Market Technical View

Getting Back To Square One

The Nifty gained 51 points over the day to close at 5103. The bull
party continued yesterday as well as the indices rallied further
and closed above the resistance levels of 17100/5074 that
provided supply the whole of last week. However the
discouraging aspect of the trading action was the fact that the
markets rallied on low volumes and not-so-great breadth. The
bullish reversal pattern that we had pointed out at 4800 levels a
couple of weeks back saw its target of 5120 almost done
yesterday. The technical set-up remains strong and hence
further upside can be expected in the near term. We still do not
have any topping out patterns on the hourly or daily charts as
yet. Interestingly, the daily oscillators are in buy mode and below
the overbought zone, which is a big positive. The DM/ADX
indicator is setting up for a major buy trigger that should be
confirmed in the next 2-5 days. The ongoing “V” shaped reversal
should take the markets to their Oct 09 highs sometime later this
week. Overall, the ongoing rally should only get stronger with
better breadth and volumes in the days ahead.

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Intraday Tips

RELIANCE

Weekly Trend Decider 2117 . Consider resistance are 2150 and crossover looks positive and higher level target are 2250-2300. Today support are 2169 mark.

ONGC

Lower level support are 1100-1110 and decline to buying opportunity. Weekly Trend Decider 1178 For smooth run it must cross and close above 1210, thereafter no hurdle and big spurt can not be ruled out. Today support are 1175.

TATA POWER

Weekly Trend Decider 1327. Trading range are 1300-1350, break and crossover in either side ... above 1350 close eye....

BHARTI

Weekly Trend Decider 295. Wide trading range of this counter 280 to 320,, breakout range, one side move in either side. Below 280 far and far support are 228.... SUPER HOT SELL.. do not try to bottom finishing.

BALRAMPUR CHINI

Weekly Trend Decider 137.. Down side support are 118-120 and it should not break... otherwise free fall.


RANBAXY

Weekly Trend Decider 422.Down side support are 400.. below weakness, higher level resistance are 431.... Thereafter it will show more power.


MARUTI

Weekly Trend Decider 1514... any decline to buying opportunity. It will show real strength above 1576.. down side support are 1525..... Long stop loss 1390.....

• India Cements Nov. Future (Rs. 104)

Buy only in the region 103-104 with a stop loss
below 101 for an intra-day target of 109.

• GSPL Nov. Future (Rs. 94)

Buy only in the region 93-94 with a stop loss
below 91.5 for an intra-day target of 98.


Nifty Future + Bank Nifty + CNX IT:

Nifty Future : On week to week basis, strong reversal were seen on Friday trading and almost closed with a green. Overall we may consider support are 4900-4890, below it will test 4840 and major support are 4750. Ultimate target are 5150-5180-5200.

Yesterday High was 5120 and low was 5068. Today likely test support 5090-5080, if break and trade below, lower level target are 5077, 5066, where the buying opportunity, higher level above 5120 and sustained target 5144-5177 can not be ruled out.

{Today Trend Decider - 5090}

Bank Nifty : Trend is still is bullish. Any decline to buying opportunity with consider support 8800-8700. Weekly trend decider 5150 In the Bank Nifty, the December series are traded at premium to Novembmer indicating good carry over and bullish sign .

CNX IT : Today support are 5350, higher level resistance are 5500, above more up side. Weekly Trend Decider 5455.OUR TARGET ARE 5700 + . We think that it could gain if the rupee goes lower again.

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Market News Trends

HOT FROM THE PRESS NEWS

* RELIANCE : submits an all-cash but non binding bid to buy a controlling stake
in the world's third largest petrochem co Lyondell Basell, if it comes out of
bankruptcy.. press rpts suggest the deal cud be in the range of $10-12bn

* BANKS : RBI will give banks six months more to set aside extra funds fm their
profits to cover NPAs, stretching an earlier deadline of Sept 2010

* PNB : scouting for acquisitions, to focus more in southern & western regions

* ICICI : raises $750mn thru a 5 year bond issue at its Bahrain branch.. the
issue had an order book of $3bn & was participated by over 250 investors

* LUPIN : US based Medicis Pharma files a patent infringement case against the
co for a dermatology medicine

* NALCO : in talks with an Islamic Bank in Indonesia for a Rs100bn loan for its
Iran project, on hold due to cos inability to secure finances for the venture

* JK LAKSHMI CEMENT : plans to raise Rs8bn thru debt and equity to part-finance
setting up a greenfield project

* ESSAR OIL : rpts Royal Dutch Shell Plc to acquire 10% stake in the Co as part
of the deal to sell 3 refineries to Essar

Corporate News – Industry trends

* RELIANCE Industries could pay up to US$12 bn for bankrupt
petrochemicals company Lyondell Basell, bankers familiar with the
transaction said; the deal, if consummated, would take Reliance’s top
line to more than US$80 bn, greater than industry titans such as Dow
Chemicals (ET)

* US-based Medicis Pharmaceutical Corporation has filed a case
against Indian drug maker Lupin, alleging infringement of its patent on
a dermatology medicine (BS)

* The Ministry of Defence has agreed to release 25 MHz of 3G
spectrum in the 1920-1980 MHz band before December 7, but with the
condition that the government will clear the proposal for laying of an
alternative optical-fibre network for the military before that date and
create a monitoring mechanism for the project’s implementation (BS)

* AS AMERICA’S top banks emerge from the Troubled Asset Relief
Program (TARP) and the economy starts showing signs of recovery,
Indian outsourcing vendors, TCS, Infosys and Wipro, are set to gain
off shoring projects worth around US$1 bn over the next one to two
years (ET)

* Rico Auto, a major component supplier to Maruti Suzuki, Hero Honda
and Tata Motors, says it will set up two new plants outside Haryana
after a protracted labour strike at its four plants in the state crippled
production for over two months (ET)

* JK Lakshmi Cement will raise around Rs 8bn through debt and equity
to part-finance setting up a greenfield project in Chhattisgarh in order
to get a foothold in the central and eastern India (ET)

* Steel magnet Lakshmi N Mittal has paid over US$10 mn to double
his stake in Africa focused Ophir Energy Plc to 21.2%, even as he
exited the oil and gas business in the Central Asian nation Kazakhstan
(BS)

* Bajaj Auto is betting big on its Pulsar bike and plans to raise
production to 90,000 units per month, in the next six months with a
sales target of one million units per annum by the end of next financial
year (BS)

* Reliance Industries Ltd’s (RIL) refinery at Jamnagar, Gujarat,
received its first consignment of Cairn India’s Rajasthan crude oil over
the weekend. The first consignment was dispatched on Saturday (BL)

* The life insurance industry is expected to grow by about 15% in the
current fiscal year to touch a total premium income of Rs 2.55 trillion
in 2009-10 (Mint)

* IDBI has awarded the mandate to three leading foreign lenders to
raise a US$225 mn five year syndicated loan in Asian and European
markets by mid December (Mint)

* Suzlon Energy, has shifted most of its management operations back
to its headquarters in Pune; Two years earlier, it had set up a Group
Management Centre in Amsterdam, Netherlands, to run its global
business, spanning 21 countries. Instead, Suzlon will soon inaugurate
a new campus in Pune with a ‘world class work environment’ for about
2,500 employees, named ‘Suzlon One Earth’. This Centre will act as
the new global headquarters and the hub for its operations worldwide
(BS)

Economic/Regulatory development

* The Reserve Bank of India’s second quarter monetary policy review
signalled an exit from the central bank’s accommodative stance,
leading many to believe that interest rates would move in only one
direction – north (BS)

* The subsidy on wheat and rice supplied through the public
distribution system (PDS) has risen sharply, thanks to an increase of
over Rs 100 per quintal in the economic cost of food grains; The level
of subsidy in 2009-10 worked out at between 56 and 60% for the
above poverty line category consumers and between 70 and 72.4% for
the below poverty line consumers (BS)

International trends

* Royal Bank of Scotland Plc sold US$7 bn of debt due in March 2012,
according to data compiled by Bloomberg, equalling the largest US
corporate sale since May (BS)

* Ford Motor Co said it will spend 4 bn to expand in the growing
Brazilian market, the largest investment it has made in the country
(BS)

* Consumer spending probably rebounded in October, showing that
mounting unemployment is restraining, not derailing, the biggest part
of the US economy (ET)

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Buy Bharti Airtel

Bharti Airtel
BUY
Price: Rs289 Target Price (Sept 2010): Rs360

Roaming tariffs lowered ahead of MNP

* What’s new: Bharti Airtel (BRTI) has introduced a new tariff plan ‘Turbo’
wherein airtime charge for roaming calls have been slashed by 20-60%.
To enroll into this tariff plan, a prepaid sub is required to pay a fee of Rs98
(Rs99 for subs on per-sec billing) with a 1-yr validity, while a postpaid sub
needs to take a tariff plan entailing a monthly rental of Rs249 (Rs299 for
subs on per-sec billing). Pulse rate for calls while roaming remains 1-min.

* Analysis: [1] BRTI’s Turbo offering is an extension of its Freedom (1-
1.2p/sec) and Advantage (50p-60p/min) tariff plans. While airtime charge
on roaming calls drops from 20-60%, the enrolment fee is Rs98/99 (for a
prepaid sub) vs. Rs50/69 for the Advantage/Freedom plan. [2] Advantage
/Freedom subs need to pay the full enrollment fee (Rs98/99) to switch to
the Turbo plan. [3] Impact on ARPUs is highly sensitive to two variables –
proportion of I/O roaming calls and traffic elasticity. Assuming 10% of a
subscriber’s call traffic emanates from ‘national roaming’, BRTI’s overall
wireless ARPU could be dented by 4-5% assuming minimal traffic elasticity
(Exhibit 1). [4] Ignoring the proportion of I/O roaming calls for a sub, ballpark
calculations indicate that assuming zero elasticity, national roaming
ARPU for a subscriber could drop by 40% (Exhibit 2), implying overall
ARPU decline of 4% (we estimate ~10% of BRTI’s wireless revenues come
from national roaming). [5] 15% roaming traffic elasticity would reduce
the potential dent on wireless ARPUs to ~3%; if a Turbo plan subscriber
maintains his/her monthly outlay, BRTI’s ARPU would marginally rise.

* Implications: We maintain our earning estimates and BUY rating for BRTI
(TP of Rs360); advise investors to accumulate the stock with a 12-mth
horizon. Our wireless revenue forecast for BRTI captures a 9.4%/7.5% qoq
drop in BRTI’s wireless ARPUs in 3QFY10E/4QFY10E. We expect near term
price performance to be muted as competition peaks and impact of per-sec
billing on wireless revenues/margins manifest in 2HFY10 results.

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Indian Banks: Top Picks

a) ICICI Bank (CMP - Rs 890, TP - Rs 1,000)
Positive impact of corrective actions has set the base to accelerate:
Meaningful impact of the initiatives taken by ICICI Bank to strengthen liabilities
franchise and consolidate retail portfolio is quite visible with significant mobilisation
of CASA deposits, domestic margin improvement, decline in adjusted credit cost
and significant cost controls. These considerable fundamental improvements have
set the base for acceleration in assets going forward. The impact of corrective
actions taken over the past several years would be completely visible in FY11E and
we expect a) Assets growth to improve to 18% p.a. in FY11E and FY12E, b)
Margins to improve from 2.2% in FY09 to 2.7% in FY12E, c) Fee income growth to
gain momentum d) LLP charge to peak out in FY10E at 1.9% and improve to 1.6%
by FY12E. Collectively, these improvements would result in risk-adjusted margins
to expand from 88 bps in FY09 to 183 bps in FY12E and ROA to improve from 96
bps in FY09 to ~120 bps in FY12E. Hence, we expect PAT to register a strong
growth of ~17% CAGR during FY09-12E (despite expected decline of 5% in
FY10E). While ROE would remain low for ICICI Bank for few years, we believe price
multiples would also be determined by quality of earnings (which would be
substantially better going ahead). We value the parent at 15x Oct’11E EPS,
implying standalone value of Rs 765 per share. We value subsidiaries at Rs 235
(net of cost of investments), implying Oct’10 TP of Rs. 1,000.

b) HDFC Bank (CMP - Rs 1,725, TP - Rs 1,900)
Acceleration in Loan Book: Improved economic outlook and reduced NPA risk at the
macro level and significantly expanded branch network, continued superior risk adjusted
margins and improvement in cost ratios at company level would drive strong assets and
earning growth for HDFC Bank. Acceleration in loan book is clearly visible in 2Q’10
results and we expect HDFC bank to achieve strong a loan growth as the demand for
loans has picked up significantly in various retail segments. We expect HDFC Bank to
deliver a strong PAT growth of 24% CAGR during FY09-12E. We value HDFC Bank at 22x
Sept’11 EPS (implied FY11E P/BV of 3.7x), implying Sept’10 target price of Rs
1,900.

c) Axis Bank (CMP - Rs 990, TP - Rs 1,175)
Continues to deliver despite challenges: Axis Bank is in consolidation mode
given credit quality pressure the bank is facing. We expect margins to remain at
elevated levels in 2H’10 as the bank deploys recently raised equity and continued repricing
of high cost bulk deposits. We expect NII to witness a strong growth of ~25%
CAGR during FY09-12E. Asset quality remains under pressure, however we expect
abatement in credit costs from FY11 ss the benefits of significant decline in interest rates
and improved economic growth flow down. We expect PAT to register a strong growth of
20% CAGR during FY09-12E, and ROE to recover to ~17% in FY12E post the recent
dilution. We value Axis Bank at 16x Sept’11 EPS (implied FY11E P/BV of 2.6x), implying
Sept’10 target price of Rs 1,175.

d) ING Vysya Bank (CMP - Rs 299, TP - Rs 375)
Improvement in profitability: With the induction of new MD and CEO, Mr.
Shailendra Bhandari, we believe that the growth for the bank is set to accelerate as
management makes higher than system credit growth a priority. ROA of IVB is set to
expand from 66 bps in FY09 to 80 bps in FY12E driven by improved margins, cost ratios
and lower provisions. Improving profitability would result in strong earnings growth
of 27% and 32% in FY11E and FY12E respectively. We believe IVB is at an inflexion
point and has a strong re-rating potential given profitability improvement over the
next 2 years. We value ING Vysya Bank at 13x Oct’11 EPS (implied FY11E P/BV of
1.8x), implying Oct’10 target price of Rs 375.

e) Yes Bank (CMP - Rs 249, TP - Rs 315)
Growth is back, superior return ratios to continue going ahead: Loan growth
during 2Q’10 was strong at 42% yoy respectively (29% sequentially) while incremental
increase in credit was the highest in 3 years. Since the bank is not facing credit quality
pressure, it is in a position to accelerate growth in the current environment and
consequently gain market share. Asset quality has remained strong even during the
recent crisis with gross and net NPLs at 0.31% and 0.08% respectively. With
acceleration in loan growth, capital market improvement and healthy asset quality, Yes
Bank is on track to continue to maintain its superior return ratios. We expect ROA and
ROE of ~ 1.5% and ~19% in FY12E, highest amongst its peer group. We value Yes Bank
at 16x Sept’11 EPS (implied FY11E P/BV of 3x) which seems reasonable given the
growth potential for the bank, implying Oct’10 target price of Rs 315.

f) Bank of Baroda (CMP - Rs 533, TP - Rs 615)
Strong performance to continue: Driven by improved margins and recovery in loan
growth we expect BOB to continue to post strong numbers going ahead. Consequently,
we expect robust NII growth of 28% yoy growth in FY11E. Asset quality continues to
remain healthy with gross NPA and net NPA at 1.3% & 0.27% respectively and coverage
ratio of 79% which is among the best in the industry. We expect BOB to generate stable
ROA of 1% going forward in FY11E as the positive impact of margin improvement and
fee income traction would be negated to an extent by lower treasury profits and higher
credit cost. We expect BOB to generate healthy ROE of ~20% in FY11E and FY12E. We
value BOB at 1.35x adjusted book based on a normalised ROE of 19.2% which gives
Oct’10 TP of Rs 615.

i) Punjab National Bank (CMP - Rs 895, TP - Rs 1,000)
Quality deserves premium: PNB continues to enjoy one of the highest margins in the
industry due to better yields on loans (due to increased proportion of SME loans), high
CASA ratio & deposit repricing. Continued branch expansion (184 new branches in
1H’10) and high CASA ratio would support margins going forward. We expect NII to
expand at 18% CAGR during FY09-12E. Gross NPA & Net NPA of 1.58% & 0.14%
respectively and coverage ratio at 91% is among the best in the industry. Going forward
we expect a) margin to remain stable, b) credit growth to remain robust, c) lower
treasury income and recoveries, d) adjusted credit cost to increase from 33 bps in FY09
to 103 bps in FY11E. We expect ROA to decline marginally before stabilizing in the range
of 1.18% in FY11, and ROE to remain strong at ~22%. We value the stock at 1.5x
adjusted book based on a normalised ROE of 19.9% implying Oct’10 TP of Rs 1,000.

j) Union Bank of India (CMP - Rs 260, TP - Rs 300)
Well managed on the core front: We expect a strong recovery in NIM in coming
quarters and expect NII to post a strong 30% yoy growth in FY11E with credit growth at
18%. Asset quality remains top class with net NPL ratio at 0.23% and coverage ratio of
88%. The bank is on track to generate healthy ROE of over 20% going ahead with
strong recovery in margins and healthy fee income growth to neutralize the adverse
impact of significantly lower treasury income and higher credit costs. We arrive at
Oct’10 TP of Rs 300, valuing the stock at 1.4x adjusted book based on a normalised
ROE of 19.8%.

k) Oriental Bank of Commerce (CMP - Rs 277, TP - Rs 300)
Improvement in core earnings to lead to outperformance: Post its amalgamation
with GTB, OBC has been the biggest laggard amongst banks. While BSE Bankex has
given a return of c. 260% since July’04, OBC has remained flat during the same period
underperforming the index by c.260% which we believe is set to reverse given legacy
issues are behind the bank. Core earnings for OBC will continue to improve driven by
margin expansion and robust growth in fee income. Trading at 0.8x and 5.6x FY11E
book and earnings respectively, we believe that the current valuations are attractive
with chances of negative surprise remote. Based on a normalised ROE of 15.5%, we
value the banking business at 0.84x book implying value of Rs 270 per share. Further,
OBC has 23% stake in life insurance JV with HSBC and Canara Bank which we value at
Rs 30 per share.

Note: More intra-day opportunities will be provided
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Intraday Tips

RELIANCE

Weekly Trend Decider 2117 . Consider resistance are 2150 and crossover looks positive and higher level target are 2250-2300. Please note stock is going to Ex Bonus on 27th November and advise to play for long side after ex bonus.


LT

Weekly Trend Decider 1634. Down side support are 1600-1575 are bull favour.. Today above 1657, one side and play for long side

GVK POWER

Weekly Trend Decider 51.... Looks good and decline to buy.. more power show above 53.. lower level support are 47....

PUNJ LLOYD

Weekly Trend Decider 213 .Down side decent support are 210, close below further weakness, but real strength show only above 224.. otherwise sell on rally.

BALRAMPUR CHINI

Weekly Trend Decider 137.. Trend is up but short weakness. Down side 131 to be watch out, below more weakness, higher level resistance 1400145 and sell side


TISCO

Weekly Trend Decider 544. . Looks hot and consider support are 520 -505, as remain hold, advise to buy side.. today above 555, over all buying and target are 570 or above.


ABAN

Stop loss 1050 for long position.. above 1374 more up side.

PFC

Looks very hot and buy side...Target 280 + in short term.

• Neyveli Lignite (Rs. 152)

Buy in the region 148-152 with a closing stop loss
below 139 for a short and medium-term target of
182 and 224 respectively.

• ITC (Rs. 259)

Buy on a move above 261 with a closing stop loss
below 252 for a short-term target of 277 and 300.

• Bank Of Baroda (Rs.540)

Buy in the region 525-540 with a closing stop loss
below 500 for a short and medium-term target of
600 and 680.

NIFTY,BSE predictions for 23rd Nov,2009


NIFTY

Over all trend is up and it high of 5079 with extremely volatile. We may expected that the strong support are 4740, as long as hold possible target are higher level 5150-5180-5300 or above. We advise to readers, any decline or panic should be accumulate and excellent buying opportunity. Over all in the Indian market, global cues would be play a important role, as far as the sentiment is concerned, some economic data is also due in the coming week which is watch out.

Today support are 5015-4980, higher level resistance are 5080-5100, thereafter over all buying opportunity in the market. Weekly trend decider 5021.


BSE

BSE: Short term trend of the Market are remain positive as hold 16000 level, but higher level it will face strong resistance 17400-17500, successfully crossover and closed above another bull move which may go beyond 18500-19000. Long term trend are still good and we expect in 2010 it will test new high.

Today : Support are 168900, 16700, higher level resistance are 17100. crossover and hold over all positive in the market and buy side. Weekly trend decider 16918.

Dow

Last week Dow recorded a fresh move and almost tested new high of 10438 which is almost achieved . As remain up trend, next intermediate target likely 11000-11300-11500 in near term. On the other hand we consider support 10000 and major support are 9500, below deeper correction can not be ruled out.

Nifty Future + Bank Nifty + CNX IT

Nifty Future : On week to week basis, strong reversal were seen on Friday trading and almost closed with a green. Overall we may consider support are 4900-4890, below it will test 4840 and major support are 4750, higher level resistance exit 5100, thereafter non stop target 5150-5180-5200. Today panic buy side...

Bank Nifty : Trend is still is bullish. Any decline to buying opportunity with consider support 8800-8700. Weekly trend decider 5150 In the Bank Nifty, the December series are traded at premium to Novembmer indicating good carry over and bullish sign .

CNX IT : Today support are 5350, higher level resistance are 5500, above more up side. Weekly Trend Decider 5455.OUR TARGET ARE 5700 + . We think that it could gain if the rupee goes lower again.

Note: More intra-day opportunities will be provided
live during the market hours

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Free Intraday Tips

* L&T Nov. Future (Rs. 1616)

Buy L&T Nov. Future (Rs. 1616) only on a move above 1630 with a stop loss
below 1612 for an intra-day target of 1659.

* RELIANCE

Weekly Trend Decider 2076.Today resistance are 2100, down side target 2040-2034.

* UNITECH

Weekly Trend Decider 86.50 . Trading range 80 to 90.... Break out will one side move. Today below 80 selling opportunity target 75.. stop loss above 83.

* JP ASSOCIATES

Weekly Trend Decider 233. Higher level resistance 245 and real strength show only above that level.... Today break 222, further weakness and it will test 212 or below.

* PUNJ LLOYD

Keep a stop loss 223 and play for short sell, below 210, real panic can not be ruled out.

* BANK OF INDIA

Weekly Trend Decider 372. Keep a stop loss yesterday high 395 and sell... negative divergence on the chart...... down side first target are 350......

* HDIL

Weekly Trend Decider 363. Below 350 do not remain long in this counter........down side target 323....

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