Rs 445.60 on 7.01 lakh shares. It was the top loser from Sensex pack.
TCS (down 2.96% to Rs 1074), Wipro (down 1.31% to Rs 494) and Infosys (down 1.54% to Rs 1878.15), edged lower.
India’s largest listed cellular services provider by sales, Bharti Airtel recovered sharply from its day’ s low of Rs 909 to settle 1.49% lower to Rs 954. The early fall was triggered by on concerns that the launch of nationwide GSM services by rival Reliance Communications would eat into its market share. The stock lost 9.43% in past one week to Rs 968.45 on 19 October 2007.
Reliance Communications was down 0.71% to Rs 722, off its day’s high of Rs 741. Reliance Communications (RCom), on Friday, 19 October 2007, got nod to launch nationwide GSM-based cellular services from Department of Telecom (DoT).
Tata Motors (down 2.27% to Rs 765), and Maruti Suzuki India (down 2.21% to Rs 1050), were the other losers from Sensex pack.
A crucial meeting of the panel set up by the government to look into Left front’s concerns over the Indo-US nuclear deal holds its fifth meeting today, 22 October 2007, with Left front demanding a clear statement that the deal is off.
The Securities and Exchange Board of India chairman, M Damodaran, will hold a video conference with overseas investors today, 22 October 2007, to clarify all issues arising from the draft proposal on participatory notes (PNs) released by the regulator on Tuesday, 16 October 2007.
After trading hours on Tuesday, 16 October 2007, Sebi issued draft proposals wherein the market regulator proposed restriction on use of the popular participatory notes (PNs) route of FII inflow and it also recommended unwinding of some PNs within 18 months. PNs are financial instruments used by foreign investors that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.
European markets opened lower today, 22 October 2007. Key benchmark indices from United Kingdom (down 1.26% to 6,445.50), and Germany (down 1.27% to 7,748.01) declined.
Asian markets were trading weak today, 22 October 2007, in the wake of a sell-off on Wall Street on Friday, 19 October 2007. Hong Kong's Hang Seng (down 3.70% at 28,373.63), Japan's Nikkei (down 2.24% at 16,438.47), Taiwan's Taiwan Weighted (down 2.61% at 9,360.63), Singapore's Straits Times (down 2.81% at 3,642.64) and South Korea's Seoul Composite (down 3.36% at 1,903.81) all edged lower.
US markets tumbled on Friday, 19 October 2007, amid lackluster profit reports and credit concerns on Black Monday Anniversary. The Dow Jones Industrial Average plunged 366.94 points, or 2.64%, to 13,522.02. The Standard & Poor's 500 index fell 39.45 points, or 2.56%, to 1,500.63, and the Nasdaq Composite index dropped 74.15 points, or 2.65%, to 2,725.
India's wholesale price index rose 3.07% in the 12 months to 6 October 2007, lower than the previous week's 3.26% rise, government data released on Friday, 19 October 2007 showed. It was the lowest annual rise in 5 years.
Volatility is expected to remain high for in coming few days ahead of expiry of October 2007 derivatives contracts on Thursday, 25 October 2007.
As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 1750.76 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 186.26 crore on Friday, 19 October 2007.
Crude oil prices fell on Monday, 22 October 2007 on profit taking from record highs, but hovered near $88 on simmering geo-political tensions and a weak dollar. US light crude for November delivery fell 77 cents to $87.83 a barrel. On Friday, 19 October 2007, it touched an all-time high of $90.07. London Brent crude fell 46 cents to $83.33 a barrel.
The BSE 30-share Sensex plunged 438.41 points or 2.44% to 17,559.98, on Friday, 19 October 2007. The broader based S&P CNX Nifty lost 135.70 points or 2.54% at 5,215.30 on that day.
The Sensex settled the week ended 19 October 2007 with a loss of 859 points or 4.7%. The S&P CNX Nifty lost 212.95 points or 3.9% to 5215.30 in the week.
The BSE 30-share Sensex was up 84.70 points, or 0.48%, to 17,644.48, as per provisional closing. It opened 300.33 points lower at 17,259.65 and slipped to a low of 17171.45 within minutes after commencement of trade. At the day’s low of 17,171.45, the Sensex had lost 388.53 points for the day. From here it staged a solid rebound. Sensex hit a high of 17,704.83 in the day. At day's high of 17,704.83, Sensex had risen 144.85 points for the day. Sensex oscillated 533.38 points in the day.
However, the broader based S&P CNX Nifty lost 22.70 points, or 0.44%, to 5,192.60, as per provisional closing.
Of the 30 shares of the Sensex, 17 rose while the rest slipped. The market breadth was just about positive on BSE. 1341 scrips advanced as compared to 1314 that declined, while 70 remained unchanged.
The total turnover on BSE amounted to Rs 7486 crore as compared to Rs 6013 crore by 14:30 IST.
India’s largest private sector mortgage financer in terms of net profit Housing Development Finance Corporation (HDFC) vaulted 5.92% to Rs 2540 on 2.25 lakh shares. It was top gainers from Sensex pack.
ICICI Bank, the country’s largest private sector bank in terms of net profit rose 4.74% to Rs 1072.45. Its net profit rose 32.7% to Rs 1002.60 crore on 41% growth in total income to Rs 9588.41 crore in Q2 September 2007 over Q2 September 2006. The results hit the market after trading hours on Friday, 19 October 2007.
North India’s largest cement manufacturer, Ambuja Cements gained 4.48% to Rs 145.85 on 5.44 crore shares after three block deals of 1.57 crore shares each were executed on the counter on BSE in opening trade at an average price of Rs 144.42 per share. It was the top traded counter on BSE with total turnover of Rs 787.18 crore
Mahindra & Mahindra (up 3.96% to Rs 757), ACC (up 3.92% to Rs 1030) and ITC (up 2.35% to Rs 179), were the other gainers from Sensex pack.
Shares from capital goods space made a late comeback. India’s largest power equipment maker in terms of sales, Bharat Heavy Electricals (Bhel) gained 1.48% to Rs 2080. The company informed BSE that due to some unavoidable circumstances, its board meet to consider Q2 September 2007 results scheduled to be held on 25 October 2007 has been postponed to 29 October 2007. Itss day’s low was at Rs 1970
Larsen & Toubro(L&T), the nation's largest engineering and construction company by sales, gained 3.04% to Rs 3115. Its day’s low was at Rs 2912.
Reliance Energy, the country’s second largest power utility company in terms of sales, rose 2.38% to Rs 1370 on 39.97 lakh shares, off its day’s high of Rs 1465. The stock surged sharply from early lows of Rs 1255, on value buying. The stock had plunged 18.52% in past one week to Rs 1333.25 on 19 October 2007.
India’s largest oil exploration company in terms of market capitalisation Oil and Natural Gas Corporation declined 1.38% to Rs 1090. As per reports that its joint venture firm ONGC-Mittal Energy had acquired a 30% participating interest in an exploration block in Turkmenistan. The report did not disclose the deal value.
India’s largest private sector entity by market capitalisation and oil refiner Reliance Industries (RIL) was down 1.98% to Rs 2420.20 on 19.74 lakh shares. It recovered sharply from early lows of Rs 2395. As a part of a restructuring exercise, RIL has reportedly decided to hive off Reliance Fresh into a separate company, Ranger Farm, for single point accountability. Reliance Fresh sells food, fruits and vegetables and consumer products.
IT stocks stayed under selling pressure throughout the day and dominated the list of top losers, on worries about a downturn in the United States, where the firms earn more than half their revenue. India’s fourth largest sofftware services exporter Satyam Computers lost 3.14% to Rs 445.60 on 7.01 lakh shares. It was the top loser from Sensex pack.
TCS (down 2.96% to Rs 1074), Wipro (down 1.31% to Rs 494) and Infosys (down 1.54% to Rs 1878.15), edged lower.
India’s largest listed cellular services provider by sales, Bharti Airtel recovered sharply from its day’ s low of Rs 909 to settle 1.49% lower to Rs 954. The early fall was triggered by on concerns that the launch of nationwide GSM services by rival Reliance Communications would eat into its market share. The stock lost 9.43% in past one week to Rs 968.45 on 19 October 2007.
Reliance Communications was down 0.71% to Rs 722, off its day’s high of Rs 741. Reliance Communications (RCom), on Friday, 19 October 2007, got nod to launch nationwide GSM-based cellular services from Department of Telecom (DoT).
Tata Motors (down 2.27% to Rs 765), and Maruti Suzuki India (down 2.21% to Rs 1050), were the other losers from Sensex pack.
A crucial meeting of the panel set up by the government to look into Left front’s concerns over the Indo-US nuclear deal holds its fifth meeting today, 22 October 2007, with Left front demanding a clear statement that the deal is off.
The Securities and Exchange Board of India chairman, M Damodaran, will hold a video conference with overseas investors today, 22 October 2007, to clarify all issues arising from the draft proposal on participatory notes (PNs) released by the regulator on Tuesday, 16 October 2007.
After trading hours on Tuesday, 16 October 2007, Sebi issued draft proposals wherein the market regulator proposed restriction on use of the popular participatory notes (PNs) route of FII inflow and it also recommended unwinding of some PNs within 18 months. PNs are financial instruments used by foreign investors that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.
European markets opened lower today, 22 October 2007. Key benchmark indices from United Kingdom (down 1.26% to 6,445.50), and Germany (down 1.27% to 7,748.01) declined.
Asian markets were trading weak today, 22 October 2007, in the wake of a sell-off on Wall Street on Friday, 19 October 2007. Hong Kong's Hang Seng (down 3.70% at 28,373.63), Japan's Nikkei (down 2.24% at 16,438.47), Taiwan's Taiwan Weighted (down 2.61% at 9,360.63), Singapore's Straits Times (down 2.81% at 3,642.64) and South Korea's Seoul Composite (down 3.36% at 1,903.81) all edged lower.
US markets tumbled on Friday, 19 October 2007, amid lackluster profit reports and credit concerns on Black Monday Anniversary. The Dow Jones Industrial Average plunged 366.94 points, or 2.64%, to 13,522.02. The Standard & Poor's 500 index fell 39.45 points, or 2.56%, to 1,500.63, and the Nasdaq Composite index dropped 74.15 points, or 2.65%, to 2,725.
India's wholesale price index rose 3.07% in the 12 months to 6 October 2007, lower than the previous week's 3.26% rise, government data released on Friday, 19 October 2007 showed. It was the lowest annual rise in 5 years.
Volatility is expected to remain high for in coming few days ahead of expiry of October 2007 derivatives contracts on Thursday, 25 October 2007.
As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 1750.76 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 186.26 crore on Friday, 19 October 2007.
Crude oil prices fell on Monday, 22 October 2007 on profit taking from record highs, but hovered near $88 on simmering geo-political tensions and a weak dollar. US light crude for November delivery fell 77 cents to $87.83 a barrel. On Friday, 19 October 2007, it touched an all-time high of $90.07. London Brent crude fell 46 cents to $83.33 a barrel.
The BSE 30-share Sensex plunged 438.41 points or 2.44% to 17,559.98, on Friday, 19 October 2007. The broader based S&P CNX Nifty lost 135.70 points or 2.54% at 5,215.30 on that day.
The Sensex settled the week ended 19 October 2007 with a loss of 859 points or 4.7%. The S&P CNX Nifty lost 212.95 points or 3.9% to 5215.30 in the week.
Companies where FII’s are invested most in
6:42 am
Company Stake in P-notes (%)
Entertainment Nt 15.0
Hexaware 14.2
Simplex Infrastr 8.5
Cranes Software 17.4
Asian Electronic 12.5
NIIT 19.9
Aztecsoft 6.9
Ganesh Housing 14.3
Aurobindo Pharma 12.1
Donear Inds. 6.4
Saregama India 10.0
Anant Raj Inds. 5.6
Indiabulls Fin. 14.8
Everest Kanto 6.5
GTL 13.6
iGate Global Sol 3.9
Financial Tech. 11.0
Tanla Solutions 12.4
Yes Bank 7.6
S Kumars Nation 13.3
Shriram Trans. 6.2
UTV Software 10.9
Tulip IT 6.6
HCL Infosystems 8.9
Gateway Distripa 10.1
SREI Infra. Fin. 10.7
Jain Irrigation 13.1
Aptech 10.0
Motherson Sumi 4.8
Indian Overseas 6.7
Geometric Soft. 9.3
Vakrangee Soft. 12.1
Canara Bank 4.8
Gokaldas Exports 5.6
Macmillan India 5.3
Sasken Comm.Tech 10.8
India Infoline 8.3
Bata India 7.6
Panacea Biotec 5.0
Taneja Aerospace 9.4
Prajay Engg. 14.3
S A I L 1.6
Max India 7.1
Balaji Telefilms 5.6
H D F C 14.2
B.L.Kashyap 4.8
Bombay Ryn Fash 7.9
Educomp Solution 5.8
Gitanjali Gems 4.9
Noida Tollbridge 8.7
Ruchi Soya Inds. 6.7
CESC 7.9
Godrej Consumer 5.0
Sical Logistics 6.8
Madhucon Project 6.8
Strides Arcolab 14.1
PSL 6.0
Reliance Capital 5.5
Britannia Inds. 4.9
Rolta India 7.5
Rajesh Exports 4.4
Lloyd Electric 7.8
Sh. Precoat. Stl 6.1
Opto Circuits(I) 7.3
Astra Microwave 8.8
M & M Financial 3.0
United Spirits 9.9
IVRCL Infrastruc 11.4
ICSA (India) 9.3
Oriental Bank 3.8
Develop.Cr.Bank 12.2
T N Newsprint 6.4
Uni.Brew.(Hold.) 4.7
Gammon India 6.4
Shree Renuka Sug 6.0
Sakthi Sugars 6.7
Balrampur Chini 6.4
ACC 4.8
Nitco Tiles 5.6
Union Bank (I) 4.6
J & K Bank 4.2
Mastek 6.7
SKF India 4.8
Bank of Mah. 2.0
Phoenix Mills 6.0
Dhampur Sugar 5.6
Federal Bank 8.5
Dredging Corp. 1.8
Tata Coffee 5.9
K E C Internatio 6.7
Entertainment Nt 15.0
Hexaware 14.2
Simplex Infrastr 8.5
Cranes Software 17.4
Asian Electronic 12.5
NIIT 19.9
Aztecsoft 6.9
Ganesh Housing 14.3
Aurobindo Pharma 12.1
Donear Inds. 6.4
Saregama India 10.0
Anant Raj Inds. 5.6
Indiabulls Fin. 14.8
Everest Kanto 6.5
GTL 13.6
iGate Global Sol 3.9
Financial Tech. 11.0
Tanla Solutions 12.4
Yes Bank 7.6
S Kumars Nation 13.3
Shriram Trans. 6.2
UTV Software 10.9
Tulip IT 6.6
HCL Infosystems 8.9
Gateway Distripa 10.1
SREI Infra. Fin. 10.7
Jain Irrigation 13.1
Aptech 10.0
Motherson Sumi 4.8
Indian Overseas 6.7
Geometric Soft. 9.3
Vakrangee Soft. 12.1
Canara Bank 4.8
Gokaldas Exports 5.6
Macmillan India 5.3
Sasken Comm.Tech 10.8
India Infoline 8.3
Bata India 7.6
Panacea Biotec 5.0
Taneja Aerospace 9.4
Prajay Engg. 14.3
S A I L 1.6
Max India 7.1
Balaji Telefilms 5.6
H D F C 14.2
B.L.Kashyap 4.8
Bombay Ryn Fash 7.9
Educomp Solution 5.8
Gitanjali Gems 4.9
Noida Tollbridge 8.7
Ruchi Soya Inds. 6.7
CESC 7.9
Godrej Consumer 5.0
Sical Logistics 6.8
Madhucon Project 6.8
Strides Arcolab 14.1
PSL 6.0
Reliance Capital 5.5
Britannia Inds. 4.9
Rolta India 7.5
Rajesh Exports 4.4
Lloyd Electric 7.8
Sh. Precoat. Stl 6.1
Opto Circuits(I) 7.3
Astra Microwave 8.8
M & M Financial 3.0
United Spirits 9.9
IVRCL Infrastruc 11.4
ICSA (India) 9.3
Oriental Bank 3.8
Develop.Cr.Bank 12.2
T N Newsprint 6.4
Uni.Brew.(Hold.) 4.7
Gammon India 6.4
Shree Renuka Sug 6.0
Sakthi Sugars 6.7
Balrampur Chini 6.4
ACC 4.8
Nitco Tiles 5.6
Union Bank (I) 4.6
J & K Bank 4.2
Mastek 6.7
SKF India 4.8
Bank of Mah. 2.0
Phoenix Mills 6.0
Dhampur Sugar 5.6
Federal Bank 8.5
Dredging Corp. 1.8
Tata Coffee 5.9
K E C Internatio 6.7
Sunday, 21 October 2007
Stock Support & Resistance, How to use n Benefit from them?
9:51 pm
You must be already familiar with the S1,S2,R1,R2 notations if you have been trading for a while. However, are they of any use? Meaning, do they really work and help you with your trading activity. Are these numbers the real support resistance prices for the respective stock? We will try to answer this and many more questions in this article.
What is a Stock Support?
Stock support price is a price where Stock tends to stabilize if it is moving down swiftly. It is sort of a cushion where the the stock feels comfortable. Usually the stock moves back up from this price, unless it is in an extreme downtrend or may even be breaking down.
What is Stock Resistance?
If a stock hits a price and cannot move past it, that price is usually termed as a Stock Resistance Price. If this happens more often, then the Resistance is termed as extremely strong. You may have 2 outcomes to this.
What are S1,S2,R1,R2?
S1,S2,R2,R2 are just mere Pivot points used for intraday trading. These are derived from the immediate previous trading day’s stock prices. S1,S2 are the immediate support levels for the stock whereas R2, R2 are the immediate resistance levels. Some myths.
Very similar to this, if you are using One day numbers to get support/resistance levels for another day, you are better off deciding if it is worth it.
So What exactly is Support/Resistance and how do you Figure it out?
I would like to point out at this time to DLN’s website using an example here, Reliance Communications. Take a look at Reliance Chart. By the way, before we proceed any further let me tell you that the Support/Resistance Charts that you find on DLNGroup.com is NOT available anywhere else in the world(as of this writing).
Let me give you an example. In this example, Train is referred to Rcom stock price and stations, the actual price.
Let us say you are traveling from Mumbai(437) to Delhi(750) by Train. The train stops at lots of small stations and some major stops. Let us say it stops at Nagpur(482), Bhopal(530), Gwalior(550), Agra(570) and Delhi(750). In between you may have smaller stops say, A(453),B(500),C(591).
The reason i used this analogy is because it clarifies the doubts of what support/resistance levels are in an easy to understand fashion. Since major stations have the most population, business and money, the train stops at these stations the longest. Meaning, Strong support or resistance as the case may be.
The amount of money poured in around these support/resistance prices is also huge. Why? Because the number of people boarding this train(buy rcom) is huge(because of the population).
When it comes to boarding train at A, B or C stations, the number of people would be a few handful. So is the case with the stock support/resistance as well.
Between May and July 07, Rcom established these strong support/resistance prices. And as you can see later in the year, Aug 07, the stock took a beating. But, wait, do you see the Volume spikes to the largest between Apr-Aug? This is because traders realized that the stock is a great buy as it is at a very Strong Support level.
Similarly, once the stock crossed the last known strong resistance level, there was a stock breakout and volumes exploded again.
So to sum up. A stock that has strong Support is denoted by a Dark Pinkish line and Strong Resistance with a Dark Blue line. These prices are tested every now and then when the stock is in no mans land. The strength of these support/resistance lines is also mentioned in the form of numbers in the left pane under “Resistance and Support” Table.
Trade only using real support/resistance lines and not the S1,S2,R1,R2’s. If you are a day-trader, you may want to use these along with the real support/resistance prices.
What is a Stock Support?
Stock support price is a price where Stock tends to stabilize if it is moving down swiftly. It is sort of a cushion where the the stock feels comfortable. Usually the stock moves back up from this price, unless it is in an extreme downtrend or may even be breaking down.
What is Stock Resistance?
If a stock hits a price and cannot move past it, that price is usually termed as a Stock Resistance Price. If this happens more often, then the Resistance is termed as extremely strong. You may have 2 outcomes to this.
* Either stock Breaks out of this resistance price.
* Or stock honors the resistance price as traders get nervous and move the stock down again.
What are S1,S2,R1,R2?
S1,S2,R2,R2 are just mere Pivot points used for intraday trading. These are derived from the immediate previous trading day’s stock prices. S1,S2 are the immediate support levels for the stock whereas R2, R2 are the immediate resistance levels. Some myths.
* How reliable are these? These do work for the most part, but only for intraday trading purposes. However it depends on the individual stock behavior as to whether it really follows these numbers.
* Are they useful? Let me give you an example. There are two cricketers. A and B. A has over 2 years of experience and B has played only 1 game. B scored a century in his first game. A has been consistently playing well and averages over 45/match. Now, if someone were to hypothetically place bets on which player will play well in the next match, chances are that you will select A. Why? Because you know that A has a proven track record that can be used as a basis to predict future performances.
Very similar to this, if you are using One day numbers to get support/resistance levels for another day, you are better off deciding if it is worth it.
So What exactly is Support/Resistance and how do you Figure it out?
I would like to point out at this time to DLN’s website using an example here, Reliance Communications. Take a look at Reliance Chart. By the way, before we proceed any further let me tell you that the Support/Resistance Charts that you find on DLNGroup.com is NOT available anywhere else in the world(as of this writing).
Let me give you an example. In this example, Train is referred to Rcom stock price and stations, the actual price.
Let us say you are traveling from Mumbai(437) to Delhi(750) by Train. The train stops at lots of small stations and some major stops. Let us say it stops at Nagpur(482), Bhopal(530), Gwalior(550), Agra(570) and Delhi(750). In between you may have smaller stops say, A(453),B(500),C(591).
The reason i used this analogy is because it clarifies the doubts of what support/resistance levels are in an easy to understand fashion. Since major stations have the most population, business and money, the train stops at these stations the longest. Meaning, Strong support or resistance as the case may be.
The amount of money poured in around these support/resistance prices is also huge. Why? Because the number of people boarding this train(buy rcom) is huge(because of the population).
When it comes to boarding train at A, B or C stations, the number of people would be a few handful. So is the case with the stock support/resistance as well.
Between May and July 07, Rcom established these strong support/resistance prices. And as you can see later in the year, Aug 07, the stock took a beating. But, wait, do you see the Volume spikes to the largest between Apr-Aug? This is because traders realized that the stock is a great buy as it is at a very Strong Support level.
Similarly, once the stock crossed the last known strong resistance level, there was a stock breakout and volumes exploded again.
So to sum up. A stock that has strong Support is denoted by a Dark Pinkish line and Strong Resistance with a Dark Blue line. These prices are tested every now and then when the stock is in no mans land. The strength of these support/resistance lines is also mentioned in the form of numbers in the left pane under “Resistance and Support” Table.
Trade only using real support/resistance lines and not the S1,S2,R1,R2’s. If you are a day-trader, you may want to use these along with the real support/resistance prices.
Black Friday on Black Monday anniversary
9:27 pm
Dow falls 360 points on renewed credit concerns
Friday, the 19th marked the 20th anniversary of the 1987 stock market crash, otherwise known as Black Monday- and stocks on Wall Street seemed to want to live up to that. Disappointing earnings, near record-oil prices, continuing credit problems and underlying fears that the worst is ahead for the economy brought the market down sharply. Citigroup, Bank of America and JP Morgan Chase led financial shares to their worst week since 2002. Energy producers dropped the most in two years.
Sentiment took further hit when Standard & Poor's downgraded another batch of residential mortgage-backed securities, adding to investor unease about credit quality. Two-year treasury notes rallied the most since September 2001 as investors sought the safety of government debt. After touching $ 90.07 overnight, light, sweet crude fell 87 cents to settle at $ 88.60 on the New York Mercantile Exchange.
The Dow fell 366.94, or 2.64%, to 13,522.02. The Dow was down for the fifth straight session and for the week was off 4.05%. For the year, the blue chip index is now up 8.5%. The Standard & Poor's 500 index fell 39.45, or 2.56%, to 1,500.63, and the Nasdaq composite index dropped 74.15, or 2.65%, to 2,725.16. For the week, the S&P 500 fell 3.92% and the Nasdaq fell 2.87%.
'Sensex likely to hit 20K this year'
8:05 pm
Two days after the Sensex conquered the 19,000-mark, it was bloodbath at the stock markets on October 17.
The Sensex plunged by 1,743 points, the largest fall in a single day ever witnessed in the history of the Indian stock markets.
Why did the stock market crash? Is there any reason to panic? Will the Sensex sustain the gains or will it go down again?
Were you hit by the Sensex crash? What should your investment strategy be now?
Should you invest more in the market? Or should you consider selling stocks? What would be the best stocks to buy, sell or hold at this juncture?
In an hour-long chat on rediff.com, market expert Pranav Sanghavi answered many such readers' queries. Here is the transcript:
PRANAV SANGHAVI says, Good afternoon everyone and welcome to the chat. Let's begin.
mona asked, im a long term investor & can wait for 20 & above years. Pl suggest me the best stocks for longterm
PRANAV SANGHAVI answers, at 2007-10-18 12:04:37: I would go with the frontline large cap stocks like RIL [Get Quote], SBI [Get Quote], L&T, Bharti, DLF etc. Also, you could look at investing in ULIP's and MF's with that sort of time frame the returns from these investments are pretty good.
kk asked, Hi Pranav, The finance ministry seems to be really concerned about the way the markets are going. what do you see in near future? will the markets correct a bit more before again going up?
PRANAV SANGHAVI answers, Yes they are concerned at not only the rate at which funds are flowing in but also the quantity of funds that are coming in to India. They are marginally concerned about the source of these funds also. Putting all this into perspective they should come up with some regulatory changes to monitor and curb the inflow of funds into India. But banning Participatory Notes and that too after18 months will not solve the problem. As that is enough time for these savvy investors to find alternate discreet methods of investing in to India.
kk asked, last week I sold whatever I had. shall i buy something now or wait a bit more?? please suggest a few picks to be looked for?
PRANAV SANGHAVI answers, You should have bought yesterday when the markets fell to the lower circuit. buy only on corrections. Fresh positions at these lofty levels could prove to be dangerous.
Pravin asked, Hello what is your view on RPL, RNRL and Reliance pack?
PRANAV SANGHAVI answers, The whole Reliance pack from both factions are witnessing unprecedented gains as is the market. I think they will continue their upward trend albeit after a pause or a minor correction.
anish asked, what will be the trend in sensex in the coming weeks till Dec '07?
PRANAV SANGHAVI answers, I think they should remain volatile for a while and post a correction the markets should move upwards.
Pravin asked, Sir, what price we look in ABB, L&T and BHEL to buy?
PRANAV SANGHAVI answers, When they correct by atleast 10 to 15% from current levels.
amar08 asked, I have shares of infosys at 2060. Whether infosys may go above that and if then in what time ?
PRANAV SANGHAVI answers, Just today TCS [Get Quote] announced a large order that they bagged and their stock has moved up. Similarly, Infosys [Get Quote] could jump up if there is some news flow on the stock. Otherwise the IT sector will remain laggards asthe Rupee continues its appreciation.
yesh asked, MRTPC holds DLF guilty for unfair trade practice.. what will be the impact on its share price?
PRANAV SANGHAVI answers, I don't think it will have a major impact. I would continue to stay invested in the stock.
PRANAV SANGHAVI answers, I don't think it will have a major impact. I would continue to stay invested in the stock.
arun asked, can v buy shares in this situation
PRANAV SANGHAVI answers, I would not. One could enter at dips or corrections with a longer term view but the markets will remain volatile for a while.
ROHIT asked, Is RPL a good buy at current lower as a long term investment
PRANAV SANGHAVI answers, I would look at it on the days the markets correct. The stock movesdown but marginally on those days. But with a long term view yes you could look at the stock.
goanspider asked, Hy when is the right time to invent in mutual funds is it now when the market is 17k
PRANAV SANGHAVI answers, It depends on your time frame for investing in the MFs. But if you do invest at the time of a correction or shortly thereafter you will tend to pick them up at slightly lower NAVs.
Rajesh asked, What is your view on Punj Lloyd [Get Quote]? Does it have ability to reach 550-600 levels?
PRANAV SANGHAVI answers, Yes but hold it with a longer term outlook of 6 to 12 months at least.
pavan asked, I have 2000 shares of panoramic universal bought 7 yrs ago(erlier known as chitaliya corporate services,IT microsystems), please advice if i keep them for couple of years or sell it down, thanks.
PRANAV SANGHAVI answers, Sorry I don't follow that stock.
Mohit asked, I Buyed JPHYDRO 200 shares @ 76.85...is it okay if i put for a long term..or..
PRANAV SANGHAVI answers, There is a lot of interest into that stock from various retail segment. But according to me the company is in to a very fixed rate based power projects and their realisations cannot givequantum jump in income and profits unless substantial further funds are invested in expansion.
raveesh asked, When will Reliance Power IPO come? Whether I should invest in RPL, RNRL, Powergrid at present level? Is there any possibility of market down?
PRANAV SANGHAVI answers, Yes the markets are at lofty levels, I have been saying from 17,500 levels but now the markets are even higher. I would not make any substantial investments at this juncture.
savitha asked, hello, Is it right time to invest in equities?
PRANAV SANGHAVI answers, Enter when there is a correction. But I am surely bullish on equities as an investment class for atleast the next 4 to 5 years.
StockGuru asked, Can I short this market.
PRANAV SANGHAVI answers, Thats a personal call you can take. There will always be two sides toa coin. But unless you have deep pockets one must not go against the momentum.
chanda asked, should i buy rnrl at the current price or should i wait forthe prices to fall?
PRANAV SANGHAVI answers, I would wait for the market to fall especially the second tier stocks.
gauravbe asked, what is the short term and long term target of powergrid? Should I hold for short term?
PRANAV SANGHAVI answers, I would hold it for a long term. It is a quality stock which was underpriced and now the stock is discovering its true value post listing.
eswar asked, Hi Pranav yesterday's fall has clearly shown that the market is dominated by FIIs.If there is complete pullout by FIIs where do you expect the levels of sensex to be? Is really money laundering happening there in the indian markets?I really doubt the markets are not reflecting the real country's growth?
PRANAV SANGHAVI answers, First of all all FII's are not investing with a short term view on India. It is mostly the Hedge Funds which look for absolute returns which causes the big jumps either up or down. I think the regulators are trying to address these funds and not the long term FII investors. So I don't think that all FII's will pull out at one time. Also the amount invested into India is not even penny change when you compare the funds under management of these FII's. Thirdly, I think the insurance sector is gaining momentum and could absorb a decent amount of FII sell off if there is one. but yes the fact remains the FII's are controlling our markets currently and they are the biggest force inour markets.
StockGuru asked, Can u tell me whether Advanta and monsanto are good shares to invest now.
PRANAV SANGHAVI answers, Yes they are into agri related businesses and our agri sector looks to be growing handsomely.
sumanth asked, well i exited from the market on monday. Is it a good time to reenter
PRANAV SANGHAVI answers, You could ride the momentum in the frontline stocks but any major investment should be made during dips and corrections like we witnessed yesterday.
James asked, Hai, I would like to invest Rs.20,000/- per month in ShareMarket for 5 years to build wealth for daughter & son after 20 years. Hardly I have two/three hours a week can spend to study market in that week. plz suggest some MF's or share where I don't have do spend much time . Thank you
PRANAV SANGHAVI answers, I would strongly suggest you take on Unit Linked Plans which and take the equity option and also some large cap diversified growth funds like DSP Tiger Fund, HDFC [Get Quote] Growth Fund etc.
preeti asked, Hi pranav. I am new to stock market and hardly have any knowedlege about it. Can u please tell me is it aright time to invest in market and which are the safest & cheapest stock at this moment.
PRANAV SANGHAVI answers, Hi Preeti, I would suggest you take on courses offered by the training institutes of BSE and NSE. Also it is not advisable to invest at times of heady bouyancy but at times of dips and corrections. I would look at stocks like SBI, L&T, Power Grid, DLF, NTPC, IDFC [Get Quote] amongst a host of others.
raj asked, hi
PRANAV SANGHAVI answers, Hi Raj. I just gave a few shares you could look at. But there are lots of more opportunities to invest in. But invest at corrections in those quality stocks.
priya asked, I have 1000 shares of remi metals bought @16/- in 1996. please advise what should i do, sell or keep it for some more time?
PRANAV SANGHAVI answers, If you are in profit book it and swith to a quality metal stock like SAIl [Get Quote], Tisco [Get Quote] or Hindalco [Get Quote].
yogeesha asked, when will this bull run stops?
PRANAV SANGHAVI answers, Most people would not like it to end. But I think if all things remain constant then atleast for another 4 to 5 years. I would also say till our corporates keep performing and show the growth rates they have in the past.
shruti asked, i an new to the market and have arnd 25,000 to invest. can i invest at this point in shares like powergrid, reliance petro? plz advise.
PRANAV SANGHAVI answers, If you are investing with a long term view you could. But on days like yesterday when there is a correction or dip.
parvez asked, Can you share your targets on Cairns India, Idea Cellular [Get Quote], ICICI Bank [Get Quote] & UCO bank [Get Quote]?
PRANAV SANGHAVI answers, I am bullish on ICICI, Idea and Uco Bank. I would say a 25% to 30% return over the next 12 months could not be ruledout.
sss asked, Should i buy gmr infra at these levels?
PRANAV SANGHAVI answers, i would wiat.
Avinash asked, Hi I wish to invest in MF , I have some MF like DSP TIGER , Magnun Contra,reliance vsion already , these fuds shows good growth , do you suggest what is the right time in coming days to invest in these same MF, is market will be corrected or just up & up
PRANAV SANGHAVI answers, No market can move only in one direction. But on a longer term we are in a bullish phase and as I have said in the past, timely corrections are part and parcel of the game.
KUMAR asked, Hi good morning Sanghvi saheb, i invested in infosys and suffered loss, can i sell those stock and reinvest in RPL at the present rate?
PRANAV SANGHAVI answers, The two stocks are in diverse sectors. The IT sector looks to remain laggard and would move only on newsd based jumps. Where as RPl looks to start its commercial production earlier than scheduled. So you could look at it.
Monu asked, Should I invest in Idea @ 150/- for long term and Powergrid @ 170
PRANAV SANGHAVI answers, You could look at the stocks but Power Grid is quoting lower I think.
KUMAR asked, When WELSPUN gone public, i was allotted 100 shares. After that so many changes in the company taken place and shares were exchanges in their new group of companies. I actually don't know how much share equivalent i got now becasue of loss of correspondance.. How should i go about it?
PRANAV SANGHAVI answers, Write to the company or check with your stock broker. Both should give you the correct information.
ds asked, should i invest in patel engineering / icra at this level for 1 years perspective for maximum return.
PRANAV SANGHAVI answers, ICRA could be looked at. Instead of Patel engineering [Get Quote] I would look at L&T or Bhel.
Gopal asked, Hi Pranav, I want to invest for a short time, which will provide me good returns, where should i invest??
PRANAV SANGHAVI answers, In the frontline stocks in the infrastructure, real estate, cement stocks.
hivik asked, what r ur opion abt reail industry? what stocks can u suggest in that? how abt pantaloon
PRANAV SANGHAVI answers, I think till there is a clear outcome of the FII investment into retail segment the local players will continue to perform. Pantaloon [Get Quote] should continue to perform as should Provogue.
shalit asked, mkys touching new highs every day, apart frm the risk profile, is it good stratedy to buy with say 10-12 profit profit then sell off
PRANAV SANGHAVI answers, If you are very strict with booking profits and losses then it is a good strategy to trade with a short term view with that strategy. But you have to keep various other factors in mind in terms of which group the stock belongs to, what is the volumes on the stock, what is the sector the company is in and more.
ps asked, Is ICICI bank good to enter at these levels ?
PRANAV SANGHAVI answers, Yes I am bullish on ICICI and you could look at it with longer term view of 6 to 12 months. But always advisable to buy on dips and corrections.
rahul asked, what is the future of IDBI and IFCI?
PRANAV SANGHAVI answers, IDBI could be heldwith a long term view. Whereas IFCI's outcome will depend on what valuation it receives from the potential bidders and also whatbusiness plan they have in mind for the company. Once that is known you could takea longer term view on the stock.
abc asked, Sir in next one year among TCS and Tata Power [Get Quote] which will give better returns.
PRANAV SANGHAVI answers, I would like to think Tata Power as there is a huge shortfall in the powers demand supply ratio. Where as the Ruppee looking to remain stronger the Tech companies dependant on foreign income willremain hampered by the same.
abc asked, In cement pack which stocks are looking good.
PRANAV SANGHAVI answers, I still like Grasim [Get Quote], ACC and Guj Ambuja.
Umesh asked, should I buy Powergrid at this level that is 147
PRANAV SANGHAVI answers, You could with a longer term view.
Marc asked, What are the future prospects of Tech Mahindra [Get Quote], in view of IT stocks not doing well in the current scenario ?
PRANAV SANGHAVI answers, Yes even their margins will be hampered. But they have recieved an additional order from BT of around US$ 1 billion to be delivered over 5 years last year. So that US$ 200 million of addtional ioncome will help spurce its topline and bottomline.
Don asked, DLF, RCom, HDFC bank. Hold or sell?
PRANAV SANGHAVI answers, Definately a hold.
adithi asked, will market ever fall??
PRANAV SANGHAVI answers, I have been asking that question from 18,000 levels. Now the Index PE ratios have gone over 20 and I think it has to fall. The problem is everytime there is some fall the index bounces back equally fast.
ps asked, Dont you think evaluations for Praj and Crompton are High ? Can I still enter ?
PRANAV SANGHAVI answers, You could look at them with a longer term. But buy on dips.
Don asked, What do u think about buying Reliance Energy [Get Quote] at this level?
PRANAV SANGHAVI answers, I think it has run up too much. It should correct along with the markets. But beyond that it could move up.
raj19 asked, sir are doing intraday trading if so pls suggest some tips
PRANAV SANGHAVI answers, I don't propagate intra-day trading as it is a very risky proposition even for the savviest traders.
lalitcs asked, should i sell powergrid at this level that is 147
PRANAV SANGHAVI answers, I would hold on.
indu asked, Will the Sensex hit 20,000 this year?
PRANAV SANGHAVI answers, It looks likely.
PRANAV SANGHAVI says, Well it is time for me to leave. Hope to see you'll next week. Bye for now.
ULIP good over long term
1:32 pm
A few days ago, an investor complained that he was taken for a ride by his insurance company. His grouse was that he had lost more than 50 percent of his premium money in a matter of a few weeks though the agent had assured him that his premium would earn annual returns of over 30 percent.
With the stock market refusing to reverse its bearish mood, it's not just the equity market investors who are scanning the stock pages. Even insurance policyholders are keeping a close watch on the Sensex, and for some, it hasn't been a pretty scene. The growing interest of insurance policyholders in the equity market has a lot to do with unit-linked insurance plans (ULIP).
In the last 12-18 months, insurance companies have been aggressively pushing ULIPs and in fact, other insurance products such as endowment plans and whole life plans have taken a back seat. What aided the popularity of ULIP was the bullish stock market condition which also helped investors earn good returns besides life cover. If the bearish market conditions persist for some more time, ULIPs probably will be put to test.
While there is nothing wrong with ULIPs in general, you can find plenty of faults with the way this product is being pushed. For one, insurance advisors have been aggressively pushing this product promising handsome returns. Invariably, investors don't know much about the various expenses involved with the product.
Not for short term
Very few are aware that insurance companies collect a huge percentage of management expenses from the first year's premium amount. While there is no fixed percentage for it, it varies from 50 to as high 65 percent in certain cases. For instance, if an investor signs up for a ULIP for a first year premium of Rs 50,000, as much as Rs 25,000-35,000 will be deducted as management expenses. After taking into account the premium allocation for life cover, the investor's contribution towards his investment corpus will be very low.
However, investors should remember that the high cost of management expenses is restricted to the first year of premium and this comes down drastically in the coming years. As a result, if you are looking at building a corpus through ULIP, you should think long term.
Though ULIP offers the flexibility of discontinuing or lowering the premium in subsequent years, an investor would be better off thinking long-term as management expenses come down drastically over a longer period of time. In fact, the management expenses are even lower than mutual funds when the policy gets older.
Think long
Though the current stock market trend is bound to make one worry, ULIP holders should pay little attention to NAV (net asset value) of their investments as ULIPs prove better over a longer period of time. Even when one signs up for a ULIP, insurance cover should be the primary focus and returns from investments should be secondary.
For those who can't handle the vagaries of the equity market, a switch to a debt product strategy could be considered though it is not advisable if you are a long-term investor. When you opt for a switch to debt, you have to exercise the option of switching to equity at the right time.
There are very few who have managed to time the market right and history has also shown that passive investment strategy too pays when you think long. More importantly, do not alter your annual premium simply because equity markets have turned negative in recent times. As pointed out earlier, management expenses come down drastically from the second year onwards in the case of ULIPs.
With the stock market refusing to reverse its bearish mood, it's not just the equity market investors who are scanning the stock pages. Even insurance policyholders are keeping a close watch on the Sensex, and for some, it hasn't been a pretty scene. The growing interest of insurance policyholders in the equity market has a lot to do with unit-linked insurance plans (ULIP).
In the last 12-18 months, insurance companies have been aggressively pushing ULIPs and in fact, other insurance products such as endowment plans and whole life plans have taken a back seat. What aided the popularity of ULIP was the bullish stock market condition which also helped investors earn good returns besides life cover. If the bearish market conditions persist for some more time, ULIPs probably will be put to test.
While there is nothing wrong with ULIPs in general, you can find plenty of faults with the way this product is being pushed. For one, insurance advisors have been aggressively pushing this product promising handsome returns. Invariably, investors don't know much about the various expenses involved with the product.
Not for short term
Very few are aware that insurance companies collect a huge percentage of management expenses from the first year's premium amount. While there is no fixed percentage for it, it varies from 50 to as high 65 percent in certain cases. For instance, if an investor signs up for a ULIP for a first year premium of Rs 50,000, as much as Rs 25,000-35,000 will be deducted as management expenses. After taking into account the premium allocation for life cover, the investor's contribution towards his investment corpus will be very low.
However, investors should remember that the high cost of management expenses is restricted to the first year of premium and this comes down drastically in the coming years. As a result, if you are looking at building a corpus through ULIP, you should think long term.
Though ULIP offers the flexibility of discontinuing or lowering the premium in subsequent years, an investor would be better off thinking long-term as management expenses come down drastically over a longer period of time. In fact, the management expenses are even lower than mutual funds when the policy gets older.
Think long
Though the current stock market trend is bound to make one worry, ULIP holders should pay little attention to NAV (net asset value) of their investments as ULIPs prove better over a longer period of time. Even when one signs up for a ULIP, insurance cover should be the primary focus and returns from investments should be secondary.
For those who can't handle the vagaries of the equity market, a switch to a debt product strategy could be considered though it is not advisable if you are a long-term investor. When you opt for a switch to debt, you have to exercise the option of switching to equity at the right time.
There are very few who have managed to time the market right and history has also shown that passive investment strategy too pays when you think long. More importantly, do not alter your annual premium simply because equity markets have turned negative in recent times. As pointed out earlier, management expenses come down drastically from the second year onwards in the case of ULIPs.
Rathi Bars - IPO Analysis Note
12:49 pm
DEBARRING DISCERNING INVESTORS
MAX. ISSUE SIZE (Rs) : 25 crores
PRICE BAND (Rs) : 35 (Fixed)
ISSUE OPENS/CLOSES : 18th to 23rd October, 2007
LISTING : BSE.
Rathi Bars, which manufactures CTD steel bars and TMT steel bars proposes to raise funds for the expansion and modernization of its current business.
Its bars are used as reinforcement material in construction activities and the company has backward integrated to produce MS ingots, its primary raw material, in-house. A Northern India based company, it has presence across 800 retail outlets.
The company operates at 85 per cent of its current production capacity of 80,000 mtpa , which justifies its plan to enhance the same to 1,00,000 mtpa by end FY’08.
The company faces intra-family competition in its space and these competitors too operate under the same brand name. Furthermore, the overhang of taxation and legal disputes ( including a criminal case ) too raise corporate governance related doubts.
Rathi Bars topline and bottomline have grown at a CAGR of 28 per cent and 37 per cent respectively over the last four years. However, a closer scrutiny of the financials reflect that the margins of this company are shrinking, both at the operating (3 per cent) and net level ( 2 per cent).
While a forward P/E of 6 does not appear too conventionally expensive, it is in line with the discounting accorded in this sector. The USP of this company thus clearly lies in the fact that it is engaged in a space related to infrastructure.
For discerning investors though, this might not be quite enough especially at a time when larger and better pedigreed companies are queuing up to enter this space .
MAX. ISSUE SIZE (Rs) : 25 crores
PRICE BAND (Rs) : 35 (Fixed)
ISSUE OPENS/CLOSES : 18th to 23rd October, 2007
LISTING : BSE.
Rathi Bars, which manufactures CTD steel bars and TMT steel bars proposes to raise funds for the expansion and modernization of its current business.
Its bars are used as reinforcement material in construction activities and the company has backward integrated to produce MS ingots, its primary raw material, in-house. A Northern India based company, it has presence across 800 retail outlets.
The company operates at 85 per cent of its current production capacity of 80,000 mtpa , which justifies its plan to enhance the same to 1,00,000 mtpa by end FY’08.
The company faces intra-family competition in its space and these competitors too operate under the same brand name. Furthermore, the overhang of taxation and legal disputes ( including a criminal case ) too raise corporate governance related doubts.
Rathi Bars topline and bottomline have grown at a CAGR of 28 per cent and 37 per cent respectively over the last four years. However, a closer scrutiny of the financials reflect that the margins of this company are shrinking, both at the operating (3 per cent) and net level ( 2 per cent).
While a forward P/E of 6 does not appear too conventionally expensive, it is in line with the discounting accorded in this sector. The USP of this company thus clearly lies in the fact that it is engaged in a space related to infrastructure.
For discerning investors though, this might not be quite enough especially at a time when larger and better pedigreed companies are queuing up to enter this space .
Stocks you can buy this week
11:14 am
Bajaj Auto
CMP: Rs 2,511.65
Target price: Rs 2,549
Merrill Lynch has downgraded Bajaj Auto to neutral rating, and slashed earnings forecasts, after the company unexpectedly cut prices on Platina- a 100cc bike brand- by 12%.
“We are therefore slashing EPS (earnings per share) forecasts by 6% in FY08 (to Rs 120.2) and 10% in FY09 (Rs 131.9), and sum of parts value to Rs 2,549 (compared to earlier 2,871),” the investment bank said in a note to clients. “Bajaj Auto’s strategy to initiate discounts goes against the company’s stated policy of targeting profits, not volumes. We believe that volumes will not compensate, given the model’s much weaker franchise compared to competition (Hero Honda’s CD-Deluxe, which has also cut prices),” it added.
Concor
CMP: Rs 1,865
Target price: NA
ASK Securities is positive on Container Corporation of India (Concor) citing major market share in the railway logistics business and strong financial position.
“While we take cognisance of Concor’s strong balance sheet, its leadership status and most importantly its domain expertise, the road ahead is tough,” the brokerage said in a unrated note to clients. “Nevertheless, we continue to believe that its robust business model will deliver results, unless the scenario gets altered dramatically. Therefore, the next few quarters would be very critical to monitor so as to identify any signs of reversal,” it added.
HDFC Bank
CMP: Rs 1,357.25
Target price: Rs 1,565
Citigroup has rated HDFC Bank a hold, with a 12-month price target of Rs 1,565, after its second quarter earnings.
“We believe HDFC Bank should be able to generate a premium to its current trading level as it sustains asset growth, consolidates its distribution, leverages off new capital and stabilises its business mix with increased retail returns,” the investment bank said in a note to clients.
“We remain positive on the bank’s prospects and management’s ability to deliver, but in the near term the stock’s performance could be moderated by high valuations relative to ROE (return on equity) and peers, uncertainty on interest rates, and competitive pricing environment,” it added.
TCS
CMP: Rs 1106.75
Target price: Rs 1,230
Morgan Stanley has rated TCS an “equalweight”, with a price target of Rs 1,230 based on price to earnings (P/E) ratio of 21 times 2008-09 estimated earnings. The investment bank feels concerns over the impact of the rupee’s appreciation on the IT services sector and a possible US slowdown already reflects in the stock, reducing the likelihood of a sharp fall. “Given its client base and management expertise, our bias is positive for the stock,” Morgan Stanley said in a note to clients.
“TCS has historically grown faster than companies in the broad market (BSE Sensex) and has consequently traded at varying premiums. Our estimates assume a P/E discount of 10% to Infosys going forward, which is also towards the average end of its historical trading range,” it added.
Patel Engineering
CMP: Rs 639.25
Target price: Rs 992
Enam Securities has rated Patel Engineering an “outperformer” with a price target of Rs 992. “At CMP, adjusted for value of real estate and BOT (build operate transfer) investments of Rs 607 per share, the core business is available at just 2.1 times FY08E EV/ EBIDTA (enterprise value/earnings before interest, tax and depreciation & amortisation),” the brokerage said in a note to clients.
At the time when the company released the report, Patel shares were at Rs 654. “We value PEL’s real estate (roughly 1,000 crore) at Rs 35 billion (Rs 3,500 crore) or Rs 591 per share in our base case estimate,” the note added.
Man Industries
Target Price: Rs 188
CMP: Rs 118.35
IDBI Capital Markets has initiated coverage on Man Industries with a 12-month price target of Rs 188 citing robust outlook for the pipes industry and stronger order book position. “As a result of increased hydrocarbon E&P (exploration and production) activities and continued rise in the crude prices has set a long-term demand for steel pipes both in domestic and overseas markets.
Well-timed capacity expansion makes the company comparable to its peers in terms of the capacities in domestic market,” the brokerage said in a note. “Robust order book of Rs 22 billion (Rs 2,200 crore), to be executable in 12-15 months, which is 1.9x its FY07 sales, provides a near term revenue visibility. This clearly indicates the ability of the company to get huge orders from the Oil and Gas behemoths amidst tough competition,” it added.
CMP: Rs 2,511.65
Target price: Rs 2,549
Merrill Lynch has downgraded Bajaj Auto to neutral rating, and slashed earnings forecasts, after the company unexpectedly cut prices on Platina- a 100cc bike brand- by 12%.
“We are therefore slashing EPS (earnings per share) forecasts by 6% in FY08 (to Rs 120.2) and 10% in FY09 (Rs 131.9), and sum of parts value to Rs 2,549 (compared to earlier 2,871),” the investment bank said in a note to clients. “Bajaj Auto’s strategy to initiate discounts goes against the company’s stated policy of targeting profits, not volumes. We believe that volumes will not compensate, given the model’s much weaker franchise compared to competition (Hero Honda’s CD-Deluxe, which has also cut prices),” it added.
Concor
CMP: Rs 1,865
Target price: NA
ASK Securities is positive on Container Corporation of India (Concor) citing major market share in the railway logistics business and strong financial position.
“While we take cognisance of Concor’s strong balance sheet, its leadership status and most importantly its domain expertise, the road ahead is tough,” the brokerage said in a unrated note to clients. “Nevertheless, we continue to believe that its robust business model will deliver results, unless the scenario gets altered dramatically. Therefore, the next few quarters would be very critical to monitor so as to identify any signs of reversal,” it added.
HDFC Bank
CMP: Rs 1,357.25
Target price: Rs 1,565
Citigroup has rated HDFC Bank a hold, with a 12-month price target of Rs 1,565, after its second quarter earnings.
“We believe HDFC Bank should be able to generate a premium to its current trading level as it sustains asset growth, consolidates its distribution, leverages off new capital and stabilises its business mix with increased retail returns,” the investment bank said in a note to clients.
“We remain positive on the bank’s prospects and management’s ability to deliver, but in the near term the stock’s performance could be moderated by high valuations relative to ROE (return on equity) and peers, uncertainty on interest rates, and competitive pricing environment,” it added.
TCS
CMP: Rs 1106.75
Target price: Rs 1,230
Morgan Stanley has rated TCS an “equalweight”, with a price target of Rs 1,230 based on price to earnings (P/E) ratio of 21 times 2008-09 estimated earnings. The investment bank feels concerns over the impact of the rupee’s appreciation on the IT services sector and a possible US slowdown already reflects in the stock, reducing the likelihood of a sharp fall. “Given its client base and management expertise, our bias is positive for the stock,” Morgan Stanley said in a note to clients.
“TCS has historically grown faster than companies in the broad market (BSE Sensex) and has consequently traded at varying premiums. Our estimates assume a P/E discount of 10% to Infosys going forward, which is also towards the average end of its historical trading range,” it added.
Patel Engineering
CMP: Rs 639.25
Target price: Rs 992
Enam Securities has rated Patel Engineering an “outperformer” with a price target of Rs 992. “At CMP, adjusted for value of real estate and BOT (build operate transfer) investments of Rs 607 per share, the core business is available at just 2.1 times FY08E EV/ EBIDTA (enterprise value/earnings before interest, tax and depreciation & amortisation),” the brokerage said in a note to clients.
At the time when the company released the report, Patel shares were at Rs 654. “We value PEL’s real estate (roughly 1,000 crore) at Rs 35 billion (Rs 3,500 crore) or Rs 591 per share in our base case estimate,” the note added.
Man Industries
Target Price: Rs 188
CMP: Rs 118.35
IDBI Capital Markets has initiated coverage on Man Industries with a 12-month price target of Rs 188 citing robust outlook for the pipes industry and stronger order book position. “As a result of increased hydrocarbon E&P (exploration and production) activities and continued rise in the crude prices has set a long-term demand for steel pipes both in domestic and overseas markets.
Well-timed capacity expansion makes the company comparable to its peers in terms of the capacities in domestic market,” the brokerage said in a note. “Robust order book of Rs 22 billion (Rs 2,200 crore), to be executable in 12-15 months, which is 1.9x its FY07 sales, provides a near term revenue visibility. This clearly indicates the ability of the company to get huge orders from the Oil and Gas behemoths amidst tough competition,” it added.
Weekly Technical views
11:04 am
ANANDRATHI
Both the Nifty and Sensex displayed bearish candlesticks for the first time during the week-ended 19.10.07, Market rallied continuously for the last seven weeks and this is the first time it has given a bearish signal.
As indicated last week we saw a heavy sell off in Nifty. Nifty cracked from 5737 to 5102 level which is 635 points down. The stochastic oscillator & RSI Index is between 40 -50 which means the market can see some sort of bounce back in the coming week.
The daily charts however signals lot of bearishness, which also indicates some sort of dip, may be @ 5020 level is quite possible. We therefore can have a week of volatility and lots of confusion. Looking at the chart, we expect stock specific activity in the coming weak.
The medium term outlook of the market continues to be bullish as defined by the moving averages. The important support levels to watch in the Nifty are at 5020 followed by 4842. On the journey upwards 5250 followed by 5324 would be important
resistance levels.
Both the Nifty and Sensex displayed bearish candlesticks for the first time during the week-ended 19.10.07, Market rallied continuously for the last seven weeks and this is the first time it has given a bearish signal.
As indicated last week we saw a heavy sell off in Nifty. Nifty cracked from 5737 to 5102 level which is 635 points down. The stochastic oscillator & RSI Index is between 40 -50 which means the market can see some sort of bounce back in the coming week.
The daily charts however signals lot of bearishness, which also indicates some sort of dip, may be @ 5020 level is quite possible. We therefore can have a week of volatility and lots of confusion. Looking at the chart, we expect stock specific activity in the coming weak.
The medium term outlook of the market continues to be bullish as defined by the moving averages. The important support levels to watch in the Nifty are at 5020 followed by 4842. On the journey upwards 5250 followed by 5324 would be important
resistance levels.
RELIGARE
Our markets were no exception to the law of gravity and busted down in the same manner it was overblown. The Indices remained strong on Monday and held on its gains on the next day too.
Technical correction which was overdue got the trigger of P-notes and later increase in span margin etc. All the Heavy weights collapsed as the Indices were locked in 10% lower circuit. It did recover smartly giving exit opportunity; but one who jumped on to the rise got trapped. Almost 730 points wer e knocked off from the Nifty in 2 days creating deep holes in the pockets of the market players.
It was mentioned that the Nifty could test 5724 points while 5715-5735 points is the resistance area in the Nifty. The Nifty recorded an all time high of 5736 points and from where we saw the free fall. Immediate support ispegged at 5033 points (trendline support in green) while 4993 points is which should not be decisively breached for the uptrend to remain intact.
Immediate support is pegged in the 5074-5110 points’ area while resistance at 5442 points needs to be sustained for further upsides. The IT and Sugar sector scrips showed resilience supporting the Bulls. Ongoing tussle between the bigwigs and the traders saw the Indices oscillating with massive intraday swings. Huge volatility kept the market players on tender
Our markets were no exception to the law of gravity and busted down in the same manner it was overblown. The Indices remained strong on Monday and held on its gains on the next day too.
Technical correction which was overdue got the trigger of P-notes and later increase in span margin etc. All the Heavy weights collapsed as the Indices were locked in 10% lower circuit. It did recover smartly giving exit opportunity; but one who jumped on to the rise got trapped. Almost 730 points wer e knocked off from the Nifty in 2 days creating deep holes in the pockets of the market players.
It was mentioned that the Nifty could test 5724 points while 5715-5735 points is the resistance area in the Nifty. The Nifty recorded an all time high of 5736 points and from where we saw the free fall. Immediate support ispegged at 5033 points (trendline support in green) while 4993 points is which should not be decisively breached for the uptrend to remain intact.
Immediate support is pegged in the 5074-5110 points’ area while resistance at 5442 points needs to be sustained for further upsides. The IT and Sugar sector scrips showed resilience supporting the Bulls. Ongoing tussle between the bigwigs and the traders saw the Indices oscillating with massive intraday swings. Huge volatility kept the market players on tender
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