CP | Dalal Street

Will the SENSEX Rally Hold ?

March 26, 20092 min read

India’s strong 25%+ bounce from lows, +ve YTD performance, and recent peer market outperformance has been backed by – Near-trough valuations, Signs of growth revival and resilience in consumption demand, Rising monetary flexibility and rate reductions, Liquidity and stabilization of domestic credit market. FIIs have bought stocks more than Rs 3,000 cr in CASH in the current rally.

The summer will be the season of election and global risk pullback will have a more lingering effect. Will this Rally Sustain or was it just a spike ? (more…)

Breaking Corporate India Earnings News

Tata Chemicals reinforces confidence

March 25, 20091 min read

As per the company soda ash prices are stabilizing and demand in North America is stable despite slowdown as flat glass demand gets replaced by container glass. The company has also not scaled back price hikes it got in CY08 in UK and Netherlands.

Post channel checks and meeting with Tata Chemicals management we believe price correction in the stock is overdone given stabilizing prices in soda ash and strong expected free cash flow led by urea and iii) improving scenario in DAP.

Post de-bottlenecking, urea capacity is up 30% and is already functional. The company is in talks with Reliance Industries for gas supply and is likely to get ~US$6/mmbtu delivered cost. Moreover, we expect DAP and IMACID operations to become profitable in Q1 FY10 given strong correction in rock phosphate prices globally.

Economy, Markets and Macro Views

Sensex in 15 Year Bull Rally ? Elliot Wave

March 25, 20091 min read

Elliott Wave International in a report released just a while ago said

Prices in India’s Sensex have just broken above a downtrend line, imitating a pattern from 2004 that led a strong rally

The Sensex rose in the past few days, on optimism U.S. plans to rid banks of toxic assets will help ease the credit crisis and revive global economic growth. This five-wave cycle will include three rallies, with each peak exceeding the previous one. The first wave started with gains between April 2003 and January 2008, (more…)

Equity Research

15 Stocks with Potential to double in 15 Months – Kotak

March 25, 20092 min read

Kotak has identified stocks that show steep increases in earnings over the next two years and / or stocks that are trading at very low multiples. 15 stocks with the potential to yield 50-100% returns over the next 18 months and examine the drivers required for these returns. In most cases, these are a sharp rebound in earnings (select commodity stocks), a potential re-rating of multiples led by better than expected operating and financial performance (largely banking stocks) and potential positive catalysts (RIL). (more…)

Mutual Funds Review

Equity Outlook by HDFC AMC

March 24, 20091 min read

Here is the outlook for Equity by HDFC’s CIO and Sr. Fund Manager Mr. Jain.

Current valuations are cheap even assuming NIL earnings growth in FY10. Sensex FY09e EPS-Rs.876, FY10e EPS-885. Equities on current yield are cheaper than bonds – Equities yield: 10.0%, Bond Yield: 6.5%. This points to extreme pessimism and significant under valuation.

Fall in oil price has reduced risks for India and has improved longer term economic outlook. Over next 3 years, potentially, HDFC AMC expects approximately 30% earnings growth (assuming nil growth in FY10 and 15% CAGR thereafter) which will lead to approximately 50-80% P/E expansion.

How Small Investors Lose Money ?
According to AMFI data, Equity Investments in Mutual Funds FY 2008 at the Peak was INR +49,360 cr. Between October – January 2009 Bottoming INR -1,072 cr. So they have invested at the Peak and Exited at the Bottom 🙂

Isn’t it easy to say BUY Cheap and SELL HIGH ? Then why aren’t you guys BUYING cheap now ? At least small amounts of SIP.

Equity Research

Respite for Ranbaxy – US Still a concern

March 24, 20092 min read

Corporate FreePress of India broke the news that, Ranbaxy’s Paonta Sahib plant has received GMP certifications from MHRA, UK and TGA, Australia. Certifications have been issued following a joint audit conducted in October 2008. The MHRA certification is valid for three years, and covers product filings across the EU, while the TGA certification is valid for two years.

Europe remains a key market for Ranbaxy, accounting for 20% of total sales in CY08 US$328m), while Australia accounted for c.1%-2% of overall revenues. These now appear secure, at least from a regulatory standpoint. (more…)

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