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Delivary Call on Hindustan Unilever - 19 MAR

March 19th, 2008 Leave Your Comment »

Price Target of 280+ in small to medium term.

Key features :-

The revenue of Hindustan Unilever Ltd (HUL) grew by 13.3% year on year (yoy) to Rs13,717.8 crore in CY2007 contributed by an increase in its volumes, a better product mix and price hikes effected during the year. Active cost-cutting measures across segments and prudent price hikes led to a 130-basis-point improvement in the company’s operating profit margin (OPM) to 13.7%. The net profit of the company increased by 14.9% to Rs1,769.1 crore.
The home and personal care (HPC) business comprising soap & detergent and personal care products (contributing around 73% to the total revenue) continued to show a double-digit growth of 12.2% yoy to Rs10,046.4 crore.
The food business posted a strong growth of 20.4% yoy to Rs2,231.1 crore. The company’s innovative and strong brand building capabilities have resulted in strong growth of 15.2%, 39.8% and 17.2% in its beverages, processed foods and ice cream sales respectively.
Exports were affected by the appreciation of the rupee and grew by 5% in rupee terms as against a growth in excess of 15% in dollar terms. The company is rationalising its product portfolio by exiting from low-value businesses to improve the performance of the export business going forward.
HUL completed the buy-back of 3.02 crore shares from the open market at an average price of Rs207.13 per share, leading to an outflow of Rs626.27 crore in CY2007. The equity capital reduced by 1.37% to Rs217.7 crore. Total reserves declined from Rs2,502.81 crore to Rs1,221.49 crore in CY2007. This has led to a hefty improvement in the return ratios. While the return on capital employed (RoCE) improved from 72.6% to 102.2%, the return on net worth (RoNW) improved from 61.2% to 85.0% in CY2007.
Better business performance, efficiencies through cost savings across segments and an efficient collection system resulted in strong operating cash flows of Rs1,710.5 crore.
Nitin Paranjpe (ex-executive director of the HPC segment) has been appointed as the managing director and chief executive officer (CEO) of the company.
We believe that in CY2008 HUL will continue to face intense competition across categories and high cost pressures. Thus the company would have the challenge of maintaining its market share and margins. We believe cost efficiencies along with measured price hikes are going to be the way forward to combat increased input costs to maintain the margins.

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Learn How To Survive A Stock Market Correction

March 8th, 2008 Leave Your Comment »

Global markets all have corrected lately. Irrespective of which market you are investing in, you would have been affected by the recent volatility. You could be an investor in America, India, China, Korea or anywhere else in the world- your situation would be pretty much the same. Many of you who are new investors might have entered panic mode, where you are unable to relax and have lots of stress and depression. I understand how it must be for somebody who just started investing in either stocks or mutual funds two months ago to see a notional loss of 30% or more now.

I remember the first time several years ago when I witnessed a stock market correction, my portfolio was down by over 50% and I too had entered panic mode. But thankfully after reading books on investing and listening to more experienced investors, I decided not to panic and hold my quality stocks. I am a much happier person today thanks to that decision.

Here are seven simple ways to survive a stock market correction as an investor:

1. Stop Listening To Analysts

Most analysts in the media instead of providing you with a solution will just confuse you. Somebody will say everything is doomed while others will say things are great in the long term. Forget listening to analysts- most of them won’t be of any help. The reason people listen to analysts is because they are looking for peace and hope. Trust me you will get none of that by listening to somebody else. Peace and hope are all within you.

2. Stop Staring At Your Portfolio Every Thirty Minutes

Another mistake people make is that they get up every morning and wait for the markets to open. Once markets open they start staring at their stock prices. A fall makes you feel worse and small rise makes you feel a little better. This won’t help either. Instead keep track of the fundamentals of your company every time the results are out. If your company is profitable and growing - be happy. If it isn’t, find out if you need to exit. The stock price will catch up in the near future if business is growing. Do you stare at your money kept in a bank FD everyday? Most probably not. Use the same principle when you invest in stocks or mutual funds.

3. Be Patient

Many of you might not have a lot of cash to buy cheap now; however please be patient with whatever you have bought. Even the youngest billionaire on Earth today is 23 years old. It took him 23 years to be a billionaire and he didn’t do it in few days or weeks. The youngest billionaire probably in history is 23-year-old Mark Zuckerberg - the founder of the social networking site-Facebook.

4. Speak To Actual Investors With Experience

Instead of interacting with analysts or your broker, speak with people who are actual investors and who have been in the market for longer periods of time than you. They will tell you how they have survived various stock market corrections and what has made them richer. Read and learn more about people who have actually created wealth and sustained it over a long period of time.

5. Stop Following Crazy Tips

Please for heaven’s sake stop following ‘hot’ tips which promise to make you a millionaire in a matter of months. Maybe the ‘hot’ tip is only meant for billionaires who would end up as millionaires in case they do follow the tip. If it seems to good to be true, it is probably just a scam, which hopes to take money away from retail investors and put them in the hands of greedy manipulators. Similarly stop following rumours about how fundamentally strong companies are going to be shut down and go bankrupt in the next few months. Use your own head and trust yourself.

6. Understand Market Cycles

Every asset class has a cycle. Stock markets, mutual funds, real estate all move in cycles. Please realize that nothing can keep going up forever in a single direction. There will be phases when prices will come down and again move up. If you go back into history you will see several instances when stock prices came down, however over a period of time quality companies always reward investors. Understand market cycles, and don’t become a slave to them.

7. Follow The Guru

Today the richest man on earth, Warren Buffett, is an investor who has created wealth because he has stayed away from what everybody else is doing and has simply invested in quality companies for the long term. He invested in Gillette, for the simple reason that he believed that men won’t stop shaving. It makes sense to follow, as I call him, “The Guru” and think long term and remember people who create wealth do things that others don’t.

I’m sure if you follow the simple techniques above you will be a much happier and a calmer investor. Investing is about controlling your emotions and being disciplined about what you do.

Source: Moneycontrol.com

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PSU banks might be good buy now

March 8th, 2008 Leave Your Comment »

Anil Manghnani of Modern Share & Stock Brokers said that everyone is talking about the bear face of the bear market. However, according to him, as long as the Nifty holds on to 4803, it may be a little safe for the shorter term. His advice is to go long and keep 4800 as the stop loss.

Meanwhile, talking about the banking sector, Neppolian Pillai said that it continues to be one of the strongest sectors of the market. According to him, there are buying opportunity within the largest of largecap banks but the private sectors side looks a little bit weaker.

Excerpts of CNBC-TV18’s exclusive interview with Anil Manghnani and Neppolian Pillai:

Q: The theory of a range seems to have gone out of the window this month. What would you do as a Nifty trader, what would you work with in terms of what’s happening with the Nifty?

Manghnani:  Now everybody is again talking about the bear face of the bear market. There are many ways to define a bear market or a bear face. The two that I particularly look at is, one is the 50-weekly moving average which I mentioned the other day. Any close below that on a weekly basis becomes a little difficult for the market. Currently, it’s at about 4890 for the Nifty, so we are just trading around those levels. It’s dipped below that on a Sensex about 16577, but we still have today and probably Friday’s trade for the Sensex to comeback over that. Any close below these levels on a weekly basis would define trouble.

The second thing I am fighting with, it’s not matching on the Sensex and the Nifty, is the higher bottom theory, even on a shorter frame. After the 15332 bottom of January 22, we had a 16457 on the Sensex, which corresponds to 4803. On Tuesday, the Sensex broke below and it’s still trading below that 16457, it already broke that higher bottom theory. So the only thing now that’s saving us from entering that difficult bear face term is the 4803 on the Nifty. As long as we hold 4803 on the Nifty, we may be a little safe for the shorter-term.

If you are going long on the Nifty, it’s safe because you are so close to 4800, that your stop loss is limited. So as a Nifty trader, you can go long and keep 4800 as your stop loss.

Q: Banking as a sector has taken quite a knock after the Budget. What are the charts suggesting about the sector and maybe a leading stock like an SBI?

Pillai: The sector continues to be one of the strongest sector in the market, it’s moving within an upward slopping channel. If you look at the comparative chart, last month it was at the higher end of the channel, this month it’s falling to come and touch the lower end. So to that extent, it’s going to be a buying opportunity within the largest of largecap banks.

The private sectors side looks a little bit weaker than the PSUs. So State Bank of India, at the current level of roughly about Rs 1845 to roughly about Rs 1785, would be a great buy range. It’s not gone into a monthly sell yet. It should give you a pullback upto Rs 1960 to Rs 2025. But at this stage, you have to sharply trade rather invest because you are right on that brink of probably entering a bear market. We have not entered it yet. So to that extent, continue to trade and keep the trading range of Rs 1845-1785.

Q: What about FMCG, Hindustan Unilever has done pretty well since the Budget as well. Can you justify or seem more upside here and what about the sector?

Pillai: I remember talking last time that FMCG has broken out of a two-year downtrend-line. Though the long-term four-year downtrend-line is still intact, to that extent it would underperform. Since it’s broken out of the two-year trend, you see all of them, ITC, Hindustan Unilever everything moving up.

Hindustan Unilever it is currently around Rs 226. If you can buy it between around Rs 218-200 levels, it should give you a target of Rs 246. Within the largecap FMCG this looks the best followed by ITC.

Q: The market is talking about autos and pharmaceuticals again. How are two stocks from both those sectors looking Maruti and Dr Reddy’s?

Manghnani: From the Budget beneficial sectors of auto, pharma and FMCG, if you look at three of them on a sectorial basis, I think the one that is clearly broken out of the underperforming stage is pharmaceuticals and you can safely see why. Cipla, Ranbaxy, Sun Pharma, these stocks are just running away like anything.

Ranbaxy is being an old favourite of mine for a long time, so I’m happy to see that move. We have talked about how Cipla did a classic double bottom after hitting Rs 160 three-four months back and in the carnage of January it touched Rs 160 again. So it’s retested its bottom and is now moving up. So having mentioned about Cipla and Ranbaxy, since they have already moved, you stay invested.

But the one we are looking at right now is Dr Reddy. That still hasn’t moved in the same context of Ranbaxy and Cipla and it’s making classic bottoming out sort of formations on the charts, especially on the monthly. I think it’s in a good range, Rs 557-509 would be an ideal range to pick up the stock. Once it takes out Rs 599, then you could see a nice move upto Rs 630.

In auto pack, the breakouts are not as strong as you have seen in pharmaceuticals, and like Neppolian already mentioned in FMCG. But there are early signs that this may now have finished the underperforming stage and now become more of a market performer. And with the Budget sops, you have seen clear-cut movements in both, not four-wheelers but even two-wheelers like Hero Honda moving up. Hero Honda has been our favourite pick over the last few months on a technical basis. Now we have taken out Maruti.

Like Neppolian mentioned, it’s a trading market, so don’t look at it as an investment point of view, but a definite a trading point of view. It’s struggling to break Rs 910, that is a resistance. But anywhere between Rs 910-860 again if it falls is a buying range. I think once it takes out Rs 910 at the upper end, you could easily see Rs 945-975 as a trading move for the stock.

Q: The only non-Index stock in your list is Sesa Goa. What kind of targets do you have for it?

Pillai: Metal is a sector which is strong but it’s coming off the highs. If you look at Sesa Goa, after falling right upto Rs 2000 in that carnage, it’s back to about Rs 3400. Now that gives me interest in that stock that it’s a momentum stock. And since we are talking of trading strategy, and not investment strategy, that stock can really give you a nice trading move. Though it’s about Rs 3450 or Rs 3470 now, my buy range would be slightly lower, closer to around that Rs 3250 zone. It should give you a range right upto Rs 3630 on the upside to around Rs 3750. That’s a Rs 400 range if you but at the lower end. That looks good, momentum is in the stock and it’s tradable at the lower level.

Q: What about real estate, those stocks have been smashed up. Do you sense any kind of an upmove coming there in any of the leading stocks?

Pillai: Not really, I think the real estate sector has gone into a bearish mode already, not such as any other sector. So to that extent, the downside is still there. DLF could fall right upto about Rs 675 and the leading Unitech could comedown all the way upto Rs 307 to about that Rs 250 level. Any pullback is going to be a relief rally. I think from an investment point of view, one needs to wait. Even from a trading buy and from a trade point of view, one needs to wait for the lower level to come in before you move in. At the current stage I think nothing is buyable as of now.

Source: Moneycontrol

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What is Subprime and How deep is the Cut ?

March 6th, 2008 Leave Your Comment »

You switch onto CNBC TV18 or NTDV or any other similar sites, you most like will come across the term Subprime which the investment experts are regularly discussing about. I’ve discovered two articles which’ll give you an idea what Subprime and Subprime lending is.

Understand what is Subprime and Subprime lending is.

The article pasted below explains how deep the Subprime cut is and what it means to the Indian Market.

There are two theories in context that we have arrived at. Theory One says that subprime low size is at USD 1 trillion. These are the Bank of England estimates. 20% of all subprime is bad, which is valued at close to about USD 200 billion - that’s the estimate of Deutsche Bank. So from USD 2 billion, we bring in a credit multiplier; five times is a rough estimate that people have - if you reduce the credit multiplier to three, the extent of write down will be lower. If you increase it, then the extent of write down will be on the higher side.

To be conservative, considering a realistic estimate of about five times, the total write downs can be seen as close to about USD 1000 billion - that is equivalent to USD 1 trillion.

We have already seen a write down of close to about USD 100 billion already till date happening. So expected further write downs according to Theory One, is USD 900 billion.

Moving on to Theory Two, the US mortgage industry size is close to about USD 10-12 trillion - that is estimated as of 2007. This estimate is given by the US government website.

14% is the US mortgage industry, is subprime at USD 1.4 trillion, according to a Deutsche Bank estimate. 20% of subprime loans are delinquent/bad - that is close to about USD 280 billion. Again, if we introduce a credit multiplier effect of five times, we arrive at close to about USD 1400 billion and a write down seen till date is about USD 100 billion. So estimated further write downs are USD 1300 billion.

Thus, net-net, we are seeing a range of USD 900 billion to about USD 1300 billion further write down.

These are CNBC-TV18 estimates.

Let’s see what are other experts saying.

Stern Business School is expecting a write down of about USD 1000 billion, Bank of New York is seeing USD 800 billion further write downs, Merrill Lynch is seeing USD 600 billion, Ben Bernanke has upped his write down estimates from USD 150 billion in November to about USD 500 billion as of yesterday and Goldman Sachs values the subprime estimates of about USD 400 billion.

We saw subprime coming into effect - the first write down was seen in September ’07 and the first estimate came by December ’07. In December ’07, we saw subprime estimates of close to about USD 300-800 billion, which is now upped from USD 400 billion to USD 1000 billion.

To sum up everything - USD 1000 billion is a size of the Indian economy, and that is the extent of write downs that people are expecting.

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Hot Calls For 9th January

January 9th, 2008 4 Comments »

Quite a day yesterday’s been. Unpredictable and volatile which offered traders gateway to get better returns on their investment.

It was indeed a profit booking day yesterday, as though all the investors were waiting for the magical 21,000 mark, which finally happened around noon, and every one, almost everyone started booking profit :).

Now heading on to todays call, I see some nice stocks for the day and for long term holding as well. There are signs of good momentum in the market, but as I browse around right now, I also see that the US market has tumbled down bad and the Asian  markets haven’t faired well either. I’m bit skeptical about today, but Indian market is far from following the trend, at least for the last few days it has been so.

Infosys

Infosys results are around the corner so one can bet to trade on Intra day / Short term Positional based calls. If it sustains good volum, it looks positive beyond 1720. It has good resistance 1700 and has a major hurdle around 1835.

Polaris

Polaris is looking strong and moving towards 140 + may be can cross 150 +. Keep a SL of 123.

PFC Power finance

PFC looks good for a buy around 248 - 250 and the stock is showing momentum towards 255 - 259.

ITC

Still bullish about ITC. It’s heading towards a target of 239 and then to 250. Keep a stop loss of 224.

Idea and DLF seem to be ready for a move. If you go through one of the old posts, I had mentioned that DLF is ramping towards 1200  and it is still the same, almost there.

Alps Industry

For long term investors (9 - 12 months), alps industries growth rate will pay off on your investments. This is a stock to watch out as it will move from 83 to close to 140 - 150 levels in the specified time.

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Hot Calls For 8th January

January 8th, 2008 5 Comments »

IFCI

Looks good for about 8% - 10 % growth, which will be around Rs 102 - Rs 104, from the level - Rs 95.5. Keep a stop loss of 90.

REL

I do not see any decline in it’s growth today. It has been one of the strong stocks even when the markets were down considerably. Though, one must be careful, if planning to get into this stock at this point. Worth watching.

Thought it would do 2500+ by mid Jan, but has over done ;) .. Have a look at this previous delivery / Intra day cal.

RNRL

In the previous call, I did mention that RNRL, if it happens to cross 200 mark, it would reach 220 - 230, well it’s almost close to 230 now.

RNRL has a strong support at 218 - 220. If it crosses 228 - 230, then it’s heading towards the 250 mark.

PETRONET and ITC, I’m still bullish on both of them. No idea why I missed ITC, but it definitely has been a bagger in the last few days.

COLGATE (COLPAL)

Colgate palmolive is heading towards it’s all time high price and geared to break past it. If you are a mid - long term trader, you should be looking at 600 mark. Stop loss for Colgate is around 420 - 422.

Sugar Stocks:

The compulsory use of ethanol, has given the sugar stocks an edge of no where. All the stocks which performed well and suddenly were pushed to the under-performer groups are making their way back into the bright light.

Sugar stocks are all set to fuel up the dark horse towards victory. Some of the good performers will be :

Bajaj Hindustan which is around 350, is looking strong to move towards 370 - 375. Looks good for intra day with a stop loss of 330.

DHAMPURSUG, once it crosses the 99 mark, it’s next stop is around 115 and subsequently 135.

Other good sugar stocks are : Balrampur chini and shakti.

Ashok Leyland

Ashok Leyland is worth a buy at Rs 56 - 58. Plan to bear a stop loss of Rs 47. Set for the first target at Rs 75 and the second at Rs 110. You need to wait a bit on this one though.

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Hot Stocks For 3rd December

January 2nd, 2008 Leave Your Comment »

Friends,
I’m sorry, I did not come online for a few days as I was held up with some personal tasks. I’ll make it a point to come and publish market status at least once a day, which hopefully will help you decide and buy stocks and commodities of your choice.

Here are some of the nice stocks for the day.

Petronet LNG Ltd
If you look at it from technical and fundamental stand point, it indicates that the stock is geared to move upto 140 - 150 level sometime by the end of this Jan or early weeks of feb.

REL:
I didn’t even think twice, this ones definitely up to 2500+, by around mid jan. Call it sentiment or value for money, this ones geared strong.

Canara Bank:
I had plans to sell this scrip at around 200 - 250, that was where it was oscillating for quite a while. With Canara banks “rebranding exercise” up the sleeve, they are sure to unleash ‘money’ their investors way. If you are vigilant, you’d have noticed, they’ve grown 20 - 25% in the last two days. A strong bet if you are looking for a 3/6 month investment.

Today it is around 400 and expecting it to go upto 520 - 550 soon. If you are a long term player, then may be you’ll see your money double by the end of the year.

Vijaya Bank is another stock I’m bullish about.

Well, heck any and mostly the bank stocks are set to rock, keep your eyes and ears open, coz this sector will be one of the major players for the current and the coming quarter.

RNRL
If it passes the 200 mark, which most likely it’ll, you can expect a minimum of 10 - 15% return out growth, to around 220 - 230.

Other stocks which I’m positive about are, Marico, Zenith comp and Apollo Tyr.

All Success.

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BUY REL for 2500

December 20th, 2007 Leave Your Comment »

Hi Friends,

Buy Reliance energy for 2500 in medium term. RPL IPO Will be out in JAN or FEB.

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Best Way to Play Market NOW

December 20th, 2007 Leave Your Comment »

Hi Friends,

Best Way to play market now is to Buy on Panic and sell on rally . Please concentrate on good volume stocks and use strict stop loss.

Any Questions leave your comments

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Morning Calls - 17 DEC

December 17th, 2007 Leave Your Comment »

530005 INDIA CEMENT

Buy Above 330 for Target1 340 Target2 350+ Stoploss 327
Sell Below 321 for Target1 314 Target2 307- Stoploss 324

532924 KOLTEPATIL

Buy Above 220 for Target1 225 Target2 230+ Stoploss 217
Sell Below 213 for Target1 207 Target2 203- Stoploss 215

507488 G M BREWERIE

Buy Above 135 for Target1 140 Target2 145+ Stoploss 133
Sell Below 130 for Target1 125 Target2 120- Stoploss 133

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