INFORMATIVE

In volatile markets, investors should have an active attitude towards investing and should be ready to try out new stocks and strategies. Keep a look out for longer-term trends specific to India and be ready to change your mind and switch stocks when necessary. To help you do that, we at Religare give you a quick rundown of the stock popular in the week just ended. Use the information to make your trading and investment decision and rebalance your portfolio if necessary.


For Technical Analysis of stock, we have used 3 terms i.e. RSI which stands for Relative Strength Index, MACD which stands for Moving Average Convergence Divergence, DMA which stands for Daily Moving Average. (We have considered these 3 terms as they are used by most of the people who have even some basic understanding of technical analysis.)


Note: ## If RSI is above 50, the stock is considered in a short term buy and if RSI is below 50 the stock is in a short term sell.


If MACD is above zero the stock is considered in strong hands and if it is below zero the stock is considered in weak hands.


If stock is above its 200 DMA it means that the stock is in an intermediate uptrend else in an intermediate downtrend.


*All prices have been adjusted for bonus & split if any.


*All data is of closing of Friday the 7th Jan, 2011


1. RELIANCE POWER


CMP (Rs.): 155.30 EPS (Rs.): 1.14 52 Week High : 192.80


Mcap (Rs. Cr.): 45063 Book Value(Rs.):51.60 52 Week Low : 133.00


Fundamental View :


• The company is planning to take its renewable energy capacity to 1,000 MW in next two-three years. Reliance Power has plans to set up 600 MW solar energy (concentrated solar power – CSP and solar photovoltaic plants – SPV) based power capacity in Rajasthan and 400 MW wind power plants in Gujarat and Karnataka. The company proposes to fund these projects from its internal resources.


• The $5 billion EXIM Bank deal taken with loans for $12 billion tied up with Chinese banks take care of a huge chunk of the debt funding for the company's upcoming power projects. While the company intends to execute 8,000 MW of gas-based and 900 MW alternative energy projects with funding from EXIM bank, funding from Chinese banks take care of $10 billion equipment order for 30,000 MW.






Outlook: The new agreement with the banks could lower interest costs (by 300-350bps) for the company in future.


Technical View:


In the daily charts the stock is below its 25 DMA which is at 156.76. The 14 day RSI is 47.20, MACD on daily charts is -0.30. The stock is below its 200 DMA which is at 158.85.


Recommendations:


For the last six weeks the stock is moving in the range of 164 – 147. If this range is broken we may see further move in the same direction.














2. RELIANCE INDUSTRIES


CMP (Rs.): 1065.40 EPS (Rs.): 48.59 52 Week High : 1149.90


MCap (Rs. Cr.): 354750 Book Value(Rs.):392.25 52 Week Low : 915.00


Fundamental View :


• In NELP-IX blocks, Reliance has shown interest in The Kerala-Konkan basin off the western coast. The natural gas production from Reliance Industries Ltd's East Coast block has dropped by about 15 per cent to about 45-46 mmscmd from 53-54 mmscmd.


• However, its core petroleum refining and petrochemicals businesses have come under pressure due to cyclical downturn and little help came from its diversification efforts.


• The company has now decided to invest in shale gas in the US, broadband wireless and power industries domestically while recently picking up a stake in East India Hotels.






Outlook: While the new businesses won't contribute much in the short run, the company may appear inexpensive at these levels.


Technical View:


In the daily charts the stock is above its 25 DMA which is at 1053.47. The 14 day RSI is 54.73, MACD on daily charts is 10.13. The stock is above its 200 DMA which is at 1033.46.


Recommendations:


The stock is trading in up-channel on daily graphs. It is trading above short term moving averages, which indicates despite market decline this stock is still showing relative strength. As long as 1040 levels are held this stock may show upside towards 1100 when broader markets support.














3. SUZLON ENERGY LTD.


CMP (Rs.): 51.35 EPS (Rs.): 0.00 52 Week High : 95.40


MCap (Rs. Cr.): 9526 Book Value(Rs.):39.21 52 Week Low : 43.00


Fundamental View :


• Suzlon Energy has signed an agreement with Hindustan Zinc, a Vedanta Group company to set up, operate and maintain 150 MW of wind power projects in Karnataka, Maharashtra, Rajasthan and Tamil Nadu. The project entails a total investment of approximately Rs. 865 crore.


• REpower Systems AG (WKN 617703) in which Suzlon Energy is a majority shareholder with over 90% holding has concluded a contract for the delivery of 25 wind turbines with EverPower Wind Holdings, Inc with an option to purchase an additional 85 units.






Outlook: Although the demand from the Indian and other emerging markets is growing, the subdued outlook for large markets like the US and Europe will remain an overhang on the company's consolidated performance in the next few quarters. Growth in emerging markets will be insufficient to propel the overall dwindling growth, led by subdued developed markets.


Technical View:


In the daily charts the stock is below its 25 DMA which is at 52.23. The 14 day RSI is 46.46, MACD on daily charts is 0.55. The stock is below its 200 DMA which is at 59.09.


Recommendations:


The stock broke out above down trend line in weekly graphs but could not sustain higher levels. This week it has formed bearish engulfing pattern. Currently the stock is trading near its support level of 50, but overall technical parameters are showing weakness. 200 DMA stands at 59.09 and until that is not crossed the trend may remain sideways to negative.










4. SATYAM COMPUTERS


CMP (Rs): 69.95 EPS (Rs.): 0.00 52 Week High : 120.90


MCap (Rs. Cr.): 8453 Book Value(Rs.): 19.52 52 Week Low : 59.00


Fundamental View :


• Satyam posted bleak results in September 2010. EBIT margins came in just 2.5% in Q2FY11 & have significantly deteriorated over FY10 margin of 4.4%.


• The company reported Q2 ending headcount of 28,068 of which about 2500 are in BPO. Utilization stood at 71% while attrition for quarter stood at 25%. The company has 217 active customers as per new classification earnings.


• The company has a current debt of Rs342mn & a cash balance of Rs 25.3bn against Rs21.8bn at the end of Q2FY10, implying a cash generation of Rs3.5bn.






Outlook: The company is in process of reversing its initial losses after January 2009 hit.


Technical View:


In the daily charts the stock is above its 25 DMA which is at 68.19. The 14 day RSI is 54.13, MACD on daily charts is 0.42. The stock is below its 200 DMA which is at 83.98.


Recommendations:


On daily graphs the stock has seen 13 DMA crossing above 26 DMA, which indicates as long as it maintains above 68 levels there can be further recovery in the stock.


Technical View:


In the daily charts the stock is below its 25 DMA which is at 65.02. The 14 day RSI is 37.82, MACD on daily charts is -1.50. The stock is below its 200 DMA which is at 77.53.


Recommendations:


The stock is trading in the broader range of 68 – 60 and shows formation like a rectangle. There has to be a breakout on either side to see any kind of direction in the stock.














6. RELIANCE COMMUNICATION


CMP (Rs.): 139.35 EPS (Rs.): 2.18 52 Week High : 207.80


MCap (Rs. Cr.): 28885 Book Value(Rs.): 244.66 52 Week Low : 119.50


Fundamental View :


• RCom is sitting on a debt pile (net) of Rs.33,500 crore, five times its June quarter annualized EBIDTA. Of this, a big part is repayable in next one year. As of June, of the Rs.38,200 crore of gross debt, 44% (Rs.16,600 crore) is due within the next year.


• An estimated operating cash flow for the next two financial years in the region of Rs.11,000 crore is comforting, 3G-related capital expenditure (among others) would mean that raising additional capital to fund expansion would become necessary. The company, however, says its capex on the rollout of 3G services will be minimal.


• Its Indian wireless business continues to report declining average revenue per minute (ARPU) and minutes of usage (MoU) despite growing customer base. Also, a high-debt burden restricts its ability to seek more financing to grow inorganically.






Outlook: RCom has not been able to give a convincing future growth path to investors. However, it will benefit from implementation of the mobile number portability regime. It is also one of only three companies to get licences in 13 of the 3G circles. While these are positives, the major upside for the stock will happen once the deleveraging plan goes through.


Technical View:


In the daily charts the stock is below its 25 DMA which is at 139.58. The 14 day RSI is 49.19, MACD on daily charts is -0.31. The stock is below its 200 DMA which is at 166.81.


Recommendations:


After forming all-time low of 119.50 in Dec-2010, the stock has rallied towards 150 levels but it still trades below short as well as long term moving averages. For a reversal of trend to upward it has to consolidate at current levels holding on to the lows made.














7. NHPC


CMP (Rs.): 27.75 EPS (Rs.): 1.61 52 Week High : 36.60


MCap (Rs. Cr.): 34811 Book Value(Rs.): 18.92 52 Week Low : 26.55


Fundamental View :


• The company commissioned one of its projects recently, which would further add to the bottomline in the coming quarters.


• It has 10 projects with 4,500 mw of capacity under various stages of construction to be completed by the end of the financial year 2013. About 1,200 mw of this is expected to go on steam in the next four quarters. These projects would double the










power generation capacity of the company.


• The increase in revenue and profit would be even higher since the new regulation provides higher returns on equity and higher efficiency parameters for new plants.






Outlook: Even though the stock has failed to attract investors' attention in the past one year, the medium term prospects of the company are good. In the longer run, the company is expected to behave like other global utility companies, offering steady cash flows and attractive dividends. The near-term movement of the stock price may remain subdued.


Technical View:


In the daily charts the stock is below its 25 DMA which is at 28.27. The 14 day RSI is 42.65, MACD on daily charts is -0.09. The stock is below its 200 DMA which is at 30.55.


Recommendations:


The stock has been unable to cross above 50 DMA on closing basis. The stock has to hold on to 26.55 as it has been 52 week low and some more consolidation could only change the trend of the stock from down to up.










8. JAIPRAKASH ASSOCIATE


CMP (Rs.): 101.60 EPS (Rs.): 7.89 52 Week High : 167.80


MCap (Rs. Cr.): 22348 Book Value(Rs.): 38.61 52 Week Low : 98.25


Fundamental View :


• Jaiprakash Associates Ltd is a diversified infrastructural industrial conglomerate in India. The company is the leader in Engineering and Construction of Hydropower projects in India. They are the only integrated solution provider for Hydropower projects in the country with a track record of strong project implementation in different capacities. The company is in the business of heavy civil engineering construction, expressways, cement, and real estate and hospitality.


• JPA’s capacity expansion in last 12 months led to 59% YoY rise in cement volumes in Q2FY11.






Outlook: The company has huge expansion plans for FY11-12; this will help in improving the financial performance of the company.


Technical View:


In the daily charts the stock is below its 25 DMA which is at 106.71. The 14 day RSI is 38.35, MACD on daily charts is -2.07. The stock is below its 200 DMA which is at 122.53.


Recommendations:


The stock trades very close to its 52 week low at 98.25 and if that is broken there can be further selling in the stock which can take it towards 90 levels. For showing some upside it has to hold on to psychological level of 100.










9. ISPAT INDUSTRIES


CMP (Rs.):23.25 EPS (Rs.): 0.00 52 Week High : 26.20


MCap (Rs. Cr.): 3133 Book Value(Rs.): -2.52 52 Week Low : 15.25


Fundamental View :


• JSW has acquired 41% stake in ISPAT for Rs21.5bn. Ispat is currently operating at utilisation levels of 80% and generates EBIDTA/ton of USD70. The company needs to revamp its operations to increase the profitability.


• Ispat Industries Ltd proposes to push the projects whose implementation has been delayed by the recent meltdown. The projects include coke oven plant at a cost of Rs 1,100 crore, power plant at Rs 490 crore and mining projects at Rs 120 crore. Except the mining project, the two others will be implemented in partnership with others. The company said that 110 MW (55 MWx2) plant would be commissioned by the middle of next year while the coke oven plant by the middle of 2012.


• Ispat Industries is aiming to raise output to 4.2 million tonnes per annum from 3.3 million tonnes per annum.






Outlook: Rising debt is a major concern.


Technical View:


In the daily charts the stock is above its 25 DMA which is at 22.26. The 14 day RSI is 56.51, MACD on daily charts is 1.01. The stock is above its 200 DMA which is at 20.22.


Recommendations:


The stock has traded sideways for the last two weeks between 24-22.60.It has tested the resistance at 26.20 with very big volumes and more consolidation is expected until it doesn’t break out above 26 levels.










10. POWER GRID CORPORATION


CMP (Rs.): 97.85 EPS (Rs.): 4.60 52 Week High : 121.45


MCap (Rs. Cr.): 45811 Book Value(Rs.): 43.95 52 Week Low : 91.80


Fundamental View :


• The company is investing Rs 5,540 crore on five projects across the country. These include an investment of Rs 2,743 crore to set up a transmission system in the first phase of a generation project in Orissa with a commissioning schedule of 36 months from the date of investment approval. The firm will also invest Rs 1,719 crore for setting up pooling stations for private power generation projects in Chhattisgarh.


• As transmission utility the company charges the customers a transmission charge for recovery of annual fixed cost consisting of components – return on equity, interest on outstanding debt, depreciation, operation and maintenance expenditure and interest on working capital.






Outlook: PGCIL is a principal electric power transmission company owning and operating more than 95% of the country's inter-state and inter-regional electric power transmission systems. The company is investing heavily on its projects and looking to the increasing opportunity in the sector we expect that the momentum likely to continue.






Technical View:


In the daily charts the stock is below its 25 DMA which is at 97.83. The 14 day RSI is 49.76, MACD on daily charts is -0.11. The stock is below its 200 DMA which is at 102.64.


Recommendations:


The stock has failed to move above 100 levels for the last six weeks and it has good support in 92 – 94 zones. After FPO the stock has underperformed the market and the sideways range may continue as long as breakout above 103 is not seen.