Tuesday 30 June 2015

Tech Mahindra: Is Guidance Warning An Oppourtunity To Accumulate---Nr Term Range 460-680 ?








Looking the the Chart, TECHM (CMP: 483) has immediate support around 477-468-462-455 zone. Consecutive closing below 455, it may further fall to 440-428-420-414-390-363-349 area in the near term under worst bear case scenario.


On the upside, technically sustain above 481, immediate target may be 491-500 & 515-525 zone and sustaining above that, it may target 536-552-565 in the short term. Only consecutive closing above 565, TECHM may target 586-610-640 in the mid term. In the long term, sustaining above 640, it may scale up to 680-748 & 870 territory in the bullish market scenario (FY:16-18).

Bottom Line: Technical Trading Levels (Positional)



SL</>5 FROM SLR







TECHM CMP 483















T1 T2 T3 T4 T5 T6 T7 SLR
Strong > 475 481 491-500 515-525* 536-552 565-586* 610 640 680 <467
Weak < 467 460 455* 440 428 420-414 390 363-349 >475

TECHM plunged yesterday after management warning about guidance & profit margin amid higher US visa sponsorship costs and seasonally weak lower revenue for its mobile telecom clients. This is the third company after Persistent and KPIT which gave such profit warning and as a result the whole IT outsourcing sector are now in some type of doldrums. Though the company (TECHM) said that efforts to improve operational levers and cost control parameters will show its impact from Q3/FY16 onwards, market is bracing for downgrading and it had already crashed 10% yesterday itself and touched its 52 weeks low.


There is a apparent tug of war between different analysts to rate the TECHM right now. As par CS, new target is 700, whereas CLSA is indicating it as 450 citing structural risks, poor margin management etc.


Going ahead, some favorable currency movements, project cost management along with expected improvement in operational metrics to achieve synergy with its recent acquisitions will dictate the actual bottom line of TECHM apart from IT spending recovery in USA/EU. Also the coming US presidential election might bring some more headwinds for all Indian IT Outsourcing company, including TECHM for the H1B VISA issue (turning into vote bank political factor there as well), but going by the time & price action, that factor may be already discounted by the market.

There will be ample opportunity for both Indian & Global IT players to participate in "Digital India" theme. 

But the real headwinds for Indian IT companies in future may come from lack of innovations and new technologies such as automation & off-the-shelf software and analytics, big data and cloud computing solutions. Indian IT companies are too much dependent on inexpensive programmers rather than adopting new technology both organically or inorganically. 

Recent acquisitions of various IT companies are largely driven by desire to enter new markets & industry segment or quickly expand business, which is short term in nature and not intended to adopt new technology for long term vision.

There are few exceptions like Infy and TCS, which did some (one & two) tech savvy acquisitions, but more need to be done in order to survive in the days ahead. Infy, being a cash rich company, might acquired better. 

Tech-M too acquire around nine companies recently, but none of them fall into this high tech category and all of them are intended for more capabilities in older technologies or business strategy for BPO & network management services. Thus Indian IT companies, including Tech-M need to acquire more such high tech company in order to be competitive with their overseas peers in the days ahead.

As par BG metrics, current median valuation of Tech-M may be around 565 and projected fair valuations are around 610-680-750 (FY:16-18) in the current market parameters.


SCRIP EPS(TTM) BV(Act)  P/E(AVG) LONG TERM SHORT TERM MEDIAN VALUE 200-DEMA 10-DEMA
TECHM 27.32 127.37 21.62 590.60 535.34 562.97 590.54 485.21

TECHM 32.01 143.5 21.62 639.29 579.48 609.38 590.54 485.21

TECHM 39.18 162.15 21.62 707.27 641.10 674.18 590.54 485.21

TECHM 47.05 183.25 21.62 775.05 702.54 738.80 590.54 485.21


    

Monday 29 June 2015

Bank Nifty Fut(Jul): Greece In Referendum Mode With All Sorts Of Capital Control,17300 Zone For BNF Again ?








Time & Price action suggests that technically, BNF (LTP:18357) has to sustain over at least 18580 for next up move immediately to 18693-18790 & 18976-19130* zone. Only consecutive closing above 19130, it may target 19480-20290-20934 zone in the near future under bullish case scenario.


On the down side, sustain below 18580, BNF may find initial support around 18351-18137-18014 area. Only consecutive closing below 18014, it may further fall to 17657-17335-17236-17119 zone in the near term under bear market scenario. Only sustaining below 17100 area, BNF might fall towards 15000-14000 territory in the worst bear case scenario.

Bottom Line: Technical Trading Levels (Positional)


BNF-JUNE LTP 18357














SD/SL=+/-  25 POINTS FROM SLR














T1 T2 T3 T4 T5 SLR
Strong > 18580 18693* 18723-790 18870-976 19030-130* 19275-481 <18530
Weak < 18530 18438-351* 18271-137 18075-014 17767-657* 17495-335 >18580


As we all know, on last Saturday Greece has announced dramatic referendum on current EU/Creditor's debt proposal to be held probably on 5-th July. This means that there may be no deal in the current Greece mega serial, unless & until Greece/EU again changed their mind. This is a very clever move on the part of Greek PM to put tremendous pressure on Troika in this classic game of chicken. The Greece referendum is about asking people there either to accept Troika/Creditors proposal in its current form with the so called austerity conditions associated with it or prepare for eventual default & Grexit. But Greece politicians are confident about a "No Grexit" vote, because, ultimately people there will not like "Grexit" & "Drachma" uncertainty and eventually, some kind of deal (debt restructuring package) will be sealed shortly/mid July, before expiry of 30 days grace period from June-30 IMF default date (most probably). Be sure, there will be more drama on this ongoing saga & we will hear more proposals & counter proposals amid great confusions. The EU leaders are urging Greece to take at least one deal proposal before going into the referendum.

The market will not like such uncertainty for a long time & is currently bleeding with EUR near 1.10 as expected (it may fall up to 1.05, if sentiment further deteriorate). With Greece in full capital control mode today/next few days amid overnight dry ATM(s), banks & market might be closed for today there, it may be an interesting opening for EU market later in the day.

On the other hand, China cuts it lending & RRR rate on Saturday evening as also widely expected to stabilize the epic fall of their market (a mere coincidence or a coordinated move to counter Greece fiasco ?), which is supporting some how the morning Asian market right now.


Be sure that, it will be not a one way journey going further with all the major four central banks will be super active mode with "blazing guns" in order to stabilize the global financial market & to prevent capitulation.


In India, we might hear more pro-reform tone from the Govt amid this Greece crisis  (such as PSU bank recapitalization, hint of more RBI rate cut, indication of joint session of parliament to pass stalled key reform bills, infrastructure & affordable housing push etc) in the days ahead, which may prevent future capitulation in our market & we will be in the current range of Nifty (7900-8500) for the time being.

Saturday 27 June 2015

China-A50: As Expected PBOC Cuts Rate---11600-11300 Could Be Very Good Demand Zone For TGT 14200-15400-16900 ?








Technically, CA-50 (LTP: 11765) has immediate support of 11596-11375 zone & sustain below that, it could fall to 11161* area. Only consecutive closing below 11161,CA50 may further fall to 11090-10767-10567-10450-10100-10000-9860 area in the worst bear case scenario.

On the upside, sustaining above 11596, immediate target might be 12057-12200-12600-12850-13035-13200. Sustaining above 13200, CA-50 may target 13350-13500-13731-14118-14232. Only consecutive closing above 14232, it may target 14350-14535-14900-15100-15400 zone in the near term. In the long term (FY:17-18), only sustaining above 15100-15400 zone, CA-50 may scale up to 16900-18100 under bullish market scenario.

Bottom Line: Technical Trading Levels (Positional)



SL</>50 FROM SLR







China-A50 CMP 11765















T1 T2 T3 T4 T5 T6 T7 SLR
Strong > 11600-11400 12057* 12200-600 12850 13035-200* 13350-500 13731 14131-200 <11300
Weak < 11300 11161-090* 10767 10450 10100-000* 9860 9475 9275-000 >11600

As expected, after year long huge market rally (nearly 140% Y-O-Y) in China market, it eventually crashed after MSCI decision of not to include mainland China Stocks at this moment (now down almost 25% from recent top) amid excessive broker margin funding, inexperienced retail participation in masses (rural China nearly swept away), creation of bubble in an epic proportion (companies overnight changed name name from real estate to technology stocks without any change in business model etc). slow down in Chinese economy & cooling of real estate (fund flowing from real estate to stock market), earnings growth degradation. IPO rush etc.

Today PBOC cuts interest & RRR rate to stimulate the broader economy of China. Clearly, PBOC is in dovish mode and will act more proactively in future, if situation arises to stem down so called China cooling (slowing economy). But this PBOC action was largely in line with market anticipation, though may not be priced in going by the yesterday's bloodbath in China market.

Looking ahead, MSCI may not prefer to ignore main land China market for so long and might include it in near future in a gradual manner as par China policy framework as it is a huge market and FII(s) are eager to enter more proactively. Though, various market analysts are forecasting now 5% EPS growth against earlier 9-16% (FY:15-16) and downgrading SHCOMP forecast to 3250-4600 (FY:15-16) against LTP of 4192 as on 26-th June, more FII(s) participation & active China Govt support may change the present "gloom-doom-boom" picture. 

After all, we should not forget that China is the world's "growth engine growing at nearly 7%" & "global powerhouse/manufacturing hub", being the 2-nd largest economy in the world (11 trl $ economy) just behind USA (18 trl $ economy) and is increasingly looking to far east for more growth out side China, EU, USA & other G-6 countries & one of the four major pillars of world economy (along with EU/USA/JAPAN), supporting the global recovery.

Along with China, it will be an interesting global market on Monday amid Greece drama and recent history shows that China market crash is helpful for India market rally (as par reverse fund flow theory), we might see the vice-verse this time.






Friday 26 June 2015

Nifty Fut (July):Global Market Is Being Mesmerized By Greece Serial Drama---Are We Heading Again Towards 8000 In Nifty ?








Looking the chart, time & price action suggests that NF (LTP:8421; SGX NF:8389) has immediate support of around 8348 zone & sustain below that we could fall to 8302 area. Consecutive closing below 8302-8265* zone, NF may head further downwards to 8212-8128-8035-7915 zone in the near term under bear case scenario.

On the upside, NF has to sustain at least over 8460 for for an immediate target of 8495-8525* & 8550-8565 zone. Only consecutive closing above 8565 area, we may head further upwards to 8675-8785-8935-9200 zone in the next cycle under bullish market scenario.

In brief technically, only sustaining above 8565, NF may enter new upwards cycle towards 9200, other wise, we may again fall to 8000-7900 area in the near term.

Bottom Line: Technical Trading Levels (Positional)




Gap Up/Dw (Indicative)




SGX NIFTY 8389 -32





        NF-JULY LTP     8421
                 
                 
  SL (+/-) 10 POINTS FROM SLR            
                 
  Intraday Swing  Trader            
      T1 T2 T3 T4 T5 SLR
Strong > 8460   8495-8525 8550-8565* 8595-8675 8701-8785 8875-8935 <8440
                 
Weak < 8440   8416-8371 8348-8302* 8265-8212 8183-8125 8079-8035 >8460









FOR  Conservative Positional Trader













      T1 T2 T3 T4 T5 SLR
Strong > 8460   8525 8565* 8675 8785 8935-9200 <8440
                 
Weak < 8440   8371 8302* 8212 8125 8035-7915 >8460
                 

Apart from domestic triggers (monsoon, RBI rate cut hopes, PSBS recapitalization, debt profiles of Indian corporates, earning growth issue etc), our market may take cues from global market which is clearly fatigued for ongoing Greece drama. Mr. Market is really confused about Greece and about who is bailing out (funding) whom & really get lost to track various proposals between Greece and EU. Market will not like uncertainty for a long or in this weekend and might show a knee jerk reaction for Greece/EU leaders to act quickly in a definitive manner, leaving this ongoing "game of chicken".

As par latest report, all meetings got cancelled/postponed & Greece-EU will again meet on Saturday/weekend for an pronounceable "Deal". Clearly the aim is to announce an official deal before the Asian market opens on Monday morning to avert a "bloodbath". Also political landscape is increasingly getting ugly in Greece & Germany about this crisis. As par market talk, Greece PM, Tsipras may offer his resignation and various German MP (of Merkel's own party) and general tax payers are increasingly getting annoyed over this long Greece drama/bail out.

Back home, our market will eagerly watch forthcoming monsoon session of parliament for GST & Land bill passage. Govt will make an all out effort to pass it in RS by making all types of political permutations & combinations in play. But, despite of that, if the bills will stuck in RS (as the political heat map is getting complicated due to various ongoing controversy and opposition might not agree), we may see a joint session of LS & RS this time for a last ditch of effort by the Govt in order to rejuvenate lost investor sentiment/confidence and to distract from the present political turmoil in New Delhi (Lalit Modi controversy etc).

If the above reform bills do not pass in the forthcoming parliament session, our market may break 7900 this time & we might head towards 7500 or lower till Bihar assembly election. Technically, Nifty has already suffered "Death Cross"  some time ago. We need to convert it again into "Golden Cross" in the immediate future, otherwise "Modinomics" may face tough questions.

Thursday 25 June 2015

Sun TV: Another Example Of "Buying Good Business In Distress Or In Unusual Conditions" (Buffett)---Near Term Range 255-455 ?







Technically, for Sun TV (CMP:293) has immediate support of  287-280-275 & sustain below that it may further fall to 265-255-250 area. Consecutive closing below 250, it may further fall to 240-215 zone in the worst bear case scenario in the near term.


On the upside, it need to sustain at least over 298-302 zone for an immediate to short term target of 312-317-324 & 335-347 area. Consecutive closing above 347, it may target 362-365-372-389-400 in the medium term. In the long term, only sustaining above 400, Sun TV might target 426-455-485 area under bullish case scenario (FY:16-18).

Bottom Line: Technical Trading Levels (Positional)



SL</>3 FROM SLR







SUNTV CMP 293















T1 T2 T3 T4 T5 T6 T7 SLR
Strong > 280 287 298-302* 312-317 324-335 347* 362-365 372-389 400-426 <275
Weak < 275 265 255-250* 240 235 225 220-215 210-180 >280

We all know the reason for steep fall in Sun TV in the last few weeks owing to reported denial of "security clearance" by MHA (citing "National Security" reason for pending 2G telecom & some other corruption cases against the promoter). This may block the broadcasting license renewal of Sun TV. Although the MIB and AG is against this "security ban" citing that such MHA's concern of "source of funding" & "national security" will not be tenable in court of law (SC). There is also a case pending in Madras HC against Sun TV, in which the Govt/MIB is appealing against the quashing (HC) of its earlier order TO win up to Sun TV. Be sure, all these cases will ultimately go to SC & the company might get great relief from there simply on legal/technical grounds.

Yesterday, there was a report/rumour that PMO has find some "merit" in MHA's "security" concern and Sun TV scrip was consequently crashed again. As par reports, I&B minister (our FM) is coming back from US trip shortly & there will be important meeting between MHA-PMO-MIB on this issue further.

The fact that, AG's opinion is against the step of MHA as it will be not legally tenable at all and due to adverse sentiment (Ease of doing business in India theme), the PMO may ultimately support the stand of MIB & AG in this issue. Certainly, there is a political (South India Politics/AIDMK/RS support) in the whole affairs, but due to overall degradation of investor sentiment recently in India (Nestle/MAT fiasco etc), the Govt may not choose to tail any big corporate group at this point of time. Our FM has also faced some tough questions on the Sun TV issue in his recent US trip/investor conference.

It may also be noted that several other broadcasting companies which are controlled by other business conglomerates faced cases related to "corporate espionage", 2G telecom spectrum and also disproportionate assets, but their security clearance has not been denied by MHA. Moreover, there are many companies which are facing cases/investigations by CBI/ED, yet they were being given permissions to take part in telecom & coal auctions. Also, as par former AG, similar case/instance of security clearance issue was raised by UPA govt for a TV broadcasting channel in AP, but ultimately the then UPA govt had accepted the AG's view (of no legal ground).

Clearly, the present Sun TV "security clearance" issue has no legal ground without any "show cause" notice or any written communications either from the MHA or MIB and will be termed as purely "unconstitutional" in the eye of law, unless the charges against the Sun TV promoters will proved convincingly, till the completion of present investigations & pending judicial proceedings. Though the AG's opinion is not binding on the Govt, but it is generally accepted.

Our FM (also the I&B Minister) is also in favour giving of Sun TV "security Clarence". Being the right hand man of our PM and probably the most respected, important & practical strategist in Modi Govt, PMO might accept the view of his FM for the sake of over all "investor sentiment or confidence" & "ease of doing business" in India and to ensure that "vendetta of politics" do not disturb business climate or any particular business group/corporate house.

If the Sun TV promoters are indeed a threat to "national security", how did the channels were permitted by the concerned authority & running for the last few years ?

Regarding some fundamental aspects, though irrelevant at this point of time, its Q4 result was tepid & below market expectations amid stagnant yields in Ad revenue. The management did not either gave any Ad revenue guidance due to uncertainty on caps Ad minutes which was mandated by the previous UPA Govt till the end of FY:2014-15.  

Going ahead, the I&B minister cleared stated that the present NDA govt does not favour any kind of Ad restrictions on either print, TV or digital media. So the entire media/TV broadcasting groups may see better times ahead and Sun TV, being a very popular channel (specially in South India) may be one of them (if permitted to operate normally).


As par BG metrics, current median valuation of Sun TV may be around 435 & its future fair valuation might be around 470 (FY:16-18) under the normal/current market parameter.


SCRIP EPS(TTM) BV(Act)  P/E(AVG) LONG TERM SHORT TERM MEDIAN VALUE 200-DEMA 10-DEMA
SUNTV 19.84 99.19 27.5 450.47 415.01 432.74 371.93 315.68

SUNTV 20.85 109 27.5 461.80 425.44 443.62 371.93 315.68


SUNTV 22.05 120.5 27.5 474.90 437.52 456.21 371.93 315.68


SUNTV 23.25 132.75 27.5 487.65 449.26 468.46 371.93 315.68
 

Wednesday 24 June 2015

Idea Cellular: Full Of Ideas Or Out Of Ideas---Near Term Range 164-180-205 ?








Technically, Idea (CMP:175) has good support of around 171 and it  has to break & sustain over 180 for an immediate target of 185-190. Consecutive closing above 180, it may target 195 & 200-205 in the short to medium term. In the long term, only sustaining above 205, Idea might target 245-250 (FY:16-18) under the bullish market scenario

On the down side, sustain below 171, it may fall to 166-164 area immediately. Consecutive closing below 164, it may further fall to 158-153-148-143-135-128-125 zone in the near term under worst bear case scenario.

Bottom Line: Technical Trading Levels (Positional)



SL</>2 FROM SLR





   


IDEA CMP 175



   









   



T1 T2 T3 T4 T5 T6 T7 SLR
Strong > 174   180* 185 190 195 200 205 210 <171
                     
Weak < 171   166-164* 158 153 148 143 135 128-125 >174
                     

Q4 result & other parameters of Idea was above street estimates. But the stock movement is somehow lackluster for the last few weeks, perhaps market is guessing the effect of R-JIO (4-G) on overall mobile data market in the coming quarters. 

As par reports, to counter 4-G of R-JIO, Idea is now focusing more on 3-G and is planning for a capex of around Rs.5000 cr in FY-16 & it will also in the process of launching of 4-G on pilot project basis in selected pockets within Dec-2015 itself and may launch the same in full throttle by FY-16.

Idea has also substantial pricing power, being projected itself as a premium mobile data provider with 24/7 good network connectivity equipped with all types of data plans & pricing. It recently hiked mobile data rates up to by 100%  in Delhi/NCR (quite expensive there 3G @755 for 3GB). 

Idea being the 3-rd largest mobile telecom company in India and backed by a financially strong & well respected Birla group, might be  one of the strong player apart from Vodafone, Airtel, Tata to counter the expected aggression in telecom/mobile data space by R-JIO in the coming days.

As par quick BG metrics, current median valuation of Idea may be around 165 and its projected fair value might be around 200-240-300 (FY:16-18) under the current market parameters.


SCRIP EPS(TTM) BV(Act)  P/E(AVG) LONG TERM SHORT TERM MEDIAN VALUE 200-DEMA 10-DEMA
IDEA 9.03 46.7 17 159.54 163.21 161.38 165.81 173.53

 
IDEA 13.55 52.05 17 195.43 199.93 197.68 165.81 173.53

 
IDEA 20.35 58.05 17 239.50 245.02 242.26 165.81 173.53
 
IDEA 30.55 64.75 17 293.45 300.20 296.83 165.81 173.53
  
To be Cont for some more useful inputs----