Monthly Archives: July 2014


The Oil and Gas sector is very important part among all the sectors. The Oil and Gas sector has to be developed in order to meet the demands. Government to focus on improving direct transfer of subsidy to poor sections thereby reduce the overall subsidy burden and there will be a ray of light of development in the poor sections and this will boost the whole sector as well.  The government will also increase the share of natural gas in the domestic energy consumption and therefore it will develop the current gas pipeline capacity of 15000kms. In FY 15, subsidy allocation is of Rs. 634 bn with last year’s carry forward of Rs. 350 bn.
The Government will take measures to promote the coal bed methane (CBM) and use of modern technology in order to revive and develop the old closed files which will help the sector to boom as the government is taking measures to open up the blocks. The Government will also promote the usage of Piped Natural Gas and rapidly scale it up on a mission basis.
Currently, the Oil and Gas sector is trading at a PE of 13x compared to CNX NIFTY which is trading at around PE of 21x. So, currently the Oil and Gas sector is undervalued compared to Nifty. Hence we are positive on this sector. We are bullish on Reliance Industries on the back of likely increasing the gas prices by the government and ONGC on the back of de-regulated diesel prices by the government.


Cement sector is one of the core industries which plays a pivotal role in the growth and development of a nation. One of the world’s largest and fastest growing cement industries, the Indian cement industry has been expanding significantly on back of rising infrastructure activities, increasing demand from housing sector, and construction recovery. There is a scenario which will likely lead to increasing demand of cement. The government is positive on infrastructure through development of Smart cities and industrial corridor development including new ports which will give boost to the cement industry. The focus of the government is on rural housing and irrigation schemes, general housing (housing for all by 2022 and additional tax exemption on Housing Interest payment raised from Rs.1,50,000- 2,00,000).
Recently, the Indian cement industry has witnessed significant consolidation. Any steps taken by the government to push infrastructure spending and give impetus to real estate projects will have a positive impact on demand of cement. Therefore meaningful recovery in cement demand is expected to take place from 2015-16 onwards. Our fair value estimate is based on the assumption of an eventual return to more normal conditions as the business cycle improves, and as the Indian government steps up infrastructure spending.

#214 Nifty Update: Some rains on the charts

Deficit monsoon has been a matter of worry for investor but some relief has been seen in the last week in some parts of India. On nifty too we saw some rain of relief for the bulls in the last few sessions. On the 14th July i did post our strategy which was going long above 7625  and we have seen a weekly close above that same level giving a confirmation for the power in hands of bulls. Nifty has closed above all the short term moving averages on Daily charts. On the weekly charts we had got a weak closing last week with Nifty closing below 5 Weekly SMA but that proved to be false as Nifty has closed back above that average. Indicators on Daily are signaling buy on the index but weekly indicators are still flat. As you could notice in the adjoining daily chart of Index, Nifty has turned around from the strong support line which had been a resistance line in the move before. It turned around with a “morning star” candlestick pattern. Fundamentally, its quarterly result season and its the first result for this financial year and for the Modi led government. Infosys has given flat results as per expectations but other 2 big giants Reliance and TCS has beaten street estimates. As per reports reliance has seen highest ever FII investment in the stock of almost 20%. This is the good sign of bulls to be in power for longer term. On the economy front, we have seen some highest IIP numbers of 4.7% which is a positive sign for the turnaround. Technically the Nifty is still in a long term bull trend

Our strategy: We recommend to HOLD long initiated at 7625 as per our last post. Tgts on upside are 7850/8031 sl:7456


Having survived the stormy market conditions over the last few years, the Indian chemical industry is now poised for next big wave of growth. The industry is at the verge of rapid growth, with the Government of India (GoI) providing an atmosphere of care and support. Indian Chemical industry is worth of $ 108.4 billion is the 6th largest in the world and the 3rdlargest in Asia, after China and Japan. The chemical sector accounts for about 14% in overall index of industrial production (IIP) and adds around 11% in national exports. The industry is on a high growth trajectory. In the base case scenario, with current initiatives of industry & government, the Indian chemical industry could grow at 11% p.a. to reach size of $224 billion by 2017.

Indian chemical industry substantially contributes to the economy; however the slow economic growth in 2013 has impacted the demand for chemicals. Nevertheless, the industry which is witnessing considerably slow is betting big on specialty chemicals that are expected to show considerable growth. Specialty chemicals include adhesives, additives, antioxidants, and biocides, corrosion inhibitors, cutting fluids, dyes, lubricants and pigments. Specialty and knowledge chemicals which form about 35-40% of the total chemicals industry, has been witnessing a double digit growth over the years due to increasing penetration and growth from a lower base. The specialty chemicals sector is characterized by requirements for high-value products, high-volume requirements with expanding customer base, a product-driven market, and addition of new participants at various levels of the value chain.

Moreover, Indian specialty chemical manufacturers have a strong presence in the export market, too. Active pharmaceutical ingredients and colorants, including dyes and pigments, are some of the key products exported. India exports specialty chemicals to Asia-Pacific countries and also to Europe and US. With a potential to grow to $70-$100 billion by 2020 from the present $23 billion, the specialty chemicals market has plotted a strong growth at 14 per cent per annum over the last five years and is expected to be the key driver for India’s chemical sector’s growth story. 

#213 Nifty Update: Dark Cloud cover at the wrong place

Its already a late July and still no sign of heavy rains anywhere in India. Dark cloud cover has arrived but on Nifty and not on the cities. Nifty has dragged almost 400 points from the high last week. Railway Budget and General Budget were the two big events last week. Both were delivered in the faith of long term growth but still common man takes it hard to digest a expensive growth. IIP which was announced after the market hours on Friday which came at almost 18 months high at 4.7%. All the major events now have been declared and now markets will work on sentiments and Quarterly results. Technically market is gonna be crucial for this 15 days now. Daily chart has already weakened and we expect a 50-80 points pull back while weekly chart has also gone in the court of bears. But Monthly charts been still positive we have some hopes. 7300 is strong support on the monthly chart but if thats broken you could see some deep correction of 10%. Nifty could take support at 50 Day SMA at 7386. On our last Post we mentioned to Hold long and our 1st tgt 7688 had been achieved after which trailing SL of 7538 had hit down.

Our strategy: Wait and Watch. Short below 7300 and Go long above 7625


With the announcement of the BUDGET on 10th July, 2014 Mr. Arun Jaitley has taken a great step keeping in mind the various sectorial problems and has made arrangements accordingly in order to give them a boost.
This is a boost to the textile sector, the Budget has announced “duty-free” entitlement for import of trimmings (all types of decorative laces), embellishments (different types of work used in dresses and sarees) and other specified items to 5% of the value of exports from the current 3%, which will help to increase the exports and is a good boost to industry.
The government has fixed $ 50 billion textile export target for the current year. Nearly 40% of this is readymade garments. The move will also help Indian manufacturers to compete with other countries in getting more orders from global souring entities, such as Wal-Mart. This move will help to bring down the cost of readymade garments meant for export by 2-3%. The government also removed basic custom duty on specified inputs for manufacture of spandex yarn, from 5%.
Export opportunities could also be opened with the announcement of 6 mega textile clusters at Bareilly, Lucknow, Surat, Kutch, Bhagalpur, Mysore and one in Tamilnadu, the budget provides       Rs. 600 Cr for this. The minister has allocated Rs. 50 Cr for a trade facilitation centre and crafts museum to promote handlooms and to set up a Hastkala Academy for preservation, revival and documentation of the handloom and handicraft sector, in a public-private partnership with the allocation of Rs. 30 Cr.

Hence, the measures have been taken to develop the textile sector, and hence the textile companies will see a boost in the coming years. So, we are positive on Himatsingka Seide Ltd.   

Infra Sector Get Boost

Ahead of the budget there was a very high expectation from the government to boost Infrastructure Sector, even in the speeches of PM Narendra Modi we were hearing about boosting Infrastructure Sector. The Issues that this sector is facing Pre-budget was Project order inflows due to slow down in industrial activity, Delays in project execution due to delays in land acquisition and environmental clearances, High interest costs and overcapacity.
The measures taken by government in the budget are Well-Defined. The actions taken by government are as follows:-
    •         Allocated Rs 37,800 Cr to NHAI for roads and Rs 14000 Cr for rural roads, plan to award 8500 KM road projects this year.
    •          Government allocated Rs 7060 Cr for 100 Smart Cities.
    •          16 new projects to be awarded this Year.
    •          SEZ to be revived.
    •          Airports I tier I and tier II cities to be developed via PPP Model
    •          Setting up Infrastructure Investment Trust for attracting long-term funds
    •          Reduction in customs and excise taxes to boost
    •          Single-window customs clearances at Indian ports.

We believe that these steps will help to boost Infrastructure spending as new orders will flow in. New and better roads will boost logistics industry. There will be spurt in demand for capital goods and heavy engineering.  So we are positive on Cement sector as starts of industrial and real estate projects. We are also positive on Infrastructure stock as well as Capital Goods Stocks.


The government is showing its concern towards reducing fossil fuel reserves. The government is taking up initiatives to invest in solar and wind power projects in order to give a boost to the power sector and resolve electricity problems, in fact the government has started working on unexplored potential lying in the desert regions- Thar in Rajasthan, Rann of Kutch in Gujarat, Lahul & Spiti in Himachal Pradesh and Ladakh in Jammu & Kashmir. The plan could include an investment of Rs. 2 Lakh Cr by 2022.

The use of solar power is a “GO GREEN” approach taken up by the government to reach the increasing demand for power. The government’s goal is to produce 10 gigawatts of solar power by 2017; already the country has 2.8 gigawatts of the technology installed, enough for 6 million homes in the nation of 1.2 billion people. Hence the government is going great on investments in the power sector and I can see growth in this sector. So, we are bullish on companies which are in solar and wind energy in power sector.