Intraday Stock Trading

Intraday Picks

- STER (LTP: 113.6) - SELL
For today's Intraday Tips, short position can be initiated only below Rs.112 for a target of Rs.108.51-107, with a strict stop loss of Rs.114. Traders are advised to avoid early morning whipsaw. More information about intraday tips please visit the site intraday-stock-trading.blogspot.com

Positional Pick

- BHUSHAN STEEL (LTP: 396.3) - BUY
For today's trade, long position can be initiated only in Rs.385-380 range for a target of Rs.405-420, with a closing based stop loss of Rs.375.

- BANK OF INDIA (LTP: 355.4) - SELL
For today's trade, short position can be initiated only in Rs.359-362 range for a target of Rs.353-352, with a strict stop loss of Rs.365.50. Traders are advised to avoid early morning whipsaw.

- POWERGRID (LTP: 106.24) - BUY
For today's trade, long position can be initiated only in Rs.104.5-103.2 range for a target of Rs.108-110, with a strict stop loss of Rs.102. Traders are advised to avoid early morning whipsaw.

- PRAJIND (LTP: 78.5) - BUY
For today's trade, long position can be initiated only in Rs.77-74 range for a target of Rs.80, with a strict stop loss of Rs.74.5. Traders are advised to avoid early morning whipsaw.

AUROPHARMA (LTP: 114.1) - BUY
For today's trade, long position can be initiated only in Rs.112 - 110 range for a target of Rs.125, with a closing based stop loss of Rs.108.

Intraday Picks

- TATA MOTORS (LTP: 283.6) - SELL
For today's trade, short position can be initiated only in Rs.288-290 range for a target of Rs.283-282, with a strict stop loss of Rs.294. Traders are advised to avoid early morning whipsaw.

- HINDALCO (LTP: 141.1) - SELL
For today's trade, short position can be initiated only in Rs.143.50-146 range for a target of Rs.140-137, with a strict stop loss of Rs.146.51. Traders are advised to avoid early morning whipsaw.

- BANK OF INDIA (LTP: 355.1) - BUY
For today's trade, long position can be initiated only in Rs.34 -344 range for a target of Rs.355, with a strict stop loss of Rs.338. Traders are advised to avoid early morning whipsaw.

- DRREDDY (LTP: 1676) - BUY
For today's trade, long position can be initiated only in Rs.1650-1641 range for a target of Rs.1700, with a strict stop loss of Rs.1626. Traders are advised to avoid early morning whipsaw.

More information about Free Share Tips please visit the site intraday-stock-trading.blogspot.com

The Nifty opened and breached our stop loss at 5435 in the first fifteen minutes of trading, thus locking in a good profit for us. The RBI did not make any changes to the CRR nor did it cut rates hence today being a potential event day became a non event day. There were so many built in longs in the system especially on the Bank Nifty yesterday expecting an event day, which is why the Bank Nifty(Nifty Trading Tips) corrected sharply today.

Most analysts would say to stay out of the market on big event days like tomorrow, could be a wise move. However after seeing the way the market has been gaping up this last week and the down move today, also considering the market has moved up sharply since the 3rd of January 2012, there is potential down side or a correction as we technical analysts might call it.

Hence I have gone short on the market with a stop loss at 5465, to be clear I have gone short with 25% of the quantity I usually trade. This is a high risk trade!

"Stock Trading Tips"

The Bank Nifty (index covering banking Stock Trading) is at its lowest in last 18 months. Bank Nifty Index was quoting at 11,484.7 in the beginning of FY12. It has fallen 23% to 8,839.8 while the broader market has fallen just 15%.

The reasons besides the weak macro-economic have been low capital adequacy, high interest rates and fear of increasing NPAs. Banking shares were also under pressure after global credit rating agency Moody’s Investor Service cut the standalone rating of India’s largest public sector bank, SBI in October 2011 due to concerns over capital and rapid deterioration in asset quality. The agency cut its rating on SBI’s financial strength to D+ from C- and lowered its hybrid debt rating on the bank to Ba3 from Ba2, following the reduction in financial strength rating.

The repo rate, the rate at which banks borrow from the RBI for short duration, was increased by 375 bps between March 2010 and September 2011 to control inflation. In this rising interest rate scenario, the net interest margin (NIM) of nationalised banks, which account for 75% of the assets of the banking system, increased from 2.64 % in March 2010 to 3.3 % in March 2011. However, in the period between March and June 2011 when interest rates have continued to rise, the NIMs of nationalised banks shrunk to 2.9%.

Outook: Outlook in the near term may improve if better than expected performance is reported in Q3FY12 results. Net Interest Margins and deterioration of asset quality are the two key areas that one should watch out for in Q3FY12. NIMs may improve sequentially as the base rate hikes of July take full impact and lower slippages should take away less from interest income as system-based NPL recognition no longer remains an overhang. On a sequential basis, provisions could be lower propping up net profit growth.

Private banks may also fare well or better than their PSU peers since the provisioning pressure isn’t likely to be as much. However, we see the scope of increasing loan restructurings across sectors including SEBs, Airlines, Metals, Telecom, Infrastructure, Power, Construction and SMEs which is likely to act as a continuous sentiment dampener until clarity emerges on a turning economic cycle.

Hence, if Bank Stock Trading rise in anticipation or in response to the Q3FY12 results, it may be a good idea to look at the numbers closely and prepare to reduce holdings if enough clarity is not available on NPA situation easing in the next few quarters.

"Stock Intraday Tips"

Base business orders to grow, large orders taking time: Thermax reiterated its ability to win base business orders of at least Rs5-6bn per quarter and hence, does not expect the order flow to be below the Q3FY12 levels (Rs5.9bn). The peak base business order flow was Rs10.5bn in FY08. The current capacities can take base business orders up to Rs14bn per quarter.

However, with very few enquiries for large and captive power plants, the order flow is likely to be muted for the next two quarters due to the given current issues like coal availability and higher cost of funds. The company expects the recovery to happen by H2FY13. Sectors like Cement, Steel and Oil & Gas (refineries) are likely to lead the recovery apart from sectors like Food processing, Hotels and Hospitals which are already investing. Power sector is likely to take time to recover.

Super critical JV update: The JV for super critical boilers with Babcock & Wilcox is on track and is likely to be commissioned by September 2012. However, with no enquiries in the pipeline, it is unlikely that the JV will have an order at the time of commissioning. The burn out for JV assuming no revenues in FY13 or FY14 (due to lack of orders) could be ~Rs1bn (Thermax share 51%). Some of the losses could possibly be offset if the JV were to get some international orders from its partner Babcock and Wilcox. The management did not sound too worried as the company’s share of losses in the JV is not large compared to the net worth.

Management believed that apart from issues like coal and land, the biggest hurdle for Power market will be for promoters garner equity. It also believes that though current preference is for Super critical plants, but given the constraint of coal and equity, smaller size plants of 150MW and 300MW might be back in favour. On issues of lack of coal linkage to captive plants, company commented that the economics will work for captive plants even if they have to import coal and run the plant as price of electricity is likely to go up further with capacity addition lagging target.

Stock Valuation and Recommendation: The Stock Intraday at 17.8x FY13E earnings. Prabhudas Lilladher believes that though the next few quarters will be weak in terms of earnings and order flow, Thermax’s ability to bag base orders of ~Rs5-6bn per quarter gives us a confidence that it will be able to tide the slowdown and participate in the upturn of the cycle meaningfully and surprise positively in terms of order flow. Expectation of rate cut aiding recovery of capex cycle will also help support multiples. Prabhudas Lilladher maintains their ‘Accumulate’ rating on the Stock Intraday tips.