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Tanmay Purohit's Instablog

Tanmay Purohit

Tanmay Gopal Purohit is a stock market analyst, studying Indian markets and global commodities at times. He completed a CFA from ICFAI.

My blog:: Tanmay Observes!

MARUTI BLOWS REVERSE GEAR HORN!
MARUTI after nearly quadrupling itself from Dec-08 lows has broken the 8-month old up channel. Now the stock is showing a bearish H&S pattern and below Rs 1450 it may give downside of Rs 200-250 more also.
Caution advised in this stock :-

Exports were an important part of revenues for MARUTI in last 2-3 months and now with Rupee appreciating by more than 13% will impact negatively.
GERMANY and AUSTRIA are not extending the Scrappage Incentive Scheme which was launched in EU this year to boost car sales, major beneficiaries were MARUTI and HYUNDAI and slowly these benefits will disappear as EU countries stop the incentives for car buyers.
MARUTI has more than 50% market share in Indian car industry and it has hit all time high sales almost every month in 2009. This was on the back of stimulus from government, 6th pay commission and festive season recently but now higher base effect will impact sales as it is always difficult to raise the performance every month for an indefinite period.
Crude Oil prices have touched above $81 which may make policy-makers rethink on fuel pricing, any increase in Petrol/Diesel rates will impact the sales of MARUTI negatively.
Metal prices have risen along with other commodities and rising input costs can be one more disturbing factor.
Labour unrest in auto belt of Gurgaon has hampered production of many companies in that area and MARUTI is the one which was affected to some extent.
The stock has gone up from Rs 433 to Rs 1737 in 10-months and 50EMA at 1332 would be a level to watch. Rs 1200 is strong support for the stock as it has been previous top for MARUTI. 50EMA-1477, 100-EMA1332, 200EMA-1132
Disclaimer: No Holdings
Original Post:-http://tanmaygopal.blogspot.com/2009/10/maruti-blows-reverse-gear-horn-maruti.html
Oct 22 12:40 am | Link | Comment!
CAIRN INDIA looks a good buy

CAIRN INDIA CMP Rs 242:-
About CAIRN -
http://www.cairnenergy.com/
http://www.cairnindia.com/

Cairn is an oil and gas exploration and production company based in Edinburgh. Cairn has been listed on the London Stock Exchange since 1988. Its current focus is on India, where it is developing significant production in Rajasthan, and Greenland where it has established a material exploration position.
Cairn holds a 65% interest in Cairn India – which is listed on the Bombay Stock Exchange and the National Stock Exchange of India. Cairn India has interests in 14 blocks in India and Sri Lanka. Cairn India holds a 70 percent stake in RJ-ON-90/1 block in western India and state-run explorer Oil & Natural Gas Corp holds the balance.

On the verge of starting oil production:-
CAIRN is on the verge of starting oil production in the western state of Rajasthan. The company has also received approval from the government to sell crude to MRPL, IOC and HPCL, Bill Gammell, non-executive chairman of Cairn India, said in a speech to shareholders during the company's annual general meeting. "The commercial terms and pricing negotiations for the initial offtake of the Rajasthan crude have been concluded with IOC and MRPL," and the company is in the advanced stage of concluding the crude oil sales agreements, Gammell said. The Mangala Processing Terminal is ready to start production with a capacity of 30,000 barrels a day of oil, which will be increased by a further 100,000 barrels per day in the first half of 2010, he said. Cairn India will transport oil in trucks to the Gujarat coast for shipping to Indian Oil and MRPL until a crude oil pipeline is completed by December 2009, he said. "The Rajasthan project is one of the biggest onshore oil and gas developments undertaken in India in recent years and the production from Rajasthan at the current envisaged rates has the potential to create significant value for all of our stakeholders," he said. Production from Rajasthan could eventually exceed 175,000 barrels a day, he said. However, extreme weather in Gujarat, and monsoon rains and heat in Rajasthan along with other factors could "pose schedule risks" to the company's target of reaching the second phase of oil production and constructing the pipeline, Gammell said. Cairn India is also expected to soon start production from its Barmer field in Rajasthan.

Low Cost of production at around $5 per barrel:-
Cairn expects to hold costs at about $5 per barrel for crude oil produced from its Rajasthan fields, a top official said, helping it reap strong revenues this fiscal year. "We intend to keep our costs low and see production cost at about $3.5 per barrel. Transportation cost will be another $1.5 (per barrel)," Chief Executive Officer Rahul Dhir told reporters at the annual meeting of shareholders. The company, a unit of UK explorer Cairn Energy, has secured deals to sell crude to state-owned refiners Mangalore Refinery and Petrochemicals Ltd and Indian Oil Corp at a 10-15 percent discount to Brent LCOc1.

Investing $4Bn in Rajasthan:-
Cairn India and ONGC will jointly invest $4 billion (Rs 20,000 crore) to scale up the production capacity of their oil fields at Barmer in Rajasthan by 25,000 barrels of oil per day (bopd) to two lakh bopd. They had earlier revised their production target from 1.50 lakh bopd to 1.75 lakh bopd. While addressing the shareholders of Cairn India in Mumbai, chairman Sir Bill Gammell said: “By 2011, Cairn and its joint venture partner will invest up to $4 billion on the development of Mangla, Bhagyam and Aishwarya fileds.” The investment will be shared between Cairn India and ONGC in the ratio of 70:30 in line with their equity holding in the oil fields

Technical Outlook:-
CAIRN (Rs 242) is trading in a narrow range between 252 and 230 but sustaining above all moving averages. CAIRN is in an uptrend and can target Rs 274-278 in current move. Short-term players can keep a stop loss below Rs 230. Long term investors can accumulate this stock at current levels and in dips for a target of Rs 340 in next 1-2 years.

Image:- http://3.bp.blogspot.com/_5UENW3Ibx6Y/So3w4dgS-tI/AAAAAAAAAOw/DxzhyBVWgMA/s1600-h/CAIRN200809.JPEG

Analysts Rajasthan Site Visit_Feb09 http://www.scribd.com/doc/18954232/Analysts-Rajasthan-Site-VisitFeb09
Analyst Meet - 3rd Feb09 http://www.scribd.com/doc/18954295/Analyst-Meet-3rd-Feb09

Cairn India:On Verge Of Starting Rajasthan Crude Ops http://online.wsj.com/article/BT-CO-20090818-702166.html
Cairn India sees Rajasthan crude costs at $5/bbl http://www.reuters.com/article/rbssEnergyNews/idUSBOM43417820090818
Cairn, ONGC to invest $4 b in Rajasthan http://economictimes.indiatimes.com/News/News-By-Industry/Energy/Cairn-ONGC-to-invest-4-b-in-Rajasthan/articleshow/4908449.cms

Disclosure:- Hold CAIRN in personal portfolio

Aug 22 01:05 pm | Link | Comment!
Clustering Of Important Events Indicates Caution Ahead
Clustering Of Important Events Indicates Caution Ahead
A Bit Of History To Start With:-
Sensex hit its fearsome lows at 7697 and many could not foresee the bull run ahead as markets abounded in predictions about 5000-Sensex which never happened. Since that time only we have been bullish about India and trying to make people aware of the importance of that opportunity through various majors. An upper circuit was predicted right to start with (http://tanmaygopal.blogspot.com/2008/10/now-probability-of-upper-circuit-is-big.html) which happened after 7 months after elections, then we reflected on how SEBI and other regulators were trying to improve the sentiment (http://tanmaygopal.blogspot.com/2008/11/i-have-not-committed-crime.html), the risk-reward was perfect at 9000 sensex also (http://tanmaygopal.blogspot.com/2008/11/why-to-fear-even-if-sensex-does-6000.html), then came Satyam Episode but India still remained investment favourite
(http://tanmaygopal.blogspot.com/2009/01/markets-are-one-crazy-animal-and-we.html), how LIC became bullish but nobody knew that (http://tanmaygopal.blogspot.com/2009/03/as-indices-have-been-falling-recently.html), right at March lows we tried to buy as it was opportunity provided by nature (http://tanmaygopal.blogspot.com/2009/03/sensex-at-40-month-low-opportunity.html), and finally we saw why INDIA was the place to be for buying (http://tanmaygopal.blogspot.com/2009/03/outlook-for-indian-equity-market-by-k.html).

Now Into The Present:-
Sensex hit 8047 which is current rally bottom on 6Mar2009 and rallied nearly 93% to reach 15600 on 12Jun2009. The P/E of Nifty has expanded from below 12 in October'08 to above 20 now and a lot of pessimism has ran away as euphoric phase took over after UPA won the elections. Almost all the sectors have contributed to this rally and many stocks have more than quadrupled also. Some caution is advised at this point as valuations look stretched, markets can run up even with stretched valuations but now the risk-reward is not favourable after indices have nearly doubled themselves. Long term investors need not worry (2-3 years and above) but short-term traders/investors may feel pain if they don't take informed decision at this point of time.
Sensex/Nifty will complete 89 days of rally on Tuesday, 21Jul2009, 21 weeks of up trend will be complete this week - Both are important fibonacci numbers in technical parlance.
Sensex has created 9 up gaps while its journey in the last 5 months of rally, also on weekly graph we are having 3 up gaps open. It is not necessary that we close these gaps always, but closing these gaps can give us a comfortable entry point which is needed for future safety of returns. If Sensex tries to feel even 2 gaps from the 9 open, we may see 13460 levels. If 2 of the 3 weekly gaps are to be closed, we may see even 12250.
61.8% retracement of Sensex fall from 21206 to 7697 will complete at 16045 which can be a place where good supply can be seen.
RELIANCE results will be out on 24Jul2009 and 80% of the results will be announced over next 8-10 days which can guide further direction to the market. Any disappointment in any of the major results can be a cause of worry as high expectations are built in.
Biggest Solar Eclipse of the century and it is one of 3 eclipses in a single month. Now I am not an astrologer to talk about this, but this is one event which needs a close watch as effects can be a bit late also.
All these events cluster together and such rare events encompassing a single week can give way to major turns, it may not be visible immediately and it is difficult to comprehend effects at this point of time but it is better to stay away or stay light as we have taken good profits since markets bottomed out in Oct'08. Technically, Sensex sustaining above 15000 levels can take it to above 16000 and more also very quickly, but it is the risk-reward which is not favourable at this juncture. PCR (Put-Call Ratio) is rising rapidly since last week as there is heavy built-up of shorts and government announcements after budgets regarding various reforms have infused fresh money into stocks. Shorting is not advisable, this is only a caution to investors. The bearish Head & Shoulders formation in Nifty has also failed so more short covering is not ruled out. There is a good chance that we may be wrong as the fall may not materialize soon and we may just become onlookers for higher levels, but if we are right, the correction from current levels can be big which can be 25% or even worse also on index.

Deja Vu 21000 - Similar caution was advised around 20000-Sensex levels in Dec'07 but we did see a rally of 1000 more points from there also. We can never sell at exact top, it is not necessary to wait until last point of rally as when one really wants to sell the market may not oblige. So take profits now, reduce positions and better to watch the events by avoiding over-aggression. In technical analysis, we always talk about probabilities and never certainties but if there is a high probability of turning around, one should have it in mind before investing. If we go up from here and rally doesn't stop, we can again catch it as we will be having cash in hand to do that, we can always take a fresh view later.

Gaps So Far:-
About the Eclipse:-
The world will witness the longest total solar eclipse of the 21st Century on Wednesday, 22Jul2009 as it will lay a carpet of darkness across India and China, from Mumbai to Shanghai. At its maximum, this will last 6 minutes and 39 seconds. Earlier, similar solar eclipse occurred on July 11, 1991 which lasted 6 minutes and 51 seconds. This solar eclipse is the longest total solar eclipse that will occur in the twenty-first century, and will not be surpassed in duration until June 13, 2132. This is second in the series of three eclipses in a month. There was a lunar eclipse on July 7 and now a solar eclipse on July 22 and then a lunar eclipse on August 6.
More details http://en.wikipedia.org/wiki/Solar_eclipse_of_July_22,_2009
July Eclipse being seen as once-in-a-lifetime opportunity http://www.dailytelegraph.com.au/news/monster-eclipse-comes-once-in-a-lifetime/story-e6freuyi-1225752210989

Jul 21 07:45 am | Link | Comment!

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MARUTI BLOWS REVERSE GEAR HORN!

CAIRN INDIA looks a good buy

Clustering Of Important Events Indicates Caution Ahead

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