Weekly Nifty Update 24 April, 2010 by Tanmay G Purohit

Nifty has closed positive (+41 points) at 5304 but this week we saw Nifty hitting 5-week low at 5160 from where it recovered in latter part of the week. Banks and Infrastructure stocks were in limelight this week after RBI policy statements. Goldman Sachs was charged with fraud case in USA and the week started negatively but RBI continued its tightening with 25bps hikes in all CRR, Repo and Reverse Repo rates and this gave way to short-covering in banking stocks, SBI was top gainer in Nifty with more than 10% gains along with HCL TECH which reported 58% rise in Q4 Net Profits. AXIS BANK, TATA MOTORS and JPASSO were other gainers this week. SUN PHARMA lost nearly 7% this week and there are reports that a New Jersey US district court ordered Sun Pharma to stop selling its generic version of Eloxatin chemotherapy, used in treating colon cancer.
Goldman Sachs worries have taken a toll on global markets this week and experts feel current fraud may be just tip of the iceberg and if proved guilty, many other such scams may be unveiled. GS has been a big investor into commodities and commodity stocks remained under pressure TATA STEEL, STERLITE INDS were top losers in Nifty.
World steel demand is growing faster and earlier than expected, driven primarily by China's runaway growth, and is now expected to hit pre-crisis levels this year, the World Steel Association said but passing on rising costs to customers is a worry which may keep rally in those stocks limited for time being. Iron Ore prices are up 90% from last year and Coking Coal is higher by nearly 50%, Steel prices have risen Rs 10,000/tonne in the last 8 months but any more rise would add to inflationary pressures as per government; so the Steel industry has assured that prices would not rise more than Rs 2500/tonne in next 6 months and these stocks may underperofrm going ahead.
Food Inflation has risen to 17.65% for week ended Apr 10 Vs 17.22% hurting the customer more and RBI Deputy Governor has said CRR will always be used as a tool whenever situation demands. Indian Met Dept has forecast a normal monsoon this year and Rainfall is likely to be 98% of the long-term average as per their forecast this year, Sugar production in UP, India’s biggest grower, is expected to jump by 35% to 7 million tonnes in the year beginning Oct 1 as per Sugar Mills Assocication and sugar prices have cooled off impacting stocks negatively this week.
Because of labour issues at key battery supplier EXIDE, production at HERO HONDA has been hit in Haryana and in the past also when labour unrest was witnessed in this area it percolated to other companies too. M&M has slashed prices of Logan by Rs 24,000 - Rs 80,000 and this is expected to add to competition in Auto vehicles market.
Nifty has shown resilience even in the wake of Goldman Sachs worries as it has never broken 5200 on closing basis. Market recovered from a low of 5160 on short covering and latter fresh long position was seen and PCR indicates street is bearish but till 5200 is not cut on downside settlement close can be around 5400 & above. Banking stocks like ANDHRABANK, BANKINDIA, UCOBANK and ALBK can see short covering while weakness in sugar seen.

Stocks looking good: JP POWER, IDBI BANK, NEYVELI, MLL
Weak Stocks: BHARTI AIRTEL, BAJAJ HIND
Supp 5263/5212/5140 Res 5359/5410/5482

Weekly Nifty Update 16 April, 2010 by Tanmay G Purohit
Nifty has closed negative (-100 points) at 5262 and this is 1st negative closing after 9 weeks of rally. This closing is lowest in last 5 weeks and RBI meet next week on 20th would keep investors anxious. Normally RBI has surprised before policy meets and accordingly BANKS have remained negative this week. INFOSYS has come out with results and they were in line with expectations and TECH stocks gained this week indicated by BSE IT by rising more than 3%. TCS, INFOSYS ended as top gainers in Nifty. While UNITECH and TATA STEEL also remained strong on short-covering support.
KOTAK BANK, HDFC, ICICI BANK were top losers this week after battle between SEBI and IRDA made investors nervous about prospects about business of selling ULIP products and still weakness is seen in those stocks. HERO HONDA and IDFC too saw profit-taking as they fell more than 5% each.
Industrial output rose 15.1% in Feb from a year earlier Vs 16.7% and data was slightly below expectations – CAP GOODS growth at 44.4% and CONS DURABLES at 29.9% were top contributors. The mutual fund industry witnessed the highest ever monthly outflow of Rs 1.6 trillion in March 2010, with assets under management (AUM) falling by 20 per cent over the month due to redemptions by corporate and banks—typical at the end of every financial quarter.
Monsoon activity is next important trigger; a second straight poor summer monsoon is unlikely, India's weather office chief has said; data shows that out of about 20 droughts since 1901, 17 were followed by near-normal rainfall and weather scientists from the United States and Britain also expect normal monsoon rains in India this year.
Rupee has become very strong and now trades around Rs 44.35/USD which means TECH stocks may see profit-taking at higher levels after recent rally and dust on INFOSYS results settles down. With most European countries withdrawing their earlier incentives for buying new cars, India  could see flat growth in exports of passenger cars in 2010-11 and 4-wheeler AUTO stocks may underperofrm.
SEBI has banned issue of fresh ULIP products and it wants all financial products to move to no entry load where Finanice Minister too has given same opinion. The battle would go to the courts now but with Government supporting SEBI view, a lot of fresh money would be impacted which can keep markets under pressure in near term. Insurers say a ban on sale and renewal of ULIPS sold by all insurance companies would have led to the bulk of the Rs 75,000 crore investments in the stock markets being withdrawn.
Nifty has hit two lower tops at 5382 and 5373 and now trades near 10-day low; it has been unable to cross 5400 resistance and almost corrected 38% of the whole rise from 4675 levels. Nifty staying below 5224 on a consistent basis would reach 5180 and below that panic selling would be seen in market. This RBI meet on 20th is important event and major results slated to be announced which can keep markets volatile; it is better to maintain good cash levels and try to exit on rallies.

Stocks looking good: GAIL, PTC, SCI
Weak Stocks: REL INFRA, PUNJ LLOYD, JPASSO
Supp 5224/5182/5100 Res 5310/5378/5455

IIP Data topping out as per graph shown below

 

Nifty has broken channel in daily and Weekly near important resistance

DISHMAN PHARMA http://www.dishmangroup.com/index.asp

CMP Rs 224 EPS Rs 17.91 (FY09) Book Value Rs 87 D/E Ratio 0.97

Dishman was established in 1983 and started with production of a range of phase transfer catalysts and quats at Naroda facility. But after that it has come a long way and now it is a leading CRAMS player. Dishman is the global outsourcing partner for the pharmaceutical industry offering a portfolio of development, scale-up and manufacturing services. The products and services offered span customers’ needs from chemical development to commercial manufacture and supply of active pharmaceutical ingredients. The company has its facilities in India, China, Switzerland, Netherlands and UK. The company’s business is divided into four major categories and two sub categories Viz. Dishman Specialty Chemicals, Dishman Custom Services, Dishman Vitamins and Chemicals, Dishman Disinfectants.

• Promoters hold 60% stake in the company (Dec-09). The Company is setting up a plant for hydro and solvent tests. As per the management confirmation, its Shanghai operations will commence by August 2010. 
• The Company has entered into a strategic alliance with a California-based biotech company Codexis.The five year strategic partnership will let company use Codexis' proprietary technology for the manufacturing of building blocks, intermediates and API's for innovator pharmaceuticals companies. This makes Dishman the only company to have a high grade technology platform in the Indian CRAMS segment.
• The Company has already started the construction of its SEZ in Ahmadabad in March FY 09. The SEZ covers area of 110 hectares, out of which 72% is earmarked for the processing zone, while the remaining 28% area will be utilized as nonprocessing zone. This will help company in some diversification.
• The Company has received approval from USFDA for its Naroda (Ahmedabad) plant and from TGA, Department of Health and Ageing of government of Australia for its Balva plant for manufacturing of APIs.
• The company has posted CAGR of more than 20% in both Revenue and Profits for the last 5 years. The Indian Govt expects 18% CAGR for the Pharma sector until 2015 which means
• doubling of revenue up to USD 40bn over the next five years. Growth will be driven by all segments: domestic formulations, generics exports, and outsourcing (CRAMS). Recent healthcare bill passed in the US aims to bring health care facilities to 10% of the total US population which is currently uninsured. Also, the US administration has projected a reduction in fiscal deficit of USD 143bn by cutting cost of public healthcare in the next 10 yrs. 
• Dishman has a very long experience in this business and has ability to manage the clients. With strong R&D backing, the processes are cost effective. Indian companies are awakening to exports and Growth of generics market in Europe, Japan and US would be beneficial. Dishman has enhanced its presence in international market by subsidiaries and so has more scope to expand. 

Technical View:

DISHMAN has underperformed the benchmark indices in last year but it is consolidating its gains and now in a channel.  The stock is trading above all important moving averages and volume oscillators show accumulation in the scrip. Buy for targets of Rs 255-260 in short-term and traders can keep stops at Rs 209 on closing basis. For investors the stock is worth buying slowly for targets above Rs 300 in 1-2 years.

Mumbai Seminar Excerpts:http://www.myiris.com/newsCentre/storyShow.php?fileR=20100405160741194&secID=mostPopular&dir=2010/04/05

Weekly Picks: http://www.myiris.com/newsCentre/storyShow.php?fileR=20100409190512194&dir=2010/04/09

Weekly Nifty Update 09 April, 2010 by Tanmay G Purohit

Nifty has closed positive (+71 points) at 5361 positive close 9th week in a row and first time Nifty has closed above 5300 on a weekly closing basis after 15-Feb-08. Nifty is trading very close to its channel resistance around 5450 on weekly graphs and INFOSYS results on 13 April would be watched very closely. Nifty hasn’t been able to cross 5400 so far and a failure to move above this level in next 1-2 sessions would mean a correction on the cards. Already this rally is 9-week old which is the longest stretch in many years now, normally such records are met with reversal of trends but until Nifty doesn’t break important support levels such as 5200 the trend is expected to remain up.

Nifty gainers this week included RELINFRA, DLF, IDFC and BHEL which rose more than 6% each while SAIL was top loser with 7% loss after Government announced disinvestment in the company worth Rs 16000Cr. HIND UNILEVER tried to suppress index gains along with HCL TECH and HINDALCO as they fell nearly 3% each. FII flows remain key to market trend as they have been buyers for 25 continuous sessions after budget.

India's power output grew an annual 6.6% in the last financial year, the highest in three years, despite coal shortages and less hydroelectric generation, the Central Electricity Authority said in a report. India has 10 percent of the world's coal reserves, the biggest after the United States, Russia and China, but imports have grown rapidly from almost zero five years ago to an estimated 70 million tonnes in the last fiscal. Due to bad monsoons hydroelectric generation were 8.8 billion kilowatt hours less than the target in the last fiscal, while less supply of domestic coal and delay in imports led to a loss of 14.2 billion kilowatt hours. Gas based generation grew 32.56% in April 2009-March 2010 due to higher availability of gas from the Reliance Industries operated gas fields, off India's east coast. Thermal electricity, which accounts for about two-thirds of Indian power generation and includes using coal, gas and liquid fuel, grew about 8.5 percent in 2009/10.

Realty stocks have been active this week on the back of Emaar MGF Land Ltd plans to sell shares in an IPO in 90 days but many times this company has tried to do it and failed so far. Second-line Gas & Refinery stocks are showing very good momentum and GSPL, MRPL, IGL, GAIL look positive.

Industrial output to rise 16% in February from a year earlier, the median forecast in a poll of 20 economists shows. That is marginally lower than an annual rise of 16.7% in January. Figures are expected on 12 April, Monday. However, a substantially stronger-than-expected data will fuel expectations for a 50-basis-point hike in policy rates when the central bank reviews policy on April 20.

Stocks looking good: MICROTECH, ABG SHIP, IFCI, KALINDEE, GIC HSG FIN

Supp 5280/5185/5112 Res 5432/5478/5550

Nifty Update:

Nifty has broken its up trendline of post-budget rally and the up-channel is now history. Technically Nifty is showing a lot of weakness now and with last 3 weeks closings being very flat market is showing signs of big correction ahead. In weekly graph Nifty is trading near channel resistance and so upside looks limited from here. Caution is advised and it is better to be in good cash levels but holding some stocks for long term (only around  30% invested) would be fair allocation at this point of time. IFCI, ONMOBILE, DISHMAN look good for upside and this is still a stock-specific market. Nifty crucial support at 5200 below which short-term panic selling is not ruled out and 5000 would be psychological level to watch. Sensex has failed to move above 18000 so far.

Companies bleed in Naxalite bloodbath

The faceoff with Naxalites is hurting India’s industry. Even as the battle to regain mineral-rich areas from the control of the Naxalites kicks off, businesses are bearing the brunt of the violence and losing big money. With the confrontation only likely to escalate, many entities fear their operations could suffer big time in the crossfire. 

• Around 80 per cent of the country’s high-grade iron ore is in the red corridor. Orissa has 33 per cent of the reserves; Chhattisgarh, 19 per cent; Jharkhand, 27 per cent. Out of the total reserves of 23.59 billion tonnes of iron ore, 13 billion tonnes is haematite ore (high-grade ore) and 80 per cent of that is in the Naxalite-infested areas.
• Business has been under attack in neighbouring Orissa. Naxalites have been blowing up railway tracks, disrupting loading of minerals, raiding mineral deposits or damaging telecom towers. The growing clout of Naxalites in the districts bordering Andhra Pradesh, Chhattisgarh and Jharkhand is hurting business activities.
• In the past couple of years, the towers of mobile operators have turned out to be the soft targets of Naxalite violence. Industry sources estimate that at least 30 towers have been destroyed by Naxalites in the last two years. The Naxalites are targeting the towers to snap any communication among the police and the security forces, a senior police officer said on condition of anonymity.
• Disruption of work, levy to insurgents, targeting of communications and security concerns stall development. http://www.business-standard.com/india/news/companies-bleed-in-naxalite-bloodbath/391233/

The disruptions due to Naxalites are impacting many important industries such as Mining, Steel, Tea Plantation, Telecom and if these industries face disruptions the growth of the economy as a whole gets affected negatively. The expenditure after destroying the facilities is for a single company but when it happens on a regular basis, it can affect the whole industry segment. Destroying telecom towers is one thing but it makes communication between people impossible.

INVESTOR MEET IN NASIK ON 04-APR-2010:

Investor Meet was very popular and main attraction was Q&A Session where almost all the queries got answered by Mr A K Prabhakar and Tanmay G Purohit. Investors were made aware of common mistakes in Trading/ Investing and F&O along with psychological factors that affect positions adversely. Indian market outlook was also given where Investors were made aware of the growth contributors for India. Mr Prabhakar talked about stocks for long-term and the event was covered very well by media also.

"Risk must be taken in Life and Stock Market also - A K Prabhakar" - Lokmat

"Investors themselves need to study markets" - Gavkari

"Good returns follow good analysis - A K Prabhakar" - Sakal

Book your seat today for Next Investor meet in Chennai on 10/April/2010 Saturday for details : http://akprabhakar.blogspot.com/2010/04/investor-meet-in-chennai-on-10april2010.html

INVESTOR MEET In Nasik

Weekly Nifty Update 01 April, 2010 by Tanmay G Purohit
Nifty has closed positive (+9 points) at 5290 positive close 8th week in a row and this is highest weekly closing for Nifty after 18-Jan-2008. Nifty broke out above 5310 resistance this week but could not sustain as still it hasn’t closed above that level on any day. BSE MIDCAP and SMALLCAP indices closed higher this week outperforming Nifty/Sensex as stock-specific performance was witnessed on the back of NAV-propping by Mutual Funds. HDFC and TATA MOTORS rose more than 7% each, REALTY stocks recovered as DLF and UNITECH were one of top gainers in Nifty. TECH stocks were on receiving end this week as Rupee appreciated towards 18-month – INFOSYS -5%, HCL TECH -4%. SUGAR stocks continued to fall this week and RENUKA, SAKTHI SUGAR, BAJAJ HIND fell 5-6% each. 
India's manufacturing growth slowed down in March, dropping from a 20-month-record in February, as mounting cost pressures took a toll on expansion in output, a survey showed. The HSBC Markit Purchasing Managers' Index, based on a survey of 500 companies, fell to 57.8 in March from 58.5 in February, which was the strongest since June 2008. A reading above 50 means activity is expanding. Overseas fund houses have made a net investment of over Rs 20,600 crore ($4.5 billion) in Indian stock markets during the last three months of financial year 2009-10, according to the SEBI data. FIIs poured over Rs 1,09,300 crore in Indian stock markets in 2009-10. In contrast, they had sold shares worth Rs 47,706.2 crore in 2008-09. 
Sensex has formed a double top at 17790 levels and until a closing past 17800 is not seen, fresh strength would be difficult to come. Nifty has to close past 5310 on a sustained basis but stock-specific action is expected to continue as investors bet on expectations of Q4 March 2010 results. INFOSYS would be important as it starts the reporting season on 13 April 2010. Nifty falling below 5200-5170 support would be a sign for reversal in up-trend and below 5000 panic selling can be seen. Nifty may face strong resistance at 5370/5450 levels as volumes are still not supporting the up move. The forecast for the southwest monsoon for 2010 is the next major trigger for the market. Good rains this year after last year's drought will boost farm output and rural incomes. But another monsoon failure will add to inflationary pressure which in turn may hamper the current strong economic rebound.
Stocks looking good: FSL, DEEPAK FERT, TINPLATE, MRPL, DISHMAN
Supp 5230/5160/5095 Res 5328/5374/5455