MONTHLY REVIEW AUGUST 2011

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1 AUGUST 2011 INVESTMENT STRATEGIST AMIT CHHEDA MILAN BAVISHI Our Vision To be the most favored financial services provider for all categories of investors by offering them comprehensive Wealth Care service.

2 INDEX CONTENTS PAGE NO. NIFTY OVERVIEW 3 Scrip ID:GAILSTOCKS Group IN FOCUS / Index:A / BSE100 Face value:10.00scrip Code: Industry:Utilities:Non-Elec MRF LTD 4 BHUSHAN STEEL LTD 5 BHARAT HEAVY ELECTRICAL LTD 6 GTL LTD 7 INFOSYS LTD 8 TATA MOTORS LTD 9 STATE BANK OF INDIA 10 MADHUR INDUSTIRES LTD 11 COMMODITY IN FOCUS GOLD 12 SILVER 13 CRUDE OIL 14 COPPER 15 CURRENCY IN FOCUS USDINR, GBPINR, EURINR, JPYINR 16 PERFORMANCE REPORT TOP RECOMMENDATIONS 17 DISCLAIMER 18

3 NIFTY OVERVIEW Nifty is trading in a range of 5180 and 5950 since seven months now, but in the process it is taking resistance on the trendline coming from its November high of 6338 making lower tops and lower bottoms. Last Low made by Nifty was at 5195 which was kind of a double bottom. Immediate resistance of that trend line now comes at 5680 levels. If that is breached on closing Scrip bases ID:GAIL thengroup we are / Index:A surely looking / BSE100 at Face even value:10.00scrip sharper rally coming in the market that can take Code: nifty to the levels Industry:Utilities:Non-Elec of 5950 and 6330 in a very short duration. Break out will lead to a short covering and fresh buying in the market. The volume and momentum will also interest institutional buying in select beaten down sector as well as strong sectors where you can benefit making right moves at right price. If nifty fails to give a breakout we need to wait and stay cautious as it can again retrace back to its lower range of 5200 and also make lower lows below major supports. As traders we need to be cautious as Nifty is not showing any signs of bullish or bearish. Avoid Over trading in such markets and be cautious at every resistance and support levels. Keep booking profits as markets are consolidating. No certain trend in the market that can decide future action. As nifty is making lower tops is a bearish signal but at the same time double bottoms are giving strong supports at Best way to trade would be staying more stock specific and sector specific. Major support levels for this month are Major resistance levels for this month are

4 STOCKS MRF LTD Industry : Tyres BSE Code: NSE Symbol: MRF P/E : Div & Yield %: 0.69 EPS : Book Value: Market Cap (Rs Cr.): Face Value : 10 Recommendation : Buy Entry Price : above 7260 Last Close : 7209 Targets : Stop loss: 7010 ( on closing basis) Risk: 3% Expected Reward : 21% MRF Code: is in an uptrend Industry:Utilities:Non-Elec making higher tops and higher bottoms. Recently it started its uptrend started after retracing 50 % from its peak of 9824 and since then it has shown bullish pattern. We recommend buying MRF above 7260 with a stop loss at 7010 and trade for a target of Long term investors can also buy the stock on every dips as it has strong supports at 6200 levels. Its long term target is at Traders trade with the trend and strict stop loss. 4

5 STOCKS BHUSHAN STEEL Industry : Steel - Large BSE Code: NSE Symbol: BHUSANSTL P/E : 8.08 Div & Yield %: EPS : Book Value: Market Cap (Rs Cr.): 8348 Face Value : 2 Recommendation : Buy Entry Price : at Current Market Price Last Close : Targets : Stop loss: 375 ( on closing basis) Risk: 4% Expected Reward : 20% Bhushan Code: steel Industry:Utilities:Non-Elec is trading around its major support levels of 380. First coming from a trend line from bottom and second coming from the tops. Overall trend of the stock is negative as it s constantly making lower tops and lower bottoms. Traders can take advantage of this turning point of the stock. If the stock takes support on this trend line between 380 and 390 and bounces back with good volumes, buy with a stop loss of 375 and trade for targets of If the stock sustains below 380 then it s heading towards lower levels. Exit in that case. Futures traders can take opportunity to trade short in that phenomena. It s a sell below 380 with a stop loss of 440 and targets of on down side. We recommend wait for the trend to be decided and take a trade accordingly. 5

6 STOCKS BHARAT HEAVY ELECTRICALS LTD Industry : Electric Equipment BSE Code: NSE Symbol: BHEL P/E : Div & Yield %: 1.26 EPS : Book Value: Market Cap (Rs Cr.): Face Value : 10 Recommendation : Buy Entry Price : at Current market price Last Close : Targets : Stop loss: 1703( on closing basis) Risk: 7% Expected Reward : 34% BHEL Code: was making Industry:Utilities:Non-Elec lower tops and lower bottoms, recently. However, the stock is giving technical indications to suggest that it could reverse and start moving up from here. The stock had formed a price gap in May Technically, price gaps act as supports if they are re-tested from above (see figure below). Secondly, the volume in the stock in the previous week has been exceptionally high suggesting some kind of accumulation in the stock around the gap filling price level. We recommend to buy the stock for the targets of Place a stop loss at

7 STOCKS GTL LTD Industry : Telecommunications - Equipment BSE Code: NSE Symbol: GTL P/E : 5.20 Div & Yield %: 4.11 EPS : Book Value: Market Cap (Rs Cr.): Face Value : 10 Recommendation : Buy Entry Price : at Current market price Last Close : Target : 152 Stop loss: 60 ( on closing basis) Risk: 20% Expected Reward : 103% GTL Code: is at its long Industry:Utilities:Non-Elec term support line at 66 and bouncing back from those levels. In past it has always made a bottom on this line and bounced back to give good healthy returns. We recommend buying this stock with a stop loss of 60 on closing basis and look for a return of more than 100 % from current levels in near term A technical bounce back to 152 is evident as this would just be a 25 % retracement of the fall it made recently from 410 to make a bottom at 66. Traders can also take opportunity to trade long with stop loss and checking proper risk reward ratio Chart 1: GTL at historic trendline Chart 2: Entire price history of GTL 7

8 STOCKS INFOSYS LTD Industry : Computers - Software - Large BSE Code: NSE Symbol: INFY P/E : Div & Yield %: 2.16 EPS : Book Value: Market Cap (Rs Cr.): Face Value : 5 Recommendation : Sell Entry Price : Sell below 2720 Last Close : Targets : Stop loss: 2910 ( on closing basis) Risk: 5% Expected Reward : 18% Infosys Code: is making Industry:Utilities:Non-Elec lower tops and lower bottoms since December 2010 on monthly charts indicating down trend. In past, Infosys has always corrected approximately 1400 points every time it makes a top and then starts correcting. In March 2000 it made a high of 1726 and then corrected to make a low at 270 in Oct Similarly it made a high of 2439 in Feb 2007 to make a low of 1040 in Oct Recently it made a high at Now if history repeats we can see the stock fall to 2080 levels. We recommend sell Infosys below 2720 levels and trade for the targets of levels. With a stop loss at 2910levels. 8

9 STOCKS TATA MOTORS LTD Industry : Automobiles - LCVs / HCVs BSE Code: NSE Symbol: TATAMOTORS P/E : Div & Yield %: 2.11 EPS : Book Value: Market Cap (Rs Cr.): Face Value : 10 Recommendation : Sell Entry Price : at Current Market Price Last Close : Targets : Stop loss: 1015 ( on closing basis) Risk: 7% Expected Reward : 25% Tata Code: Motors has Industry:Utilities:Non-Elec been making lower tops and lower bottoms on weekly chart, indicating down trend. The stock witnessed rising heavy volumes during the fall from 1300 to 925. This suggest strength of the bears in the stock. We recommend to sell the stock with the targets of and stop loss of Traders can add positions once the 925 levels is broken on the downside. Below is the weekly chart of Tata Motors. 9

10 STOCKS STATE BANK OF INDIA Industry : Banks - Public Sector BSE Code: NSE Symbol: SBIN P/E : Div & Yield %: 1.28 EPS : Book Value: Market Cap (Rs Cr.): Face Value : 10 Recommendation : Sell Entry Price : Sell below 2334 Last Close : 2342 Targets : Stop loss: 2530 ( on closing basis) Risk: 8% Expected Reward : 28% State Code: Bank of Industry:Utilities:Non-Elec India is in a downtrend, making lower top and lower bottoms, as seen the weekly chart below. The current pullback from 2123 to 2529 is a 50% retracement of the current fall from starting from However, after the pullback, the stock has resumed its downtrend. Further increasing volumes in the falls suggests strength of the bears over the bulls in the stock. We recommend to sell the stock only below 2334 for the targets of Place a stop loss at Below is the weekly chart of SBI. 10

11 STOCKS MADHUR INDUSTRIES LTD Industry : Food - Processing - Indian BSE Code: NSE Symbol: MADHURFOOD P/E : Div & Yield %: 0 EPS : 0.51 Book Value: Market Cap (Rs Cr.): Face Value : 10 Recommendation : Buy Entry Price : Buy above 63 Last Close : Targets : Stop loss: 53 ( on closing basis) Risk: 8% Expected Reward : 28% Madhur Code: Industries Industry:Utilities:Non-Elec is showing bullish patterns on Weekly charts where its making higher swing tops and swing bottoms. Volumes are supporting where we see rising volumes on rise and falling volumes during retracements. It s a buy for the stock above 63 with a stop loss placed below 53. Traders can trade for targets of It s a B group and we also suggest that you invest a small amount of capital which is not more than 5 percent in this stock. 11

12 COMMODITIES GOLD MCX Gold CMP Rs23187 Support: Resistance: Comex Gold CMP - $ Support: Resistance: The scenario currently across the world is summarized as follows: The Scrip sovereign ID:GAIL Group debt issues / Index:A in EU / BSE100 zone are Face far value:10.00scrip from over and they continue to keep the situation fragile in that part of the world. In Code: the US, there Industry:Utilities:Non-Elec is an urgent need to come to a solution over raising the debt ceiling and take more debt to meet the obligations. In the last few years, to revive growth, the US has cut interest rates to virtually zero, it has introduced stimulus packages, and finally it has undertaken rounds of quantitative easing. However, the GDP growth is far from satisfactory and numbers for Q2 show GDP growth below expectation at 1.3%. On the flip side inflation is on the rise. As a result the US dollar has weakened and led to rise in precious metals. Such conditions are supportive to the rise in Gold prices. Unless the US Fed announces an out of the box solution to curb deficit and spur growth, we expect Gold to remain bullish. MCX Gold has major support at above which Gold could be bought on declines for the targets of In the event is broken, we could a Gold taking next support at levels. Below is the daily bar chart of MCX Gold. 12

13 COMMODITIES SILVER MCX Silver CMP Rs58898 Support: Resistance: Comex Silver CMP - $39.8 Support: Resistance: While Gold is trading at its all-time highs, Silver is far away from making a new high. Technically, Comex Silver has formed a base between $32-$39 and now has broken the upper Code: edge of the Industry:Utilities:Non-Elec range. After the breakout, it has retested and taken supports at $39.40 levels. On monthly charts, Comex Silver has given a bullish engulfing pattern suggesting trend reversal and uptrend in the near future. Rising inflation, weak GDP numbers, debt issues in US and a race to catch up with Gold could push Silver prices up in the coming days. We expect bullish trend to continue in silver. MCX Silver could be bought for the targets of On the downside, supports come at Below is the daily bar chart of MCX Silver 13

14 COMMODITIES CRUDE OIL MCX Crude Oil CMP Rs4237 Support: Resistance: Nymex Crude CMP - $95.86 Support: Resistance: While on one side lower GDP numbers from US put downward pressure on Crude oil prices, tropical Scrip storm ID:GAIL activity Group in / the Index:A Gulf of / BSE100 Mexico Face leadsvalue:10.00scrip to fear of production halts. Gulf of Mexico accounts for ~30% of crude oil production of US. Code: Industry:Utilities:Non-Elec This year it is expected that there is a 70% chance of between 3 to 6 major hurricanes until the end of November We believe, Crude oil prices could consolidate in between the range of $89-$99 in the coming days until the decision on the US debt ceiling issues are resolved. A decisive close over $100 could lead to strong rise in prices to $103-$114. Overall, we maintain an upward bias on Crude oil prices. Crude oil could be bought on declines for the targets of Below is the daily bar chart of MCX Crude oil. 14

15 COMMODITIES COPPER MCX Copper CMP Rs Support: Resistance: Price movements in Copper have remained range bound for large part of July On Scrip one ID:GAIL side negative Group / new Index:A emanating / BSE100 fromface thevalue:10.00scrip US put a downward pressure, and on the other supply side constraints due to strike in Escondida copper mine give supports. Code: Industry:Utilities:Non-Elec Technically, on monthly charts, Copper is making higher tops and higher bottoms indicating bullish trend. Copper remains a buy on declines for the targets of On the downside, supports come at Below is the daily bar chart of MCX Copper. 15

16 CURRENCIES USDINR CMP: USD-INR continues to remain a sideways movement for more than a year now. It is trading a range of and This week too, it took supports around Near term support lie at and resistance at Below is the Weekly Chart of USDINR Code: Industry:Utilities:Non-Elec GBPINR CMP: GBP-INR has recently bounced back from levels. Next level of supports come at levels. And it can face resistance at and levels. EURINR CMP: EUR-INR recently bounced back from levels. It can find next level of support at levels. And on the upside resistance at levels. JPYINR CMP: JPY-INR has been in an uptrend after it broke multiple tops around levels. The next level of supports come at and on the upside the resistance comes at

17 PERFORMANCE REPORT TOP RECOMMENDATIONS The table below gives the performance of recent top recommendations. RECOMMENDED DATE STOCKS RECOMMENDATION PRICE RETURNS REMARK Code: Industry:Utilities:Non-Elec 13/6/2011 RCOM BUY % FIRST TARGET ACHIEVED 20/6/2011 ASIAN PAINTS BUY % FIRST TARGET ACHIEVED 27/6/2011 BATA INDIA BUY % SECOND TARGET ACHIEVED 4/7/2011 MARUTI BUY % NEAR FIRST TARGET 4/7/2011 ASHOK LEYLAND BUY % NEAR FIRST TARGET 11/7/2011 HEXAWARE BUY % SECOND TARGET ACHIEVED 18/7/2011 INDIA BULLS BUY % FIRST TARGET ACHIEVED 18/7/2011 DCM BUY % FIRST TARGET ACHIEVED 18/7/2011 FEDERAL BANK BUY % FIRST TARGET ACHIEVED 17

18 Created by: Inventure Research Contact : Research Coordinator, Inventure Growth & Securities Ltd,201,Viraj Tower, Near Landmark Building, Western Express Highway, Andheri (East),Mumbai Tele: Extension :577, Fax: amit.chheda@inventuregrowth.com, website : Notice: This document is prepared by Mr. Amit Chheda, Mr. Milan Bavishi. Research for Inventure Group for private circulation exclusively for their clients. Disclosure: Scrip ID:GAIL We and our Group affiliates, / Index:A officers, directors, / BSE100 andface employees, value:10.00scrip including persons involved in the preparation or issuance Code: of this material Industry:Utilities:Non-Elec may; (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company/companies mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company / companies discussed herein or act as advisor or lender / borrower to such company / companies or have other potential conflict of interest with respect to any recommendation and related information and opinions. The same persons may have acted upon the information contained here in. Disclaimer: This document has been furnished to you solely for your information and may not be reproduced or redistributed to any other person. This material is for the personal information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. The material is based upon technical reading of the Graph. Though utmost care is taken by the writer of this document, and it should be relied upon as such. Neither Mr. Amit Chheda & Mr. Milan Bavishi of Inventure Growth & Securities Ltd. nor any person connected with any of these entities accepts any liability arising from the use of this document. Opinions expressed herein the report are our own and are based on Technical Research as of the date appearing in this document only. Reports based on Technical Analysis centers on studying charts of a stock's price movement and trading volume, as opposed to focusing on a company's fundamentals and as such, may not match with a report based on a company's fundamentals. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. Prospective investors and others are cautioned that any forward- looking statements are not predictions and may be subject to change without notice. Our proprietary trading and investment businesses may make investment decisions that may not exactly adhere to the recommendations expressed herein. No part of this material may be duplicated in any form and /or redistributed without Mr. Amit Chheda s and Mr. Milan Bavishi s prior written consent. In so far as this report includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed. 18