Starting from 11-Jan-2010
We are starting a new series – Indian Stock Observatory – from 11-Jan-2010. This will be meant for short term traders and also for long term traders who may wish to cash their gains or losses due to subsequent events. We would try to pick up stocks based on last 7 days movements, news or other policy related developments.
We would not write more than 4 lines, similar to Kabir’s Chopai. This is why we have sub titled it “Kalidas Chopai”. We will make a standard format with first line being a header that contains Stock name (in brief), date, time and headline. Last item will be on top.
The headlines will be time based – no sorting. At month end, they will be consolidated and kept in html (searchable) or PDF format. We will also database it in FileMaker program. We will figure out ways to publish this database on web so that it becomes searchable criteria on line. If it is achieved, other html/PDF format will be discontinued.
The comment box is open but we will NOT reply. It will be only one way street. The reason being that day to day movement depends on hosts of factors, previous day’s Dow, current day’s Asian performance ahead of India, currency market movements etc. In short, use our comments on “AS IS WHERE IS” basis. It will be updated twice a day.
There are no guarantees either. Consult your professional adviser, broker or banks before acting on our Chopai. Do it at your own risk. We are sure that this will prove to be as popular with the readers as Confused Mind Clear Answers series. Good luck. –
Kalidas (Anil Selarka)
Ref: 23 Friday, February 19, 2010
FED raised discount rate by 0.25% after the close of the market. Only United States has two rates – Federal Funds Rate and Federal Discount Rates. The important rate is Federal Funds Rate which acts as benchmark for the market and LIBOR. Fed Funds rate is the window for the banks to borrow the money from Fed directly. It is similar to Bank Rate in other countries.
The Discount rate is the rate at which the banks lend their balances lying at the Federal Reserve to other banks. Almost all banks are required to keep certain portion of their deposit liability with the Central Bank. In Hong Kong, it is known as Statutory Liquidity Reserve or SLR. These funds lie with the Hong Kong Monetary Authority. In India, such requirements are in the form of CRR or Cash Reserve Ratio. The balances lying with RBI are not lendable by the concerned bank. It is absolute reserve that can not be utilized by concerned bank.
In USA, it appears that they are allowing concerned banks to lend to other banks where the discount rate will be applied. So, if JPMC lends to Citibank, JPMC will earn extra 0.25% from last quarter. So, the profit of JPMC will be higher. Now, Citi will lend to BOA and BOFA will lend to Goldman Sachs and GS will lend it back to JPMC. These entries are mostly in book entry form, and act like “flying saucer”. No one sees them and yet they exist on paper.
As disclosed in previous Ref: 22, the banks like JPMC, BOFA and Citi are said to be holding $ 1.8 trillions in cash. Wow! If they have so much of cash, and not lending to outside world, why should there be rise in interest rate? It means that those reported “cash balances” are just book entries, having been created by Federal Reserve who credited their accounts under TARP funds. There is no real movement of funds – just book entries. If they lend to outside world, these banks will have move the funds out which they do not have.
In its statement that was made public 30 minutes after the markets closed, the Fed reiterated its view that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” Why do you play with discount rate then, Fed?
It is Just to lend confirmation to the market that the economy is on recovery track. By saying that the interest rates are on rise, and at the same time qualifying that the interest rate (Funds rate) will not be rise, The Fed wants to achieve triple purpose
1. Addressed to markets – that the recovery is on track (even if all numbers suggest otherwise. They want to create “feel good” impressions about the economy.
2. Feelers are sent to world central banks that they should continue buying T-Bills because the yield may rise in future.
3. Feelers are also sent to the Housing markets and financial markets that the interest rates will remain low for long time, even if the discount rates rise.
In other words, the present act ion is “an exercise in market and exchange rate manipulation”.
Neutral, except psychological impact lasting for a few days. If the markets are down a lot, better buy some desired stocks for about 2 to 3 days horizon. Stay with strong Index stocks or high quality mid caps.
Dow rose 84 points to close at 10,393. The discount rate rise was announced AFTER the close of the market. Obviously, the Fed wanted to judge the reaction from overseas market first which would be negative of course. If the Asian markets fall, and Dow closes on plus side on Friday close with weekly gain, all Asians and Europeans would feel stupid. US markets are better – they rise, we fall – will be the feeling of the Asian-European investors.
NIKKEI fell to 10,124 (-212 or -2.05%) and Hang Seng fell to 19,894 (-528 Pts or -2.59%) . These are micky mouse markets
Indian monkey – BSE and NSE also fell albeit less severely to 16,196 (-131 pts – <1%). US market will rise after initial fall to close the day and week on plus side. All world markets will recover on Monday to wipe out today’s losses.
Buy some Oil Refiners, Infra Structure, High Tech and Pharmaceutical shares. Avoid banks or financial stocks. Buy LICHF at about 743 now. This is a trading market, so what you invest, may be cashed again on Monday or Tuesday latest.
None today from my side
Update Ref No: 022 Wednesday, February 17, 2010 (PM)
1. None accept some abrupt rally in Gold. We only know that there is strong physical buying than paper trading in which 3 largest banks in US, one from Hong Kong and one from Germany are taking aggressive short position in derivatives. They are bankrupt and using taxpayers’ funds to gamble. Losing gambler gambles more. Do whatever it takes, is the message from US administration to its bankrupt banks.
2. They say the three largest banks – CITI, JPMC and BOFA are flush with cash, having accumulated over $ 1.8 trillions – Wow! They have no money to lend and they have $ 1.8 trillions when only other day they needed over $ 500 billions bail out? From where did they get the money? What is the source for such large funds?
- If the money rotates every 2 months, the cash of $ 1.8 trillions could support the US economy for one year, and that too, with these three banks. What about almost 1500 other smaller regional banks who have no money to lend? They contribute nothing to US economy?
- It is said that these banks have cash and deposit with other banks. In this banking collapse environment, who will keep the money in billions with other banks?
- It is likely that the banks are not crediting to debts when they receive the funds. They inflate the balance sheet by crediting to some other accounts on liability side, so that fresh credit and debit balance them out.
- Such huge cash balances, if they are really real, are like water in ocean. You can see it, feel it but can not take out even a few drops for drinking purpose, because it is too salty – not usable. It applies to these 3 banks too. These are bogus numbers just to show the world that they are healthy banks.
OVERNIGHT: Dow rose over 1.68% for no reasons. Same old theory – better than expected result when everything is going down. The market was propped up to pass the S&P beyond 1083. No fundamentals, just technical which are manipulated increasingly.
TODAY ASIA: All up may go down to end slightly up or turn mildly negative.
TODAY INDIA: Moved up as we expected. See our Monday edition. The market is due for strong correction in profit taking. RUCHI INFRA is in strong demand with over 600,000 on buy side. The market may correct after 3:00 PM
ACTIONS: Gold/Silver are still out choice to own. Use any correction to pick them up, with silver first followed by gold.
Ruchi Infrastructure is the only one that we would prefer.
Chopai or Four liner
None at the moment
Be a seller now until 3:00 PM IST
Ref No: 20- 021 Monday, February 15, 2010 (AM)
1. Due to severe winter snow that led to road closure and many places, the activity in the market place is thin. Any movement is not broad indicator of events
2. We mentioned almost a month ago in this blog that Goldman Sachs may surrender banking license. A news appeared today in Financial Times that reads few lines as under. Click the above link for more.
“Goldman Sachs and other banks should give up their bank status if they want to avoid the ban on proprietary trading proposed by the White House, Paul Volcker, head of President Barack Obama’s Economic Recovery Advisory Board, said.”
· Bharati Airtel succeeds in take over of ZAIN’s African business having 40 millions subscribers. Deal US$ 10.7 billions = 50,000 crores that cost Rs 12,500 per subscriber or about 3 to 4 of Annual revenue.
· Relatively cheaper compared to worldwide deals. However, Bharati achieved it at wrong time. Stocks and bond markets are slippery. It could have saved at least 20% by waiting for 2 more months.
· It is to be seen how is it going to fund the expansion when the rates overseas are about to rise. The prospects of rising rupee may also hurt its earnings or make them volatile.
3. Gold rose sharply mainly due to strong demand. Still it is found to be range bound with weaker bias. Silver is weaker than gold but more valuable. We still suggest buying gold and silver at current prices or in correction in small lots.
4. OVERNIGHT: Dow rose 105 pts after initial fall. S&P still below critical level. We find that the market is pushed up near the close in increasingly thin turnover.
5. TODAY ASIA: Hong Kong and China will be closed for two days – Monday and Tuesday and as such it may not be able to offer any cue. Dow Jone too will be closed on Monday, so Indian stocks may not have much risk in closing higher until Tuesday. NIKKEI is open, but it does not cast leading influence on Indian stocks. Nikkei, Australia and New Zealand opened lower with 0.3% loss restricting trading on Greece bonds.
6. TODAY INDIA: Indian stocks will open today after 3 days holidays. They are stronger due to pre-budget expectations and relatively higher strength compared to Asian counterparts. Expect mildly opening lower and then firming up throughout the day. Europe and London may cast some influence after 12:30 PM India time. However, the trouble spot Greece is on holiday today. Do not be surprised if the market puts up another 200 points before correcting on Tuesday afternoon session.
7. ACTIONS: Gold/Silver are still our choice to own. Use any correction to pick them up, with silver first followed by gold.
1. News that UCO Bank may raise up to Rs 500 crores in FPO issuing new shares and possibly divestment by Government by equal amount. Looks like the FPO prices will be Rs 60 to Rs 80. Until the FPO is out of the way, there may not be much upward movement in prices.
Chopai or Four liner
Not at the moment. May be this afternoon.
1. Good for traders until Wednesday. If you want to sell, wait; If you want to buy any stock, buy in the morning session when it is down
Thursday, February 11, 2010 (AM)
Will be posted tomorrow, or this afternoon, as I have routine medical appointment today. It will be revised here. Revisit at 2:PM IST
None today, may be in afternoon. It will be revised here.
Stay on course. Do not hesitate to take profits even for some long term holding counters. Indian stocks are weaker than global stocks. It is time to readjust portfolio before and after budget.
Real gains will begin to emerge after 1st April. Until such time, readjust, do not increase exposure.
Tuesday, February 09, 2010 (PM)
1. Buy Shree Ashtha Vinayak (21.90) from today in 2 lots on different date
2. Buy Some Ruchi Infrastructure (Rs. 49.70)
3. Our other stocks remain on buy list – no change in target.
4. Avoid metal and mining stocks. Metal & ore prices are on decline.
Use strength in the market to lighten up. The stocks may fall even if $ rises. Currency volatility is biggest enemy of the markets. Still, devote 15% of money to equity now.
Pure Gold in murky Politics….
Monday, February 08, 2010
Why PIGGS are attacked?
Of late, there are attempts to denigrate 5 European nations for their so called “Budge Deficit” and high debt level relative to GDP.
PIIGS = Portugal, Ireland, Italy, Greece and Spain. They (US and UK Media) use this slur, similar to “pig” or Suvvar in Hindi. Why so much of hatred for these nations.
GOLD my friend GOLD. Look at the following chart that represent the extent of gold held relative to total Forex reserve by these very nations:
Look at them. It will also give you idea which nation will be the next on downgrade or slur.
- Portugal holds – over 80% of Forex reserve in Gold
- Italy holds – 65$ of its reserve in Gold
- Greece holds – nearly 70% of its Forex reserve in Gold
- Spain holds – 38% of its reserve in Gold
- Ireland – Number not available
It is clear from my book (Chapter 14 on Gold – Where is McKenna’s Gold?) which proves beyond doubt that US has lost over 80% of its gold in shorting or hedging operations which will never come back. So ignore their holding.
Now, the question arises why US and its affiliate player like US Banks, Rating agencies are after the above countries, projecting them as very near to debt default level? Why? What is the purpose?
The reason is US appear to want to buy back the Gold as soon as possible before it is too late. By squeezing the nose of these countries, US appear to make them sell gold (so that its affiliates could buy back or cover the short position) and buy the worthless dollar printed in trillions by the gang of Bernanke/Paulson/Geithner with the seal of approval from President Bush and President Barack Obama.
What a politic? Will these countries sell gold to oblige USA – I do not know. They do not know the ulterior motive of the Uncle Sam. And what the organizations like World Gold Council is doing?
The big cat – United States – walks stealthily without any one taking notice (except this Kalidas). They want to get hold of shorted gold and in return of billions of dollars floating around, having been printed by FED and Treasury.
The European Union and its central banks “European Central Bank” are just naïve or almost stupid. They are still sleeping like “Kumbhakarna”. They need visual and hearing aid. They do not know how to protect their own house and family members. One fine day they will see that their European Union has crumbled, and Euro will be sold like a cigarette carton box.
Intelligent Idiots they are.
Hong Kong February 8, 2010
Updates: Thursday, February 04, 2010 PM (Added Satyam, MTNL & Tata Motors – all ADR)
Focus on Indian ADR for multiplier return
Better opportunities exist on ADR front. They can be bought by NRI Investors in USA, UK and other financial centers such as Hong Kong, Singapore, Japan and Australia. If India permits the buying of securities (Under RBI’s remittance facilities), then Indian investors will be benefitted on several counts as under:
- Some ADRs are available at discount to Indian bourse prices (check with Equitymaster.com and make as regular visit on daily basis)
- ADRs may subject to premium or discount. When the scrip is in demand, the ADR can develop premium on upside. For instance, WIPRO is traded at 45% premium. Thus, if stock like TATA MOTORS is trading at marginal discount, and its low end nano car become popular in USA, its ADR will develop premium from 10% to 30%, giving above average gain than Indian investors.
- ADRs have conversion ratio from 1:1 to 1: 4 or more. E.g. MTNL has ratio of 1:3. This company, with ZERO debt and large cash holding, has vowed to expand in Saudi Arabia and Africa. With interest cost nil and potential income on upside in 2 or 3 years, this stock could propel very high on 2 to 3 years basis. In that case, the ADR, not trading at 3% discount could develop premium up to 15% to 25%. The present price of MTNL is attractive.
- ADR also enable one to sell the stock forward in hedging operation. One can sell only one contract (= 100 shares) whereas in India, one has to sell over 3000 to 5000 shares under one stock option contract. The cost is also very cheap abroad – just $ 2.50 per contract or about.
- If Rupee rises, the value in terms of $ will also rise. Therefore, if the stock rises by 50%, Rupee rises by 10% and premium develops by 15% (against 3% discount for MTNL), the gain in ADR could be 75%
- It can work in reverse gear also.
- One can short ADR and keep short position open for 12 months continuously. Supposing you go long (BUY) cheap stocks like MTNL, Satyam and Tata Motors, and short Wipro ADR, trading at 40% premium, and if the market crashes, the stocks like Wipro trading at premium will lose the premium fast. If rupee rises, it can also affect Wipro. In short one can go long, buy/sell calls/puts, even for small sizes, and hedge his position.RESOURCES: A single point of reference for ADR/GDR, ADR to Underlying (Local) shares ratio etc is available from Bank of New York DR Section. Go to its directory, select India for all industries, prefer listing on single page, You get whole list. There is option to download in Excel format too.
Stock: MTNL Symbol: MTE CMP:$3.10 Ref: 10-ISO-025 Thursday, February 04, 2010
Kalidas observes: MTNL best Telco stock with Zero debt at bargain with huge gain potential
Many ignore MTNL, but it is world’s best stock to own. Stock at Rs 72; Zero debt; Book Value Rs 192; and free cash of Rs 104 (50% more than stock itself – Total debt free capital of $ 2.6 billions. ADR = 2 local shares; Seeking huge expansion in S Arabia and Africa, the underfed telecom market. Quadruple engine for growth. only 63 cr shares o/s. Med/Long term Lo/Hi 6/8<9M; $15/18 >3 years (M=Months)
Stock: TataMotors- ADR Symbol: TTM CMP: $15.76 Ref: 10-ISO-024 Thursday, Feb 04, 2010 PM
Kalidas observes: Indian ADR better than local. Buy TATA MOTORS ADR for better gains..
Tata Motors is third choice as ADR trading at 5% premium. With its plan to market nano and now Jaguar in US, brand name visibility may increase, resulting in more demand for ADR. Premium may develop to 30%. Indian business solid CV, HV trucks and car solid performer. Wide roads, ports set the stage for expansion for 3 years. Lo/Hi $18/20 <4M; $23/26 <16M and $36/42>24M. Gain huge if bought in deep correction (M=Months).
Stock: Satyam – ADR Symbol: SAY CMP: $5.10 Ref: 10-ISO-023 Thursday, Feb 04, 2010 PM
Kalidas observes: Satyam – more attractive as ADR than local share in India…
We are bullish on Satyam. However, we found it’s ADR more attractive for 3 reasons – Price, Premium and Rupee. ADR Ratio 1:2; Prem +16%. Our Target in 6MO 180 ~240 or $10~13.3 in ADR terms expecting Prem 25% and Rupee rate 45. Medium Term $10.50 8MO and $36 in 3 years PROVIDED there is no merger between Tech Mahindra and the company. Follow ST because merger decision by Aug10. The stock may move sideways in July end due to account finalization
Updates: Wednesday, February 03, 2010
US CHINA CONUNDRUM
- US Does not like China’s attitude in not buying $ T Bills and its action of selling instead.
- Visit of President Obama and Tim Geithner to China has now failed officially.
- US is preparing ground/excuse for military confrontation with China due to dollar debacle. It is trying to find what China dislikes. US does exactly same to instigate China into military actions of some sort.
- US First salvo at China – Arm sales to Taiwan. Expectation – China will react. Result – China did.
- Second Salvo: Spread rumor China bubble to explode. Properties, banks, inflation etcetera
- Third Act: Meet Dalai Lama in White House. What is the motive? Save Dollar.
- If China takes military action of even smallest dimension, US will impose economic sanction. China’s strong response will pave the way for US to “freeze $ 800 billions in treasury” in the name of economic sanction. When China does not have dollar to sell, the selling pressure could disappear overnight for several months. Dollar ($) could stabilize or even move higher.
- Properties in China, Hong Kong, Macau and Taiwan could collapse in such scenario and US analysts will say – we told you so.
- However, Chinese are different breed of animals. They have learnt a lot from Chairman Mao, Ziang Jamin, Li Pang and other wily presidents. Under such circumstances, and if China is really smart, it will start selling dollar before taking military actions against Taiwan. In fact, it may not take action at all but resume verbal rhetoric.
- It has happened before. When Saddam Hussein of Iraq, furious at US freezing his $ 1.8 billions in the name of economic sanctions, started quoting Oil prices in Euro. US was shocked and attacked Iraq in the name of Weapons of Mass Destruction (WMD) that were never found.
- US is also trying to use GREECE to attack Euro so that dollar remain strong. In Asian Crisis, it used Thailand to attack first to prevent Asian funds from being diverted to Euro at the time of its birth in 1999.
- US like corrupt nations, because it can have its own way. Instead of telling others to buy dollar, it is telling them “Don’t Buy Euro – they have problems in Greece” so as to cause people buy dollar as alternative choice.
- Europeans are stupid not to anticipate US moves. If Greece decides to leave EU, more nations could follow. This is why we never liked EURO. We have always said that without Political union, there can never be Monetary union.
- With commodities falling (hurting Can$ and Au$), Euro teetering on edge due to GREECE and prospect of Chinese Yuan hurting, GBP (British Pound), despite all problems surrounding the nation, will have cause and only alternative choice to rise. We have always said that only the currency of English speaking country could replace dollar.
- Did anyone hear about GREECE except in the pre-historic days of Alexander and Cleopetra? Similarly no one heard of Afghanistan until President Bush decided on search and destroy mission to find Osama. Instead, he succeeded in finding Obama as his replacement in White House.
- And lo, if China and Europe fall, India could prosper in world wide trade. When the skirts and bikinis disappear, the Sarees are best choice to clothe the naked on water front and beaches around the world.
- Serious currency wars are going to be major feature in second quarter of 2010. BEWARE
for NRI/Overseas Investors
- With rupee rising, ADRs more profitable for NRI and Overseas funds.
- MTNL (ADR- MTE) $3.10 Premium 3% more profitable – Accumulate
- Satyam (ADR – SAY) $5.10 Premium 15% better than local. In rising market, the premium develops fast and strong rupee adds its value.
- Tata Motors (ADR – TTM) $ 15.6 Discount 0.5%. Attractive as ADR than local
- SELL/SHORT WIPRO (ADR – WIT) $ 20.7 (Premium 45%) and Swap to Satyam (SAY) $5.10
For Domestic investors
- Hindustan Lever at Rs 239 coming within our buy range. Ideal entry 210 Moderate 230
- Continue selling Metal and mining stocks – with demand falling, rising rupee, they lose more
- SOE refiners still better value. All retirees should start buying them IOC, MRPL, BPCL. HPCL in that order. Buy private refiners as second choice
- Mid Cap such as Spicejet, UCO, DishTV, IFCI to rise more from tomorrow for 2 or 3 days.
- US China tension may escalate. Read US-China conundrum in the box
WITHDRAWN– Shree Ashta Vinayak write up is withdrawn due to material discrepency with regard to shareholding pattern noticed. Kindly do not act on it. It is withdrawn until clear picture is known
Updates….. Tuesday, February 02, 2010 AM
Stock: M Satyam Symbol: Satyamcomp.ns CMP: 101.90 Ref: 10-ISO-022 Tuesday, Feb 02, 2010
Kalidas observes: Satyam is up and running again, poised for great height medium term
Satyam executive mentioned revenue Rs 4500 to 7000 crores, recalled 2000 old staff, in addition to 500 employed recently. Business must be good. Old head count reduced from 53K to 30K, Consider 25% profit margin, lower employee cost & 67 crores shares, EPS could be Rs 30. PE 3.3. Account to finalize in June, merger ruled out till Aug, Accumulate. Lo/Hi 121/180 <6Months. Not for short term. Desirable stock. Swap some from established high tech stocks to this counter
Updates: Monday, February 01, 2010 AM
- The market may open lower, but gain after 2 hours to close on plus side
- It is time to shop good scrips: UCO Bank, IFCI, Spicejet, Satyam, some hotel stocks
- Airlines/Hotels are brother sisters. Since Airlines fare better, focus on key hotel stocks
- Auto sector is another focus – keep it under watch. Also, auto financing companies
- Again, oil producers, metals, mining will be on medium term decline. Avoid or cash them
- SOE refiners are still better; Refining margin up. IOC, MRPL within Buy range
- Umpteen cooking gas supply to reduce use of Kerosene, helps Refiners avoid under recovered subsidy.
Stock: UCOBANK Symbol: UCOBANK.ns CMP: 60.10 Ref: 10-ISO-021 Monday, Feb 01, 2010 AM
Kalidas observes: Gem in PSU Bank stock …UCO is just a buy short/medium/long term
We issued buy at Rs 41, now reiterate again at 60.10. Its earning solid, deposit, loan growth high double digits, NPA on decline and the management simply too good. Best in banking stock. EPS may grow to Rs 17 by YE31.03.2010 and may grow to over Rs 30 < 2 years. Stock rose on huge volume on Friday closing at day high. Strong Buy regardless of market. lo/hi 73/83<1M; 92/108<3M; 250<18M. Have no fear for banks mergers. Good for even retirees and pensioners
One Liner.. update Friday, January 29, 2010 at 10:22AM IST
- The market may see the low of 16,160 , rebound and may close >16,270
- FII and Funds appear to be liquidating LICHF, so buy small now and more <685.
- Buy Spicejet upto 56, Petronet <71, Dish TV upto 41.85 today in that order
- Collect some Exide Industries. Enter buy limit 92.35 today until 3 days. Do not pay more.
- Reduce UCO Bank now by 30% and swap to IFCI (start collecting <43.50, 41.10 and 38.35 in 3 stages)
- Enter RNRL to buy <60, preferably enter order limit 57.85 and 53.85 in two lots.
- Use ITC and Hindustan Lever both <230 as parking lot to continue in the market.
- Again, avoid metals, mining, fertilisers and oil producers. They are in decline for 1 to 2 months.
- Focus on SOE refineries (not private refiners) and gas based stocks
- Among Infrastructures, select Ruchi Infrastructures <40 (not now)
- Watch out for Ruchi Soya < 78 to 81 max. to accmulate
- Enter EVINIX to buy at 3.65 or below.
- Ispat Industries is entering our buy range. <17.85 to collect some now.
Update Thursday, January 28, 2010, 10:10 AM IST
1. The market may have some rebound after 10:30 AM, sustain mild rally till close.
2. Margin call related selling may start from today, Allow 3 days to digest the selling.
3. M&M Finance (M&MFIN.ns) @Rs 337 is at buy level. Prefer <340 and accumulate
4. Buy LICHF small lot, and add with every Rs 50 fall
5. Accumulate Spicejet <56 and buy on alternate days.
6. Buy Dish TV between 38/41 levels. Add more with every 10% fall. Buy 2 times only.
7. Avoid Oil and Metal producers. Also avoid Mining shares.
8. Do not chase. Place only limit orders at desired prices.
9. Go for liquid stocks. Prefer large or mid cap, not small caps
10. Reappointing Bernanke will not improve economy. Use Bernanke rally to lighten up.
11. Continue selling into strength. Buy suggested stocks in small lots.
12. The situation in US is pretty grim. Next 15 days (until 9th February) are very heavy.
Update: Wednesday, 27 Jan, 2010
Downgrading Japan from AA with negative outlook by S&P
There you are. Why? They have too much of Domestic debt. So what? Japan also has $1 trillion lying in FOREX reserve? Why so much fuss now? Reason is, Japan is no longer buying US T Bills. If Japan has lot of debt, a liability, they also have Assets – Dollar T-Bills 800 billions. Japan was printing Yen through deficit financing to buy dollar. They will reverse this practice selling dollar buying yen and repay domestic debt. No big deal!
Compare United States. They have $14 trillions of debt having no back up assets. US may have shares and Promissory notes from Citigroup, AIG and similar ghosts having ZERO value. And still, US, the greatest debtor, is rated AAA by same agency and Japan, the largest creditor after China, is rated AA with negative outlook. Great job, S&P. Why don’t you rename yourself from Standard & Poor to Poor Standard? You deserve it. Now, don’t tell me that you have China in your next list.
Read my recent article again – Rating & Mating Game. It is timely. By KALIDAS 2010-01-27
Updates (25-Jan-2010) PM
Stock: DishTV Symbol: DISHTV.BO CMP: Ref: 10-ISO-020 Monday, January 25, 2010
Kalidas observes: DishTV on right Track to profitability by 4Q2010 solid performance
Many sent me news release that Dish lost money. It was expected. Read our report on 11Jan, Reef: 002 (scroll down). The absolute loss is due to higher than normal depreciation. Strong sales; operating profit. May be profitable by 4Q09-10 instead of 1Q2010-11. See our comments Confused Mind Clear Answers Jan 2010 for more. Target 80/92, 4 months
Updates: (25-Jan-2010) PM
Stock: Spicejet Symbol: Spicejet.bo CMP: 58.25 Ref: 10-ISO-019 Monday, Jan 25, 2010
Kalidas observes: Spicejet reports first profitable quarter convincingly; Future Star
Spicejet reported stunning Rs. 108 cr profit on 24 Crores shares o/s, QEPS at Rs 4.5, Revenue rose 43%. Expected profits for FYE 2011- about Rs 20/shr. The company is up on all cylinders. Regardless of bad market, the stock target is LoHi 80/92 (<3 months) and Rs 220~260 <15 mos. Swap from other JetAir/KFA and any slow performer between Rs 40/ 120. Best Buy
Short Message 25-Jan-2010 PM
- Continue selling in rally
- Buy some Spicejet and add more on weakness
- Dish TV weaker. Accumulate strongly in meltdown. This could be a big winner
- Moody positive about Indian Rupee. Discounted ADRs better than underlying in India.
- Go on taking profits on other counters and take even up to 9% losses.
- Bernanke’s confirmation still in doubt. If he is confirmed, it is bad for America.
- More banking troubles on way. Obama State of Union address on 27/1 very important.
Friday, 22 Jan, 2010 PM
Justified our opinion. The company reported first profit of Rs 108 crores. At 24 cr shares o/s, the EPS for single quarter is Rs 4.6 or so. Full year profit may be Rs 5 per share but 2010-11 full year profit could be around Rs 20/shr. Our view is that (1) oil prices will go down (2) Firm rupee will bring down ATF cost (3) Higher revenue by 25% due to healthy economy and (4) positive sentiment for Airline sector from now on. UNLESS the company enters into misadventure of taking over some other Airline, the stock may rise to Rs 180 or even more in less than 15 months. In short run, expect higher target of Rs 81/108 in <3 months. Strong recovery play. SWAP from Jet Airways (you get 10 times the shares) or KFA (its existence is in doubt) or any other shares having CMP Rs 70 or more. If you want to buy today, try your luck at 57.35 to 58.85
Obama’s plant to restrict proprietary trading by the banks will mean that banks like Goldman Sachs and Morgan Stanley will surrender banking license in near future, in less than 5 months. In India, the bank like SBI, BOI, BOB and ICICI will be affected because if they want to operate in USA, they can not do the investment banking activities as easily as before. Their profits overseas could be affected if the proposal becomes a law. Not immediate effects seen. Prefer other pure domestic banks like IDBI (who wants to take over Federal Bank).
Stock: Spicejet Symbol: 500285.bo CMP: 54.80 Ref: 10-ISO-018 Thursday, Jan 21, 2010 PM
Kalidas observes: Spicejet up on strong volume . May rise on expected better 3Q result
Spicejet, our old favorite, is now on second leg of its rally. This jetliner may become profitable once it crosses Rs 2000 crores by FYE 03/2010. Oil prices to decline, higher rupee lower ATF. Passenger traffic higher, Company may earn Rs 2.50 by year end. 2010-11 may be +60%. Target LoHi 63/71 < 1 month. Recovery play. Medium term 92<5 months Buy some today 53~56
21 Jan, 2010, Thursday
Today, the numbers from Goldman will be out. They will be very positive because they appear to be the greatest beneficiary of and in arranging guarantee of $306 billions of Citigroup debt through their ex-Chief Hank Paulson. Such numbers will propel them into stratosphere that “Goldman does no wrong” like “King does no wrong”. Warren Buffet will also applaud them for being outstanding company and management. It might revive “recovery hope” again. The markets the world over may react to yesterday’s night fall in Dow and S&P. As the day progresses, there is possibility that “Red” may become “Green”. Our SELL call however remains unchanged.
2010.01.20 One Liner
RNRL Good to accumulate now. Swap from RPOWER to RNRL
ABHISHEK: Uptrend established. Ride the rally. Take profit at 20.85, 23.10
NO CHANGE IN SALE CALL
Stock: IOC Symbol: IOC.ns CMP: 325.10 Ref: 10-ISO-017 Tuesday, Jan 19, 2010 PM
Kalidas observes: Indian Oil Corporation (IOC) most valuable stock to own ST/MT/LT
Oil prices having peaked may develop downtrend. Good for refiners. IOC, largest SOE Refiner, has sales Rs 307,000 crores (FYE 2009) . Stock is trading at <6 time PE. If present budget liberalizes the oil prices in parts, the large refiners benefit most. A Must own stock for any LT investor. It shows strength on upside. ST Target is Lo/HI 385/435 <3M. LT Investors look for IOC in crash. LT Target is Lo/Hi 1200/1800 <3 years. Earnings/dividends are highly leveraged to decontrol.
Stock: M&M Finance Symbol: M&MFIN.ns CMP:350.20 Ref: 10-ISO-016 Tuesday, Jan 19, 2010 AM
Kalidas observes: M&M Finance Ltd. is well priced and shows the signs of getting higher
M&MFIN, of Mahindra group, is well poised for next few years for excellent growth due to its parent’s business in all sectors on growth path again. Higher crop prices help tractor business, wider roads help its cargo vehicles, and passenger car and two wheelers may ensure constant demand for its finance division. The stock is convulsing to go higher. Buy <357, more in Feb. ST Target Lo/Hi 387/435 <1 month.
Kalidas Says ….Tuesday, January 19, 2010 AM
The market is getting extremely pricey with very few bargains. The overall risk has increased beyond investment tolerance level. Bad news may arrive from overseas.
|Please think it over and take the rational decision. Look at your family before buying more|
Stock: MRPL Symbol: MRPL.ns CMP: Ref: 10-ISO-015 Monday, Jan 18, 2010 AM
Kalidas observes: MRPL rise firmly morning in large trades.
MRPL rising for over 3 days and firmly rests over 80 level. The volume today has picked up with large trades. The stock is not cheap though. Expected change in Oil pricing policy in the budget. The stock may correct >3:00 PM due to weak overseas market. Adventurous may buy some now. Others wait till 3:45 PM. Target LoHi 103 /108. Buy it as pre-budget play.
Overseas market may remain soft due to Japan Air bankruptcy & JPMorgan weaker result. Better to buy desired strong stocks after London opens. Time it around 3:45 PM 15 Min before close if there is no more damage at London opening.
Stock: UCOBANK Symbol: UCOBANK.ns CMP: 58.10 Ref: 10-ISO-014 Friday, Jan 15, 2010 – PM
Kalidas observes: UCO Starts zooming up..Follow up IPO?
UCOBank on strong rise – first leg of its rally. Stock up 5%, Volume+350%. Other banks are docile, meaning that stock rising on own. It was mulling to raise capital for some time, May be the deal is finished. The lead may have started pushing up. Earnings too could be better ahead of FPO. ST Target Low/Hi 66/71. Not for the long term now due to change in govt. policy to merge PSU banks
· Moved up as predicted by us. Swap GSPL » Petronet for quick return.
· As projected, stock rose 6% Volume 600%. >185 means sailing ahead fast
· Volume up 50% – want to go higher – Swap from RPOWER » RNRL now
· Rise in Volume and Value (+6%) due to rotational switch into telecom sector
· Looks all set to cross 300. Wait for 2 days, if the volume rises >4 Mil, Buy
Stock: TataTele Symbol: TTML.ns CMP:29.95 Ref: 10-013 Friday, Jan15, 2010 AM
Kalidas observes: Tata Tele gains on rotational switch into Telecom sector…..
TTML is a sleeping dog stock. Swap to other stocks suggested only a day back, but FII funds have started wetting into Telecom sector. Stock up 6%; Volume 600%. Buy back or buy small to gain in this rally. We do not expect rise > Rs 36 to 39. Safe to enter with limited downside. Buy on morning dip (28.85?) caused by old holders. ST Target LoHi 36/39. Downside 3%
Stock:Balaji Telfilm Symbol:BALAJITELE CMP: 65. Ref: 10-ISO-012 Thursday, Jan 14, 2010 – PM
Kalidas observes: Balaji Telefilm convulsing to go higher, may rise fast.
After consolidation around 60, the stock is stronger and convulsing to go higher. Its business appears improving with more serials coming to the market.. Good value for competent people managing its business. Volume>1 Million may result in strong and fast gain. Risk less, . Reward more. Go long on entertainment industry. ST Target LoHi 75/92
Stock: Mah Satyam: Symbol: SATYAMCOMP.ns CMP: 119.30 Ref: 10-ISO-011 Thursday, Jan 14, 2010 AM
Kalidas observes: Satyam on Roll now.. strong buying, perhaps from FII Bearish phase over.
Satyam, suggested in past from 92 to 104, is now on roll after long consolidation. The stock is up on strong volume. Looks like FII are buying – Rupee higher because of FII inflow finding way into Mid cap stocks. A large trade of 10 Mln shares block shown at 120.05 in morning. The counter may witness strong upward move after 11 AM. Ride the rally, and buy 30% more if you are holding some at lower level. ST Target Lo/Hi 156/181 with about 8% downside at 119.3
Stock: Dev Credit Bank Symbol: DCB.ns CMP: 39.40 Ref: 10-ISO-008 Thursday, Jan14, 2010 AM
Kalidas observes: Development Credit Bank runs amuck with strong gains and volume
DCB was suggested about a month ago below 35 level. It needs Rs 300 crores of which Rs 84 crores (from Rs 100 crores – undersubscribed) raised via QIP. Bal Rs 200 crores reserved for public issue. May come soon. The stock is jacked up to price the FPO higher. There will be PUMP and DUMP strategy. The stock rose 9% on 10 times volume. May drop 3% in morning and then move higher. Pick up <40 and ride the rally. Come out soon. LoHi Target Rs 48/56 < 1 month.
Stock: Evinix Symbol: EVINIX.ns CMP: 5.25 Ref: 10-ISO-009 Thursday, Jan 14, 2010 AM
Kalidas observes: Evinix will outperform market by yards .Trade actively, retain some
Never heard this name. Me neither until one reader asked for my opinion when the stock at 3.20. Good company. In retail. Cheap stock with good growth. Study its financial for regular follow up and trading. Rose strongly by 60% in last few sessions, but % look higher due to low base. Watch to buy in correction. Entry Point 4.80/4.35/3.85. Expect 30% to 100% < 6 months. Volatile yet safe stock.
Stock: Storeone Symbol: STOREONE.ns CMP: 43.45 Ref: 10-010 Thursday, Jan14, 2010 AM
Kalidas observes: STOREONE gallops. Good for aggressive investors – not for salary earners
Formerly IB Retail, and Piramal Group. Not so strong fundamentals but it is market maker’s stock. Up 20% – upper circuit – no reasons in less than millions shares. Employees got the options <30. The lower floor Rs 28. It is a sucker stock – you never get it when you want. Always trade in upper circuit for 3 to 5 sessions. LoHI 60/80 <3 Months. 30% downside. Trade fast and furious.
|SPECIAL COMMENTS||Physical versus Paper Derivatives||Date:||2010.01.13 PM|
|Why Gold/Commodities fell sharply on 12/Jan Tuesday in USA when they rose elsewhere?|
|It is a common pattern for last few months. The Gold/Silver/Metals/Soft Commodities rise in Asia, Europe and UK but gets battered in USA. It happens on select days only. Yesterday, they fell sharply again. Gold from $ 1154 in Asia, then $ 1152 in London fell to $ 1128 in New York. Soyabin fell sharply, so also Sugar, cotton, and other grains. The reason is again same – Paper trading in derivatives. US-A appear to have hired trusted brokers (GS?) and TARP banks to short the gold, commodities, metals in derivative (futures) trades. What for? Controlling CPI numbers – core and non core. If the prices drop on reporting date, the inflation numbers will look better that will again justify the lower rates.
Bloomberg reported massive uptake of gold PHYSICALLY in December. The buyers were unwilling to accept the cash settlement. In short, while the physical demand has increased, the derivatives or paper trades are pushing down the above items only in US. How long? They lose heavily while buying back those paper derivatives later. But then, the FED can afford to print more notes for which it does not need Senate approval.
How to benefit from above? Buy the target stocks at a discount when the market corrects due to such manipulative practices. United States has still not learnt the costly lesson after banking debacles due to same derivatives. It will suffer more and this time around, the pain will be so severe that United States will break apart. Next few months will give first indications. Go to Temple or Church to pray that it does not happen. GOD says “Nothing doing. I do not need to contest any election in November (in USA). My Universal Law will prevail. “
Stock: Reliance Comm. Symbol: RCOM.NS CMP: 178.95 Ref: 10-ISO-007 Tuesday, Jan 12, 2010
Kalidas observes: Reliance Communication is convulsing to go higher… (PM Post)
RCOM has consolidated enough for last 20 days. The volume is moderate with upward bias. The sellers are thinned out at this level. It may take 2 to 3 days for the stock to break out of the range. Major buying signal will be when the stock crosses 7 Mln share volume or >186 closing one day. Buy some now and more in momentum in 2 or 3 days. Target Lo/Hi 221/245 < 2 months. (Afternoon Post)
Stock: ABHISHEK IND Symbol: ABHISHEKINDS.NS CMP: 18.0 Ref: 10-ISO-006 Tuesday, Jan 12, 2010 AM
Kalidas observes: Abhishek on its first trial run.. Volume quadruples. Solid rise
Our report 6Nov09 when the stock was at 14.60 estimated rise to 21 within 6 months – we are in just 2nd month and the counter saw huge volume rise with solid gains. Last few sessions were pointing higher price. May be good numbers are expected on 3QDec09. Solid small value stocks with large revenues. May dip 3% in morning due to sudden rise, L/H 23/29 <30 days. Sell 70% ahead of result.
Stock: PETRONET Symbol: PETRONET.NS CMP: 80.25 Ref: 10-ISO-005 Tuesday, Jan 12, 2010 AM
Kalidas observes: Gas stocks on strong upward move world over.. PETRONET to run faster.
Severe cold grip has seen the gas prices moving up by 9% in last month. Petronet is well poised to report strong 3Q Dec 09 soon. Reflected in strong upward move hitting magic 80 on large volume of 5.9 Mln on NSE., 2 to 3 times than previous days. It may dip in the morning by about 1.5% but will gain later. ST L/H target 92/108 in <30 days. See our detailed stock report last month. Turtle on run now.
Stock: ESSAR Ship Symbol: ESSARSHIP CMP: 84.30 Ref: 10-ISO-004 Tuesday, Jan 12, 2010
Kalidas observes: Essar Shipping trending upwards strongly…
After long period of consolidation near 66 the stock is on strong upward move. Its short term fundamentals are not that good as the long term one. However, this is a sucker stock. The company’s shipping business, mainly transportation of oil in tankers will do well. The stock is a very fast mover in the past. Its move >80 on strong volume indicates at further stops at 92, 108 and 120. Tricky yet rewarding
Stock: Reliance (RIL) Symbol: RELIANCE.NS CMP: Ref: 10-ISO-003 Monday, Jan 11, 2010 PM
Kalidas observes: Something ominous happening in Reliance Industries Ltd.
The stock dropped by 1.3% in heaviest volume seen recently – On NSE alone, over 44 Million shares recorded at this time (12:15 PM IST), that is, huge Rs 4,400 crores or nearly $ 1 billion. BSE not counted. Something is going on. Is it the political fall out of YSR death or some major derivative losses, we do not know. But it will be financial. If this hippo falls, Sensex/Nifty will suffer most. Reduce Reliance
Stock: DISHTV Symbol: DISHTV.NS CMP: 42.20 Ref: 10-ISO-002 Monday, January 11, 2010
Kalidas observes: Bearish phase to end soon – may be profitable by 4Q March 10
After successful raising of capital, company has reduced interest cost by 80%. The company turned profitable before depreciation in 2Q Sep09. 3Q Dec09 should be better than 2Q. The company may turn profitable by latest by 1Q Jun10. These could be last bearish days for Dish TV. Position now. ST Target low/high 48/60 three Months (except in market crash)
Stock: IFCI Ltd. Symbol: IFCI.NS CMP:56.90 Ref: 10-ISO-001 Monday, January 11, 2010
Kalidas observes: IFCI Reports good numbers – Company on growth path again
Company reported Q3 2009-10 Net Profit after Tax of Rs 136.30 crores, QEPS 1.84. The real EPS will be higher. For June and Dec quarter, the company provided for taxes at 48% and 43.7% whereas actual Tax will be 28% to 29%. The stock corrected by 4% from Friday peak of Rs 59.95. The stock may resume its growth path after initial pull back in first 30 minutes. ST low/high target Rs 68/73