Indian stock market and companies daily report (June 08, 2012, Friday)

The Indian markets are expected to open in the red tracing negative opening in most of the Asian bourses and the SGX Nifty. Asian stocks were trading lower after comments by Federal Reserve Chairman Ben S. Bernanke overshadowed China’s first interest-rate cut since 2008.
The People’s Bank of China has lowered its benchmark lending and deposit rates by 25 basis points. The announcement, two days before China is due to report inflation, investment and output figures, may signal that the economy is weaker than the government expected. Bernanke said the central bank will need to assess conditions before deciding if more measures are needed to stoke an economy threatened by Europe’s debt crisis and U.S. budget cuts.
Meanwhile Indian shares extended recent gains on Thursday after the rupee breached the 55 mark to hit a two-week high against the dollar reflecting a return of appetite for risk. Talks of the government giving a big push to infrastructure development bolstered sentiments. Although there were reports of the Union Cabinet deferring a decision on the Pension Bill due to lack of consensus, the benchmark indices ended the trading day with significant gains.

Markets Today
The trend deciding level for the day is 16,617/5,039 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,713 – 16,777/5,070 – 5,091 levels. However, if NIFTY trades below 16,617/5,039 levels for the first half-an-hour of trade then it may correct up to 16,552 – 16,456/5,018 – 4,987 levels.

China cut borrowing costs
China reduced interest rates for the first time since 2008 and loosened controls on banks’ lending and deposit rates, in its bid to combat a deepening slowdown as Europe’s ongoing debt crisis threatens global growth. The one-year lending rate and one-year deposit rate were reduced by 25bps to 6.31%, and 3.25%, respectively. Banks are now given more leeway to offer upto 10% higher than benchmark deposit rate to depositors and to charge upto 20% lower than the key benchmark lending rate (previously 10%).

RIL plans a capex of Rs.100,000cr over next 4 years
Reliance Industries (RIL) conducted its Annual General Meeting (AGM) for FY2012. With cash and equivalents of ~Rs.80,000cr as of March 31, 2012 on RIL’s balance sheet, Chairman Mr. Mukesh Ambani announced that the company plans to invest Rs.100,000cr across business segments over the coming four years. It targets to invest ~US$3.5bn on shale gas. On its core petrochemical business, RIL aims to increase its capacity to 25mn tonnes from the current 15mn tonnes and also invest in operational efficiency projects. RIL aims to become a market leader in retail business and targets to achieve top-line of Rs.40,000-50,000cr over the next threefour years (current top-line Rs.7,600cr). Further RIL informed that although KG D6 production has declined over the past one year to 34mmscmd, it aims to raise total gas production to 60mmscmd by 2015. On profitability front, Mr. Ambani said that RIL aimed to double its operating profits in the coming five years. RIL has bought back 2.79cr shares at a cost of Rs.1,929cr under its share-buyback program. Alongside decline in KG D6 gas output, deployment of huge cash pile was amongst the key concerns on the stock. Clarity over deployment of cash is positive in our view. We maintain our Buy rating on the stock with a target price of Rs.879.

L&T bags orders worth Rs.2,410cr
L&T’s construction arm has won Rs.2,410cr new orders across various businesses during April-June 2012. The Buildings and Factories IC has secured new orders worth Rs.1,921cr. The orders are from leading developers for the construction of major residential towers across various cities in the northern part of the country. L&T Infrastructure IC has won orders to the tune of Rs.345cr for the design and construction of viaducts and three elevated stations from Delhi Metro Rail Corporation which also includes additional orders from various ongoing projects. Water effluent and treatment business has bagged new orders worth Rs.244cr from Bangalore Water Supply and Sewerage Board for upgrading the existing water distribution systems including additional orders from various ongoing projects.
At the CMP of Rs.1,277, the stock is trading at 16.7x FY2014E earnings and 2.4x FY2014E P/BV on a standalone basis. We have used the SOTP methodology to value the company to capture all its business initiatives and investments/stakes in different businesses. Ascribing separate values to its parent business on a P/E basis and investments in subsidiaries on P/E, P/BV and mcap basis, our target price works out to Rs.1,553, which provides 21.6% upside from current levels. We recommend Buy on the stock.

Economic and Political News
- People’s Bank of China cuts interest rates as economy continues to slide
- Monsoon 36% below average in first week: IMD
- PM's push for infra sector to boost investor confidence: CII
- Cabinet defers decision on pension reforms bill

Corporate News
- Tata Steel to set up Rs.30,000cr plant in Karnataka
- Suzlon to invest Rs.15,000cr to set up a 2,500 MW wind farm in Karnataka
- Dr Reddy's launches generic Parkinson's disease tablets in US
- BHEL commissions 250MW unit at UP thermal power project
- Jubiliant Life Sciences to invest ~Rs.1,000cr across businesses in Karnataka

Online share trading in India, open demat account in Angel Broking for stock market trading

What are the advantages and disadvantages of Online Trading?

Due to the problems that arose during paper shares, there was a need of a system that would make share transfer, buying/selling of shares, etc. an easier affair.

Therefore in 1996, the Indian parliament passed the Derivatives act, which allowed online transaction of shares, thus making it much easier for the broker and investor.

In the new online Trading system, an investor must open a demat account with one of the Stock Brokers to start trading online.

A demat account is a must for an investor to trade online.

Mentioned below are some of the advantages of trading online:

1)            Easier and convenient way to own shares

2)            Immediate transfer

3)            Zero stamp duty on transfer of shares

4)            Safer than paper shares, e.g., fake signatures, delay, thefts, etc.

5)            Lesser paperwork for transfer of securities

6)            Less transaction cost

7)            No “odd” problems. Even a single share can be sold.

8)            DP registers a change in address with all companies. No need for the investor to contact the companies immediately.

9)            DP transmission of securities, thus eliminating the need of notifying the companies.

10)          Automatic credit in demat accounts

11)          Both equity and debt instruments can be held by a demat account

The depository system aids in reducing the expenditure of new issues due to lesser printing and distribution costs. It increases the efficiency of the registrars and transfer agents and the secretarial department of a company. It provides better facilities for communication and timely service to shareholders and investors.

The disadvantages of online trading are mentioned below:

1)            Investors, who are trading for the first time, go with the flow and get immersed in technology and actually temporarily forget that they are actually using their real money. 

2)            There is no relationship that of a mentor between a professional broker and an online trading account holder, thus leaving the investor on his own to make choices of the right shares.

3)            Users who are not familiar with the ins and outs of the basics of brokerage software can make mistakes which can prove to be a costly affair.

4)            This is like any other financial strategy, where your commitment to online trading takes research and dedication to make sure by yourself that everything is up to par. You have to take time out to do your own research where you will have to overcome a great learning curve to make some money from online trading a possibility.

Online share trading in India, open demat account for stock market

Factors influencing Stock Prices in India

A stock price or share price is the price of a single stock or a number of stocks that are saleable of a particular company. Once the stock or stocks have been purchased, the owner becomes a shareholder of the company that has issued the particular stock.

Analysts use random walk techniques in economics and financial history to model the behavior of asset prices in particular share prices on stock markets, currency exchange rates and various commodity prices.

This practice is ritual and has its basis on the presumption that the investors will act rationally and without any biasness and any moment they can estimate the value of an asset based on future expectations.

Under these conditions, all the current information affects the price of the stock which changes only when any new information comes out. The asset price is randomly affected when new information appears randomly.

It has been demonstrated by empirical studies that prices do not completely follow the random walk.

Low serial correlations may exist in short term and have slightly stronger correlations over the long term. Their sign and strength also depends on a variety of factors.

It has been found by the researchers that some of the biggest price deviations are from random walks that result basically from seasonable and temporal patterns. Particularly, the returns in January normally exceed those in other months and on Mondays, stock prices may go down more probably more than on any other day.

It has been observed that these effects in various markets since last 50 years or so.

But there has been no satisfactory explanation for their persistence.

Most of the technical data is used by the anomalies to gather and extract information on future price movements via historical data. However, some economists’ follow the Eugene Fama as a result patterns occurs most frequently. This results in an irrational or insufficient behavior of many investors. The large amount of data that is available for researchers for an analysis that can literally cause fluctuations.

Another school of thought, i.e. behavioral finance is attributed by non-randomness to investigations, cognitive and emotional biases. Thus, this can cause a contrast with the main fundamental analysis.

When this is viewed over longer periods, the stock price may or may not be directly related to the earnings and dividends of the firm. Over short periods of time, more so for the younger or smaller firms, the relationship between a stock price and dividends are mostly unmatched.

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Indian stock market and companies daily report (March 30, 2012, Friday)

The Indian markets are expected to open in the red tracing negative opening in most of the Asian indices. Asian stocks fell for a second day as growth in U.S. durable-goods orders trailed estimates.
The US markets drifted lower over the course of the day on account of profit booking as some traders cashed in on the recent strength in the markets amid calls by a number of analysts for a correction. Traders also reacted negatively to the latest batch of U.S. economic data, including a report from the Labor Department showing that weekly jobless claims came in above economist estimates. However the indices recovered significantly in the later sessions and eventually ended up near the opening.
Indian shares extended losses for a second consecutive session on Thursday, as concerns about growth prospects in the world's two largest economies prompted investors to square off long positions on the expiry of March series derivative contracts.

Markets Today
The trend deciding level for the day is 17,136/5,200 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,232 – 17,342/5,231 – 5,267 levels. However, if NIFTY trades below 17,136/5,200 levels for the first half-an-hour of trade then it may correct up to 17,026 – 16,930/5,164 – 5,133 levels.

TCS to provide banking solution - BaNCS to AmBank, Malaysia
TCS' financial services platform, TCS BaNCS, will replace Malaysian AmBank's core banking engine. This integrated banking suite, spanning conventional and Islamic banking, will support both retail banking and lending functionalities. TCS BaNCS will help expand AmBank's business into new areas. It will also enable development and the scalability required to meet both current and future market and regulatory needs. Due to this deployment, TCS may soon have a regional support centre for TCS BaNCS in Kuala Lumpur. We maintain Accumulate rating on the stock with a target price of Rs.1,262.

NTPC Tamil Nadu Energy Co. commissions Unit I of Vallur Power Project
NTPC Tamil Nadu Energy Co. Ltd. a JV of NTPC Ltd. and TNEB has commissioned Unit I (500 MW) of Vallur Thermal Power Project on March 28, 2012. With this, the total capacity of NTPC group has become 36,514 MW. In all NTPC group has commissioned 2,320MW of capacity in FY2012 till date, which is below the initial target of 4,320MW. At the CMP, the stock is trading at 1.6x FY2013E P/BV. We maintain a Buy on the stock with a Target Price of Rs.199.

Economic and Political News
- February infra output up 6.8% yoy
- Indian GDP to grow at 7.5% in FY2013: Fitch
- Government will clarify stance on P-Notes taxation: Finance Minister

Corporate News
- Tata Motors hikes commercial vehicle prices by up to Rs.60,000
- Tata Motors to invest Rs.600cr on defense vehicles
- NTPC to halt expansion of gas-based projects
- Bharat Forge earmarks Rs.100cr to develop artillery gun

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Daily Report for Indian Stock Market

Vision on markets today

A lower than expected economic growth in the third quarter led to bearish outlook on the Street yesterday. The BSE Sensex plunged over 250 points from the day's high to fall into negative province in afternoon session. The Sensex closed up 21.56 points at 17752.68, while the broader Nifty index up 9.7 points at 5385.20. The third quarter gross domestic product (GDP) grew at 6.1%, falling short of consent guess that had pegged GDP growth at 6.3%. This is the slowest pace of economic growth since 2008. BSE Midcap Index was up 1.10% and BSE Smallcap Index moved 0.62% higher. Amongst the sectoral indices, BSE Oil&Gas Index gained 2.53%, BSE Power Index moved 0.28% higher and BSE Realty Index advanced 1.10%. Whereas BSE Capital Goods Index was down 1.59% and BSE Bankex slipped 0.59%. The Major Sensex gainers were ONGC, Sterlite Industries, Tata steel, Reliance Industries, and Wipro up 3.46%, 2.98%, 2.90%, 2.84% and 2.72%. Whereas Larsen & Toubro, Jindal Steel, HDFC Bank, Maruti Suzuki and Tata Motors were down 2.91%, 1.81%, 2.34%, 1.02%, 0.68% respectively. Shares of ONGC pitch higher on reports that the government is set to initiate its FPO through share auction. The government is likely to mount around Rs.124Bn.

Market breadth was muscular at ~1.23x as investors bought large lid stocks. On interim basis, FIIs bought equity of Rs.5.80Bn while domestic institutions sold equity of Rs.4.31Bn.

Asian markets are mixed today, as Japanese stocks are increasing while Chinese are down after a weak close for the US markets.

We anticipate a cautious opening for the Indian markets which tumbled on profit taking from the investors yesterday. Weak GDP data announced yesterday may oppose investors for strong buying in the Indian markets today.

Economic and Mutual Improvement

The government's financial deficit target for the current year has been violated in January, and with the numbers for the two months still to come, the gap between expenditure and revenue may extend further. At the end of the 10 months ending January, the financial deficit was Rs 4, 34,933 crore or 105.4% of the target, the Controller General of Accounts (CGA) said.

Bustling stock

In one of the prime property covenant in the country in recent years, the real estate division of Adani Enterprises (AEL) has bought a two-acre land parcel in Mumbai from property developer HDIL for Rs 900 crore. The plot is situated at the city’s Andheri suburb. It was component of a large mixed-use project being developed by HDIL, sources said.

ONGC’s overseas investigation arm ONGC Videsh Ltd (OVL) and GAIL India have confirmed their awareness in bidding for UK-based Cove Energy. The association may have to quote a price in surplus of $1.77 billion, the amount already quoted by Thai rigid PTT.

A joint venture (JV) between BGR Energy Systems and Hitachi Power Europe has appeared as the lowest bidder for NTPC’s Rs 16,000-crore supercritical boiler order. BHEL had appeared as the second-lowest bidder, while a JV between Larsen & Toubro (L&T) and Mitsubishi Heavy Industries was placed third lowest, an official from NTPC said.

Arvind Ltd, the textile chief is looking to liquidate about 1.5 million square meters of its enormous tracts of land in Gujarat and Karnataka with the predictable revenues of Rs 5000 crore over the next two years' time.

State-owned oil companies today hiked jet fuel price by 3.2% on the back of firming up of global oil tariff.

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