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December 27, 2008
Weekly Review
Angel Broking Ltd : BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM / CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302
Note: Stock Prices are as on Report release date;Refer all Detailed Reports on Angel website
Indices Jan Dec. Dec. Weekly YTD01, 08 19, 08 26, 08 (% chg)
BSE 30 20,287 10,100 9,329 (7.6) (54.0)NSE 6,139 3,078 2,857 (7.2) (53.5)Nasdaq 2,652 1,564 1,530 (2.2) (42.3)DOW 13,265 8,579 8,516 (0.7) (35.8)Nikkei 15,308 8,589 8,740 1.8 (42.9)HangSeng 27,813 15,128 14,184 (6.2) (49.0)Straits Times 3,482 1,795 1,726 (3.9) (50.4)Shanghai Composite 5,262 2,018 1,852 (8.3) (64.8)KLSE Composite 1,445 876 867 (1.0) (40.0)Jakarta Composite 2,746 1,348 1,341 (0.5) (51.2)KOSPI Composite 1,897 1,181 1,118 (5.3) (41.1)Sectoral IndicesBANKEX 11,418 5,631 5,211 (7.5) (54.4)BSE AUTO 5,667 2,562 2,364 (7.7) (58.3)BSE IT 4,530 2,347 2,149 (8.4) (52.5)BSE PSU 10,468 5,394 5,149 (4.5) (50.8)
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December 27, 2008
Sensex sinks back below 10k on profit booking, weak global cuesThe Indian stock markets opened this holiday truncated week in the backdrop of a strong rally over the previous two weekswherein the Sensex had gained almost 13%. During this part of the year, usually FIIs across the globe are not very active playersin the markets as they are vactioning on account of Christmas. However, this time round, FIIs opted to book some profits in wakeof the continued 'not so good' news on the global front. While the US consumer spending was down in Nov 2008 for the fifthconsecutive month, albeit better than forecasts, the US unemployment rate came in at 26-year highs. Japan's auto productionalso registered its steepest drop in the last 40 years in Nov 2008 owing to the US slowdown. All this was not taken kindly by marketparticipants as concerns pertaining to the bleak global economic outlook resurfaced.Profit booking marked the week at the Indian bourses with indices closing negative in all the 4 trading sessions of the week. Poorglobal sentiments and derivatives expiry added to the weakness and volatility. However, intra-day intermittent rallies werewitnessed on expectations of another interest rate cut by the RBI and likely announcement of a second fiscal stimulus package bythe government. But, these did not sustain. The FIIs were net sellers to the tune of Rs620cr in the first 3 trading sessions of theweek, provisional numbers indicate they were net sellers of Rs345cr in the cash market on Friday as well.For the week, the BSE Sensex lost 7.6%, while the NSE Nifty lost 7.2%. Inflation figure for the week ended December 13, 2008came in lower at 6.61% (6.84%), falling further to a 9-month low. This figure is expected to dip even more in the coming weeks, asa slowing global and domestic economy could result in lower demand and inflation settling at 3-4% levels by March 2009. Thus,inflation, which till recently was a matter of concern with crude prices hovering close to US $150/barrel mark, is no longer aconcern. Boosting investment, demand and credit availability are the issues that need to be emphasised at the current junctureand the recent fiscal and monetary stimulus packages are ample reflections of this. We believe even though In the medium termthere would be a correction in the growth rate of the Indian economy, going forward, given favourable demographics and hugemiddle class, the structural growth story of India has not changed and we remain positive on the 'India Story'.BSE Oil and Gas Index - Short-term non-enthusing, long-term gains intactThe BSE Oil and Gas Index closed in the red this week losing 8.3% week-over-week (wow) and under-performing the Sensex,which ended 7.6% lower. RIL (55.9% weightage in the index) lost a whopping 10.2%, ONGC (16.2% weightage) 9.2%, GAIL (6.0%weightage) 4.9% and RPL (5.6% weightage) 4.7%. Oil marketing companies (OMCs) outperformed the Index with IOC (3.2%weightage) losing just 0.8%, BPCL (2.9% weightage) 2.8% and HPCL (2.7% weightage) 1.9%. Cairn India (3.6% weightage) wasthe only oil stock that ended 4.5% higher due to crude gaining 11.9% wow. Global slowdown has seen a decline in crude prices,petrochem margins and GRMs, which has impacted upstream companies (ONGC and Cairn India) and integrated oil companieslike RIL. However, softening crude prices and strong Rupee v/s the USD has helped OMCs. We believe it would be status quo forupstream, refining and petrochem companies in the near term, though in the medium term the segment offers good prospects.
FII activity during the Week Rs crore
As Cash Stock Index Neton (Equity) Futures Futures ActivityDec 19 463 (51) 324 735
Dec 22 (224) (40) (489) (752)
Dec 23 (271) (385) (553) (1,209)
Dec 24 (119) 455 (921) (584)
Net (151) (20) (1,638) (1,810)Mutual Fund activity during the Week Rs croreAs on Purchase Sales Net Activity (Equity)Dec 19 905 610 295
Dec 22 476 313 163
Dec 23 345 441 (96)
Dec 24 736 399 337
Net 2,461 1,763 699
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Fundamental Focus
Company Update
Indraprastha Gas - Neutral
Peaking out
Indraprastha Gas (IGL), a retail gas distribution company, hasunderperformed the benchmark indices as well as the Oil andGas index over the last 2-3 years by a substantial margin. Thescenario continues to be bleak for IGL owing to headwindssuch as higher capital expenditure and slowdown in CNGconversions impacting Earnings growth going ahead.Declining Return Ratios and continuance of Regulatoryoverhang over the company’s operations is also likely toprevent re-rating of the stock.
Regulations to rein in excessive Margins: On account ofenjoying monopolistic position in the sector and unregulatedmargins, IGL has been registering high EBITDA Margins inexcess of 40% and RoCE ranging from 38% to 45%. However,the period of unregulated Margins is about to cease with thePNGRB guidelines ushering in regulations to limit Networkand Compression tariffs with Marketing Margins being left outpresuming it will be self-regulated due to competitive forces.Further, IGL’s Marketing exclusivity is also likely to end postFY2011. Thereon, a level playing field for all players who wouldsee IGL sourcing gas at higher prices leading to squeeze in it’sMarketing Margins.
Unjustified returns for low-risk business model: Onaccount of earning super-normal returns - generated returns ofmore than 42% on core assets in FY2008 - IGL has fullyrecovered its investments. IGL’s returns exceed the risk-returntrade off involved in the city gas distribution (CGD) business.However, going ahead, we believe such super-normal returnswould temper due to increase in gas costs, competition or theregulator interfering to cap the returns.
APM gas price hike imminent: IGL gets 2 mmscmd of APMgas (1.9 mmscmd for CNG and 0.1 mmscmd for PNG) for itsoperations in the NCT region of Delhi, which helps it postrobust performance. However, going ahead, declining APM gasproduction and exhaustion of current supply allocation is likelyto increase gas prices for the company. Similarly, the supplycontract with GAIL is also due to renewal towards end CY2010,which could also increase gas costs for the company.
Gas Utilisation Policy a dampner to CGD business: Therecently announced Gas Utilisation Policy (GUP) favours thePower and Fertiliser industry over the CGD business as firstclaimants of the upcoming domestic gas. Thus, the GUP hasdiminished chances of CGD incumbents to have a pie of
Price - Rs101
Source: Company, Angel Research; Price as on Dec.27,2008; DetailedCompany Report to be released shortly.
Key FinancialsY/E March (Rs cr) FY2007 FY2008 FY2009E FY2010E
Net Sales 614.1 706.0 844.1 939.5
% chg 17.9 15.0 19.6 11.3
Net Profit 138.0 174.5 202.5 204.6
% chg 30.0 26.5 16.1 1.1
OPM (%) 41.6 42.5 41.9 40.8
EPS (Rs) 9.9 12.5 14.5 14.6
P/E (x) 10.2 8.1 7.0 6.9
P/BV (x) 3.0 2.5 2.0 1.7
RoE (%) 29.5 30.3 28.8 24.8
RoCE (%) 41.8 41.2 40.1 34.6
EV/Sales (x) 2.2 1.8 1.5 1.4
EV/EBITDA (x) 5.4 4.2 3.6 3.3
Research Analyst - Deepak Pareek / Amit Vora
domestic gas. This leaves them with R-LNG as the only optionfor incremental growth. However, this would increase gas costfor incumbent CGD players like IGL.
Authorisation issues impact IGL’s expansion plans: IGLhas formed a joint venture with Siti Energy and plans to expandinto new geographies such as Ghaziabad, Panipat and Sonipatin Haryana on nomination basis. However, PNGRB guidelinescould impact IGL's expansion plans significantly as theregulator plans to offer newer geographies on competitivebidding basis. Thus, delay in authorisation and intensifyingcompetition could affect IGL's expansion plans.
Outlook and Valuation
IGL is currently on a capex spree (it is almost doubling its GFAcapacity over the next two years) in wake of the upcomingCommonwealth Games and increasing demand for CNG.However, we continue to have concerns over IGL’s pricing policydue to which it has been earning exorbitant margins. We havevalued IGL using DCF methodology and have arrived at afair value of Rs105. At Rs101, the stock is trading at 7.0x and6.9x FY2009E and FY2010E Earnings. We believe IGL’sinability to pass through higher gas costs and declining ReturnRatios are likely to be a drag on its performance going ahead.Hence, we remain Neutral on the stock.
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Fundamental Focus
Research Analyst - Sarabjit Kour Nangra / Sushant Dalmia
Event Update
Piramal Healthcare - Buy
Minrad International: Small but Strategic fit
Piramal Healthcare announced its definitive merger agreementwith Minrad International Inc, a provider of generic inhalationanaesthetic, for a total consideration of US $40mn. PiramalHealthcare had entered the Inhalation Anaesthetic segmentthrough acquisition of the Rhodia IA business in FY2005. Itcurrently produces Halothane and Isoflurane at its facility inIndia. With the Minrad acquisition, Piramal will have all fiveproducts, viz. Desflurane, Sevoflurane, Enflurane, Isofluraneand Halothane of the Anaesthetic segment under its portfoliomaking it the third largest player after Abbott and Baxter in theUS Inhalation Anaesthetic market.
Contours of the Deal: As per the agreement, Minrad willmerge with a newly incorporated wholly-owned subsidiary ofPiramal. The transaction is conditioned upon approval byMinrad's stockholders and other customary closing conditions.The deal is expected to close in the first quarter of 2009. Out ofthe US $40mn consideration, which will be raised throughinternal accruals and debt, Piramal Healthcare will pay Equityconsideration of US $5.9mn (at $0.12 per share), assumeexisting debt and other charges of US $3.3mn and redeemconvertible notes of US $30.8mn. The company also plans toinfuse additional US $12mn as working capital investment.
Management expects acquisition to be EPS accretive inFY2010: Piramal Healthcare intends to turn the acquisitionprofitable in its first year of operation by rationalizing costs acrossthe value chain and through working capital management.Management expects Minrad to clock Revenues of US $65mnwith EBITDA Margins of 25% and be marginally EPS accretivein the first year of consolidation (FY2010). We believe thisacquisition will help the company scale up its InhaledAnaesthetic product portfolio and build a global presence in theCritical Care segment in the long term. We have not factored inany upsides from the acquisition on the Net Profit front.
About Minrad
Minrad, founded in 1996, has presence across three segments,viz. Inhalation Anaesthetic gases, Conscious Sedation systems,Image Guidance systems. Minrad has transformed itself into ageneric provider of Inhalation Anaesthetic products, whichcontributed 98% of Total Revenues in the first nine months ofCY2008, with all four key products (Desflurane-ANDA filed,Sevoflurane, Enflurane and Isoflurane) under its portfolio.
Price - Rs231Target Price - Rs340
Source: Company, Angel Research; Price as on Dec.24,2008
Key Financials (Consolidated)Y/E March (Rs cr) FY2007 FY2008 FY2009E FY2010E
Net Sales 2,420 2,848 3,334 3,751
% chg 52.9 17.7 17.1 12.5
Net Profit 218 334 444 469
% chg 80.8 53.0 33.0 5.7
Adj EPS (Rs) 10.4 15.9 21.2 22.4
EBITDA Margin (%) 13.7 18.9 19.3 20.2
P/E (x) 21.9 14.3 10.7 10.2
RoE (%) 21.1 33.7 37.0 32.3
RoCE (%) 21.2 27.9 30.5 28.1
P/BV (x) 3.9 3.9 3.3 2.7
EV/Sales (x) 2.2 1.9 1.6 1.5
EV/EBITDA (x) 13.4 9.3 7.8 7.1
Inhalation Anaesthetic Market
The global Inhalation Anaesthetic market is estimated at US$1,050mn (CY2007) having five gas molecules with the USmarket accounting for 50% share. Sevoflurane currently hasthe lion's share of the total Inhalation Anaesthetic market with72% followed by Desflurane having 20% share. The USInhalation Anaesthetic market is dominated by few players likeAbbot, Baxter and Minrad. Minrad's market share is currently inlow single digits and with the acquisition by Piramal Healthcareit expects to increase it by 10-12% going forward on the back ofexpansion in vaporizers installation, investment in workingcapital and global material sourcing.
Outlook and Valuation
Piramal Healthcare has been a key entrant in the CMG space.Over the last few years, the segment has been the key growthdriver for the company. We expect the company's Revenues togrow at a CAGR of 14.8% over FY2008-10E to Rs3,751cr andNet Profit to post CAGR of 18.6% over the mentioned period toRs468.9cr. At Rs231, the stock is trading at 10.7x FY2009E and10.2x FY2010 Earnings. We maintain a Buy on the stock witha Target Price of Rs340, which implies a Target multiple of15x FY2010E EPS.
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Bulls losing momentumSensex (9329) / Nifty (2857)
In our previous weekly report we had mentioned that initial part of the week could see a minor correction to 9990 - 9820 / 3015 - 2975levels, where one can initiate long positions with a stop loss of 9633 / 2900 level for a target of 11400 -11650 / 3400 - 3450 levels.However, magnitude of the correction has clearly taken us by surprise and has broken our short-term swing low, which was at around9600 / 2900 level thereby negating our previous weekly view and has lost momentum on the upside, which was seen in earlier week.
Pattern Formation:
The short-term swing low on the daily charts (9633 /2923 level) dated 18/12/08 has been broken, which suggests loss ofmomentum in the short term. The next support is at 9200 - 9050 / 2800 - 2770 levels.
The RSI (smoothened), which is a momentum indicator is giving a negative crossover in the daily charts, which suggests somefurther downside. However, same RSI (smoothened) in the weekly charts is still positive, which suggests buying may emerge atlower levels.
Technical Picks
Source: Advanced Get
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Technical Research Team
Technical Picks
Future Outlook:
Summarizing from the above, the coming weeks are likely to witness a move in the range of 9200 -10188 / 2800 - 3100 levels, with10188 / 3100 level clearly acting as a strong resistance. Very clearly the upside target of 11400 / 3400 level is now in doubt, and maybe achieved only if the indices close and trade above the strong resistance of 10188 / 3100 level. On the flip side, if 9200 - 9050 / 2800- 2770 level is broken then markets can even test 8460 - 8370 / 2530 - 2500 levels.
The short-term momentum indicators are suggesting a downside drift in the prices but not a one way crackdown. Also, the fallin the last four trading sessions has been on low volumes, which suggests that some buying may come at lower levels. Thoughwe hold a bearish view in the long term (three to six months), we feel that the short term may witness some buying before thefall happens.
RSI (smoothened)
Negativecrossover
Source: Advanced Get
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Mutual Fund Focus
ELSS - Equity linked Savings Scheme
ELSS is a mutual fund scheme that invests in equity & equity-related securities. ELSS are also eligible investments undersection 80C of Income Tax Act 1961, where the investments up to Rs.1 Lac is eligible for deduction from your total income.There are many tax-saving instruments, like NSC, PPF, Bank FD that has a fixed Long Term maturity period and gives fixedreturns on the amount invested.
Disclaimer: - Angel Capital & Debt Market Ltd is not responsible for any error or inaccuracy or any losses suffered on account of information contained in this report. Mutual Fund investments are subjected to market risk.Please go through offer document before investing.
Objective Long-term Capital Appreciation & Tax Planning
Risk Average
Investment Portfolio Stocks-Large & Mid Cap
Who should invest Investors -Tax Planning & Capital appreciation
Investment horizon 3 years Lock in Period
Tax Deduction-Sec 80 C
(With Effect from 01/4/2008) Investment up to Rs.1 Lac Exempt from Tax
Tax Implications Dividend-Tax Free
Long Term Capital Gain(LTGC) -NIL
Benchmark S&P CNX Nifty Index
Features of ELSS Schemes ELSS v/s Other Investment Avenues
Particulars PPF NSC ELSS (Mutual Bank FD
Fund)
Duration (years)-Lock in
Period 15 6 3 5
Minimum Investment(Rs.) 500 100 500 5000
Maximum Investment
(Rs.)- For Tax Advantage 70000 100000 100000 100000
Safety/Ratings No Risk No risk Average Risk No Risk
Returns % (CAGR) 8.50 7.50 22.50 10.50
Interest Income/
Dividend Tax Free Taxable Dividends& Taxable
LTCG tax are free
Tax Saving
(Tax Rate-33.33 %*) Rs 23331 33330 33330 33330
*Note: Investors Falling in Highest Tax Bracket
An Efficient Tax-Saving ToolSIP Analysis in ELSS Schemes
The Graph shows that SIP started in a Bear phase & heldfor a long period has created wealth for the investor.
SIP period considered: January 2002 to December 2006
ELSS has Triple Advantage Compared to other tax Savings OptionShortest lock-in period of three years
Highest Returns PotentialDividend & Long term Capital Gain are Tax Free
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Mutual Fund Focus
Disclaimer: - Angel Capital & Debt Market Ltd is not responsible for any error or inaccuracy or any losses suffered on account of information contained in this report. Mutual Fund investments are subjected to market risk.Please go through offer document before investing.
Bharti AXA Tax Advantage-NFO
Fund features: NFO Period: - 12thDecember, 2008 to 12th February, 2009Scheme Objective The Scheme seeks to generate long-term capital growth from a diversified portfolio of
Predominantly equity and equity-related securities across all market capitalizations. The Schemeis in the nature of diversified multi-cap fund. The Scheme is not providing any Assured or guaranteedreturns. There can be no assurance that the investment objectives of the Scheme will be realized.
Type of Scheme An Open - Ended Equity Linked Savings Scheme offering Tax benefits to eligible assesses underSection 80 C of the Income Tax Act, 1961
Bench Mark Index S&P CNX Nifty IndexNFO Price Rs 10 per unit in cash plus applicable Entry Load.Plans Eco and RegularInvestment Option(s) Growth Option
Dividend Option offering Dividend Re-investment and Dividend Pay-out facilitiesMinimum Application Rs.500/- and in multiples of Rs.500/-AmountEntry load Regular Plan - Where the purchase amount is less than Rs. 2 crores - 2.25% of the Applicable
NAV; Where the purchase amount is Rs. 2 crores and above - NilEco Plan - 2.25% of the Applicable NAVInvestments through SIP/ STP - 2.25% of the Applicable NAV
Exit Load NILInstrument Risk Profile Range
Equity & Equity related instruments * High 80%- 100%Debt & Money Market Instruments** Low to Medium 0% - 20%Mr. Prateek Agrawal
Asset AllocationPattern
Fund Manager*Investment in derivatives instruments may be made only if permitted under Equity Linked Savings Scheme, 2005 and SEBI Regulations. In suchevent, the investments in derivatives shall be up to 50% of the net assets of the Scheme. **The Scheme will not make investments in securitizeddebt
Outlook on Equity Market by Bharti AXA AMC
Performance of Bharti AXA Equity Fund
Period 1 Week 2 Weeks 1 Month Since
Inception
Fund 2.50 9.10 11.30 7.13
Benchmark-
S&P CNX Nifty 5.34 13.37 15.27 13.87*Absolute Return % as on 21 Dec 2008
Medium to long term Investment horizon.
Attractive investment opportunity for claiming tax Benefits.
Long Term Wealth Creation
Bharti AXA Tax Advantage Fund Suitable for Investors
CommodityPrices
decline/InflationPeaks Out
FinancialConditions
Ease
Flow of EquityResume
Central bankersturn from fighting
inflation toSupporting
growth
Equity Marketsstart to
Outperform
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Last week correction due to profit bookingTrade with positive bias using Nifty call options
Derivatives Review
Nifty spot has closed at 2857 this week against a close of 3078 last week. The Put-Call Ratio is at 1.12 levels against the 1.48 levelslast week and the annualized Cost of Carry is positive 3.99%. The Open Interest in Nifty Futures has decreased by 29.35% due toexpiry.
Derivative Strategy
Scrip : RPL CMP : Rs. 84.75/- Lot Size : 1675 Exercise Day (F&O) : 29th January 2009
Expected PayoffView: Mildly Bullish
Closing Price ExpectedProfit/Loss
Rs. 80.00
Rs. 85.00
Rs. 92.50
Rs. 95.00
Rs. 100.00
BEP: Rs. 92.50/-
Max. Risk: Rs. 4,187.50/- Max. Profit: Rs.12,562.50/-If RPL closes on or below Rs. 90/- If RPL closes on or above Rs. 100/-.
NOTE: Profit can be booked before expiry if RPL moves in favourable direction.
Buy/Sell Qty Scrip Strike Series Option MarketPrice Type Price(Rs.)
BUY 1675 RPL 90 January CALL 5.00
Sell 1675 RPL 100 January CALL 2.50
(Rs. 2.50)
(Rs. 2.50)
Rs. 0.00
Rs. 2.50
Rs. 7.50
Strategy: Bull Call Spread
PCR-OI has declined from 1.48 levels to 1.12 levels in beginningof January series. We have less strike prices to deal with in thisseries. Both 3000 call and put have shown significant activityinitially. This level would be pivotal for the series. 2800 put hasmaximum open interest and taking into consideration relativelylow IV's this appears to be blend of both buying and selling.FII's interestingly have shown interest in stock options too.
Nifty futures annual volatility has decreased week-over-weekfrom 66.74% to 61.21%. Implied volatility has increased from42.50% to 43.25%. Call option IV's are trading at 40.54% andput option IV's are trading at 45.96%. Interestingly even aftersignificant fall of more than 7% IV's have not shot up, indicatingthis is just profit booking. Counters where HV's have increasedare CMC, TVSMOTOR, PETRONET, KSK and GSPL. Stocks whereHV's have decreased are ULTRACEMCO, SYNDIBANK, UTVSOF,CHENNPETRO and STERLINBIO.
Put Call Ratio Analysis Futures Annual Volatility Analysis
Total open interest of market week-over-week has decreasedfrom Rs. 65,720 crores to Rs. 36,550 crores and that of stockfutures has decreased from Rs. 16,971 crores to Rs. 12,512crores due to expiry. Liquid counters like SATYAMCOMP,IBREALEST, IDFC, and BAJAJHIND have managed to add openinterest despite expiry. Most of these positions are on the shortside. Counters where significant reduction was witnessed werePFC, INDIAINFO, DRREDDY, AXISBANK and HDFCBANK.
January series was trading at premium of 28-30 points beforeexpiry. However on Friday the premium has shrunk to 10.30points. This was mainly due to long unwinding. We don't expectnifty to go into significant premium or discount as both long andshort standing in market at this point in time. Stocks with positivecost of carry are WWIL, TV-18, HOTELEELA, CIPLA andBRIGADE. Counters with significant negative CoC areGMRINFRA, UNITECH, AMTEKAUTO, IBREALEST andEDELWEISS.
Open Interest Analysis Cost of Carry Analysis
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Commodities Center
Spices Outlook
Research Analyst (Commodities) - Nalini Rao
India's total spices exports from April to October 2008/09 rose by 7 per cent in volume terms due to strong demand for jeera, turmericand coriander according to the Spices Board. Spice exports during April-October stood at 284,560 tonnes as compared to 266,325tonnes a year ago. Jeera exports surged by 74 per cent to 26,000 tonnes during Apr-Oct due to lower output in major producingnations like Syria and Turkey ,Coriander exports rose by 13 per cent to 17,100 tonnes and turmeric rose by 6 per cent to 32,250tonnes whereas Pepper exports declined by 35 per cent to 14,750 tonnes. Global financial turmoil has adversely affected export ofspices from India in the third quarter of 2008-09. Demand for the Indian Pepper from the US and European buyers has slowed downon account of the economic meltdown. Outlook for some of the spices is as under:
Turmeric:
Turmeric prices witnessed a downward trend in the past few weeks on expectation of better Turmeric production for the year 2009.Production estimates for 2009 are around 48 lakh bags compared to 42 lakh bags in 2008. Beginning stocks of Turmeric isestimated to decline and stand lower at 6-7 lakh bags. Fresh arrivals of Turmeric would be available only by mid of January 2009.Spot prices of Turmeric at major mandis traded in the range of Rs.5,000-3,800/qtl in the previous year. Turmeric Futures April contractafter making a high of Rs.4,210/qtl in August 2008, dipped to a low of Rs.3,050qtl in October. Currently, prices are trading aroundRs.3,350 levels. We expect prices to fall further towards Rs.3,050 levels in the coming weeks.
Pepper:
Decline in the export of Black Pepper from the nation is pressurising prices at the domestic market. Demand from the US and Europehave declined due to economic slowdown. Other reasons attributed to reduction in exports is sufficient stocks of Pepper with thesenations. Indian international parity of Pepper though being competitive in the overseas market is not providing support to the prices.Pepper Production in India is expected to be 45-50 thousand tonnes for 2009. If demand from overseas continues to be grim, pricesmay dip further.
Jeera:
Export of Jeera soared to 74% in the first seven months of the current fiscal 2008-09 to around 26,000 tonnes due to lower availabilityof Jeera in other major growing countries such as Turkey, Syria. This encouraged the farmers of Gujarat and Rajasthan to go forbetter sowing of Jeera. Jeera production is affected by the vagaries of weather. Thus, the period from December end to February ofthe next year is crucial for the growth of Jeera. If there are any disturbances in weather, that may support the prices to strengthen.Overall trend remains sideways to down.
Particulars February Contract (per 100 Kg)Resistance-2 10750Resistance-1 10525Close 10350Support-1 9980Support-2 9710
Particulars Spot pricesBlack Pepper 10300
Jeera 10800
Turmeric 3950-3800
Particulars April Contract (per 100 Kg)Resistance-2 3680Resistance-1 3525Close 3385Support-1 3250Support-2 3055
Particulars February Contract (per 100 Kg)Resistance-2 10730Resistance-1 10410Close 9900Support-1 9720Support-2 9475
Turmeric: Jeera:
Pepper:
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Last week, Gold prices opened the week at 12760 but foundvery good support at 12760 levels. Later prices recover sharplybreaking all the resistance and made a high of 13466 andfinally ended the week with a huge profit of Rs.620 to close at13380.
TREND : SIDEWAYS UP
TRADING LEVELS:
This week market is expected to find very good support at13240-13250 levels. Strong support is seen at 13080-13090levels.
Trading below 13080 would lead to lower prices initiallytowards 12880 and then finally towards the major support at12665.
Resistance is observed in the range of 13640-13660. Strongresistance is seen at 13770.
Trading above 13770 would lead to higher prices initiallytowards 13910 and then finally towards 14000.
Recommendation: Buy in the range of 13090-13120 with astrict stop-loss below 12850 for a target of 13480 and 13550.
MCX FEBRUARY GOLDLast week, Silver prices opened the week at 17633 initially movedhigher and found good resistance at 17883 levels. Later pricesfell sharply lower breaking all the supports, and made a low16935 and finally ended the week with a loss of Rs.238 to closeat 17395.
TREND : SIDEWAYS
TRADING LEVELS:
This week market is expected to find good support at17100-17120 levels. Strong support is seen at 16950-16980levels.
Trading below 16950 would lead to lower prices initiallytowards 16820 then 16630 and then finally towards 16500levels.
Resistance is observed in the range of 17650-17680. Strongresistance is seen at 17890-18000 levels.
Trading above 18000 would lead to higher prices initiallytowards 18260 and then finally towards 18600.
Recommendation: Neutral
MCX MARCH SILVER
Last week, Copper prices opened at 144.70. Initially it movedhigher but found strong resistance at 149.50 levels. Later, pricesfell sharply breaking all supports and made a low 138.55 levelsand finally ended the week with a loss Rs.0.70 to close at 144.
TREND: SIDEWAYS DOWN
TRADING LEVELS:
This week market is expected to find good support in therange of 138-135 levels. Strong support is seen at 133-130levels.
Trading below 130 would lead to lower prices initially towards125 and then finally towards 120 levels.
Resistance is observed in the range of 148-150 levels andstrong resistance is seen at 156.
Trading above 156 would lead to higher prices initially towards161.80 and then finally towards 171 levels.
Recommendation: Neutral
MCX FEBRUARY COPPERLast week, Crude opened at 2060 levels initially and movedhigher but found strong resistance at 2108 levels. Later, pricesfell sharply breaking all supports through the week and made alow of 1751 and finally ended the week with a huge loss ofRs.216 to close at 1844.
TREND : SIDEWAYS DOWN
TRADING LEVELS:
This week market is expected to find good support in therange of 1695 levels. Strong support is seen at 1545-1550levels.
Trading below 1545 would lead to lower prices finally towards1500.
Resistance is observed in the range of 1930-1950 levels andstrong resistance is seen at 2060-2070
Trading above 2070 would lead to higher prices initiallytowards 2175 and then finally towards 2310.
Recommendation: Neutral
MCX JANUARY CRUDE
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Commodities Center
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