Japan stimulus turbocharges-- GLOBALLY..!!!

Bank of Japan stimulus turbocharges market

Sensex, Nifty gain 1.9%, most since May 12

BS Reporter  |  Mumbai  

October 31, 2014 Last Updated at 18:12 IST

The Indian market on Friday soared nearly 2% -- most since Narendra Modi got elected as Prime Minister -- after The Bank of Japan (BOJ) announced huge stimulus programme, stoking a rally in global stocks.

In an unexpected move, the Japanese central bank raised its annual bond buying target to $725 billion (80 trillion yen), up from 60-70 trillion yen. Japan also increased equity holding limit of foreign shares for its pension funds from 12% to 25% of their portfolio.

Japan's benchmark Nikkei index soared 5%, while the yen fell to seven-year low against the dollar. Most Asian market ended with more than 1% gains, while the European markets too opened strong.

Gaining for a fourth straight day, the benchmark Sensexclosed at 27,865.83, up 519.5 points, or 1.9%. The NSENifty closed at 8,322.2, up 1.87 per cent, or 153 points, most since May 12 (last day of polling of the general elections). Both the indices scaled new record highs for a second straight day.

The rupee strengthened against the dollar, while international gold prices dropped over 2% on Friday.

"Bulls have once again taken charge. The large-than-expected quantitative easing programme announced by Japan, has boosted sentiment," said UR Bhat, managing director, Dalton Capital.

The fresh stimulus package by BOJ came on the day the six-year US stimulus, or bond-buying programme came to an end. Investors hoped that the Japanese central bank's action will make up for any shortfall that the US's quantitative easing is likely to create.

"This is a short burst of euphoria. The action by BOJ acknowledges that the global economy continues to remain weak. Next the central bank for Europe will announce stimulus," said Saurabh Mukherjea, CEO-Institutional Equities, Ambit Capital.

Foreign institutional investors (FII) pumped in Rs 1,754 crore into Indian stocks on Friday, taking their two-day investment tally above Rs 3,000 crore.

The Indian market have rebounded a sharp 7% from its monthly low touched in mid-October. The reversal in the market fortune has come on the back of reform initiatives taken by the government and also improving global investor sentiment.

Deutsche Bank on Friday upped its Sensex target to 29,000 for March 2015 "on intensifying policy action". Abhay Laijawala, managing director and head of research at Deutsche Equities India in a note said aggressive reform-oriented policies will emerge as a core catalyst for the Indian market.

After a period of intense volatility, during which FIIs pulled out over $1 billion from the Indian market (between September 16 and October 17), overseas investors have once again turned aggressive buyers, pumping in Rs 5,500 crore in the last nine trading sessions. Interestingly, the mutual funds have been consistent buyers this month having invested more than Rs 5,000 crore in stocks in October.

Experts said that the stimulus packages announced by the global central bank largely have a neutral impact on India.

"Stimulus packages are neutral for India. On one had they help equities but on the other hand they also put upward pressure on the commodity prices. India's fortunes are more linked to its fundamental story. And India is on the path of becoming a healthy robust economy. We have bottomed up and are moving upward," said Mukherjea.

Analaysts said that the capital flows into the emerging market on account of Japan's stimulus package will not be as strong as US.

"While the stimulus by Japan can provide a counter balance to some extent but it cannot be as strong as the US stimulus. The money from US stimulus flows into all over the world including emerging markets. Japan's economy is not that international yet," said Bhat.

http://www.business-standard.com/article/markets/bank-of-japan-stimulus-turbo-charges-market-114103101144_1.html

NIFTY ALL TIME HIGH...

The STOCK-O-METER is back: STOCKS Performance Monitor:

Today Market Action Review:30-10-14

The Nifty exhibited a stellar show on the day of expiry and also on the day of ALL TIME HIGH, but missed closing. Nifty made a comeback to highs (HIGH touched 8180.2 on 8th Sep-14) after a serious correction from 8160.9 on 19^th Sep-14 to a low of 7723.90 on 17^th Oct-14. This is a “V” shape rise took one month to fall and in 15 days crossed the HIGHs. We have expected the rise but up to 8050 level or at the best 8130 but it could easily cross all barriers, without any resistance!.

SRF continued its journey as the results are good, add another 11+%, Century added 7 odd %, the story of FDI in Affordable housing is being sold high to rise the real estate sector and NBFC and Housing finance companies…

Actually a carpet are of 645sft falls under this category and all other small payers have the BIG advantage but markets are favoring these companies also.

The Bharat Forge, Eicher, T-motors & Maruti are darlings of the auto sales boom but the market yet to consolidate as the major state elections are over and the demand may fall in future but two wheelers may continue..

The BANKs asset quality is drifting, may see further erosion as demand is not picking and may take 2 more quarters.

The POLICY activity is BIG and the markets are enthused by such announcements but the quality of results yet to be ascertained. So buying at lower levels is advisable rather than catching……

…………………..

On 20^th Oct-14 published like…F&O action: The Reliance below 926 can take unwinding pressure to 876-79 range; any move above 948 can easily take it to 990-996 range without much difficulty. Reliance on the of gas price announcement (20^th Oct-14, Monday) registered a low of 911.55 since then it never traded below 926 touched a high of 981.55, today low is 947.10

Today published: The Relinfra may touch 600+ lower support at 573-71, Today High 601/575.30

On 22^nd Wednesday Published as...The Tata Steel may bounce from lows as the bottom support at 452, the run will take place due to short covering from 463, may easily touch 480 level. Today High 477.45/468.4

The major miss-reading is with ONGC and to some extent OMCs.

ICICI, YES, & DrREDDY RESULTS in focus...

BAMMIDI EMERGING ENTRY POINTS –

DAILY ENTRY & EXIT POINTS-BEEP-DEEP —30-10-14-Thursday

Yesterday Market Action Review: The markets are in BULLs grip as the BULL run has not even halted. The earlier correction seems to be an internal correction of a BULL run. The local developments may see a dampen BULLs hopes in future course of action as many HNIs names are involved in the 627 BLACL MONEY cases and SIT will EXPIDITE the process for the GOOD. My personal view is that huge bets are made in NIFTY as per F&O data but the market has neither made a sharp fall nor made a run up for new HIGHs.

The yesterday announcement of US, didn't made any impact on the stock markets but definitely will drag the markets down as anticipated by the analysts as the easy money pumping in the system will dry up in future.

The political will, economic developments and policy liberalization may hold the bottom support to markets.

STOCKS ACTION: Yesterday metals stocks made a serious come back from their lows, registered 3-6% rise. The Construction sector got FDI liberalization gave a positive jerk to realty stocks. The results of SRF kept the stock up by 20%. The Jubilant Life suffered 12%, fall OBC fell 5% due to poor numbers.

DEEP ACTION for 30-10-2014-THURSDAY:

Today the expiry will keep the markets choppy and the results of ICICI and YES in Banking space, DrReddy will swing to their numbers. Technically, the Nifty has good support at 8030, so long it stays above will add strength to Bulls. Bank Nifty took some pause but it registered 1300+ points rise from last F&O closing, whereas Nifty bare added 180+ points.

Today Nifty may see a gap up opening as Asian markets are in GREEN but the resistance at 8114-18 and 8135 needs to be decisively be crossed otherwise, it will add pressure on BULL to keep above 8090 will become a burden. The Nifty range can be 8145-8070, but deliveries are not advisable.

The Reliance as suggested earlier took support at 926 bounced back to 953-56 range will continue to cross resistance at 963-67, the bottom support at 946-44. The ONGC most laggard after the GAS price rise may see up move once crossed the resistance at 396 to 406 then to 411-414. The OMCs may also see some jump by 2 odd percentage.

The ICICI resistance at 614, above it will see it touch 1660-65 range, below 1589 will take it to 1518-16 range.

The SBI resistance at 2658-63 range will bring it to 2606-08, Yes Resistance at 644-45, below 635 will take to 606-08, above resistance 690 is easy to touch.

The metal pack will continue the journey. The Relinfra may touch 600+ lower support at 573-71, Relcap resistance at 461 need to be crossed for decent up move.

The PFC and REC will consolidate will see lower levels. BHEL has resistance at 259 may touch 246-48 range. The HUL may see short covering above 732 but advisable to short above 738-42

STOCK-O-METER---TUESDAY

The STOCK-O-METER is back: STOCKS Performance Monitor:

Today Market Action Review:

The markets are in Range bound without giving clear signal of direction move but the prime counters made a decisive move when the results are good. The pharma counters like SunPharma, RanBaxy, cipla and auro gave 3-6% gain where as other pharma counters gave negative returns.

As suggested, both the SBI and ICICI opened and stayed above he resistance, so made decent up move as it was happened yesterday in YESBANK.

The real estate stocks saw some recovery especially the INFRA ones, the NCC, IRB, HCC gave more than 5% returns, the telecom stocks continued to be under pressure, Justdial, Bharti, RCOM

LUPIN, BEML, BIOCON, ARVIND SUN, GE SHIP lost bulls favourate support for now.

Today Morning SUGGESTED:

Technically, Nifty has to trade above 8035, B-Nifty has to trade above 16480 for all good reasons. Today Nifty resistance at 8014-18, support at 7952-48 and 7936-39

NIFTY High/Low- 8037.8/7995.05; B-Nifty- High/Low- 16702/16607;

Reliance- High/Low- 942/926.1, ONGC-High/Low- 397.75/388.65:

SBI - High/Low- 2664.30/2606; ICICI BANK- High/Low- 1607.8/1580.0

BEEP_DEEP-28-10-14, Tuesday

BAMMIDI EMERGING ENTRY POINTS –BEEP

DAILY ENTRY &EXIT POINTS-BEEP-DEEP —28-10-14

27-10-2014- Monday-Review: The markets as expected fell from the top, resistance at 7062 level took support at 7985 level. The Reliance took down move but above the support level.

The HUL down ward journey as expected gave 5% fall.

The Yesbank registered stellar gain once crossed the resistance at 531. The

ONGC and OMC are the misses.

----In the broad market the BHEL and BEML are gaining day after day with bulls support. The Eicher motors also riding the BULLET boom.

The results dampened the JUST DIAL stock tanked by more than 10%,

All the reality stocks took a beating, fell by 5%, DLF double fall by 8 odd%

DEEP ACTION for 28-10-2014-TUESDAY:

Market may see a serious correction on the proposed/ongoing political battle of BLACK MONEY at least on the short-term. The holdings in mid- caps and high beta stocks shall be reduced by 70%. It got a serious reason to play on down side.

Technically, Nifty has to trade above 8035, B-Nifty has to trade above 16480 for all good reasons. The bottom support for Nifty stands good at 7930 and Bank Nifty 16180, any downward breach shall be used for shorting.

Today Nifty resistance at 8014-18, support at 7952-48 and 7936-39

The Reliance has to trade above 932 and ONGC above 393 for BULLs sake.

The SBI resistance at 2609-11, ICICI resistance at 1582-84, any move below 1565 will take it to 1518-14 range. But these are in consolidation mode.

The Anil group stock are being down played by markets, Relcap, Rel Infra, RCOM, R-power are no longer enjoying BULLs support, wait for some time.

The PSU Banks may see consolidation moves….

The STOCK-O-METER is back: STOCKS Performance Monitor: YESTERDAY SUGGESTED

NIFTY HAS RESISTANCE AT 8064-72 RANGE AND SUPPORT AT 7991-89 LEVEL

NIFTY High/Low-8064.4/7985.65; B-Nifty- High/Low- 16664/16471;

Reliance- High/Low- 963.95/936.8, ONGC-High/Low- 406/393.60:

RelInfra - High/Low- 581/565;

HUL High/Low- 766.05/715.5; RelCap- High/Low-469.5/453.5

DEEP-MARKET ACTION-27-10-14, Monday

BAMMIDI EMERGING ENTRY POINTS –

DAILY ENTRY &EXIT POINTS-BEEP-DEEP —27-10-14-Monday

The Nifty is likely to shuttle between 8140-7930. Bank Nifty broadly between 16750-15850.

DEEP-MARKET ACTION

NIFTY HAS RESISTANCE AT 8064-72 RANGE AND SUPPORT AT 7991-89 LEVEL

Reliance increased PTA price despite the drop in crude prices, will get support at 942-39 level will face resistance at 967 level, buy on declines scrip.

ONGC fell from 929 level 396, likely to cross 406 resistance may touch 411-14 range.

The OMCs will resume , BPCL support at 682-79, HPCL 491-87 and IOC at 366-64 is goo place to buy and even average if they break the support levels for decent gain in this week.

The power stocks will gain momentum, RelInfra support at 569-67, the stock may cross 606-611 easily.

The SBI&ICICI is in consolidation phase.

The Relcap has support at 456-58, can go up to 490+ in days to come.

The HUL is feeling heavy at 760-775 range, unless it trades above 770 with the results out-come, can see lower levels below 691 in days to come as the GST play is over.

The momentum stocks like ADANI, CENTURY, BHARATFORGE, APOLLO HOSPITALS, ARVIND MAY SEE SOME CONSOLIDATION TO UPWARD BIAS.

Positive returns--Nifty

Positive returns in four out of five Samvats

More reforms and economic recovery-led earnings growth should see markets head higher in new Samvat

Vishal Chhabria  |  Mumbai  

October 22, 2014 Last Updated at 22:45 IST

In four of the past five Samvats, the Indian equity marketshave delivered positive returns. What's more, compared to the other key global markets, Indian markets have figured among top performers in three of the last five years. This tally would have been better but for the currency crisis India faced in mid-2013 due to the Fed's surprise announcement that it was looking at tapering the quantitative easing - the liquidity it had infused in the US system to prop up economic growth rates. Nevertheless, India still ended with healthy returns - Sensex and Nifty delivered 11-13 per cent in Samvat 2069. India's performance in the last five Samvats is commendable given that the world over, the markets and economies were struggling to recover from the recessionary phase post the Lehman Brothers fall. In India, too, the last few years had seen a policy paralysis, leading to anaemic GDP growth. The credit also goes to FIIs who kept their faith in India's growth story, except on a few occasions like currency crisis and during 2010-11 when key markets across the world were in the red. (SAMVAT: TAKING STOCK)

As the new government led by Narendra Modi was seen taking control, Indian markets have been on the rise and scaling new highs. Modi's government has started taking major decisions after emerging the single-largest party in the Maharashtra and Haryana elections this Sunday. And, experts believe there are more such decisions in the offing, which along with a recovery in economic growth and India Inc. earnings should lead the market to new heights in the coming years.(Click here for tables)

http://www.business-standard.com/content/general_pdf/102314_01.pdf

http://www.business-standard.com/content/general_pdf/102314_02.pdf

http://www.business-standard.com/article/markets/positive-returns-in-four-out-of-five-samvats-114102201008_1.html

The Week Ahead & Stocks to buy in Samvat 2071

The Week Ahead:27^th to 31^st OCT-2014

Technically the markets are in Bulls move but a consolidation with short covering from the low of 7726 level. The markets rallied from 7930 level and has steam to touch 8070 level.

The expiry is round the corner, the markets wills ee a choppy session from Tuesday to Thursday.

The Diwali saw a gap up opening and continued with positive gains may continue on Monday first half with Bulls support and some short covering, the challenge may open up from Tuesday.

The run-up in the equities is dried up and results will dominate the moves. The PNB results are not exiting put the counter down from a high of 975 level to 920 level but it bounce from a low of 860 levels, whereas the BoB counter is struggling to stay above 880 level.

The quarterly results of HUL, Bharati Infratel and India Bulls Hsg on Monday, ABB, LUPIN, Ranbaxy on Tuesday, DrReddy, Grasim, OBC, SESASETERLITE, Tata Elxsi, Tech Mahindra on Wednesday, ACC, AMBUJA, ALBK, AndhraBank, BHARATI, ICICI Bank, IDFC, IOB, YES, TITAN on F&O Expiry day will announce results, ITC, GAIL, M&M, IDBI, NMDC, CENTURY, UNION BANK, NTPC and others like JSW Energy KTK Bank…etc will announce their quarterly numbers… The filter is ON with the results,… The growth stocks has bright future ahead.

Now, Nifty is in Bulls grip so long it stays above 7930 level but shorts can be initiated only below 7850 level. The buying at these levels is advisable with long perspective rather than quarterly basis. The Nifty has serious of resistances above 8050 level at 8070, 8135. The Nifty is good above 8120 when crossed the resistance at 8130-40 level. The Bank Nifty is good above 15850 and likely to cross 16750, may touch and face resistance at 16993. The Reliance and ONGC may find buyers interest at the lower levels.

 -------------------------------------------------------------------------------------

Stocks to buy in Samvat 2071

Here are a few stock recommendations for Samvat 2071 by leading brokerage and research houses

Puneet Wadhwa  |  New Delhi  

October 22, 2014 Last Updated at 22:48 IST

Samvat 2070 has been an eventful year for the Indian stock market, with the benchmark indices – the S&P BSE Sensexand the CNX Nifty rising 26 per cent each – hitting an all-time high of 27,354.99 and 8,180.20, respectively, in a liquidity and hope-driven rally that a stable government at the Centre after the general election outcome in May will help kickstart the comatose reform process and implement key policy decisions.

The BSE Mid-and Small-cap indices outperformed their larger peers rising 72 per cent and 52 per cent, respectively, during Samvat 2070.

Outlook and stock picks
While most analysts believe that the Indian markets are likely to trend higher and see a multi-year bull run on the back of an improvement in the economy as well as corporate earnings, they are mindful of the possible slowdown in global economy and its impact on India.

“For FY15, we would expect a Sensex EPS growth of around 15 per cent. We would expect earnings growth to accelerate once investment activity is revived and average at 20–25 per cent for the next several years. Considering that the valuation in several sectors like public sector banks, capital goods and infrastructure are extremely subdued, we would expect significant outperformance from these sectors in the next few quarters,” points out Varun Goel, head of portfolio management services at Karvy.

While capital goods, consumer durables, auto, banking and pharma indices rallied between 40 per cent and 60 per cent in Samvat 2070, a look at the top 10 stock recommendations (based on potential upside in percentage terms from the current levels) for Samvat 2071 from leading brokerage and research houses in the country suggests that select stocks can gain up to 70 per cent.

Infosys, ICICI Bank, Punjab National Bank, Reliance Industries, State Bank of India (SBI), ACC and Hero MotoCorp are some of the large-cap stocks that are part of the top recommendations across brokerages.

Analysts at HDFC Securities, for instance, believe that FY15 is a year of transition for Infosys and expect the company's growth to accelerate in FY16. “We see scope for Infosys to narrow the growth differential with peers, which could boost P/E expansion for the stock. Better clarity on capital allocation could be an additional trigger,” they said in a report.

SBI remains Motilal Oswal's preferred pick to play the recovery in Indian economy. Since SBI is highly levered to macro-economic conditions, an improvement in investment climate and interest rates would assuage asset quality fears, they believe.

Kolte Patil Developers, KNR Constructions and Prestige Estate Projects are some of the stocks brokerages remain bullish on in the real estate/infrastructure sector.


http://www.business-standard.com/article/markets/stocks-to-buy-in-samvat-2071-114102200188_1.html

Indian Markets WEEKLY REVIEW..!!!

WEEKLY REVIEW- 20^TH To 24^TH

The markets saw a rebound on the policy decisions made by the Central Govt. on diesel decontrol and the gas price hike made the required blood to BULLs to lift the Nifty from a low of 7727 to 8032 level and it may continue for a while with downward bias.

The markets are now at the crucial junction while index is concerned, whereas the Bank Nifty is in firm grip of Bulls. The Bank Nifty will not go into Bear Grip unless it trades below 15850.

The major gainers are the OMCs and ONGC but the ONGC saw a serious unwinding at higher level by Bulls as they built long positions with the much anticipated decision, long-back.

The DLF counter saw a serious short covering and bargain hunting gave a boost from 105 to 120+ levels but the SKS Microfin gave good returns on firm financial stability, rose from 280to 320 level. It is a medium term safe bet in the financial sector that can fetch from 300 to 450, with a stop at 280 level.

The REC and PFC got the bottom support and short covering as the rise of GAS price didn’t affect much and the power producing companies can easily pass on the costs. The NTPC, RELINFRA, T-POWER, R-POWER, ADANI has more steam in built to move up. The bank stocks took some up move due to the anticipated stability in the power sector and the demand for new loans.

The STOCK-O-METER is back: STOCKS Performance Monitor:

Earlier on Monday published as Nifty likely to see crossing the resistance at 7980 level, may easily touch 8032 in next 4 trading sessions

Nifty touched a high of 8031.75

On the same day regarding ONGC, mentioned as Technically speaking the yearly high cut can be expected so long as it stays above 420.

ONGC touched a high of 429 but it failed to trade above 420, came down to 397

On Monday regarding BULL COUNTERS: PSU OMCs and Oil producing companies. The ICICI bank in bulls grip has bottom support at 1489-92 range, may cross 1551-56 resistance. Axis results are good, so may cross 418-16 resistance from 398-401. Yes bank is good above 593-96, may cross 626 resistances to touch 636.The short term short covering may take BOB to 906-914 range once it stays above 875.

ICICI touched a high of 1593 from 1508 Friday closing, AXIS touched a high of 428 from 402 Friday closing, YES Bank touched a high of 631 from 600 Friday closing. The BoB yet to perform.

On Tuesday, expected ICICI may face resistance at 1552 which didn’t happen.

Where on Tuesday as expected YES took resistance at 632 level but could stay above 616 level. Similarly, RELCAP and RELINFRA performed very well as expected. But Tata Steel yet to deliver the results and cross 480 level.

NIFTY OUTLOOK--ONCE AGAIN...!!!

AN ADVANCE PREDICTION...NIFTY OUTLOOK

PHENOMENAL RISE&HIGHs but A Denial for NOW….

The Indian markets have performed stupendously, like a race against all ODDs and against all emerging markets. We are the best performing Indices YTD or for the quarter. The Rise is so phenomenal that no-body expected but few could CASH the opportunity. Now many new entrants are making inquiries and many more are looking as a decent opportunity to make HUGE money to meet their DREAMS.

The fact is that, since January-14, Nifty rose by 20%, Mid-Caps by 30% and Small caps by 55%, some Individual stocks rose by 400-700% from their LOWs. The hype generated now is due to change in the Government, a market friendly team at the top. But the fact is that No-body could SELL the National property via LIBERALIZATION for no reason, nor for a simple cause. The National growth based on immediate requirements and will be judged by prioritising/striking a right balance between “NECESSITY & COMMERCIALIZATION”. The Future is GOOD as huge investments will take place and the results will come in due course of time.

As far as the Stock Markets rise is concerned, a dead cheap stocks are at a historic low was one of the major reasons for FIIs relentless investments. The Global markets are also encouraging and FREE Supply/HIGH Liquidity is driving the markets for NOW. Very few are working on the REAL worth for the paper but relying on the PROJECTIONS. The Nifty is POISED for touching 9000+ as experts are working on the next 3-year EARNINGS and P/E that could safely take us above the above said number. I am not pessimistic but play a realistic role for valuing the Available Opportunity. The main reason for Nifty may seek SOUTHWARD JOURNEY because of looming DROUGHT, Poor Investments made by the CORPORATES in the Preceding/Previous 2-3 years, so NO earnings Surprise by the top companies.

So, the scenario is GLOOM in the Short-term, however the POLICY push can give some bounce but for the next ONE year will be very challenging. The Nifty stocks are moving up but the UN-Winding is a concern. The rise from here may not be that much sharp or serious, from here 2-Ups and 4-5 Downs. Because the FUTURE is promising, on any DEEP cut/ steep fall BULLs take charge to make a comeback to take away the Retail Investors most of the STOP-LOSSES.

THE BLOOM and GLOOM story…..THE MOMENTUM IS HIGH….

THE NIFTY MAY TOUCH 8785-8850 RANGE; BUT VERY LIKELY, IN THE SHORT-TERM LOW MAY  TOUCH 7000, NO SURPRISE EVEN IF IT TOUCHES 6600-6400 RANGE

THE BANK-NIFTY MAY TOUCH 20100-22000 RANGE; IN THE SHORT-TERM LOW MAY  TOUCH 12500-800, NO SURPRISE EVEN IF IT TOUCHES 10100-10300 RANGE

THE RELIANCE MAY TOUCH 1450-1550 RANGE;IN THE SHORT-TERM LOW MAY  TOUCH 801-811, NO SURPRISE EVEN IF IT TOUCHES 759-736 RANGE

THE ONGC MAY TOUCH 620-650 RANGE; IN THE SHORT-TERM LOW MAY  TOUCH 311-321, NO SURPRISE EVEN IF IT TOUCHES 270 RANGE

THE SBI MAY TOUCH 3850-3950 RANGE, IN THE SHORT-TERM LOW MAY  TOUCH 1920-1950, NO SURPRISE EVEN IF IT TOUCHES 1450-1430 RANGE

THE ICICI MAY TOUCH 2130-2080 RANGE; IN THE SHORT-TERM LOW MAY  TOUCH 1180-1220, NO SURPRISE EVEN IF IT TOUCHES 970-950 RANGE

THE RELCAPITAL MAY TOUCH 950-1050 RANGE;IN THE SHORT-TERM LOW MAY  TOUCH 440-415, NO SURPRISE EVEN IF IT TOUCHES 330 RANGE

THE RELINFRA MAY TOUCH 1080-1150 RANGE; IN THE SHORT-TERM LOW MAY  TOUCH 520-540, NO SURPRISE EVEN IF IT TOUCHES 440 RANGE

WE CAN EXTEND AND READ MORE NUMBERS… BUT THE DENIAL IS RIDING HIGH EVEN IN MY MIND…

PLS DON’T BUY NOW UNTIL NIFTY TOUCHES 7250-80 RANGE, BUT THE ACTUAL BUYING IN QUALITY STOCKS SHALL EMERGE FROM 7000 ONLY. THOSE WHO ARE COMPULSIVE, SHALL TAKE A STOPLOSS ROUTE RATHER THAN HOLDING FOR LONGER…THW WAIT MAY BE 3 YEARS…!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

FUTURE STARS..MID-CAPS.!!!

30 stocks with potential for strong RoE gains

Mid-caps in cyclical sectors such as Cement, Financials and Capital goods are estimated to earn higher profit for every rupee of shareholders' funds invested in the business

Sheetal Agarwal  |  Mumbai  

October 26, 2014 Last Updated at 15:20 IST

The S&P BSE 500 index has rallied by about 29% in 2014 so far fuelled by improving global scenario and formation of a stable government in India. Expectations of a revival in macroeconomic growth and hence better performance by corporates have made investors incrementally positive. Pick up in macroeconomic growth, improving profitability of corporates and potentially lower interest rates are likely to rub off positively on India Inc’s earnings as well as Return on Equity (RoE) ratio.

Return on Equity ratio, a key valuation parameter the Street tracks, is calculated by dividing net profit by shareholders' equity. It indicates how much money or return a company is earning on the shareholders' funds. Business Standard identifies some of the companies having potential for strong RoE expansion of over 300 basis points in each FY15 and FY16 and robust earnings per share (EPS) growth, based on consensus Bloomberg estimates. Most of these companies belong to beaten down cyclical sectors and hence are likely to witness significant RoE expansion on the back of revival in macroeconomic growth which in turn will boost their prospects.

Of the BSE 500 companies, about 30 are likely to witness RoE expansion of over 300 basis points each in FY15 and FY16. Of these, 12 are likely to turn profitable over the period of FY14-16 versus a loss in FY14, while four are likely to report high earnings per share (EPS) CAGR over FY14-16 - namely, JaiPrakash Power Ventures (up 334.1%), Ramco Cements (up 311.9%), Motilal Oswal Securities or MOSL (145.6%) and Gujarat Fluorochemicals (118.6%).

Barring Lanco Infratech, all other companies are expected to post earnings CAGR of 26% to 94.6% over FY14-16. Lanco Infratech, though will continue to post losses, albeit at an improving pace (losses are expected to decline). Its EPS is estimated to move from -Rs 10.2 in FY14 to -Rs 4.8 in FY15 and -Rs 2.4 in FY16. However, given the uncertainty surrounding various sectors, especially infra and power, investors would be better off avoiding companies in such sectors and await for clarity before taking an investment call. In fact, there are many well-known names with reasonable valuations outside these two sectors that investors may want to consider.

There could be multiple reasons for RoE expansion. Premal Madhavji, Head of Equities, Espirito Santo Securities, says, "The key reason for expansion in RoE is that most of these companies are unlikely to raise fresh capital in the next couple of years and management will focus on delivering stronger earnings. Also, if a company can issue debt at a lower interest rate than the rate of return on its investments, its ROE can increase."

Improving prospects
	Return on Equity (%)		EPS CAGR (%)	FY16E P/E (x)
Company	FY15E	FY16E
Bajaj Electricals	16.5	22.6	LTP	14.1
Birla Corp	10.9	14.5	66.7	9.7
Blue Dart Express	22.7	26.4	26.0	62.9
Capital First	8.3	13.1	68.7	13.9
Carborundum Universal	12.3	15.9	50.7	17.0
Crompton Greaves	12.0	16.0	67.1	17.4
Gujarat Fluorochemicals	12.3	20.1	118.6	9.1
Hathway Cable	-3.7	3.2	LTP	116.0
HSIL	7.3	11.4	94.6	20.1
India Cements	3.1	6.6	LTP	12.9
Indiabulls Power	2.5	7.0	LTP	7.2
Jain Irrigation	8.3	12.6	32.5	12.5
Jindal Saw	7.6	10.8	LTP	4.4
JK Cement	8.4	12.5	81.2	15.2
JK Lakshmi Cement	11.2	15.2	58.3	17.2
Jubliant Life Sciences	10.7	15.8	105.9	5.2
Mahindra CIE Automotive	8.0	12.5	LTP	16.2
Motherson Sumi	36.4	40.4	53.6	19.0
Motilal Oswal Financial	12.5	18.6	145.6	12.7
Oberoi Realty	10.9	14.8	54.8	9.7
Phoenix Mills	11.1	15.4	60.4	16.2
Prism Cement	4.4	18.3	LTP	17.2
PVR	18.0	22.2	45.9	23.3
Ramco Cements	12.5	18.3	311.9	3.7
Shoppers Stop	4.8	12.0	LTP	67.5
Tata Communications	21.2	32.3	85.8	30.4
Trent	5.9	10.2	LTP	32.8
Tribhovandas Bhimji Zaveri	16.1	20.0	43.1	12.8
TVS Motor	28.0	36.1	49.4	27.7
United Spirits	9.0	15.0	LTP	50.3
E:Estimates; LTP is Loss to Profit; EPS CAGR is over FY14-16
Source: Bloomberg, brokerages

Pick-up in industrial/consumer demand and consequently, capacity utilisation is another factor that can lead to better return ratios. Softening input costs (particularly crude oil prices and its derivatives) for companies with better pricing power will also rub off favourably on their return ratios through higher profitability.

Market experts believe domestic cyclicals such as banks and cement companies have high potential for RoE expansion from here on.

Pankaj Pandey, Head of Research, ICICI Securities, says, "Based on the theme of RoE expansion, we like sectors like cement, banks, capital goods, auto and telecom. In these sectors our key stock picks include UltraTech Cement, JK Cement, Larsen & Toubro, Greaves Cotton, SKF India, State Bank of India, Federal Bank, Bharti Airtel, Maruti, Bosch India and Exide Industries."

Madhavji, too, believes that the cement sector has scope for sustained RoE expansion in the next two years. "The recent uptick in demand and stable pricing is a positive sign. We expect a gradual recovery in cement demand on the back of our analysis of central plan and state spends in key states. We like JK Cement and Prism Cements in this sector", he adds.

The valuations of some of these companies, however, have partially captured the improving prospects. 13 of these 30 companies are trading at 15 times or less their FY16 estimated earnings - at par/below Sensex which is trading at about 15 times estimated FY16 price/earnings. Of the rest, seven companies are trading between 16 times and 20 times FY16 estimated earnings, and nine companies are trading at 20 times and above. While Lanco is expected to report losses, Hathway Cable and Datacom, Shoppers Stop and Blue Dart Express have the highest valuations of 63-116 times.

"We believe that valuations as of now do offer opportunities to make reasonable returns over a three to five year period. If the required reforms do happen as per expectations then the recovery may be stronger, which would further propel earnings’ growth rate/RoE expansion. This would then make the current valuations more attractive", says Pandey of ICICI Securities.

http://www.business-standard.com/article/markets/30-stocks-with-potential-for-strong-roe-gains-114102600340_1.html