Monday, October 31, 2011

METALS, CEMENT AND OIL & GAS DRAG SENSEX

The Sensex was down by 100 points despite net buying by FIIs to the extent of Rs 358Cr. Hindalco, Sterlite, Grasim, Ambuja, DLF and SAIL were down from 3 to 6% . HUL was the top gainer with almost 7% gain and closed at Rs 374 after touching all time high of Rs 378. In spite of its bad numbers Maruti closed in the positive. ICICI bank reacted positively to its number and recovered from the days low of Rs 921 and closed at Rs 931. Axis and Kotak Bank stocks closed in the positive.

The stocks that will be active with bias towards upward movement in the next 2-3 trading sessions are L&T, Coal India, RIL, HINDALCO, Hero Motor corp, Axis bank, SBI and ICICI bank.

Sunday, October 30, 2011

IPO ANALYSIS: CARE – TRUSTWORTHY OFFER - INVEST








The Canara and IDBI Bank promoted CARE will be shortly hitting the market with an IPO, an offer for sale.

Being a rating agency which has graded many IPOs knows the importance of right pricing. The IPO would be priced be priced appropriately, keeping in mind the retail investors interest.

CARE is a leading, full service credit rating company and in terms of rating income, for the year ended March 31, 2011, CARE is the second largest rating company in the country.

The primary focus has been to provide credit rating services. CARE has 18 years of experience in rating debt instruments and related obligations covering a wide range of sectors, such as manufacturing, services, banks and infrastructure. The list of clients includes banks and other financial institutions, private sector companies, central public sector undertakings, sub-sovereign entities, small and medium enterprises and micro-finance institutions, among others.

Strengths:

1. Established presence in rating debt instruments and bank loans.

2. Domain experience across a range of sectors.

3. Strong rating credibility and brand presence.

4. Strong origination capabilities and relationship management.

5. Experienced management.

6. Strong financial position and profitability - the total income has increased from Rs. 301.39 million for the financial year 2007 to Rs. 1,766.28 million for the financial year 2011, at a CAGR of 55.6% during such period. The profit after tax has increased from Rs. 135.61 million for the financial year 2007 to Rs. 910.59 million for the financial year 2011, at a CAGR of 61.0% during the same period.

AWAIT DEATILED ANALYSIS.

Friday, October 28, 2011

METALS, INFRA AND BANKS STOCK RALLIES, SENSEX UP BY 500 POINTS

Positive news from euro zone coupled with selective buying by Institutions has pushed the Sensex by more than 500 points. Hindalco, Rel infra, Sterlite, Tata Steel, Jindal Steel, Tata Motors, DLF, JP Associates, SAIL and ICICI bank were up from 6% to 10%.

FIIs have turned very bullish on our market and net purchased in excess of Rs 2100Cr, for the first time in recent months, in cash market.

DIIs have net sold Rs around Rs1100Cr in cash market.

Delivery, as a percentage of traded volume, is in excess of 60% for TCS, Hero, Infy, Axis, Hindalco,RIL,Cairn, Coal India,HDFC Bank,Tata Power,ITC,BHEL,ONGC,Sun Pharma,Dr Reddys and ICICI. For L&T, Sterlite and ACC it is in excess of 50%.

The NIFTY is likely to test 5500 level next week.


Thursday, October 27, 2011

HINDALCO, SBI AND ICICI BANK POISED FOR SUBSTANTIAL UPWARD MOVEMENT

Muhurat trading was modest with NIFTY gaining just 10 points. However, the under current is very strong after FIIs turned net buyers in the last two trading sessions, barring yesterday. Banks stocks were hammered on 25th, fearing profitability concerns, the new guidelines likely to have on the banks. SBI staged a smart recovery in the brief trading session indicating bias for upward movement tomorrow. Similarly ICICI bank's stock is likely to trade in the positive territory tomorrow.

HINDALCO counter is likely to be active with positive bias ahead of its Q2 results.

Wednesday, October 26, 2011

SAVINGS RATE DEREGULATION WILL NOT DENT PROFITABILITY OF BANKS









The popular perception of the new guidelines issued by the RBI on savings rate is that that will considerably hit the profitability of banks.

This is based on the view that there would be rate war among banks and savings deposit rate would move up. Close examination of components of total bank deposits and the likely impact of the new guidelines on the profitability reveal a different story.

On an average CASA accounts for 40% of the total deposits of a bank and SA accounts for less than 20% in CASA. And in that 20% more than 90% of the accounts falls under the category of Rs 1lac or less, for which fixed uniform rate applies. In effect, the savings account which may qualify or compete for higher rate will be around 1% of a bank’s total deposit. The outgo of additional interest on account of this would be negligible and would not affect the NIM of banks.

The banks to offset the additional interest out go on savings accounts, due to new guidelines, will revisit the interest rates for loan products to maintain the desired NIM.

The new guideline is likely to attract more deposits, which hither to invested elsewhere. And this will help the banks in improving the overall profitability.

BUY WELL MANAGED BANK STOCKS. WE RECOMMEND BUYING - SBI, AXIS,CANARA AND ICICI AT CMP.

Tuesday, October 25, 2011

RATE HIKE ON EXPECTED LINE PUSHES NIFTY BY 100 POINTS

RBI, as expected hiked the repo and reverse repo rates by 25 basis points. The governor also hinted this could be the last hike, as inflation is expected to fall from the current level. This positive news, coupled with short covering on the expiry day pushed the NIFTY up by 100 points. The rally was led by IT, Auto, Metals, Cement and Infra stocks. Reliance too staged a smart rally, up by Rs 30, to close at Rs 877. The delivery percentage too is healthy indicating further upward movement in these stocks.

Barring Kotak and ICICI, other bank stocks in the NIFTY, closed in the negative, reacting to the rate hike and policy announcement made by RBI in respect of savings rate deregulation.

FIIs net bought in excess of Rs 400Cr in cash market.

HAPPY DIWALI TO ALL OUR READERS, WELL WISHERS

STOCK WATCH : BUY L&T, CMP RS 1274

Notwithstanding ratings downgrading by agencies First Choice IPO recommends buying of L&T at the current price. The stock after hitting 52 week high of Rs 2212 is trading around 52 week low. If one believes in India growth story one should stay invested in this construction and engineering major. There are major state assembly elections in 2012 and 2013. The progress card of UPA, so far, in ushering infrastructure development projects are far below the expectations. Major thrust will be given to this sector in the coming months. The major beneficiary would be L&T and other infra firms. The company has finest pedigree, management and capability. The stock will give 25-30% return on YOY basis from the current level.

Monday, October 24, 2011

FIIs TURNS NET BUYER

After net selling for almost a week FIIs turned net buyers today. Barring Axis bank other banking stocks were subdued fearing another 50 basis point rate hike by RBI. The negativism on L&T is over done and the stock is likely to reverse the downward trend from tomorrow. This has pulled down the otherwise 100 points NIFTY rally. Auto, Metal and IT stocks staged smart rally. The delivery volume as a percentage of total traded quantity is good in these segment. The upward movement in Sensex is likely to continue tomorrow.

The controversial IPO Vaswani Industries got listed today. As against the issue price of Rs 49, the stock closed at Rs 19.

Saturday, October 22, 2011

EXPECT GAP UP OPENING ON MONDAY


The Asian stock markets on Monday are expected to open and trade in green. The U S markets on Friday closed strongly. The net selling by FIIs in the last 3 trading sessions is likely to be reversed. Some short positions are still to be covered in pivotols which may further push the Sensex. And this may continue for one or two trading sessions.

Friday, October 21, 2011

L&T, MARUTI AND BHARTI PULL DOWN NIFTY

Market did not take the L&T's not so rosy guidance in the right spirit. The company reported decent numbers for Q2. Revenue stood at Rs 11245Cr with net profit at Rs 798Cr. The company's result was in line with market expectations. However the guidance was short of market expectations and the stock was hammered by 3.5%, to close at Rs 1336. The other major loser were Tata Motors and Bharti Airtel. Auto stocks had good run led by Bajaj Auto. Reliance and SBI too closed in the green. The under current continues to be strong ahead of expiry on 25 Oct.

FIIs net sold to the extent of Rs 234Cr and DIIs net purchased to the extent of Rs 73Cr in cash market. NIFTY stocks turnover (CM) was one of the lowest.

Thursday, October 20, 2011

NIFTY POISED FOR POSITIVE MOVEMENT

Notwithstanding net selling of stocks to the extent of Rs 600Cr by Institutions in cash market, NIFTY was marginally down by 47 points. Among others, Tata Steel, Maruti, Infy and SBI closed in the positive. Brisk activity was also witnessed in RIL, Axis Bank, Coal India and L&T counters. These stocks will see more action from tomorrow till the expiry, on 25-Oct. Keep a watch on these stocks.

Wednesday, October 19, 2011

P E INVESTORS IN SKS MICRO SUFFER HUGE LOSSES


SKS Micro IPO was managed by Kotak Mahindra Capital Company, Citigroup Global Markets and Credit Suisse Securities (India). The IPO was priced at Rs 985, with Rs 50 discount to retail investors. The BRLMs justified the high premium basing on the company’s past CAGR, future growth prospects and picking of equity by well-known PE investors.

The IPO was sold telling investors that this company is next Infosys and TCS. Investors believed them.

The PE investors included Sandstone, Kismet, Bajaj Allianz, ICP Holdings, Catamaran, Quantum and Tree Line Master Fund. The total holdings of these investors are around 25% of SKS Micro’s paid up capital. The first five picked at Rs 300 per share and the last two picked up at Rs 636 per share. Apart from opportunity cost, all these investors have suffered huge losses.

What perplexes the investing community is how come the PE investors paid such a huge premium for a company which had limited track record and no record of dividend payment.

Not only they have suffered huge losses, they made many retail investors to lose their money too, who had invested relying on the expertise and wisdom PE investors.

There are unconfirmed reports that Quantum and ICP Holdings have exited SKS, booking losses.

SHORT COVERING PUSHES SENSEX BY 300 POINTS

Both the FIIs and DIIs were net sellers in cash market today. In spite of this, Sensex zoomed by 300 points, mainly due to short covering in pivotals. NIFTY stocks volume (CM) is one of the lowest in recent days. FIIs and DIIs have net sold more than Rs 470Cr in the last 3 trading sessions. We had indicated earlier that 6 stocks would be active and they were active today with upward movement.

Monday, October 17, 2011

Sunday, October 16, 2011

JOYALUKKAS GETS GRADE 3 FROM CRISIL


Joyalukkas, Kochi-based Company engaged in retail jewellery business, which is planning an IPO, has been assigned grade 3 by CRISIL.

Through the IPO, Joyalukkas plans to issue 18 mn new shares and has outlined a capex of Rs 5.2 bn.

Friday, October 14, 2011

KNOW YOUR BRLM – KOTAK MAHINDRA CAPITAL COMPANY

From Nov 1 this year, BRLMs have to disclose their past track record in managing the IPOs. Starting from today First Choice IPO will publish the track record of all merchant bankers. We shall start with the so called number ‘one’ merchant banker in the country – Kotak Mahindra Capital. The statistics is for the period starting from 01-01-10 till date. Along side, the recommendations of the First Choice IPO are also mentioned. Judge yourself.

NAME OF THE COMPANY

MONTH

ISSUE PRICE

CMP

13-10-11

FIRST CHOICE RECOMMENDATIONS

VASCON

2010

JAN

165

49

AVOID

DB REALTY

JAN

468

52

AVOID

JUBILIANT FOOD

JAN

145

900

AVOID

NTPC

FEB

201

174

AVOID

HATHWAY

FEB

240

102

AVOID

REC-FPO

FEB

193

178

INVEST

NMDC-FPO

MAR

300

252

INVEST

NITESH ESTATES

APR

54

17

AVOID

JAYPEE INFRA

MAY

102

51

AVOID

STD. CHRTD. BK

IDR

MAY

104

88

INVEST

SKS MICRO

JUL

985

218

AVOID

HM MEDIA VENTURE

JUL

166

146

INVEST

BAJAJ CORP

AUG

660

510

INVEST

GPPL

AUG

46

73

INVEST

TECPRO

SEP

355

213

INVEST

EROS

SEP

175

253

INVEST

OBEROI REALTY

OCT

260

231

INVEST

COAL INDIA

OCT

245

332

INVEST

PRESTIGE ESTATES

OCT

2010

183

109

AVOID

TATA STEEL FPO

JAN 2011

610

454

INVEST

MUTHOOT FINANCE

APR

2011

175

170

INVEST

FUTURE VENTURES

APR

2011

10

9

AVOID

Thursday, October 13, 2011

STOCK WATCH: COAL INDIA - BUY


The share price of Coal India has corrected more than 10% in the last few trading days, due to the following reasons:

  1. The clearance of draft mining bill by the cabinet.
  2. Threat of strike by employees for better pay and bonus.
  3. The decision of the coal ministry agreeing to the demand of power ministry to divert a portion of e-auction sale of coal to the power sector.

The consequences:

The draft bill envisages that the companies would have to share 26% of the profit with locals. This is applicable to all mining companies, including Coal India. Being the largest producer and reserve holder of coal, it would not be difficult for the company to adjust its pricing and maintain profitability. In the long run, what is good for the locals will be good to Coal India too. Growth in any sector / region should always be inclusive. This policy move of the government is in the right direction.

Coal India is one of the largest employer in the country, has successfully implemented many wage settlements in the past. The company reviews the coal prices regularly. They should have factored the possible wage increase and other demands of the workers in to it. Hence this may not have any impact on its earnings.

The company, in the e-auction, sales around 10% of its total productions, gets a premium of Rs 900 a tonne, compared to the regular sales. By diverting a portion to coal starved power sector, as agreed by respective ministries, its profitability to some extent may be hit. However Coal India may rework its coal prices for both e-auction and others, to maintain and improve its profitability. Coal India has almost monopoly power over production, pricing and supply of coal in India. Coal India’s prices are cheaper by 30-35% compared to international prices.

At Rs 335 the share is trading around 10 PE of its FY 13 earnings, which is very attractive. Investors can accumulate at this level.

Tuesday, October 11, 2011

VERY BULLISH UNDER CURRENT

FIIs are net buyers for the third consecutive day in cash market. DIIs too are cautiously bullish and net bought in excess of Rs 100Cr today. Tech stocks reacted negatively ahead of Infosys results tomorrow. The under current is still bullish and lot of short positions are yet to be covered in Banks and Metal stocks.

Monday, October 10, 2011

PERFORMANCE OF IPOS RECOMMENDED BY FIRST CHOICE IPO


NAME OF THE COMPANY

ISSUE PRICE

CMP

GODREJ PROPERTIES

490

660

TANGAMAYI

75

154

REC

193

161

UBI

66

72

NMDC

285

237

PERSISTANT

310

300

PRAKASH STEELAGE

110

121

MANDHANA

130

211

HM MEDIA VENTURES

166

126

MOIL

375

266

PFC

90

98

PSB

120

65

GRAVITA

125

370

COAL INDIA

245

338

ACROPETAL

90

15

VATECH#

1310

1945

EROS

175

235

OMKAR

98

68

BAJAJ CORP#

660

500

INVENTIVE

117

81

GPPL

46

68

ASHOKA BUILDCON

324

240

MUTHOOT

175

159

TREE HOUSE

135

173

EIL

276

249


# ADJUSTED TO SPLIT.