Saturday, January 31, 2009

History Of SENSEX

History Of SENSEX

For the premier Stock Exchange that pioneered the stock broking activity in India, 128 years of experience seems to be a proud milestone. A lot has changed since 1875 when 318 persons became members of what today is called 'The Stock Exchange, Mumbai' by paying a princely amount of Re.1/-.

Since then, the country's capital markets have passed through both good and bad periods. The journey in the 20th century has not been an easy one. Till the decade of eighties, there was no scale to measure the ups and downs in the Indian stock market. The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that subsequently became the barometer of the Indian stock market.

SENSEX is not only scientifically designed but also based on globally accepted construction and review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing a sample of large, liquid and representative companies. The base year of SENSEX is 1978-79 and the base value is 100. The index is widely reported in both domestic and international markets through print as well as electronic media.

The Index was initially calculated based on the 'Full Market Capitalization' methodology but was shifted to the free-float methodology with effect from September 1, 2003. The 'Free-float Market Capitalization' methodology of index construction is regarded as an industry best practice globally. All major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-float methodology.

Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to be the pulse of the Indian stock market. As the oldest index in the country, it provides the time series data over a fairly long period of time (From 1979 onwards). Small wonder, the SENSEX has over the years become one of the most prominent brands in the country.

The growth of equity markets in India has been phenomenal in the decade gone by. Right from early nineties the stock market witnessed heightened activity in terms of various bull and bear runs. The SENSEX captured all these events in the most judicial manner. One can identify the booms and busts of the Indian stock market through SENSEX.

Calculation Methodology

SENSEX is calculated using the 'Free-float Market Capitalization' methodology. As per this methodology, the level of index at any point of time reflects the Free-float market value of 30 component stocks relative to a base period. The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company. This market capitalization is further multiplied by the free-float factor to determine the free-float market capitalization.

The base period of SENSEX is 1978-79 and the base value is 100 index points. This is often indicated by the notation 1978-79=100. The calculation of SENSEX involves dividing the Free-float market capitalization of 30 companies in the Index by a number called the Index Divisor. The Divisor is the only link to the original base period value of the SENSEX. It keeps the Index comparable over time and is the adjustment point for all Index adjustments arising out of corporate actions, replacement of scrips etc. During market hours, prices of the index scrips, at which latest trades are executed, are used by the trading system to calculate SENSEX every 15 seconds and disseminated in real time.

Scrip selection criteria

The general guidelines for selection of constituents in SENSEX are as follows:
Listed History:The scrip should have a listing history of at least 3 months at BSE. Exception may be considered if full market capitalisation of a newly listed company ranks among top 10 in the list of BSE universe. In case, a company is listed on account of merger/ demerger/ amalgamation, minimum listing history would not be required.
Trading Frequency:The scrip should have been traded on each and every trading day in the last three months. Exceptions can be made for extreme reasons like scrip suspension etc.
Final Rank:The scrip should figure in the top 100 companies listed by final rank. The final rank is arrived at by assigning 75% weightage to the rank on the basis of three-month average full market capitalisation and 25% weightage to the liquidity rank based on three-month average daily turnover & three-month average impact cost.
Market Capitalization Weightage:The weightage of each scrip in SENSEX based on three-month average free-float market capitalisation should be at least 0.5% of the Index.
Industry Representation:Scrip selection would generally take into account a balanced representation of the listed companies in the universe of BSE.

Track Record:In the opinion of the Committee, the company should have an acceptable track record.

Definition of Free-float

Share holdings held by investors that would not, in the normal course come into the open market for trading are treated as 'Controlling/ Strategic Holdings' and hence not included in free-float. In specific, the following categories of holding are generally excluded from the definition of Free-float:

Ø Holdings by founders/directors/ acquirers which has control element

Ø Holdings by persons/ bodies with 'Controlling Interest'

Ø Government holding as promoter/acquirer

Ø Holdings through the FDI Route

Ø Strategic stakes by private corporate bodies/ individuals

Ø Equity held by associate/group companies (cross-holdings)

Ø Equity held by Employee Welfare Trusts

Ø Locked-in shares and shares which would not be sold in the open market in normal course.

The remaining shareholders would fall under the Free-float category.

Understanding Free-float Methodology
Free-float Methodology refers to an index construction methodology that takes into consideration only the free-float market capitalization of a company for the purpose of index calculation and assigning weight to stocks in Index. Free-float market capitalization is defined as that proportion of total shares issued by the company that are readily available for trading in the market. It generally excludes promoters' holding, government holding, strategic holding and other locked-in shares that will not come to the market for trading in the normal course. In other words, the market capitalization of each company in a Free-float index is reduced to the extent of its readily available shares in the market.

In India, BSE pioneered the concept of Free-float by launching BSE TECk in July 2001 and BANKEX in June 2003. While BSE TECk Index is a TMT benchmark, BANKEX is positioned as a benchmark for the banking sector stocks. SENSEX becomes the third index in India to be based on the globally accepted Free-float Methodology.

Major advantages of Free-float Methodology

1) A Free-float index reflects the market trends more rationally as it takes into consideration only those shares that are available for trading in the market.

2) Free-float Methodology makes the index more broad-based by reducing the concentration of top few companies in Index. For example, the concentration of top five companies in SENSEX has fallen under the free-float scenario thereby making the SENSEX more diversified and broad-based.

3) A Free-float index aids both active and passive investing styles. It aids active managers by enabling them to benchmark their fund returns vis-a-vis an investable index. This enables an apple-to-apple comparison thereby facilitating better evaluation of performance of active managers. Being a perfectly replicable portfolio of stocks, a Free-float adjusted index is best suited for the passive managers as it enables them to track the index with the least tracking error.

4) Free-float Methodology improves index flexibility in terms of including any stock from the universe of listed stocks. This improves market coverage and sector coverage of the index. For example, under a Full-market capitalization methodology, companies with large market capitalization and low free-float cannot generally be included in the Index because they tend to distort the index by having an undue influence on the index movement. However, under the Free-float Methodology, since only the free-float market capitalization of each company is considered for index calculation, it becomes possible to include such closely held companies in the index while at the same time preventing their undue influence on the index movement.

5) Globally, the Free-float Methodology of index construction is considered to be an industry best practice and all major index providers like MSCI, FTSE, S&P and STOXX have adopted the same. MSCI, a leading global index provider, shifted all its indices to the Free-float Methodology in 2002. The MSCI India Standard Index, which is followed by Foreign Institutional Investors (FIIs) to track Indian equities, is also based on the Free-float Methodology. NASDAQ-100, the underlying index to the famous Exchange Traded Fund (ETF) - QQQ is based on the Free-float Methodology.

Edited By Jigar Sheth

Friday, January 30, 2009

As said yesterday GAP DOWN opening

Banking, Realty and metal stocks are likely to lead the losers as investors are likely to book profits in these stocks

Yesterday as said STBT for nifty , Today, Expect a Blood--Bath below 2790 ... Expect a Level of 2755 - 2735

On Positive Territory , Will Show the Power Only Above 2800 Mark, Will Hit 2825 - 2850 Mark.

The stock of Satyam computers might see some volatility on the news that there are 7 companies in the bidding fray for a pie in the company. L&T has already publicly shown interest to take control of the company

Pharma stocks like Aurobindo Pharma, CIPLA, Glenmark and Divis Lab might be in demand on the news that international major Merck is eyeing to acquire a prominent Indian harmaceutical company and established drug brands.

Alok Ind, Adlabs, BEML, Aurobindo Pharma, CEAT Ltd and Deccan Chronicle are the stocks that might see some action as investors will closely look at their Q3 numbers. Short term traders are adviced to stay away from the market, where as long term investors could hold on to quality companies. Over all expect the indices to close in red on the last trading day of the week.

Biocon

We recommend a ‘sell’ in Biocon for a short-term trading perspective. It is visible from the charts of Biocon that after finding support at its 52-week low of Rs 86 in late November 2008, it began to move up. This up move continued till the stock encountered resistance at around Rs 130 in early January. The stock reversed lower resuming its long-term downtrend. During this decline Biocon breached its 21 and 50-day moving averages and started loosing momentum. On January 27, the stock tumbled 7 per cent, reinforcing the bearish trend. A short-term downtrend is in force since early January. Both the daily and weekly relative strength index (RSI) are featuring in the bearish zone. The daily moving average convergence and divergence (MACD) indicator has entered in to the negative territory. Our short-term outlook is bearish for the stock. We expect it to decline further until it hits our price target of Rs 90. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 105.

Thursday, January 29, 2009

Reality and banking sector

Watch out for stocks in the banking sector especially ICICI Bank and Axis Bank as the euphoria in the financial stocks across the globe might rub on to these stocks.

Reliance Power might see some action on the news of bagging 4,000 MW Tilaiya project.

IT major TCS might see its share price rise after inking a $ 100mn deal with a Uk phone company.

Unitech and SAIL were very active both on the F&O and equity side and expect some more action ahead of the F&O expiry.

Real Estate and Shippingt stocks like GE Shipping and Varun Shipping are likely to extend their gains in to Thursday's trade.

Watch out for speculative stocks that have been beaten up, like Adlabs, Deccan Chronicle and Hanung Toys

Nifty (2850) Sup 2805 Res 2915

Buy Tata Motors (147) SL 143
Tgt 154, 156

Buy HDFC Bank (912) SL 900
Tgt 933, 937

Buy Bharti Airtel (654) SL 648
Tgt 666, 670

Buy R Power (103) SL 100
Tgt 109, 110

Great Offshore

We recommend a buy in Great Offshore for a short-term horizon. It is evident from the charts of Great Offshore that after encountering resistance around Rs 550 in late September, it has seen a steep decline.

However, in early October, the stock found support around Rs 250 and began to consolidate sideways. We notice formation of a falling wedge pattern, spanning the period since October. This pattern is a bullish pattern and acts as a reversal pattern in this stock, as the falling wedge slopes down with its prevailing downtrend.

On January 28, the stock broke out of this pattern by gaining 13 per cent, accompanied with good volume. The daily relative strength index (RSI) is rising in the neutral region towards the bullish zone. Moreover, weekly RSI is displaying prolonged positive divergence and is on the brink of entering the neutral region. We are bullish on the counter from a short-term horizon. We anticipate the stock to move up until it hits our price target of Rs 283. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 243.

Wednesday, January 28, 2009

Open gap up then profit booking

Today Expect a Level of 2810 to 2830 where one can sell nifty

Favours, Bears Only, Below 2747 Mark.... If, Break, that Level, Expect a Level of 2727 - 2710 Mark

The key indices could turn choppy after a slightly positive start. Volatility could be higher ahead of F&O expiry

Buy ROLTA at 83.1 stop loss 80.5 target only to client
Short Term - Buy RNRL only above 51.5 stop loss 48.2 target only to client

We like Pharma, Metal and some second rung IT stocks for today's trade. Pharma stocks like Ranbaxy, Cipla and Wockhardt might see some buying interest today after a day in green yesterday.Tata Steel, Sterlite Ind and JSW Steel are our picks in the metals sector.

We recommend a trade in Rolta In (Rs 83) at current levels, as the stock has seen some speculative interest and looks ready for an upmove technically, as its broke some key technical levels on high volumes. Andhra Bank, Ballarpur Ind, Bartronics, BHEL and Cairn India are some of the stocks to keep on radar for the traders, as these companies will be reporting their Q3 numbers this week

Tuesday, January 27, 2009

Higher opening on the cards, Banking and Pharma stocks to lead the gainers

Markets here should get strong fillip at least in early days. Later on of course, the trade will hinge on what the RBI does in its quarterly review

Banking sector is likely to lead the rebound in today's market. Investors could bet on PSU banks like Canara Bank and a short term trade in ICICI Bank could be a profitable bet.Metal stocks like Tata Steel, SAIL and Sterlite Ind might trade in green on opening bell.

The stocks of Satyam Computers might consolidate near the Rs 40 level as things have cooled off a bit.Pharma stocks are likely to remain in the lime light after the blockbuster deal between Wyeth and Pfizer. The stock of Cipla has witnessed huge interest on very high volumes on Friday and is likely to inch higher in the morning trade as the company is touted to be a potential take over candidate.

Akruti City is likely to see huge short covering which gives a strong upward signal to the sotck. Buy at 799 with stop at 780 and book profit at 880 levels. You may carry over long position overnight
Dish TV
We recommend a buy in Dish TV India from a short-term trading perspective. It is evident from the charts of Dish TV that it has been on an intermediate-term up trend from its 52-week low of Rs 11.75, recorded in late October 2008. On December 10, the stock conclusively broke through a key resistance level of Rs 18 by surging 16 per cent. This resistance level is currently acting as a significant support level for the stock.

Taking twin support from a significant support level at Rs 18 and the intermediate-term up trendline, the stock moved up by 3.5 per cent with good volume on January 23. This up move has reinforced the bullish momentum.

The daily relative strength index (RSI) is rising in the neutral region towards the bullish zone. Considering that the intermediate-term up trendline continues to be intact, we are bullish on the stock from a short-term perspective. We anticipate the stock to move up further until it hits our price target of Rs 21 in the upcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 18.

Friday, January 23, 2009

Flat opening in nifty

we expect another choppy day as Reliance Industries’ better-than-expected results will be offset by bleak global cues. RIL has surprised the market by surpassing all optimistic estimates. The index bellwether may see some spark at least in early trades.

Auto and Realty stocks may hog the limelight amid news of fresh relief measures being considered by the Government.

Airlines may also gain on news that a cabinet panel may take up the proposal to allow foreign carriers to pick up stake in Indian airlines.

Overall, the key indices are likely to open flat, may rebound a bit but are unlikely to sustain any bounce

Tata Steel

We recommend a sell in Tata Steel from a short-term trading perspective. It is apparent from the charts of Tata Steel that after bottoming in late November 2008 at Rs 146, it rallied up to Rs 260. The stock price has appreciated almost 78 per cent between late November 2008 and early January 2009. However, presence of significant resistance at around Rs 250 triggered the stock’s reversal. Since January 7, the stock has been on a short-term down trend. While declining, the stock breached its 21-day moving average. On January 22, the stock conclusively penetrated its 50-day moving average by plummeting 5 per cent on above average volume. The daily relative strength index (RSI) has entered into the bearish zone from the neutral region and weekly RSI is also featuring in this zone. The moving average convergence and divergence also has entered in to the negative territory. We are bearish on the stock from a short-term perspective. We expect the stock’s current decline to continue until it hits our price target of Rs 160 in the forthcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 188.

Thursday, January 22, 2009

Banks and Realty stocks to lead the rally

Our nifty and Educomp will rock today

Expect the indices to recover the ground lost yesterday, a gain of 200-300 points or nearly 2 percent is on the cards in morning

SEBI today announced that founders of companies must disclose shares pledged in return for loans, as authorities tighten disclosure rules in the wake of the alleged accounting fraud at Satyam Computer Services Ltd.Banking stocks will be the first ones to bounce in today's trade. Metals and Realty stocks are likely to be among the major gainers.

Some power stocks like Neyveli Lignite and Guj Industrial Power migh put on good show after experiencing double digit losses yesterday. The stock of Satyam computer might have another positive close after news reports that L&T might be very close to take over the company with the support from other stake holders.

Wednesday, January 21, 2009

Nifty target 2720

As adviced yesterday, stay away from the banking stocks for now, ICICI bank might be on tremendous pressure from the bears in today's trade.Banking,Metal and Realty stocks are the sectors that are likely to be pounded by the bears.Investors from a long term perspective might look in to 'Power', 'PSU' and 'Pharma' stocks as safe plays for now

The Civil Aviation Ministry’s proposal for allowing foreign airlines to pick up a stake in domestic airlines might boost the stocks in the aviation sector. We expect the stocks in the sector to end flat given the negative sentiment in the market.Later this week the Committee of Secretaries headed by the Cabinet Secretary is to consider a proposal to allow foreign airlines to hold a 49 per cent stake in scheduled, non-scheduled and charter airline.

Wipro has announced its third quarter numbers, reports CNBC TV18. Its Q3 consolidated net profit went up at Rs 1,003.9 crore as against Rs 969.8 crore, QoQ. Its consolidated net sales were up at Rs 6,634.30 crore versus Rs 6,519.60 crore

Tuesday, January 20, 2009

Prefer selling at high

The global banking crisis has intensified this week as Royal Bank of Scotland Group Plc slumped 67 percent after saying it expects to post a loss of as much as 28 billion pounds ($41 billion) for 2008 and the government got ready to raise its stake in the lender.

Banking is the sector that looks vulnerable in the current scenario as we might see another round of defaults in the international banking sector, which might hurt the banking stocks.ICICI Bank and few oother private banks with international exposures are the ones to avoid for now.

Satyam Computers might see some activity on the upside with the news that Essar group might consider bidding for the company's BPO business.Unitech might see some buying interest after the company renegotiated 75 percent of its debt obligations with the lenders giving the company some breathing room to operate atleast for the next 12 months.

Monday, January 19, 2009

Sega goa, Satyam Buy

The stock of Satyam (Rs 24) might see a positive opening, as investors might bid up the shares of the firm following news reports that Engineering major Larsen & Toubro might be interested in acquiring Satyam Computer Services

There was some buying seen in the midcap space especially in PSU firms like Neyveli Lignite, which has seen some buying interest and a spike in the price on huge volumes. Commodity stocks might gain futher after a decent move on Friday, reflecting the global trend in metal prices. Tata Steel and Sterlite Ind might be the beneficiaries of this trend

We also advice investors to watch out for the so called 'Green' stocks, which might be the beneficiaries of the new Obama policies in the US. Wind energy major Suzlon (Rs 50.55) and Solar wafer manufacturer Moser Baer (Rs 70) are the stocks to watch out.

Friday, January 16, 2009

Nifty , Banknifty BTST will give good profit

Above 2740 No, Problem for Bulls !!!!!

Will, Take Nifty Future to 2770 - 2790 Mark.

Below, 2680 Marks, It'll Be Bear Grip !!!

Then, Will Hit 2667 - 2650 Mark

But, Chances Are Very Remote....

For traders, ICICI Bank could be a good bet intraday as the banking space might rebound after a sell off yesterday. The banking index fell nearly 6 percent yesterday and was among the major losers in the market.Zensar technologies, Jet Airways and Zensar Technologies are the stocks to keep a close eye on, ahead of their Q3 numbers.

We see compelling valuations for the long term players and advice medium term traders against taking new positions. Short term traders might consider trading in metal, IT and Realty stocks.Satyam is one stock that is living dangerously, but we do not see a huge down side from the Rs 20 levels

Sasken Communications is another stocks that is looking vulnerable after one of its biggest customer Nortel filed for bankruptcy and the stock might be hammered yet another time after the Tata's have backed out of the JV with the company

Thursday, January 15, 2009

Sell satyam

Reliance might be under some pressure after a decent gain today. Short sellers might return back to the Realty counters after a bad day yesterday.Avoid Realty, Auto and Metal stocks for now. Dr. Reddy's stock might witness some selling this morning after the news that its consignment worth Rs 24 Crores is seized by the authorities in Netherlands, citing patent infringement.The stock will likely test the Rs 450 level and might even slide further.

The results on TCS are not likely to be anywhere close to Infosys. We advice short term investors to book profits at current levels of Rs 540, and long term investors should continue to hold the scrip

Wednesday, January 14, 2009

Nifty btst will rock today

Market is likely to see some bounce today

Today the markets are likely to open positive. The other major Asian markets have also opened in green and the US markets closed mixed. The markets are likely to bounce back a little today after consecutive negative closing for so many days. In a major bailout the government has announced a package of Rs2,000 crore for Satyam’s revival. This could bring some charm in the market sentiments as well. The over all atmosphere across Asia looks good and therefore in today’s trade we expect the markets to be trading northward with a pinch of volatility

Key Results Today: HDFC Bank, GTL Infra, NIIT Tech and PSI Data Systems

Nifty (2745) Sup 2700 Res 2795

Bharati , tata steel on radar

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Tuesday, January 13, 2009

Sell IT Stocks

WiproWe recommend a sell in Wipro stock from a short-term trading horizon. It is apparent from the charts of Wipro that it has been on a long-term downtrend from its February 2007 peak of Rs 690. Since then the stock has been forming lower peaks and lower troughs. In September, this downtrend accelerated and the stock witnessed a steep decline.

However, the stock found support at Rs 181 in late October and bounced back. We notice the formation of a descending triangle pattern spanning over the past two months, with the lower horizontal line at Rs 220. This pattern is a bearish continuation pattern.

On January 12, the stock plummeted by 9 per cent, accompanied with heavy volume. The stock is currently testing the lower horizontal line. The weekly relative strength index (RSI) features in the bearish zone.

We are bearish on the stock from a short-term perspective. We anticipate the stock to penetrate its lower horizontal line and decline until it hits our price target of Rs 204. Traders with short-term perspective can sell the stock, while maintaining a stop-loss at Rs 238.

Infosys Technologies Q3 consolidated net profit rose 33.3% to Rs 1,641 crore for the quarter ended December 31, 2008 as against Rs 1,231 crore in the corresponding quarter a year ago
No positive surprises were expected from Infosys and it was expected to miss its reported dollar guidance
The outlook on the industry remains weak.

Monday, January 12, 2009

Companies that may cook books!

After the Satyam debacle it would be better idea to stay away from markets for few days.

DLF:
DLFs non-DAL revenues declined 44% QoQ to Rs22.5bn and around 40% of sales have been to DAL, a group entity. 44% of debtors are DAL and of total debtors, the share of DAL has increased during the quarter with DAL receivables increasing by Rs14.5bn QoQ.
During 1QFY09, sales to DAL were Rs15.6bn, which is marginally higher than the increase in receivables from DAL. We would like to add that DLFs high level of transactions with group company DAL and high level of receivables has been a point of debate since it went public.
Dr Reddys Labs:Dr. Reddy's has adjusted mark to market losses on outstanding US$250m of hedges in balance sheet, while P&L reflects forex gains realised. The company also reclassified its contract manufacturing business (CPS) revenues into API and Formulations, which makes it difficult to analyse its segmental performance.

HCL Tech:
HCL Tech has normally had a very large hedge position compared to its revenue base. While the rupee was appreciating, the company reaped benefits of this and reported US$79.2m in Forex gains in FY07. The company has always maintained that it would prefer to lock-in a constant INR/US$ rate through hedging rather than suffer from the currency volatility.
However, the company unwound US$540m of hedges in Jun-08 and booked large Forex losses. We find this change in Forex policy surprising and the company has likely brought forward its potential FY09 FX losses to 4QFY08 through this change in policy.

JP Associates:

Jaiprakash Associates did not provide for FX losses on outstanding FCCBs of US$400m through its P&L and plans to provide for the FX losses/ gains at the end of the year.

Jet Airways:

Jet Airways changed its depreciation policy from WDV to SLM, and thereby wrote back Rs9.2bn into its P&L, which helped the company to report profits during the quarter. It also helped Jet to report higher net worth, which will help in keeping reported gearing low. This is a one-time exercise. Jet also capitalised Forex loss of Rs6.2bn on Forex debt and adjusted it against carrying value of fixed assets.

Prajay Engineers Syndicate:

Hyderabad based developer, reported a loss in its fourth quarter results against expectations of a profit. The company "lost" records for a project worth 40% of its annual revenues at the site office.
The company in its press release said - "After the year end, basic records relating to sale agreements / revenue and construction expenses of one of the Projects of property development were lost at the site office, Vishakhapatnam. The auditors in their report have stated that they were not able to verify the books and records relating to income of Rs1437.71m and relevant construction cost of Rs752.654m. Management is making all efforts to locate/ retrieve the lost records."

Ranbaxy:

Pharma major has mark to market losses of Rs9.09bn on forex derivative contracts, which have not been provided for because the company believes "the gain on fair valuation of underlying transactions against which the derivative transactions were undertaken amount to Rs10.3bn." This argument is against the principles of conservative accounting wherein mark to market losses are being offset against assumed future profit.

Reliance Communications:
Telecom Company has adjusted short term quarterly fluctuations in foreign exchange rates related to liabilities and borrowings to the carrying cost of fixed assets. The company adjusted Rs1.09bn of realized and Rs9.55bn of unrealized Forex losses in the above manner.
In addition, the company has not recognised Rs3.99bn of translation losses on FCCBs, since the FCCBs can potentially get converted, although the FCCBs are out of money. Adjusted for all the above, the company would have virtually no profits in 1QFY09.

Reliance Industries:
In continuance of its policy, adjusted "foreign currency exchange differences on amounts borrowed for acquisition of fixed assets, to the carrying cost of fixed assets…which is at variance to the treatment prescribed in AS11." Had AS11 been followed, profits for 1QFY09 would have been lower by Rs9.4bn (23% of reported net profits).

Sobha Developers:
South Indian developer changed its accounting norms in 1QFY09 for revenue recognition which facilitates revenue being recognized earlier in a project cycle. According to its press release, if the accounting policy had not been changed, the company's 1QFY09 PBT would have been lower by 20%.
Excerpts from the company's press release: "With effect from April 01, 2008 the Company has changed its accounting policy for revenue recognition for sale of undivided share of land (group housing) on the basis of certain minimum level of collection of dues from the customer and / or agreement for sale being executed rather than criteria relating to the project reaching a significant level of completion to align it with revenue recognition policy for sale of villa plots.
This has been resulted in additional revenue recognition and higher profit before taxes of Rs321m and Rs150m respectively during the quarter ended June 30, 2008.

Tata Motors:

Company has transferred 24% stake in Tata Automotive Components (TACO), a company with revenue of US$675 in FY07, to Tata Capital, a group company, and booked profit of Rs1.1bn in 1QFY09. Management has declined to disclose the valuation methodology.
Senior management of Tata Motors, in a conference call with analysts, said, "I would not be able to share with you the specific valuation methodology, except to say that the things are done by an independent reputed firm and based on the company's track record and the future business opportunity."
Tata Motors has also changed its methodology for calculating provisions for doubtful receivables, which resulted in higher reported EBITDA to the extent of Rs507m (10% of EBITDA).

TCS:

The software major increased its depreciation policy on computers from 2 years to 4 years. As a result, 1QFY09 PBT was higher by an estimated Rs500m (c.4% of net profit in 1QFY09). TCS follows cash-flow hedge accounting and till FY08, it used to recognise hedging gains on effective hedges in its revenue line, thus boosting the reported revenue growth and EBIT margin.
In FY08, TCS had Rs4.21bn from hedging gains, of which, Rs1.37bn was included in the revenue line. However, from 1QFY09, TCS will report all Forex losses/gains below the EBIT line in other income. Thus the losses it had on its hedge position will no longer be booked in the operating line.

Zee Entertainment:

Media company withdrew its buyback offer "for the time being" without assigning any other reason. This happened after SEBI made it mandatory that companies will have to complete the entire buy back within the stipulated time, if the stock is trading below the maximum buy back price at the end of the buyback period and the buyback amount has not been completed.



DP DISCLAIMER: This is a individual opinion - please do your own research. This was a forwarded message with a intention to spread panic :-)

IIP no Today slight better than October

On, Friday's It Was Clearly Written, that REALTY CO. May Face Severe Cash Crunch, Just See, All REALTY STOCKS, Melt Down Heavily , 101% Looking Weak, But some of them, Can Caught the fire in Today's Trade

Sms, Was Sent to Satyam Computer @ 19 , Yes, Our Target Was 25 , It's Hit 25 Level, and Still Holding in Today's Trade


In an interesting development ADAG is considering selling stake in its UK unit, igniting some rumors that Anil might be in trouble. Stay away ADAG stocks like Reliance Capital, Reliance Power and Reliance Communications. Also stay away from realty stocks for the time being

Tata Motors might get a bail out of nearly 500 million pounds from the Uk government in the next 2 weeks. Investors are advised to pare their holdings and observe a 'wait and watch' approach for now, as things need to settle down a bit before 'taking stock'

Buying is advised in Unitech at Rs.36 with stoploss at Rs.34. Book profit at Rs.39

Friday, January 9, 2009

Subscribe , CAlls for Clients only

One stock that looks great even in this pessimistic environment is BEL. We recommend a 'Buy' on Bharat Electronics Ltd at Rs 770 might offer a health 10 to 15 percent return in the next few months. We believe that this stocks is a great defensive play in the volatile markets and there might be a run ahaead of the budget due next month.

We might see some selling from the foreign funds as they might decide against having huge positions in Indian equities. In short, we advice short and mediium term investors to liquidate their holdings, atleast in the ones they have some profits.

Wednesday, January 7, 2009

Renuka buy

Now, If Closed Above 3150 Mark, Will Hit 3190 - 3220 Mark, in Next Week Trading Session.

Today, Below 3070 , Bears Will Have Upper-Hand

Support 3070 - 3020

Resistance 3160 - 3200

Today, we expect the market to open firm in line with the global trend. Thereafter, the key indices’ move will hinge on how the institutions behave. Indian markets will be shut on Thursday for Moharam. So, we do not rule out some softening later in the day

Realty stocks might see a good bounce after a 4 percent decline in the sectoral index yesterday

Midcap IT is one space that looks interesting and Rolta, Mind Tree and Vakrangee could give handsome returns from these levels. Bartronics and MIC electronics have shown a break out yesterday and we might see further upside in these stocks today.

BGR Energy Systems

We recommend a buy in BGR Energy Systems from a short-term trading perspective.

It is clearly visible from the charts of the stock that after recording an all-time low of Rs 115 on December 2, it began to trend upward. This trend reversal was triggered by the stock’s prolonged positive divergence displayed in the weekly relative strength index (RSI). Since then, the stock has been on a medium-term uptrend. While trending up, it breached its 21- and 50-day moving averages recently.

Furthermore, the stock is trading well above these averages. Reinforcing the bullish momentum, the stock jumped by 10 per cent on January 6. We notice that there is an increase in volume over the past three trading sessions. The daily RSI has entered the bullish zone and the weekly RSI is on the verge of entering the neutral region from the bearish zone. Our short-term forecast for the stock is positive. We expect the stock’s uptrend to prolong until it hits our price target of Rs 202 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 172.

Tuesday, January 6, 2009

Ranbaxy weak

Today, we see the market opening flat to slightly positive. There may be some cooling at higher levels. On the whole, we expect some choppiness after the recent spurt

Rolta and Suzlon are two stocks that are worth taking a look at these valuations. Radico Khaitan might be a stock worth watching and keeping on the radar for the day traders as a positive announcement on the FCCB buy back front might attract some buying.

Investors might look to book some profits in metals and banking space after a bull run yesterday. The commodity story might be intact atleast for the next few weeks and there is no need to panic.

We have advised investors to book profits in Satyam around Rs 185 levels and the stock looks ripe to accumulate around Rs 135 - Rs 145 levels,if available. Hindalco is one stock that is looking to break out, and a 10 to 15 percent move from here is not ruled out.

ICSA India

We recommend a buy in ICSA India from a short-term trading perspective. It is evident from the chats of ICSA India that it was on an intermediate-term downtrend from August peak to late December 2008 low (from Rs 400 to Rs 127). However, the stock found support at this December low and reversed direction. This trend reversal has been backed by positive divergence displaying in the weekly relative strength index (RSI). A positive divergence is also noticed in daily moving average and convergence and divergence. On January 2, the stock penetrated its intermediate-term down trendline by jumping 6 per cent, accompanied with good volume. Subsequently, it breached 21-day moving average, reinforcing the bullishness. The daily RSI is rising in the neutral region towards the bullish zone and weekly RSI is on the brink of entering the neutral region from the bearish zone. We are bullish on the stock from a short-term perspective. We expect it to move up until it hits our price target of Rs 166. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 142.

Monday, January 5, 2009

Buy IDFC

The Nifty on the downside may dip to 3000 while on the upside it may test 3100. The Sensex has a likely support at 9800 and may face resistance at 10100.

Airline stocks look interesting this morning, especially Spice Jet and Kingfisher Air as there are rumors floating around in the market about a relaxation in FDI norms in the Aviation sector. The other piece of news on the sidelines is the possibility of British Airways picking up a 25 percent stake in GoAir.

After the hype that PE firms and MNC's like IBM and HP picking up stake in Satyam, the latest speculation on the street is the 'possibility of a merger with HCL, which we think is a distant possibility and is likely to be a dampner on the stock temporarily

We recommend a buy in SREI Infrastructure Finance stock from a short-term trading perspective. It is evident from the charts of this stock that it was on an intermediate-term downtrend from August 2008 high to early December 2008 low (from Rs 130 to Rs 35). This December low is also its 52-week low and a significant long-term support level for the stock. It recently bounced up, forming a double bottom around the previous trough at Rs 35. On January 2, the stock conclusively penetrated its intermediate-term down trendline as well as 21-day moving average by jumping 11 per cent. The volume was heavy during this jump. The daily relative strength index (RSI) is rising in the neutral region towards the bullish zone and weekly RSI is recovering from the oversold territory. Considering the penetration of the stock’s intermediate-term down trendline and the presence of significant support band at Rs 35 to Rs 40, we are bullish on it from a short-term perspective. We expect the stock to move up until it hits our price target of Rs 52 in the approaching trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 43.