Monday, September 29

Enter 20% now

Tomorrow we may see a week opening

trade below 3874 continue then heavy panic may seen in market and it slide up to 3752 and then 3654 level. At upside it face resistance at 3970.

Try to Build a portfolio by entering just 20% of fresh investment.



REL cap around 979

BHEL at 1450

Reliance around 1832 (Good Support)

Unitech is a value buy at 100 levels


ICICI bank keep on accumulating.Use these levels to enter


Bounce is excepted in Market in coming days probably tommrow or day after so buy scrips for quick 5-10% gain.

Sunday, September 28

Outlook For Next Week (29 Sep- 03 October)

4200 Levels to be watched as at this level call Writing has taken place and 3800 on Downside


Nifty Views Updated in http://brameshtechanalysis.blogspot.com/2008/09/nifty-weekly-29-03-oct.html

Please have a look at this post http://brameshtechanalysis.blogspot.com/2008/09/hope-people-have-exited-there-longs.html

Stocks Specific Trading Calls

SBIN Buy at 1404-1420 Levls for a tgt of 1486 SL 1375

Reliance Buy at 1950-1970 Levels TGt 2013 and 2063

LT will be going Ex Bonus so trade with caution Buy at 2450-2470 Levls tgt 2506 2535

BHEL Buy for a tgt of 1600

Mercator Lines BUy at 53-55 Odd levels and Book at 60+

Moser Bear Buy at 110 Levels for a TGT of 132

VISHAL INFO BUY IF BREAKS 356.50 TGt 365

Ranbaxy buy Few at 250-260 levels for a tgt of 300

Ranbaxy is a decent medium-term pick as it has corrected heavily. With the promoters increasing stake and the US problems getting resolved, the stock is bound to appreciate.


Mid cap Universe only for Investment


Celestial Labs has been attracted good investment buying. Knowledgeable persons project an EPS of Rs.11 in FY09 and a share price of Rs.45.

ITC & HUL are the only scrips standing rock solid in the carnage since January 2008. This means that big players are bullish on the domestic consumption story.

GAIL and L&T go ex-bonus in few days from now. Marketmen expect GAIL to touch Rs.400 and L&T Rs.2000 in a few months from now.


Default Stop Loss 2%.Keep Trailing your Positions



Any Specific Stock Query mail to bhandaribrahmesh@gmail.com

Saturday, September 27

Nifty Weekly 29-03 Oct


Friday, September 26

Why Did Lehman Go Bust And What Exactly Is Subprime?

US mortgage crisis: A subprimer


Q: What is a sub-prime loan?

A: In the US, borrowers are rated either as 'prime' - indicating that they
have a good credit rating based on their track record - or as 'sub-prime',
meaning their track record in repaying loans has been below par. Loans
given to sub-prime borrowers, something banks would normally be reluctant
to do, are categorized as sub-prime loans. Typically, it is the poor and
the young who form the bulk of sub-prime borrowers.


Q: Why loans were given?

A: In roughly five years leading up to 2007, many banks started giving
loans to sub-prime borrowers, typically through subsidiaries. They did so
because they believed that the real estate boom, which had more than
doubled home prices in the US since 1997, would allow even people with
dodgy credit backgrounds to repay on the loans they were taking to buy or
build homes. Government also encouraged lenders to lend to sub-prime
borrowers, arguing that this would help even the poor and young to buy
houses.
With stock markets booming and the system flush with liquidity, many big
fund investors like hedge funds and mutual funds saw sub-prime loan
portfolios as attractive investment opportunities. Hence, they bought such
portfolios from the original lenders. This in turn meant the lenders had
fresh funds to lend. The subprime loan market thus became a fast growing
segment.

Q: What was the interest rate on sub-prime loans?

A: Since the risk of default on such loans was higher, the interest rate
charged on sub-prime loans was typically about two percentage points higher
than the interest on prime loans. This, of course, only added to the risk
of sub-prime borrowers defaulting. The repayment capacity of sub-prime
borrowers was in any case doubtful. The higher interest rate additionally
meant substantially higher EMIs than for prime borrowers, further raising
the risk of default. Further, lenders devised new instruments to reach out
to more sub-prime borrowers. Being flush with funds they were willing to
compromise on prudential norms. In one of the instruments they devised,
they asked the borrowers to pay only the interest portion to begin with.
The repayment of the principal portion was to start after two years.

Q: How did this turn into a crisis?

A: The housing boom in the US started petering out in 2007. One major
reason was that the boom had led to a massive increase in the supply of
housing. Thus house prices started falling. This increased the default rate
among subprime borrowers, many of whom were no longer able or willing to
pay through their nose to buy a house that was declining in value. Since in
home loans in the US, the collateral is typically the home being bought,
this increased the supply of houses for sale while lowering the demand,
thereby lowering prices even further and setting off a vicious cycle. That
this coincided with a slowdown in the US economy only made matters worse.
Estimates are that US housing prices have dropped by almost 50% from their
peak in 2006 in some cases. The declining value of the collateral means
that lenders are left with less than the value of their loans and hence
have to book losses.


Q: How did this become a systemic crisis?

A: One major reason is that the original lenders had further sold their
portfolios to other players in the market. There were also complex
derivatives developed based on the loan portfolios, which were also sold to
other players, some of whom then sold it on further and so on.
As a result, nobody is absolutely sure what the size of the losses will
be when the dust ultimately settles down. Nobody is also very sure exactly
who will take how much of a hit. It is also important to realise that the
crisis has not affected only reckless lenders. For instance, Freddie Mac
and Fannie Mae, which owned or guaranteed more than half of the roughly $12
trillion outstanding in home mortgages in the US, were widely perceived as
being more prudent than most in their lending practices. However, the
housing bust meant that they too had to suffer losses - $14 billion
combined in the last four quarters - because of declining prices for their
collateral and increased default rates.
The forced retreat of these two mortgage giants from the market, of
course, only adds to every other player's woes.


Q: What has been the impact of the crisis?
A: Global banks and brokerages have had to write off an estimated $512
billion in sub-prime losses so far, with the largest hits taken by
Citigroup ($55.1 bn) and Merrill Lynch ($52.2 bn). A little more than half
of these losses, or $260 bn, have been suffered by US-based firms, $227
billion by European firms and a relatively modest $24 bn by Asian ones.
Despite efforts by the US Federal Reserve to offer some financial
assistance to the beleaguered financial sector, it has led to the collapse
of Bear Sterns, one of the world's largest investment banks and securities
trading firm. Bear Sterns was bought out by JP Morgan Chase with some help
from the Fed.
The crisis has also seen Lehman Brothers - the fourth largest investment
bank in the US - file for bankruptcy. Merrill Lynch has been bought out by
Bank of America. Freddie Mac and Fannie Mae have effectively been
nationalized to prevent them from going under.

Q: How is the rest of the world affected?
A: Apart from the fact that banks based in other parts of the world also
suffered losses from the subprime market, there are two major ways in which
the effect is felt across the globe. First, the US is the biggest borrower
in the world since most countries hold their foreign exchange reserves in
dollars and invest them in US securities.
Thus, any crisis in the US has a direct bearing on other countries,
particularly those with large reserves like Japan, China and - to a lesser
extent - India. Also, since global equity markets are closely interlinked
through institutional investors, any crisis affecting these investors sees
a contagion effect throughout the world.

$700 BILLION BAILOUT – For US Finnacial System Will It Work

All eyes are on the US, will this $700 billion package come through or not? Though most know that US does not have any other option today, the question is will the entire $700 billion be sanctioned all at one go or would it be in tranches? At the same time, there are many more core questions which have come to the fore now. Questions you wanted to ask but did not know where to ask. So here goes…

Will the bailout work?

The US Federal Reserve has asked for a bailout of an eye-popping $700 billion. Treasury Secretary Henry M. Paulson Jr and Ben Bernanke are busy convincing the Senate to agree to the bailout and they are convinced that this bailout is the only and right answer to help America go ahead, to pull it back from the deep abyss it is today in. But no one really knows how exactly this bailout package has been designed. The only thing we know is that the Govt will use the money to buy the mortgage-linked investments and it will then try and sell the assets, trying to recover as much money it can. Surely, given the slump in the housing markets and not knowing how much more further it could slip, putting a value to the amount of money, the Govt would be able to recover, is akin to predicting the weather. The tax payer does not know today how much would be his ultimate price tag and even after paying the price, it does not ensure that all will be well.

The $700 billion bailout package does not guarantee anything. But what it would do is bring back confidence and re-establish the badly pummeled faith of the world back into the system. So basically the bailout is a confidence building exercise. This is needed as banks have the liquidity but are unwilling to lend as they do not know who would go down next. So this bailout would help restore the faith back, announce to the world that all which was bad has already happened and now America is on a rebuilding mode. This will thus ensure that banks start lending again and bring back the much needed liquidity into the system.

Right now, in America, too many people are out of jobs, too many people are unable to pay their mortgages and too many banks have collapsed. So the main objective of the bailout is to get liquidity back into the system, so that the housing slump is arrested and people come back to buy homes.

What is the credibility of the credit rating agencies today?

After the collapse of legendary financial institutions, how can we ever trust the rating agencies, who all along have been giving these collapsed institutions a AAA rating, the gold standard? To a large extent, it would be no exaggeration to lay the blame of this entire crisis on the rating agencies. A report put out by Bloomberg states that the top two rating agencies on New York – Moody’s and Standard & Poor’s, since 2004, have adjusted their rating requirements for securities backed by commercial properties because of the ``threat of losing deals.'' Wall Street underwrote $3.2 trillion of loans to homebuyers with bad credit and undocumented incomes from 2002 to 2007. If these grading’s had not been adjusted to AAA, the money flow would have stopped and this entire financial mess could have been avoided.

Bloomberg has stated that after the defaults started, S&P and Moody's downgraded more than three-quarters of the AAA-rated CDO bonds issued in the last two years. So what is their credibility today? A secure investor puts money only in FMPs, only in companies which have been graded AAA but what to do when that rating itself is flawed?

Apart from these two, one cannot help but wonder about the Great American Transparency system. When it came to transparency, America was stated to be the place to learn one’s lessons. So if there was so much transparency, how come no one saw this coming six months ago? When Lehman, Merrill Lynch, Washington Mutual or AIG presented their numbers, wasn’t the rising NPA pointing towards a collapse? What happened to Corporate Governance? And what about the top notch executives working in Lehman and the likes? They were looked up with a kind of reverence. What is their credibility today? Haven’t they sold off their credibility for a few dollars more?

The collapse of the American financial system is more about a complete erosion of values and this is probably what the $700 billion bailout is attempting to restore.

Thursday, September 25

Buying Excepted in ABB once it breaks 847



ADX is near 30 which is a sign of bullishness.

DI+ is about to crossover DI- Long positions can be taken with a SL of 829 on all Longs Initiated.

Wednesday, September 24

Praj Forming Double Botton at 141




Can see a bounce from 139-141 levels or else go short below 138

Wait n Watch at 138 Levels

Tuesday, September 23

IOL NETCOM

Buy this stock at cmp or add more at dips for a month or so

GDR Issue is offing may rock any time


BOok Profit in NIfty PUTS and add more at lower levels


BHEL at its support add now and more at dips

Sell SBI on strength around Rs.1,527/1,535 with a stop of Rs.1,546. The stock is ripe for a correction upto Rs.1,487 and Rs.1,472.

ECB RELAXATION

People are yet to get over the historical collapse of the US financial markets last week and the resultant meltdown on Dalal Street. Yesterday’s run-up on the price of crude led to some more anxiety. And in all this anxiety, a news which otherwise would have boosted the markets, went seemingly unnoticed.



Yesterday evening, the Govt relaxed norms for External Commerical Borrowings (ECBs) for infrastructure projects. This means that companies engaged in building ports, airports, roads, bridges, power and telecom, could, till yesterday, borrow only upto $100 million a year for rupee spending in India. But from today, they can now borrow 5 times more – the limit having been increased to $500 million per year. These ECBs would have a minimum repayment period of seven years, obviously meaning that only projects with long gestation periods, mainly infra projects would thus be able to access these ECBs.



For ECBs of three to seven years tenure, the borrowing rate has been left unchanged at 200 to 350 bps plus LIBOR. For borrowings between five-seven years, the all-in-cost ceiling has also been left unchanged at 350 bps while for those above seven years; the rate has been relaxed from 350 to 450 bps above LIBOR.



This is good news. Good because it indicates that the Govt is going ahead with its promised eye on reforms. Maybe in the current scenario, where even companies with a strong balance sheet might find it difficult to get funding, for the long term, this is a positive move. The relaxation of the ECB norm, as experts say, might help bring down the dollar vis-à-vis the rupee. But probably, another way to look at it is that Govt is seeing the rupee at stronger levels in the months to come. So maybe right now, this news may not make much sense given the volatile rupee and dollar tussle. This, run up on the dollar, many say, is an aberration and once things settle down a bit, the rupee would also stabilize at better rates. So once that happens, this ECB relaxation will make a lot of sense.



Interest rates on the overseas markets would come at a much cheaper rate for large borrowings and for such long tenures would make more sense to borrow abroad than to borrow in India, where the interest rates would be higher.



What this also means is that, to a very large extent, the India growth story, as the Govt sees it, remains intact. Given the turmoil world over, India, to a large extent has remained more resilient. Unlike the US, which is the world’s largest economy, shocked everyone by overleveraging itself to just one sector and allowed that one sector to bring down the entire financial pillars of the country. To that extent, we should be thankful that India is not a “card swiping” economy, basing all its growth on the housing sector. So when the growth of India is still driven by the core sector, and with the impetus now being given to the Govt, the infra sector, which is expected to need around $500 billion by 2012 would find many takers for the ECBs.



The realty sector does not qualify for this increased ECB limit. The ECB ceiling for companies other than infrastructure companies stays unchanged at the previous $50 million. And taking a lesson or two from US, the Govt would not be in a hurry to relax this limit for realty companies any time soon. Little wonder then that the realty stocks were sulking at lower levels on the bourses today.



The rising crude has given the jitters once again, raising concerns of inflation and growth and dollar rates. Undoubtedly, this relaxation of the ECBs limit for infra is a step in the right direction but it will take some time to get to the desired destination. Its like the story of Birbals’ khichdi – the ECB right now is like the light to the man in the cold water in the night; it brings warmth to know that more ECB is now available; we just have to get through this long, dark night.

Sunday, September 21

Calls for 22-26 September

Nifty Bounced from Lower Levels Made double bottom at 3800 which means a Intermediate Bottom has been formed and can see a bit of Upsteam Nifty charts updated in Previous post.

People who bought Reliance BHEL and other scrips recommended in previous post should have good money All stocks showed a good bounce and some profit should be book at lower levels.

Hedge your Self with 4000,4100 puts at 4450-4500 Nifty Levels

Stock Specific:

LT resulted in a higher bottom formation on the daily charts. A higher bottom formation is the initial sign of a bottoming out process in the short term. It's Outperforming Nifty and will continue

Traders can buy the stock at current levels and on declines to supports of
Rs2,620-2,600 levels for the following targets A)Rs2,750-2,780
B) Rs2,825 levels. A stoploss above Rs2,560 is recommended on
all long positions



SBIN Now trade above 1577 lead it to the 1608 to 1651 level. At downside support at 1534 and then at 1503.

BHEL It go for 1735 level and if sustain above it then go for 1762 to 1804 level. At downside support at 1693 and then 1666. IF it sustain above 1800 than 1850 in on site BUt that look a grim possibility.


Relaince The news of KG basin will make this stock blast on Monday.A rally of 5-7% could not be ruled out today.Above 2139 it can touch 2208.


MoserBear above 110 can see a TGt of 115 and 117


Ispat is at its support of 19 can see higher levels Accumulate this scrip for 50% in 2-3 Months


IDFC accumulate till 65 Levels

RPL strong support at 140 Levels Buy around that levels.


Small Caps Picks

Confidence Petroleum
Hope people entered at 11 Levels Stock trading at 12 more to come its and excellent scrips

HB Stock Holding accumulate this scrip for a double tgt around 22 Levels

Any stock specific query ping me on bhandaribrahmesh@gmail.com


Keep a Stop Loss of 2% on all or longs id not mentioned and keep trailing your SL.


Regards

Bramesh

NIfty Weekly Chart 22-26 September.

WEEK GONE BY
Head & Shoulders Neckline breach saw target bottom of 3800 tested as anticipated. Also Market put a surprising 10%+ pullback from lows.
WEEK AHEAD
Double Bottom @ 3800 signals a medium term support. Any weakness could be used to trade long now. Weekly Support 4090, Weekly Resistance 4450-4560. Nifty Strong/Weak Above/Below 4200 for the week.

Wednesday, September 17

Selling Excepted in Rpower Once 155 gone



Selling Excepted in Rpower Once 155 gone Gap of 142 to 147 needs to be covered so a tgt of 142 can be reached in coming sessions

Hope people have exited there longs today was good opportunity.

Nifty can make new low in coming days and we can see a bounce from there

Heavy FII selling is excepted in coming days


Hold cash and enter with 25% of cash at 3700-3800 Levels.Only fill ur portfolio with large caps

Reliance is a Buy around 1750 Levels

UNITECH is a Value buy can see rs 105 levels

BHEL AROUD 1500 lEVELS

LT around 2100 Levels

IFCI is long term bet buy that 35-40 levels

One can g short in Bank Stock SBIN and AXIS bank can see a good fall

US FINANCIAL CRISIS:Effect on India Corporates.

Globalisation today seems like a double edged sword. If we were celebrating the big way in which major FIIs of the world were queuing up to invest in the Indian stock markets and also in major projects through FDIs, today, that same investment looks like a big burden. What we used to say with pride yesterday of “being globally aligned” seems like a curse now.

The collapse of the USA financial markets has unleashed a wave of uncertainty, we don’t know which bank or financial institution or mutual fund or insurance company might announce bankruptcy. If Lehman and Merrill could collapse, nothing more would now come as surprise, its just that people want this precipitation to get over and done with, so that we can salvage what we can from the debris and once again look at rebuilding.

For the Indian markets, this crisis of confidence is huge. We are still trying to ascertain the damage and like the rest of the world, do not know what more lies ahead. The day the news broke, there was a virtual meltdown across the board but the maximum brunt was borne by the banking, finance or NBFC stocks, realty and IT stocks. It was too early for the banks to come forth and state their damage but the markets knew that it would be substantial.

EFFECT ON INDIAN BANKS:
The worst affected is the private sector bank, ICICI Bank, its exposure is to the tune of $80 million, which it invested in Lehman’s senior bonds. The bank has issued a statement saying that it had already made provisions of $12 million on these bonds and a further $28 million worth of provisioning might be required if 50% recovery is assumed. SBI has an exposure of around $55 million (Rs256 crore) and PNB $5 million to Lehman. Bank of Baroda’s exposure is less than $10 million. Bank of India is stated to have a direct exposure of $11.33 million.

One will soon seen banks issuing statements, stating that its exposure is minimal and its impact on the profitability would not be too much. But surely, the impact would be there and profitability will take a hit. At such times, we cannot help but wonder how our hard earned money, which we park with the banks, manages to earn such losses?

EFFECT ON NBFCs:
The effect on portfolio management services is expected to be huge. Even when Bear Stearns had collapsed, there wasn’t this sense of panic and surely confidence was intact. Today, investors have lost complete faith. They are just too scared to go even bottom fishing in this market. The feeling is that this bear phase is for the long run, no one knows where the bottom is, so they feel why invest now when there might be an opportunity later? This psyche of the investors is bound to hit the business of these NBFCs. As such these NBFCs were seeing a slowdown due to lower demand from customers and challenging market conditions, The collapse just made things worse.

EFFECT ON REALTY/INFRA PROJECTS:
Now this is going to be the most troubled. Lehman and Merrill have invested through FDIs in many projects in India, in realty and infrastructure. Those projects which have received the full amount earmarked for the project are safe. But what about those, who are yet to get the promised funds? Surely their projects lay in a lurch today. Unitech has also gone on record stating that it has received Rs.740 crore and has closed the deal with Lehman Brothers. DLF Assets raised US$200 million in 2007 as equity from Lehman Brothers, the company says that the money has been received but equity is yet to be transferred. In HDIL, Lehman, through its Hong Kong subsidiary, had signed a written agreement to float a SPV for developing a project in Dharavi. That lies in uncertainty now.

Lehman had also invested $80 million in Bangalore-based SEZ Gandhi City and was likely to hike its share to $300 million. Ashok Piramal’s Peninsula Land has inked a JV with Lehman, which will have a stake of 75% is to bring in Rs.5 billion, to invest in various realty projects of Peninsula. What happens to that now?

Lehman has a 28.41% stake in KSK Energy. The above shares are locked in for a period of one year from July 05, 2008 (the date of IPO allotment) and cannot be sold in the stock market till the expiry of the said period. But does this rule hold true when Lehman goes bankrupt?

Similarly, Merrill Lynch has taken a 12.74% in Resurgere Mines.

EEFECT ON PRE-IPO PLACEMENTS:
Apart from the projects, the biggest threat is for projects which currently seeking pre-IPO placements. With a fear psychosis gripping all, and FIIs yet to ascertain the losses on which they are sitting on, it is going to become difficult for companies, vying to set up mega projects but seeking pre-IPO placements with reputed FIIs. Lack of any takers for pre-IPO stakes would mean delays. Yes, there will be other invesors who would be willing to buy stakes but would now expect it at far below the prevailing market rates. But will that again be ecnomically viable?

Adani Power is currently looking at placing 4.4-5% stake of its equity with private equity investors. Jet Airways had planned to raise $400 million from private placement with institutions. ICICI Securities planned to offload 15% of its stake to raise $1 billion. What happens to their IPOs now?

Morgan Stanley Private Equity is to pick up a 30.4% stake in Biotor Industries for Rs.240 crore ($53 million). Will that happen now? Tata’s Ginger Hotel chain planned to offload 20% of its stake to raise $75-100 million for expansion of its no-frills hotel chain Ginger. Retail chain group – Subhiksha which also nurtures plans of going public is seeking FII investment for its 9% stake and was hoping to raise $80-100 million(Rs.400 crore). Will these investments come through?

This does not bode well for the market as it is the primary which feeds the secondary market. The primary market is an indicator of the economic activity and now, with pre-IPO funding also expected to face an uphill task, IPO markets could come to a grinding halt for some time.

AIG might have been pulled back from the brink of bankruptcy but it indicates the deep rooted trouble in the US financial markets. The collapse of Lehman and Merrill is sure to have far reaching consequences in India. We can only hope that this is the end of the dark tunnel though the road to light is dark, long and winding.


NB:Article is compiled

Tuesday, September 16

RELIF RALLY BUT OFFLOAD YOUR POSITION AT ALL HIGHS

NIFTY WILL SEE RELIF RAALY IN COMING DAYS BUT I STILL EXCEPT TO OFFLOAD POSITIONS AT ALL HIGHS.

I HAD ALREADY UPDATED NIFTY MEDIUM TERM VIEWS IN AUGUST AND IT'S ALL WORKING ACCORDING TO AS PREDICTED HAVE A LOOK AT THIS ONE.

http://brameshtechanalysis.blogspot.com/2008/08/nifty-medium-term-elliott-wave-theory.htm

DOW ZONE CURRENTLY 35 POINTS DOWN CAN SEE A REVERSAL AFTER FED SPEAKS WHERE THERE IS POSSIBILITY OF RATE CUT TO HELP THE ALLING FINANCIAL SECTOR.

BACK IN INDIA I AM BULLISH ON NIFTY ABOVE 4150 AND TOMORROW THAT LEVEL CAN BE REACHED AND STOCK SPECIFIC KEEP AN EYE ON REL INFRA AT 789 LEVELS WILL SHOW A GOOD BOUNCE AT THAT LEVEL

STOCK CHARTS WILL KEEP ON UPDATING BUT THIS TIME BETTER TO BE OUT OF MARKET AND PRESERVE CAPITAL

Sunday, September 14

Calls for 15-19 September

Markets with good IIP numbers , low inflation data , low crude prices are at present very attractive.
Nifty view already updated

http://brameshtechanalysis.blogspot.com/2008/09/nifty-view-15-19-septemberbmp.html

If there is no Bail out for Lehman Brothers than we can open week and may go below 4200 in opening hours.Keep an Eye on 4156 Nifty Levels as per cash.Can see a Bounce from that levels which may take Nifty to 4300+ Levls

Stock Specific

Reliance The Big Boy Be a buyer above 1950 and Keep a SL of 1920 on closing Basis.

BHEL above 1712 for a TGT of 1768 1800+

LT be a Buyer in DIP sl 2596

SBIN can see a tgt of 1700 sl 1488

Akruti City above 850 can see 950 Levels

Sterlite Industries as the stock looks to recover after a steep fall , the stock may recovery in coming sessions .Try out in small quantities.

Options can write 4200 Put if Nifty bounce from 4156 levels
Long term Buy Call Micro Technologies is progressing well with its undergoing expansion. EPS of Rs.75 is expected. The share is good for long-term and can fetch 100% return.


Small Caps Pics Confidence petro accumulate around 11 rs tgt 40-60% return

BAMPSL will issue Bonus share in 2:5 Can see some firework


Keep an Strict SL of 2% on all Ur longs if not mentioned.

Trails Ur SL and Keep Booking Profits

Nifty if breached 4156 on Closing Basis Square off your Positions.

Saturday, September 13

Nifty View 15-19 September

Nifty has formed complete bearish H&S pattern and if neckline around 4200 is breached (two closes below 4159 for confirmation), bottoms of 3800 can be retested in short-medium term. However when everybody is talking of H&S pattern on Nifty, markets are known to give surprises when least expected. Weekly support 4159-4000, Weekly resistance 4435.

Five Places to Look for Next Investment Bubble

Commentary by Matthew Lynn

Dot-coms? Done that. Property? Oil? Corn? Been there, got the T-shirt and nursed the losses, as well.

One thing we know for sure about today's global economy is that there is always an investment bubble somewhere. If you get in early enough, you can make a fortune riding the boom.

So with property prices collapsing faster than a tent on a stormy day and with the oil-and-commodity bandwagon gone, where should investors be looking for the next big thing? There are five areas worth thinking about: Old Europe, automobiles, stockbroking, the dollar, and private islands.

Anyone looking at the financial markets over the last 20 years would have noticed one common thread: Something is always the flavor of the month. Investors spot a trend, and everyone piles in until valuations become overextended and the whole thing collapses in a heap of bankruptcies and lawsuits.

At the turn of the decade, we saw the bubble in dot-com shares. More recently, we have witnessed the same in real estate -- fueled by the availability of subprime mortgages -- as well as in oil, food and commodities.

We have seen buying frenzies in the much-hyped BRIC economies -- Brazil, Russia, India and China. And there have been bubbles in financial instruments, such as collateralized debt obligations, that helped trigger the subprime meltdown. Along the way, we have some minor bubbles in the things purchased by the people who made money out of the other bubbles. Look at how the price of art or English Premier League soccer teams has soared.

Basic Truth

Of course, bubbles are never entirely ludicrous. The boom always has some basis in reality. The Internet was an important new technology, and a few companies would make a lot of money from it over time. The dot-com boom took that basic truth, and blew it out of proportion.
Likewise, adding China and India to the developed world is going to mean commodities get more expensive. And yet the natural-resources boom took that upward-sloping graph and assumed it carried straight on into the sky.

So where are the next bubbles? You need to find something where there are solid reasons for expecting good growth, but which can also be puffed up into a mega-trend once some smart investment bankers get to work on it.

Here are some places to start looking, bearing in mind that bubbles come in five basic types: places, industries, financing, currencies and luxuries.

FIGs Beat BRICs

First, the place: Old Europe. Forget about the BRICs. The next decade will belong to the FIGs -- France, Italy and Germany. We have written them off for so long that we're in danger of forgetting that all three have been among the richest societies in the world for more than 1,000 years.

As the Chinese and Indian middle classes expand, they will spend money on the kind of upmarket, design-led, history-rich products the FIGs are so good at making. After the credit crunch, their mix of stable, export-led, self-financing growth will look more attractive than the debt-fueled U.K. and U.S. models.

Next, the industry: automobiles. It has been almost a century since we last witnessed a gold rush in cars, suggesting it's high time for a replay. After oil prices reached records, some of the world's smartest people began looking more seriously at creating cheap and non-polluting electric cars. If they crack it, a few hundred million vehicles will be replaced within a few years. Think about the fortune the music industry made when we replaced our vinyl records with compact discs and then multiply it by 10,000 or more. It sure sounds like a boom.

Stockbroker Boom
How about the financial bubble? That will be stockbroking. It's so long since it was in fashion, there aren't even many left in business. Most are just divisions of investment banks. And yet, there are now thousands of companies with shattered balance sheets from the credit crunch. They need advisers who have strong relationships with investors and can raise money for their clients by selling shares.

That's what stockbrokers used to do. If you are smart, quietly shut down that hedge fund, and become a stockbroker. In a few years, UBS AG will pay a fortune to buy you out.

The currency bubble will involve the dollar. The markets have kicked it around for a long time, and yet by next year it may well be the U.S. that has the world's strongest economy. The weak dollar will spark an export boom. Pretty soon we'll be describing the U.S. as the new Germany -- an export-led, manufacturing economy, held back only by the reluctance of its consumers to spend money.

And how will the mega-rich, who make their money from those bubbles, put their new wealth on display? Forget about a Matisse to hang on the wall. That is too vulgar. As for soccer teams, that is just another bubble waiting to pop. The new FIG- automobile-stockbroker billionaires will value privacy and discretion above all else.

There is no better way of doing that than by buying part of a country. Grab yourself a windswept, Scottish island now, ignore the gales howling in from the North Sea, and you'll be able to sell it for a fortune in a few years' time. Just remember to get out before all the bubbles burst.

Thursday, September 11

Infalation at 12.10% IIP numbers excepted to be positive

GYoY, the GDP growth for the month of July ‘08 dipped from 8.3% to 7.1% but the market celebrated this news with a spurt of gain and started recouping the losses it had posted in the morning session. Why did the glass look half full for the markets?

Firstly, the IIP growth figure was expected to be lower than the June growth rate and the average estimate was around 6.25% to 6.5% but when it surged above 7%, naturally, there was a reason to celebrate. Sequentially, the growth has also gone up from 5.4% in June ‘08. So this too added on to the optimism.

Another major reason for rejoicing was the massive surge in the capital goods sector. This sector which has been listless, showed a growth at 21.9% as against 12.3% in July ‘07. Growth in the capital good sector is very good news as this means that investment activity continues to remain strong.

What also added on to the growth was the rise in consumer durables growth, which YoY, grew from a retraction of 2.7% to a positive 11.2%. But industry experts warn that there is no need to be jubilant over this growth as 41% of these consumer durable goods comprised of 10 articles which are completely irrelevant, questioning the very veracity of the IIP compilation.

Manufacturing which accounts for about 80% of India’s production, on a MoM gained 7.5% from 6.1% but YoY, it fell from 8.8%.Electricity output fell 4.5% from 7.5% in July ‘07. Mining grew 5% from 3.2% YoY. Consumer-goods production increased marginally from 7.1% to 7.3%.

With inflation seemed to have been reigned in, crude prices falling and given these IIP figures, all point to the fact that India Inc is now on the revival path. There is no doubt that first quarter of the current fiscal was the most challenging in recent times, with high crude prices, higher interest rates and lower demand. Corporate profitability is expected to increase from the second half of the current fiscal and this is based on the big assumption that retail demand would pick up. And why would retail demand pick up? The govt has recently given an average 21% pay hike to about 5 million government employees, which is the highest hike in the entire Asia-Pacific region. This means that there would be more disposable income with these many people and with this money coming in exactly during the festival time, demand is sure to pick up. Once demand picks up, industrial production would rise, that is the simple economic co-relation.

So now that growth is showing signs of revival and inflation seems to be stabilizing, should we say that RBI would now go slow on any more tightening? Right now, at least for the immediate 2-3 months, there is no case for tightening money supply or hiking interest rates. And later, if crude once again starts rising, it is expected that, at the most, there could be a 25 bps rate hike, but this again is based on the assumption of crude shooting up. If things remain as they are right now, it is unlikely that interest rates could be tightened any more.

For now, when the demand is low, the industry should concentrate on boosting growth. There is no doubt, in the coming days, inflation rate and crude price would continue to dominate. For now, things look good, so best to enjoy the moment.

Wednesday, September 10

Calls for 10 September

NIfty today took support at 4380 twice as it was evident that smart players are buying at lower levels.But cause of concern is that FII are still selling.Today they sold equities worth 1080 Cores DII were buyes of 500 cores.

Inflation will come lower as compared to previous week around12-12.20%

Crude declining 102.51 as i am writing Positive for INdia

We have IIP number coming on Friday 12 Sep so 2 days full of action.

Now its better to go with Banks and Capital Goods

Reliance be a buyer with a SL of 2050

BHEL be a buyer in Dips.It can again show 1800-1850 Levels SL 1625

SBIN and Axis bank be a buyer in DIPS

SBIN is a good buy around 1550 levels and it is facing resistance around 1580 levels once crossed 1600 1625 levels on cards

Axis bank resistance around 720 support 694-700 levels Plan ur trade accordingly.

POST RESTRUCTURING - A VALUATION ANALYSIS of Sterlite Industries

We have analysed the whole restructuring of Sterlite Group announced by Vedanta Resources, the principal promoter of the group, yesterday and today we try to take a valuation call mainly on Madras Aluminium (MALCO) and Sterlite India Ltd. (SIIL) post-restructuring.



There has been only re-allocation of various projects between MALCO and SIIL and only one new project being Konkola Copper Mines (KCM) with 79% stake is added in SIIL. Asarco Project with 100% ownership having shown in post-restructuring of SIIL was already there with SIIL. The acquisition of ASARCO was confirmed by SIIL, by a release dated 31-05-2008, wherein, it was stated that a definitive agreement has been signed for the sale to Sterlite of substantially all the operating assets of Asarco, for $ 2.6 billion in cash. The release has also stated, that the asset acquisition will be financed by Sterlite through a mix of debt and existing cash resources.



So, it can be said that excluding 100% of Asarco from SIIL in pre-restructuring and showing it in post-restructuring is a mis-statement by the Vedanta Resources.



So to understand the valuations parameters, we need to look the market capitalization of MALCO and SIIL on pre and post-restructuring.



MALCO had its closing of Rs.152 on 5th September 08 and has been hovering in the range of Rs.140 to Rs.150 for the last couple of months. However, on 8th September, it closed at Rs.182 while on 9th September, closed at Rs.214. Obviously, rise in stock price of MALCO in those two days were due to restructuring news.



So, we have calculated market capitalization of MALCO taking market price of Rs.150 only. On 11.25 crore, issued shares of MALCO, market cap at Rs.150 works out to Rs.1,700 crores. Post restructuring, equity of MALCO would rise to about 131 crore shares (see yesterday’s cover feature) and at the current price of Rs.200 per share, it translates into a market capitalization of Rs.26,200 crores. This has resulted in an increase of Rs.24,500 crores in market capitalization of MALCO.



Now let’s have a look at market cap of SIIL. On pre-restructuring, SIIL had a market cap of Rs.42,500 crores, calculated on 70.85 crore issued shares, at Rs.600 per share. On post restructuring, issued shares of SIIL would rise to approx. 102 crore shares and calculating the same with the current market price of Rs.510 per share, it translates into a market cap of Rs.52,000 crores. This has resulted in a rise of about Rs.10,000 crores in market cap of SIIL, despite hiving off 51% stake of BALCO and 100% of SEL and adding just 79% stake of KCM into SIIL.



So, the effect of restructuring has resulted in an increase of Rs.35,800 crores in the market cap of MALCO and SIIL put together, as stated hereinabove. Now the question is – whether KCM stake of 79% is worth at Rs.34,000 crores?



On our estimates, we feel that the correct valuation of KCM stake of 79%, should be within a range of Rs.8,000 crores to Rs.11,000 crores.



This means that overvaluation to the extent of Rs.25,000 crores has crept in.



So, if we take pre-restructuring market cap of Rs.44,200 crores and add Rs.9,000 crores for KCM, it comes to around Rs.53,200 crores.



This needs to be apportioned between MALCO and SIIL and hence, on a ballpark figure, the same could be Rs.20,000 crores for MALCO and Rs.33,200 crores for SIIL.



If we take these valuations as the basis and divide it by expected outstanding number of shares of MALCO and present outstanding number of shares of SIIL, valuation of MALCO comes to at Rs.152 per shares while of SIIL at Rs.470 per share, on cum-rights or pre-restructuring basis. However, one may add Rs.5 to the value of MALCO share being value of 1 share of SIIL to be issued for every 51 MALCO shares held, thus having value of close to Rs.157.



Hence, there is room for correction in the value of MALCO share from Rs.200, which may fall to Rs.160 at the lower end, while SIIL shares could settle at Rs.470. The product profile of MALCO, post-restructuring, valuation of Rs.20,000 crores seems reasonable and justified.



We have seen many brokerages report having worked the valuations of MALCO and SIIL on various other parameters, but they are not easily understood by the common investors, and hence we have devised this formula of analyzing the valuation between both the stock.



In this whole restructuring process, the promoters have stood to gain as equity of SIIL is getting diluted by 44% by merely adding 79% stake of KCM and hiving off 51% stake of BALCO and 100% of SEL.



Post-restructuring, VAL would be holding 61% stake of SAL (now MALCO) thus making SAL as the subsidiary of VAL. Inspite of this holding subsidiary relations, SAL will be holding 15% of VAL, which is prohibited by the Companies Act, as a subsidiary cannot hold any stake in its holding company. Maybe, holding of SAL in VAL is presumed to have been parked in a Trust, for which beneficial ownership will be with SAL. We have seen this precedent in case of Reliance Industries Ltd., where, 7.20% stake of the company is held by the Petroleum Trust. beneficiary, of which is Reliance Industries Ltd. itself.



In nutshell, the restructuring move has been very good on part of Vedanta Resources but valuation Methodology having adopted on DCL led approach supplement by NAV and market value is purely loaded in favour of the promoters viz. Vedanta Resources and detrimental to the interest of public shareholders.



Vedanta Resources have been able to mop up Rs.34,000 crores for its 79% stake of KCM, due to which, SIIL has been forced to carry overcapitalized assets in its books and thus damaging the valuations and worth of the public shareholders. This has also raised finger on the Vedanta Group, for which they may have to pay a price in the long run. Wounds of Reliance Power are still raw and investors are in no mood tolerate the greedy and unprofessional attitude of any promoters.



Also, it will be wrong to say that it is value neutral for the shareholders, as majority of the public shareholders are holding SIIL shares and on aggregate valuation basis, post-restructuring, they will see erosion in their worth.



As stated hereinabove, share price of MALCO, may not fall much on pre-restructuring due to low floating stock as this will help the share price to rule above Rs.200. Once the supply of new shares of MALCO comes in, it is definite to rule between Rs.150 to Rs.160.



Also, presently one could acquire MALCO share, only from SIIL shares, whereby 7 shares of MALCO would be issued free of cost, for every 4 shares held of SIIL. So, this will provide a good support to SIIL stock at Rs.500 levels. On ex-basis, SIIL would finally settle at Rs.225 to Rs.230 levels.


NB:ARTICLE IS COMPILED BY ME IT'S NOT MY STUDY

Bombay Dyeing Sell on rise upto 586 SL 601

Tuesday, September 9

Calls for 10 September

All calls Hit tgt again ORG was up by 20% Voila

buy 4300 put & 4500/4600 calls Follow hedging if one trade in option

Buying adviced in Nagar Construction once crossed 135

ONGC looks a good buy for trade if it breaks 1110

BHEL around 1732 and next at 1,749 level for a tgt of 1762+

SBIN support is at 1,564.5 and that 1556 buy around these levels. tgt 1580 and 1600

Reliance resitance is at 2173 and 2214 and support at 2103 so plan ur trade accordingly

Keep an eye on Usher Agro can reach rs 200 in short term

Sorry unable to attach chart due to some problem with Blogspot but if one need that Just ping me on bhandaribrahmesh@gmail.com


Keep trailing sl

Monday, September 8

Call for Tommorow

All calls Hit the tgts

ORG INformatics can hit One more UC

Buy Glenmark INfra if it crosses 679.50

Buy Reliance around once it crosses 2140

BUY some 4400 Puts

BHel and LT be a buyer at dips


keep a SL of 2% and keep trailing SL

NUCLEAR DEAL – Impact on INDIA INC.

History has been made and India has got an entry into the nuclear club. So how does this benefit India Inc? That’s the biggest question playing in the minds of all and the market has infact even started celebrating, as though the deal has opened up an “Alibaba’s cave”!

ü First and foremost, to allow private sector participation, the Government has to work on getting the Parliament to amend the Atomic Energy Act under which all activities in the nuclear field remain the domain of government entities. Currently, the private sector can supply equipment, even those as crucial as the nuclear reactor vessel, but the power plant can be operated only by a Government-controlled entity such as the Nuclear Power Corporation.

ü If the Atomic Energy Bill is amended, private sector participation would help India achieve its target of 60,000 MW, entailing investment of Rs 600,000 crore, since each MW of nuclear power costs about Rs.10 crore.


ü Given the low cost of production in India, vis-à-vis the developed countries, India is likely to emerge as the “nuclear hub” for the world, where local companies would form alliances with global companies for supply of various nuclear components and reactors.

ü The deal will enable India to get nuclear fuel for its reactors, which have been running at almost half their capacity

ü The biggest opportunity could come from the US but for this to happen, US based nuclear firms would have to wait for the clearance of the deal by the US Congress to commence trade with India. And once that happens, GE would be one of the biggest gainers as it already has a JV with Hitachi and it would be using this JV to enter India. It would also look for tie-ups with Indian companies as its strength lies in technology.

ü Currently in India, all nuclear power, which comes under the Government of India is run by Nuclear Power Corporation of India Ltd (NPCIL). It means it has a monopoly in India and it has already identified four reactor manufacturers — Westinghouse Electric Company, GE-Hitachi, Areva and the Russia’s atomic energy agency Rosatom. This is based on “suitability” of technical parameters for placement of orders that will form the first phase of the Centre’s plan to build 40,000 MW of nuclear capacity by 2020.

ü NPCIL hopes to set up “Nuclear Parks” or reactor clusters, which would house around 8 reactors of 1,000MW each. The orders would initially be placed for around two reactors of 1,000 MW at each of the locations, following which more reactors could be added. It has identified four coastal sites across Gujarat, Andhra Pradesh, Orissa and West Bengal.

ü Foreign reactor suppliers are unlikely to be allowed to own equity in the projects in the first phase.

ü This entry of India into the nuclear club bodes well not just for the country but also for other countries. Russia has offered India to invest in its upcoming international uranium enrichment centre in, Siberia, in lieu of paying for nuclear fuel to be supplied to the Koodankulam nuclear station. French company Areva NP (a JV between Areva and Siemens), Russian company Rosatom, USA’s GE, Toshiba Corporation, Westinghouse Electric Co would soon start queuing up for a bite into the succulent nuclear pie of India. Then there are the uranium supplying countries – Kazakh and Canada which are also eager to do business with India. Australia will supply uranium to India only if it signs the NPT.


NB:I have compiled this article

Sunday, September 7

Call for 08-12 September

Nuclear Deal Done Good for India Hard Fought Battle won after 33 years.

But we should not get over excited.Market is showing good resilience on account of this news in the previous week.We should except gradual change in India's Economic outlook with the progress of Nuclear Deal.

Outlook for Coming week

Nifty will open gap up tomorrow probably around 4421 Levels.but nifty around these levels for a tgt of 4490

Buy 4400 Put and exit id Nifty crosses 4540 as already discussed in http://brameshtechanalysis.blogspot.com/2008/09/nifty-weekly-08-12-september.html


Stock Specific Action

Reliance Buy above 2100 possible tgt 2125 2145 2170 2255 Keep a Sl of 2050

BHEL Buy above 1760 TGT 1 1788 TGT 2 1824 TGT 3 1850 SL 1720

LT Buy above 2669 TGT 1 2689 TGT 2 2700 and 2800 (If market remains positive)

HDFC Bank and SBI good upside

RNRL Reliance Capital and Rel infra 5-10% upside

ROLTA showing good strength possible tgt can be 390 in coming days Buy in dips till 324 SL 320


Keep a Default sl of 2% from ur buying price and keep trailing SL

Saturday, September 6

Stocks benefited from nuclear deal.

L&T


L&T has done engineering, procurement and construction projects for nuke power plants. It is currently working on the 2,000 MW Kudankulam nuclear project. The company will get into mainstream nuclear projects if the deal goes through. L&T’s talks with Toshibha failed. It entered into a recent tie-up with Mitsubishi for super critical boilers. The Mitsubishi technology would be used for Nuclear Power Corp. L&T may leverage its relationship with Mitsubishi for its other nuclear business.

LT is planning to form a Rs 2,000-crore forging venture with NPCIL. At present L&T’s reactor making segment contributes 3% to the company’s turnover and this is expected to go up to 7-10% now that the deal has been signed.

BHEL

BHEL supplies up to 500 MW of equipment to Nuclear Power Corp. It is looking for a tie up manufacturing equipment of up to 700 MW & 1500 MW. The company has been in talks with Alstom, GE Energy, Russia's LMZ and Siemens. It has an existing tie-up with Siemens for nuclear technology.

BHEL has a JV with NPCIL for manufacturing nuclear reactors and now, the signing of the deal would give this JV a major boost.

NTPC

The company is in talks with Nuclear Power Corporation of India. It is looking at setting up 2000 MW nuclear plant. He is In talks with GE Energy for technology and fuel. NTPC is looking at the project to be operational by 2012-2013.

NTPC has also drawn plans to enter nuclear power generation by setting up a 2,000 MW project. It would be easier for PSUs as there is no restriction on them.

Areva T&D


Areva T&D is looking at a plant for uranium mining and recycling. The plant would be set up after nod from Nuclear Power Corp.


Alstom Projects

The company already makes nuclear reactors and rotors. Its parent company is a world leader in conventional nuclear projects. It makes turbines for nuclear power stations. It supplies steam turbines to over 30% of nuke power stations globally.

Rolta



The Rolta-Stone and Webster joint venture competent provides reactor-building technology. It will leverage on its partner's core competency. Stone & Webster's parent has 20% in Westinghouse Electric, a nuclear reactor maker.




HCC

HCC has constructed four of seven nuclear power projects in India. It is an EPC contractor for nuclear projects.


ABB

ABB makes components for power projects. Its parent company’s exposure includes new
nuclear power plants, systems and components. The parent company’s exposure includes fuel services, waste management and decommissioning.


Crompton Greaves

Crompton Greaves works with Nuclear Power Corporation of India. It has completed a switchyard for nuclear project.



Walchandnagar Industries Walchandnagar Industries has supplied critical components like the calandria to most of the nuclear power plants in India and now naturally be a big beneficiary.


Siemens has a marginal exposure through its parent company.



Reliance Energy
plans to invest additional Rs 12,000 crore in nuclear power capacity. It plans to install 2000 MW of nuclear power capacity.



Tata Power has tied up with some major nuclear equipment suppliers like Areva. It already has a relationship with Toshiba;
it will leverage on it.

Tata Power is looking at entering this sector either alone or in a JV once it is opened up to private utilities. It also plans to go into the business of front-end and back-end fuel cycle technology business.


ppls are recommended to buy any of these stocks in dips not on MOnday as most of these stocks will rally on Monday.

NIfty weekly 08-12 September

WEEK GONE BY
Weekly Resistance was suggested at 4540. Nifty topped at 4522.40 for the week. Also chances of Head & Shoulder pattern to be formed was hinted,the same has been formed on Nifty EOD Charts.

WEEK AHEAD
Head & Shoulders Pattern is very bearish if Nifty breaks below 4159 on closing basis. Nifty Strong/Weak Above/Below 4370 for the week. Weekly Support 4159, Weekly Resistance 4540.

WHAT EXACTLY IS THIS NUCLEAR DEAL?

At the crux of this entire political conundrum, the core issue, which lays quite forlorn and forgotten is the nuclear issue. Today the politicians might have turned it into an opportunity to topple the UPA Govt but few remember that it all started with the nuclear deal.

Surely few of these politicians would have actually taken the effort to read the 82-page nuclear deal and tried to understand what it is all about. Somehow that does not come as a surprise at all! So without getting into the “political” angle of it, let us take a look at what exactly is this nuclear issue. What would India gain if UPA wins the vote and what we stand to lose if the deal gets cancelled?

What exactly is nuclear power?
Nuclear power is generated using Uranium, which is a metal mined in various parts of the world. It produces around 11% of the world's energy needs, and produces huge amounts of energy from small amounts of fuel, without the pollution that you'd get from burning fossil fuels.

Where does India currently stand on nuclear power?
In India, nuclear power is being produced under the Nuclear Power Corporation of India. Seventeen reactors are under operation and five reactors are under construction. These power projects are highly capital intensive and currently, takes care of 2.8% of the power needs of the country. Amongst the 30 countries in the world that use nuclear power, India’s rank at 27 is one of the lowest.

Why nuclear power?
To take India’s economic growth rate to greater heights, there is no doubt that power would be required as the main fuel for this growth. Though coal, thermal and hydro fuel would remain India’s dominant energy mix, it cannot continue to depend on coal alone. Global warming considerations and the immediate availability of clean coal technologies may constrain the coal route at least in the short term. Hydropower may also face constraints that arise from changes in the hydrological cycle triggered by long term climatic change. Hence having nuclear power in India’s energy portfolio is crucial for preserving India’s energy security

What does 123 agreement mean?
The 123 Agreement is the terms of engagement which operationalizes the treaty agreement between India and USA for transfer of civil nuclear technology. India’s right to test nuclear weapons, guarantees of lifetime fuel supply and India’s right to reprocess the spent fuel have all been covered in this agreement.

What is the Hyde Act?
The Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006, it is known as the Hyde Act. It is the legal framework for this deal and provides the legal basis for the 123 Agreement with India.

What would the deal with USA mean for India?
The Govt has chalked out a roadmap wherein over the next 25 years, through the deal, it has set a target of generating 20,000 MWe (unit of nuclear power) as against the current 3,900 MWe.

The biggest advantage, which the UPA Govt is actually seeking is projecting to the world that it an ally of USA, which is a superpower in the world of today. The deal would provide India with access to American civilian nuclear technology. It would finally open up the door to US military technology, especially the fascinating US missile defense system.

Once the new reactors are set up, and they go critical without any time overrun, the nuclear power generation would take care of 8% of India’s total power requirement. More than 80% of the power generated in India comes from coal and thermal. And that will continue but just as oil has become critical today, coal will also one day reach such a stage. And unless we have backups ready, our entire country could get unplugged. Having nuclear power could help India, over the long run, offset the rising cost of coal.

Yes, price of uranium is also mounting. Between 2005 (when the India-US nuclear deal was first proposed) and 2007 (when the 123 Agreement was finalised), since then, the spot price of uranium has quadrupled. According to a June 2008 market assessment, a further 58 per cent increase is expected. But remember unlike oil, we are dealing with more mature economies here who will supply uranium and hopefully, they will prevent the present cartelization which we see in oil.

What is the cost of nuclear power?
At present, power from existing nuclear reactors costs, after huge subsidies, between Rs 2.70 and Rs 2.80 per kWh. The coal-fired Sasan mega power project in Madhya Pradesh will be supplying power at Rs 1.196 per unit. The real cost of power from existing nuclear reactors is around Rs 4 per unit; the cost of power produced by new reactors will be around Rs 5.50 per unit. But the economies of scale would soon start giving the advantages. Plus, these costs are today at the present levels of coal price, so when price of coal escalates further, cost would only go up.

What would the deal mean to Indian companies?
India has plans to set up 15 plants over the next 20 years. Business worth $100 billion is expected to be generated from this nuclear deal over the next 20 years. Apart from USA and France, which would benefit immensely, Indian companies too will get a part of this juicy pie. Over 400 Indian companies are expected to benefit, mainly for those involved in making equipment for nuclear power plants.

Why did the Left withdraw support?
The Left alleged that the deal would undermine the sovereignty of India's foreign policy. It has also stated that the Indian government was hiding certain clauses of the deal, which would harm India's indigenous nuclear program

Friday, September 5

Trading Idea ABAN OFFshore




The stock seems to have bottomed out at 2,000 levels

After consolidating between the levels of Rs2,020-2,150, it has formed an
Upside Breakout formation on the daily charts, breaching through the trading range of last week. The
daily oscillators are also showing signs of revival in the stock with RSI showing a positive crossover.

Be a buyer in Dips of this stock with a tgt of 2546 and 2650 Keep a SL of 2000 on Longs initiated.

Dow Theory

1.The market has three movements

(1) The "main movement", primary movement or major trend may last from less than a year to several years. It can be bullish or bearish.

(2) The "medium swing", secondary reaction or intermediate reaction may last from ten days to three months and generally retraces from 33% to 66% of the primary price change since the previous medium swing or start of the main movement.

(3) The "short swing" or minor movement varies with opinion from hours to a month or more. The three movements may be simultaneous, for instance, a daily minor movement in a bearish secondary reaction in a bullish primary movement.

2. Trends have three phases

Dow Theory asserts that major market trends are composed of three phases: an accumulation phase, a public participation phase, and a distribution phase. The accumulation phase (phase 1) is a period when investors "in the know" are actively buying (selling) stock against the general opinion of the market. During this phase, the stock price does not change much because these investors are in the minority absorbing (releasing) stock that the market at large is supplying (demanding). Eventually, the market catches on to these astute investors and a rapid price change occurs (phase 2). This occurs when trend followers and other technically oriented investors participate. This phase continues until rampant speculation occurs. At this point, the astute investors begin to distribute their holdings to the market (phase 3).

3.The stock market discounts all news

Stock prices quickly incorporate new information as soon as it becomes available. Once news is released, stock prices will change to reflect this new information. On this point, Dow Theory agrees with one of the premises of the efficient market hypothesis.

4. Stock market averages must confirm each other

In Dow's time, the US was a growing industrial power. The US had population centers but factories were scattered throughout the country. Factories had to ship their goods to market, usually by rail. Dow's first stock averages were an index of industrial (manufacturing) companies and rail companies. To Dow, a bull market in industrials could not occur unless the railway average rallied as well, usually first. According to this logic, if manufacturers' profits are rising, it follows that they are producing more. If they produce more, then they have to ship more goods to consumers. Hence, if an investor is looking for signs of health in manufacturers, he or she should look at the performance of the companies that ship the output of them to market, the railroads. The two averages should be moving in the same direction. When the performance of the averages diverge, it is a warning that change is in the air.
Both Barron's Magazine and the Wall Street Journal still publish the daily performance of the Dow Jones Transportation Index in chart form. The index contains major railroads, shipping companies, and air freight carriers in the US.

5. Trends are confirmed by volume

Dow believed that volume confirmed price trends. When prices move on low volume, there could be many different explanations why. An overly aggressive seller could be present for example. But when price movements are accompanied by high volume, Dow believed this represented the "true" market view. If many participants are active in a particular security, and the price moves significantly in one direction, Dow maintained that this was the direction in which the market anticipated continued movement. To him, it was a signal that a trend is developing.

6. Trends exist until definitive signals prove that they have ended

Dow believed that trends existed despite "market noise". Markets might temporarily move in the direction opposite to the trend, but they will soon resume the prior move. The trend should be given the benefit of the doubt during these reversals. Determining whether a reversal is the start of a new trend or a temporary movement in the current trend is not easy. Dow Theorists often disagree in this determination. Technical analysis tools attempt to clarify this but they can be interpreted differently by different investors.


Hope it help you all in making investment Decisions.

Thursday, September 4

INR / USD and Sensex -----SMART MONEY finds money

Although equities, commodities have lot of considerations like yield, value, cash flow, crop, inflation, demand etc etc but in the end equity is a piece of paper and commodities is a contract but all these have a value if somebody is ready to pay a price ! for it ! . So in the end its all about MONEY.

The curiosity about money influence on equities urges me to find some co- relation of money with markets and especially Indian capital markets. Its a known thing FII money governs India indirectly . This is how a brief observation comes into the blog today comparing INR/USD with Sensex.

Views below can be termed logical or HIGHY Fictional and Stupid :) !!------Comments Invited!

INR/USD and Sensex :

FIIs convert Dollars to Rupees to invest in Indian Markets. Worldover a major concern is investment in Dollars is risky over a period of time as the currency can detoriate !

Ideally FII money should come in India at high Dollar rates !!!!
FII money would go out when Dollar dips to low values. !!

LETs term this FII dollars to be SMART MONEY which finds more money.

Now lets c some major points on Sensex from 2003 with peaks of dollar as that could trigger money push into India ideally !

Jan -May 2003 - USD/INR roughly 47-48.
Sensex moved from 3000 to 6000 and dollar dipped till 43 by May. mkts corrected to 4200 after that.

July - Sept 2005 - USD/INR 46
Sensex again moved from 5k to 12k and dollar dipped to 44-43.5 . mkts corrected to 8800 after that.

July - Sept 2006 - USD /INR 46 -47
Sensex moved from 9k to 21k and dollar dipped to 39. mkts corrected to 13k.

Maybe this is confusing but from the data it seems FII dollars starts entering into India when Dollar is quoting at a price of 45-47 or tops out and this money creates the next bull run !!! .

Lets try understand this flow of money with an example of how SMART MONEY has made more Money.

1) 1 Lakh Dollars of FII - SMART MONEY .

USD/INR - 46-47 in Aug 2006 .

This money is put into Sensex at 9-10k . So money put in is 46 lakh rupees.
Now Sensex comes till 20-21k in Oct 07-Mar 08 .
46 lakh rupees is now double or more at 90 lakh rupees and this money is now pulled out.

Now USD /INR 39-40 .

So 90 lakh rupees can now buy 2.25 lakh Dollars.

So DUMB MONEY if would have stayed in Dollars then it would have lost 15 % in value !!!

SMART MONEY is now 125 % up in 1.5 years or more instead of being 15 % down !!!

WELL now people would ask Where did the Smart Money go between Jan to August ! . For the record Crude was 90-100 in Jan and 145 + by July. !!!

In simple words FII money has been very smart with India !!

Conclusion -

Yet again Dollar is about to peak out at 44/45/46 . Doesnt this tell us SMART MONEY and all those dollars all set to come back to India and Asia in next few months to start the next BULL RUN in emerging markets!!!!

Truth is stranger than fiction.

Buy Bajaj Hidustan if it breaks 170

Tuesday, September 2

Resurgere Mines & Minerals:SURGING ON MARKET MANIPULATION

There is always a reason, a logical reasoning behind all, well, almost everything. So one should look at the current spiraling price rise of the newly listed Resurgere Mines with a lot of trepidation, rather than awe. There is no new found fancy or reckoning for the stock, it is just pure market manipulations.

Resurgere Mines & Minerals went public on 11th August, 2008 with an issue of 44.50 lakh equity shares of Rs.10 each at Rs.270 per share. Price band for the issue was between Rs.263 to Rs.272 but it was discovered at Rs.270. QIB portion got subscribed by about 1.34 times with 9 allottees, while HNI category subscribed by about 2.36 times with 38 allottees and retail category was undersubscribed to 0.3491 times with about 4,100 allottees.


Out of total issue size of 44.50 lakh equity shares, three allottees have got the allotment of 23,64,839 shares. These three allottees are :--

1) Elara India Opportunities Fund Ltd. 16,09,529 shares
2) Prime India investment Fund Ltd. 3,77,655 shares
3) Rahn And Bodmer 3,77,655 shares

Total 23,64,839 shares


This constitutes 53.14% of the public issue.



Now let’s have a look at the trading pattern of the stock on its listing day.
On 1st September, 08, first day of listing, 332 lakh shares were traded on BSE, while 336 lakh shares were traded on NSE, totaling to 668 lakh shares. This is over 15 times of the issue size.

The delivery on BSE on first day were of 19.96 lakh shares while on NSE it was at 11.99 lakh shares, totaling 31.95 lakh shares, which amounts to 71.80% of IPO size. So it is obvious that the three allottees stated above have participated in the delivery trades on the first day.

On first day, average rate at which trades were executed on BSE were at Rs.433 per share, while on NSE they were at Rs.447 per share. So it can be presumed that delivery transactions must have also executed at that rate.

One fails to understand that when there were no takers for the issue, even at Rs.272 per share, about a fortnight back, who were those desperate (and unfortunate) investors who bought 31.95 lakh shares at a rate above Rs.272 per share? Share had its high of Rs.563 and a low of Rs.272 on the first day itself. Also, why these three allottees who were so confident to buy more than 50% IPO, have not found it worth holding the stock even for a day? One may argue, that these allottees have booked profit and exited the stock, which is very much acceptable and within the market norms. But, then who were these buyers on first day, buying a stock like Resurgere at or above the issue price?

It is said that all the accommodation allottees were given exit on the first day as they were arranged on the pre-determined terms and new set of players have come in.
In view of delivery transaction having taken place of 31.95 lakh shares on the first day, there is likely to be auction of the short delivery on Friday, the 05-09-08. By then, share price is likely to get jacked up to Rs.750, as per information gathered from the market sources. As there is virtually no floating stock, the momentum play will continue in the stock. It is certain that these prices will not be sustained after 15 – 20 days. In all probability, the share price will fall to the issue price or even below that in the next couple of months, finally recognizing the true worth.

Strangely, many prominent promoters of broking companies and its executives are allottees in the company, having acquired shares at a lower than issue price, in pre-IPO placement. Obviously, all of them have lock-in of one year from the date of allotment, which will expire on 26th August, 2009.

When we compare the company on pure fundamentals, we find Sesa Goa as the comparable peer, which is now ruling at a PE ratio of less than 5, based on estimated FY 09 earnings. If we accept the projections of Resurgere Mines for FY 09, where it is expected to have an EPS of Rs.54, and now ruling at Rs.630, it means that it is now ruling at a PE ratio of over 11 times. A company, which has not revealed quantitative details of its past operations and also no material information, with respect to mining contract, (which is key and material), as given in its RHP, it is difficult to accept this kind of PE multiple getting applied. Also, the company does not own any of its mines and despite this , it has stated “own mining reserves” in its financials of FY 08, which is grossly a wrong statement.

It is known fact, that the scrip is driven by the operators and many of the analysts know the modus operandi. Nick names and codes have been given to these players by the market to identify them.

It has always been held that the primary market is a tool for the investors to make money, which is now being misused by these operators to rob and loot these gullible investors. No doubt, some investors are making money, due to these manipulations, but they are not masses but classes. If this trend continues, it is certain that confidence from the primary market would get wiped off further and probably the experts and agencies, those who are responsible to keep this faith intact, would only be held responsible in shattering it further.

In such manipulative operations, it is the gullible traders (investors) who loose crores of rupee and in the process, are left holding stocks with no exit route. Regulator must look into it and timely actions are desired to prevent irreparable loss being caused to primary market and in turn to secondary market and overall investment climate of the country.

9 great management lessons from Dhirubhai Ambani

Dhirubhai Ambani, founder of the Reliance Industries, was no ordinary leader. He was a man who gave management a whole new "ism".
There is a new "ism" that I've been meaning to add to the vast world of words for quite a while now. Because, without exaggeration, it's a word for which no synonym can do full justice: "Dhirubhaism".
Inspired by the truly phenomenal Dhirubhai H Ambani, it denotes a characteristic, tendency or syndrome as demonstrated by its inspirer. Dhirubhai, on his part, had he been around, would have laughed heartily and declared, "Small men like me don't inspire big words!"
There you have it - now that is a classic Dhirubhaism, the tendency to disregard one's own invaluable contribution to society as significant.
I'm sure everyone who knew Dhirubhai well will have his or her own little anecdote that illustrates his unique personality. He was a person whose heart and head both worked at peak efficiency levels, all the time. And that resulted in a truly unique and remarkable work philosophy, which is what I would like to define as Dhirubhaism.


Dhirubhaism No 1: Roll up your sleeves and help.
You and your team share the same DNA.
Reliance, during Vimal's heady days had organized a fashion show at the Convention Hall, at Ashoka Hotel in New Delhi.
As usual, every seat in the hall was taken, and there were an equal number of impatient guests outside, waiting to be seated. I was of course completely besieged, trying to handle the ensuing confusion, chaos and protests, when to my amazement and relief, I saw Dhirubhai at the door trying to pacify the guests.
Dhirubhai at that time was already a name to reckon with and a VIP himself, but that did not stop him from rolling up his sleeves and diving in to rescue a situation that had gone out of control. Most bosses in his place would have driven up in their swank cars at the last moment and given the manager a piece of their minds. Not Dhirubhai.
When things went wrong, he was the first person to sense that the circumstances would have been beyond his team's control, rather than it being a slip on their part, as he trusted their capabilities implicitly. His first instinct was always to join his men in putting out the fire and not crucifying them for it. Sounds too good a boss to be true, doesn't he? But then, that was Dhirubhai.


Dhirubhaism No 2: Be a safety net for your team.

There used to be a time when our agency Mudra was the target of some extremely vicious propaganda by our peers, when on an almost daily basis my business ethics were put on trial. I, on my part, putting on a brave front, never raised this subject during any of my meetings with Dhirubhai.
But one day, during a particularly nasty spell, he gently asked me if I needed any help in combating it. That did it. That was all the help that I needed. Overwhelmed by his concern and compassion, I told him I could cope, but the knowledge that he knew and cared for what I was going through, and that he was there for me if I ever needed him, worked wonders for my confidence.
I went back a much taller man fully armed to face whatever came my way. By letting us know that he was always aware of the trials we underwent and that he was by our side through it all, he gave us the courage we never knew we had.

Dhirubhaism No 3: The silent benefactor.
This was another of his remarkable traits. When he helped someone, he never ever breathed a word about it to anyone else. There have been none among us who haven't known his kindness, yet he never went around broadcasting it.
He never used charity as a platform to gain publicity. Sometimes, he would even go to the extent of not letting the recipient know who the donor was. Such was the extent of his generosity. "Expect the unexpected" just might have been coined for him.

Dhirubhaism No 4: Dream big, but dream with your eyes open.
His phenomenal achievement showed India that limitations were only in the mind. And that nothing was truly unattainable for those who dreamed big.
Whenever I tried to point out to him that a task seemed too big to be accomplished, he would reply: " No is no answer!" Not only did he dream big, he taught all of us to do so too. His one-line brief to me when we began Mudra was: "Make Vimal's advertising the benchmark for fashion advertising in the country."
At that time, we were just a tiny, fledgling agency, tucked away in Ahmedabad, struggling to put a team in place. When we presented the seemingly insurmountable to him, his favourite response was always: "It's difficult but not impossible!" And he was right. We did go on to achieve the impossible.
Both in its size and scope Vimal's fashion shows were unprecedented in the country. Grand showroom openings, stunning experiments in print and poster work all combined to give the brand a truly benchmark image. But way back in 1980, no one would have believed it could have ever been possible. Except Dhirubhai.
But though he dreamed big, he was able to clearly distinguish between perception and reality and his favourite phrase "dream with your eyes open" underlined this.
He never let preset norms govern his vision, yet he worked night and day familiarizing himself with every little nitty-gritty that constituted his dreams constantly sifting the wheat from the chaff. This is how, as he put it, even though he dreamed, none of his dreams turned into nightmares. And this is what gave him the courage to move from one orbit to the next despite tremendous odds.
Dhirubhai was indeed a man of many parts, as is evident. I am sure there are many people who display some of the traits mentioned above, in their working styles as well, but Dhirubhai was one of those rare people who demonstrated all of them, all the time.

5. Dhirubhaism: Leave the professional alone!

Much as people would like to believe, most owners (even managers and clients), though eager to hire the best professionals in the field, do so and then use them as extensions of their own personality. Every time I come across this, which is much too often, I am reminded of how Dhirubhai's management techniques used to be (and still remain) so refreshingly different.
For instance, way back in the late 1970s when we decided to open an agency of our own, he asked me to name it. I carried a short list of three names, two Westernised and one Indian. It was a very different world back then. Everything Anglicised was considered "upmarket."

There were hardly any agencies with Indian names barring my own ex-agency Shilpi and a few others like Ulka and Sistas. He looked at the list and asked me what my choice was. I said "Mudra": it was the only name that suited my personality. And the spirit of the agency that I was to head.
I was very Indian and an Anglicised name on my visiting card would seem pretentious and contrived. No further questions were asked. No suggestions offered, just a plain and simple "Go ahead and do it." That was just the beginning.
He continued to give me total freedom -- no supervision, no policing -- in all my decisions thereafter. In fact, the only direction that he gave me, just once, was this: "Produce your best."
His utter trust in me was what pushed me to never, ever let him down. I guess the simplest strategies are often the hardest to adopt. That was the secret of the Dhirubhai legend. It was not out of a book. It was a skillful blend of head and heart.


6. Dhirubhaism: Change your orbit, constantly!
To understand this statement, let me explain Dhirubhai's "orbit theory."
He would often explain that we are all born into an orbit. It is up to us to progress to the next. We could choose to live and die in the orbit that we are born in. But that would be a criminal waste of potential. When we push ourselves into the next orbit, we benefit not only ourselves but everyone connected with us.
Take India's push for development. There was once a time our country's growth rate was just 4 per cent, sarcastically referred to as the "Hindu growth rate." Look at us today, galloping along at a healthy 7-8 per cent.
This is no miracle. It is the product of a handful of determined orbit changers like Dhirubhai, all of whose efforts have benefited a larger sphere in their respective fields.
In a small way, I too have experienced the thrill of changing orbits with Mudra. In the 1980s, we leapt from the orbit of a small Ahmedabad ad agency to become the country's third largest ad agency -- in just under a decade.
However, when you change orbits, you will create friction. The good news is that your enemies from your previous orbit will never be able to reach you in your new one. By the time resentment builds up in your new orbit, you should move to the next level. And so on.
Changing orbits is the key to our progress as a nation.

7. The arm-around-the-shoulder leader
I have never seen any other empire builder nor the CEO of any big organisation do this (why, I never adopted this myself!).
It was Dhirubhai's very own signature style. Whenever I went to meet him and if on that day, all the time that he could spare me was a short walk up to his car, he would instantly put his arm around me and proceed to discuss the issues at hand as we walked.
With that one simple gesture, he managed to achieve many things. I was put at ease instantaneously. I was made to feel like an equal who was loved and important enough to be considered close to him. And I would walk away from that meeting feeling so good about myself and the work I was doing!
This tendency that he had, to draw people towards him, manifested itself in countless ways. This was just one of them. He would never, ever exude an air of aloofness and exclusivity. He was always inviting people into sharing their thoughts and ideas, rather than shutting them out.
On hindsight I think, it must have required phenomenal generosity of spirit to be that inclusive. Yes, this was one of the things that was uniquely Dhirubhai -- that warm arm around my shoulder that did much more than words in letting me know that I belonged, that I had his trust, and that I had him on my side!

8. The Dhirubhai theory of Supply creating Demand

He was not an MBA. Nor an economist. But yet he took traditional market theory and stood it on its head. And succeeded.
Yes, at a time when everyone in India would build capacities only after a careful study of market expectations, he went full steam ahead and created giants of manufacturing plants with unbelievable capacites. (Initial cap of Reliance Patalganga was 10,000 tonnes of PFY way back in 1980, while the market in India for it was approx. 6000 tonnes).
No doubt his instinct was backed by years and years of reading, studying market trends, careful listening and his own honed capacity to forecast, but yet despite all this preparation, it required undeniable guts to pioneer such a revolutionary move.
The consequence was that the market blossomed to absorb supply, the consumer benefited with prices crashing down, the players increased and our economic landscape changed for the better. The Patalganga plant was in no time humming at maximum capacity and as a result of the plant's economies of scale, Dhirubhai's conversion cost of the yarn in 1994 came down to 18 cents per pound, as compared to Western Europe's 34 cents, North America's 29 cents and the Far East's 23 cents and Reliance was exporting the yarn back to the US!
A more recent example was that of Mukesh Ambani taking this vision forward with Reliance Infocomm (which is now handled by Anil Ambani). In India's mobile telephony timeline there will always be a very clear 'before Infocomm and after Infocomm' segmentation. The numbers say it all. In Jan 2003, the mobile subscriber base was 13 million, about 16 months later, shortly after the launch, it had reached 30 million.
In March 2006, it has touched 90 million ! Yes, this was yet another unusual skill of Dhirubhai's -- his uncanny knack of knowing exactly how the market is going to behave.

9. Money is not a product by itself, it is a by-product, so don't chase it
This was a belief by which Dhirubhai lived all his life. For instance when he briefed me about setting up Mudra, his instruction was clear: 'Produce the best textile advertising in the country,' he said.
He did not breathe a word about profits, nor about becoming the richest ad agency in the country. Great advertising was the goal that he set for me. A by-product is something that you don't set out to produce. It is the spin off when you create something larger.
When you turn logs into lumber, sawdust is your by-product and a pretty lucrative one it can be too! It is a very simple analogy but extremely effective in driving the point home. Work toward a goal beyond your bank balance.
Success in attaining that goal will eventually ring in the cash. For instance, if you work towards creating a name for yourself and earning a good reputation, then money is a logical outcome.
People will pay for your product or service if it is good. But if you get your priorities slightly mixed up, not only will the money you make remain just a quick buck it would in all likelihood blacklist you for good. Sounds too simplistic for belief? Well, look around you and you will know exactly how true it is.

Monday, September 1

Tommrow Call

Go Long on Nifty Resistance come around 4370 Good Buying can be accepted after 4370 Level.4413 will act as a resistance.

Maruti Try to buy in range of 605-610 Range tgt of 636

BHEL buy around 1721 for a tgt of 1751 and 1778

LT buy around 2575 levels for a TGt of 2591 and 2617 2642

REC call see the chart

SBI Tgt 1446 and 1477

Default SL 1.5% from ur Buying. Keep Trailing yor SL

REC LTD made a Break out today


The stock rose almost
4.50% and closed above its 20DMA with significant volume on 1st
September. Leading indicator like Stochastic and RSI are rising with
positive divergence after coming out from the oversold zone. Considering
the technical evidences discussed above, Go for it with a Tgt of 93,97 Stop Loss 89

See sharp fall in Resurgere Mines in 2-3 weeks: Tulsian

: Does that deserve to go up 100% on its listing day? What are the fundamentals?

A: This is a classic case of momentum or operator play which we have been witnessing in case of other recent listings. If one compares this company with Sesa Goa, which right now is ruling at P/E multiple of 5-6 times and takes EPS projections given by Resurgere�s management of about Rs 50-55 for FY09, it is ruling at a P/E multiple of 10. This is purely a trading company having fixed assets of close to Rs 2 crore on a turnover of about Rs 400-450 crore. The prices will not sustain at these levels, so one will see a sharp fall in prices maybe after two or three weeks. One cannot take a call on those things right now but it is a classic case of momentum and operator play.

Q: What can one do with regards to such companies when traded volumes, due to operator activity or otherwise, actually cross such fundamental limits?

A: One will always notice these kinds of volumes in new listings because arbitrators find it very convenient to enter and exit these stocks with a gap of about Rs 1-2. If one checks the the data, which will be released by the stock exchanges at the end of the day, one will find that many arbitrators have carried out huge volumes at a difference of Rs 1 or maybe Rs 1.5-2. When the stock is driven by momentum or operators then interest is much more in the counter and one sees huge volumes.

Q: Do you think for such issues there should be some restrictions on intra-day arbitrage? Is that something the regulator can look at?

A: I do not think it can work. The Securities and Exchange Board of India, or Sebi, can always look into that data. I don�t think that one can really restrict all these activities with artificial restrictions like those on trading volume or price movement on the first day. However, one can check the allotment pattern. When one checks the activities carried out by insiders, one can always map the culprits or operators in the counter.

Q: What is your view going forward on that stock? Will the party be over today or going forward are there further gains on this one? Do you think this will slide to sub-Rs 400 or close to its issue price? What do you see happening in this particular stock?

A: I am expecting this momentum or party to last for about 2-4 weeks. I do not think this stock deserves a price of more than Rs 200.