Power - No longer Powerful

Power - No longer Powerful

 

The sector is facing lot of hurdles leading to growth pains for many of its players as well for the companies related to the industry.

 

Unless the issues are resolved or any government policy action is brought in the headwinds for the sector are to continue for some time now. The sector as a whole has been corrected downwards 36% from the Oct 2010 highs till date. Going forward the weakness in the sector is to continue.

 

Companies like NTPC, Tata Power, Adani Power and Reliance power look weak, while NHPC looks good on longer term perspective. The business model for NHPC is different with focus on hydro power generation which is a growing need of an hour as the generation capacity is skewed towards thermal power. NHPC will also not be influenced by the on going concerns of thermal segment directly. We already have coverage on the stock with a price target of Rs. 33.    

 

Berger Paints - Value Pick - BUY

 Paint Your Imagination

 Berger Paints                    Buy                                  Price    108                                                                      Target   130  

Berger Paints India (Berger) is the second largest decorative paint company in India. Company has an overall paint industry market share of ~17%.

 Company Description

Berger Paints India Limited is a paint manufacturing company. The Company's products consist of interior wall coatings, exterior wall coatings, and metal and wood paints. Berger Paints India Limited was founded in 1760 and is headquartered in Kolkata, India 

 

Investment Arguments
~Lucrative Industry Outlook
~Capacity addition plans help to enhance sales
~Less vulnerable to increase in raw materials prices
~Increasing their Presence

 

~ Valuations

 

Going forward, we expect Berger to maintain the good growth momentum on the back of additional capacity along with new product offerings in premium segment and its expansion plans in south region. At CMP of 108 stock is quoting around 18x and 16x for FY 12e & FY 13e. We recommend to buy the stock at CMP for 12-15 months horizon for a target price of 130 (19.19x FY13E EPS of 6.78), giving an upside of 20% from current price.

 

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Daily Fundamental Snippets - 14/09/2011

OUTLOOK

 

Today global markets are positive and we may see positive opening on our indices also.

 

Yesterday Banking shares gave up early gains that were spurred by talk the Reserve Bank of India (RBI) may pause its 18-month long monetary policy tightening after one more rate rise this week. Industrial output growth had slumped to 3.3 percent in July as high borrowing costs crimped demand.

 

Monthly inflation data is due today and is expected to set the tone for RBI's rate decision on Friday. Also advance tax numbers may help to get some sense of the direction of the markets and set the mood for the nvestors as well.

 

There are different views on whether the RBI will raise rates or not, but it's quite possible that the peak of the cycle is around. But rates may not start falling in a hurry, with inflation being what it is.

 

We maintain our cautious stance on markets for today.

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Derivatives Strategist 14 September 2011

Market Outlook

 

After a gap down opening, nifty future moved up towards 5040 levels but was unable to hold those levels and fell down sharply to 4900 levels. On option front, maximum Put OI is at 4700 followed by 4800 strike while maximum Call OI is at 5200 followed by 5000 strike. If Nifty future sustains above 4950 levels then it may move up towards 5020-5050 levels. On downside if it fails to hold 4900 levels, then selling pressure may get intensified in the market towards 4850-4800 levels.

 

Derivatives Calls : Buy Cairn and Sell Jswsteel

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First Morning Technical Call_14092011

Market Outlook:

S&P CNX S&P CNX Nifty for the day range 4910-4985, breaking the range would give better sense of direction but, Nifty has to close pending partial  Gap-down (5046-5030) which is an immediate resistance on downside below 4900 then 4815 which is 200Weekly average and 4720 recent low can be important levels to watch. Shorter term Nifty 5169 double Top is important resistance added to that Gap-down(5229-5324) on 5^th August, then 100DMA 5407 and 200DMA 5554 are important levels  to be crossed by any rally. Nifty on downside breaking 200Simple Weekly average 4818 below close then 4500 & 4350 would be faster to become possible as advance tax numbers have started to flow with no major surprise as per indication. Weaker Rupee 47.56 lowest in 15months, down 8% from July peak is hurting importers and falling crude prices is negated keeping inflationary pressure high as RBI meets on 16^th and many exporters who have hedged their position would face mark to market losses.

 

 

 

§  Sensex- has closed partial Gapped-down (16830-16766), and corrected to go below previous day low making 16350 as important support breaking which, Sensex moving below previous low of 15765 is very high. Sensex 200Simple weekly average 16068 below close market correction would be fastest and 14,000 levels is not ruled out. Sensex 20DMA 16585, 100DMA 18008 and 200DMA 18513.

 

Technical Calls:

 BEML-473, has formed a triangle formation near a bottom, making higher lows and higher high could lead to levels near Rs.520. Stock would be a break-out above Rs.480 as there has been multiple top around Rs.478-479 nearly 4 times in last 6trading days and previous day volumes has been high in last 11trading session which shows inherent strength in Defense PSU.

 

TULIP-148, stock has closed @ 19trading days high on higher volume and this stock faces resistance around 154 which is 100DMA and 200DMA Rs.158. Stock has been in trading range so breaking Rs.150 it would move to higher range of Rs.165-150 so this can be good for smart traders who trade within a range on daily basis.

 

 

 

 

  Technical View:

BHEL Cmp Rs.1701, Stock has closed near 15 days low added lowest close for the stock since 14^th May/2009 is 1681 and lowest level in 28months if Rs.1660. Stock has been trading in a lower range for almost 2months and any break below 1660 then 1545 can be possible level on downside in the stock which is trading in a falling channel in weekly charts.

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