IT and Banking stocks will continue to rule

Indian stocks will continue to rise due to positive clues from global markets. Investors are following this herd mentality for many years. They will continue to buy/sell irrationally and feel sorry after some time. My advice is use caution before buying and stays away from penny stocks. Book partial profits in sound stocks. Banking stocks are in better position to gain more.

Global Markets: All the global markets are in euphoric mood. Use this opportunity to exit worst stocks. Are you ready for some shocks in the next week?

Market Movements:

1. BSE Sensex:
CMP: 15,307.
Target: 15, 400 and 15,490.

2. NSE Nifty:
CMP: 4,462.
Target: 4,500 and 4, 540.

Courtesy: Reliance Money.

Sector of the Day: Banking and IT Stocks.

Stocks of the Day:

1. Omaxe: It will be listed today. Grey market premium is around 100-120.
CMP: 310.
Target: It will list around Rs 420 and book profits around Rs 430-440.

2. State Bank of India: Government gave its nod for stock split.

Significant Views:

1. Indian stocks will correct 10% more due to high leveraged position – Mark Mobius.
2. Get used to rupee rise which is inevitable – Finance Minister.
3. Gap is increasing between rich and poor which is not a good sign for Asian countries – ADB.

Positive Stock News:

1. RIL will buy stake in Modern Diaries.
2. Infosys got nod for 2 SEZs in Andhra Pradesh. Ispat Industries also got BOA approval for its multi product SEZ. Rs 10,000 crore Ispat project will be spread over 3,000 acre.
3. Motherson Sumi announced bonus issue – 1 share for every 2.
4. Alok Industries will sell stake in retail and garment divisions.
5. SBI got government nod for stock split.
6. Idea will start Mumbai operations within 3-4 months.
7. Tata Power is in talks with Areva to buy Nuclear power equipment.
8. Reliance Industries is in the short list to buy HUL’s Bengaluru property.
9. Apollo Hospitals will enter into health insurance business.
10. Opto circuits got SEZ approval.

Negative Stock News:

1. You have to wait for another one month for Petro price hike.
2. TTML will raise $ 200 million debt for expansion plans.
3. Australia Reserve Bank raised interest rates to 11-year high of 6.5%.

My Stock Views:

1. Markets discounted the negative impact of new ECB norms on major stocks like L&T, Tata Steel etc. This is a classic mentality of investors who overreacts to both positive and negative news.

2. IFCI is struggling due to RBI restrictions on FIIs and F&O ban. But it is showing classic signs of consolidation and gradual rise for the past 3 months which is beneficial for long term investors.

3. Hanung Toys is a safe stock for long term investors along with Celestial labs and Fortis Health care.

4. Despite ECB norms, rupee will continue to rise in the long term. RBI should stop these futile measures. Best exporters will only survive in the coming years. But dollar will appreciate in the short and medium term against rupee.

5. Banking stocks will get more benefits than IT stocks in the coming days due to ECB norms.

6. Reliance Vision fund bought IDFC, ICICI Bank in August and increased holdings in Indian Hotels, GSFL and Reliance group companies. Reliance Growth fund exited NDTV and BPCL and increased holdings in Reliance Energy, Divis and GSFL.

7. Expansion plans of DLF, Tata Chemicals, Kesoram Industries, IOC and Pharma acquisitions will be affected by new ECB norms.

Best Stock picks for Day Traders: IT and Banking stocks will continue to gain.

1. Modern Diaries: Reliance Retail stake buy.
CMP: 68.4
Target: 70.5

2. Ispat Industries: SEZ approval.
CMP: 14.15
Target: 14.58.

3. State Bank of India: Stock split approval.
CMP: 1705.
Target: 1760.

4. Reliance Industries:
CMP: 1875.
Target: 1923.

5. Reliance Communications:
CMP: 544.
Target: 551.

6. Idea Cellular: TRAI new proposals.
CMP: 126
Target: 128.3

7. Alok Industries.
8. Infosys Technologies.

Stocks in the F&O ban: IFCI and Nagarjuna Fertilisers.

Note: I have holdings in some stocks discussed here.

IT stocks will hog limelight

It is a golden day for Export Companies but dooms day for many companies. FII selling pressure will gradually impact market in the short term. Will mutual funds and domestic buyers save the market? Markets are at crucial stage and I will closely watch the FII inflow and out flow. Rupee appreciation will be halted against dollar. Major boost for export companies like IT, Textile etc.

Global markets: US Markets ended on positive note after the intra-day volatility. But FIIs will spoil Indian Markets by moving funds from Indian markets to US markets due to dollar appreciation. Lack of liquidity is a concern. Falling crude oil price is the positive cue from global markets.

Market movements: If investors immediately understand the impact of ECB tightening, it will be a sharp fall. If investors temporarily buoyed by IT stocks rise, markets may sustain for some more time.


Sector of the day: IT Sector. 5-10% gains may be possible for these battered stocks.

Stock of the Day: Infosys.

Significant News:

1. No change in fed interest rates. Inflation is a real concern.
2. Fresh restrictions on External Commercial borrowings (ECB). Maximum limit is $ 20 million for rupee.
3. More sops for exporters by this month end. Accumulate these laggards.

Positive Stock news:

1. City Union Bank announced stock split in 1:10 ratio.
2. TTML, Bharti Airtel and R-Com are in race for 51% stake in Kenya Telkom.
3. Telecom companies will get tax benefits due to tower sharing.
4. Take Solutions IPO oversubscribed 59.4% times but retail portion got 23% over subscription.
5. Great Offshore will buy a Scandinavian company for $ 500 million.
6. ICICI Bank cuts deposit rates by 25-50 bps.
7. Punj Lloyd will place a QIP for $ 400 million.
8. India is now the 5th largest crude steel producer.

Negative Stock News:

1. Left Parties blocked Indo-US Nuclear deal.
2. Due to tightening of ECB norms, Companies will have to pay extra money for loans.
3. Falling crude is a positive sign while dollar appreciation is a negative signal for oil marketing companies.

Stock Recommendations for Day Traders:

1. City Union Bank:
CMP: 237.
Target: 242.

2. Infosys:
CMP: 1878.
Target: 1930.

3. Satyam:
CMP: 463.
Target: 478.

4. TCS:
CMP: 1109.
Target: 1140.

5. IFCI: If it breaks 68 resistance.

Please share your views and stock recommendations.

Is there any method in this madness?

Indian stock markets along with global markets are witnessing most volatile intra-day sessions in the recent days. Investors are repeating same mistakes by investing in weak stocks when fundamentals and valuations are big worrying points. Investors ignored the negative implications of credit policy on Indian companies in the yesterday session. Volatility will continue in the coming sessions.

Global Cues:

1. US markets lost 146 points after trading in the positive zone in the early session. Crude is in the $ 77-78 zone. Asian stocks are following their global peers.

Market Movements: All the global markets are in negative zone.

1. BSE Sensex:
CMP: 15,550.
Target: 15,330.

2. NSE Nifty:
CMP: 4528.
Target: 4465.

Stock of the Day:

1. Everonn Systems – It will list around Rs 450-500 and may cross Rs 550. Long term prospects are good for this stock but may be volatile in short term.

Significant views on Economy and Stock Markets:

1. RBI Credit policy will be misfired. Instead of decreasing liquidity, it may increase liquidity and also impact balance sheets of companies. Investors will realise the negative impact of credit policy within a short term. Volatility will continue in markets.

2. It will be difficult to keep Rupee above 40 against dollar. Rupee appreciation will continue in the long term. If RBI tries to keep rupee above 40, there will be negative implications due to rise in inflation. No government wants this situation just before elections. IT Midcaps and Textile stocks will be affected.

3. Hindustan Sanitary ware is a contra pick for long term investors while Meghamani Organics is a safe best for long term investors.

4. One investor asked me about Jain Studios. Don’t concentrate on such penny stocks without fundamentals and growth prospects. One should buy stocks with either strong fundamentals or better growth prospects. There will be no buyers for such stocks if markets go into bearish zone.
5. Sectors like food processing, Electronic hardware, Hotel and leather companies will get more sops in the coming budget – Finance Minister.

6. Q1 Results – Decrease in sales growth but increase in profits growth compared to recent quarters. Decrease in growth is a worry.

7. There will be no hope for Sugar, Textiles and Midcap-IT companies in the medium term except Government sops.

Positive Stock News:

1. Imerys may acquire ACE Refractories.
2. Satyam got big orders from FIFA. Satyam is getting more orders from Europe in the recent days.

Negative Stock news:

1. RBI hiked CRR by 0.5%.

Best stocks for Day Traders:

1. Satyam Computers.
CMP: 480.
Target: 485

2. Everonn Systems.
Target: 550.

3. Sell BHEL and L&T.

4. Sell DLF.
5. Sell Tata Steel and Hindalco.

Things I can’t understand:

1. How can the good showing by companies like L&T and Reliance will change the fortunes of bad companies? Why investors are buying these companies?

2. Why BHEL is rising despite poor results?

3. Why banking stocks rose despite credit policy effect?

4. Is there any change in fundamentals between 550 points crash and 290 points rise?

5. Is there any change in US subprime market worries?

6. Are investors watching the poor results by Indian companies in the recent quarters in the most sectors?

7. Can Investors understand the crude price rise on Inflation?

8. Why RBI announced worst credit policy ignoring major problems? Is it a stop gap policy?

9. Why RBI doesn’t allow rupee appreciation despite benefits to common man like fall in inflation and benefits to balance sheets of most companies except exporters?

10. Why investors can’t wait for the settle down of this volatility?

Is there any method in this madness? Please share your views.

Sound stocks rebound with volatility

Sound stocks like ABB, Reliance Energy will rebound and volatility will continue due to expiry of derivatives. Short term risk taking investors can take positions in HPCL and BPCL as oil ministry is mulling price hike.

CRUCIAL POINT: If Inflation remains stable, there will be no change in interest rates in RBI credit policy on July 31. This is a trigger for Banking, Finance, Auto and Real estate sector. Take positions in these sectors if Inflation is below 4.3%.

Global Markets: All the global markets are volatile with positive moment.

Stock of the day: ABB – It will announce good results.

Significant views:

1. Total un-liquidated turnover in derivatives is around Rs 1, 00,000 crore. My view is we may experience another May, 2006 crash. When I see atmosphere in Ongole town, many retail investors are buying stocks without any basic knowledge about the companies, valuations and other fundamentals. This is surely a worrying sign.

2. Laxmi Mittal supported Mukhesh Ambani on gas pricing.

Rumour of the day:

1. IFCI may announce stake sale/new business model on August 4. Don’t sell your shares for another 2-3 months. Long term investors should not leave this goldmine.

2. Government will hike diesel and petrol prices soon.

Positive News:

1. SAIL announced will jointly explore opportunities and R&D activities.
2. Infosys and Philips signed $ 250 million BPO deal.
3. KEC International announced 74% jump in net profit.
4. Yes Bank net profit jumped by 113%.
5. 62% rise Wockhardt consolidated net profit.
6. Ispat industries recorded net loss of Rs 9.53 crore in 2006-07 Vs loss of 812 crore in 2005-06.
7. Ashahi India net profit in Q1 increased by 316%.
8. Godavari fertilisers announced merger with Coromandel fertilisers.
9. IndusInd bank posted 62% increase in net profit.
10. IDFC signed MOU with IIFC to finance infrastructure projects. Its net profit rose by 38%.
11. HDFC announced 25% rise in net profit.
12. Castrol India net profit rose by 32%.

Negative News:

1. Sterlite Industries posted unimpressive results. Some more selling today.
2. Aptech Q2 net profit fell by 13%.
3. Suzlon net profit fell by 116%.

Stock advice:

1. No analyst talked positively about ITC in the recent days. Everyone is recommending ITC now and giving targets. It happens only in Stock markets. Never follow hot stocks and hot ideas. Invest in sound stocks with strong fundamentals and good growth prospects before everyone will talk about it.

2. Sugar companies are announcing disappointing results. Accumulate on dips and sell them on the day of Govt. Sops announcement.

3. Closely watch Essar Oil. Another turnaround story is in the making.

4. It is waste to subscribe to Zylog now. Allotment will be very low in the retail category.

Hot stocks for Day Traders:

1. IFCI: August 4 meeting on stake sale.
2. IDFC: Big Investment plans.
3. SAIL: Mittal association.
4. Ashahi Glass India: Good results.
5. ABB: Results today.
6. Reliance Communications and DLF - With risk

Please share your ideas.

Welcome to volatile week

With derivative expiry and RBI credit policy are around the corner, Indian share markets will trade in extreme volatility in the coming sessions. Indian stocks are in “unclear” zone with Mutual funds and big domestic investors are waiting for correction, NRIs and FIIs are pumping money. My advice- does not take long positions and book profits immediately in high growth stocks. Correction is eminent but when will it happen?

Global markets: US markets suffered heavy losses on Friday due to poor results by Google. Emerging markets suffered heavy losses along with Japan market. China is the only exception.

Stocks of the day:

1. Hindustan Lever: Future rise will depend on offer price. Dividend and Buyback offer make this stock of the week. My Target is Rs 250-280. HUL board will officially announce offer price on July 29 board meeting.

2. Dr Reddys – Results.

Rumours of the day:

1. NTPC will announce Bonus shares and good preferential allotment to existing investors in its FPO.

2. Chevron may buy stake in Petronet LNG.

Significant events:

1. Derivative expiry on July 27. Expect volatile trading in between.

2. Watch out for RBI’s credit policy on July 31st. What will happen to Interest rates? May be no change.

Significant News:

1. Current interest rates are at reasonable value – Finance Minister.

2. We are waiting for softening of interest rates – ICICI Bank.

3. Crude will cross $ 75 and may touch $ 90– Analysts.

Positive Stock news:

1. Nitin fire net profit rose by 109%.
2. Lead prices are rising. Watch out for Hindustan Zinc.
3. Karur Vysya bank net profit rose by 25% while Indian bank posted 29% rise in net profit. Bank stocks already factored these good results.
4. Mahindra and Mahindra will acquire Lokesh machines.
5. FICCI recommended 10 year tax holiday to health care infrastructure builders and soft loans.
6. UB Holdings is planning to sell stake in Deccan Aviation.

Negative Stock News:

1. ADRs of Indian IT stocks suffered heavy losses along with MTNL.
2. McKinsey sued Reliance and Reliance Communications over dues.
3. Increase in gross NPAs of ICICI Bank is worrying news.
4. UTI Bank priced its GDT at 1.7% discount.
5. NDTV and Arvind Mills are in F&O ban.
6. 50% of the penny and loss making companies are trading near all time highs. Stay away from such stocks.

Stock advice:

1. Ispat industries will announce results on July 24. Will it surprise CNBC analysts?
2. Zee News fundamentals does not justify the steep rise.
3. Voltas is looking very good and Meghamani Organics is a safe one for long term investors.
4. Raymond is a contrarian bet for long term investors.
5. Tayo Rolls is a safe bet for long term investors. Corus supply will propel this stock.
6. Dr Reddys is ready for sound results despite rupee appreciation.
7. Don’t take fresh long positions in Real estate stocks. You will get better price later.
8. Adlabs may move upwards at any time. Good results will be a trigger.
9. Business Standard published very good article on Gujarat NRE Coke. Must read.
10. If RBI will not change interest rates, Bank and real estate stocks will rule the markets along with Maruti. Crude oil price is a real concern.

IPO views:

1. Central Bank of India will list around Rs 130-140. 25-40% gains on the listing day itself. Invest in this IPO.
2. Omaxe may list with 40% gains. Good return if you will get allotment.
3. I don’t have positive opinion on IVR Prime. Stay away from this IPO.

Hot stocks for day traders and investors:

1. Hindustan Zinc – Rise in lead prices.
2. Hindustan Lever – Buyback offer.
3. Nitin Fire – wonderful results.
4. Voltas – Positive momentum on the back of good results.
5. Sell UTI Bank – GDR low pricing.
6. Dr Reddys – will post wonderful results.
7. ICICI Bank – good results.
8. Deccan Aviation – Stake sale and open offer.
9. Prajay Engineers syndicate – Medium term stock.
10. EID Parry – Technically strong.
11. Sun TV – Bonus, Dividend and Stock split.

Please share your views on Indian Stock markets and my stock recommendations.

Volatility will return to Indian stock markets

With uncertain cues from global markets, Indian stock markets will again return to volatile zone today. BSE Sensex and NSE Nifty will find it difficult to break resistance zones. Rupee depreciation is the only factor that can move these indices into higher zones. Will it happen? Watch out.

Global Markets: US Markets are ended in negative zone while Asian markets are in positive zone.

Sector of the day: IT Stocks may bounce back id dollar appreciates.
Stock of the day: State Bank of India- Merger of 4 wings with SBI.

Warning News:

1. The Directorate general of Hydrocarbons slashed the estimates of gas discoveries by GSPC and ONGC.

Significant news:
1. Government is planning to auction 80 oil blocks for exploration in August.
2. Government is planning to disinvest 10% stake in Oil India along with IPO later this year.
3. Cabinet may give nod to Mittal-HPCL deal.
4. Wadias (Britannia) will end their dispute with DANONE.
5. Tata Motors will launch 1 lakh car in early 2008.

Positive stock news:

1. Melstar will buy 14.4% stake in GE Shipping.
2. PSL bagged Rs 380 crore order.
3. UB Holdings make an open offer to the equity shareholders of Deccan Aviation. Offer price is Rs 155 a share and open between July 25 - August 13, 2007.
4. Ranbaxy got tentative US FDA approval for Amlodipine.
5. BHEL is increasing power equipment manufacturing capacity.
6. Yahoo partnered with Idea cellular in Mobile search.
7. Gillette sold Gurgaon property for Rs 78 crore.
8. BEML may bounce back today.

My stock picks for medium term investors:

1. Hindustan Construction Company.
2. Hitachi Home.
3. Royal Orchid Hotel – Safe bet even for long term.

Stock picks for value investors:

1. FDC Pharma.
2. ITI Ltd.
3. Himachal Futuristic Communications.
4. RSWM.

Safe stocks for Long term investors:

1. Bharti Shipyard.
2. Wire and Wireless – with some risk.
3. Nagarjuna Constructions – Wait for correction.
4. Tata Motors.

Stocks of the Day:

1. State Bank of India.
2. Ranbaxy.
3. Melstar.
4. Tata Power.
5. Tech Mahindra-watch out for rupee.
6. Satyam-watch out for rupee.
7. Deccan Aviation.

Please share your views on my stock picks.

Bulls are dominating Indian Stock Markets

Indian Stock Markets may continue their bull run today. Positive cues from global markets and Reliance results will help in continuing the bull run of the Indian shares.
Advice: Never enter in the first 2 minutes as most of the stocks will start on high note on bull days.

Global Markets: All the global markets are on positive mood and Dow Jones crossed 13,000 yesterday. Asian stocks are continuing their positive momentum. These are good signs for Indian Share markets.

Crude oil prices are reaching new highs. Rupee is attaining new highs.

News of The day: Reliance Industries will announce results today. It will have a major impact on the movement of markets.

Stocks of the Day:

1. Eicher Motors
2. Grasim Industries
3. Reliance Industries
4. Larsen and Toubro
5. Cipla
6. Marico
7. Dr Reddys Labs

Positive Stock news:

1. L&T bags order worth Rs 200 crore from UAE firm.
2. TV 18 to launch 2 new channels.
3. Dr Reddys labs received approval for Zolpidem.
4. Dabur India has highest growth in oral care.
5. Reliance Energy may gain today due to marginal loss yesterday.

Negative Stock news:

1. Nalco announced disappointing results.