Can Stayam Computer be a takeover candidate?

From being the top four IT companies of India, Satyam is now reduced to a sinking ship, all because the father decided to bailout his sons. The love for his sons has now threatened to kill the very goose, which laid the golden eggs for him. One mistake and the company is now on an irreversible path of regret. Corporate governance, which seemed mere fashionable words to mouth has become a reality. This is probably the single biggest gain for India Inc – the top management of learning the bitter lessons of Satyam that it cannot take the shareholders for a ride, always.



The exodus of the independent directors has begun and there is news that even the employees in the senior and middle rung are busy circulating their resumes. The all important Board meeting is scheduled for 10th Jan 09’ and major decisions, mainly in the form of complete management reshuffle and probably Raju resigning is expected to keep all on tenterhooks. That is assuming that some PE fund or IT major like IBM or Accenture or Cap Gemini does not make a bid to takeover before 10th Jan.



Satyam is indeed the best takeover target right now. Any company looking for value need not look too far beyond. Corporate governance apart, Satyam is an ace IT player, not just in India but has deep trenched global footprints too. Satyam offers a variety of services from application development and maintenance to infrastructure management. India is a growing market and will add millions of internet and IT users within the next few years. The opportunity for tech companies in India is immense. An acquisition by a global company would mean it can increase its immense market share in Indian IT market as this is an opportune time to get a foothold.



If one removes all this shroud of shame surrounding the company, Satyam is actually a very good catch. The company, had a consolidated net profit of Rs 580.85 crore for the second quarter ended September 30, a growth of 42 per cent over the corresponding period a year ago. Total revenue earned was up 35% at Rs. 2,898.87 crore. For the fiscal 2008-09, the company has revised its guidance upwards and stated that its consolidated revenue was to be between Rs 11,273 crore and Rs 11,475 crore, implying a growth rate of 33.0 % to 35.4 % over fiscal 2008. EPS for the full year is expected to be between Rs. 33.57 to Rs. 34.10, implying a growth rate of 33.0 % to 35.1 %.



54% of its business now comes from offshore and 46% from onsite business. 62% of its revenue comes from USA, 21% from Europe and another 17% from rest of the world. Its subsidiaries includes Satyam BPO, Citisoft , CA Satyam , STI , Satyam in China and Bridge Consultancy. So we are basically looking at a US$2 billion company up for sale. Also, the good news is that more number of employees work offshore, almost 70% of the total workforce, than onsite. It currently has 690 customers, of which, 185 are Fortune 500 companies. But how many would renew their contracts after this would depend on how the company handles this situation. And given the fast image rescuing it would have to do, the beating down of the stock price makes it an excellent buy.



Also, the promoters might not have too much of a say in the matter now as they just not have enough shares to have any controlling stake. Raju family’s stake is now stated to have slipped below 5% after the shares pledged by the promoters was sold by the lenders. With margin calls coming in, the lenders would have had no option but to sell to cover the shortfall.



Satyam is sure to take a further beating on its image but its only way out now is through a strategic partner coming in or a takeover happening. The company, as a pure IT company, is a gold mine and would surely help escalate the standing of any company taking over. This is only silver lining in this otherwise bleak cloud.

Twiggs Money Flow indicator warns a trend reversal in Sensex

Chart shows 4 year chart of Sensex with Twiggs Money Flow indicator. Twiggs Money
flow indicator(13 Week) shows that a drop down below zero with negative divergence
show the confirmation of trend reversal towards downwards. And this is the third time
the indicator is dropping below zero. Every Upside should be use as an opportunity to
build shorts with a stop loss of 3050 for a minimum target of 2600

Twiggs Money Flow signals accumulation if above zero, while negative values signal distribution. The higher the reading (above or below zero), the stronger the signal.

* Go long if a breakout above resistance is supported by Twiggs Money Flow above zero.
* Go short if a breakout below support is confirmed by negative Twiggs Money Flow.

Divergences also provide good signals:

* Go long on a bullish divergence.
* Go short on a bearish divergence.

The strongest confirmation of the above signals is when either:

* Twiggs Money Flow is trending upwards and completes a trough without crossing below zero, or
* Twiggs Money Flow trends downwards and completes a peak without crossing above zero.

In other words: when Twiggs Money Flow respects the zero line.


Compiled from Marketscall.in

Weekly Nifty 50 Outlook and Trading Ideas

An Ominous end of Tumultuous Year

In Previous Week Nifty failed to pick gauntlet thrown by market by unable to cross 3110 and falling almost 7%.But this week if 2860-2820 Holds we can see a 3-4 % Santa Rally back to 3k on Nifty.But if war clouds Hover around we can see Nifty back to 2400-2500 Levels.

Nifty Views are updated on
https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgX_HA25rfS7gTFpMSZc50P91NPIHRBgBGpswxEQaUwUbxw1HeMLj9zmnnzp0rmiAC4-Clhr2XmcAO-LJnAO1NkfhAVvh3-xIlLikUtkbZqKjGo5gX0g5rlLvEJeDxHQL-eoW08DYBdJuoj/s1600-h/Nifty+50+Weekly+29-02+JAN+2009.bmp



Trading Ideas

BHEL has broken symmetrical Triangle can be shorted with SL as 1354 tgt 1280 and 1244

EDUCOMP BUY BETWEEN 2240-2355 FOR TGT 2525-2650 STOPLOSS BELOW 2210

RELIANCE POSSIBLE UPSIDE 30% FROM 1170-1180 LEVELS.

RELInfra can see a bounceback to 600+ Levsl Sl 512

TATA STEELAbove 215 it go for 221 to 231 level. At downside support at 206 and then 200.

ONGC It is possible to it come down upto 619 level and if break this then slide more upto 597 to 557 level. At upside it face hurdle at 659 if cross this then it go for 681 to 721 level.

United Spirits can be bought for a tgt of 925 and 956 Sl 853

Small Cap Pick

MSK PROKECT buy for 50-100% upside Buy back at 85 cmp around 50

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Regards,

Bramesh
9985711341

Nifty 50 Weekly 29-02 JAN 2009

Nifty is at very precarious situation 2860 is very important level from Technical Point of view.IF it goes below and sustain this level we can see a downside till 2700 Levels in near term.

But Santa Rally can take us back up to 3k level if 2860 is sustained.


Please click on Image to see Enlarged Image.

Reasons for Investment in Satyam Computers

Satyam Computers

The company has seen a severe beating because of a decision to buyout or say bailout Maytas ( satyam = maytas ) infra n maytas properties. This would have meant transferring shareholder money into promoters pockets indirectly whatever be the valuation given.

Although such a move has been a major sentimental and reputation blow to the stock and would continue to hamper any face saving move from the management. In such markets nobody likes uncertainty from management side.The World Bank news was another blow to the already beaten stock

Looking at the Positive side of the story

Now some positives :
The market cap of Satyam is roughly around 9500 cores.
The pure cash or asset side is 7000-8000 cores . They were going to give around 7.5-8k cores for Maytas infra and Maytas properties.

So it implies the cash component is around 80 rs or more per share for every share of Satyam. The debt is nominal.

The IT business continues to be decent enough with decent earnings growth although i am not an IT fan in current scenario.

The stock has corrected as investors are worried that the cash is not safe with this mgmt !. In such a scenario any face saving measure would mean management may possibly try to transfer cash into shareholders pockets through dividend , buy back or any other method . FIIs hold more then 45-50 % and promoters 8 % . Can FIIs dictate the mgmt ! , Will there be a mgmt change etc are favorable turns.


We have already taken positions in Satyam at 157(20%)and 118(30%).we will wait for more opportunities to come.

This type of stagger investment we should always do to conserve our capital

The risk component is any litigation , suit which may hit the cash otherwise the cash is much more secure then before as the management may no more try another coup.

This is just a personal view and can be wrong too ( numbers are not exact but an estimate ) . Investors may do their own research and take exposure with keeping in check of your risk profile.


Satyam management were aware that the deal is going to blow the stock that's why top management sold the stock a day earlier


Now another observation clearly shows the intentions of the top management !!!
As per the insider trading disclosure the

Satyam Computer Services Ltd A S Murthy 16/12/2008 S 19000

Satyam Computer Services Ltd V Murali 16/12/2008 S 20000

So some action from SEBI can come in near future.

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Best Regards,
Bramesh
09985711341

Restructuring of Jaiprakash Associates

Jaiprakash Associates (JPA), flagship listed arm of Jaypee Group is acquiring four companies and merging into it. Let us have a look to the scheme:-- i) Jaypee Hotels (JPH), a listed company, in which JPA is holding72.18% stake is being merged with JPA on share swap ratio of 1 share of JPA of Rs.2 each, for every 1 hare held in JPH, of Rs.10 each. The present paid up equity of JPH is at Rs.55.49 crores. So 15.44 crore shares of Rs.2 each of JPA would get issued to non-promoter shareholders of JPH and 40.05 crores shares would get parked in Trust, for promoters stake.



ii) Jaypee Cement Ltd (JPC) a 100% subsidiary of JPA, having paid up equity of Rs.355.95 crore is being merged on swap ratio of 1 shares of Rs.2 each of JPA, for every 10 shares of Rs.10 each, held in JPC. So, 355.95 lakh shares of JPA would get issued and shall be held in Trust.



iii) Gujarat Anjan Cement Ltd. (GAC) a 99.88% subsidiary of JPC having paid up of equity of Rs.333.95 crores, is being merged on a share swap ratio of 1 share of Rs.2 each of JPA for every 11 shares of Rs.10 each, held in GAC. So, 303.24 lakh shares of JPA shall be held in Trust and 0.35 lakh shares shall be issued to Non-promoter shareholders.



iv) Jaiprakash Enterprises Ltd (JEL) is engaged in infrastructure and property business with majority of its stake being held by the promoters of JPA in their personal capacity. No financial details of JEL is available, except that 3 shares of JPA of Rs.2 each shall be issued for every 1 share of Rs.10 each held in JEL. The present paid up equity of JEL is reported to be Rs.33 crores, being 3.30 crore equity shares of Rs.10 each. So, 9.90 crore shares of JPA shall be issued to JEL shareholders.



Now let us have a look to some other key features:--

a) JPA is not holding even a single share of JEL while JEL, is holding 801.98 lakh shares in JPA, being 6.83% of total issued capital of JPA, as part of promoters equity.

b) Paid up equity of JPA, as at 30-09-08, is consisting of 117.38 crore equity shares, of Rs.2 each, being Rs.234.76 crore as paid up equity. Of this, promoters stake is at 52.16 crore shares being 44.44% stake.

c) On acquisition of four companies by JPA, as stated hereinabove, 22.04 crore shares of JPA for Rs.44.08 crores would be issued, due to which, paid up equity of JPA would rise from Rs.234.76 crores to Rs.278.84 crores.

d) Of 22.04 crore new shares of JPA being issued, 10.60 crore shares would get parked in Trust, as Treasury stock while 11.44 crore shares would get issued to non-JPA shareholders. Of this 11.44 crore shares, about 9.90 crore shares being issued to JPE shareholders, is presumed to be coming to the promoters of JPA viz. Gaur family.

e) Equity dilution of JPA would be about 15.80% from Rs.234.76 crores to Rs.278.84 crores. Of this, 7.60%, would get parked in Trust while about 8.20% would get issued to non-JPA shareholders.

f) Of expanded equity of Rs.278.84 crores of JPA, promoters would be holding about Rs.124.12 crores (62.06 crore shares of Rs.2 each being 52.16 crore share held presently and 9.90 crore shares to be received on swap of JPE) which would be 44.51%. So, present stake of 44.44% in JPA would remain almost at same level at 44.51%. In addition to this, 7.60% would be held in Trust, which implies a holding of 52.11% by promoters, in JPA.

g) JPE got a valuation of about Rs.860 crores, if we multiply 9.90 crore shares to be issued by JPA for acquiring JPE with closing price of JPA of Rs.87, on 22-12-08. Though no financials of JPE is available, it is estimated that its PAT for FY 08 was at Rs.35 crores and a multiple of 25 times has been given for acquiring JPE. Promoters of JPA have valued the assets of JPE at around Rs.9,000 crores. It may not be correct to value JPE purely on earnings method, as some of its realty assets though may be having huge value may not be yielding any income. This would constitute about 7% of the total assets of JPA, post acquisition of four companies.



So it can be said that though valuation of JPH, JPC, and GAC seems to be correct, one may raise doubt on valuations of JPE. But we are not having any apprehensions or concerns on the valuations of JPE.



However, one needs to consider the rationale or objective behind this move of consolidation? We feel that cement, realty (including hotel) and construction having come under one umbrella viz JPA, we may see next round of restructuring in JPA with hiving off of cement business into a separate company, in which, strategic investor may get inducted at a later date. Presently, JPA has a capacity of 8 million TPA of cement, which is being increased to 24 million tonnes by end of calendar year 2009. So, JPA would be requiring another Rs.2,500 crores to complete this capex. Though JPA had issued 5 crore warrants in the past, to Jaypee Ventures, one of the promoter, at Rs.397 per share, but one needs to see the fate of these warrants. On consolidated basis, JPA has a debt of Rs.11,500 crores, on a net worth of Rs.5,000 crores as at 31-03-08. So, promoters need to look for alternatives to raise funds for cement expansion.



Coming on the other business of JPA, its infra projects need huge fund requirements. 160 km. long 6 lane Taj Expressway Project and 1,047 km. long 8 lane Ganga Expressway Project along with development of land parcels adjacent to Expressway projects are some of the big projects. In addition to this, huge hydro power capacity is being created. Since, JPA holds about 63% stake of J. P. Hydro Power, all funding for these projects have to be provided for, by JPA.



So maybe, to raise huge capex requirements of over Rs.12,000 crores one flagship is being created by Jaypee Group to expeditiously implement these projects. It seems that Jaypee Group would be able to succeed in its plan and this merger move may prove to be timely and result-oriented.

Nifty 50 and Stock Trading

HI all

Hope u all had rocking week as all our calls rocked like anything

Educomp gave up some 600 rs per share

Keep ur self tuned to This blog from more rocking calls

This week nifty can go down and which should be used to buy till 2820

For ur own insurance buy 3100 Put

Stocks specirfic

IOC has made breakout from it's inveted haed and shoulder patten buy for a tgt of 500 sl 380

IDBI buy for a tgt of 74 and 77 sl 67.50

Suntv can rock to 180

PNB will put a good shown in coming week keep sl of rs 500 on all ur positions


Hope u all have a rocking week

Bramesh

9985711341

Weekly Nifty Forecast (22-12-2008 to 26-12-2008)

Satyam-Maytas deal fiasco

Satyam means the truth. And Satyam Computers has defied the very name that it stands for. The way the Board of Directors and the promoters have tried to siphon off funds under the pretext of providing capex for the other two group companies – Maytas Infra and Maytas Properties has left the foreign fund managers completely stumped. There is a mood of complete distrust about India Inc and the general perception formed now is that all Indian companies openly flout rules of corporate governance and thus cannot be trusted. This is what Satyam has done – shroud the entire India Inc is a blanket of asatyam!



The first question which comes to mind is – how did the independent directors on the Board allow this to happen in the first place? The Board of Directors should first be made more accountable for this. Looking at the Rs.6,000 crore, which was lying in the balance sheet of Satyam, they probably salivated, thinking how it could earn them more, by merely lending it to another two group companies. But didn’t they think that they as Board of Directors were doing something so wrong? Apart from the core promoters, there are eminent names like Vinod Dham – father of Pentium; Professor Krishna G Palepu who is also on the Boards of Dr. Reddy's Laboratories Limited, Exeter Corporation, USA and Harvard Business School Publishing Co., USA; Prof. M Rammohan Rao who is the Dean of Indian School of Business (ISB); T. R. Prasad who apart from being a Cabinet Secretary has also been the Defence Secretary of the Government of India; Secretary, Industrial Policy and Promotion, Ministry of Industry; Chairman, Foreign Investment Promotion Board (FIPB); Secretary, Heavy Industry, and Chairman, Maruti Udyog Limited. And there is also Prof. V. S. Raju - former Director of the Indian Institute of Technology, Delhi; and was a professor and Dean at the Indian Institute of Technology, Madras and right now he is the chairman of the Naval Research Board, Defense Research and Development Organization, Government of India. Were they present in the Board meeting of Satyam having decided on this?



So what exactly is the credibility of these people if they could not see what the core promoters of Satyam were doing? What is their responsibility? Are they mere ornaments on the Board? And someone like Vinod Dham? Could he have ever dreamt of doing something in his company in the USA? Or is it that India mein kuch bhi chalta hai?



We talk of corporate governance but obviously it exists only on the papers of the balance sheet. Sterlite Industries too tried to take the investors for a ride. So when two big companies like Sterlite and Satyam have thrown corporate governance to the winds, what can one say about the others? Yes, at the same time, it is companies like these which will now spoil the names for the others who actually do practice corporate governance, It’s the rotten apple which spoils the whole basket.



And what was Satyam thinking? Rs.6,000 crore for infra and realty companies? Why was it forcing the shareholders of Satyam to get into infra sector against their will and judgement? If the shareholders wanted they would have invested themselves but what manipulate them? Also another question which comes to mind is – what is the need for Rs.8,000 crore for two infra companies, that too of the size of Maytas Infra and Maytas Properties? Even when we put together more credible and proven companies like Sobha Developers, Parsvnath, Puravankara, Omaxe, their present value do not add to Rs.8,000 crore. So how did Maytas group valued so much ? Greed? Avarice? These are the most obvious answers which come to mind. The

Rs 6,000 crore in the balance sheet was like a bone for the dog, enticing them to do something and get their teeth into it.



What also comes forth in this entire drama is the vigilance of the shareholders. They are the only ones who have played their role well, being the watchdog which was actually the job of the independent directors. This also goes on to show how shareholders can actually bring about the change, how they can, with their will and vigilance force companies to follow corporate governance. Just as we Indians need to be more vigilant about our security as the politicians have failed, we also need to take care of our money because the promoters and independent directors of companies are no longer trustworthy.



To think that Satyam could do this, that too at a time when there is a global financial crisis and even established companies are treading with utmost care to keep the faith intact; it is shocking!


India Inc will face the ire for some time but will manage to win over if they show they are serious about corporate governance but for Satyam – this blow to the image is irreparable as trust once broken can never ever be glued back together without the cracks showing.

Educomp Solution ready to roar

Weekly View

HI all Hope everybody had a very good weekend.

Nifty Views have been updated in https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzT8O6GWrE1qkWManzYNbrK_-JX79s6TMXIqP_T5tOrpVJP2Z3lE-4Q7TbT85a1tXkbmplGMXNucps1qoSc2bWBHzlnSpnlZ_jztvyXvXRsKOSevNuju9fwEPMDpkItL8fI0MVIF5LlKmu/s1600-h/Nifty+Weekly++View+15-19+Dec.bmp

Stock Specific

Reliance is near its supply zone of 1335-1356 be cautious on this level.

SBIN near its resistance levels of 1220

Praj Industries Tgt 71 and 79 sl 58

JP Hydro Tgt 30 and 35 sl 26

ABG Shipyard tgt 109 and 120 Sl 94

STERLITE INDS BUY IF BREAKS 299 Tgt 311 and 318 Sl 294

Educomp can give a jump of 10% from cmp


Hedge all you longs with 2800 Put It is just for
your own insurance.

For stock Specific Quey send a mail to

bhandaribrahmesh@gmail.com

Regards,
Bramesh
9985711341

Nifty Weekly View 15-19 Dec

FCCB BUY BACK – MAKES PERFECT ECONOMIC SENSE

There is now one more “first” which Anil Ambani can add to his already overcrowded cap – his company Reliance Communication would most likely be the first company to announce buy back of its Foreign Currency Convertible Bonds (FCCBs), the first Indian company to do so after RBI relaxed the norms last Saturday.



As per the new norms issues by RBI, companies are now prematurely allowed to buy back their Foreign Currency Convertible Bonds (FCCBs) , financed by the company's foreign currency resources held in India or abroad. The only conditionality justifying the buy back using foreign currency held in India, including Exchange Earners Foreign Currency Accounts (EEFC) or foreign currency held overseas or raise fresh foreign borrowings, provided there was a minimum discount of 15% on the book value of the FCCB. Companies can also buy back using rupee resources, if there is a minimum discount of 25%, on the book value. The conditionality over ruling all this is that companies will use their internal accruals, which has to be certified by the statutory auditor.

R-Com had issued zero-coupon FCCBs in February 2007, to raise USD 1 billion. The bonds are now trading at a 35% discount to the issue price, meaning, its bonds worth has now come down to US$650 million. And as the RBI has allowed the companies to use internal accruals, this should not be too much of an issue with RCom, as it currently has over Rs.100 billion in cash reserves, which also includes about US$ 600 million worth of investments in mutual funds overseas. And if the other option which the company has, is, to also convert a portion of the rupee reserves into foreign currency for the buyback.

This move to buy back by Rcom is good, as it would help the company reduce its liability and also bring down its forex exposure. Converting the bonds into equity is not a viable option, or rather not workable option as almost all the stocks are today quoted at a huge discount to the conversion price. Another option then would be to raise ECBs which has also been relaxed by the RBI. That too might not come through as no one is today willing to lend, irrespective of the pedigree or the repaying capability. Also, with the dollar now becoming a precious commodity, coming across ECBs would be difficult. And thus this premature buy back is the best possible option available.



The premature buy back does not just reduce the liability, but this would mean that the companies after buying back these FCCBs, would now go for new FCCBs at today’s rates, thus keeping their capex plans intact and at the same time, adjusting their liabilities to current rates. For companies like Rcom and other bigwigs, reducing the capex is not an option – maybe they can postpone but not bring down. And going by all these circumstances, it thus makes more sense to buy back the FCCBs.



Rcom will be the first company to do so, but not the last. Others expected to follow suit at as majority of the FCCBs are today trading at an average discount of 30-70%. Prominent amongst them could be Aban Offshore which has a FCCB of Japanese Yen 11610 million, Aurobindo Pharma of US$150 million, Ashok Leyland of US$100 million, Bajaj Hindusthan of US$120 million, Educomp of US$80 million, HDFC of US$500 million, JP Associates of US$265 million, JSW Steel of US$325 million, M&M of US$200 million.



Suzlon Energy also has a FCCB of US$450 million, but, given its deferment of rights issue and need of internal accruals to buy additional stake in German RE Power and fund the expansion plans, maybe the company might not go for a premature FCCB buy back - unless the company decides to defer the expansion plans and the additional stake buy, which logically makes more sense under the present circumstances.



Another such company which has FCCBs but not enough internal accruals will be Tata Motors. It has a FCCB of US$ 890 million and another FCCB of Japanese yen 11,760 million. Tata Steel too has a FCCB of US$875 crore which could see premature buy back.

All in all, this is a good move by RBI to allow premature buy back of the FCCBs. And in the present circumstances, makes perfect economical sense.

Reliance keeping NIfty Dumb

Reliance is positive above 1160-1180 Can see 1220-1300 Levels

Govt to pump in Rs 300,000 crore to boost economy

The Government on Sunday announced a Rs 300,000 crore ($60 billion) package to boost the economy with specific measures for various sectors and contain the impact of the global financial crisis on India.

The amount is to be spent over the remaining four months on a host of areas and stake holders such as exporters, housing, infrastructure and textiles. A four-percent cut in Value Added Tax has also been announced to help the corporate sector in general.

"The Government has been concerned about the impact of the global financial crisis on the Indian economy and a number of steps have been taken to deal with this problem," an official statement said, unveiling the package.

The measures come a day after the Reserve Bank of India reduced its key rates and eased the norms for accessing overseas funds to reduce the cost of borrowing for commercial banks and signal them to lower interest rate for India Inc.

These measures were overseen by Prime Minister Manmohan Singh himself, in consultations with now Home Minister P Chidambaram, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Commerce Minister Kamal Nath, officials said.

As a first step, the Government will seek Parliament's mandate for an additional allocation of Rs 200 billion to take the authorised plan and non-plan expenditure to Rs.3,000 billion in the remaining months of the fiscal. Parliament session is slated to open Dec 10.

“The economy will continue to need stimulus in 2009-2010 also and this can be achieved by ensuring a substantial increase in plan expenditure as part of the budget for next year,” the statement said.

The measures for exporters, who saw a decline in shipments in October for the first time in five years, include an interest support of two percent for labour intensive sectors like textiles, handicraft and handloom.

This apart, additional allocation has been made towards various incentives for exporters, guarantee of export credit, full refund of service tax to foreign agents and refund of service tax under the duty drawback scheme.

Instructions have also been given to state-run banks to unveil a scheme under which borrowers for houses under two categories—up to Rs, 500,000 and up to Rs.2 million—will get special incentives.

“Housing is a potentially very important source of employment and demand for critical sectors and there is a large unmet need for housing in the country, especially for middle and low income groups,” the statement said.

For small and micro enterprises, the limits under the credit guarantee scheme which gives access to working capital and other financial needs, have been doubled to Rs.10 million.

The lock in period for loans covered under the existing credit guarantee scheme is also being reduced from 24 to 18 months to encourage banks to extend more loans under the credit guarantee scheme, the statement said.

The government has also authorised the India Infrastructure Finance Co Ltd (IIFCL) to raise Rs.100 billion ($2 billion) through tax-free bonds to support financing of government-financed infrastructure projects.

“These funds will be used by IIFCL to refinance bank lending of longer maturity to eligible infrastructure projects, particularly in highways and port sectors.”

In a push to the automobile sector, government departments have been allowed to replace vehicles within the allowed budget, with a major relaxation in the time-consuming procedures.

This apart, import duty on naphtha for use by the power sector is being reduced to zero, while export duty on iron ore fines will be eliminated, and reduced to five percent for lumps.

“The government is keeping a close watch on the evolving economic situation and will not hesitate to take any additional steps that may be needed to counter recessionary trends and maintain the pace of economic activity.”

Nifty 08-12 Dec

Nifty Technical View

Nifty is on a precarious situation and can be bought at dips at weekly support and resistance.

Simple ways to spot multibaggers

"IF you stay half-alert, you can pick the spectacular performers right from your place of business or out of the neighborhood shopping mall, and long before Wall Street discovers them." -- Peter Lynch.

Easier said than done? You can make it 'easier done than said'!

Here's how:

1. Keep your eyes and ears open.

A simple way to identify potential multi-baggers is to look around for emerging sectors and new trends and invest in the leading companies participating in these trends.

For instance, some of the mega sectors (organized retail, media, telecommunications, real estate etc.) helped to create wealth for many investors who participated in those sectors in the early phase of discovery. Let’s take the example of two mega sectors - telecommunications and organized retail. If you had invested in Bharti Enterprises during their IPO in 2002 or in Pantaloon Retail when you saw their first 'Big Bazaar' store, you would have grown your investment by 18 times in Bharti and by 65 times in Pantaloon!

2. Go out, explore and see 'what's in'
Peter Lynch used to spend some weekend time for going to malls and shopping with his daughters. According to him, this was a great place to spot new stock stories and do some real market / business research. He’s found amazing stock ideas by simple observations like the favourite toy store with kids, the restaurant people frequent the most, fashion trends with teens etc. Once he would get these answers, he would research the underlying companies and find out if they were attractive investment opportunities.

This might seem like a far too easy but difficult to implement strategy but trust me, it can work. See what products are in demand, what things get picked up from shelves in super markets the fastest and so on. It might give you good insights on stock picking.

BOOSTER REQUIRED – ECONOMICAL AND PSYCHOLOGICAL

Something is required to lift up the spirits. The terror attacks have left everyone wounded, so much so that it has taken over, at least for now, the entire spectrum away from the world recession knocking at our doors and the impact of the ongoing economic slowdown already making its presence felt in India.



Accountability and responsibility from our politicians would be hard to come by. After Shivraj Patil and R.R.Patil, neither any heads have rolled nor have any netas resignation been accepted. And probably hoping to shift this onus and to give the much needed kick start to the economy, the new FM and also the PM of our country, Manmohan Singh is working on a “booster” package. A committee working on the economic crisis has mooted a new plan which amongst a lot of things, proposes to set up a special infrastructure fund, provide interest subsidy for housing and export-dependent sectors like textiles, handicrafts and leather. The package also includes monetary measures, prime amongst which are interest rate cuts.



Improving credit off take and the overall liquidity scenario in the country would go a long way in rectifying the situation. High on the agenda is a cut in the repo and reverse repo rates which determines rates at which RBI accepts and lends to the other banks. The news is that RBI is flush with funds, with deposits coming in from the various commercial banks. Once the reverse repo rates are made more attractive and the repo rates – rates at which RBI will lend to the commercial banks is also made more attractive, the current situation of liquidity crunch is expected to get a breather. There is money in the system but no one wants to just lend and it is this which the Govt should be aiming at resolving.



News is that repo rate might be reduced by 150 basis points, which is currently at 7.5% and the reverse repo rates by a 200 basis-point cut, which is at 6% currently. News of brining down the CRR to 5-4.5% from the present 5.5% is also on the cards. This is expected to infuse an adrenalin rush of around Rs.60,000 crore into the system.



The Govt is planning to give impetus to infrastructure development by building more roads, ports, airports, bridges. This in turn is expected to give fillip to demand for cement, steel and all the other sectors which provide materials to build the infrastructure.



Another fiscal measure, aimed specifically at boosting the realty sector is providing funds to the National Housing Bank to finance small housing. It is also looking at the option of providing funds to NBFCs to finance infrastructure projects.



There is also talk of interest subvention. What does that mean? Interest subvention is when the Government steps in by picking up a part of the interest burden. The PMs panel is looking at interest rate subvention in housing loans and for the export oriented units. Exports declined 12% in October on a year-to-year basis to touch $12.8 billion, due to a severe demand slowdown in the US and Europe.



Another fiscal measure includes providing credit to the hardest hit sectors like textiles, leather, automobiles and handicrafts.



On the anvil are also import duty cuts, especially for auto, engineering and metals.



A slew of such measures are expected to be announced on Saturday. Manmohan Singh is known more for his skills for being a financial wizard rather than a politician. Maybe now its time for him to once again show his financial wizardry, which in turn could actually do some damage control to his image as a politician? And if he really shows some spine and takes those accused and responsible for the terror attacks to task, then maybe, he could actually save his party from a complete routing defeat in the coming elections.

BOOSTER REQUIRED – ECONOMICAL AND PSYCHOLOGICAL

Something is required to lift up the spirits. The terror attacks have left everyone wounded, so much so that it has taken over, at least for now, the entire spectrum away from the world recession knocking at our doors and the impact of the ongoing economic slowdown already making its presence felt in India.



Accountability and responsibility from our politicians would be hard to come by. After Shivraj Patil and R.R.Patil, neither any heads have rolled nor have any netas resignation been accepted. And probably hoping to shift this onus and to give the much needed kick start to the economy, the new FM and also the PM of our country, Manmohan Singh is working on a “booster” package. A committee working on the economic crisis has mooted a new plan which amongst a lot of things, proposes to set up a special infrastructure fund, provide interest subsidy for housing and export-dependent sectors like textiles, handicrafts and leather. The package also includes monetary measures, prime amongst which are interest rate cuts.



Improving credit off take and the overall liquidity scenario in the country would go a long way in rectifying the situation. High on the agenda is a cut in the repo and reverse repo rates which determines rates at which RBI accepts and lends to the other banks. The news is that RBI is flush with funds, with deposits coming in from the various commercial banks. Once the reverse repo rates are made more attractive and the repo rates – rates at which RBI will lend to the commercial banks is also made more attractive, the current situation of liquidity crunch is expected to get a breather. There is money in the system but no one wants to just lend and it is this which the Govt should be aiming at resolving.



News is that repo rate might be reduced by 150 basis points, which is currently at 7.5% and the reverse repo rates by a 200 basis-point cut, which is at 6% currently. News of brining down the CRR to 5-4.5% from the present 5.5% is also on the cards. This is expected to infuse an adrenalin rush of around Rs.60,000 crore into the system.



The Govt is planning to give impetus to infrastructure development by building more roads, ports, airports, bridges. This in turn is expected to give fillip to demand for cement, steel and all the other sectors which provide materials to build the infrastructure.



Another fiscal measure, aimed specifically at boosting the realty sector is providing funds to the National Housing Bank to finance small housing. It is also looking at the option of providing funds to NBFCs to finance infrastructure projects.



There is also talk of interest subvention. What does that mean? Interest subvention is when the Government steps in by picking up a part of the interest burden. The PMs panel is looking at interest rate subvention in housing loans and for the export oriented units. Exports declined 12% in October on a year-to-year basis to touch $12.8 billion, due to a severe demand slowdown in the US and Europe.



Another fiscal measure includes providing credit to the hardest hit sectors like textiles, leather, automobiles and handicrafts.



On the anvil are also import duty cuts, especially for auto, engineering and metals.



A slew of such measures are expected to be announced on Saturday. Manmohan Singh is known more for his skills for being a financial wizard rather than a politician. Maybe now its time for him to once again show his financial wizardry, which in turn could actually do some damage control to his image as a politician? And if he really shows some spine and takes those accused and responsible for the terror attacks to task, then maybe, he could actually save his party from a complete routing defeat in the coming elections.

SLOWDOWN GAINING SPEED

The terrorist attacks have made the chinks in the Indian economy jarringly visible. The Finance Minister who mouthed inane and utterly unbelievable optimistic quotes about the economy last week, now as the Home Minister, would probably get some home truths clear.



If some people had still nursed doubts that India was cocooned from the world recessionary pressures, would surely like to rethink their perceptions. The terror attacks have downed the sentiments to a new ebb and even economically, the tally of repercussions is starting to stack up.



In the aftermath of the terror attacks, India has been rated amongst the top 20 most dangerous places to visit, sharing the place alongside Iraq, Afghanistan, Pakistan, South Africa, Chechnya, Jamaica, Sudan, Colombia, Haiti, Eritrea, Democratic Republic of Congo, Liberia, Burundi, Nigeria, Zimbabwe, Lebanon. Touted to be the great rising Asian Tiger and constantly talked about in the same breath as China, this is a huge blow to the image, which would take a lot of repairing.



The immediate fallout is that the airline industry is expected to suffer a combined loss of Rs.200 crore in December and January with the passenger load feared to dip below 40% during the peak season. Tour operators and travel agents have already reported huge cancellations in their bookings for December and January. The hotel industry is expecting a 25-30% drop in its inbound tourists. As such the global slowdown had affected business and now with this also adding on to the woes, the cup seems to be overflowing.



This apart, India is also showing signs of a serious slowdown. Oil prices have come down below $50 per barrel and despite the fall in prices, sales of oil products, after a gap of 17 months has reported a drop in October, which is like an “official” confirmation of the slowdown. Sale of industrial fuel and diesel has dropped 1.7% in October. When prices of an essential commodity is down and yet demand falls, surely this tantamounts to a slowdown, right?



The automobile sector, which is the wheel of the economy, also seems to be turning at a very slow speed. Sales of cars and 2-wheelers dropped 20-40% in November. Maruti, Tata Motors and M&M have reported a drop in sales and so have two-wheeler majors like TVS, Bajaj Auto. Only Hero Honda bucked the trend and showed a positive.



The Indian realty industry, which was booming like never before has hit the ground with a resounding crash and the casualties are eking their way out from underneath. With sales not picking up at all and despite the realty companies having taken all measures to boost sales, no one seems to be buying. And for the realty companies, it is a question of survival and if they have to survive, they have to reduce costs. And that brings us to the biggest casualty of this fall in the sector – the employees. Huge job losses and an almost 50% drop in paychecks is what awaits those employed in this sector.



This is sure to affect many industries and job losses are bound to follow and when there is threat to job security, naturally, people cut down on spending and demand all over drops. This cycle has been set in motion and would continue till the world economies do not emerge out of this recessionary cycle. Actually recession is in but what we have to see is that it does not lead to depression, something which Bernanke says would never happen now.



Well, there are a lot of things which Bernanke and our politicians say and do. But their words, sounding hollow and not the least bit reassuring, cannot stop the ball of slowdown which is fast gaining speed.

Weekly OutLook

Before I begin my Nifty views for the forthcoming week, I would like to start by giving my share of tributes to our brave army and police officers. Not only the ones who lost there lives but also the ones who made the Operation cyclone a success.



As seen from the Nifty Weekly Chart we may see 2830 which in 20 DMA will act as a stiff resistance.

If that is crosses we may step into 3k range.Lets see what pane out in coming days.

Stock Specific:

Patni Computer has formed Bullish engulfing pattern can see a jump of 5-10% in coming week

Bharti Airtel coming out of Channel formation can see 700-730 Levels

ABB is a buy above 446

Reliance can see 1200 Levls in coming week.

Nifty Views Dec 1-5 2008

Before I begin my Nifty views for the forthcoming week, I would like to start by giving my share of tributes to our brave army and police officers. Not only the ones who lost there lives but also the ones who made the Operation cyclone a success.

Selling excepted in IBreal est below 82

Reliance and SBI are sell for tomorrow TGT 1019 and 1025

CITIGROUP – GETS THE UMBRELLA OF BAILOUT

The one big question on everyone’s mind was the fate of Citigroup. After the crashes of Lehman and then Merrill, people have now become wary and the feeling today is that no company, how so ever big it might be, is immune - any company can go down like the Titanic, sink into the oblivion.



The news that Citgroup might sell part of its assets or even all of it came as a shocker. The plunge in its share price was also worrying, threatening to engulf other big banks. But finally, this dark looming cloud seems to be dissipating. After a tense, round-the-clock bout of negotiations that stretched until almost midnight on Sunday, a bold plan seems to now have emerged.



The US Govt knew that this is one collapse, which its economy could no longer afford to have. And rescue Citigroup, it had to do! Hence a plan, mooted jointly by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp (FDIC) will now provide the required crutches to the maimed group.



As part of the plan, apart from taking a $20 billion stake, the Treasury and the FDIC will guarantee against the "possibility of unusually large losses" on up to $306 billion of risky loans and securities backed by commercial and residential mortgages. Under the loss-sharing arrangement, Citigroup Inc. will assume the first $29 billion in losses on the risky pool of assets. Beyond that amount, the government would absorb 90% of the remaining losses and Citigroup 10%. Money from the $700 billion bailout and funds from the FDIC would cover the government's portion of potential losses. The Treasury Department will use its bailout fund to assume up to $5 billion of losses. If necessary, the FDIC will bear the next $10 billion of losses and losses beyond that would be borne by the Federal Reserve.



In exchange, Citigroup will issue $7 billion of preferred stock to government regulators. In addition, the government is buying $20 billion of preferred stock in Citigroup, which will pay a 8% dividend and will marginally erode the value of shares held by investors.



Apart from this complex plan, as a condition of the rescue, Citigroup is barred from paying quarterly dividends to shareholders of more than 1 cent a share for three years unless the company obtains consent from the three federal agencies. The agreement also places restrictions on executive compensation, including bonuses.



Investors are happy that this bank too has been rescued but the dissent amongst the smaller banks, which could also have been rescued if the Govt had taken timely action seems to now be growing. Why was Lehman allowed to go down? Couldn’t it too have been rescued with a timely action plan? Another growing worry is that these actions could put billions of taxpayers' dollars in further jeopardy. Moreover, it would encourage financial companies to take excessive risk on the belief that the government will bail them out.



Collapse of Citigroup was one more crisis which could have toppled the US economy and to some extent, sent the global economy into a longer drawn out recession. Citigroup, America’s largest and mightiest financial institution today is sitting on a loss of $65 billion and more than half that amount comes from mortgage related securities created by one man - Thomas G. Maheras, who repeatedly assured the bank that everything was alright and stated that there were no losses. The bank, which is actually a worldwide conglomerate, relied on the words of this one man and allowed the bank to collapse. And by the time the risk management team took over, it was too late. The question that comes to mind once again – how can such a large bank rely on the words of just one man? The near collapse of Citigroup is symbolic of the madness, which had taken over the entire Wall Street – to get rich fast, two hoots to management and risks! And today, the whole world is paying a price. This is the price we all have to pay for depending so largely on one super power.



For now, one more crisis has been averted. But are there any more lurking in the background? How many more bailouts to go?

Nifty 24-28 Nov Outlook

G-20 or 420?

The "Group of 20" nations met in Washington over the weekend. The weather was cloudy and cool. The winds were blowing west-by-north-west at 14 miles per hour. But what came out was mostly hot air. Stale, hot air.

President Bush who is destined - unless saved by some miracle - to go on record as the worst President in the history of modern day USA laid the foundation for this nothingness.
Before the meeting began President Bush reminded us all that this financial crisis was not a failure of capitalism - there was no need to discourage financial innovation with excessive regulation.
Sure, the world needs a lot more financial innovation to be wrapped around the greed and slimy business practices of the financial geniuses.

The Europeans wanted more global oversight, more regulation. Eventually, the G-20 came out with a list of 20 points: a promise to do more and put in action with a notice that "we will meet again by April 30, 2009, to review the implementation of the principles and decisions agreed today".

Doctor, what's the problem?
But before any doctor sets forth a prescription, there must be a clear understanding of the disease. A treatment can only be effective when one understands the illness and identifies the cure.

So, what are the events that led us to where we are? What are the crises that led to a dinner and weekend meeting of the leaders of 20 countries that represent about 90% of the global GDP and 75% of the world's population?

This is what the statement of the G-20 had to say (points 3 and 4):

"Root Causes of the Current Crisis

3. During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence.

At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system.

Policymakers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions.

4. Major underlying factors to the current situation were, among others, inconsistent and insufficiently coordinated macroeconomic policies, inadequate structural reforms, which led to unsustainable global macroeconomic outcomes. These developments, together, contributed to excesses and ultimately resulted in severe market disruption."

Now let's put that in English.

G-20: During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence

The English version: After the technology bust in 2000 and the 9/11 terrorist attacks on the US, the global economies were on the edge of a long recession and - to prevent that from happening - the central bankers of the world kept on cutting interest rates with a view to encouraging economic activity. Whenever there is pain around the corner, the doctor prescribes the pain killer to remove the pain. The central bankers prescribed the drug ecstasy to turn that pain into the most orgasmic experience. The central bankers printed so much money that the financial geniuses figured out what to do with it: they gave it to people who could not really afford to ever repay it. And each time they lent money, the financial geniuses made a profit. And each time they made a profit, the financial firms rewarded themselves with salaries and USD 65 million bonuses.

G-20: At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system.

The English version: Hey, if you were cleaning out USD 1 million in salary every year (and there must have been 100,000 people in the field of finance, law, accounting, and consultancy who made that much money) and then getting a bonus and stock options over and above that - would you care about the vulnerability in the "system". Man, you were the "system"! People relied on you for ethical practices and you didn't give a damn about that - your annual salary and the sound of the bonus money getting to your bank account sounded sweeter than God's church bells.

G-20: Policymakers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions.

The English version: Mr. Alan Greenspan was the head of the US Federal Reserve. He knew what he was doing: giving money away for free to encourage businesses to take risks - and spur economic activity. The European central bankers were appalled at the "cheap money" policy of the US. They knew what Mr. Greenspan was doing - building a bubble economy. An economy fuelled by higher debt at the consumer level. An economy oiled by financial products that needed more global supervision. Mr. Brown, the then equivalent of the Finance Minister of the UK (and now the Prime Minister) did not want more regulation and oversight in Europe. His reason: because the US was grappling with the post-Enron and post-WorldCom frauds by putting in place more reporting standards for corporate governance, financial businesses were moving more of their innovation to London and Europe. If Europe placed more regulation, then it would lose its "competitive" advantage. London could no longe r challenge New York as a financial centre. Mr. Brown's arguments prevailed. Back in the US, the current "Finance Minister" Hank Paulson - who was then head of Goldman, Sachs pleaded with the SEC to allow Wall Street firms to borrow more. And the SEC approved that: more of Mr. Greenspan's free money found its way into hands of the financial geniuses. The bonuses got higher and higher.

G-20: 4. Major underlying factors to the current situation were, among others, inconsistent and insufficiently coordinated macroeconomic policies, inadequate structural reforms, which led to unsustainable global macroeconomic outcomes. These developments, together, contributed to excesses and ultimately resulted in severe market disruption

The English version: Maybe the Chinese have not picked this one - but they are being blamed for the "current situation". Follow me on this line of thought. The US central bank wants to give money free in the hope that businesses borrow this money and businesses invest. This investment creates jobs. Job creation leads to higher income. Higher income leads to more consumption. Higher consumption leads to higher economic activity. This leads to businesses investing more. More jobs, more incomes, more consumption...a virtuous cycle is established. But that is in the text books.

This is what happened in real life: The US central bank gave free money. The Wall Street firms lent this money to individuals in USA to consume more. The individuals consumed goods that were "Made in China". Investments did increase: in factories in China. Salaries did increase: of the labour class in China. Businesses did flourish: that is how the Wall Street firms could afford to paid out the big bonuses. The "structural" imbalance was caused by the fact that the Chinese - and other exporting countries that benefited from the surge in US household consumption - did not allow their own currencies to strengthen. If the Chinese currency had strengthened, exports from China would have been more expensive - and China would have lost out to other exporting nations like Vietnam, Indonesia, Thailand, Malaysia, and Mexico. Exports to USA allowed China to create jobs and increase employment and brought stability within China. All this because China kept its currency low and allowed exports to flourish.

At the US end, the packaging and re-packaging of financial loans - as one commentator noted - was the only export. The US exported USD 300 billion worth of these loans mostly to the European banks (remember London wanted to be the centre of the financial universe) and some to the Japanese and Asian banks.

The "problem" was not that Wall Street was giving loans to US consumers. That is the job of any finance company: to arrange finance.

The "problem" was that Wall Street and the credit rating companies like S&P and Moody's were rewarded to help sustain a lie: the lie that the loans being given to people who could not really afford them were able to pay these loans back.

Along the way, everyone got their pound of flesh: the Wall Street firms got the salaries and bonuses; the rating agencies got their fees; and the Chinese and the exporters got their jobs and built foreign exchange reserves.

And, yes, the US consumer - financially illiterate and unaware of www.personalfn.com - was able to buy new homes, new cars, new everything. All for some debt obligation and interest payments that seemed really cheap - and (due to financial innovation) began sometime in the distant future.

So, if this is indeed the problem - in simple English - what is the cure?

Complexities of drugs
The last time there was a problem - and, sigh, it involved the same Wall Street firms - the US Fed prescribed "cheap money" as the cure.
But drugs have side-effects. Any doctor knows that.
And in certain combinations - they can be lethal.
Mr Greenspan knows that by now - you mix free money, with the ability of Wall Street firms to borrow infinitely, and sprinkle that with self-regulation - you end up where the world is today.

So the action plan that the G-20 has recommended is one of more oversight, more regulation. And more transparency of the accounting standards used to evaluate the risks of the financial instruments created by the financial geniuses.

Good stuff, I am sure and the G-20 will figure what the new system will look like.

But they have not addressed two issues:
1) The G-20 statement was silent on whether they will punish the crooks who mis-sold financial products to borrowers and to the lenders, and
2) The G-20 statement did not spell out how "unsustainable global macroeconomic outcomes" will be addressed. Will China - and other exporters - allow their currencies to strengthen so that they stop exporting - and will China risk a social upheaval at home due to job losses from shutting down export factories? China had already announced a USD 560 billion stimulus package - to offset the decline in exports to countries like the US.

So the G-20 was what it was: a lot of good photo ops for the leaders and some long-worded statements.

But, "hot air" is sometimes a good thing.
It tells the doctor that the patient is still alive.
Still pretty sick - but alive.

The world will take some time to get back on its feet and run again.

And India? I hope that the policy makers get their act together and start chalking out some serious investments in infrastructure (and not just the electronic voting machines) to build the base that India needs to take it to an 8% rate of annual growth in the economy - on a sustainable basis.
And the Indian stock markets? Let me know when SEBI shuts down P-Notes then we can have a rational discussion.
Until then, it remains a casino.

A wonderful, no-failure-in-settlement-systems, highly efficient casino.
But a casino - not a vehicle to allow Indian companies to attract long-term capital to build out India's economy.

Flag Formation Sign of Reversal

Weekly Outlook

HI All

Nifty is at very precarious situation at present moment.

Support exists at 2746 and than at 2600 Below that October LOws are only Support visible.

nifty IS POSITIVE ONLY ABOVE 2900 and a Dead Cat bounce can not be ruled out.

Stock Specific

Lanco Infrastructure Stock Plummeted 12% in Fridays Session RSI is in Sell mode.

Sell with a S/L of 152 TGt 133 and 120


Axis Bank is also looking Week Sell with a Stop loss of 515 TGt 450 and 405


Reliance is Looking week on charts support at 1002 and resitance is at 1098 Below 1002 it can test previous Lows.

Relinfra support is at 500 and resitance at 546 can go to 565 and 618 above 546


HDFC: A break below Rs1,350 levels will see the stock entering a fresh
intermediate downtrend for target of Rs1,100-1,000 levels. The
Rs2,000 levels looks like a strong resistance for the stock for the
next few months. Any pullback to the same should be used to exit
any pending long holdings.
Aggressive traders can sell at current levels and on rallies to Rs1,600-
1,620 levels with a stop loss of Rs1,675 for target of Rs1,400-1,425
levels.

Calls via SMS Channel during market Hours

Hi all

I had made one Channel where in we will post during Market Hours and u will get that.

If Ur interested please Open the below link in new browser and click Yes.

http://labs.google.co.in/smschannels/subscribe/BrameshCalls

Nifty weekly Chart for 17-21 November

SBIN in Down channel can see new lows in coming weeks

As visible from figure SBIN is in a cahnnel formation and can easily see new lows in coming session While upside will be capped at 1300-1350 levels Downside can see New lows and in 3 digits.

Selling Excepted in Jindal Steel once it is below 748

IIP – brings some cheer on Dalal Street

The listless markets of the morning finally got some reason for cheer, some sense of direction, some reason to move. The much awaited IIP figures were released and as was expected, it was good. Good when compared with the figures of August 08’ but indicating that recovery is a long way off when compared to the earlier year’s growth.



Index of Industrial Production for September grew by 4.8% compared to 1.3% in the previous month but lower than 6.98% on a YoY. Manufacturing which accounts for two-thirds of the IIP rose 4.8% against 7.45% on a YoY. Capital goods were up 18.8% as against 20.9% growth last year. Mining was up at 5.7% as against 4.9% on a YoY. Consumer durables production reported a robust growth at 13.1% as against a fall of 7.3% last year.



The August Industrial Production figure has been revised marginally upwards at 1.4% from 1.3% in August. Albeit marginal, it’s at least upwards. Hanging on any small straw in this bad time is welcome.



After all this number crunching, what is the emerging writing on the wall? Undoubtedly, the growth rates still show signs of pain and it would take a while to get out of the woods. Due to the oncoming festival season, industries usually stock up inventories and hence the figures in September were more or less on the expected lines. In October too, nothing untoward or a negative growth is expected, it would be more or less flat. But November would be a different story and that too a painful story. With many companies cutting down on production and shutting down factories to cut down on the piled up inventory to lack of demand, November IIP figures would be tough. In the entire second half of the current fiscal, IIP is expected to show an average growth at 2.5-3%.



Right now, there is an overall slowdown, The auto sector, realty, steel, cement, all are now showing signs of a slowdown. Though the RBI has taken to infuse some liquidity back in to the system, more rates cuts are expected to help revive the economy. Tight money situation is pinching the common man on the street and demand has taken a beating - be it automobiles, homes or even consumer durables. The season of Diwali has not been as exuberant for the industry as it had been expected. The news of India’s exports plunging to a five year low in October, merchandise exports dipped 15% and slipped into negative territory during October 2008 compared to the same month in 2007. The government expects the situation to continue or even deteriorate in the coming months. Labour-intensive sectors like textiles, garments, handicrafts, certain segments of leather and gems & jewellery are the ones, which have been hit the most by the slowdown in the West. Resultant job-cuts are only further expected to impact the IIP figures.



The only way to kickstart the economy, apart from reducing interest rates is by accelerating spending on building roads, ports, utilities and other infrastructure facilities. As our Prime Minister states, ``expanding investment in infrastructure can play an important counter-cyclical role”. But till that happens, the coming months, especially Q3, will remain tough.

Nifty is forming an inverted head-and-shoulders pattern

Nifty is forming an inverted head-and-shoulders pattern, whose neckline is placed at 3,241 and an upside breakout of this
neckline will take Nifty to 3,650 in the near future. Further,the close of Nifty above the 20-day simple moving averages is adding to this bullish scenario until Nifty holds the support of the moving average.

Mundra Port buy at 344 SL 324 tgt 369 and 409

Buy Mundra Port at the current market price of Rs347 with the
stop loss of Rs324 for the targets of Rs379 and Rs409. The
stock has completed large corrective with multiple +ve divergences.

Exit All Longs if nifty is unable to stay above 3260

Hi all

Now nifty has rallied quiet a bit in recent days.

Now we will face major resistance at 3260which is 38.25 retrace of current powerful bear market rally .

Long pepole should get a bit of caution as if unable to cross the 3260 mark we may retrace back to 2860 level.

Technically speaking On daily chart, Nifty is forming an inverted head-and-shoulders pattern, whose neckline is placed at 3,241 and an upside breakout of this
neckline will take Nifty to 3,650 in the near future. Further,the close of Nifty above the 20-day simple moving averages is adding to this bullish scenario until Nifty holds the support of the moving average.

Buying advised in Indian Bank above 140

Buying in Nagar Fertlizer above 18.5 tgt 18.8 19.30 and 20.2

Telecom:A Volume Led Story.

We believe that the Telecommunication sector will outperform the market during the next 6-9 months as at current prices, telecommunication stocks are trading at a discount to the market’s P/E multiple. The average P/E multiple for telecommunication stocks is 10x against the market’s P/E multiple of 13x. Besides, the Indian mobile telecommunication sector continues to be a strong volume-led story with mobile telephone penetration rate still below 30%. We expect the number of mobile subscribers to grow 10% qoq till at least the end of 2010, driven by the availability of cheap handsets, the widening network coverage across the country, and a substantial reduction in tariffs.
In our view, large telecom companies such as Bharti, Reliance Communications, and Idea boast of a significant early-mover advantage in the face of expected competition from the likes of upcoming players such as Swan, Unitech, and Datacom. These companies have captured most of the creamy customers in the country and have substantially scaled up their operations in the last 4-5 years. Besides, they have already established a wide network across the country and own submarine cables across continents, thereby providing competitive tariffs to subscribers and achieving an average EBITDA margin of around 30%.
Furthermore, the upcoming 3G operations should boost their margins by enhancing the
contribution of Value Added Services (VAS) to the total ARPU from around 8% currently to 15% in the next 3-4 years. Other than this, these companies have a net debt/EBITDA ratio around 1, which can support their domestic CAPEX plans and international expansions in the other emerging markets of Africa and South-East Asia.

Top Picks

Bharti

Rcom

IDEA

Nifty Weekly 10-14 November

India Bulls Real Estate Buy if 163.50 is broken

OBAMA WINS – IGNITES HOPE OF CHANGE

5th November 08’ will be a historic day for America. The 44th President of USA is an African American, with a middle name of "Hussein" and elected by a hugely white population, breaking the racial barrier forver. The winning of Barrack Obama has sent waves of optimism all over the world. The whole world is eager to put Bush and his 8-year regime deep into the closet, and look ahead now with hope.



It was a taken that Obama would be the next President of USA but after the debacle of Florida during Bush’s time, there was still a glimmer of doubt, one never knew for sure till it happened.



Call it the smartest advertising and PR blitzkrieg of the decade or the need for a ‘Change”, its indeed a momentous victory. Obama has shown the world how to win elections and by using the internet as a medium of communication, he has shown how it is today the best mode of communicating with the youth.



The editorial in New York Times states - Mr. Obama won the election because he saw what is wrong with this country: the utter failure of government to protect its citizens. He promised to lead a government that does not try to solve every problem but will do those things beyond the power of individual citizens: to regulate the economy fairly, keep the air clean and the food safe, ensure that the sick have access to health care, and educate children to compete in a globalized world.



Obama is coming into the Office at a time when America and the whole world is going through the worst possible crisis. Call him a good orator or his charisma, after a long time, we saw how a leader can inspire people and how much hope he ignites if the priorities are clear. He now has the huge task of first setting the economics right, take a long and hard look at the various “war” decisions of America and more importantly, bring back the respect to the American passport and its citizens world over.



More than anything else, the winning of Obama brings back optimism and hope onto Wall Street and hence all over. Obama has no magic wand, which he can wave and miraculously set everything right. So what exactly does the winning of Obama mean? It has brought about a wave of hope, his winning has unleashed optimism which had become extinct. Markets are all about sentiments and right now, the sentiments are buoyed and that will help the overall psyche.



What does the winning mean for India? Well, Obama loves Indian food, that’s about all we know for sure right now! This win does not change anything overnight for India or the Indian companies. H1B visa’s and outsourcing are too micro issues and do not make sense in the whole macro picture. Once the sentiments improve and only when the economy picks up can we start talking about these issues again. Improvement in sentiments would mean that FIIs would once again start looking at emerging markets and that is what India needs the most. Right now, the whole world needs a change; a change from recession and slowdown; a change from the constant pallor of gloom to an air of optimism. And this is the hope of change that America and the world expect’s from Obama. The Dow closed up 300 points and that alone is enough for India and the world markets – rising US markets would bolster markets world over. That’s the biggest change – a change in sentiments, which the winning of Obama would bring about for India.



Bush is one President, which Americans would like to forget about as soon as possible. Under Bush, all that could go wrong has gone wrong; this is the lowest point. So for Obama, whatever he does now, which if different from what Bush has done so far, would make him a hero. Its like he now has a huge white canvas and he can decide what to paint – the picture could turn either very beautiful or ugly.

India Infoline Buy if 65 is broken

India:In A Drunken Stupor

Use the RBI sponsored rally to sell all interest rate sensitive stocks-Real Estate, Infrastructure and Banks.

The guys at North Block and the Central Bank remind me of two drunks trying to support each other. Rightly so, their action on Mint Street reflect the pre-occupation with massive Forex Outflows, Sinking Stock markets, an Economy going downhill, huge Trade Deficit and net portfolio outflows which have cost the country atleast $ 65 bn in the last few months.



The series of CRR, SLR and Repo cuts announced on Saturday last are perhaps the last salvos, that the Duvuuri Suba Rao-Finance Minister combine can fire at the markets for now.



The liquidity that the Central Bank and the Finance Ministry has been throwing at the Economy through most of October 2008, is unlikely to end in jump starting the economic wheels stuck in mud. The only thing, "the cut", may do in the short term is to bring down PSU bank PLRs a notch, release some money to industry but will not be enough to ratchet up Asset prices. On the flip side, throwing money at the wind will result in increased NPAs for Banks which will become visible in a year from now.



This so called Government largesse is only covering up the gap in Bank funding, caused by Dollar buying from the RBI. In what way the liquidity so released can be considered as extra resources for financing growth beats me.



Mr. Rao should have looked at the US and Japan, both nations are now at almost zero per cent rates and yet neither stocks nor the economies seem to grow.



The lesson? No one — not even the government — is more powerful than the market ...

For more than a year now, the Fed has bombarded the Wall Street with government bailout packages. We have seen interest rate cut after interest rate cut.



The elected officials (and the unelected policymakers at the Fed) have seen fit to spend hundreds of billions of dollars in taxpayer money — to save Fannie Mae, Freddie Mac, AIG, and Bear Stearns.



They are handing out $250 billion to everyone from Citigroup to SunTrust, even helping banks merge in transactions partially funded with public money. And yet, by this one crucial gauge — the cost of a 30-year fixed mortgage — the government and the Fed have failed to achieve much of anything. The lesson is simple: No one ... not even the government ... is more powerful than the market.



Worst yet, the fear is spreading throughout the world ...



Market players — mortgage bond buyers — are worried about the direction of house prices. They're concerned about the credit quality of U.S. borrowers. This is filtering into the price of mortgage bonds, and keeping yields elevated.

Foreign investors, who used to snap up every last mortgage backed security and corporate debt security sold by Fannie Mae and Freddie Mac, appear to be backing away somewhat.

Concerns about the precise nature of the government's support of Fannie and Freddie are also driving the two agencies' borrowing costs up. That, in turn, puts upward pressure on mortgage rates.



Another reason for higher rates overall: Concern about the long-term fiscal position of the U.S. The government has committed more than $1 trillion to all of its various bailouts — and the list of companies begging for taxpayer money gets longer every day.


Insurers want the same kinds of government-funded capital injections that banks are getting. GM and Chrysler want government money to help them merge, close factories, and fire thousands of workers. Home builders want fresh tax credits to spur purchases.


You'd think at some point that officials in Washington and investors on Wall Street would get it. You'd think that they'd understand the only solutions to the credit mess, the deleveraging, and the real estate bust are simple: Time and price.


You simply can't cure the popping of a multi-year debt and housing bubble by waving a magic wand — not even a $1 trillion one.

For stock investors, my prescription remains the same: When you get government-fueled, short-term rallies, you should look at them as opportunities to SELL.

At some point — once the unwinding is complete, once the recession has run its course, and so on — THEN I think you can start to bargain-hunt and bottom fish. But now is not that time, in my opinion. The conundrum is still very much with us.

Infaltion:The Magic of Base Effect

Yet another logical and mathematical fiction which actually needs lots of calculations which some economist may come out in the future with a detailed report on .
I have taken a simplistic view!! Whereas its one of the complicated calculations. If there is something wrong people can please bring it to my notice.

INFLATION:
In simpler words Inflation rate is the % rise in prices corresponding to the same week in previous year.
Lets see a simple example of how this calculation works .
First an index is taken by giving different weightage to different commodities etc.

Simple example with Base effect implications:

Week1 - 07= 200
Week2 -07= 195

Week1- 08 = 224
Inflation Week1- 08 = 224-200 / 200 = 12 % .

Week2- 08 =224

Inflation Week2-08= 224-195/195 = 14.87 % .

This in turn leads to a higher spurt in inflation even though when the Index has not moved.

Now taking the next scenario.

Week1-08 = 224.
Week2-08= 228.

Week1-09 = 250.

Inflation = 11.61 %

Week2-09 = 250.

Inflation = 9.65 % .

This scenario will lead to a quick drop in inflation although when the index doesnt fall.

NOW WHY ARE WE DISCUSSING SUCH Mathematics and calculations. Lets c why.

For last many months we have seen inflation zoom away coz of the price moves in commodities which was also accentuated by the lower base last year. Also crude oil impact lead to the next jump in inflation. This impact of lower base can stay for another couple of weeks or months is a guess.

Now in the current period of 8-13 % inflation in the period of March - September or even later it may happen that its creating a higher base for the INDEX.

So in the mid of next year onwards this impact could slowly start coming into play if prices just remain stable !!!!. Also if commodities and index constituents take a good drop inflation could also plummet quickly. !!! Also lot of monetary actions are being taken and Rupee is at lows a bounce in it in coming months could also effect.

One needs to see exact values for particular periods to know about which periods would see major impacts.
If possible will try to gather exact data and calculate which would be a difficult task but the simple mathematical logic seems much more easier n effective although how big an impact it can be needs calculation.


Well as a matter of fact such a BASE effect in Year on Year results may also make lot of results next year to be more better then they are.

Example:
Q2- 07 - profits = 100 crores
Q2-08 profits = 60 crores.

Drop of 40 % in profits Q-o-Q .
Q2-09 profits = 90 crores .

Q-0-Q growth now is 50 % . Which would still be lower then the best times of 100 crores.

Nifty Donchain Channel View

According to Weekly Nifty view and using Donchain Channel it can be interpreted as we are in middle of Rally so its better not to short now and buy puts.Better to buy calls.

Nifty can be shorted on intra day basis but positional short should be avoided for the time being.