Weekly Nifty Update 12 Feb, 2010 by Tanmay G Purohit

Nifty has closed positive +69 points at 4826 which is first positive close in last 4 weeks and market has shown quite a resilience to negative global market cues. Nifty was gap-down on Friday 5th Feb, but now the gap is closed and once we sustain past 4850 a swift rally towards 4950-5000 is possible. Nifty has time and again shown good support near 4700-4730 levels and below that we have 200DEMA which is 4659 which can be a crucial support too, so the downside looks limited. Budget is driving the trends in individual stocks and this week belonged to PSUs as HIND COPPER, STC, NMDC rose more than 5% each. IBREALEST, SESA GOA, CHAMBAL FERT, LITL were prominent gainers this week while DR REDDY, GUJ NRE COKE, REC, PFC saw profit-taking as they lost above 4% each. UNITECH was top gainer in Nifty with 8% gains.

Food price index rose 17.94% in the 12 months to Jan 30 Vs 17.56% in previous week as per government data. India's annual wholesale inflation picked up to 7.31%t in December 2009, compared with 4.78% in November. India's finance and oil ministers will meet on February 14 to discuss fuel pricing and subsidies, as per news reports and we have to see if really fuel prices are going to be raised and we get deregulation or something else, stocks in action would be GAIL, ESSAROIL, RIL, HPCL, OIL, BPCL, IOC. India's exports in January rose 11.5% to $14.3 billion, Trade Minister Anand Sharma said. The Reserve Bank said it is not going to change its policy rates or other tools, which have a bearing on interest rates, till April 20 when it comes out with its annual monetary policy for next fiscal. The Indian economy is expected to grow 7.2% in the financial year through March, the government said in its advance estimate, the growth would still lag China which grew 8.7% in 2009 but would be enough to maintain 2nd largest economy status. Steel consumption rose 7.9% to 45.93 million tonne during April-January in the current financial year over the same period a year ago and as per Steel Minister India will become 2nd largest steel producer by 2012.

India's industrial output rose at a faster-than-expected 16.8% in December from a year earlier, helped by stimulus measures that boosted domestic demand, data showed. The median forecast in a Reuters poll was for an annual rise of 12%. This is a very positive surprise and next week we may have a strong start but markets are still in consolidation mode and no big fall or big rally seems until budget so if one has bought in dips, one can slowly take profits when we see good rise. Nifty has to sustain above 4850 for further move else once again selling is not ruled out. But given heavy shorts in the system it is covering which can boost the indices further. 

TELECOM stocks BHARTI AIRTEL, IDEA, RCOM look to outperform whem indices continue up trend. PSU Stocks HIND COPPER, STC, NEYVELI look good.

Supp 4770/4710/4645 Res 4860/4940/5000

Don't fall prey to tips for quick returns: Sebi

SEBI has observed a proliferation of websites that offer investment advice to investors. Many of these websites offer investment advice not backed by any reasonable basis and prima facie appear to be misguiding. Investors should realize that when they follow such advice they are exposing themselves to undue risk in using unconfirmed information available on such Websites/Blogs/astrology predictions or advice/Newspaper Advertisements/SMS’s/Emails/rumours/ advice rendered through television or print media and trading tips on an intra-day basis, short term basis or long term basis. The public in general is advised not to fall prey to or be lured by such sources of information promising quick gains and unrealistic high returns. It is advised that investors should take well informed investment decisions.

The following may be borne in mind:

• Deal only with/ through SEBI registered intermediaries.
• Do not get carried away by advertisements promising unrealistic gains and windfall profits.
• Do not invest based on market rumours or unconfirmed or unauthentic news.
• Be aware that advice through television or print media does not mean that it is the opinion of the channel or publisher.
• Be extra cautious while using information available from media sources such as Websites/ Blogs/ Newspaper Advertisements/ SMS’s Emails/rumours/ advice through television or print media for information and tips for intra-day, short term or long term investing.
• Do not be guided by astrological predictions on share prices and market movements.
• Do not make investment decisions on the basis of implicit/explicit promises made by anyone.
• Do not be unduly influenced by indicative returns.
• Do not be unduly influenced by Bull Runs/Bear Runs while making investment decisions.

Remember: Always know your risk-reward BEFORE investing.

• There are many websites which educate us as investors, there are news websites, company websites, database websites which we can use to know more about the companies that we wish to invest.
• Never invest on market rumours or tips, if one says one has inside information why oneself is not taking full benefit and sharing with everyone else. Are the so-called insiders so reckless that they don't know how to protect their own interests?
• Now there are so many  business channels and investment related newspapers and a multitude of analysts write their views but nobody is bothered about knowing their credentials, a failed trader becoming a super analyst is a  rarity but it seems it is becoming abundance. May be SEBI is of the same view and that is why they have had to caution investors.
• Predicting market turns is always difficult but as human beings we have to predict for future course of action. As investors we need to be cautious with those who claim they can time the market like a school time-table, only certainty in market is its uncertainty so never invest on any market call / tip before knowing the credentials of the person, IT IS YOUR HARD-EARNED MONEY AT STAKE!

Caution to investors : SEBI press release http://www.sebi.gov.in/press/2010/201036.html 

Sebi cautions investors against misleading ads http://www.financialexpress.com/news/sebi-cautions-investors-against-misleading-ads/578218/

FACTBOX - Key facts about India's steel industry

Reuters - Steel demand in India rose more than 8 percent in 2009, buoyed by the government's focus on infrastructure and revival in the automobile and consumer goods sectors of Asia's third-largest economy.

With strong growth predicted for the auto and housing sectors in 2010, steel demand is set to grow in double digits.

Global steel production, however, fell 8 percent last year as demand from key industries shrank amid the economic downturn.

Following are some key facts about India's steel industry, which is witnessing growth rates second only to China.

* India's iron and steel industry contributes about 2 percent of gross domestic product, or about $20 billion to the country's $1 trillion economy.

* India is now the fifth-largest producer of steel in the world, behind China, Japan, Russia and the United States.

It produced 55.1 million tonnes of the alloy in 2009, but is still only a tenth the size of China, the No.1 steel producing country.

* State-run Steel Authority of India is the largest producer, with capacity of 13.8 million tonnes. Tata Steel, the world's No. 8 steelmaker, has capacity in India of 7 million tonnes, while JSW Steel is third with annual capacity of about 6.9 million tonnes.

About half of India's steel industry comprises a large number of makers of higher-end re-rolled steel with less than one million tonnes of capacity each.

* India's steel producing capacity is likely to touch 120.62 million tonnes by 2011/12, according to the federal steel ministry. Based on planned projects, capacity could go up to 293 million tonnes by 2020.

Regional governments have signed 222 memorandums of understanding for planned capacity of 276 million tonnes.

* India has immense scope for increasing consumption of steel. Current per capita consumption is around 40 kg, compared with 100 kg in Brazil, 250 kg in China and a global average of 198 kg. Steel demand is expected to rise 5-6 percent annually until 2019-20.

* India's growing status as a global small-car hub is drawing global steel makers, especially Japanese firms, to the country. World No. 2 steelmaker Nippon Steel is in talks with Tata Steel for an automotive steel joint venture, JFE Steel has tied-up with India's JSW Steel, while Sumitomo Metal Industries Ltd is considering a JV with Bhushan Steel.

* Indian steel companies have been among the best performing stocks in 2009, widely outperforming the benchmark stock index.

Shares of Tata Steel, SAIL and JSW Steel rose between 2-4 times during the year, compared with the 81 percent rise in the main BSE index.

Source: http://in.reuters.com/article/businessNews/idINIndia-46052120100210?pageNumber=2&virtualBrandChannel=0&sp=true

Steel sector demands hike in export duty on Iron Ore in Budget http://economictimes.indiatimes.com/news/economy/foreign-trade/Hike-export-duty-on-ore-Steel-min/articleshow/5541314.cms

India will become 2nd largest steel maker by 2012: Virbhadra Singh http://economictimes.indiatimes.com/news/news-by-industry/indl-goods-/-svs/steel/India-will-become-2nd-largest-steel-maker-by-2012-Virbhadra-Singh/articleshow/5555478.cms

Update on Coal and GUJ NRE COKE:-

We had talked about Coal Sector and GUJ NRE COKE in particular. Lets see why Coal prices are expected to rise.  

• India could face a ‘coal shock’ sooner than later if the power utilities do not wake up to the fuel security risks from stagnating domestic production and start planning long-term coal imports to meet the fuel shortage. Although big power producers like NTPC are already meeting domestic coal shortages with imports, they have not shown any urgency to get into long-term import contracts. 
• China’s coal demand has overtaken its domestic production, forcing the world’s largest coal producer to import coal. Till 2006, China was a net exporter of coal.
• The global coal production in 2008 was 6.8 billion tonne while consumption stood at 6.7 billion tonne. China produced 43% of the world’s coal. So there is a clear risk that if a big coal consumer like India suddenly enters the world market, it could send international coal prices soaring.
• Macquarie Research has maintained its ‘Outperform’ rating Gujarat NRE Coke post third quarter results. It expects the stock to touch Rs 103 target in next 12 months. http://economictimes.indiatimes.com/Views/Recommendations/Macquarie-sets-target-of-Rs-103-on-Gujarat-NRE-Coke/articleshow/5512351.cms

GUJ NRE COKE:
The stock has held on to the channel support so far and higher coal prices may drive the stock price higher in future. Accumulate for handsome returns.

India likely to face a coal shock - http://www.financialexpress.com/news/India-likely-to-face-coal-shock/576845/
Previous Post about Coal - the Black Diamond http://tanmaygopal.blogspot.com/2010/01/coal-black-diamond-india-is-3rd-largest.html

Weekly Nifty Update 06 Feb, 2010 by Tanmay G Purohit

Nifty has closed down by 2.5% this week after the bounce towards 4950 was limited only to 4950 and we could not cross the resistance as follow-up buying was absent. Nifty trades below its important moving averages but 200DEMA is at 4654 which still may give short-term support, below 200DEMA, if Nifty sustains for 2-3 sessions, more panic selling is not ruled out in which case even 4300 can be a possibility. 

There are many stocks who come as good opportunities for investors and bull market or bear market they do perform, case in point would be a stock like IGL which was recommended long back around Rs 165 and now even after this correction the stock has hit new all time high at Rs 249 on Saturday special session. GMR INFRA, EKC are stocks where worst is getting over and one can accumulate these stocks. RELIANCE looking to buy Oil Sand company in Canada is very positive development in my view and this correction one can slowly buy RELIANCE IND for long term. TELECOM stocks have remained stable even in this fall and BHARTI AIRTEL/IDEA/RCOM would do well once there is stability on index, TATACOMM has been recommended before but it has only become more attractive after that.

Union Budget to be announced on 26 Feb and Railway Budget on 24 Feb would drive some stocks volatile - FERTILIZER stocks can be watched for action as some subsidy-related announcement may happen given tight finance position for Government - DEEPAK FERT, CHAMBAL look very good. Kirit Parikh Commeetee Report was submitted last week and the panel recommended raising of Fuel prices which has not been followed yet by the Government but soon a decision is expected to that effect. Any rise in price can benefit RIL/ESSAR OIL as they can start their retail outlets soon and already ESSAR OIL has announced they are going to double their petrol pumps in next few months. GAIL has been excluded from subsidy burden as per a recommendation in report and the stock would be a huge beneficiary if the advice is followed. 

Nifty so far has taken support at 4693 which was crucial resistance before and as long as we don't see closing below this level a small pullback towards 4900 is always possible but this market is becoming an investor's market and long-term investment would only pay rich rewards. Any rally has to be backed by good volumes which have been lacking so far and short-term traders may find the going very difficult on long side for now. 

Supp 4690/4535/4478 Res 4833/4950/5030