KPIT - Strong buy CMP Rs 132

KPIT (Rs 132)

• KPIT Cummins provides technology solutions to global clients in the areas of Advanced Technology Solutions, Enterprise IT and Business / Knowledge. So far the company has made seven acquisitions since 2002, most recent being Sparta last year.
• KPIT is dealing in following verticals - Auto Electronics, Semiconductor Solutions, Business Intelligence, Global Business Solutions, Manufacturing and Diversified Financial Services. KPIT developed AUTOSAR 2.0 complaint tools used by leading Tier-1 company to develop system level components for car manufacturers.
• KPIT focused on three verticals - automotive, industrial and high-tech, these sectors got badly affected by the downturn and now we already see Auto industry reviving very well along with other sectors.
• The company is looking at Government and Defense contracts which would result in the company foraying into the domestic space.
• Recently the stock is in a firm up trend after announcement of Joint Venture with BHARAT FORGE for innovative solutions belonging to next generation of automotive technology.

The stock trading at Rs 132 looks very good long term investment and investors can accumulate this stock in dips. It is near a major breakout and once Rs 145 is crossed next rally would be very smooth; 12-15 month investment target can be Rs 190-200 for the stock.
In short-term one can buy around current levels for target Rs 155-160, stops below Rs 128 for short-term traders only.

Weekly Nifty Update 12 June, 2010 by Tanmay G Purohit

Nifty has closed at 5119 down 16 points and this week has seen flat closing after lot of volatility in the markets. BSE REALTY index fell the most 3.8% while HEALTHCARE stocks stood strong. SIEMENS, HDFC BANK, M&M, CIPLA rose more than 3% each while DLF, BPCL, HINDALCO, HCL TECH and UNITECH were major losers from Nifty.
India's IIP rose 17.6% in April from a year earlier, sharply higher than 13.5% growth recorded in the previous month, underscoring a strong pick up in the economy. Data was better than expected and it may push RBI to raise rates before July 27 policy review meeting; it would be interesting to see how Base rate comes into effect as banks are to enter new system of lending from July 1.
Mines Minister has said that proposal to impose a windfall tax on miners for Iron Ore has been sent to Finance Ministry and it is negative for SESA GOA. Metal stocks have not recovered in this rally and this looks the weakest sector of the market where big correction is possible when market falls again.
Finance Minister has said Escalation in Euro zone crisis may hurt capital flows and India cannot remain aloof of global developments and he also cautioned banks should pay immediate attention to contain Bad Loans. He has cautioned banks that rising non-performing assets (NPAs) could lead to high lending rates and in turn hamper credit flow to productive sectors.
Both IMF and World Bank have warned that a double-dip recession could not be ruled out in some countries if investors lose faith in efforts in Europe and elsewhere to tackle rising debt levels and first time we are witnessing cautions from all important organizations about global recession.
Global hedge funds suffered worst losses for 18 months as investors bet wrongly that stock markets would rise. Hennessee Hedge index said funds were down on average 2.99% last month, the heaviest fall since October 2008.
The Indian auto industry sold 12,08,851 units last month, a record sale for the month of May and auto export from the country stood at 1,79,130 vehicles which is also a record but best looks discounted by the market as Nifty trades around 21 P/E and correction would be a chance to buy for long term investors; we have previously also advised maintaining 65-70% cash and we would wait for better opportunity until right time comes.

Technical View:
Nifty is trading in a channel for the last 8 months and now until breakout above 5200 is not seen trend would be considered weak. Any break below 5020 would give way to fresh selling in days to come where levels below 4600 are also possible. Nifty to become strong has to close past 5200 on a consistent basis.

Stocks looking good: TATACOMM, JSW ENERGY, HDIL
Weak Stocks: TATA STEEL, SESA GOA, HERO HONDA
Supp 5075/4950/4760 Res 5170/5265/5350

Investors need Training

Training programme which we have been conducting for a long time http://www.akprabhakar.com/training.php  was highlighted in ET where Mr.Tanmay Purohit is mentioned.

Many feel why do we need training to be an investor and there are few videos which were done in Mumbai and Nasikhttp://www.youtube.com/akprabhakar  and Mr. Tanmay video http://www.youtube.com/tanmaypurohit  these are just few minutes link we have given as training programme is conducted 6-7hour.

http://economictimes.indiatimes.com/personal-finance/savings-centre/analysis/Get-trained-first-before-you-turn-an-investor/articleshow/6018323.cms  What to expect ? “We offer investors a set of tools that can be used in the market and the necessary know-how as to how to use them. It’s up to investors to enhance their skills over a period of time,” says Tanmay Purohit, an independent trainer and techno-fundamental analyst.
Check print edition of Economic Times in Personal Finance section also, same article is published.

Weekly Nifty Update 05 June, 2010 by Tanmay G Purohit

Nifty has closed higher 2nd week in a row and it gained 68 points to close at 5135. AUTO and PSU stocks were major gainers this week after robust sales numbers from all Auto companies and PSU stocks saw buying as we move into decision for Fuel price deregulation on Monday June 7. TELECOM stocks rose on value-buying support after various stake sale rumours in the sector – RCOM rose 14%, IDEA 11% while BHARTI was up 6%. METALS continued to lose this week as Steel Companies indicated price decrease in June – STERLITE fell 4.8%, JINDAL STEEL, TATA STEEL were among top losers. SUZLON fell the most 8% in Nifty after company announced Rights issue of 2:15 at Rs 63/share.

GDP data was above expectations as Indian Economy grew by 7.4% during 2009-10 Vs 6.7% in 2008-09 but Agriculture growth has been lowest in 5 years at 0.2% because of weak rainy season last year. Better growth in Economy may make Central Bank tighten more and Deputy governor Subir Gokarn said RBI will not move away from the monetary policy tightening path and interest rates will rise in the coming months.
The government said on Friday all listed companies are required to maintain a minimum public float of 25 percent and existing listed companies having less than 25% public holding have to reach the stipulated level by an annual addition of not less than 5% to public holding and it can make many companies raise money through IPOs which may pressurize Secondary markets in the wake of global slowdown.
FII data shows negative signs as they sold Net Rs 9,436 crore in the month of May and they have turned net sellers after January as Eurozone troubles have made them take money out of India and Rupee depreciating more would pressurize only. Though GDP data was impressive Chief Statistician Pronab Sen said it may be difficult to achieve an 8.5% economic growth this fiscal as many uncertainties persist - the growth drivers continue to be weak; because consumer demand is not growing that fast, Sen added.
AUTO numbers were excellent for May and production & sales figures of five cement companies signal healthy demand from real estate and infrastructure sectors, although the impending monsoon is likely to put the brakes on cement usage in the near term.  - A.C.C, GRASIM, JPASSOCIAT, ULTRATECH, SHREECEM can see more correction. SAIL has cut prices by Rs 1500/tonne this week and Copper, aluminum, zinc fell as metals extended their decline after Chinese manufacturing expanded at a slower pace in May, adding to signs that growth may moderate in the world’s biggest metals consumer and Metal stocks here show 15-20% more decline – TATA STEEL, STERLITE, BHUSANSTEEL would lead the fall when markets start correcting. The global sugar market will see a surplus of about 5 million tonnes this year, 30% more than previously expected, even as consumption rises, while India is unlikely to export any excess sugar soon, industry sources said – SUGAR stocks have shown outperformance in a weak market and they may continue if monsoon recedes somewhat.
The monsoon rains were 11% below normal in the week to June 2, the weather office said and if such news continues it would impact negatively. Food prices are still a concern as food price index rose 16.55% in the year to May 22; India's anxiety over erratic monsoon rains will become more acute as rising incomes and a growing population push up demand for farmed produce faster than supply, turning the nation into a major importer within 5 years.

Technical View:
Nifty has pulled back for the last 8 sessions and now 5170 which is 61.8% retracement of the whole fall is a crucial resistance. Nifty has formed support at 4960 and caution advised if that is broken. After this week Nifty has been able to close above all important averages which is a positive sign but volumes remain a concern and participation is missing while Adv-Dec stats are also not supportive. METALS, CEMENT, CAP GOODS would be weak sectors while SUGAR can pull back more. FERTILIZERS show signs of more short-term rally and UNIPHOS looks good too. It is advisable to remain stock-specific in this market as Index not showing a lot of strength and risk-reward not favourable for an investor.

Stocks looking good: APIL, UNIPHOS, DIVI LAB
Weak Stocks: ABAN, FORTIS, HOTEL LEELA
Supp 5070/4955/4840 Res 5175/5279/5349

AXIS BANK breaks the up trend

AXIS BANK (CMP Rs 1205) has broken the up trendline support which it had been maintaining well in whole rally. Now there are rumours of KARNATAKA BANK being merged with AXIS BANK but whether really synergies are present after the merger is anybody's guess. We have seen ICICI BANK cracking after unfavourable ratio of merger with BANK OF RAJASTHAN and I feel small private banks merging with larger ones would be negative in short-term.
AXIS BANK shows next major support at Rs 1048 which is its 200DEMA and looking at formation levels below Rs 1000 look possible. Investors may take profits in this stock while traders may have Rs 1240 as stop loss for the down move.