NSE/BSE STOCK MARKET TIPS

Analysts'Picks: Tata Motors
27 Aug, 2008.

Tata motors
cmp: Rs 433.50
target price: Rs 454

HDFC Securities has maintained its ‘sell’ rating on the stock with a revised target price of Rs.454 (from Rs.431 earlier). The brokerage believes due to uncertainties looming over the company’s Nano project at Singur and 24-35% equity dilution would cap the upside in the stock.

Also the Jaguar-Land Rover (JLR) acquisition would continue to be an overhang on Tata Motors’ stock, the note added. “We are revising our earnings per share estimate upwards by 9% (Rs.29.9 earlier) mainly on account of lower equity dilution by reducing the amount of funds raised through the equity route. We value the company on an SOTP basis with the core business valued at Rs 293 per share and subsidiaries at Rs 161 per share,” the note to clients said.

Analysts'Picks: Infosys Tech
27 Aug, 2008

Infosys Tech
cmp: Rs 1,697.60
target price: Rs 1,703

Broking firm Edelweiss Securities has maintained its ‘accumulate’ rating on the stock as it believes that the company’s recent acquisition of the Axon group would bolster the company’s presence in the consulting space.

“The deal is earnings per share (EPS) neutral on standalone basis in FY09 (estimated), but EPS accretion in FY10 (estimated) depends on Axon’s growth and margin trajectory. Incorporating the financial impact of this acquisition, the stock trades at 16.5 times and 13.9 times FY09 and FY10 earnings respectively,” the note said. However, according to the brokerage firm, slowdown in US, significant increase in the salary hikes and attrition rate, reduction in the number of H1B visas granted by US, and incremental appreciation of rupee against US dollar, euro and GBP remain key concerns for the company.

Analysts'Picks: Infosys Tech
27 Aug, 2008

Infosys Tech
cmp: Rs 1,697.60
target price: Rs 1,703

Broking firm Edelweiss Securities has maintained its ‘accumulate’ rating on the stock as it believes that the company’s recent acquisition of the Axon group would bolster the company’s presence in the consulting space.

“The deal is earnings per share (EPS) neutral on standalone basis in FY09 (estimated), but EPS accretion in FY10 (estimated) depends on Axon’s growth and margin trajectory. Incorporating the financial impact of this acquisition, the stock trades at 16.5 times and 13.9 times FY09 and FY10 earnings respectively,” the note said. However, according to the brokerage firm, slowdown in US, significant increase in the salary hikes and attrition rate, reduction in the number of H1B visas granted by US, and incremental appreciation of rupee against US dollar, euro and GBP remain key concerns for the company.

Analysts'Picks: Infosys Tech
27 Aug, 2008

Infosys Tech
cmp: Rs 1,697.60
target price: Rs 1,703

Broking firm Edelweiss Securities has maintained its ‘accumulate’ rating on the stock as it believes that the company’s recent acquisition of the Axon group would bolster the company’s presence in the consulting space.

“The deal is earnings per share (EPS) neutral on standalone basis in FY09 (estimated), but EPS accretion in FY10 (estimated) depends on Axon’s growth and margin trajectory. Incorporating the financial impact of this acquisition, the stock trades at 16.5 times and 13.9 times FY09 and FY10 earnings respectively,” the note said. However, according to the brokerage firm, slowdown in US, significant increase in the salary hikes and attrition rate, reduction in the number of H1B visas granted by US, and incremental appreciation of rupee against US dollar, euro and GBP remain key concerns for the company.

Macquarie Research initiates 'underperformer' rating on ABB
10 Sep, 2008

ABB India
cmp: Rs 893.40
target price: Rs 728

Macquarie Research has initiated coverage on ABB India with an ‘underperformer’ rating saying ABB has traded at a significant premium to peers in the power sector equipment space.

“We expect growth to moderate and multiples to come off,” said Macquarie in a note to its clients. Macquarie expects the company’s growth to mod-erate to 26% CAGR over CY08-10.

“We expect ABB’s growth to come in line with BHEL’s (proxy to generation sector investment) projected growth. Our projected topline growth over CY08-10 is 26%, against 42% over CY05-07,” the note said. According to Macquarie, ABB has built-in price escalation clauses in its contracts and has also hedged key raw materials such as copper.

“We expect margins to remain stable on pass through clauses, earnings growth around 27%,” the note added.


Wait for more signals before turning positive
28 Jul, 2008,

At the recent low of 12514 points, the Sensex has tested the 12800-12000-pts support zone and has since then attempted a corrective rally. During the past trend phases in the Sensex, a monthly moving average convergence/divergence (MACD) cross-down below its trigger line, have, typically, led to a significant value erosion, with the corrective phase lasting, at least, for a year.

Therefore, immediate rallies would be interpreted as corrective in nature until the medium-term technical parameters turn positive. The recent upmove in the Sensex since the low of 12514 pts has been very sharp. The upside gap of July 23, 2008 had created a bullish ‘Island Reversal Gap’ on the daily charts between 14510 pts and 14519 pts.

Normally, the implications of this on the medium-term outlook would be very positive, especially since the “Island” comprised of 22 trading sessions. When a stock indicates an uptrend, trades above the gap which occurs, then gaps back down and trades below the initial price, an island reversal has occurred.

However, the Sensex has since run into a strong resistance zone between 15026 pts and 15390 pts. The monthly mid-point of June 2008 is at 15026 pts. The 50% retracement level of the fall from the May 2008 peak (17735 pts) is at 15124 pts. The positive implications of the bullish “Island Reversal Gap” would thus get negated if the Sensex has a daily close below 14104 pts (the close on July 22, 2008). The Sensex is then expected to have an initial downside of 13513 pts, the 61.8% Fibonacci retracement level of the recent rise from 12514 pts to 15130 pts.

If the bearish “Island reversal gap” of 14484-14568 pts is immediately filled and the Sensex manages to decisively overhaul the resistances between 15130 pts and 15390 pts, the ongoing upmove would continue. The Sensex may then test higher levels between 16618 pts and 16860 pts.

The 78.6% Fibonacci retracement level of the fall from the May 2008 peak is at 16618 pts while 16860 pts is the 50% retracement level of the entire fall from the January 2008 peak. Hence, one would await further confirmation before turning positive on the medium-term outlook.

Dish TV shines bright on debut in NSE F&O
August 14, 2008

Dish TV India on Wednesday surged 10.26 per cent to close at Rs 39.75 after being included in NSE’s futures and options segment with effect from August 21. NSE announced this yesterday after the market hours. The stock opened 7.07 per cent higher at Rs 38.60 and touched an intraday high of Rs 40.45.

The counter witnessed volumes of 76,78,034 shares vis-à-vis a two-week average of 34,47,892 shares. The stock hit a 52-week high of Rs 106.4 on January 1 and a 52-week low of Rs 26.3 on July 2. The scrip has gained 18.1 per cent in the last one week.

Vornado, RIL team up for shopping centres
August 15, 2008,

The US-based real estate investment trust Vornado Realty Trust has announced an equal joint venture with the Mukesh Ambani-led Reliance Industries to acquire, develop and operate shopping malls in India. Both partners will invest $250 million (nearly Rs 1,000 crore) each in the JV.

“The shopping centers, spread over 5,00,000 to 10 lakh square feet or more, will be anchored by a hypermarket owned and operated by Reliance,” Vornado said.

The JV is expected to boost the expansion plans of RIL’s retail venture Reliance Retail, which operates 700 multiple-format stores across 60 cities, encompassing 3.5 million sqft.

Reliance Retail has announced ambitious plans to the tune of Rs 25,000 crore. The retailer runs neighbourhood store Reliance Fresh, consumer durable chain Reliance Digital, hypermarket chain Reliance Mart, apparel chain Reliance Trends and footwear chain Reliance Footprint.

The New York Stock Exchange-listed Vornado already has an exposure to the Indian realty market. The company has an aggregate investment nearing $91 million and capital commitments of $92 million in joint ventures across the country. Vornado Realty Fund, an integrated real estate investment trust, owns over 100 million sq ft of office, retail and other properties in the US.

Retail rentals have doubled in most premium locations across Mumbai, Delhi and Bangalore in the last three years. Retailers have been hit hard due to the soaring realty prices, delays in getting properties and reduction in footfalls.

In a bid to counter this, most retailers have floated their own funds that invest in shopping malls or formed JVs to invest in real estate.

Future Group, which houses India’s largest retailer Pantaloons, has floated Kshitij realty fund that invests in the group’s shopping malls. Tata’s retail arm Trent has tied up with private equity firm The Xander Group to float a retail real estate fund, while Aditya Birla Retail, formed by AV Birla group, has plans to float a retail real estate fund.

The domestic retail market that is currently valued at $511 billion, is projected to grow to $833 billion in the next five years. Organised retail is expected to grow by 40 per cent every year to $107 billion by 2013, according to retail consultancy AT Kearney.

Property consultancy CB Richard Ellis sees a likelihood of nearly 100 million sq ft retail property being developed. Some of the biggest shopping centre developers and investors have started their operations in the country. South Africa’s Old Mutual Property Investments, the UK’s Liberty International, Israel’s Plaza Centres and Metro Junction have announced plans in the country.

Analysts are however concerned about an impending oversupply of space in the retail sector. “Over-supply and saturation may result in correction of rentals in certain pockets and micro-markets in the short to medium-term,’’ said a report from property consultancy CB Richard Ellis.