UPDATE ON GAIL

Kirit Parikh Committee recommendation:

GAIL could benefit the most. If implemented, the proposals would benefit GAIL the most, as it has not been included in the new proposed graded subsidy sharing mechanism. The proposed formula (post abolition of auto-fuel subsidy) would be applicable only to players that were given nominated blocks by the government (ONGC, OIL) and would thus not, logically, include GAIL. http://prabhakar-views.blogspot.com/2010/02/inflation-taxation-and-social-justice.html

Technical view:

GAIL Cmp Rs.419 is trading near its all time high of Rs.445 and trading comfortably above short & long term moving average, this stock can target Rs.550 in next 18months or even before.

http://akprabhakar.blogspot.com/2009/11/gail-to-benefit-from-gas-highways.html  GAIL’s pipeline is around 7,000 km long now and would go up to 14,000 km by FY-2013, Transmission capacity would increase to 300 mmscmd from 150 mmscmd. GAIL current capacity utilisation to be 55-60% is expected higher with capacity utilisation at 70-75% by 2012-13. New tariff regime – likely to be announced by December2009, average blended tariff to increase by 5-10% say’s management in analyst meet.

The government is planning to start gas supplies for transportation and cooking in 201 new towns by 2015. Pipe transportation is an economical mode of transport compared to traditional modes of rail, road and sea transport. This mode of transportation also helps in saving scarce natural energy resources and time taken for transportation. However, pipe networks need to be guarded from any kind of damage.

Update on Fabulous-15 stock

Neyveli Lignite Corp. Ltd is seeking joint venture partners to identify and acquire coal blocks in Asia and Africa. The company is also planning to bid for ultra mega power projects under tariff-based competitive bidding and has sought necessary approvals from the government for the same, it said. The coal extracted from the blocks will mainly cater to the fuel requirements for the power projects and serve as a fuel linkage for its 2x500MW power project at Tuticorin in Tamil Nadu. The firm currently has three mines of total capacity of 24 mt and three thermal power stations of total capacity 2,490MW.

FABULOUS-15 Tracker

FABULOUS-15 is down 3.75% so far against 8.35% fall in Nifty so far this year and this investment list is specially hand-picked for investors, the stocks in FABULOUS-15 have shown good recovery in market rise and the downside has been limited so far. Stocks like EKC, SUZLON have been underperformers from the list but worst looks over for EKC from an investor's viewpoint and SUZLON is a high-beta stock and can outperform when markets stabilize. MRPL, SKUMAR, EMCO are very stable which indicates recovery would be faster in them. Markets have not yet bottomed out but it is not Index where one has to invest, it is individual stocks and accumulating good stocks would be a perfect recipe in bad market times.

FABULOUS-15 TRACKER - List Launched on 31-Dec-2009
Stock Name	Reco Price (Rs)	CMP (Rs)	High So Far (Rs)	Target (Rs)	% Returns So Far	Action
3IINFOTECH	87	80	97	118	-8	Hold
ADHUNIK MET	110	109	127	152	-1	Hold
EKC	156	125	162	189	-20	Hold
EMCO	91	91	109	130	0	Hold
GIC HOUSING	92	85	94	150	-8	Hold
GLENMARK	278	255	290	350	-8	Hold
GREAVES COT	286	276	303	352	-3	Hold
GSPL	98	91	102	125	-7	Hold
GUJ NRE COKE	80	74	98	110	-8	Hold
IFCI	54	51	60	75	-6	Hold
MRPL	78	77	86	100	-1	Hold
NEYVELILIG	152	146	172	196	-4	Hold
POWERGRID	109	108	121	141	-1	Hold
SKUMAR	41	43	47	70	5	Hold
SUZLON	91	74	95	140	-19	Hold
ABG SHIP	210	270	270	270	29	Profits Taken

*RELIANCE IND, GAIL and JUBILANT are stocks waiting to be included in FABULOUS-15.

*This list is for investors over 1-2 year period and one can buy slowly as SIP.

* Many want me to present the way i have done உங்களுக்காகவே ஒரு ஷேர் போர்ட்ஃபோலியோ which is time cosuming and very difficult and almost for 1year in bear market people who read this made positive return so use the same method.

Excerpts from SUNNEWS Interview (04/February/2010)

Outlook of Indian Market from here?

Market has to correct till 13,000 levels by this year in my view but exact time when it would happen is difficult short term budget is holding market.

International markets are weak?

Good data from many countries but market has its own way and Volcker ban on trading for profit of banks pending for discussion in senate is important http://prabhakar-views.blogspot.com/2010/02/banks-shouldnt-be-hedge-funds-volcker.html

View on Gold?

I have a bearish view on Gold and Crude as Dollar index has started to show strength and can move towards 85 which is now 79 and Gold can have negative returns. Dollar index gaining strength can also trigger Dollar carry trade.

SUZLON you have started to like and you have recommended a buy?

SUZLON was a stock where I had bearish view but company reducing debt and taking steps to restructure operation is very positive, still next one year will be difficult time after which it can start to perform. For an investor when performance is seen then stock will be in premium so bad times buy good stock.

Parikh Committee Report impact on stock market?

It is not easy for government to implement the report in full but a part of this can be implemented and freeing diesel and petrol price are very positive for RELIANCE & ESSAROIL as they have huge network already in place and this will enable level playing field.

Won’t rising Diesel and cooking gas stroke inflation?

Yes inflationary impact will be there but Government and oil companies will have to pass on the burden to consumers and if we notice in month of December 2009 our non-oil imports have risen by 22% which means our food security is under threat. So in my view government has to come with a good fertilizer policy which will help companies expand as this sector needs good policy imitative.

View on RELIANCE?

RELIANCE is an evergreen stock and now Gas has started to make good profit and refinery has recovered and if free pricing Is allowed then they will open the closed petrol pumps and they are doing retails sector is also picking up this company will see overall performance and I have advised many of my clients to do SIP (Systematic investment plan) of this stock buy daily one share or weekly or monthly.

Textile sector I hold xxx stock?

I hold long term bullish view on the sector as slowly many companies have started to report profit and improve margins this has been underperformer for last 3-4years so downside is very limited for investor.

Positive sector?

Oil & Gas and Fertilizer are the positive sector which didn’t participate in 2009 rally and this can be outperformer for 2011 rally GSPL, RELIANCE, GAIL, IGL are some stocks I like as SIP. Oil & Gas holds 22% in Nifty and 23% in Sensex weightage and this sector plays important role for any major up move.

Telecom sector and 3G any view?

Telecom sector has given flat to negative returns in the last one year and awaiting final correction after which these stock will be attractive but investor can buy IDEA & BHARTIARTL in this segment and MTNL can be contrarian buy as they are only listed company in 3G space and this company can’t exist in current form any longer either it has to merged with BSNL or sold out or should expand pan India.

How will market be till budget?

Difficult to predict as many rumor and news flow will be there, but after budget I expect a major correction but when 13000 levels in Sensex will come is hard to predict. 

Note: Correction is part of market and today whole global market is negative and traders should avoid this market or I don’t have advice for them. Investor annual discount sale is starting, prepare you buy list and start to shop as the offer will be till the stocks last. When everyone is a seller we good a good bargain to buy and when everyone is a buyer we get a smart exit so be slow daily investment of a small amount in next 100trading days will be the best average in next 6years. 

Quote from George Soros, "biggest gains in my life have come when i was insecure in investing"

Investment is about financial planning and mistake in investment is made by greatest of the great people so an investor if he has divided his risk invested systematically and if his % of right is more than his wrong then he will do good in stock market.

Whenever stock market has failed to break January high in next 1 or 2months the correction has been big

http://akprabhakar.blogspot.com/2010/01/nifty-sensex-view-and-january-impact-on.html

http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500379  SBI Home finance when you see the name what will u think? this company should be linked to STATEBANK but it is not so and the company is not trading please check before you buy..... Buy Quality stock u can average and beneift 

Dollar Index 

Dollar Index has been strong ever since Dec’09 and now it has started working perfectly as commodities have shown inverse co-relation with this index, Dollar has been becoming stronger and we see Crude/Gold/Copper and other commodities falling sharply.

Crude Oil

  

Crude Oil is near breaking down out of a channel formation where $65 would be major support below which there can be more correction in this commodity. We have 22% weight in Nifty and 23% in Sensex for Oil & Gas sector and with falling crude the market may be impacted negatively by this sector in short-term.

Outlook of Indian market with NTPC Largest Divestment Drive

Indian Market corrected when Global market are turning positive as investor turned nervous ahead of NTPC FPO which would rise Rs.8287crs. FPO has been priced attractive @ Rs.201, discount to closing price of Rs.206 this will reduce government holding from 89.5% to 84.5%. NTPC is expanding its generation capacity to 52,000 MW by 2014 from 30,644 MW on Sept. 30, 2009, to meet growing demand. Between April and May last year, India had a peak energy deficit—the difference between energy demand and supply--of 12.3%. The success of NTPC issue is very important for the disinvestment plans of current government as fiscal deficit is expected to cross budgeted 6.8% of GDP also given postponement of 3G auction and rise in Fertilizer subsidy bill. If NTPC issue gets oversubscribed 1st day itself, other PSU stocks HIND COPPER / STC / MRPL / SAIL may get a boost in secondary market too.

Parikh Committee Report:-

• The government may take a decision on freeing petrol and diesel prices after the Kirit Parikh committee on rationalising fuel  subsidies submits its report this week, oil minister Murli Deora said. Price of petrol may go up by Rs 4.70 a litre and diesel by Rs 2.30 a litre if the government gives the pricing freedom to state-owned oil marketing companies — IndianOil Corporation (IOC) Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL).
• Media reports say the committe may table the report tomorrow itself and there is a mention of  allowing just 6 cylinders for one family and freeing up of fuel prices.
• If these reports are to be believed, the recommendations, if followed, may take away huge burden of subsidies from the back of current government and state-run HPCL/IOC/BPCL stocks can benefit.
• Freeing up of Fuel prices will benefit ONGC, GAIL and OIL also which have to share subsidy burden for state-run refineries.

• RELIANCE IND and ESSAR OIL would be other stocks to benefit after free pricing as they have had to stop many retail fuel outlets after not being able to compete forced lower prices of state-run outlets. If current regime of controlled pricing is over, RIL and ESSAR OIL may once again go full throttle for their retail outlets and there will be more competition and better service for final consumer, RIL / ESSAR OIL to benefit.   

Further direction of the market depends on various government moves and time and again it has been proved that many announcements have led to major moves in stock markets.The average value of assets managed by mutual funds in India declined at its sharpest pace in 13 months in January, slipping 4% from December, as banks likely cut holdings in debt schemes due to heightened central bank scrutiny and on a decline in stock prices. Indian mutual funds' average assets under management dropped to about INR7.62 trillion ($164.72 billion) from INR7.94 trillion in December, according to data issued by the Association of Mutual Funds in India. RBI has indicated banks not to pursue MF investments in a big way as these funds many times come back to banks as deposits from MFs and this may have put pressure on banks to exit their debt MF holdings slowly which has made AUMs fall for 2nd month running.
Watch SUNNEWS on Thursday 4th February 2010 live on stock market 9.30-10.30

FABULOUS-15 Monthly Update

Fabulous-15 has returned minus 2.06% so far and looking at market carnage the diversified portfolio has stood the test of correction so far. To repeat the intentions, this portfolio was specifically designed for investment over 1-2 years and as we expect 2010 to be an year of flat to negative returns only select stocks are expected to do well. Nifty has fallen 6% in Jan’2010 and Sensex has logged worst monthly loss after Oct’09; Fabulous-15 has fallen 2.06% average and we have taken profits in ABG SHIP which has balanced our returns so partial profit booking and adding back in dips is advised , others stocks have remained quite resilient and as investors one should accumulate these stocks in such market dips that we have seen recently. Market timing is always difficult and it is in such periods that one becomes aware of the importance of diversified portfolio, the quote of Warren Buffet is so true, “It is when tide goes out one knows who has been swimming naked!” Divide your risk in 15-20 stocks and accumulate is what is required from an investor, going after getting rich quick by leveraged positions has normally made people poorer much quicker.

FABULOUS-15 TRACKER - List Launched on 31-Dec-2009
Stock Name	Reco Price (Rs)	CMP (Rs)	High So Far (Rs)	Target (Rs)	% Returns So Far	Action
3IINFOTECH	87	82	97	118	-6	Hold
ADHUNIK MET	110	112	127	152	2	Hold
EKC	156	132	162	189	-15	Hold
EMCO	91	97	109	130	7	Hold
GIC HOUSING	92	89	94	150	-3	Hold
GLENMARK	278	242	290	350	-13	Hold
GREAVES COT	286	268	303	352	-6	Hold
GSPL	98	91	102	125	-7	Hold
GUJ NRE COKE	80	72	98	110	-10	Hold
IFCI	54	51	60	75	-6	Hold
MRPL	78	78	86	100	0	Hold
NEYVELILIG	152	152	172	196	0	Hold
POWERGRID	109	112	121	141	3	Hold
SKUMAR	41	44	47	70	7	Hold
SUZLON	91	77	95	140	-15	Hold
ABG SHIP	210	270	270	270	29	Profits Taken

GREAVES COTTON, GSPL results have been excellent. Next week PSU stocks like GSPL, MRPL, NEYVELI and POWERGRID can be in action.

FABULOUS-15 News Update:

• Adhunik Metalik reported Q3 results for 31Dec2009 - Rs 15.95Cr Profits, an increase of 188% and Sales Rs 302Cr Vs Rs 229Cr
• Emco Ltd said it posted a net profit of 100.4 million rupees on a net sales of 2.08 billion rupees for the quarter ended Dec. 31, 2009.
• GIC HSG FIN standalone numbers for Q3 -Net Profit Rs 155.0mn vs Rs 100.4mn Income from ops Rs737.4mn vs Rs793.8mn
• Glenmark results:- Net profit Rs 940.74mn vs Rs 814.32mn Net Sales Rs 6,416.85mn vs Rs 5,813.89mn
• Greaves Cotton reported a net profit of 326.9 million rupees on net sales of 3.42 billion rupees on a standalone basis for quarter ended December 31, 2009.
• Power Grid Corp said its board gave an in-principle approval for a follow-on public offer of 10 percent of equity. The board also approved investing 2.16 billion rupees for a 1,000 megawatt project to be commissioned in 28 months.
• Neyveli Lignite Corporation Ltd has announced the Unaudited financial results for the quarter ended December 31, 2009. The Company has posted a net profit after tax of Rs 3711.10 million for the quarter ended December 31, 2009 as compared to Rs 2242.50 million for the quarter ended December 31, 2008. Total Income has increased from Rs 10162.10 million for the quarter ended December 31, 2008 to Rs 13881.80 million for the quarter ended December 31, 2009.
• Gujarat State Petronet Ltd (GSPL) has posted a four-fold rise in net profit, at Rs 115.36 crore, for the quarter ended December 31, 2009, the company said in a filing with the Bombay Stock Exchange. The profit for the corresponding quarter in the previous year was Rs 27.64 crore. The firm's total income rose more than two-fold, from Rs 123.28 crore for the year-ago quarter to Rs 271.79 crore for the quarter under review.
• GSPL is in advanced talks with GSPC-Adani consortium for picking up about 25 per cent stake in the proposed 20-MMTPA LNG project at Mundra in Gujarat.
• Consolidated results for 3i Infotech for the nine months ended December 31, 2009: Revenue for the nine months ended December 31, 2009, is Rs.18.36bn, a growth of 8.4% over the corresponding period of the previous year. Net profit for the nine months ended December 31, 2009, is Rs2bn, an increase of 4.8% over the corresponding period of the previous year.

Nifty & Sensex view and January impact on Indian market

Nifty Weekly graph is a break-down from rising wedge where 4530 can be likely support but if Nifty holds 4770 then bounce back till 5100 to 5150 not ruled out the correction has been very fast any recovery or pull back also will be equally fast and OIL & GAS, Power and PSU can lead the rally.

In last 6 year there has been 2major correction one in 2004 and 2008 both topped in January

2004 Sensex made Top on 09/01/2004=6249 & 15/01/2004=6248 almost a double top and after which is crashed in May 2004 to see a low of 4227 0n 17/May/2004 and it took 6months to cross the high again on 01/Dec/2004

2008 Sensex made high on 10/Jan/2008=21206 and from there it corrected till 7697 on 27/Oct/2008 and Sensex has recovered to make a recent high on 06/Jan/2010 which is 17790 in 15months.

In 2009 January Sensex corrected from high of 10469 made on 07/Jan/2009 to 8047 low of March/06/2009.

Investor should understand correction is a part of market and it is here to happen and instead of buying in euphoria always buy when everyone is a seller in market we can never judge the low & high of the index or stock perfectly but systematic investment makes a big difference. Buy in small quantity on a regular basis and only in cash.

Only in cash-Many don’t understand importance of this, 90% of leverage traders lose money to 10% of the brilliant traders and if you notice people doing derivative( F&O or Futures) make fast money to lose it even more faster in the slightest mistake or wrong trade. Why lose good (Hard earned) money on a trade?

In our view Sensex can make new high by 2011/Dec and target by 2016 is 45000 to 50000 which is almost triple in 6years from current level of 16k and by any chance we get a correction till 13k or below we get better average but in case our prediction is wrong also as u r a systematic investor you never lose on opportunity.

Value Pick in next 2years RELIANCE, MRPL, GSPL, MTNL, SAIL, IFCI, IDBI, NEYVELILIG, 3IINFO and GLENMARK and our Faboulous-15 http://akprabhakar.blogspot.com/2010/01/markets-consolidated-their-gains-this.html  are stock when slowly accumulated would give good gains for investors above 2years.

Update on Telangana and how it haunted Infra companies:-

• Fears on Telangana Issue have become a reality and now companies in Andhra Pradesh are really facing problems shown by results so far. HCC has come out with results for Q3FY10 and HCC reported 10% growth in revenue at Rs900Cr for Q3FY10, which was below many estimates, largely due to slow execution of projects in Andhra Pradesh. 
• HCC witnessed slower execution during the quarter as it lost about Rs100Cr during the last couple of months due to turbulence in the state of Andhra Pradesh leading to payment issues. Currently, the total outstanding receivables from AP are Rs600Cr, out of which Rs260Cr is for the last three months. 
• NAGARJUNA CONST, IVRCL INFRA and many other companies from AP are still to come out with results and they may have faced similar problems like HCC. 
• Technically IVRCL INFRA is looking very weak as the stock has broken support near Rs 330 and now the stock trades below all major moving averages, the stock may find support near Rs 270 or Rs 240 if the downtrend persists.

Previous Posts about Telangana:- 

IVRCL looks bearish http://akprabhakar.blogspot.com/2009/12/ivrcl-infra-looks-bearish-avoid.html

Telangana haunts Realty and Infra http://akprabhakar.blogspot.com/2009/12/telangana-issue-haunts-infra-and-realty.html