Monday, March 29, 2010

Indian Technology Sector Prospects in 2010

This article appeared in the March 2010 issue of Wealth Insight and was published on value research online.

From reaching starry highs to being virtually written off, to reaching for the skies again, information technology (IT) firms have come a long way. With the pressure of the recession decreasing on the West, they are again bagging new orders and getting old ones extended.
NASSCOM, which is charting this trend, says India’s IT and BPO exports are projected to grow 13-15 per cent in FY11 to $56-57 billion. For this fiscal, IT and BPO export revenues are seen growing 5.5 per cent to $49.7 billion. Added to the equation is the sizzling domestic demand for IT products.

The domestic market in this fiscal is expected to reach Rs 66,200 crore in revenue, which is a growth of 12 per cent over last year. Also, the next fiscal is expected to be better on the domestic front on greater public spending on e-governance. Even private companies are splurging on automation especially in retail, healthcare, and BFSI. This is likely to spur the growth rate to 15-17 per cent and revenue is seen at Rs 76,100-77,500 crore.

That the IT story is built on solid ground is evident from the bellwether — BSE IT index. It has consistently beaten Sensex. That does point to the near-term conclusion that the outlook, at least into the next fiscal (FY11), is positive, but beyond that uncertainty is overwhelming.
The good part of the trend is that the recovery of the IT sector had been led by the mid- and small-cap firms, thereby indicating they are getting savvier in promoting their businesses.

The top five firms have been treading a healthy path too with three of them logging a jump in net profits year-on-year (YoY), with Mphasis leading at 211 per cent, while Wipro’s stands at 67 per cent. But, HCL and Infosys net profits were down 35 per cent and seven per cent respectively. Quarter on Quarter (QoQ) the scene changes a little with net profits of Infosys rising almost 2 per cent. Wipro and HCL’s QoQ were negative. Mphasis has dominated on the net sales front, which surged 248 per cent as per December, 2009 data.

Prospects, going forward, for the industry remains positive. Take for example Infosys. The projected income growth YoY is anything between a range of 0.7 per cent to 1.5 per cent for the quarter ending March 31, 2010. BRICS Research summarises: “IT companies are expected to post better performances in FY11, but most of this is already factored in stock prices.”

On markets, the four top companies HCL, TCS, Wipro and Mphasis, barring Infosys, have posted over 200 per cent returns since the bull-run till February 23, 2010. Infosys returns was 115 per cent. Having gained handsomely, the valuations are already high, and prospects for upward movements are limited.

However, since, the industry’s fate is closely connected to the US economy, risks abound, especially as the unemployment rate there is going to stay high well into FY15. This indicated the US economy is going to log very slow growth, and IT companies here will chart a similar trend.

Budget 2010-11 will hit the IT sector too as it made no mention of the extension of a tax holiday scheme which ends in March, 2011. Also, the hike in Minimum Alternate Tax (MAT), which has been raised from 15 per cent to 18 per cent of book profits, will impact them adversely too.

Sunday, March 28, 2010

Indian Stock Recommendations,latest brokerage reports

NMDC Ltd (Hold)
Rs. 298.30 -5.90 (-0.06%)
STOP LOSS: Rs. 282.00 TARGET: Rs. 381.00
Ashu Bagri - Technical analyst at SBI Capital Securities

UCO Bank (Hold)
Rs. 56.30 0.40 (0.00%)
Sharad Avasthi - Senior equity analyst, SKP Securities

GAIL (India) Ltd (Hold)

Rs. 401.30 -0.40 (0.00%)

Sharad Avasthi - Senior equity analyst, SKP Securities

Larsen & Toubro Ltd (Hold)

Rs. 1635.55 -4.35 (-0.04%)

Sharad Avasthi - Senior equity analyst, SKP Securities

NMDC Ltd (Hold)

Rs. 298.30 -5.90 (-0.06%)

Sharad Avasthi - Senior equity analyst, SKP Securities

Bajaj Auto Ltd (Hold)

Rs. 1976.60 97.05 (0.97%)

STOP LOSS: Rs.1933.00 TARGET: Rs. 2020.00

Ashu Bagri - Technical analyst at SBI Capital Securities

Suzlon Energy Ltd (Hold)

Rs. 72.80 -0.20 (0.00%)

STOP LOSS: Rs.70.00

Mileen Vasudeo - Technical Analyst at Angel Broking

Cairn India Ltd (Hold)

Rs. 295.00 -3.45 (-0.03%)

Vikram Bhatt - Consultant at Positive Finnovationz

Dabur India Ltd (Hold)

Rs. 164.90 4.80 (0.05%)

STOP LOSS: Rs.146.00

Mileen Vasudeo - Technical Analyst at Angel Broking

ICICI Bank Ltd (Hold)

Rs. 947.70 22.10 (0.22%)

STOP LOSS: Rs.910.00

Mileen Vasudeo - Technical Analyst at Angel Broking

Unitech Ltd (Hold)

Rs. 71.40 -0.60 (-0.01%)

Naresh Pachisia - MD at SKP Securities

Friday, March 19, 2010

Latest Stock Recommendations

Latest stock recommendations from the various research and brokerage firms

Reliance Industries Ltd (Hold)

Rs. 1089.80 14.75 (1.37%)

STOP LOSS: Rs.1060.00 TARGET: Rs. 1091.00
Ashu Bagri - Technical analyst at SBI Capital Securities

Technically, the stock has a strong resistance at around 1091 levels. The investor can hold the counter with a trailing-stop-loss at 1060 and exit at around 1091 levels.

Unitech Ltd (Hold)

Rs. 73.70 0.00 (0.00%)
Ashish Kapur - CEO at Invest Shoppe

The counter looks promising as the demand is picking up. Its debt is expected to go down. So the investor can hold from a long-term perspective, as the stock can pick up the momentum in coming days.

Unitech Ltd (Hold)

Rs. 73.70 0.00 (0.00%)

STOP LOSS: Rs.67.00 TARGET: Rs. 103.00
Ashu Bagri - Technical analyst at SBI Capital Securities

The counter can go up to 103 after breaking the immediate resistance of around 80 levels. The investor can hold the counter with a stop-loss at 67.

Bharti Airtel Ltd (Hold)

Rs. 311.85 11.85 (3.95%)
Ashish Kapur - CEO at Invest Shoppe

Fundamentally, the stock has good upside potential. The investor can hold and accumulate the counter from long-term perspective.

Bharti Airtel Ltd (Hold)

Rs. 311.85 11.85 (3.95%)

STOP LOSS: Rs.280.00 TARGET: Rs. 335.00
Ashu Bagri - Technical analyst at SBI Capital Securities

The counter looks upward in current trade-pattern. The investor can hold the counter with a strict stop-loss at 280 and exit at around 335 levels.

HDFC Bank Ltd (Hold)

Rs. 1818.20 15.15 (0.84%)
Ashish Kapur - CEO at Invest Shoppe

The housing sector is expected to boom in coming days and HDFC has a strong presence in housing loan segment. So its business looks secured and an investor can hold the counter from a long-term perspective.

HDFC Bank Ltd (Hold)

Rs. 1818.20 15.15 (0.84%)

STOP LOSS: Rs.2600.00 TARGET: Rs. 2685.00
Ashu Bagri - Technical analyst at SBI Capital Securities

The counter can go up to 3,292 if breaks the immediate resistance at around 2,865 levels. The investor can hold the counter with a trailing-stop-loss at 2600 for the first target at around 2865 levels.

Glenmark Pharmaceuticals Ltd (Hold)

Rs. 245.40 3.30 (1.36%)

STOP LOSS: Rs.229.00 TARGET: Rs. 272.00
Mileen Vasudeo - Technical Analyst at Angel Broking

The counter looks bullish technically. The investor can hold the counter for the target at around 272 levels with a stop-loss at 229 levels.

National Aluminium Company Ltd (Hold)

Rs. 403.25 0.60 (0.15%)

TARGET: Rs. 500.00
Vikram Bhatt - Consultant at Positive Finnovationz

Fundamentally, the stock looks positive. It has acquired new lease for its mines. The investor can hold the counter for medium-term target of 370 and long-term target of 500.

National Aluminium Company Ltd (Buy)

Rs. 403.25 0.60 (0.15%)

STOP LOSS: Rs.380.00 TARGET: Rs. 480.00
Mileen Vasudeo - Technical Analyst at Angel Broking

The stock can surge up to 480 levels after breaking the 414 resistance levels. The investor can hold the counter with a stop-loss at 380.

Indian Stock Screener Tools

There are several ways to learn about new companies and sectors to invest your hard money in. I am being a dumb investor (yes, still I am even after a couple of years in the market!!) dependent so far on business news websites like, Usually, I come across an interesting story, like millions of other readers, and then start to dig a little into sector and/or companies mentioned.

But, I learnt that this top-down approach is not the most effective way since the news papers, sites, analysts and brokerage firms can and will cover only a small percentage of the companies listed on NSE/BSE and you miss out on the bigger percentage where some of the best opportunities lie hidden. And you basically just follow the crowd since everyone have the same information as you!

So, the obvious (which was not so obvious till a week ago) question was "is there a better way?."

And the answer is yes, that’s what I got while reading a book yesterday and it’s called stock screening. Stock screening, simply put, is the process of filtering/identifying companies, from thousands across sectors and industries, based on parameters that meets an individual's risk, expected returns, and even taste. One example could be searching for companies with a dividend yield of 4% or more. Of course, this will only help you cut down the number of companies to look at from 1000s to, possibly, few 10s but then one needs to analyze each company further to better understand its business, past and future(expected) performance before making a decision of whether to invest in it or not.

Since we are lucky to be living in an internet age this screening process is not as daunting as it could sound like. There are several tools, limited for Indian stocks but numerous for US listed ones, that help with this and some of the good ones are really free! The following is the list of some sites and tools that provide free tools to screen NSE and BSE listed stocks.

IDBI Paisabuilder

I had used this site in the past and I really like it. It provides a decent number of parameters, more than equity master which comes next in the list, to filter stocks on and the research section of the site also includes various other useful tools that can be really useful. The following screenshots shows the search form and the results for a search on stocks in NSE 500 that have a dividend yield of more than 3%

Search form:

Search results:


This has a decent stock screener; the following screenshot shows the results I got for companies having a dividend yield between 3% and 4%.

There are few bugs with this tool though, the year criterion in the search form is only till 2007 but the search still does give results for 2009 and 2008 so I am not sure (have not compared against other tools) if the results are accurate and reflect latest information.It also has other useful tools like sector info,recent quarterly performance of some of the companies (I liked this one, see screenshot below)

ICICI Direct Research

ICICI Direct also provides a screener but the search form is limiting in the parameters e.g. I could only search large cap stocks, and not all, with dividend yield greater than 3%


BSE website also find a stock screener but again the form is limited to four criteria (see screenshot below)

Buzzing Stocks

This one is different in the sense that it lets you screen stocks based on technical parameters. The search form takes criterion in plain english and it also comes with a pre-defined list that users can use. I plan to use if I buy anything for trading purpose. The following screen shot shows list of stocks that have had serious buying interest and which could go up higher.

There could be other tools and I plan to update this post as and when I come across them.


Other posts that could be of interest:

Warren buffets low diversification good for average investors?

Think before investing in india's ETFs

Stock picks top 20 indian stocks to own

Financial bubbles of next decade

Little book that beats the market

Sunday, March 7, 2010

India Brokerage Recommendations : Stock advices for first week of march

This post covers some of the recommendations and advices of the Indian brokerage and research firms that came out in the first week of March. This is a follow up to my first post where I started tracking the recommendations from Indian brokerage and research firms.

In the last week - Aurobindo Pharma had two BUY calls, a number of IT companies also had a BUY and there was one REDUCE for Ranbaxy. The following is the list

Date Brokerage/Research Firm Name Stock Recommendation Target Price on the date of recommendation
5-Mar-10 Prabhudas Lilladher Infosys BUY 3,250
5-Mar-10 Firstcall Research NIIT HOLD 76 66.5
5-Mar-10 Firstcall Research Bilpower HOLD 205 177.65
5-Mar-10 Reliance Securities Dishman Pharma HOLD 238 208
4-Mar-10 Firstcall Research SREI Infra BUY 90 73.45
4-Mar-10 Firstcall Research Mundra Port BUY 790 709
5-Mar-10 Karvy Inox Leisure MARKET PERFORMER 79
3-Mar-10 Sunidhi Securities KPIT Cummins BUY 140 112
4-Mar-10 Angel Securities Balrampur Chini NEUTRAL
3-Mar-10 Firstcall Research Jyoti Structures BUY 200 161
3-Mar-10 Firstcall Research Tata Power HOLD 1499
3-Mar-10 Emkay South Indian Bank BUY 180
3-Mar-10 SKP Research Aurobindo Pharma BUY 1800
3-Mar-10 Angel Securities Ranbaxy Labs REDUCE 445
3-Mar-10 Anand Rathi Pratibha Industries BUY 501 350
3-Mar-10 Hem Securities Videocon Ind BUY 280
2-Mar-10 Motilal Oswal Financial Tech BUY 1822
3-Mar-10 Karvy Aurobindo Pharma BUY 1283 970
26-Feb-10 Angel Securities Tata Motor BUY 942