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.

MOODY'S VIEW ON INDIAN BANKING SYSTEM.

Moody's maintains negative outlook on Indian banking system.

Moody’s Investors Service on Tuesday said its outlook on the Indian banking system for the next 12-18 months remains negative, reflecting the continued challenging nature of its domestic operating environment.

The global credit rating agency has had a negative outlook on the Indian banking system since November 2011.
...

“This environment is characterised by slow economic growth, high inflation, high interest rates, and a weak local currency, and we expect these factors to lead to a further deterioration in asset quality, an increase in provisioning costs, and a fall in profitability,’’ said Vineet Gupta, Moody’s Vice-President and Senior Analyst.

Further, considering the high level of loan growth which, at about 15 per cent annually, is expected to continue outstripping internal capital generation, then most of the Moody’s-rated Indian banks will be challenged to maintain capitalisation levels at current levels, and some will even need to raise new capital externally, Gupta added.

Furthermore, Moody's views the loan classification — more particularly with regards to restructured loans — and provisioning practices in India as weak.

“Loan classification and provisioning requirements mask the extent of the banks’ asset quality and capital challenges,’’ said Gupta.

On the positive side, Moody’s, in a statement said one anchor of stability for Indian banks is their strong business franchises, which support their low-cost funding profiles, helping them maintain sizeable lending margins to sustain pre-provision earnings.

Moody’s is continuing to assume a relatively high probability of systemic support, observing that the Indian Government already provides strong ongoing support in the form of annual equity infusions for the public sector banks, and all banks are mandated to meet loan quotas for certain sectors of the economy.

This implies a high degree of involvement by the Government in the banking sector and related public accountability.

BANK NIFTY VIEW

From the above chart of BANKNIFTY we can clearly see that BANKNIFTY is in an overbought position, RSI Williams's %R Bollinger Bands and StochRSI showing the same, so i don't think it has the potential to go further up without a small correction.I would advise to SELL BANKNIFTY 27 DECEMBER 12500 CALL@ 140-145 with a target of 100.

RELIANCE INDUSTRIES

From the above chart of Reliance Industries we ca clearly see that the stock is oversold and it is in the range from which it has bounced previously also.So i would advise to buy Reliance Industries November Futures @ 761-763 with a target of 775-780.

Dow Jones Industrial Average

From Dow Jones daily chart we can see Bullish engulfing cum hammer like situation with increase in volumes and RSI of 28.39 and range (12500-12600) from which Dow jones index has bounced 3 times previously.Now is the time for short sellers to book their profits as now i see the markets in the hands of the bulls.My target for Dow Jones would be 12900-13100-13300.

HEXAWARE TECHNOLOGIES

From the above chart of hexaware we can see that after falling from 140 levels to 110 levels and i feel at CMP it is worth buying.Signs of bullish reversal can be clearly seen on the charts,ParabolicSAR,candlesticks and MACD are giving a buy side.So one can BUY HEXAWARE NOVEMBER FUTURES@ 110.110.3 with a target of 115.

KARNATAKA BANK

 
 From the above chart of KARNATAKA BANK we can se that it has moved from 80 level to 138-140 levels in a matter of one month that too without any significant correction.Yesterday was the first bearish sign which i felt in this stock, a GRAVESTONE DOJI was formed.Daily RSI of KARNATAKA BANK IS 85.45 whereas Weekly RSI is 76, i am expecting this rally to pause and correct a bit from these levels. So in that case one can short KARNATAKA BANK NOVEMBER FUTURES @136-139 with a target of 130-125.