Professional Documents
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Contents
Market Review
Global Snapshot
Economy Update
Technical Picks
Fundamental Picks
Market Tutorials
Commodity Section
Auxiliary Section
help in easing Greece's debt burden and strengthen banks and the European bailout fund. As per the tripartite agreement, private investors would accept a loss of 50% on Greek bonds, which will cut Greece's debt burden to 120% of GDP by 2020, banks will be forced to raise more capital to protect them against losses resulting from any future defaults and approved a crucial mechanism to boost the EFSF to an estimated 1 trillion
Volatility %
30 20
107.1
1000 0
10 0
*NSE 18-Oct 19-Oct 20-Oct 21-Oct 24-Oct 25-Oct 26-Oct 28-Oct 31-Oct
19
19
30 20 10 0
29
33
40
16
10
euro. Investors' morale got further propped up because of the US GDP data which showed that the world's largest economy gathered additional steam and expanded at a better than expected pace of 2.5% annual rate in the third quarter on stronger consumer spending and business investment, easing concerns that the US was on the verge of a double-dip recession. For the upcoming month 5415-5430 could be the key resistance zone. Any break out above this level with substantial volumes may lift the domestic sentiments and we might see 5570-5600 in short span of time. On the flip side 5150-5170 could be the key support zone. HAPPY TRADING.
14
GLOBAL SNAPSHOT
advanced 0.1% in September after falling 0.1% the prior month, and the nation's savings rate fell to nearly a four-year low. Separately, University of Michigan stated that its index of consumer sentiment increased in the final review to 60.90 in October from 59.4 in September. The preliminary estimate for the month was 57.5. Emotion got strengthen after the European policy makers approved a three-pronged agreement which will help in easing Greece's debt burden and strengthen banks and the European bailout fund. As per the tripartite agreement, private investors would accept a loss of 50% on Greek bonds, which will cut Greece's debt burden to 120% of GDP by 2020, banks will be forced to raise more capital to protect them against losses resulting from any future defaults and approved a crucial mechanism to boost the EFSF to an estimated 1 trillion euro. Morale of investors globally also was buttressed because of an impressive US economic report which showed that the GDP gathered additional steam and expanded at a better than expected pace of 2.5% annual rate in the third quarter, easing concerns that the US was on the verge of a double-dip recession. The U.S. economy cultivated at its fastest pace in a year in the third quarter as consumers and businesses stepped up spending, creating momentum that could carry into the final three months of the year.
Source: reutersindia.com
Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time
ECONOMY UPDATE
Despite the slowdown in global economy, Foreign Direct Investment (FDI) in India jumped by 95% in the first five months of the 2011-12. According to the ministry of commerce and industry's data, FDI in April-August 2011 stood at $17.37 billion as compared to $8.887 billion during April-August 2010. In the first seven months of the current calendar year, foreign investments surged by 50% to $20.76 billion compare $13.85 in the same period of last year. On monthon-month basis, FDI in August stood at $2.83 billion compare to $1.099 billion in July. July's FDI inflow was the lowest figure in 2011-12, which indicate the slowdown in the global economy has affected the pace of capital inflow. However, experts have the view that the government should further streamline polices and make the environment more conducive to the overseas investments. In order to attract foreign investment, the government had relaxed FDI norms. The government had also relaxed norms for FDI in construction of old age homes and educational institutes and without lock in period rules. The major sectors attracting overseas investment in the country are service (financial and non financial services), Telecommunication, housing and real estate and power sector. The major investing countries are Mauritius, Singapore, the US, the UK, the Netherlands, Japan, Germany and the UAE. According to the latest press release from the Reserve Bank of India (RBI), the country's forex reserves increased by $858 million to $318.358
Source: reutersindia.com
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TECHNICAL PICKS
TECHNICAL ANALYSIS
Pantaloon Retail (India) is India's leading retail chain and part of Indian conglomerate Future Group. It operates retail space spread over 11 million square feet. It has a network of more than 1000 stores across 63 cities in India and has employee strength of 30,000 people. Pantaloon Retail (India) is planning to mop up Rs 1,500 crore by issuing equity-linked securities amounting to stake dilution of about 15 percent. In this regard, the company has got its board approval. The securities could be either convertible instrument, convertible into shares, debt instruments with attached warrants giving right to the holder of such warrants to subscribe for Equity/Class B Shares, issue of Equity/Class B shares. Further, the company's board directed that, it should ensure that overall dilution of equity through aforesaid is within 15% and the debt equity ratio is not to exceed 1.33. The company's promoters had 44.92% stake in the firm as on June, 2011. On technical perspective, after taking significant correction from the highs of Rs 310, scrip has shown crucial resistance below Rs 170 level. At current juncture we believe scrip has the potential to recover from the current level as its technical indicators i.e. RSI and MACD also suggest some technical pull back in near term. Hence we recommended 'Buy' in this stock.
SCRIP NAME
TRIGGER PRICE
TARGET 1
TARGET 2
STOP LOSS
DURATION
PANTALOON
175-180
160
210
225
1 Month
Federal Bank is the fourth-largest private lender in the country and the largest in Kerala, with a balance sheet of Rs 81,000 crore as of September 30. The company's net profit for the quarter rose 36.15% at Rs 191.16 crore as compared to Rs 140.40 crore for the quarter ended September 30, 2010. Its net sales has increased by 32.29% to Rs 1484.79 crore for the quarter under review from Rs 1122.38 crore for the similar quarter of the previous year. Federal Bank, a Kerala-based private sector bank, has opened 66 new branches on October 18, 2011. Of the new branches inaugurated 12 are in Gujarat, 10 in Karnataka, 9 in Tamil Nadu and 6 in Maharashtra. The way forward for Federal Bank is to scale up on its strength in new territories. This move is in line with its vision of becoming the most trusted partner for the SME, retail and NRI customer segments. Recently, in a bid to expand the services and facilitate its customer to bank under single roof the bank is eyeing to foray into equity broking services business. The Kerala-based bank is also keen on starting investment banking services but is yet to formally move to the regulators and exchanges in this regard. On technical viewpoint, stock has shown double bottom formation around Rs 340 and currently in upward bias. In close proximity scrip has given crucial break out above its 200 DMA (Rs 400) which itself a bullish indicator in near term. Moreover it's RSI and other technical indicators also displaying some buying opportunities in near term. Hence investors are advised to BUY this stock for a price target of Rs 440-460 in near term.
SCRIP NAME
TRIGGER PRICE
TARGET 1
TARGET 2
STOP LOSS
DURATION
FEDERAL BK
390-400
370
440
460
1 Month
If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.
FUNDAMENTAL PICKS
FUNDAMENTAL PICK
HCL Technologies Ltd
HCL Technologies, a leading global IT services company offers integrated portfolio of services including software-led IT solutions, remote infrastructure management, engineering and R&D services and BPO. It provides services to industry sectors including financial services, manufacturing, aerospace & defense, telecom, retail & CPG, life sciences & healthcare, media & entertainment, travel, transportation & logistics, automotive, government, energies & utilities. With offices in 26 countries and partnerships with several leading firms, it is a leader in providing IT services to its clients restructuring the core of their businesses. Financials: The Top Line of HCL Tech grew at CAGR of 17.5% over the last five years (FY06-11), bottom Line and Operating Profit of the company for the same period grew at CAGR of 13.5% and 16% respectively. In FY11, the Net Sales of HCL Tech jumped 34% to Rs 6794.48 crore over FY10, Operating Profit of company surged 12% to Rs 1516.37 crore and PAT also increased by 13.4% to Rs 1198.28 crore. In Q1FY12 (Sep 2011), the Net Sales of the company grew by 32%, Operating Profit grew by 71% and PAT phenomenally jumped 104%. The OPM for the same period stood around 24% while PAT margin was 20%. INVESTMENT GROUNDS Indian IT exporters generate more than 90% of their revenue from the developed economy and any unfavorable economic conditions in these developed countries affects the growth of IT sector in India. As we can see that right now due to current economic uncertainty the IT sector has been impacted, though dollar appreciated against rupee and played a vital role to offset several revenue losses for the past quarter. However, in forth coming period the situation is likely to improve as many global software providers expressed that uncertainty has failed to affect software and services spending. On the other hand, the individual efficiency of IT companies like increasing outsourcing contracts and introducing new business models can make them competent for this environment. Timely contract Execution Track Record is an advantage With the new contracts worth Rs US$2bn during past six months, HCL Tech is focusing to obtain more large deals. HCL Tech featured among TPI's Global 6 IT Services providers by TCVs awarded, across all the three regions of the world has won multiple transformational deals and has a record of accomplishment to deliver them with timely execution with excellent customer supports. It has collaborated with Apacheta to provide global delivery of mobile sales, delivery and merchandising solutions to consumer goods industry to enhance operational efficiencies & provide improved time-to-market benefits.
Quarter & Year Ended Sep-11 Sep-10 %Chg JUN-FY11 Net Sales (Rs Cr) 1979.22 1498.32 32.1 6794.48 Operating Profit (Rs Cr) 475.54 278.32 70.9 1516.37 OPM% (Chg in bps) 24.03 18.58 545 22.32 PAT (Rs Cr) 397.55 194.88 104.0 1198.28 PATM% (Chg in bps) 20.09 13.01 708 17.64 EPS (Rs) 5.76 3.46 2.9 17.4 Dividend (%) 0 0 0 375 Equity (Rs Cr) 137.96 136 1.4 137.74 Data Matrix as on 01.11.2011 Key Financial Ratios (TTM) CMP (Rs) 430.75 P/E (x) TTM 21.22 52- Week High (Rs) 528.4 P/BV (x) TTM 4.91 52- Week Low (Rs) 360.1 EV/TTM EBIDTA (x) 15.28 Latest Book Value (Rs) 87.65 EV/TTM Sales (x) 4.08 Face Value (Rs) 2 MCap/ TTM Sales( x) 4.09 Total No of Shares (Cr) 68.98 Total Debt/Equity (x) 0.18 Avg. Monthly Vol. (Lakhs) 10.04 ROA (%) 18.12 Market Cap (Rs Cr) 29,728 ROE (%) 23.08 Beta (Sensex) 1.16 ROCE (%) 21.04 Industry P/E 19.55 Dividend Yield (%) 1.74 Major Shareholders as on 30 Sep 2011 Promoters (%) 64.27 FIIs (%) 20.51 Non-Institutions (%) 8.51 DIIs (%) 6.71
Education is the foundation of success. Just as scholastic skills are vitally important, so are financial skills and communication skills.
MARKET TUTORIALS
When & How to use Bear Put Spread? Bear Put Spread is a type of options strategy used when an option trader expects a decline in the price of the underlying asset. Bear Put Spread is achieved by purchasing put options at a specific strike price while also selling the same number of puts at a lower strike price. In fact, this option strategy is also a method to buy put options at a discount, because you sell to open an Out of the Money (OTM) put option in this option strategy, which reduces investment on our In The Money (ITM) or At The Money (ATM) Put options. This option strategy would be an ideal strategy for the beginners who want to profit from a down market as it reduces upfront payment and therefore the risk of the position too. deducting the net premium paid from the Strike price of the purchased put. To understand the bear put spread let us take an example, suppose stock of a company is trading at Rs 38 in Oct. An options trader bearish on this stock decides to enter a bear put spread position by buying a Oct 40 put for Rs 300 and sell a Oct 35 put for Rs 100 at the same time, resulting in a net debit of Rs 200 for entering this position. The price of stock subsequently drops to Rs 34 at expiration. Both puts expire in-the-money with the Oct 40 put bought having Rs 600 in intrinsic value and the Oct 35 put sold having Rs 100 in intrinsic value. The spread would then have a net value of Rs 5 (the difference in strike price). Deducting the debit taken when he placed the trade, Advantages of Bear Put Spread Bear Put Spread can be considered a double hedging strategy as the price paid for the put with the higher strike price is partially compensate by the premium received from writing the put with a lower strike price. Thus, the investor's investment in the long put and the risk of losing the entire premium paid for it is reduced or hedged. The position is hedged as loss is limited if the underlying asset rises instead of fall while on the other hand if the underlying asset fails to fall beyond the strike price of the out of the money short call option, the profit yield will be greater than just buying put options. It is also a way of buying put options at a discount by selling the out of the money put option at a strike price beyond that which the underlying asset is expected to fall. Conclusion: The bear put spread is a debit spread as the difference between the sale and purchase of the two options results in a net debit. This spread is sometimes more broadly categorized as a "vertical spread": a family of spreads involving options of the same stock, same expiration month, but different strike prices. Either they can be created with all calls or all puts, and is bullish or bearish. The bear put spread, as any spread, can be executed as a "package" in one single transaction, not as separate buy and sell transactions. For this bearish vertical spread, a bid and offer for the whole package can be requested through your brokerage firm The Break Even Point with an exemplar The Break-even point for the Bear Put Spread can be achieved by from an exchange where the options are listed and traded. Hope this option strategy helps to make some reasonable profits in falling markets. his net profit is Rs 300. This is also his maximum possible profit. If the stock had rallied to Rs 420 instead, both options expire worthless, and the options trader loses the entire debit of Rs 200 taken to enter the trade. This is also the maximum possible loss.
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first trading session of a new week as marketmen chose to take profits off the table after the spike up in American dollar and growing doubts over Europe's bailout plan undermined sentiments. However, the red metal prices also got weighed down after a data showed that the Chicago PMI fell more-than-expected to a seasonally adjusted 58.4 last month from 60.4 in the preceding month. Copper futures for December delivery slumped 7.40 cents or 2% to settle at $3.6320 per lb after trading as high as $3.7425 and as low as $3.4890 on the Comex metals division of the New York Mercantile Exchange. Copper for threemonth delivery on the London Metal Exchange plummeted $175 to end at $8,000 a tonne. Meanwhile investors relentlessly accumulated positions in the growth sensitive metal after Europe's hard-won debt deal to save the Eurozone and the global economy from recession. Investors' morale also got boosted because of an impressive US economic report which showed that the GDP gathered additional steam and expanded at a better than expected pace of 2.5% annual rate in the third quarter, easing concerns that the US was on the verge of a double-dip recession. The red metal prices also got underpinned by the depreciation in greenback which made the dollar priced metal look more attractive to global investors.
AUXILIARY SECTION
Introduction
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