Time to seed.........!!!

 Hello Readers !

Time for passive Investor to Turn Active.

Undoubtedly the confidence crisis has hurt the market sentiment which is further deteriorated by the weak set of nos by SBI. Bears has upper hand at the moment and sell on rise is the buzz. They are even successful.

The story is getting repeated again and again. Bears are not enjoying huge sell on top of the market because of the technical calls and every time they try to take charge of the market it happens on lower end of the market.

This time too the bears have taken charge around 5550 and last 150 odd points is in their favour. They will go short till 5300 probably but buy the time they go aggressive short to break the last leg of the market their average will come down to 5400 or below and market will rise by 200 odd points giving no chance to them either to make profit in a big way.

Nifty has a strong support around 5350 levels. Market can bounce back form these level.
Level to be watched.

5482.04

5448.58

5449.42

5459.43

1. 5482

   2.5528
   3.5555

Don't judge each day by the harvest you reap but by the seeds that you plant

  

Thanks & Regards

Dev Purohit

No Confidence without Integrity

Hello Readers !!!

End of the day….


NAV exercise of funds is on. Nifty has crossed 200 DMA as well as SMA giving clear break out on upside.


All my friends are still waiting for 4700 and 4800 and Nifty has decided to close to the year at 5750 plus.


Stocks still filling gaps and ownership pattern is allowing this with thin volume.


CNI as a matter of fact has proved prudence of buying in dips in a BULL market. The pending calls have come to just 6 and there is enough scope to find new buy calls. Bears so long as remain short, the bias will be positive. Current state is dangerous for all technical guys as there is no clear signal ob buy side or sell side. For fundamentalists there is no confusion.

"There can be no friendship without confidence, and no confidence without integrity"

Thanks & Regards

Dev Purohit

No Sign of Break Out !!!

Hello Readers !

Indian stock market cut initial losses and recovered in mid morning trade after Japanese shares rebounded
from an early morning sell off and the yen moderated from a new record high versus the dollar. However, it
lost ground once again after the RBI hiked rates by 25 bps and raised its inflation estimate amid persistent
worries over the global uncertainties. Market ended the session in red.

Nifty closed at 5,446.65, down by 64.50 points or 1.17 percent over the previous day closing of 5,511.15, after witnessing a low of 5,435.30 and a high of 5,510.05. Sensex closed at 18,149.87, down by 208.82
points or 1.14 percent over the previous day closing of 18,358.69. It touched an intraday low of 18,104.02 and high of 18,354.27.


The markets’ breadth was negative. Out of 2,967 stocks traded, 1,203 stocks advanced, 1,638 stocks declined and 126 stocks remained unchanged. In Sensex, 8 stocks advanced and 22 stocks declined.


Indian stock market is likely to trade range bound as no triggers are visible for an upside. Instead, RBI inflation outlook that has been raised from 7% to 8% for March 2011 may dampen sentiments. However, no sharp reaction to this may be seen either. Buy Mirza International and also Fedders Lloyds, Whirlpool and
Bluestar, falling copper prices, summer demand likely to boost their prices.


                                            OPTION STRATEGY
           Scrip/Index: BHEL
           Strategy: Long Call option
           Current Price of Underlying: Rs 1964/- Lot Size: 125
           Long Mar 2000 Call option @ Rs 28/-
           Profitable when closing price is below Rs 2028/- on expiry
           Maximum Potential Profit: Unlimited Maximum Possible Loss: Rs 3,500/-
           Time to Expiry: 14 days

Thanks & Regards

Dev Purohit

POSSIBLE TURNAROUND COMPANIES -- MAHINDRA FORGINGS LTD

MAHINDRA FORGINGS LTD

Mahindra Forgings Ltd is among the top global forging companies with multiple manufacturing facilities in India, Germany and UK. The company produces most of the forging components for cars and commercial vehicles. It generates close to 80% of its revenues from its international operations, which primarily caters to the European region.

Mahindra Forgings operates through Stokes Forgings in United Kingdom, having three manufacturing facilities. The company caters to the German market through Jeco (4 plants) and Schoneweiss (3 plants). These facilities provide a diversified and complementary portfolio for its customers. Daimler Chrysler and MAN are Mahindra

Forgings‘ top customers.

Problem

Mahindra Forgings over 2/3 rd of its revenues from its international operations. The global slowdown post the Lehman crisis affected the demand for automobiles globally. This slowdown had a cascading effect on auto ancillary manufactures including Mahindra Forgings. Sales slumped from  r 2,318 crore in 2008 to 2,242.4 crore in 2009 and to r 1,327 crore for in 2010.

Mahindra Forgings consolidated EBITA declined  from r 195.2 crore in 2008 to r 144 crore in 2009. The EBIDTA for 2010 showed a loss of  r8.8 crore as a result of decline in sales.

Signs of A Turnaround

If we look at last two quarters number we see a strong pickup in sales after staying flat in the range of  R 300-325 crore in the lean period.

 

Since the company has 7 plants in Germany, we analyzed the German production data for Commercial Vehicles over 6 tonne, where Mahindra Forgings is considered a leading supplier. We have seen that the demand has remained firm over the last 3 months in the range of 12,000-13,000 vehicles as shown. If the demand continues to remain firm, we would see it trickling down to auto manufacturers like MFL. We expect the company to post higher consolidated sales for Q3 FY11 and for FY 2012 on account of improved global demand.

Mahindra Forgings  successfully reduced its cost . Employee cost reduced form  r593 crore in 2009 to r363 crore in 2010. Other than , it seems company has managed to control as well, as seen through quarterly numbers . The company has even close a plant in UK  as a part of restructuring .

With improved global sales coupled with reduction in costs, the company is addressing important issues. Mahindra Forgings is available at an Enterprise Value of  r1,345 crore. E/V Sales stood at 0.6 for 2009,1.01 for 2010 and 0.78 for H1FY11 as against Bharat Forge’s  EV/ Sales of 3.2 for 2010.

MFL’s acquisition of Jeco was at EV of around  r800 crore . At current price of r82 the company’s EV is close to r1,300 crore, with increased possibility of a turnaround. Mahindra Forgings appears to be offering value at current levels

Thanks & Regards

Dev Purohit