Report ----- For Monday 19th

It's Time To Stay Invested

In the recent times, often in Flash News we have compared the Indian Stock market ride with the new cricket format, Twenty20. Speed and the rapid turn of events characterize the two. And we have been proved right in using such terms to describe the way the market behaves. Look at the way things happen in the market now. We think that currently the corrections in the market are looking like a hapless Twenty20 bowler asking to be hit out of the ground. Like the Twenty20 bowler, the role of corrections in the market is limited and even the spells are shorter. The Sensex galloped 893 points in a single day on Wednesday (November 14, 2007) to wipe off the latest correction in the market. This is the highest ever absolute one day gain in the history of the market. In 2007, investors got many opportunities to enter the market but very few were able to take advantage of the same. But in one of our Flash News issues, we distinctively mentioned that every fall in the market should be taken as an opportunity. Now that is the past and the market is driven by future factors. Perhaps now every investor may be thinking of what lies ahead. We feel, although, we are once again at the levels near to the all-time high, there is little to be worried. There is good amount of liquidity in the market and hence, there are no reasons for the market to go down in a hurry. But one thing is clear, higher the liquidity higher is the volatility in the market and therefore expect a great deal of volatility in the near future.

The reason for liquidity to stay longer is simple. The liquidity is coming as international investors are reducing their exposure to the Dollar based assets and are investing in the emerging markets. And with India expected to grow at more than eight per cent, it has become a favorite destination to park funds. Further, the Rupee appreciation has created a natural hedge for foreign investors, which made Indian markets safer than the other markets. In addition, money is also coming from new destinations like Middle East apart from traditional markets like the US and Europe. We are not the only ones to claim that liquidity will stay for long. Many analysts in the market have stated that liquidity in the market is not going to fry up at least in the next one year. The main reason for the increase in liquidity was the US Fed rate cut. Many fund managers feel that the US Fed will make another rate cut in December and this will be followed by many such cuts in 2008.

In addition to the above factors, even the market regulator SEBI is making cautious efforts to increase the liquidity. And the same can be seen from the fact that SEBI is planning to come out with new derivative products, which will increase the liquidity further. SEBI is taking cautious approach to make the contract size smaller, which will actually result in more number of market participants. And secondly, it is also planning to increase the tenure of options from three months to six months. Both these changes are being made to improve liquidity.

There is some good news for exporters. In a cabinet note on an incentive package for exporters likely to be taken up within a fortnight, the department has proposed that the government should reimburse exporters all service taxes paid by them. This could offer some sort of comfort to exporters who have been facing the brunt of the appreciating Rupee for some time.

On the economic front, inflation seems to be under desired levels. The government has said that it has no immediate plans to increase the price of petroleum products and hence inflation is not expected to increase in a hurry.

Regarding the markets, there is no negative news on the global front and not even on the domestic front. With good amount of liquidity and with the entire fundamentals right in the place, we feel that there is further upside to the market. Going ahead, the strength of the market will be questioned, but the advance decline data for last week shows that there is good amount of demand for large-cap and mid-cap counters. Hence, the rally will be wide spread. We advise investors to stay invested at the current level.

Recommendations

Graphite India Face Value - Rs 2 Buy Rs 73.30

Ticker: 509488 Equity: Rs 29.38 crore H/L: Rs 79.90/47.25

• Graphite India (GIL) manufactures graphite electrodes for the electric arc furnaces, which are used in steel manufacturing. Today with a combined capacity of 33,000 MT per annum spread over three plants at Durgapur, Bangalore and Nashik, GIL boasts of possessing the largest pool of technical personnel in graphite technologies.
• Backward integration in the manufacturing chain by investments in a hydel power plant of 18 MW capacity and a 25,000 MT petroleum coke calcining facility have contributed towards maintaining tight quality control and achieve cost effective operations. GIL now exports around 65 per cent of its production overseas with a customer base of over 150 in 50 countries.
• The financial performance of the company has been strong and it has been successful to increase its topline and bottomline for three successive years. Even the H1FY08 results have been good with a topline of Rs 505 crore and bottomline of Rs 70.79 crore. With good demand for steel, GIL is expected to post good results in next two quarters and hence investors can buy the scrip at current levels.
• On the valuation front, the CMP of Rs 76.05 discounts its FY07 earnings by 5.76x. With better results expected in the next two quarters, we think the scrip has scope for further upward movement.

LECS Face Value - Rs 10 Buy Rs 487.15

Ticker: 504258 Equity: Rs 2.46 crore H/L: Rs 547.95/236

• Lakshmi Electrical Control Systems (LECS) manufactures LV switchgear, which is used in large numbers in the building of control panels. The company has been able to access the know-how from the renowned Sprecher Schuh, Switzerland. As for the products, it manufactures low voltage switchgears, motor protection and control devices and various other automation devices and elements.
• The reason to recommend the scrip is because of its strong financial performance in the last five years. It has been able to increase the topline as well as the bottomline for last five years. In addition, the company has also managed to maintain the margins at higher levels.
• Even the H1FY08 results have been good, where the company posted a topline of Rs 42.75 crore and bottomline of Rs 5.21 crore as compared to Rs 32.40 crore and Rs 3.84 crore for H1FY07. LECS managed to improve its margins by more than 400 basis points.
• On the valuation front, the CMP of Rs 501 discounts its FY07 earnings by 10.49x, but with better expected results in H2FY08, we feel the scrip has further room for upward movement.

Kalpataru Power Trans. Face Value - Rs 10 Buy Rs 1880

Ticker : 522287 Equity: Rs 26.50 crore H/L:Rs 1959/880

• Kalpataru Power Transmission (KPTL) has presence across the infrastructure sector, which has a very high potential for growth in India. The company has a large order backlog to take revenues to new heights. With burgeoning infrastructure industry, especially power and construction, KPTL has an order book of Rs 5400 crore, i,e, 3.4x FY07 sales. Out of the total order backlog, Rs 2100 crore is of JMC projects.
• We estimate net sales to be around Rs 2761 crore in FY08, 73 per cent growth (Y-o-Y). Going forward, in FY09 net sales is likely to grow by 27 per cent over that of FY08, to touch Rs 3497 crore.
• KPTL has enjoyed superior margins compared to its peers due to better efficiency, scale and diversification, which we expect will continue in future. We expect EBITDA margin of KPTL to be around 16 per cent, against 17 per cent of the previous year. This is due to integration of JMC projects from FY2008, which enjoys relatively lower margin. However, the company still appears to be undervalued at the current level and hence investors can go for the scrip with a time horizon of two years.

Dividends declared in last few days

Company Name Per cent XDividend Date

Deepak Spinners 5

Mahalaxmi Seamless 5

Garware Marine Industries 5

Crazy Infotech 5

Greaves Cotton 20

Prime Securities 30

Manugraph India 100

Television Eighteen India 25

Shree Precoated Steels 11

Nods Worldwide 350 15/11/2007

Dollex Industries 5 15/11/2007

Elgi Equipments 60 15/11/2007

Taparia Tools 20 7/11/2007

Kilitch Drugs(I) 10 15/11/2007

Khoday India 10

United Spirits 10 20/11/2007

Sagar Cements 15 15/11/2007

Shakti Pumps (India) 10

GMM Pfaudler 35 15/11/2007

Patels Airtemp (India) 5 16/11/2007

SB&T International 5

ISMT 20 15/11/2007

FIEM Industries 25

Kingfisher Properties & Holdings 10 22/11/2007

Monsanto India 120 14/11/2007

KSB Pumps 20 8/11/2007

Lakshmi Machine Works 200 20/11/2007

Nile 20 15/11/2007

Avaya GlobalConnect 67.5

Nicco Parks & Resorts 12

JK Paper 22.5

Tamil Nadu Newsprint And Papers 20 12/11/2007

Jagran Prakashan 50 15/11/2007

Natco Pharma 12.5 12/11/2007

MRF 30 7/11/2007

Nitco Tiles 20

Alfa Laval (India) 100 13/11/2007

Apollo Sindhoori Capital Investment 40 6/11/2007

Glenmark Pharmaceuticals 70 7/11/2007

Porritts & Spencer (Asia) 30

Anjani Synthetics 5

IG Petrochemicals 5 7/11/2007

Hindustan Unilever 300 7/11/2007

Greenply Industries 30 19/11/2007

Ingersoll-Rand (India) 30 7/11/2007

Satyam Computer Services 50 7/11/2007

Indoco Remedies 65

Skyline Millars 10 6/11/2007

DLF 100 5/11/2007

Parsoli Corporation 5 7/11/2007

Kewal Kiran Clothing 20 5/11/2007

Hindustan Zinc 25 8/11/2007

Orient Paper & Industries 50 7/11/2007

Varun Shipping Company 15 5/11/2007

Apar Industries 15 7/11/2007

Sundaram Clayton 70 2/11/2007

Crompton Greaves 20 2/11/2007

Splits declared in last few days

Company Name Ratio* XSplit Date

Anant Raj Industries 10:02 8-Oct-07

B L Kashyap & Sons 10:05

Banco Products 10:02

Birla Kennametal 10:02 26/10/2007

Cinevistaas 10:02

Compucom Software 10:02 8-Oct-07

Gulf Oil Corporation 10:05 26/10/2007

Jai Prakash Associates 10:02

Lancor Holding 10:02

Lloyds Metals & Engineers 10:02 19-Oct-07

Maharashtra Seamless 5:02 9-Oct-07

Peninsula Land 10:02 16/10/2007

Rajesh Exports 2:01

Subros 10:02

West Coast Paper Mills 10:02 26-Oct-07

(*10:2 means old FV Rs 10 & New FV of Rs 2)

Bonus declared in last few days

Company Name Ratio XBonus Date

Anjani Synthetics 1:01

Ashiana Housing & Finance (India) 5:02

Axon Infotech 3:01 15-Nov-07

Brady & Morris Engg Co 1:02

CNI Research 1:02 5-Nov-07

Company Name XBonus Date

Freshtrop Fruits 1:01

Jai Corp 1:01 5-Oct-07

Kanoria Chemicals & Industries 1:02

Mediaone Global Entertainment 5:01

Parenteral Drugs (India) 1:01 2-Nov-07

Rajesh Exports 2:01

Rolta India 1:01

Satra Properties (India) 2:01

State Trading Corporation Of India 1:01

Ushdev International 1:01

W H Brady & Company 1:02

3:1 means, 3 bonus shares for one share held

TECHNICALS

outlook remains bullish

The Sensex seems to have once again ended its corrective phase but keeping in mind the higher base (since it is at an all-time high, there aren't any known resistance levels), the volatility could continue to be a inherent part of the movements and doesn't seem to be in a mood to go away in a hurry. It has also taken support on its trading range between 18300 on the downside and 20200 on the upside indicating a further upside - the outlook continues to remain bullish. The Sensex has posted a fresh all time high while some resistance can be expected from the 20200 level for the time being.

Trend (Index): Up Last Index Closing: 19929.06

Support: 19621, 19276 Resistance: 20000, 20200

55-WEEK EMA: 15002.93 100-WEEK EMA: 13229.66

MACD: BUY MODE RMI: BUY MODE

ROC: BUY MODE RSI: BUY MODE

STOCHASTIC: SELL MODE

W.H. Brady Buy Rs 198.95

1st Target: Rs 219 2nd Target: Rs 227 Stoploss: Rs 176

W.H. Brady bottomed out by posting an intra-day low of Rs 67.10 on 11.07.06, moved upwards for quite a few trading sessions while continuous resistance came in the form of the 70 level (congestion area) and continuous support came in the form of the 55-day EMA. The scrip finally posted an intra-day low of Rs 67.50 on 10.08.06 and these levels have not been seen very often since then. W.H. Brady commenced a short-term uptrend from here (there was enough clarity on the medium-term front), struggled but overcame the 55-day EMA, posted a series of progressively higher tops and bottoms, started moving within the confines of an upward slopping channel, almost gave a throwover from this channel and finally peaked at an intra-day high of Rs 203.85 on 16.01.07. The scrip almost gave a downward key reversal from here, couldn't sustain these levels for long, entered a corrective phase, declined to post an intra-day low of Rs 102.60 on 13.06.07, rebounded smartly from here, posted a good but unsustainable rally to post a high of Rs 137 on 03.07.07 only for the scrip to enter a sharp correction. Currently, W.H. Brady seems to be on the verge of entering a short term uptrend (could commence a medium-term uptrend), has overcome the 55-day EMA and with the oscillators looking positive indicating the possibility of a further upside from here.

Trading Pointers

Indicators: MACD-Buy RMI-Buy Stochastic-Buy ROC-Buy RSI-Buy

Support: 176, 145 Resistance: 211, 229

BSE code: 501391 55-day EMA: 165.19

Bhartiya IntERNATIONAL Buy Rs 124

1st Target: Rs 148 2nd Target: Rs 157 Stoploss: Rs 109

Bhartiya International peaked by posting an intra-day high of Rs 178 on 18.09.06, but couldn't sustain these levels for long and finally declined to bottom out by posting an intra-day low of Rs 125 on 21.10.06 where strong support prevented further downside. The scrip finally posted an intra-day low of Rs 130.20 on 11.12.06 and these levels have rarely been seen since. Bhartiya International commenced a short-term uptrend from here (this time around there wasn't enough clarity on the medium-term front), struggled but eventually overcame the 55-day EMA, posted a series of progressively higher tops and bottoms, started moving within the confines of an upward slopping channel, almost gave a throwover from this channel and finally peaked by posting an intra-day high of Rs 229 on 31.01.07. The scrip almost gave a downward key reversal from here, couldn't sustain these levels for long, entered a corrective downmove, declined to post an intra-day low of Rs 75 on 06.08.07, recovered sharply from here, posted a smart but slightly unsustainable upmove to post a high of Rs 162.45 on 29.09.07. Currently, Bhartiya International is in the midst of commencing a medium-term uptrend, while it seems to have exhausted its weekly downmove (has recently overcome the 55-day EMA) and with the mechanical indicators looking positive, a further upside from these levels cannot be ruled out.

Trading Pointers

Indicators: MACD-Buy RMI-Sell Stochastic-Buy ROC-Buy RSI-Buy

Support: 113, 094 Resistance: 129,162

BSE code: 526666 55-day EMA:115.21

Street Talk

Buy now

Investors can buy the scrip of Dredgeing Corporation (BSE code: 523618) trading at Rs 1348.25. One of the dealers from a leading broking house is bullish on the counter. Investors can enter the scrip with a long-term prospective.

Momentum call

Siemens (BSE code: 500550) trading at Rs 1936.35 is expected to get into momentum. Investors can go for the scrip with a medium-term perspective.

----- With due apologies and full credits for Flash News Publishers