Intraday Calls 30 Apr. 2010

• YESTERDAY RECOMMENDATION: BUY HDIL MAY FUT 270.25 STOPLOSS 265.25 TARGET 274.95/280.65(1ST TARGET ACHIEVED)
• SELL UNITECH FUT 84.45 STOPLOSS 85.25 TARGET 83.95/82.90(1ST TARGET ACHIEVED)
• SELL TITAN FUT 2142 STOPLOSS 2160 TARGET 2113.30/2106.65
• OPTION STRATERGY : SELL 1 LOT RELIANCE 1120 CA AT RS 8 AND SELL 1 LOT RELIANCE 960 PA AT RS 8.50 "HOLD ON EXPIRY"
• SELL MCDOWELL FUT 1246 STOPLOSS 1258 TARGET 1236/1228(SL TRIG)
• BTST : BUY SAIL FUT 218 STOPLOSS 214 TARGET 221/225

Intraday Call 29 Apr. 2010

• STRATGEY CALL: SELL NIFTY 1 LOT 5400 CE AT 43.80 AND SELL NIFTY 1 LOT 5000 PE AT 44"HOLD ON EXPIRY"
• SELL JSWSTEEL FUT 1209 STOPLOSS 1217 TARGET 1202.15/1194(SL TRIG)
• BUY HEROHONDA MAY FUT 1843 NO STOPLOSS TARGET 1860/1890(1ST TARGET ACHIEVED)
• BUY HDIL MAY FUT 270.25 STOPLOSS 265.25 TARGET 274.95/280.65

Intraday Calls 28 Apr. 2010

• BUY JSWSTEEL FUT 1180 STOPLOSS 1176.15 TARGET 1191.05( BOOK PROFIT AT 1185 AND MADE NEW HIGH 1189.95)
• BUY BHEL FUT 2466 STOPLOSS 2457 TARGET 2486.80/2497.90

THIS RECOMMENDATION GAVE ON 26 APR.2010

• SELL AXISBANK FUT 1270 STOPLOSS 1285 TARGET 1251/1224(1ST TARGET ACHIEVED)

Maruti’s royalty to Suzuki rises 47% as it introduces new models

Maruti paid Rs1,000.93 cr in royalties to the Japanese firm in 2009-10, against Rs679 cr a year earlier. Mumbai: The royalty payments of Maruti Suzuki India Ltd to its Japanese parent have surged as India’s biggest car maker has stepped up the introduction of new models such as the Ritz and Eeco as it fights off competition to hold on to its top ranking. In the fiscal ended 31 March, royalty payments to Suzuki Motor Corp. rose 47% to Rs1,000.93 crore from Rs679 crore a year earlier. Maruti has been introducing at least one new model every year since 2003. Royalties are typically calculated as a percentage of net sales and derived from the use of an asset or a fixed price per unit sold of an item. Royalty as a percentage of net sales rose marginally to 3.5% from 3.3% a year ago. The upper limit on royalty as a percentage of net sales has been capped at 5% by the Reserve Bank of India. It’s factored in after reducing the value of the imported content. According to Ajay Seth, chief financial officer at Maruti, the company paid royalty on 86% of its total unit sales, 5% more than a year ago. In fiscal 2009-10, the company sold 1.18 million units in the domestic and export markets. While the number may rise in the next few years, analysts aren’t too perturbed by the increased payout. “In order to ensure that market share does not taper off, new model launches are a necessity and not a choice,” said Joseph George, analyst at BNP Paribas Securities India Pvt. Ltd. Royalty payments are a proxy for research and development expenses, he said. While Maruti launched eight new models in a span of 20 years from 1983 to 2003, it has introduced a similar number since that time, George said. Maruti needs to introduce new models as rivals try to capture market share with releases such as Ford India Pvt. Ltd’s Figo, Volkswagen India Pvt. Ltd’s Polo and General Motors India Ltd’s Beat. Meanwhile, the spiralling royalty costs may be reined in once Maruti’s in-house research and development centre at Rohtak in Haryana is set up. The company wants to produce a car designed and developed indigenously from this facility by 2012. “The India designed and developed car will help the company reduce their royalty bill gradually,” said Mahantesh Sabarad, analyst at Fortune Equity Brokers Pvt. Ltd. Royalty payments in the years ahead will be a function of a host of factors, said Maruti’s Seth. “It will depend on the kind of work we do there, and the use of technology,” he said. While there may be a reduction in the outgo, it’s premature to put a number to that, he said. Typically, new models attract a higher technical fee. As the model matures in its life cycle and the investment on fixed costs is amortized, royalty on the model diminishes, eventually exempting it from the fee. Seth said the Omni, 800 and Gypsy models do not attract any royalty. Maruti currently sells the 800 only in tier II and tier III cities, and will eventually discontinue its entry-level model. The phasing out of the 800, sales of which have been averaging 1,500-2,000 a month, will not have much impact on the royalty outgo. If the company phases out the Omni, which has been averaging 8,000 units a month or 10% of total sales, overall royalty outgo may rise as buyers switch to a new model. Maruti’s shares dropped 3.88% to close at Rs1,283.15 each on the Bombay Stock Exchange. A report released on Tuesday by Prabhudas Lilladher Pvt. Ltd showed that Ebidta (earnings before interest, taxes, depreciation and amortization) margins per car decreased to Rs34,000 in the fourth quarter of last fiscal compared with Rs39,000 in the previous quarter. “The aggressive pricing of the recently launched Wagon R and price cuts by other manufacturers make us believe that the industry’s profitability is in for a decline,” the report said. Sources : Live mint

Markets turn red as Greece, Portugal are downgraded

NEW YORK (AP) — U.S. stocks are following European markets lower after Portugal’s debt was downgraded, deepening fears that Europe’s debt problems are spreading. Standard & Poor’s slashed Portugal’s credit rating Tuesday, sending stocks sharply lower across Europe. S&P also downgraded Greece’s debt. Investors have been on edge about Greece’s fiscal crisis, and have worried that Portugal could be the next weak European economy to require help. That has undermined confidence in Europe’s shared currency, the euro. The Dow Jones industrial average is down 145.86, or 1.3 percent, at 11,059.17. The Standard & Poor’s 500 index is down 19.79, or 1.6 percent, at 1,192.26, while the Nasdaq composite index is down 35.91, or 1.4 percent, at 2,487.04. Stocks fell early in the day after European shares tumbled on new concerns about Greece’s ability to tap a bailout package to help relieve its debt troubles. Greece has to make a new round of payments on debt on May 19 and there are now questions about whether the country will get access to bailout money before then. The dollar rose against the euro as investors worry that debt problems in Greece and some of the 15 other countries that use the currency will upend an economic rebound on the continent. Most Asian markets fell on concerns that Chinese regulators will try to slow the country’s supercharged economic growth. The government has been trying to slow the country’s real estate market in hopes of avoiding a speculative bubble. source: Yahoo Finance

Core sector grows 7.2% in March

NEW DELHI: Core sector industries expanded by 7.2% in March, indicating strong industrial growth for the month and a pickup in investment activity. The six industries — crude production, petroleum refinery products, coal, electricity, cement and finished steel — have a combined weight of 26.7% in the index of industrial production. The core sectors had grown by 3.3% in March 2009. “I expect it (core sector growth) to reflect in the IIP figures for March,” said Suresh Tendulkar, former chairman of Prime Minister’s Economic Advisory Council. The data comes almost 15 days ahead of the industrial production numbers. The strong performance, however , failed to cheer the stock market . On Tuesday, the Bombay Stock Exchange’s benchmark 30-share index closed 0.31% down at 17,690.62, breaking a five-day winning streak. The core sector registered a 5.5% growth for the 2009-10 fiscal year against 3% last year, an official statement said on Tuesday. The sectors had grown 4.7% in February. The overall industrial growth in that month came in at a strong 15.1%. Industrial production had risen at a 16-year high of 16.8% in December 2009. The strong performance was led by a 9.2% growth by the steel sector, indicating strong demand in the user industries such as cars and white goods. Robust demand has pushed steel prices sharply in the last few months, prompting the government to step in persuade the major producers not to hike prices in view of high inflation. The Reserve Bank of India has hiked policy rates in its April 20 monetary policy review. Interest rates are likely to move up in reaction to the RBI’s action but this happens with a lag. Higher interest rates could depress both demand for goods and also investment activity, which has a bearing on both the core sector and the industrial production. Sources : Economic Times

Intraday Calls 27 Apr. 2010

• SELL RELCAPITAL FUT 741 STOPLOSS 748 TARGET 739.40/733.80(1ST TARGET ACHIEVED)
• BUY MCDOWELL FUT 1228 STOPLOSS 1218.75 TARGET 1239/1249(SL TRIG)
• BUY MARUTI FUT 1286 STOPLOSS 1270 TARGET 1304/1320