Monthly Update From Mansukh (For Private Circulations Only) Issue: April 2013
 
 
 
1
Market
Review
2
Global
Economy
3
Economy
Update
4
Technical
Picks
5
Fundamental
Picks
6
Market
Tutorials
7
Commodity
Section
8
Auxiliary
Section
 
 
 
 
March series F&O expiry could not do much for the Indian markets. Traders preferred to remain on the sidelines, booking profits at every up move. Global concerns too remained lingering and thwarted any recovery attempt. However, one positive was that markets after a washout in the
 
monthly magzine
last week, attempted recovery in all the three trading sessions. On the final , expiry day markets showed a good bounce back with lots of shorts being covered at the lower levels and benchmarks snapping the week on a positive note. Markets made a soft start of the week

as the major indices lost their way after a good gap-up start on the very first day, the concern of Cyprus lingered though paving the way for 10 billion euros ($13 billion) of emergency loans the island nation agreed an aid package to stave off the threat of default. Traders got some support with Finance Minister P Chidambaram, in an effort to bridge the widening current account deficit decided to ease restrictions for foreign institutional investors in government and corporate bonds next month. For FII investment in corporate bonds and long-term infrastructure bonds will be merged effective from 1st April.
Expanding at its slowest pace since November 2011, the seasonally adjusted HSBC Purchasing Managers' Index, a composite indicator of operating conditions in the manufacturing economy slowed to 52 in March against its previous reading of 54.2 in February. Later on, weighed down by a steep drop in natural gas output, the production of eight core sector industries

 
contracted by 2.5% in February, the first time in 2012-13The government has planned to pay Rs 25,000 crore additional cash subsidy to state-owned fuel retailers to cover for their losses incurred in this fiscal for selling auto and cooking fuel below cost. So far in this fiscal, the government has already provided Rs 55,000 crore to state-owned fuel retailers that include BPCL, IOC and HPCL to cover the part of the revenue they lost on selling diesel, domestic LPG and kerosene at government controlled rates which were way below the cost. These three firms are together projected to end the 2012-13 fiscal with an under-recovery or revenue loss of Rs 161,343 crore on sale of diesel and cooking fuel.
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Meanwhile what started as a promising session of trade at D-street turned out to be an ordinary start of the new Financial Year, with benchmark equity indices unwinding most of their early gains and negotiating a close just above the neutral line. Slew of disappointing macro-economic reports mainly deterred the sentiment at D-Street.. The March series closed on a flat note for the benchmarks, while realty index took a major hit and declined by over 11% for the series. IT healthcare and FMCG were the few gainers of the series. Market wide rollover was at 56.22%, lower than the 3M average of 60.03%. For the upcoming series 5580-5530 could be the key support zone where possibility of consolidation can't be rule out. On the flip side 5895-5960 could be the crucial resistance levels. HAPPY TRADING

 
 
 
 
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  GLOBAL SNAPSHOT    
 
   
 
 
US ECONOMY IN REVIVAL MODE: CONSUMER SPENDING AT 5 MONTHS HIGH
 
 
 
 
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The US economy expanded at an annual rate of 0.4%, a moderately faster rate at the end of last year than previously reported, but the pace of growth remains sluggish as in the final quarter of 2013, that was slightly better than the previous estimate of 0.1% growth. The revision reflected stronger business investment & export sales. And a rebound in company stockpiling, further gains in housing and more business spending also likely drove faster growth in the first quarter. The 0.4% growth rate for the GDP, the economy's total output of goods and services, was the weakest quarterly performance in almost two years and followed a much faster 3.1% increase in the third quarter. The fourth quarter was hurt by the sharpest fall in defense spending in 40 years. For all of 2012, the economy grew 2.2% after a 1.8% increase in 2011 and a 2.4% advance in 2010. Growth appears to be strengthening this year even after taxes increased on Jan. 1 and automatic government spending cuts totaling $85 billion started to take effect on March 1. The Congressional Budget Office has estimated that the combination of tax increases and spending cuts could trim economic growth this year by about 1.5 percentage points. The CBO is predicting just 1.5% growth for 2013.


 
Sales of previously occupied homes rose in February to the highest level in nearly three years, while builders broke ground on more houses and apartments. Employers have added an average of 200,000 jobs a month since November. That helped lower the unemployment rate in February to 7.7%, a four-year low. Meanwhile US consumers earned more and spent more in February, helped by a stronger job market that has offset some of the drag from higher taxes. According to the Commerce Department, consumer spending rose 0.7% in February from January. It was the biggest gain in five months and followed a revised 0.4% rise in January, which was double the initial estimate. Americans were able to spend more because their income rose 1.1% last month. The huge swings reflected a rush to pay bonuses and dividends in December before taxes increased. After-tax income increased 1.1% last month. The jump in income allowed consumers to put a little more away in February. The saving rate increased to 2.6% of after-tax income, up from 2.2% in January. The jump in spending and income suggests economic growth strengthened at the start of the year after nearly stalling at the end of last year. Inflation, as measured by a gauge tied to consumer spending, increased 1.3% in February compared with a year ago. That's well below the Federal Reserve's 2% target, giving the central bank room to keep stimulating the economy without having to worry about price pressures.

US MARKET: Recent data has pointed to a strengthening US economy in general, however, and has helped push stocks to record highs on both the Dow and S&P 500. The S&P 500 ended March with a record closing high, and posted its best quarterly performance in a year, while the Dow broke into new record territory in early March. For the year, the is up 9.5%, the Dow is up 11.2% and the NASDAQ is up 7.3%. The benchmark S&P index remains below its record intraday high of 1,576.09. Moves may be limited this week in the absence of major catalysts before the closely-watched US payrolls report on Friday. For the upcoming month we strongly believe that 1,582-84 could be the upper range for S&P and we might see some sharp profit booking near to 1550-52 in a short span of time however any consolidation could be used as an opportunity to go long.
 
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      ECONOMY UPDATE  
   
 
 
INDIA'S MANUFACTURING PMI AT ITS 16 MONTHS LOW: FISCAL DEFICIT RAMPS
 
 
 
 
monthly-magzine

Expanding at its slowest pace since November 2011, the seasonally adjusted HSBC PMI, a composite indicator of operating conditions in the manufacturing economy slowed to 52 in March against its previous reading of 54.2 in February, thereby underscoring shrinking domestic and foreign demand. Deceleration in new orders and power outages mainly slowed the growth momentum in the manufacturing sector, with the March headline reading showing the biggest month-on-month drop since September 2011. Despite that, Indian goods-producing sector has shown output growth advancement for the forty-eight consecutive month. The PMI index has now stayed above the 50 mark that separates growth from contraction for almost four years. Further, although March data signaled higher volumes of incoming new work in the Indian goods-producing sector, the growth in total new orders was the slowest in 16 months. The new orders sub-index in the survey, a reliable gauge of future output, slipped from 56.3 in February to 52.8, the weakest pace of growth since November 2011, with overall output growing at its weakest pace in more than a year.
 

Meanwhile, input prices increased in March, but the rate of cost inflation eased to the slowest in 32 months. Input prices in the Indian manufacturing sector rose for the forty-eight consecutive month, suggesting the increased prices of raw materials and unfavorable exchange rates. However, even as the survey suggests inflation rate easing over coming months, it also hints at the limited room for rates cut that RBI has given the sharp uptick in headline inflation numbers and record-high current account deficit that country is dealing with. The RBI in its mid-quarter monetary policy review on March 18 reduced the repo rate by 25 basis points from 7.75 to 7.50 per cent. In a worse-than-expected performance, mainly driven by heavy oil and gold imports and muted exports, India's CAD hit an all time high of 6.7% of gross GDP or $32.6 billion in the October-December period of 2012. The CAD was $20.2 billion in the same period a year ago and $22.6 in the second quarter of 2012.

Q3FY13, Exports increased marginally by 0.5% yoy to $71.8 billion. Services exports registered a negative growth of 2.0% against a 6.4% growth recorded in the same quarter last year. RBI data also showed that the balance of payments was in surplus of $781 million, compared with a deficit of $158 million in the previous quarter, mainly on the back of robust dollar inflows. Net FDI declined to $2.5 billion in Q3 of 2012-13 from $5 billion in the corresponding quarter of 2011-12. The financial account, which includes foreign direct investment, portfolio investment and overseas borrowing by Indian companies, showed a surplus of $31.1 billion in the December quarter, compared with $24.2 billion in the previous quarter. The government in FY14 Budget has proposed to follow the international practice with regard to defining FDI and FII to remove the ambiguity in making distinction between the two types of investments. India has allowed FDI in most of the sectors through automatic route including multi-brand retail, power exchanges and broadcasting among others. In the April-January period of FY13, FDI contracted by 33% to $21 billion against $31 billion in the same period of previous fiscal due to global economic uncertainties.

 
 
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  TECHNICAL PICKS    
 
   
 
TECHNICAL ANALYSIS
 
 

ADITYA BIRLA NUVO has reported results for third quarter ended December 31, 2012. The company has reported 11.03% fall in its net profit at Rs 85.13 crore for the quarter as compared to Rs 95.68 crore for the same quarter in the previous year. However, total income from operation of the company has increased by 14.37% at Rs 2747.37 crore for quarter under review as compared to Rs 2402.08 crore for the quarter ended December 31, 2011. The company, on consolidated basis, posted a rise of 28.06% in its net profit at Rs 323.21 crore for the quarter as compared to Rs 252.39 crore for the same quarter in the previous year. Total income of the company increased by 10.24% at Rs 6396.17 crore for quarter under review as compared to Rs 5802.07 crore for the quarter ended December 31, 2011. Meanwhile Aditya Birla Nuvo has received an approval for brownfield expansion of urea capacity by 3,850 tonnes per day (TPD) at existing fertilizer complex at Jagdishpur in Uttar Pradesh. Such expansion is envisaged at a capex of around Rs 4,000 crores.

On technical perspective, after taking significant correction from the highs of Rs 1180, scrip has shown crucial resistance below Rs 940 level. At current juncture we believe scrip has the potential to recover from the current level as its technical indicators i.e. RSI and MACD also suggest some technical pull back in near term. Hence we recommended 'Buy' in this stock.

 

ADITYA BIRLA NUVO LTD

monthly research report
SCRIP NAME TRIGGER PRICE STOP LOSS TARGET 1 TARGET 2 DURATION
ABIRLA NUVO 970-980 930 1050 1130 1 Months
 
 
 

CIPLA focuses on development of new formulations and has a wide range of pharmaceutical products. It offers prescription drugs, bulk drugs, animal products and pesticides. It also offers a wide range of food and beverages, baked foods, oral hygiene products, detergents, room fresheners & personal care products. Credit rating agency, CARE has reaffirmed 'AAA' rating to Cipla's long-term bank facilities worth Rs 72.38 crore which was enhanced from 68.60 crore and 'A1+' rating to company's short-term bank facilities worth Rs 1,723.50 crore. The company has received the said rating on the back of its leading market position in respiratory segment, stable business performance, continuing strong financial profile. Cipla has offered over $500 million to buy out South African affiliate Cipla Medpro sweetening its bid by 17 percent after earlier talks stalled over price. In November Cipla offered $215 million for 51% of the company. Company would offer 10 rand per share, up from its initial bid of 8.55 rand and valuing the company at around 4.5 billion rand ($508 million).

On technical viewpoint, stock has shown consolidation pattern around Rs 380 and currently in upward bias. Moreover it's RSI and other technical indicators also displaying some buying opportunities in near term. Hence investors are advised to BUY this stock for a price target of Rs 430-450 in near term.

 

CIPLA LTD

monthly report
SCRIP NAME TRIGGER PRICE STOP LOSS TARGET 1 TARGET 2 DURATION
CIPLA 370-380 350 430 450 1 Months
 
 
 
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      FUNDAMENTAL PICKS  
   
 
 
FUNDAMENTAL PICK
 
 
 
   Infotech Enterprises Ltd Target Price:` 234
   
 
 

Infotech Enterprises Ltd provides leading-edge engineering solutions, including product development and life-cycle support, process, network and content engineering to major organizations to a wide range of industries. Infotech has 10,000+ associates and it operates from 36 global locations, including seven development centres and accommodates the largest operations out of India for engineering services, GIS, and IT services. Infotech has cutting edge expertise in industry specific domain, people and processes, technologies, tools and training.

Financials: In the preceding five years the Top Line of Infotech grew at CAGR of 20%, Operating Profit and PAT of the company for the same period also grew at encouraging CAGR between 18.50-19.50%. In FY12, the Net Sales of Infotech grew by 33.40% to Rs 863.76 crore over FY11, Operating Profit of the company surged 54% to Rs 210.98 crore and PAT of the company jumped by 34.5% to Rs 158.6 crore for the same period. In Q3FY13, The Net Sales of the company surged 15% from Q2FY12, Operating Profit grew 7.35% while, due to foreign exchange loss in Q2FY12, the PAT abnormally jumped 141% in the same period. OPM of the company for the same period turned down 193bps to 27.08% while PAT of the company for the same period stood at 19.43%, which is 1017bps higher than Q2FY12 PAT margin.

INVESTMENT GROUNDS
Globally in engineering, India would gain 40% share by 2020 ....
The growth potential of both Engineering and Network & Content Engineering (N&CE) space have tremendous scope across the world. The recently released NASSCOMs - Booz Global Engineering R&D report shows that globally offshorable revenues of both traditional verticals (Aerospace, Automotive, Telecom, Semiconductors, Consumer Electronics and Construction/Heavy Machinery) and emerging verticals (Computing Systems, Energy, infrastructure, Industrial Automation and Medical Devices) are expected to reach between US$ 90-100 billion. Out of which, India would be able to garner 40% share by year 2020 equivalent to US$ 45-50 billion from the current share of about US$ 9 billion.

Significant traction in Engineering Business segment …

In Q3FY13, due to a short rest and recreation of a client in Heavy Equipment segment, the significant part of its engagement has been highly impacted and resulted in sudden ramp-down of our existing engagement. However, despite this shortfall the remainder of the accounts performed quite well in Q3FY13 and further owing to increase revenue and better utilization, company expects to scale back to earlier levels. Infotech is also envisaging good traction in Rail Transportation & Heavy Equipment business, in Rail Segment company has signed two customers while in Heavy Equipment, it has expanded its existing engagement with a 5-year Technical Publications deal valued at $7M with customers.

 
 

Developing business centers in tier-II cities ...
To expand its services in costal areas and company's strategy to grow inclusively by expanding operations in tier-II cities, Infotech Enterprises has inaugurated a new development center having a built up area of 52,000 square feet at SEZ Andhra Pradesh. The center would deliver cutting-edge solutions to customers primarily in the oil and gas, energy and utilities industry. It currently has 650 seats and employs 850 professionals. The company plans to ramp up this facility to 1500 seats and employ 2000 professionals by 2014. The new development center is Infotech's seventh in India and second in Andhra Pradesh.

Expanding Global presence with strategic partnerships ...
Infotech Enterprises has entered into a strategic partnership with a leading software solution provider Viryanet that optimize planning, execution and monitoring of service processes for mobile networking. This relationship not only ensures a combined global presence but also expands Infotech's capabilities to include the ability to deliver purpose-built mobile workforce management applications for strategic planning, optimized scheduling, exception-based dispatch and online/offline mobile work execution by integrating the best-of-breed mobile workforce management solutions from ViryaNet.

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  MARKET TUTORIALS    
 
   
 
 
IMPACT OF RESEARCH ON STOCK PRICES
 
 
 
 
Fund houses or Investment firms issue research reports, which include recommendations, on many listed companies. Investors may react to these recommendations on the date the reports are issued. However, these reports are also covered subsequently by other research houses but if the stock market is efficient in incorporating new information into stock prices, a secondary dissemination of the information should not affect stock prices. However, recent studies document significantly abnormal stock returns upon the publication of analysts' recommendations, which are considered secondary since they are given to the analysts' clients before publication. Though, we can estimate the impact of research reports on the basis of quantitative as well as qualitative basis. On a quantitative basis, you could perform a regression analysis to determine the correlation between changes in a stock's price and the publication of a research report. While on a qualitative basis, it has been proved that having more information about a company in the marketplace is better than less information, but the return on the investment in research is nevertheless hard to calculate, therefore we have tried to expose the probable impacts of research & reports published on them.
 

Quantitative vs Qualitative Research
However while doing calculations on quantitative basis, you would need to filter out the effect of "noise", the impact of news releases, competitor news releases, economic reports, as well as other macroeconomic factors. After all that work, the results may not show statistical significance, which means that you would not have found any direct relationship between the movement in a stock's price and the issuance of a report. Additionally, the results can be manipulated by a change in the length of the time period being studied. Whereas on a qualitative basis, objective information in the marketplace about a company reduces the "halo effect" on that company if its competitor announces unexpected bad news. With objective information, the market can evaluate the impact of the news event on both companies.

Benefits of Research for Investors
Definite benefits of research on stocks are quite difficult to quantify, most of the value of research lies in the theoretical benefits provided to investors and these information are:

  • Comparative operating and valuation data on a company
  • Earnings estimates and target valuations based on reasonable     ata included in the report
  • A reliable source of independent, third-party information on a     continuous basis so that investors can track performance and     evaluate an investment

 



The benefits of research coverage are not immediate, and the decision to invest in stock research is generally a long-term process. It takes time for investors to familiarize themselves with a stock and get comfortable with a new company and its investment potential. Research, however, provides the market with more information and increases market efficiency, but it is hard to determine exactly when a report will convince an investor or a fund manager to buy a stock. It could be near the publication date or months later, but it will be the third party report that helps provide the information on which that investor makes his or her decision.

Conclusion: Although the total return on the investment in research is hard to quantify, the information provided via third-party research has substantial value. The main objective of research reports is to provide information to the market to reduce uncertainty. Even though the nature of the stock market prevents us from isolating any one of the many variables that affect a stock's price, no one can disagree that in the long run, greater available information means greater market efficiency. Therefore, investors should beware of "research" reports that advertise how the stocks these reports followed rose immediately after publication of the report. While it may be true that the stock rose after the report was issued, there is generally no way to prove beyond a reasonable doubt that the report was the sole reason why the stock rose. If you see such a claim, check the long-term trend of the stock's price and see if it fell back after a few days or weeks.

 
 
 
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      COMMODITY SECTION  
   
 
 
BULLIONS AND BASE METALS IN PRESSURE MODE: CRUDE JUMPS OVER ECONOMIC NEWS
 
 
 
 

GOLD futures rose in light holiday trade on the first day of April 2013, after a lackluster US manufacturing report stirred economic worries ahead of the nonfarm payrolls report later this week. The yellow metal traded in a narrow $6 range with low volume, as most financial markets in Europe including London remained shut for the Easter Monday holiday. Gold futures for June delivery settled up by $5.20 at $1,600 an ounce on the New York Mercantile Exchange. While spot gold rose 0.2% at $1,598.60 an ounce. Technically $ 1560-1555(Rs 28500-28400 in MCX) could be the good support levels in near term. On the flip side $ 1640 followed by $ 1670 may provide strong resistance on higher side.

CRUDE OIL futures were witnessing some profit booking in early Asian trade on Monday (1 April 2013), after a series of gains. Demand concern increased after Chinese manufacturing data missed market expectations. However, the fall was capped, as Exxon Mobil continued the cleanup of an oil spill in Arkansas and concern about supply disruption resulting from the shutdown was supporting the prices. Earlier crude futures posted some exceptional performance in the last week on the back of some upbeat economic news. US GDP grew more than previously estimated in the fourth quarter. GDP increased at an annual rate of 0.4 percent in the fourth quarter compared to the previously reported 0.1 percent increase. Crude also got support from the weakness in the dollar against the euro even as investors weighed the easing concerns over Cyprus with banks reopening after a long break without the anticipated customer run for money. Finally, the US crude futures ended the first quarter with a gain of 5.9 percent after dipping 0.4 percent in the final quarter of 2012. On technical grounds $ 98-100 could be the stiff resistance zone for the upcoming sessions. Any break outabove this range with large volumes may further ramp crude towards $ 106-108

 
monthly report
( Rs 5800-5900 in MCX) where profit booking opportunities near to $ 90 could be very high.

SILVER is an investment that will benefit many industries that focus on producing goods. With the US dollar and Euro losing its value, silver will be a good investment for the future since manufacturing industries use silver for numerous products. Silver as well as gold is a safer investment than fiat currencies. With Cyprus as the next victim of the Euro, silver is a safe bet. As the Euro continued to decline, the US dollar reached an 8-month high last week. But that is because the US dollar is still a reserve currency that is seen as a safe haven for the short term. More investors are seeing metals especially silver as a safe haven instead of the US$. For the upcoming sessions we believe $ 27-26 (Rs 48000-47000 in MCX) could be the crucial support levels in near term. On the flip side $ 32-34 could be resistance zone.
 
 
 
 
 
 
MANSUKH SECURITIES& FINANCE LTD.       :
MANSUKH COMMODITY FUTURES PVT. LTD:
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MEMBER NCDX-CO-04-00187& MCX:10615(FMC:NCDEX/TCM/CORP/0293 & MCX/TCM/CORP/0740
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Disclaimer : :This report is for informational purposes only and contains information, opinion, material obtained from reliable sources and every effort has been made to avoid errors and omissions and is not to be construed as an advice or an offer to act on views expressed therein or an offer to buy and/or sell any securities or related financial instruments. Mansukh, its employees and its group companies shall not be responsible and/or liable to anyone for any direct or consequential use of the contents thereof. Reproduction of the contents of this report in any form or by any means without prior written permission of the Mansukh is prohibited. Please note that we and our affiliate, officers, directors and employees, including persons involved in the preparation of issuance of this material may; (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) may trade in these securities in ways different from those discussed in this report or (c) be engaged any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments or the company(ies) discussed herein or may perform or seek to perform investment banking services for such Company(ies) or act as advisor or lender / borrower to such Company(ies) or have other potential conflict of interest with respect to any recommendation and related information and opinions. All disputes shall be subject to the exclusive jurisdiction of Delhi High Court.
Safe Harbor Statement :Some forward looking statements on projections, estimates, expectation, outlook etc are included in this update ot help investors / analysts get a better comprehension of the Company's products and make informed investment decisions. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Investors are advised to consult their certified financial advisor before making any investments to meet their financial goals.
 
 
 

 
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  AUXILIARY SECTION    
 
   
 
 
MIFM - CAREER ENRICHMENT THROUGH KNOWLEDGE AND INNOVATIVE THINKING
 
 



Mansukh Institute of Financial Markets (MIFM) is an advanced research institute established by Mr. J U Mansukhani, an ex-IES Officer, who has decades of experience in financial markets and research, is the founder of Mansukh Institute of Financial Markets. MIFM is specializes in Financial Market Education and Services. MIFM is pioneers in introducing short-term job-oriented diploma programme for providing state-of-the art facilities in the field of financial markets. Specifically, it caters to the need of training and placement for the personnel engaged in financial markets like Marketing Personnel, Dealers/Arbitrageurs, Research Analysts and Managers.

Vision
To be world class Training & Education Institute shaping careers through our eminent faculty & cutting edge research & becoming a shining example of achieving such high standards as to make the alumni proud of its pedigree.

Mission
To enhance the glow of knowledge through quality educational programmes resulting in improvement of the intellectual & practical skills of individuals for their overall growth & growth of society.

For more updates please visit our website :- www.mifm.edu.in or follow us on facebook at http://www.facebook.com/Mansukh.Institute.of.Financial.Markets