Kensource

STOCK LETTER

Antelope
Medium-term Growth

Monday, 4 October 2010

Volume 3, Issue 24

Highly stretched over the short term

T
he market ended with splendid gains in the week ended 1st
October on positive economic triggers and across-the-board
buying support by institutional investors. In this scenario,
we find the market highly over-bought over the short-term with a
correction due any time.
The market opened strong on positive global cues on the first
trading day of the week, but gradually drifted lower and
settled with meagre gains. It closed flat with a negative
bias on Tuesday amid choppy trading. Huge selling
pressure resulted in the indices closing below their
psychological levels on Wednesday. The decline was
led by Sterlite Industries, which lost over 8% after
the Madras High Court ordered the closure of
its Tuticorin plant on environmental issues.
The market bounced back on Thursday
helping the benchmarks regain their crucial levels.
Earlier in the day, the market touched its intraday
low on reports of a rise in the weekly inflation
numbers. It started the new month on a roll with the
key barometers touching a 33-month high in intraday
trade.
pace in 10 months in September, as per the Purchasing Managers’
Index (PMI) data. The HSBC Markit PMI, based on a survey of 500
companies, slid to 55.1 in September, compared to 57.2 a month ago.
This is the second month in a row that PMI has fallen. A reading above
50 indicates expansion in manufacturing activity.
Bajaj Auto is all set for another expansion at its Pantnagar facility
with an investment of Rs75 crore. Presently the facility is
running at full capacity. The company plans to ramp up
the production capacity of the plant to 1,800,000
units from 1,200,000 units per year at present. Such
expansion is expected to be complete by October.
Bajaj Auto became a part of Nifty-50 starting
1st October 2010. The stock hit all time high
on first day itself and was up 7% over the week.
Subject to the necessary approvals, the board
of Managalam Cement has decided to offer one
equity share of the company in exchange of 10
shares of Mangalam Timber Products Ltd (MTPL)
on merger of MTPL with Mangalam Cement. With
construction activity picking up following the withdrawal
of monsoon, cement prices are set to rise.

Indices Change
On a weekly basis, MARKET WATCH Mangalam Cement rose 5% while Ambuja Cements
the indices clocked gains fell 3% over the week. Dr Reddy’s Lab (DRL) was
BSE Sensex 2%
of 2% with the Sensex surging 399.86 declared a prize winner in Outstanding Export Performance Awards
points and the Nifty added 125.10 points. and Patent Awards for 2009-10, instituted by the Pharmaceuticals
Nifty 2% The top Sensex gainers during the Export Promotion Council. It has bagged awards in the overall
week were Hindalco Industries (up 7%), category for bulk
Tata Steel, DLF, Jindal Steel & Power (JSP) and BHEL (up 6% each.). drugs and the FII DII
The top losers were Oil and Natural Gas Corporation (ONGC), Patents Awards Date Net Inv Date Net Inv
Hindustan Unilever (HUL) (down 2% each), ACC, Hero Honda and (Gold Awardees) (Rs Cr) (Rs Cr)
Reliance Communications (RCom) (down 1% each). for securing patents 27-Sep-10 1,136.81 27-Sep-10 (1,054.06)
All sectoral indices ended in the positive territory this week. The in 2009-10 for API/ 28-Sep-10 573.13 28-Sep-10 (905.32)
top gainers were BSE Metal and BSE Realty (up 5% each). bulk drugs. India may
29-Sep-10 756.37 29-Sep-10 (835.21)
Food inflation increased to 16.44% in the week ended 18th ban anti-diabetic
September, climbing 0.98 percentage points from 15.46% in the drug rosiglitazone 30-Sep-10 2,496.89 30-Sep-10 (1,521.63)
previous week. This was the fifth consecutive week in which the rate on fears that 01-Oct-10 1,825.20 01-Oct-10 (671.09)
of food prices has risen, after a spell of moderation in July and the treatment with the Total 6,788.40 Total (4,987.31)
first half of August. medicine could lead
The country’s exports grew by 22.5% to $16.64 billion in August to increased risk of cardiac arrest. . Generic versions of the medicine
compared to the same period last fiscal. Imports, too, jumped by are manufactured by 30 other firms in India including DRL. Clarifying
32.2% year-on-year to $29.67 billion in August. During April-August the reports of a dilution in stake, managing director of DRL said
this fiscal, exports posted a growth rate of 28.6% to $85.27 billion on that the promoters have no intention of diluting of their stake.
a year-on-year basis. Imports during the same period grew by 33.1% DRL, too, became a part of Nifty-50 starting 1 October 2010. DRL
to $141.89 billion. fell 1%. BEML rose 1% while Sabero Organics ended flat. We are
Manufacturing activity in the country expanded at its slowest recommending to exit from Ambuja Cements.

Disclaimer: None of the stock information, data and company information presented herein constitutes a legally binding recommendation or a solicitation of
any offer to buy or sell any securities. Information presented is general information that does not take into account your individual circumstances, financial
situation, or needs, nor does it present a personalised recommendation to you. Individual stocks presented may not be suitable for you. Although information
has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and the information may be incomplete or
condensed. All opinions and estimates constitute our judgment as of the date of the report and are subject to change without notice. This report is for informational
purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. Past performance is no indication of future results.
KenSource
Kensource
STOCK LETTER
Antelope
Medium-term Growth
Monday, 4 October 2010
Volume 3, Issue 24

Financial* Valuation** Return# Price

Av. Sales Av. OP MC/Sales MC/OP RoE Entered at Current Comment

Current Recommendation
BEML 673.02 55.87 2.19 71.91 11% 1,092 1,108 Patience is the key

One of the few cement

stocks with low valuation.
Mangalam Cement 151.22 46.23 0.80 3.45 28% 171 160 Waiting for a major
upmove

High growth and low

Sabero Organics Guj 106.24 20.13 0.60 3.34 31% 77 71 valuation

Bajaj Auto 3,162.21 637.06 2.88 14.41 68% 1,235 1,547 Powerful growth lies ahead

Rallying strongly as
Dr Reddy’s Lab 1,164.90 291.37 4.94 19.90 15% 1,326 1,485 expected

Exit Profit/ (Loss)

Ambuja Cements 1,885.19 534.87 2.59 8.41 22% 115 142 23%
* 5 quarter average(Rs crore) ** Based on latest quarter (annualised), MC- Market Cap # Return on Equity (based on net profit of previous 4 quarters)

We welcome our new subscribers. Please await our new recommendations.

Exit Strategy: Please exit from an Antelope position if the stock closes 15%, below the purchase price. This is called stop loss. However, if the
market price is above 50% of the purchase price, exit if the stock falls by 20%, below any day’s closing price. This is called stop profit.