comments on 05-12-2007,Flow of river....

Wednesday, December 05, 2007

Yet again it was a spectacular day for the market. IDFC and NTPC have shown huge accumulation pattern like GAIL we had initiated buy call in GAIL. Our inst desk is still bullish in GAIL and advising clients to hold positions till Rs 550 plus. In fact, GAIL is now heading for Rs 1000 in next 6 months. Similarly they are very aggressive on NTPC, IDFC, RPL, R Com and RNRL. As reported on last Saturday we had indicated that 12 items were among call volumes out of 27 items and aforesaid 5 items were from the said list. Something is definitely cooking in IDFC, NTPC and RPL and hence just keep tab on the news. These 3 stocks might explode the way GAIL exploded.

OBC has direct nexus with SBI rights issue. With SBI heading for Rs 2700 before rights all banking stocks might just burst and in that rally OBC will cross Rs 400 very easily. The only resistance is Rs 280 which could happen tomorrow early morning then only zoom. We have reduced IDBI from SC and introduced IFCI again though we are equally bullish in IDBI, for the simple reason that IFCI is again tossing up the idea of land story through separate entity. The reason is very simple that IFCI is seeing the potential valuation of Rs 250 in the co and that is reason the entire process is getting delayed. In fact, the very logic that F I accepted entire conversion could only mean that the value is much higher. IFC too taking stake pre dilution only for realty development purpose.

Our call on Nifty was never a blinder and we still maintain that 6200 will see the light of the day. Now you will find couple of dozen analysts coming on wire channels and saying Nifty target 6200 and do not forget to their recordings that they were negative at 5600. Our call market is like flow of river from GANGOTRI to HAWRHA. The direction is onto only way.

Every day the FINMIN is coming out with one or other announcement concerned with Budget which is now making more convinced that market is intact till Budget. Some quarters have gone on record that FII are going on leave and therefore market may remain sluggish in Dec. Let me deal with first…

Fresh allocation is set to happen in JAN which will bring fresh rally because now even a person sitting outside Churchgate station can say that INDIA allocation will be huge. Technically this has frozen the FCCB deals for the time being and therefore FII have no option than to deploy the excess liquidity through cash markets. Since market is all along buoyant FII have churned good amount of portfolio and also sitting on huge cash piles and if they show huge cash piles their allocation will be affected and hence they will have keep their books open even on holidays. May seniors will enjoy and juniors will meet targets. Bonus is dependent on performance in calendar year which means portfolio churning will happen madly and volumes too will rise and in this market increased volume means huge upside.

Now coming back Budget, F M is on its way to announce record reforms ahead of Budget which will lift further expectations. However my guts feeling is that F M is set to deal with reforms issue out of Budget so that no pressure from LEFT and RIGHT comes him except RUPEE CONVERTIBILTY. R C could be the major theme of this Budget and if this is going to happen then TECH sector where lot of buzz is heard in the market may go sour because R C could push rupee to Rs 35 in just 24 hours. Therefore do not go long in TECH sector before Budget.

The bottom line is simple. Reforms will be dealt with before Budget; there could be just five cent tax on S T C G which could be offset by small increase in entry load balancing the revenue and expenditure. But the major populist measures could be taken care of keeping elections in mind and the revenue for the same will come from only stake dilutions through IPO of PSU stocks. Oil stocks will fire because Govt wants OIL cos to sell stake at huge market cap and conserve their call on GAS.

Coming back to cash, Asian Oil has now been awarded 3 D status and their order book position has crossed Alphageo for that matter. On the basis of the order book, I would put it that ASOL could achieve an EPS of Rs 75 to 90 in 09 itself. You may value the stock on the basis of the same. Something is happening in ADITYA FORGING which has got some nexus with Gujarat elections.

Rajeswari Foundation which is one of the great realty stories in Chennai could just explode. This stock is under FII banner and could become multi baggers in the times to come.

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