Corporate News

Corporate News

Reliance Industries sends letter to MTN; says it has the first right of refusal to buy the controlling interest in Reliance Communications.(FE)
JSW Steel plans to invest Rs800bn to add 20mn tonne capacity.(BL)
Idea Cellular to buy Spice Comm. in a three stage deal in which minority shareholders of latter can swap their shares for Idea’s shares or sell them in an open offer.(BS)
Goldman Sachs to pay Rs7bn for a minority stake in M&M.(TOI)
Hindalco Industries considering various options including rights issue to repay a US$3bn bridge loan it took to finance the acquisition of Novelis Inc.(BL)
Telekom Malaysia is understood to have picked up ~15% stake in Idea Cellular at a price of Rs158 a share.(DNA)
Videocon to roll out its GSM services from Chennai on August 15th of current year.(ET)
Vedanta Resources bid for US copper firm Asarco faces a roadblock.(Mint)
Hinduja Group to finalise a strategic investor to offload 15% stake in the 1,040MW coal fired project at Vizag in Andhra Pradesh.(FE)
Wipro Technologies pulls out of its JV with Motorola.(ET)
SBI decides against raising interest rates for the time being.(BS)
ONGC Videsh, Indian Oil and Oil India together expect to spend US$3bn if they get the right to develop the Farsi block in Iran.(BS)
The New York Times Company in discussion to acquire a 5% equity stake in Sieger Solutions, a 100% subsidiary of Deccan Chronicle Holdings.(BL)
Reliance Power emerges as the lowest bidder to build two power projects in the Allahabad district of Uttar Pradesh.(BS)
3i Infotech completes the acquisition of US based Regulus Group for US$100mn.(DNA)
TPG Newbridge may invest US$150mn for a 49% stake in a company that will hold 100% equity capital of Shriram City Union Finance.(BL)
Pipe manufacturer PSL secures Rs 1.2bn order from BPCL.(BL)
Spice Comm. promoter B K Modi in negotiations to acquire 39% stake in Sony Entertainment Television.(BS)
Reliance Retail will soon enter into a 51:49 JV with US-based Avery Dennison Corp.(ET)
Philips Electronics India decides to buy back shares for Rs1.8bn at Rs260 per share.(DNA)
Maharashtra government decides to allot 25 acres of land in Nagpur to Mahindra Lifespace Developers.(ET)
Ultra mega power project in Tilaiya, Jharkhand to be awarded in November; eleven companies short listed for the project.(BS)
MAN Infraprojects, subsidiary of MAN Industries, to invest Rs10bn in real estate (DNA).
Indo Asian Fusegear forms JV with a Spanish firm to manufacture wiring devices for home automation.(Mint)
Lehman Brothers to invest Rs7.5bn in Unitech’s 97 acre project in North Mumbai.(ET)
JK Tyres to set up a greenfield site for passenger car tyres.(ET)
Sarswat Cooperative Bank has made a fresh application to the RBI to acquire the ailing South Indian Cooperative Bank.(ET)

Economic News

Inflation rises to 8.75%, a seven year high on dearer primary goods for week ended May 31st.(BL)
State governments are planning to cap sales tax on jet fuel at 12.5%.(ET)
Government raises export duty on iron ore and long steel products; imposes fresh excise duty on large cars and SUVs.(BS)
Cement output in May 2008 fell marginally to 14.89mt against 15.02mt in April according to Cement Manufacturers’ Association.(BL)
Drug price regulator has introduced pro rata pricing for injectibles in addition to oral liquids, tablets and ointments.(ET)
Due to slowdown in passenger traffic and high ATF costs, airline companies are canceling or cutting deliveries due this year or sub-leasing them to other carriers globally.(BS)
Government withdraws 5-15% export cess imposed on variety of steel products including hot and cold rolled coils, steel pipes and tubes and galvanized sheets.(ET)
DoT may impose eligibility conditions for 3G spectrum auction.(BL)
Cable operators may be allowed to build an optical fibre infrastructure.(ET)
Government approves 13 FDI proposals worth Rs 15bn including one by steel major ArcelorMittal for its operations in India.(FE)
Mining ministry to buy a Rs4.5bn deep-sea research vessel for seaboard mapping.(ET)
Government is contemplating ban on maize exports to reduce price in the domestic markets.(ET)
Empowered group of state finance ministers likely to discuss today Center’s proposal to reduce sales tax on petrol, diesel, cooking gas and jet fuel.(ET)

Technical view: Hike in repo rate to impact market

The broad-based Nifty on Wednesday closed with a gain of 73.8 points, or 1.66%, at 4,523.60, thereby ending its three-day loss, as investors felt the market entered into oversold zone.

Unexpected repo rate hike of 25 basis points by the Reserve Bank of India will have an impact on the market, opined Suresh Iyer, technical analyst at Asit C Mehta.

Banks may soon raise lending as well as deposit rates with the Reserve Bank of India increasing repo rate, or the rate at which it lends to banks, by 25 basis points to 8 per cent. While trying to rein in the runaway inflation, the central bank, however, left the reverse repo rate unchanged.

The interest-sensitive banking, realty and auto stocks have already witnessed huge pressure in the recent past, which is likely to continue now as there appears to be little possibility of interest rates coming down in the near future, said analysts

The nation`s central bank has hiked its key lending rate by 25 basis points to 8% to arrest inflation expectations. However, the RBI kept all other rates unchanged. Iyer termed Wednesday`s closing as comfortable. The market breadth was also good on Wednesday. Anyway the market was like cat on the wall, he added.

In the short term, the market will be news driven. ``As the market is news driven one, I will be on sidelines. Nifty has top short term resistance near 4,611-4,626. Once these levels get breach, I will be on a long side,`` Iyer said.

Next resistance levels are at 4,656, 4,746 and 4,825. The major support levels are placed at 4,370, 4,228 and 4,040, he added.

Nifty future falls amid high volumes

jumped sharply to Rs 58,333.52 crore in the F&O segment on the NSE on Monday even as the NSE future witnessed sharp fall. The Nifty June future closed at 4466.60 against the Nifty spot close of 4500.95. It saw a marginal addition of 5.81 lakh shares in open interests that indicate a lot of traders, who went short in the opening session, have squared-off their positions during intra-day itself.

Cost-of-carry turned deep into the negative at 25.47, suggests traders lack of will to carry over their positions, fearing loss.

The India VIX also increased to 32.43 from Friday’s figure of 26.46. This also paints a negative picture, as lot of traders have added put positions expecting a further fall in the market.
Among the options, Nifty 4500 call and put were the most active. The other active options include Nifty 4400 put, Nifty 4700 call.

While Nifty 4500 put saw some shedding in open interest, indicating profit broking, Nifty 4500 call and Nifty 4200 put saw sharp accumulations. While the latter addition of 23 lakh shares, the 4500 call added 24 lakh shares. This indicates that Nifty might move in this range in the coming days.

Why do Companies issue Bonuses and Stock Splits?

Does issuing Bonus Shares or a stock split add value to a company?
Why do Companies issue Bonuses and Stock Splits?
The Case of L&T
The Case of Reliance Power
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Last week we saw one company announce a stock split on Thursda y and another going ex-bonus on the exchange on Friday. Yes, we are talking about L&T and Reliance Power. A lot of folks lost cash (or at least thought they lost cash) on Friday when Reliance Power listed ex-bonus, but did they really lose cash and if they did who was to blame? What exactly happened? What is the deal with splits and bonuses? Do they add value to a company? Let’s find out the answers to these questions!

Bonuses and Stock Splits:
When a company issues bonus shares to its existing shareholders, investors receive a certain number of “free” shares for a given number of shares they own.

For example, if a company issues bonus shares in the ratio of 1:5, this means a shareholder receives one bonus share for every five shares held by him/her. In the case of Reliance Power, the ratio was 3:5 which meant that investors received three bonus shares for every five shares held.

When a company announces a stock split, a share gets divided into more shares (number depending on the ratio of the split).

For example, a 1:1 split means that each share outstanding has been split into two shares. The total shares outstanding in a company are now double what they were in this case.

The difference between a bonus and stock split is that in the case of the former, new shares maintain the same face value of existing shares, while a stock split, “splits” the face value of the share. So, let us say there is a company called QWE and each share of QWE has a face value[1]of Rs.10. If QWE announces a stock split of 1:1, this means each share has split into 2 and the new face value of the split share is Rs.5 each. In the case of bonus shares, there is no change in the face value of existing shares and new shares also have the same face value of Rs.10.
Does issuing Bonus Shares or a stock split add value to a company?Let us answer this question by dividing it into three stages.
Stage 1: Period immediately after announcement of bonus/stock split:

The announcement of a stock split/bonus generally is generally viewed as a positive decision and investors (especially day traders) start to buy the stock and this generally results in an upward rally that may last a few days. In the case of L&T, the stock moved up significantly on Thursday and Friday, following the company’s decision to split the shares of the company. When Reliance Power announced its decision to give bonus shares to its investors, the stock price went up substantially[2].
Stage 2: Time between announcement and actual day of stock split

This is a stage of uncertainty and the movement of the stock generally depends on how long it takes for the bonus/split to actually come into affect from the time of announcement. If this period takes several months (as in the case of Reliance Power) then the stock may correct or may stay range bound. In India, it is generally the case where the actual date of implementing a split/bonus takes a considerable amount of time[3].
Stage3: After SplitOn the day the split/bonus comes into effect, t

he price of a share should theoretically fall in the same proportion as the split/bonus ratio. However, this does not happen in practice. In an ideal situation, if the price of QWE is Rs.100/share and a 1:1 split is announced, the share should list at Rs.50, ex-split. However, this rarely happens since this does not take into account other factors like a gap up opening because of positive global sentiments or some other external/internal developments in the company. Thus, the script may open slightly higher or lower than Rs.50.

In theory, stock splits and bonuses do not add value on their own to a company. Both are simply examples of dividing a pie into smaller pieces. The price of a share of a company is bound to fall after a bonus/stock split.

Why do Company’s issue Bonuses and Stock Splits?If the value of the company remains constant after issuing bonus shares or announcing a stock split, why do companies announce splits and bonuses? Well, the answer is quite simple - it makes the stock “look cheaper”. The valuations of the company may stay the same (i.e. price-earnings ratio, price-book ratio etc), but psychologically the script does look cheap to an investor (at Rs.50 QWE looks cheaper than at Rs.100).

The second reason why companies announce stock splits is since the price of a script is lower; it makes it more affordable to investors. L&T at Rs.3000 is a very high price for one share for several investors and it reduces the opportunity that everybody has in investing in L&T. At Rs. 1,500 a few more investors can chip in and buy some shares. Thus, a stock-split/bonus increases liquidity in a stock and the volume of shares traded increases as well.

This does not however mean that all companies that have shares with high prices should declare splits. Warren Buffet’s Berkshire Hathaway has a price tag of US$134,650 (over half a crore rupees per share) a share and even though only a few hundred shares are traded each day, the company has no plans to declare a split.

Legalities:

In terms of legalities, for a company to declare a stock split, the average price of the stock over the 6 month period preceding the declaration of a split should have been above Rs.500. Reliance Power could not declare a split since the company did not satisfy either condition - it had not been listed for six months and the average price of a share was nowhere near R.500. This could have been one of the reasons why Anil Ambani went for the the bonus option.

The case of L&T:L&T declared a stock split last week and the script went up significantly on both Thursday and Friday. Today morning (Monday), the counter was up for the first half of the day but the fall in stock price during the second half of the trading day can be attributed more towards the negative market sentiment that brought down most stock prices.
The case of Reliance Power:Reliance Power was quoting a price of Rs.386.16 when the market closed last Thursday. The stock officially listed at its ex-bonus price on Friday morning when the markets opened. Now keeping all other factors constant, the stock should have quoted an ex-bonus price of Rs. 241 when markets opened on Friday, May 30th[4]. The stock opened well above this mark and traded in the Rs.230-240 range for most of the day. So did the stock really “tank” on Friday when it went ex-bonus? The logical answer is No. Analysts and investors that were surprised by the magnitude by which the stock price “fell” did not do their research thoroughly.

Yes, traders who bought the script at Rs.450 (before the stock went ex-bonus) and sold their shares on Friday lost money, but wait…. shouldn’t they have done their analysis before entering the script at that level?

Now, if you own Reliance Power shares, you must be asking yourself, “Where are my bonus shares?” The bonus shares will only come into the DEMAT accounts of eligible investors thirty days after the ex-bonus date.

Those who bought their shares on Thursday (the last day before the stock went ex-bonus) received their shares in their DEMAT accounts today. Again, analysts expected the share price to fall this morning (Monday morning), since they suspected that these shareholders would also sell their shares today. However, that did not happen. This was largely because investors knew they had not lost too much if they bought these shares on Friday. Yes, the stock corrected later on in the day, but so did other power stocks and scripts in other sectors. Ideally for a short-term investor, one can wait for an upward rally before taking a decision on selling the script. Long-term investors can simply stay invested!

That’s all from EQUITY BITERS this week. Have a great week and till next time, keep biting into that slice of equity!

Nifty May 2008 futures below 4,900

Reliance Industries May 2008 futures most active

Nifty May 2008 futures were at 4,878.35, a premium of 3.30 points as compared to spot closing of 4,875.05.Nifty May 2008 futures are set for expiry on Thursday, 29 May 2008.

As per reports, rollover of Nifty positions from May 2008 series to June 2008 series stood at 32% and marketwide positions were 18%, as on 23 May 2008.

The NSE's futures & options (F&O) segment turnover advanced to Rs 44103.52 crore, as compared to Rs 41,317.97 crore on Friday, 23 May 2008.Reliance Industries May 2008 futures was at 2528.75, a premium as compared to spot price of 2525.90.

It the most active contract with turnover of Rs 839.89 crore.Cairn India May 2008 futures were at premium at 309.65 compared to the spot price of Rs 308.35.However Tata Steel May 2008 futures were at discount at 876.50 compared to the spot price of Rs 877.15.In the cash market, the S&P CNX Nifty lost 71.50 points or 1.45% at 4,875.05

Market likely to fall in an extended consolidation phase

At times market’s trend could be misleading. Dalal Street in its attempt to consolidate is throwing up contrasting indications in the recent weeks. In the process, it had created higher tops and lower bottoms in the benchmark index and expanded the playable range in the period between March 19 and May 5. A few weeks ago, the short-term range on the Sensex was between 14,000 and 16,000. It had further been extended between 16,000 and 18,300. But, now a new trend of setting lower tops and lower bottoms has just begun.

Of late, price actions, have increasingly become subservient to short-term developments on weak volumes and a sense of slow sinking has gripped the sentiment. Changing perception of inflation is making the difference. Inflation, which impacts corporate revenue and margins, is belatedly being factored in for the whole financial year. Earlier, market had been trying to readjust earning estimates expecting that high inflationary pressure would pass over in a matter of quarter or so.

Now, with crude oil prices reaching a record high coupled with a declining trend in consumption growth and leveraged spending – both corporate and household – earnings prospect is getting gloomier for the next few quarters.

If one believed Goldman Sachs, which predicted the world might face a crude oil “super-spike” in a trading range from $150 to $200 a barrel as early as October, things appear slipping all around.


In India, energy use is less than 10 per cent of the US on per capita basis, but it imports oil over 70 per cent of its total requirement and the consumer prices of oil is maintained at a heavily subsidised level – just about the half of the international prices (almost like that in China). This leaves enough room for the economic growth applecart to get upset going forward. If the developed economies continue to pursue the expansionist policies, Goldman Sachs’ prediction may come true.

In the short term, the local equity market is likely to drift down in an extended consolidation phase, but may not immediately try to find the bottom. However, surprises from the political front may change the complexion of the current game.

A sudden announcement of Lok Sabha elections is likely to push the market to a crash. On the other hand, if the Government can manage to pull off a coup of sorts by going ahead with the proposed nuclear deal with the US, the market would shrug off the creeping weaknesses.

But the possibility of these events is in the realm of conjectures. Only the unfolding medium term developments could indicate which way the market would break the rigour of a range.

Source:Business Line

Big FIIs selling index futures?

The stock market turned extremely weak during the week. The Nifty tumbled 4.09 per cent, while the Nifty future, which was commanding a premium last week over the spot close, dipped into the discount. According to market sources, a couple of FIIs have turned extremely bearish on the Indian markets and are offloading their positions. They are also taking a directional call on the Indian market by shorting index futures and stock futures of index-heavyweights in the derivative segment.

According to brokers, big names such as Goldman Sachs are offloading their holdings, as they are wary of Indian market going forward, since the depreciating rupee will erode their returns further. Crude prices are another source of worry due to the pressure they exert on the Indian economy.

During the last three days, FIIs were net sellers to the tune of Rs 2,205 crore in index futures and about Rs 450 crore on stock futures. Part of the selling could be accounted by portfolio hedges, while the rest could be naked short positions. In the cash segment also they remained net sellers to the tune of Rs 1,481 crore in the last three days.

Nifty to see some more pressure.Nify support at 4916

Nifty having traded weak throughout the week ended the week with a negative closing for the consecutive fifth day. The Nifty opened at 5,227.25 and made a high of 5,254.50. The Nifty closed at 4,982.60, with a loss of 4.7% on a weekly basis. The Nifty made a low of 4,969.40 during the last week. The volume in the Nifty futures was at the low ebb during the whole week. The overall volume was moderate. Some stock specific action was seen during the last week. The Nifty May futures was trading with the modest premium and narrowed down gradually towards closing.

In the daily charts, the Nifty was not able to cross one of the crucial long-term average (100 day SMA) and traded weak. The Nifty lost the support of the 5, 10 and 20 day SMA. The reversal from the 100-day SMA is a bearish sign. In addition, the 5-day SMA is facing resistance near to the 200 day SMA and breached the 10-day SMA, during the last week fall. The Nifty closed well below the 13, 34, 89 EMA. The short term EMA`s are facing resistance near to the long term EMA. All these indicate short-term bearishness.

The 14, 3, 3 stochastic and RSI is moving down side, which are in sell mode. The 5, 3, 3 stochastic entered into a highly over sold zone. This may cause a weak relief rally

During the last week`s fall, the MACD generated a fresh sell signal. In addition, the Nifty lost the PSAR support level. The swing trade entered into negative zone. So far, the Nifty is forming a lower top and higher bottom formation since the January, 08 fall. The break out on either side will be more powerful.

However, the Nifty has a good support at 4,916 (with 1% variation) on many fronts.(The 50-day SMA, the trend line support drawn from the March 2008 low, 0.382 retracement support (from 4,468 and 5,299). Interestingly, the pattern is same as in October 2004, on many fronts. The previous pattern formation is also supporting the above statement. (In Sensex, the previous gap formed on 18 the April lie near to the same level.)

Based on the above rationale, the Nifty has the probability, to end the correction near to the level and may resume the upward journey. Any decisive breach of these levels will negate the above said view.

In the weekly charts, the Nifty formed a bearish reversal pattern. (Nifty futures and Sensex engulfing pattern) The 5, 3, 3 stochastic is in sell mode and above the 80 mark. Any further weakness may cause a sell signal in RSI. The MACD is converging to give a buy signal. Any further weakness will make the weekly trend further down. The swing trade entered into positive zone since the week ended 11/01/2008 and became neutral now. The last week`s ADX buy signal got failed in this week. The medium term trend is neutral.

The question in front of us is whether this correction is a technical one in nature or we had made short to medium term top. This will be answered with the Nifty breaching the crucial levels of 4,916 and 4,610 - 4,640, i.e if it manages to do so.

In the monthly charts, the MACD is in a sell mode. However, the bottom of 4,448 is becoming a strong support. Any decisive breach, will initiate a fresh down movement. The 20-month SMA is giving a good support since May 30, 2003 on a closing basis, which is currently placed at 4,653.83. In the quarterly charts, since October 2003, the Nifty is trading above PSAR. For this Quarter it is placed at 4,448.50.

Outlook for the week

Likely to get support near to 4,916 level and any failure may led to another 1% or 6% fall. Based on the above rationale, the Nifty is expected to see some more pressure in the initial move. On many fronts, the Nifty is near to the multiple support levels. Any failure will extend more correction. For this week, the Nifty has support at 4,916 (on many fronts may be a reversal point-with 1% variation), 4,850 and 4,623-4,646 (in the worst case) and 4,448.50. The Nifty has resistance at 5,035-5,058, 5,130, 5,179 and 5,279.

Strategy

Watch whether the Nifty is able to hold above the mentioned levels. On failure, exit long positions and create short positions. On the other hand either near to 4,850 or 4,623 create good long positions with suitable stop loss.

Risk Factor in “buy and hold” strategy

Most of us hear the advice- “Buy XYZ stock and hold it for a long time”. These advices are more rampant when markets are down and the current stock prices are usually below your purchase price. This is because no “buy and hold” expert wants to acknowledge his/her mistake . So till the stock price gets above the recommended price, you can continue to increasing the holding period ( From 1 year to 3 years to 5 years to even 10 years). Some might even recommend to buy even more while the stock continues to fall! I don’t blame them-after all their job is to offer you some hope in bad times.

There are couple of things which I have observed for “buy and hold” investing. One thing which often gets quoted in favour of “buy and hold” is that it is not possible to time the market. Of course, I can’t pick tops and bottoms but one can’t surely pick a few uptrends and avoid a few downtrends.

Secondly-people often quote the famous Warren Buffet while advocating “buy and hold” strategy. Now can you be as patient as Warren Buffet in holding a stock like Coca Cola for last 10+ years without generating any significant returns. He holds Coca Cola for its “brand value”. Mr. Buffet can afford to “own a business”and influence the way it is run. Can an ordinary investor emulate that? How many “buy and hold” investors can stay on cash like Mr. Buffet did from 2004-2007 (during the great bull run) ?

I feel that “buy and hold” carries a lot more risk for a normal investor.

From the recent memory take a stock like JP associates. The stock went from 150 in June-July 2007 to 500+ in December 2007, only to fall back to 200 in January 2008.
If you consider a “buy and hold” investor who bought at 150, he would have made 30% on his investment but his drawdown from the top would have been 60%(risk). And those who bought at above 200-250 might have experienced a negative return.

Now lets take the case of picking a few trends. Even if a trader bought at 170 and sold at 400 or even 350 (not at the peak of 500), he/she would have made a return of more than 100% (in 6 months) while having a drawdown of just 20% from the peak (your risk). Doesn’t it offer a better risk/return profile?

Another advantage is that “buy and hold” guys never know when to cut their losses . They are so blinded by their hope and conviction that they sometimes miss the real picture. Take the JP associates example again. When do you think will the “buy and hold”investor bail out? Add to it the psychological pain of seeing such huge drawdowns (50-60% sometimes) in “buy and hold” strategy. It shakes your confidence and affects your mental ability to seek superior performance in the markets.

On the other hand, if you are trading the momentum you are always prepared to cut your losers(again not easy!) and get the best out of your winners.This results in better risk adjusted returns.

The only word of caution is that you don’t want to be over leveraged while trading trends. This is because one bad reversal can ruin your trading account!
“Buy and hold” is more about the future and I feel future is unknown. Do you know how stock markets shall look like in next 10 years? Would they still be generating 20% per annum returns or will the returns shrink to 5%? Is it a good idea to hold a stock for 10 years when you don’t know its future?

Many people ask me to recommend a stock they can hold for the next 10-20 years. Although I personally like a stock like Reliance which is in long term uptrend but I am not too sure if it shall stay that way for next 10 years. What if oil falls back to $30/barrel? Will Reliance stay at these elevated levels? What will a buy and hold investor do if Reliance stock reverses sharply in case of such scenarios?

Thats I why I feel uncomfortable giving such “buy and hold” recommendations. To me they appear more risky as it involves a lot of guess work.To me a simple”buy and hold” offers no real edge to the investor.

Tips for making money in bear market

Everyone loves bull markets. In a bull market, every stock will give us good returns. But bear markets test one's real ability, company's fundamentals and investor's patience levels. But Bear markets also provide wonderful investment opportunities if we can able to spot investment chances early. We can make good money in very short term period.

There are two types of investment strategies in bear market:

1. Accumulate more on every fall and invest for long term to reap full benefits. Even good stocks will be available at cheap prices in bear market due to bad sentiment.

2. Ultra short term opportunities. You should always be on alert to utilise these chances. If you enter late, losses will be more as it happened in case of Orchid chemicals investors who entered into that stock at above 300 levels.

Alert: Operators will try to fool investors by artificially rising stock prices by spreading rumours. Be careful with stocks like Ispat, RNRL, IFCI and Essar Oil. If don't have enough knowledge on Stock Markets, stay away from these things. If you are a long term investor, don't buy major stocks at current levels.

Bear markets- best money making opportunities:

1. Over reaction: When L&T announced minor losses in Forex derivatives, everyone sold it despite strong fundamentals of the comapny. We should see for such opportunities to enter into those stocks.

2. Sudden options: Orchid chemicals suddenly lost 50% value despite no change in fundamentals. That was due to Bear sterns sell off. We should be always on alert for such chances.

3. Over enthusiasm: Markets over reacted to open offer and acquisition rumours and took stock price to unreasonable 350 levels. Even if Ranbaxy take over Orchids, 250-280 is reasonable price. We will look for short selling opportunities in such instances.

4. Buyback offers: In a bear markets, prices generally do not justify its intrinsic value. So companies try to buy back shares at higher prices. Just see what happened in Sasken Communications. Look for good buy back offers.

5. Never chase operators: If a stock is rising without any reason, simply stay away from such stocks. It is due to operators activities. Never invest in any stock basing on rumours.

6. Crucial breaks: Some decisions will change company fundamentals to much attractive levels. In these instances, stock price will rise for prolonged period as it happened in Bombay Dyeing.

7. Rallies in bear market generally will not last for prolonged periods. So, make money in short term and exit that stock.

8. Short term opportunities will be available in stocks that lost more than 50% in a short period despite good growth. We should identify them early before markets recognise them as it happened in ICSA India and Gujarat NRE Coke.

Investors can't sit idle in bear markets as investors over react to bad news and stocks will lose all the gains in 1-2 days. These ultra short term opportunities are only for experienced investors who can spend enough time on stock market research and at trading terminal. More companies are planning to buy back shares means we are going to get investment chances to make quick money.

Global cues to dictate near term trend

Local market are expected to take cue from the global markets in the near term as earnings season has almost come to an end with majority of frontline companies having already declared their results.

Corporate results have been good. Aggregate results of 988 companies showed 17.10% rise in net profit on 21.60% rise in net sales in Q4 March 2008 over Q4 March 2007, so far. There was 27.30% rise in net profit on 23.40% rise in net sales in the year ended March 2008 over year ended March 2007.

i-flex Solutions, Century Textiles, JSW Steel, Union Bank of India and Ashok Leyland among others are the key results to watched out for during the forthcoming week

Markets across the globe have managed to stage a sharp pullback from lows hit in mid January 2008 on hopes the global credit-market turmoil will ease. The benchmark index BSE Sensex has risen 2,790.63 points or 18.84% from its low of 14,809.49 touched on 17 March 2008. However, it is still 3,606.65 points or 17% away from its all time high of 21,206.77 hit on 10 January 2008.


The market extended gains for the fourth straight week in the week ended Friday, 2 May 2008, tracking firm global markets. The 30-share BSE Sensex gained 474.14 points or 2.76% to 17,600.12, in the week ended. The S&P CNX Nifty rose 116.50 points or 2.27% to 5228.20, in the week.

Inflation remains the biggest concern for the Indian stock market. The measures taken by the Union government to control inflation have also added to uncertainty on corporate profit. Finance Minister P Chidambaram on Tuesday, 29 April 2008, said government will impose export tax on basmati rice and some steel products, and cut import duties on key inputs like ferro alloys and metallurgical coke. He said the measures were being taken to improve domestic supplies and to moderate prices. The government has already banned export of cement and non-basmati rice.

Given that parliamentary elections are scheduled next year (in May 2009), the government may leave no stone unturned in its attempt to rein in inflation.

The structural growth drivers of the Indian economy remain intact – India’s economy is expected to witness a decent-to-strong growth for a long period of time due to favourable demographics. Acceleration in infrastructure creation will be another driver of strong growth in India’s economy. Rating agency CRISIL in its latest outlook for Indian economy for the year through March 2009 has stated that the overall growth scenario is expected to remain strong with investment as the main driver.

Nifty Likely To Cross 5200-Mark This Week

The last week saw expiry of the April derivatives contracts. The Indian markets came off from a holiday mood (there were two holidays in the earlier week) and started with a gain of over 1.7% on Monday.

The markets witnessed strong rollovers into the May series, which indicates that the momentum, which had set in April, is likely to continue. The Nifty saw almost 70% of its positions getting rolled while the market rollovers were well over 85%. Among stocks, Hindalco witnessed maximum rollovers, at around 92%.

The rollover cost improved significantly across the board as compared to the last expiry. This is primarily because of the optimism that has come back into the market. 4950 was a crucial level (Nifty had fallen thrice from these levels during the last two months) and the Nifty managed to break it. It closed at around 5000 levels for the April expiry.

The best part about last week was that the mid-caps drew significant attention from investors. Strong buildup was seen in that space. This is another factor, which indicates that investor confidence is coming back into the markets.

The Nifty April futures traded at a premium at most times and the calendar spreads turned positive, suggesting that the rollovers were mostly towards the long side.

The last trading session for the week saw the Nifty gaining over 2.5% to close at 5111. The markets witnessed a huge build-up in telecom stocks after the announcement of Bharti's results. Bharti Airtel was up 9% for the day with Reliance Communications also registering a 8% gain. In the banking space, ICICI Bank and HDFC witnessed upmoves after the inflation numbers were announced.

Going forward, we believe that Nifty is all set to cross the 5200-mark this week. Sectors like metals and power are poised to give strong moves. The metal stocks have witnessed significant long rollovers, which is very promising. The power stocks on the other hand had witnessed weaker rollovers. This means shorts have got expired last month and the stocks are likely to bottom out. Other sectors that are likely to witness an upmove are FMCG and construction.

Banking stocks, which have had a good run after the result announcements, are likely to witness some profit-taking before the quarterly monetary policy on April 30.On the options front, the Nifty 5000 calls added significant long positions as the open interest rose sharply along with rise in implied volatility. However, call writing has been severe in the 5200 and 5300 Nifty strikes.

The 5200 level can therefore be a strong resistance for Nifty.On the puts front, put writing has been witnessed in the Nifty 4800 and 4900 strikes, indicating support at those levels. On the stock options front, strong buildups have been witnessed in the ICICI Bank 900 call and put.

This suggests a straddle positions getting built with expectations of a sharp movement in the stock ahead of the monetary policy.

Review on Markets Trends

Today’s move might have taken a few bears by surprise and now everybody is trying to know if this is a “resumption of long term uptrend ” or just a “bear market rally”.

Let me throw some data at you and see what we come up with.(Rather than a mere guess!)
A close analysis of past market cycles(about 15 years) might provide some answers( with the benefit of hindsight). This might be useful for people who have just seen the 2003-2007 period in the markets.
• Dec 1994-Jan 1996: Nifty fell from 1250 levels to 810. A drop of almost 35% in 12 months. The intermediate rallies were never more than 10-15%. So it was a clean downtrend.
• Jan 1996- June 1996: NIFTY rose from 810 to 1200 levels in 6 Months. A gain of almost 50% in 6 months. Intermediate corrections of not more than 15% are observed.What needs to be observed here is that market failed to take out the previous market high of 1250. So this might have counted as bear rally for many market participants.
• July 1996- Dec 1996: NIFTY fell from 1200 levels to 780 odd levels- a drop of almost 35%. The in between rallies were never more than 10-15%. So it was a clean downtrend.
• Dec 1996 - Aug 1997:NIFTY rose from 780 levels to 1300 levels. A again of almost 80% in 8 months with deepest correction of about 30%. This time market took out previous high of 1200 and 1250 but it turned out to be failed break out.
• Aug 97 -Feb 98: NIFTY fell from a high of 1300 to 940. A drop of almost 28%. The bear market rallies were again limited to 10-12% range with one or two rallies giving close to 20%.
• Feb 1998- April 1998- NIFTY went from 930 to 1250. A gain of 35% with no significant corrections.
• April 1998- Dec 1998- NIFTY fell from 1250 to low of 800. Again a 30-35% fall.
• Dec 1998- Feb 2000 - This was the IT/dotcom mania. The markets rose from 800 to 1800 in almost 1 year. A gain of 125% with intermediate corrections of not more than 20%.
• Feb 2000-Sept 2001- This was the last bear market we had in our markets. NIFTY fell from a high of 1800 to a low of 850 (53% fall) in 18 months with intermediate rallies of 25%.
• Sept 2001- Feb 2002- NIFTY rose from 850 to 1200 levels again in 6 months. Almost 30% gain.One can consider this as part of bear rally.
• Feb 2002-April 2003- A fall back to 920 levels from 1200 levels. A loss of 25% with intermediate bear rallies giving as much as 20% on the upside.
• April 2003 - Jan 2004- Beginning of current bull run. NIFTY went from 920 to 2000 levels. A gain of 100%+ with intermediate corrections of not more than 10%. A clean uptrend.
• Jan 2004-May 2004- NIFTY fell from 2000 to 1300 levels. A fall of 35%. A swift correction!
• May 2004 -May 2006- NIFTY went from 1300 to 3750 levels. A gain of 190% with intermediate corrections of not more than 10-12%.
• May 2006-Jun 2006- NIFTY fell from 3750 to 2600 levels.A loss of 30%. A swift correction!
• June 2006-Jan 2008- NIFTY went from 2600 to 6350 levels. A gain of 145% with intermediate corrections of not more than 20%.
• Jan 2008 - Present- Nifty fell from 6350 to 4450 levels. A loss of 30%. Bull market correction? Bear market? What?
Can we draw any conclusions from the above data? It is a little difficult but let me give it a shot.

Bull Markets:

Bull markets look a lot more simpler.They usually give more than 50% from the bottom.
Normal bull market corrections are not more than 15-20%.
In case the corrections exceed 30-35%, they are usually a swift ones (May 2004,May 2006).
And most important of them all, in a bull market markets take out the previous highs!
Bear Markets:

They are much more tricky.
From the past data it looks like bear markets are much more painful and markets fall more than 35% from top. Before 2000-2001, many of the downtrends gave a 30-35% downfall.(may be because markets were in a range) Only in 2001 did we fall more (55%).
Also bear markets rallies can extend up to 25% with 15% being the average.

Coming to present situation:

Before we begin ,one more thing one should notice is that “Future is never exactly like the past”. Before the current bull run, we had not seen gains of 188% in a single upmove! Similarly, markets can easily fall more than 55% in bearish conditions.
This is all about working on some probabilities. And hence the reason to manage risk.
Does it look more like 2000-2001 or May 2004 or 1995-96?
Right now we have had 30% correction on top. This certainly means that we might still NOT be in a bear market. Also as the correction was again swift, I won’t call this a bear market yet.
Does that mean that we are in a bullish zone? Again till we take out the previous high of 6350(a distinct characteristic all of the previous bull markets), one can’t say that we are in clear uptrend.
So as of now, this looks more like the 4450 to 6350 zone kind of market. Theoretically this is a big zone to play with-almost 35-40% in between.
So if we break 6350 on the upside with the current uptrend, the current rally shall be termed as a bull market correction while if we break 4450, the current upmove shall be construed as a bear rally. Even if this is a bear rally, this can extend almost 30-35% from the bottom. But,one needs to be less aggressive in his/her approach till we are sure.
Carefully observe the 1995-1998 period market moves(many 30-35% moves on the upside and the downside with an average of 6 month duration) and not just look at 2003-2007 period.
My own sense is that the current upmove might surprise many participants. The answer lies in the investor psychology. Many players have been hit hard (big and small) and they won’t dare to venture again. Smart players who have the capital and who were quick to react last time have the courage and the capital to make the best of the current uptrend.
One can position himself keeping these facts in mind. Don’t go after various definitions of bull and bear markets. If you are still listening to TV experts, it time to stop listening to these “equity strategists”. Just know what your risks are and then decide to play this market from the long/short side.

Brokers View on Nifty -Bullish trend after some consolidation

The markets ended the week with a flourish. The tempered inflation numbers gave the markets the much needed sentiment boost and the indices surged ahead. The Nifty closed at 5,112 up 112 points, while the Sensex shut shop at 17,126 up 405 points.

Sudarshan Sukhani of Technical Trends said we are seeing evidence that the rally is intact and tells investors to buy on dips. "There is nothing to disturb it as of now, so I am not surprised. The Nifty has been breaking resistance levels since 4,800. First, it was 4,800, now 5,000, and the next resistance is at 5,350-5,400. There is no reason to suspect the face of the rally. On some days, we are going to see consolidation, while on others we are going to see a rally as we are seeing today. The trade is to buy on dips."

He feels the next target for the Nifty is 5,350. "I would say 5,350 is a much more realistic target than 5,100. This rally doesn’t need to stop just now."

E Mathew of Mathew Easow Fiscal Services feels the upmove is far from over. "The genesis of this move can be trace to early April when volatility preceded the trend change. The trend changed when we formed a higher bottom at 4,630-4,640 and a significant higher top at 4,930-4,940. Yesterday, even in a correction we did not come down to that. We are certainly heading to a 200-day simple moving average which is located at 5,140. These significant levels for individual stocks which have a play on the Nifty tells me that this move is far from over. Next week, we should be taking out 5,140 which is where the 200-day simple moving average is located. If that happens, on every retracement after a small correction, the target for this move should be around 5,400."

Ambareesh Baliga of Karvy Stock Broking feels the markets can go up by 100-200 points. However, he sees selling pressure at those levels. "We could see the markets again settling down at slightly lower levels, closer to around 16,000-16,050. That should be a good time to re-enter the market."

Investors should book profits at these levels, Baliga said. "We have been telling people for the last 1.5 months to keep buying at every dip. At this point of time, we are asking them to book profits and stay on cash for a while. Once the result season is over, there won't be any further triggers. One could see the markets drifting down after that and that would be a good time to enter the markets again at lower levels."

Abhay Aima of HDFC Securities said he wouldn’t be surprised if the index crosses 20,000. "This is going to be a volatile year. The last bottom and stop was made and should hold during the year. I won’t be surprised if you see 20,000 index but I will be surprised if it crosses the previous stop this year. I won’t be surprised if it goes near the last bottom made on the index

Brokers` outlook: Volatility to continue on Thursday

Bharat Thakur, assistant manager, Karvy Stock Broking said that market was very volatile today (Apr.23). Sensex closed down 85 points at 16,690 while Nifty ended at 5022 down by 26 points. Fresh short positions are building up in the markets for the next month`s (May) F&O series.

Almost IT and Cement stocks were holding firm today. Sugar stocks also remained in limelight. ACC Cements and Grasim Industries moved up.

He expects the same volatility to continue on Thursday as well due to F&O expiry but Nifty is most likely to close above 5k. Crucial level to be watched is Nifty 5200 with a stop loss of 4850.

He is bullish on sugar stocks and stocks to be watched out include Bajaj Hindustan and mid cap sugar counters.

Alex Mathew Head of Research, Geojit Financial Services said, ``Being the last day of April futures, Nifty may remain in a narrow range of 5000-5075. A break above or below will give a direction to the market.``

Rollover figures are not encouraging. Majority stock future rollover figures were below 50% suggesting weak outlook for May contract.

Midcap and smallcap futures stocks like IFCI, Arvind Mills and Hotel Leela have attracted good volumes. Buying interest can continue in these stocks.

Cement stocks like ACC, Grasim may move up due to fairly good rollovers.

As the signs of caution are high, one should not carry over long positions. Market participants are expecting some more actions from RBI to contain Inflation soon, added Alex

Nifty future sees rollover of 62%

Turnover improved marginally to Rs 52,107.86 crore on Wednesday in F&O segment on the NSE against Monday’s figure of Rs 51,644 crore, as rollover of open interest positions from April to May series improved substantially.
Nifty April future closed in premium of about eight points at 5031.1 against the spot close of 5022.8, while the Nifty May future closed with a larger premium at 5040.1. Rollover of open interest positions improved to 62 per cent.
Options

Among the May options, Nifty 5000, 4800 strikes were most active among puts and 5000-strike was the most active among calls. Puts saw sharp accumulations when compared to calls, indicating a negative bias for the market in May.
Stock futures

Reliance was the most active followed by RPL, Tata Steel, RNRL, Reliance Capital, IFCI, ICICI Bank and DLF. IFCI maintained momentum as its April future closed with a sharp gain of 4.23 per cent at 61.55 against the spot close of 61.50. Rollover stood at 66 per cent and the IFCI May future closed at Rs 62.
Reliance Industries saw a rollover of about 62 per cent, while for RPL it stood at 54 per cent. The market-wide rollover also remained subdued at 58-60 per cent.

Bullish Trend if Nifty closes 5133

Pivot Point trading levels for the Month of APR is as under.S1 PIVOT R1 R2 4457 4754 5033 5330

200-DMA 513350-DMA 4943This on going Major correction can be termed as 100% over, only when Nifty closes above 5377.5133 is a strong hurdle and hence any kind of consistant bullishness can only be seen, if we close above 5133. I shall be cent percent bullish on a close above 5133.

Low & Medium risk traders can enter once Nifty closes above 5133 while

High risk traders can enter now keeping a stoploss of 4884 weekly pivot.

Whether there will be sharp downward jerks or not, is hard to say, specially after the CRR rate hike by RBI. But looking at the overall market from domestic and global point of view, I feel that the bottom hit on 18th March will hold. Last year the yearly low was made on 16th MAR (sensex). This year also, low is made on 18th MAR (sensex) and it looks like it will hold. In case of any adverse opening bell movement, one should use it as an opportunity for going long. This is for high risk traders. It has also made a double bottom (22nd Jan & 18th Mar). An inverted H&S formation has been formed with a break above the neckline which is considered bullish. Hence all these indicators are pointing that, yearly low has been formed.

Brokers`outlook: More short covering expected before expiry

Bhupendra Sharma, vice president, Hornic Investments said that market ended on a positive note amidst choppiness. Sensex was up 44 points at 16783 while Nifty ended at 5049 up by 12 points. IT index underperformed due to below than expected results by TCS.

Buying was visible in stocks like Ansal Infrastructures, Unitech, DLF and GMR Infrastructures.

According to Bhupendra, if Nifty sustains above 5000 level till this month`s F&O expiry then we may see new rally coming in. He expects markets to open positive on Wednesday and is bullish on infrastructures stocks. Stock specific action likely to happen in the next few trading sessions.

Stocks to be watched out include Tata Teleservices Maharashtra, Ankur Drugs, Ranbaxy, Glenmark Pharma, Unitech and Ansal Infrastructures.

Alex Mathew Head of Research, Geojit Financial Services said, ``Today we had seen selective buying in small-cap F&O stocks. More and more retail participation is coming in and mid-cap and small-cap stocks remained attractive.``

He also added, `` Nifty rollover figures are encouraging and we may see some more short covering before expiry. We had seen huge short positions in Tech stocks and the trend will continue for some more time.``

Nifty may face minor resistance at 5075 and 5100 and above that it will test 5135. The ongoing rally will be terminated either on Thursday evening or on Friday afternoon. So investors should take cautious approach especially while Nifty trading above 5129.

Short term long positions can be initiated in IVRCL Infra, Escorts, IDBI and Nagarjuna Fertilizers & Chemicals

Brokers`outlook: Nifty may test 5135 in short run

Bharat Thakur, assistant manager, Karvy Stock Broking said Nifty closed above 5000 mark, which is positive for the market sentiment. Sensex closed with good gains of 258 points at 16739 while Nifty ended up 78 points at 5037.According to Bharat, better expectations of results from Reliance Industries added to the positive market sentiments. Almost all Reliance Group stocks fared well at the bourses. Steel sector also remained in limelight. Major gainer includes Reliance Communications and Tata Steel.

He expects the same positive movement to continue on Tuesday as well, led by Reliance Industries. Short covering may be seen in stocks like Steel Authority of India (SAIL) ahead of F&O expiry.

He also added that now Nifty will test the range of 5250 to 5280 in next two to three trading sessions, with a stop loss of 4850.

Stocks to be watched out include Reliance pack, Tata Steel and some mid cap counters like Bartronics, GIPL and Ispat Industries.

Alex Mathew, head of research, Geojit Financial Services said , ``Volumes in the Nifty futures have come down, but futures started trading at a premium which is suggestive of short covering. Overall market breadth was positive coupled with good buying in Banking, Cement, and Telecom sectors which were the front runners today.``
As Nifty has breached the key resistance level of 5000; it may test 5135 levels in the short run before making a downtrend.

Suzlon, ICICI Bank, HDFC, Axis Bank may get more attention and may witness short covering. L&T, Welspun Gujarat and Ranbaxy may trade higher, recommended Alex.

IPO Re-rated with current market price

Over the past year, we have rated IPOs and told you which ones to subscribe to and which ones to avoid. In light of the recent meltdown in the market, we thought this is a good time to do a re-rating of sorts of the IPOs that came into the market last year. Post a detailed analysis, which involved taking a deep, hard look at the numbers of these companies, we have come up with our recommendation on what you should do with these stocks if you happen to have them in your portfolio. So, for those of you who have been patiently holding on to your initial allotment, here’s ETIG’s picks of the lemons and peaches that have emerged in the IPO space over the past year ...

ALLIED DIGITAL CMP: Rs 783.55 Change over offer price: 324.3% Market Cap: Rs 1,354.75 crore Industry: IT Infrastructure Rating: HOLD
• It can expect high growth due to opportunities in the core IT infrastructure business and addition of remote infrastructure management biz in its portfolio.
• The company is shielded from currency fluctuations and the US slowdown due to its India-centric business model.
• The govt’s focus on data centres and digital connectivity will strengthen demand.

BGR ENERGY CMP: Rs 428.15 Change over offer price: -19.9% Market Cap: Rs 3,082.68 crore Industry: Engineering (turnkey services) Rating: ACCUMULATE
• BGR has a current order book of around Rs 3,200 crore, out of which, around Rs 1,700 crore will be executed in FY09 and Rs 1,100 crore in FY10.
• The order book is likely to expand, as several new power projects come up across the country.
• Winning new contracts and their timely execution is essential for future growth.

CAIRN CMP: Rs 252.75 Change over offer price: 42.5% Market Cap: Rs 44,949.06 crore Industry: Oil Exploration Rating: HOLD
• Its hydrocarbon reserves in Rajasthan are estimated at 3.75 boe. It’s expecting another 1 boe from other exploration efforts.
• It will commission production in H2 FY09.
• It needs to construct an $800-million pipeline to evacuate its crude oil. But the government has not yet allowed its inclusion in the total project cost to be recovered subsequently.

CENTRAL BANK CMP: Rs 92.05 Change over offer price: -10.78% Market Cap: Rs 3,720.1 crore Industry: Banking Rating: HOLD
• Its business (advances and deposit) grew at around 28.5% in 9M FY08.
• Strong interest earnings, thrust on increasing other income and better asset quality have boosted financials.
• It is currently trading at valuations, which are relatively lower than its peers. But the bank is comparable with its peers in terms of other financial parameters like asset quality and return on assets.

CONSOLIDATED CONST CMP: Rs 644 Change over offer price: 21% Market Cap: Rs 2,380.22 crore Industry: Construction & Engineering Rating: HOLD
• The company focuses on tier-II and tier-III cities, which helps it maintain lower costs.
• It’s a professionally-managed company and has one of the strongest balancesheets in the industry.
• At the end of February ’08, Consolidated Construction had a total order book of nearly Rs 2,300 crore, which was nearly four times its FY08 revenues.

FORTIS HEALTHCARE CMP: Rs 77.25 Change over offer price: -28.6% Market Cap: Rs 1,751.02 crore Industry: Healthcare RATING: SELL
• Despite promising prospects, healthcare is a highly capital-intensive industry, with new facilities taking at least five years to break even.
• Although it’s the second-largest private healthcare company in India, Fortis has been making losses.
• It also lacks visibility in earnings compared to market leader Apollo Hospitals.

HDIL CMP: Rs 618.90 Change over offer price: 31% Market Cap: Rs 13,261.17 crore Industry: Real Estate RATING: HOLD
• The company has a niche business model of slum rehabilitation scheme (SRS) in Mumbai. This protects it against downside, as there is ample scope for SRS projects in Mumbai.
• The bid to rehabilitate Dharavi, Asia’s biggest slum, if successful, can turn out to be a big growth driver for the company.

IDEA CELLULAR CMP: Rs 99.6 Change over offer price: 29.3% Market Cap: Rs 26,248.18 crore Industry: Telecommunications Rating: HOLD
• The current growth in the company’s performance is fuelled by the buoyancy in monthly subscriber additions in the existing 11 circles.
• The stock is currently trading at a discount to biggies like Bharti Airtel and Reliance Communications. This may change, postspectrum allocation, providing good upside to long-term investors.

INDIAN BANK CMP: Rs 157.35 Change in price over offer price: 78.8% Market Cap: Rs 6,762.43 Industry: Banking Rating: HOLD
• Its topline grew more than 30% for the nine months ended December ’07. Recoveries of bad loans helped its other income soar 74%.
• NIMs got a boost from its rural focus, as yield on advances is higher vis-a-vis other banks.
• It is trading at a P/E of 7, which is comparable to peers like Andhra Bank, Allahabad Bank and Corporation Bank.

JYOTHY LABS CMP: Rs 659.65 Change over offer price: -5.8% Market Cap: Rs 957.81 crore Industry: FMCG Rating: HOLD
• It is in the fast moving consumer goods industry, which is characterised by low manufacturing costs and high brand building.
• It’s a market leader in fabric wash segment, with its ‘Ujala’ brand having high brand equity and recall.
• Growth is likely to come from the fastgrowing mosquito repellent segment.
• Within the sector, it has attractive valuations.

MAYTAS INFRA CMP: Rs 654.40 Change over offer price: 73% Market Cap: Rs 3,851.14 Industry: Infrastructure & Construction Rating: HOLD
• The company is present across all major segments including airports, ports, highways, power and residential.
• Besides being a contractor, it is also a leading developer and promoter of infrastructure on a public-private partnership basis.
• In the past few months, it has signed a slew of joint ventures to develop more projects and diversify into related areas.

MINDTREE CONSULTING CMP: Rs 377.1 Change over offer price: -8% Market Cap: Rs 1,427.32 Industry: IT Software Rating: HOLD
• It has been witnessing a topline growth of over 25%, which is better than the average growth of mid-tier IT companies.
• Business in non-US regions is rising, helping it reduce exposure to the US economy.
• Focus on services based on R&D, which contribute nearly one-fourth to revenues, places it higher in the value chain compared to other plain-vanilla IT service providers.

POWER FINANCE CORP CMP: Rs 157.75 Change over offer price: 85.8% Market Cap: Rs 18,106.07 crore Industry: Finance Rating: ACCUMULATE
• In the first nine months of FY08, its topline rose 36.3%, while the bottomline grew 50%.
• Given the thrust on power sector, players across the value chain are expected to perform well, thereby driving PFC’s growth.
• The stock trades at a P/E of 11 (ttm basis), which is low. It recorded an average return on assets of 2.8% in FY05-07, which is comparable to leading financial institutions.

RELIGARE CMP: Rs 364.9 Change in price over offer price: 100% Market Cap: Rs 2,775.79 Industry: Non-Banking Financial Services Rating: HOLD
• The company’s diversifying its business portfolio, which is currently dominated by broking-related operations. More than half of its revenues come from this segment.
• With the acquisition of Hichens, Harrison & Co, the London-based broking firm, Religare now aims at giving a global exposure to its institutional business, which is expected to boost revenues in the long term.

TIME TECHNOPLAST CMP: Rs 820.2 Change over offer price: 157% Market Cap: Rs 1,716.67 crore Industry: Plastic Products Rating: HOLD
• Its technology-driven product range has enabled the company to maintain operating margins above 20% in the past.
• Commissioning of three plants over the past six months and its acquisition of a Bahrain-based valve regulated lead acid (VRLA) battery manufacturer is likely to drive the company’s revenue growth.

VISHAL RETAIL CMP: Rs 797.3 Change over offer price: 196% Market Cap: Rs 1,785.95 crore Industry: Retail RATING: HOLD
• The company focuses on tier-II and tier-III cities, which helps it to maintain lower costs.
• It has been on a massive expansion spree. It has opened 32 stores since its IPO in April ’07.
• The stock is trading at 23.7x its FY09 estimated earnings,which makes it an attractive pick.