Infotech Enterprises - promising growth for the future

1) Infotech Enterprise is India's growing Information Technology company. It provides IT based solutions in various domains such as Aerospace, Telecom, Utilities, Consumer Energy, Medical, Oil & Gas to name a few.

2) The company has posted growth rate of 28% in the sales and 50% in profit on year to year basis. Also, it has fared better in European sector which is a positive indication for the company. 

3) The company has recently received many awards for its growth, CSR and governance related matters. It has received "Golden Peacock Awards 2012 for Corporate Governance" which is given to promising IT companies which further provides it the premium over its peer as FIIs and DIIs give focus to corporate governance while investing the funds into a company.

4) The company operates in verticals which has lesser congestion. It is doing well which gives it comparatively stronger platform to boost its business.

5) No shares have been pledged, which is a +ve indication. No major interest expenses (0.01%) and hence no major worry in that space.

6) In terms of valuations, the company is not expensive. It is likely to earn EPS of around 22-24 Rs for FY13. Even at conservative PE of 11-13X, the fair target price arrives in the band of 232-312 Rs. It translates into the potential upside of ~15% from current levels conservatively.

7) In the last one year, the share price has increased by 100%. Though in the last three months, it is trading in the narrow range of 175-195 Rs.

Wishing you a profitable investing!!

Tremendous addition in Open Interest in PSU Banks- 12 Dec 2012

Indian Stock Markets though, have ended flat in today's session, but an interesting trend has seen in the derivatives space.
Amongst the top 10 stocks which have gained Open Interest, 6 are from the banking space, all gaining between 2-12%. These are listed below:

1) Karnataka Bank is up 12%, with Open Interest addition of 58%.

2) Federal Bank is up 5% with Open Interest addition of 46%.

3) Oriental Bank is up 5% with Open Interest addition of 20%.

4) Canara Bank is up 1% with Open Interest addition of 17%.

5) Dena Bank is up 4% with Open Interest addition of 17%.

6) Vijaya Bank is up 4% with Open Interest addition of 15%.

It seems Indian Equity Markets are discounting the news of Bank Re-capitalization and Mergers which is expected to be announced this week. Watch out for the banking space and enter into any Public Sector Banks cautiously. Even if you plan to enter, place strict stop-losses for the same.

Wishing you a profitable trading...

Buy Arvind - Accumulation seen...

Arvind Industries is a textile based firm. The stock is 2nd highest gainers amongst the F&O stocks in the last one week showing rise of 5.5%.

Open Interest too has declined marginally on rising prices, which indicates profit booking is yet to take place. Today also, the stock was rising steadily before RBI dovish policy pulled the markets down.

Another positive indicator has been Open Interest in 85 Calls and 90 Calls which have seen strong accumulation on Friday and yesterday.

The stock can be purchased around 82.5 Rs with stop-loss can be placed at 79 and target levels of 85 Rs. and 89 Rs (ref diagram below).

Buy Century Textiles at 387 with stop loss of 375 and target levels of 415 and 430

Century Textiles has broken the previous short term high made at 376 and close the Friday at 390, which indicates a break-out.

The stock is in strong bullish momentum and likely to move further. The stock provides attractive risk to reward ratio. One may buy the stock at around 387 with stop-loss at 375 and target levels of 416 and 432.

Sell ICICI Bank around 1040-1045, target levels - 1020, 995 and stop-loss 1065

ICICI Bank rallied sharply in the beginning of September and reached the levels of 1050-1100. Since then, it has stuck in this range for about a month.

On Friday though, it has broken that range and closed at 1044. Technically it is a breach of support range and likely to further go down. We anticipate it to first take some support at around 1020 and then at around 990-995. On the upside, one may put stop-loss at 1064.

Wishing you a profitable trading!!

Buy REC Limited around 227 with stop-loss of 223 and target prices of 230 and 240

REC Limited is public sector enterprise which works in the area of rural electrification. With the announcement in the reforms in the power sector, the stock is buzzing.

It is up around 25% since September. The stock retraced from 230-235 levels twice in the last two weeks and consolidating at around 220 levels. On Friday evening though, the stock went up from 222 to 230 levels in the last one hour of trade. 

Trading volume was up by 40% and delivery volume was up by 3 times on day-to-day basis which indicates growing momentum in the stock. The stock though has a resistance at around 230 but should be breached this time, as suggested by trading volumes and delivery volumes data.

The stock can be bought at around 228 with target levels of 233 and 240. One may place the stop-loss at 223.

Happy Trading!!!

Sell Canara Bank around 430, stop-loss of 445 and target price of 422 and 405 Rs.

Canara Bank has appreciated by 40% in the last one month. Since last one week though, it is facing resistance at around 430-440 range. The chart also shows a long term resistance in this range. 

Technically, RSI is also close to 80 which indicates over-bought situation.

From the current levels, the stock likely to fall down to 400 levels on the account of profit booking and hence, recommends sell.

One may sell Canara Bank at around 435 with stop-loss of 446 and target levels of 422 and 405.

Sell Colgate, Buy BEML and Crompton Greaves

Colgate Palmolive

 

Colgate Palmolive has almost given up all the gains made by it in the last one month and now looking weak. This is also confirmed by the increase in Open Interest, which indicates further downside. With this anticipation, sell call on Colgate Palmolive is generated with recommended price of 1180. Stop-loss can be placed at 1215 from where renewed upward trend can be confirmed, while target prices can be placed at 1150 and 1125 where two support levels are created in the past by the stock.

 

Buy BEML and Crompton Greaves

Both the stocks have seen short-covering, which is confirmed by the decrease in Open Interests. For Crompton Greaves, Open Interest declined by 22% while for BEML, it has declined by 20%. This trend is likely to continue till Wednesday and hence, we may see some more upward trend in the stock. With this view, buy calls on BEML and Crompton Greaves have been generated.

 

For Crompton Greaves, it can be bought at 123 with strict stop-loss of 121.80 and target prices of 125 and 130.

 

For BEML, it can be bought for 313 with stop-loss of 305 and target price of 325.

 

Wishing you a great day of trading tomorrow!!

 

RAJIV GANDHI EQUITY SAVINGS SCHEME (RGESS) - Basic Guidelines

RAJIV GANDHI EQUITY SAVINGS SCHEME (RGESS) - FINANCE MINISTER APPROVES THE OPERATIONAL FEATURES

PRESS RELEASE, DATED 21-9-2012

 

The Union Finance Minister Shri P. Chidambaram approved a new tax saving scheme called "Rajiv Gandhi Equity Saving Scheme" (RGESS),exclusively for the first time retail investors in Securities Market. This Scheme would give tax benefits to new investors who invest up to Rs. 50,000 and whose annual income is below Rs. 10 lakh.

The Scheme not only encourages the flow of savings and improves the depth of domestic capital markets, but also aims to promote an 'equity culture' in India. This is also expected to widen the retail investor base in the Indian securities markets.

Salient features of the Scheme are as under:

a. Scheme is open to new retail investors, identified on the basis of their PAN numbers. This includes those who have opened the Demat Account but have not made any transaction in equity and /or in derivatives till the date of notification of this Scheme and all those account holders other than the first account holder who wish to open a fresh account.

b. Those investors whose annual taxable income is ≤ Rs. 10 lakhs are eligible under the Scheme.

c. The maximum Investment permissible under the Scheme is Rs. 50,000 and the investor would get a 50% deduction of the amount invested from the taxable income for that year.

d. Under the Scheme, those stocks listed under the BSE 100 or CNX 100, or those of public sector undertakings which are Navratnas, Maharatnas and Miniratnas would be eligible. Follow-on Public Offers (FPOs) of the above companies would also be eligible under the Scheme. IPOs of PSUs, which are getting listed in the relevant financial year and whose annual turnover is not less than Rs. 4000 Crore for each of the immediate past three years, would also be eligible.

e. In addition, considering the requests from various stakeholders, Exchange Traded Funds (ETFs) and Mutual Funds (MFs) that have RGESS eligible securities as their underlying and are listed and traded in the stock exchanges and settled through a depository mechanism have also been brought under RGESS.

f. To benefit the small investors, the investments are allowed to be made in instalments in the year in which tax claims are made.

g. The total lock-in period for investments under the Scheme would be three years including an initial blanket lock-in period of one year, commencing from the date of last purchase of securities under RGESS.

h. After the first year, investors would be allowed to trade in the securities in furtherance of the goal of promoting an equity culture and as a provision to protect them from adverse market movements or stock specific risks as well as to give them avenues to realize profits.

i. Investors would, however, be required to maintain their level of investment during these two years at the amount for which they have claimed income tax benefit or at the value of the portfolio before initiating a sale transaction, whichever is less, for at least 270 days in a year. The calculation of 270 days includes those days pursuant to the day on which the market value of the residual shares /units has automatically touched the stipulated value after the date of debit.

j. The general principle under which trading is allowed is that whatever is the value of stocks/units sold by the investor from the RGESS portfolio, RGESS compliant securities of at least the same value are credited back into the account subsequently. However, the investor is allowed to take benefits of the appreciation of his RGESS portfolio, provided its value, as on the previous day of trading, remains above the investment for which they have claimed income tax benefit.

k. For the purpose of valuation of shares, the closing price as on the previous day of the date of trading will be considered so that new investors are certain about their debits and credits into the account.

l. In case the investor fails to meet the conditions stipulated, the tax benefit will be withdrawn.

Like all financial products which have reached out substantially to the retail investors (post office savings, life insurance policies etc) through tax benefits, this tax break for direct investment in equity is expected to substantially encourage the retail participation in securities market as well as to enhance their participation in the growth of Indian industry. Entry of more retail investors are expected to further deepen the securities markets as they bring in long-term stable funds, which can counteract the volatility created by the liquidity providers of the market. The Scheme, thus, also furthers the goal of financial stability and promotes financial inclusion. Since Exchange Traded Funds and Mutual Funds have also been brought under the Scheme, the Scheme should provide encouragement and re-assurance to the first time investors.

The broad provisions of the Scheme and the income tax benefits under it have already been incorporated as a new section 80CCG of the Income Tax Act, 1961, as amended by the Finance Act, 2012.

Department of Revenue will notify the Scheme and SEBI will issue the relevant circulars to operationalize the Scheme in the next two weeks.

Sell IB Realestate at 55.3 with target price of 51.5 and stop loss of 57.5

Post announcement of Veritas report in August this year, the stock dropped from 53-55 Rs levels to 44 from  where it accelerated back to 55 Rs, thanks to short-covering and renewed positive sentiments in the broader market.

Though the stock has reached the pre-crash levels from where we saw institutional selling coming in the stock. Since the company has heavy FII holdings, so we again might see some institution paring its stake in the company. 

Also, the rise has been phenomenal of around 30% from the lowest level and we might see it facing some resistance at around the current congestion zone of 54-57 Rs. 

RSI Indicator too has too reached close to over-bought zone, currently at around 70 levels. Thus, the stock becomes a short-term sell with possible target levels of 53.5 and 51.5. The stop-loss can be placed above congestion zone of 57 at 57.5

Sell SUN TV around 329. Stop loss at 343. Target prices of 314 and 308

SUN TV steeply rose from 220 levels in June first week this year to 320 within one month. Since then though, it has been trying to nudge higher but making deeper corrections after every small rise. The resistance zone of 320-340 Rs is where the correction is coming in the stock.

The recent run up in the markets have again brought the stock into the middle of this resistance zone. Though the political uncertainity would now keep markets in check and hence, the stock too might face pressure again to cross that level.

Open Interest in the stock has increased by 15% and now at the maximum levels for last 6 months. So likelyhood chances that it might again go for correction with possible targets of 314 and 308. The stop-loss can be placed over this resistance zone at 343.

RSI at around 80 levels which indicates overbought situation.

 

Sell Lead at around 122-123 with stop-loss of 126 and target levels of 119, 116

 

Lead has seen almost perpendicular rise in the last 1 month. On 16th August, Lead Sep contract was trading at 103 Rs. It is now trading at 123 Rs, which translates into the rise of 20% within one month. The primary reason behind the same is QE3 anticipation by Fed and ECB announcement of backing Euro currency through unlimited funding support to the troubled countries in Euro region.

 

But at the current levels, the commodity seems over-bought. It is also confirmed through RSI indicator which is currently at 88 on daily charts (over 80 indicates over-bought). Also the perpendicular rise makes risk-to-reward ratio more attractive.

A normal correction under such cirumstances goes till around 30% of the total gains (Fibonacci Retracement). So with 20 Rs rise, 6 Rs correction can come and hence, we arrive at possible target price levels of 119 and 116 respectively.

 

Stop-loss can be placed at 126 which stands above 125, the last major resistance level.

 

Wishing you a happy trading!!

 

Buy CMC with target price of 1250-1300 for FY13

CMC - an IT company which was previously owned by Govt of India and now owned by TCS has a good hold in Govt projects across the country. Off-lately, with the backing of TCS, the company now also has some decent projects into Systems Integration and Customer Servicing from overseas. 

The company now has a much bigger portfolio of services and offerings which can be leveraged for future growth. Also, the company doesn't have debt in its balance sheet which makes it further more attractive and less prone to factors such as Interest rates, Inflation or even global slowdown (though marginal impact is there).

In FY12, the company earned EPS of 50 Rs and was trading at PE of 17-19 times. In Q1 of FY13, it is able to achieve the EPS of 19 Rs which is quite a decent figure. Major growth is seen in Systems Integration and Customer Servicing segments which are again a higher margin segments. 

If the given momentum is sustained, CMC is likely to earn EPS of 80-85 Rs for FY13. Given PE of 15X, the minimum target price arrives at 1250 Rs which is around 15% growth in next 6 months. 

Thus, the stock can be accumulated on dips around 1000-1050 with given target prices.

Reference Links - http://www.cmcltd.com/downloads/Q1FY13.pdf

Wishing you a successful and profitable investing!!

Grow Your Paisa