Market view & Stock Pick
Prabhakar A.K
Nifty (5989) - Nifty has seen 7days of negative close taking support @50DMA 5984 chances of trend reversal very high if Nifty trades above 6015 then chances of positive closing ahead of long weekend becomes possible. Today becomes very crucial 8th day today’s low becomes very important and if Nifty doesn’t breach 5972(sustainable basis) previous day low and close above 6045 then we can assume short term correction is over and nifty can likely target 6157 & 6200 in days to come. While on other hand if markets continues to be weak then 5946 & 5885 becomes important support levels.
Banking stocks to be in focus after RBI governor Dr. Raghuram Rajan said No Fundamental Reason for Rupee Volatility.
RBI has 3ways to tackle OMC repayment, easiest option would be for us to settle the swap with the OMCs by making net payments in rupees
RBI is concerned about the weak economy as well as high inflation
RBI to undertake OMOs for Rs. 8000 crore on November 18 ( Taken from RBI Press Release)
HDFCBANK-AXISBANK-ICICIBANK-BANKBARODA-SBIN-CANBANK-PNB-INDUSINDBANK-KOTAKBANK looks very good for 4-8% rally if yesterday’s low is held and other PSUBANK may follow soon.
SUNDARAMFINACE Rs.581, Stock has made all time high with V-shape recovery, breaking previous high Rs.575 (which was double Top in weekly & Monthly) made 111trading days before; now target of Rs.645 & 680 becomes possible in this stock.
Market cap-6458crs Bloomberg FY14EST- EPS 59.7 EST Book/FY14-284
RECLTD Rs.209
Market cap-Rs.20662crs TTM EPS-43 Book Value-191.8 NIM-4.86% and check asset quality better than most of the banks & NBFC. Stock trades 1.08 time book being a PSU and having 87% exposure to state (82%) and centralPSU (5%).
http://www.recindia.nic.in/download/FINAL_Q2_FY14_131113.pdf
RECLTD on weekly chart is on verge of major break-out above Rs.218 and target of Rs.242 -268 & 300 for different time frame becomes possible. Stock corrected from all time high Rs.413 (October 2010) to low of Rs.143 (December 2011).
Prabhakar A.K
Nifty (6056) - Nifty has closed positive after correcting from 6342-5972 now if 5970 holds on closing basis then 6250 & 6475 on cards in next 2-3weeks. Range for the week could be 5970-6210 and for the day Nifty has to hold 6015 and cross 6105 to confirm that trend has reversed after 7days of correction.
Nifty has sustained GOLDEN CROSS made on 1st November, trades above all major averages 200DMA 5862 100DMA 5853 and 50DMA 5994.
Result season ended with no major negative surprise & any pick up in economy, market normally will discount well in advance
Result season has ended on better than expected results with Capital Goods companies showing improved order book, Metals results indicate visible ending of down cycle while PSU Banks fresh slippage are showing signs of deacceleration and in next 2quarters worst maybe over . Nifty 20Companies benefit on weak rupee and they have reported better than expected earnings on Rupee weakness, pick-up in global growth and cost control. IT and Pharma Companies guidance show strong prospects of growth pick-up.
While negative where Cement & PSUBANKS where government reform push is need of the hour which is started to happen, but will take more time and effort to implement on ground level.
Bloomberg Estimate full year2014(January-December) earnings 499 for which market trades 12time forward and for investor looking for 2-3years these levels are very attractive as worst is getting priced in and best is yet to come.
Source Bloomberg
M&MFIN Rs.293
Market cap-16676crs Bloomberg FY14EST- EPS 18.85 Book-78 NIM above 9%
M&MFIN has highest NIM being well connected rural base and company has consistent growth since inception in 1991. MMFS didn’t apply for banking which surprised market, but company didn’t want to miss any of the 650branches and the strong rural base it already had in the process of bank conversion.
Technically stock looks very good to target Rs.350 in next 2-3months Stock made all time high Rs.306.5 on 29th October and made a small triangle in last 12trading days and Stock holding 283 on sustainable basis can cross 310 in 1-2week.
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A.K.Prabhakar
Prabhakar A.K
Nifty (6189) - Nifty has gapped-up(6101-6110) and if the gap level 6101 holds for next 2-3days then Gap-down(6311-6304) made on 5th November could be closed in next 6-7 trading days. Today nifty holding 6150 and crossing 6240 is very important for the upmove to continue where 6290 & 6357 by the week becomes possible, while falling to cross 6240 then correction till gap levels becomes possible, which would only become opportunity to buy as BANKNIFTY is showing strength for 8-10% rally supported by RELIANCE, ITC, HINDUNILEVER and L&T which form more than 50% weightage.
Update—6th November report,” HINDALCO Stock has made a W-Shape consolidation and now stock above Rs.119 on closing basis could lead to Rs.135 & 147 by end December”.- Stock has closed above Rs.119
AXISBANK-Rs.1139 (Makes Positive ISLAND Reversal) Target above 1265 by 31st December 2013 if Rs.1100 is held on lower side
Market cap-53481crs Bloomberg FY14EST- EPS 117 Book-772 NIM above 3.82 %( 1st half) Branches 2225 & ATM-11796
AXISBANK has made Positive Island on daily & Weekly chart which is very positive for 8-12% up move, ISLAND is formed when Gap up& down form at same level making a portion of the chart away from main charts. On weekly charts Gap-down (1112.55-1010.55) next week Gap-up (1010.55-1116.35) and weekly candle showing a Hammer pattern which suggest trend reversal.
AXISBANK on daily charts Gap-up(1102.45-1116.35) so till 1102 is not breached on downside chances of Stock crossing recent high Rs.1261 is very high.
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A.K.Prabhakar
Prabhakar A.K
Nifty (6203) - Nifty range bound in 32points ahead of FOMC meet and if 6230 doesn’t cross then small dip till 6125 on cards before the rally can gain strength. Today Nifty has to hold 6185 and cross 6215 to target 6250 & 6300 while failing to cross 6230 then correction below 6180 could bring 6150 or 6125 levels before an up move can resume.
December Month of positive with average 4.8% return in last 10years in Nifty, with 2011 only being the negative year which makes it one negative year in last 11years 2002-2012.
While Sensex which has data for last 20years just 4times December has been negative 1994, 2000, 2001, and 2011.
December2013 View: Nifty made all time high in January 2008 -6357 and failed to cross that making double top in November2010 6338. Now Nifty has regained strength and made high 6342 with 8trading days still remaining for the month if we break 6357 in this month, then I expect year 2013 close to be around 6500-6800.
Update— http://economictimes.indiatimes.com/markets/stocks/views/recommendations/markets-off-highs-what-traders-should-buy-or-sell/articleshow/26029780.cms BATAINDIA has made all time high Rs.1038 and target of Rs.1150 & 1235 looks possible in the stock.
INFY-Rs.3442 (All time high Rs.3499 made in January 2011)
INFY on verge of making all time high after 34months of consolidation, once INFY closes above 3500 then target in next 11-13Months Rs.4380 & 4630. INFY has made good rounding bottom formation on monthly charts and for the kind of base formation stock has made, above Rs.3500 can see Rs.1000-1200 being the Depth of the pattern. Stock has Gapped-up twice in last 8trading days post settlement in U.S(Visa Issue) which indicate strong hands accumulating the stock.
Market cap-197706crs Bloomberg FY14EST- EPS 181 Book-756 Cash in BS 21011Crs Free Float-166002crs
Comparison of P/E INFY vs TCS, INFY was trading @ rich valuation compared to peers due to high Cash holding and delivering above market expected results with relatively high margins but from 2010 Stock lost leadership due to falling margins & growth. TCS post listing took time but now commands premium to peers; TCS trades now @ 29P/E to 19P/E of INFY.
Source Bloomberg
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A.K.Prabhakar