FUNDAMENTAL STOCK PICK:
MIC CLECTRONICS
CMP 48, TARGETS 125.
Co’s products are used in sports and live events, advesrtising application covering electronics bill boards and hoardings.
News advertisements ticker displays.
Indoor applications at shopping malls, airports, railways and bus stations.
Mobile applications.
Co’s products has big opportunities in rural electrification and railways as LED products are more efficient ,consumes lesser energy ,last longer ,more powerful and small size.
Global LED market is estimated to be US $ 8 billion by 2011 from US $4 billion.
As per management LED renting industry’s expected to grow to 100 crore by 2010 and live –entertainment industry is expected to touch 800 crore by 2010 in India.
This will help to company.
MIC is monopoly player in India in LED displays and lighting business.
Having monopoly Player Company enjoys operating profit margin of 21% which is healthy.
Over the last 5 year co has maintain debt-equity ration of 0.4 and interest coverage ration of 12 times which are very good.
Keeping above all in mind we expect stock to touch 125 in the next few years from current price of 48.
Which is 160% rise in stock price.
MUTUAL FUND PICK:
ICICI TAX GAIN
Recommendation: Avoid
Ratio: This fund has failed to deliver impressive return in this industry.
WEEKLY MARKET OUTLOOK:
SUPPORT AT 4925/4830
RESISTANCE AT 5115/5208
Trend reversal or correction? A million dollar question.
Nifty correct from 5300 to 4950 – whopping 6.6% down in the 13 days.
Let’s paint the scenario to give answer of above question a trend reversal or correction by two way (1) technical analysis arguments (2) fundamental analysis arguments.
(1) TECHNICAL ANALYSIS ARGUMENTS
If we look at the global market like hang sang and shanghai composites, both index have failed to make higher top and start correcting. In India both sensex and nifty made higher top –though both couldn not sustain at those higher levels but at least we have formed the new high on dow theory rules, so this is bit more positive for India when we compare to the heng sang and shanghai.
In market history when market creates new high it always corrects and retrace to 7-8% and there after rally starts.
In India we believe the Dubai-fall bottom is much important based on Dow theory, because this is the last higher bottom formed by both index which are 15300 for Sensex and 4500 for nse Nifty.
If we look at the moving average set-up of both index which are placed like first short-term average, second medium term average ,third long term average and both index are trading above all respective averages so bull market is their.
We try to find out support based on moving averages which are 15500 for Sensex and 4600 for Nifty which are 200 day DMA.
Now as per Dow Theory index need to walk in higher top –higher bottom formation and both sensex and nifty has make higher top above 17500 and 5300 now both index need to substation above higher bottom which are placed at 15300 and 4500 respectively.
As long as we are holding those levels we are in bull market based on Dow Theory and moving averages.
As of now traders and investor needs to find value buying and try to enter at this levels.
(2) FUNDAMENTAL ANALYSIS ARGUMENTS.
Nse nifty is trading at P/E multiple of 22.24 and historically when bubble has formed the P/E multiple has been rise to 28 so as of now we are not in any case in bubble zone.
If nifty falls to 4500 then P/E will also fall to 19.87 levels which will make market more attractive, if we analyze The aggregate results for 439 companies announced so far showed that net profit rose 41.4% to Rs 31011 crore on 20.2% rise in sales to Rs 249678 crore in Q3 December 2009 over Q3 December 2008.which show the good recovery in corporate India.
So down side will create value buying opportunities to enter in to market not exit from market.
One should focus on those companies whose sales and profit growth will rise and has limited leveraged balance-sheet and having good corporate governances.
CONCLUSION
So over all both on technical and fundamental arguments we believe this is not trend reversal and just a correction and trader and investor should find out value buying in market.
TECHNICAL STOCK PICKS:
PUNJ LYOD
stop loss 176, target 196/210.
Ivrcl infra
stop loss 317, targets 352/368.
Guj nre
stop loss 74 targets 82/86
Praj ind
stop loss 90 targets 102/106
Hcc stop
loss 131 targets 144/151
KEY NEWS TO WATH OUT:
26th January-holiday in market.
29th January- RBI Quarterly monetary policy review.
A host of key results will be announced. Prominent amongst them are,
Maruti Suzuki India (on Saturday, 23 January 2010);
Mahindra & Mahindra, Hero Honda Motors, Hindalco Industries, Sterlite Industries, StateBank of India (on Monday, 25 January 2010);
Hindustan Unilever (on Tuesday, 26 January 2010);
Steel Authority of India, DLF (on Wednesday, 27 January 2010);
Tata Steel (on Thursday, 28 January 2010);
Tata Motors, and Sun Pharmaceutical Industries (on Friday, 29 January 2010).
