4 Jan 2010

4th Jan, 2010

Asian Markets :

SGX Nifty : +8 (5227)
Hangseng : + 40.33 (21912)
Nikkei : + 122 (10669)

Recommendations :

Note : Follow buy recommendations in +ve bias and v.v.

Buy Thomas Cook  sl 65   Trg 72
Buy  Kamathotel sl 61  Trg 72
Buy SREINTFIN  sl 73  Trg 89
House of Pearl Fasion sl 83  Trg 91
RIIL sl 923  Trg 970 / 996
Aban sl 1242 Trg 1330
RECLTD sl 236  Trg 252
CMC sl 1320  Trg 1382 (Abv 1350)
Bartronics sl 143  Trg 158 (Positional)
Buy Radico dl 110 Trg 124

Seems to weak :

McDowell
Hanung
Zeel
Canbk
Archies



Weekly Wrap :




The year 2009 ended on a high note, with benchmark (BSE & NSE) indices registering best yearly gains in the last two decades and touching fresh 19-month peaks. The year, however, will be most remembered for the Sensex and the Nifty hitting the upper circuit for the first time.



In the week under review, the markets surprisingly moved in an extremely narrow band despite the two holidays and the derivatives expiry. The BSE benchmark index, the Sensex, moved in a narrow range of 200-odd points. The index touched a high of 17,531 and settled with a gain of 104 points at 17,465.



Among index stocks, Reliance Infrastructure surged over 4 per cent. NTPC, Grasim, Bharti Airtel, SBI, Hindalco and Jaiprakash Associates were the other major gainers. Sun Pharma dropped 3.6 per cent. DLF, Wipro and ITC were some of the other prominent losers.



Lack of momentum on the upside suggests the up move may halt temporarily. The Sensex needs to sustain above 17,550 for further gains, while on the downside, the index may seek support at 17,385-17,335, below which the bears are likely to have the upper hand.



The longer-term picture, since we are at the start of the New Year, looks quite promising. Chances are that we may re-test the 21,000-mark this calendar year, while there are multiple strong supports for the index on the downside. The bias will remain bullish as long as the index remains above 13,840 this year. There is a further deeper support around 11,590 in case of extreme bearishness. On the positive front, the Sensex is first likely to target 19,550, followed by 21,090, in 2010.



The Nifty moved in a range of 62 points and ended with a gain of 23 points at 5,201. The index was unable to close above 5,210 on any single day. Currently, the chart suggests that the Nifty needs to close above 5,237 for fresh bullishness. The Nifty may face resistance around 5,225-5,240 and find support around 5,177-5,163. A dip below 5,163 could see the index fall to 5,100 and then further lower to 5,010.



Unlike the Sensex, the yearly Nifty chart reveals that it will be difficult for the index to attain its 2008 peak (6,357) this year. In fact, the index has strong resistance around 6,225. The first significant target for the index is 5,790. On the downside, the index is likely to find considerable support around 4,600 and further lower at 4,175.





Mutual Funds Investment Picks 2010 :



The year 2009 started off on a subdued note for equity investors but by year-end both the BSE Sensex and Nifty were trading 80 per cent higher. With the markets trading at a price-earning multiple of well over 21 times from 11 times at the start of year, the upside in the indices may be limited from here on. So equity investing in 2010 may require greater stock selection skills. Why not select actively managed diversified funds for your portfolio?



In emerging markets such as India there are several diversified funds that have managed to deliver better-than-index returns. However, these funds, even if they deliver better returns, may also, at times, take on higher risk.



While comparing the top performing equity schemes whose returns are identical, investors can look at additional factors such as beta and expense ratio to gauge the risk return profile. Investors planning to take exposure to equity funds should, of course, pick funds with a proven track record over an entire market cycle.



Here there are three funds from the large and mid-cap space that investors can consider for long-term wealth creation.



HDFC Top 200: This fund is among the few to consistently remain on the buy list due to its steady returns across market cycles. Its performance over the year has validated our recommendation.



HDFC Top 200, which invests in the top 200 companies by market capitalisation, despite its ever growing asset size (Rs 5,781 crore) continued to maintain its tempo and beat its benchmark BSE 200 by a wide margin.



For instance, over a three- and five-year period, the fund outpaced its benchmark by 10 percentage points. Even during the market meltdown in 2008 the fund contained the losses better.



In 2008 when most of the funds preferred to move in to cash to protect their portfolios, the fund had the grit to stay invested. This helped in a neat recovery from the market lows; the fund went on to generate returns of 96 per cent over a one-year period and was one among the top ten performers over this time frame. In its November portfolio, the fund's preferred sectors were banks, pharma and consumer non-durables. Despite its huge asset base the fund adopts a buy and hold strategy. To prop up its return, the fund invests 10-15 per cent of the assets in mid-cap stocks (with market capitalisation less than Rs 7,500 crore).



DSP BlackRock Equity: DSPBR Equity and DSPBR Top 100 more or less has similar investment strategy in selecting sectors. But the former invests sizable assets in mid- and small-cap stocks while the latter sticks to its mandate of investing in large caps. The advantage of DSPBR Equity is that the fund prefers to stay invested in equities irrespective of the market condition and despite the presence of the mid and small-cap stocks (this segment being more prone to volatility). This demonstrates the fund's conviction in its investment strategy. Even during 2008, with reasonable exposure to mid and small-cap stocks and lesser cash position it withstood the market correction and contained losses. Clearly, stock-picking strategy has held the key. Though the fund is benchmarked against Nifty, one-third of the assets are invested outside the Nifty basket.



For the risk it has assumed the fund compensated its investors and concurrently outpaced its benchmark by over 10 percentage points over three and five-year periods. Good stock selection strategy and a lower beta than its peer DSPBR Top 100 were key reasons for DSPBR Equity being a better choice for your portfolio. In its November portfolio the fund's top sectors were software, consumer non-durables and pharma.



Birla Sunlife Midcap: A consistent performer across the market cycles, this fund outpaced its benchmark over a three and five-year period by a good margin and can lend support to one's portfolio returns. It is therefore worthy of a place in your core portfolio.



Having said this, some large cap funds with lower risks generated returns as good as the top performing mid-cap funds over the past five years. Midcap funds such as Birla Midcap generated very good returns during the bull phase of the market compared with lesser “beta” stocks, implying that they have the ability to identify the winner ahead of market rallies.



The fund also dilutes its holding risky sectors once there are signs of over-heating and moves to defensive sectors to protect its portfolio.



The fund's one-year performance emphasises that it has timed its sector calls well during this ongoing rally. However, given the extraordinary gains that this fund generates during bull phases, investors would do well to occasionally book profits to cash in on such rallies. In its November portfolio the top three sectors were banks, power and finance which together accounted for less than 30 per cent of the assets. The fund has a well diversified sector allocation and its assets are spread across 22 sectors.

Sources*







Index based market wide circuit breaker :

The exchanges implement on a quarterly basis the index based market wide circuit breaker system. The system is applicable at three stages of the index movement either way at 10%, 15% and 20%. This circuit breaker brings about a coordinated trading halt in all equity and equity derivative markets nationwide.

The market wide circuit breakers would be triggered by movement of either SENSEX or the NSE S&P CNX Nifty whichever is breached earlier.

In case of a 10% movement of either of these indices, there would be a 1-hour market halt if the movement takes place before 1 p.m. In case the movement takes place at or after 1 p.m. but before 2.30 p.m. there will be a trading halt for ½ hour. In case the movement takes place at or after 2.30 p.m. there will be no trading halt at the 10% level and the market will continue trading.

In case of a 15% movement of either index, there will be a 2-hour market halt if the movement takes place before 1 p.m. If the 15% trigger is reached on or after 1 p.m. but before 2 p.m., there will be a 1 hour halt. If the 15% trigger is reached on or after 2 p.m. the trading will halt for the remainder of the day.

In case of a 20% movement of the index, the trading will be halted for the remainder of the day.

The percentages are calculated on the closing index value of the quarter. These percentages are translated into absolute points of index variations (rounded off to the nearest 25 points in case of Sensex and 10 points in case of Nifty). At the end of each quarter, these absolute points of index variations are revised and made applicable for the next quarter.





Auto Sector end 2009 with superlative growth

The country’s largest four-wheeler manufacturer Maruti Suzuki sold 71,000 units in India, a 36.5% increase over previous year’s December. Counted with exports, Maruti’s sales grew at 50.6%.

Hyundai Motor 2009 sales up 10% vs 2008

Sales for Mahindra & Mahindra (M&M), a major player in the utility vehicles (UV) space with vehicles such as the Scorpio, Bolero and Xylo, grew at 122%. It sold 22,754 units last month compared to 10,253 units in December 2008.

Among motorcycle, leader Hero Honda said it sold 3.75 lakh units versus 2.15 lakh units year-on-year, a 74% growth. Hero Honda said it would launch new models across various segments by March.

The number two player in the segment, Bajaj Auto, has not yet released its December sales tally.

TVS Motor Company registered a domestic growth of 42% in December over the same month last year, selling 1,02,479 units compared to 72,355 units.





US STOCKS-Market dips but still set for best year since '03



Jobless claims fall to lowest level in 17 months

* Chicago PMI number revised downward

* U.S. stock indexes on track for best year since '03

* Dow off 0.5 pct, S&P off 0.4 pct, Nasdaq off 0.3 pct

* For up-to-the-minute market news, click STXNEWS/US



NEW YORK, Dec 31 U.S. stocks slipped on Thursday in the last trading session of 2009 as investors sold some of 2009's winners to lock in some of the year's strong gains and a reading on Midwest business growth was revised downward.

The US markets ended lower yesterday. The Dow Jones Industrial Average slipped 120.46 points, or 1.14%, at 10,428.05. The Standard & Poor's 500 Index shed 11.32 points, or 1%, at 1,115.10. The Nasdaq Composite Index declined 22.13 points, or 0.97%, to close at 2,269.15. Among 30 stocks from Dow 30 Index, the only gainer was JP Morgan.

Still, the three major U.S. stock indexes were on track to post their best yearly gains since 2003, with the bemchmark Standard & Poor's 500 index up 24 percent for the year.

The Dow is up 19.5 percent for 2009, while the Nasdaq is up 44.8 percent from its close on Dec. 31, 2008.

The December reading of the Institute for Supply Management-Chicago index, also known as the PMI or purchasing managers' index, was revised downward on Thursday from the level reported on Wednesday.

Industrials were among sectors leading the S&P's decline, with 3M (MMM.N) down 0.9 percent at $83.16.

Earlier on Thursday, the Labor Department said initial claims for jobless benefits fell to a 17-month low. While a drop in jobless claims is a bullish sign for the crucial labor market, some analysts indicated it could mean less government stimulus ahead.

Signs of economic strength, including a record percentage of companies beating profit expectations this year, have pushed the S&P 500 up more than 60 percent from its March 9 closing low.

The Dow Jones industrial average .DJI was down 53.43 points, or 0.51 percent, at 10,495.08. The Standard & Poor's 500 Index .SPX was down 3.99 points, or 0.35 percent, at 1,122.43. The Nasdaq Composite Index .IXIC was down 7.19 points, or 0.31 percent, at 2,284.09.

Oracle Corp (ORCL.O), one of the Nasdaq's best-performing stocks this year, was down 0.8 percent at $24.72.

Volume is expected to be light throughout the day, with many investors out for the holidays. By early afternoon, only 287.2 million shares had traded on the New York Stock Exchange, well below last year's daily closing average of 1.49 billion. U.S. financial markets will be closed on Friday for New Year's Day.

The broad S&P 500 is up 24.2 percent for 2009, on track for its best performance since 2003. That gain comes on the heels of the S&P 500's slide of 38.5 percent in 2008, when the economic crisis led to Wall Street's worst year since the Great Depression. [ID:nN30218732] [ID:nN30221050]

Despite this year's rally, Wall Street is also set to wrap up its first-ever negative decade on a total-return basis, even with dividends reinvested.

The Midwest business index was revised on Thursday to 58.7 in December from the 60.0 level that was reported on Wednesday. The employment component of the Chicago index was revised to 47.6 -- below the threshold of 50 that represents expansion. [ID:nNAT007226]

Walt Disney Co (DIS.N) was one of the Dow's best performers, up 0.6 percent at $32.48 after Marvel Entertainment Inc (MVL.N) shareholders approved a merger with Disney.





Harley-Davidson: Revving up to charm the Indian biker

The 170-year old company is the latest of the world’s leading motorcycle brands eyeing its share of the Indian bike market, which is the second largest market for two-wheelers after China. In a publicity event recently, the company offered its niche collection to Indian bike enthusiasts for test rides. The company will announce its initial product line-up along with prices at the upcoming Auto Expo in New Delhi. The starting price of a Harley-Davidson bike is expected to be upwards of Rs 7 lakh.



India imports about 200tn gold vs 420tn year ago

India's gold imports in December jumped to 32-35 tonnes provisionally from 3 tonnes a year ago, Gold imports in 2009 was "a little over 200 tonnes" versus 420 tonnes in 2008, Gold prices have been on a record-breaking spree in 2009, denting demand significantly in the price-sensitive country.