NIFTY VIEW FOR THE MONTH OF MAY

Looking at the chart of NIFTY May series may turn out to be disastrous for the market on a global perspective. We have seen a sizable rally this week, people will start coming back to the market and say there is value and it will start bottoming out. But that will not be the case.I wouldn’t bet on this market going much beyond 5800.But if does come to higher than 5800, I will go short on the mark...et. You have to be careful if you are playing long on this market because you have to be conscious that you are playing the counter trend rallies. Counter trend rallies can end without warnings, so that is the downside if you are going to play the markets here.This is looking merely like a nice large rebound from 5500 to 5800, it is about 300 points correction from the entire fall from 6100. This rally will set the base for a much larger decline going closer to 5300-5200 for the formation of LOW 5(Refer the photo).
Mixing technicals with history is a good idea as we have seen stock markets crashing in the month of may and even Technicals are telling us the same story.

 

ANSAL API

 

Ansal too has become a BUY due to the recent midcap carnage in the equity markets. Technically Ansal API is a BUY with Money Flow index at 21.89, RSI at 26 , a hammer like candle formed and that too near the lower tip of the bollinger band.
Long term investors can look to enter at these levels as the book-value stands at 102, P/E ratio stands at 10 as compared to the industry average of 17. Price /Book-value is astonishingly 0.22. On seeing the longterm charts of Ansal 20-22 seems a strong support area and bounces from these levels.

 

I feel ansal can easily reach the levels of 32-34 in a year's time.

MOIL

Taking a call on MOIL, there are two positive triggers that we feel. The company will clock a sale of Rs 1,080 crore for next fiscal that is our conservative projection, while the market consensus is around Rs 1,125 crore. The company is roughly working with a net profit margin of almost 48 percent on adjusted basis, if I adjust with the cash. So that 48 percent roughly gives you a profit after tax (PAT) of Rs 500 crore and the current market cap is Rs 4,200 crore.
“The next important trigger is the cash that this particular company is holding, which is again over Rs 80 to Rs 100 per share that is again going to give you a comfortable valuation.”


“The third important aspect is the dividend yield that the company is available at; 3 percent with almost debt-free status for this particular company on cash adjusted basis. This is fairly lucrative.”


I am forecasting a bottom-out for the Manganese and on ferrous space somewhere in that April May season and that will actually see lot of momentum for price up shift. What is interesting for playing this non-ferrous or ferrous space is that a rupee change into the top line significantly adds to the bottom-line because there is expansion in terms of operating profit margin.


MOIL is one pick where i feel there is hardly any downside, not even 10 percent from current levels given good cash levels. And strong earning even on the bad phase the entire sector is going through but if there is an upward shift that is what we had projected we feel the stock would stabilize around Rs 325 levels. Stabilization doesn’t mean that it will stop around that level.I have a target of Rs 370-380 but i am taking a conservative call right now given that it is a projection from my quant model and i feel this will definitely hog limelight because of news flow that is coming in MOIL.


“Recently only the company announced that it has applied for eight coal blocks which was given by the government of India mandate, which is again a positive for this particular company. So given all this fundamental developments for the company we feel this is on risk reward front very attractively positioned even if the projections work against few of our models.”

Financially :
“MOIL sales at Rs 2.28bn (-4.7%YoY/-0.5%QoQ) were lower than estimate of Rs 2.45bn primarily due to lower than expected realisations which fell by 1.4%YoY/ 12.7%QoQ to 239kt (DCe: Rs 8055 per tonne). Realizations were lower as company sold 74.1kt of fines (25% of sales) vs 36kt in Q2FY13 (15% of sales). Sales volumes fell by 0.9%YoY to 282kt whereas production rose by 10.5%YoY to 315kt.Ferro manganese sales declined by 53%YoY/37%QoQ to Rs 108mn due to weak demand whereas wind power sales fell by 71.8%QoQ to Rs 16mn due to seasonality.”

“EBITDA rose by 4.9%YoY/6.2%QoQ to Rs 1.14bn (DCe: Rs 1.16bn). Margins improved to 50.3% (460bpsYoY/320bps QoQ) due to higher realisations. Other income increased by 28.6%YoY/8.9%QoQ to Rs 644mn. PAT improved by 11.8%YoY/4.4%QoQ to Rs 1.13bn (DCe: Rs 1.05mn) due to higher than expected other income. MOIL has reduced the prices for Q4FY13 given the subdued demand and fall in international prices. MOIL prices are currently at 5% premium to the landed prices of the imported ore. It has maintained its volume targets for the year. BHP has maintained the prices for Q4CY12 globally. We have largely maintain our estimates for FY13E and FY14E and introduce FY15E. MOIL is currently trading at 3.5xFY13EV/EBITDA and 3xFY14EV/ EBITDA.
 

COAL INDIA

COAL INDIA IS A BUY FUNDAMENTALLY , TECHNICALLY AND ACCORDING TO DERIVATIVE ANALYSIS.

Fundamental Aspect:
“CIL’s consolidated net sales grew 12.9percent YoY to Rs173.3bn primarily on account of a 9.2percent YoY growth in sales volume to 120.1mn tonnes. Production grew 2.4percent YoY to 117.4mn tonnes. E-Auction and non-coking beneficiated coal realisations came in much higher-than-expected at Rs2941 per tonne (up 19.5percent QoQ) and Rs1718 per tonne (up 38.6percent QoQ) while FSA sales realisation came in lower-than expected at Rs1232 per tonne (down 3.8percent QoQ). This could be due to higher grade coal being e-auctioned and beneficiated. E-auction sales volume declined 8.7percent YoY to 10.48mn tonnes.”

 “CIL’s consolidated EBITDA came in lowerthan expected at Rs42.9bn, down 5.7percent YoY on account of higher-than-expected power & fuel costs (higher diesel prices), welfare expenses, contractual expenses and other expenditure. EBITDA margin declined ~490bps YoY to 24.8percent.  CIL’s consolidated adjusted PAT came in higher than expected at Rs43.8bn, up 8.7percent YoY on account of higher non-operating income at Rs23.6bn, up 27.2percent, lower depreciation and lower tax rate at 29.5percent, down 170bps YoY. Higher non-operating income was on account of increase in both interest income and transportation recovery charges.”

 “With earnings estimates, and quarterly rollover of our 1 year forward DCF value, my 1 year target price for CIL is Rs400. My target price implies a potential upside of 25.6 percent from the CMP.

Technical Aspect:
Coal india has formed a morning doji star candle pattern , whereas the previous candle being a hammer with a RSI of 25and Coal india is trading below the lower tip of the bollinger band.OBV, William,s % R, StochRSI.

Derivative Analysis:
We can see short covering in the futures contract of Coal India for the month of March series.