Category: Your Money

Sunder’s List

Roundup: S&P -0.33%. Dow -0.44%. Nasdaq -0.30%. Gold $1,596.10. London -0.22%. Germany -0.51%. France -1.12%.

Emerging market stocks have turned in their worst Q1 performance since 2008. Money managers are cutting exposure first, asking questions later, with a BAML survey showing them selling emerging markets to boost S&P 500 holdings. Bulls say emerging markets will lead the next stage of the global rally as record low interest rates send investors into riskier securities. Pessimists say the trend will continue as investors favor more transparent markets. (SABloomberg)

China’s crude-steel production has reached a “plateau,” with output increasing by just 4% this year compared to 13.5% in 2009. (WSJ)

India’s IT outsourcers are promoting “mini CEOs” capable of running businesses on their own, while trimming down on the hordes of entry-level computer coders they normally hire as they try to squeeze more profits out of their staff. (Reuters)

Paul Krugman argues for nationalizing Google Reader. You can’t make this stuff up… (FT, NYT)

Good luck and happy holi!

Analysis: TATASTEEL

We last took a look at TATASTEEL [stockquote]TATASTEEL[/stockquote] in October last year. We were waiting for a decisive breakout above the (down) trend-line before getting bullish on the stock. It made a 52 week low of Rs. 320 last Friday.

Technical chart of TATASTEEL

As you can see from the chart, the stock has tested the Rs. 320 levels twice before since 2009 and has bounced back each time. From a valuation point of view, it is trading at a PE of ~8 which is on par with its global peers like US Steel and Arcelor Mittal. Plus, the Tatas have been giving a Rs. 12 per share dividend since 2011. However, the global outlook for the metal is bearish, with European steel demand being down by 30%, and the industry remains highly fragmented.

So the question is will TATASTEEL be a good  buy at today’s levels? The RSI indicator is at neutral and MACD is bearish. So from a technical point of view, it is a short-term sell. From a long-term perspective, it is trading at valuations that might be a good entry point for investors who can stomach volatility. If the stock closes above Rs. 320 levels today, it is a long-term buy from our point of view.

Sunder’s List

Roundup: S&P +0.72%. Dow +0.63%. Nasdaq +0.70%. Gold $1,606.20. London +0.07%. Germany -0.27%. France -0.12%. Nikkei currently +1.42%

Do we have a deal to save the world (again)? Cyprus will close its second largest bank and screw the Russians for $13 billion bailout. (Reuters)

If Cyprus can do it, will Britain have to? There are only three ways out: inflation, taxation or confiscation. (FT) And its not just Britain: in the developed world total debt (including that of the financial sector, consumers and companies, as well as governments) is so high that it is implausible that it can be repaid via the fruits of economic growth. The debt must either be written off (defaulted on) or slowly inflated away. (Economist)

“In money management what sells is the illusion of certainty.” Is your financial advisor be comfortable saying, “I don’t know,” even if that is the real answer? (RP)

Weekly Recap

NIFTY.2013-03-18.2013-03-22

The NIFTY ended on a bearish note, melting down -3.26% for the week.
Biggest losers were RELINFRA (-18.36%), DLF (-15.25%) and JPASSOCIAT (-14.43%).
And the biggest winners were LUPIN (+2.91%), ITC (+1.23%) and HINDUNILVR (+0.11%).fii.2013-03-18.2013-03-22
Decliners eclipsed advancers 47 vs 3

Gold: +1.04%, Banks: -5.67%. Infrastructure: -0.96%,
Net FII flows for the week: $315.10 mm (Equity) and $219.03 mm (Debt)

At the begining of this week we gave a long call for LUPIN in this post.

 

Analysis: SHOPERSTOP

Today’s pick is SHOPERSTOP [stockquote]SHOPERSTOP[/stockquote]. The stock initially rushed to Rs. 400 points, but after facing resistance there it dropped to the Rs. 300 levels. After a couple of weeks support on this level, the stock started its up-move in June to see its 52 week’s high of Rs. 495 in December. Since then the stock has been on a downtrend. In the last three months, the stock moved -16% vs. -4% of Nifty’s.

SHOPERSTOP Technical analysis chart

Oscillator RSI and CMO are reaching the over-sold territory. The stock is currently trading in the lower range of the Bollinger bands. Short-term technical saw a bearish Gravestone Doji.

The MACD line and signal line are very close to each other and are not suggesting any direction. But the inversion in the histogram levels is giving early sign of an upcoming bullish move. Also, the Long-term and short-term GMMA lines are too close to give out any directional bias.

SHOPERSTOP correlation chart

SHOPERSTOP’s average correlation with the Nifty is 0.44, which is positive. The scrip will be closely replicating movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

SHOPERSTOP volatility chart

SHOPERSTOP has a historical volatility in the narrow range of 0.5 to 1.1. The scrip’s volatility is currently in the lower end of the range.

Given the technicals, we suggest a short-term buy. A long-term call could be taken depending on the directional move of the GMMA lines and price action near the support levels of Rs. 360. Also, it is advisable to have a relaxed trailing stop-losses level to book profits in case of a trend-reversal.

For a better picture of the Retail sector as a whole, you can look at what the expert has to say here.