Anand Rathi Retail Research

Equities
Make or Break..
(Levels as on 8th July 2013)

A.K. Prabhakar
Sr. VP, Equity Research, Anand Rathi Equities

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Anand Rathi Retail Research

Quick thought!!
Nifty has been making higher lows and higher high; Nifty made low of 4521 in December/2011 and subsequently made 5629 in February 2012,

Low of 4770 in June 2012 and high of 5815 in October 2012, 4888 as freak trade in October 2012 was followed with high of 6111 in January 2013, low of 5477 in April 2013 was followed by 6229 high in last 31months and now 5566 is the higher low will 6229 higher high be breached is very important.
Nifty stocks which could outperform if rally takes-off RELIANCE, ITC, SUNPHARMA, M&M, HDFCBANK, HDFC, LUPIN, TCS, ICICIBANK & HINDUNILEVER.

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Anand Rathi Retail Research

6111 5815 5629

6229

5566 5477

Freak low of 4888 4770 4531

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Anand Rathi Retail Research

Structural changes begin

Volatility continues, from US Federal Reserve statements on slowly winding up of monetary easing to improvement in CAD situation has swung the market and sentiments. Rupee has been volatile with touching all time high and almost losing 9.1% percent against the dollar in the second quarter (Apr-Jun). FIIs have been net sellers to the tune of Rs. 10,500crs in the last month though domestic institutions have turned buyers specially LIC. The advance tax numbers have been better and the next big trigger for the markets are the Q1FY14 result season.

Also the ongoing process of reforms from government front is holding the positive sentiments on streets. The banking licenses, hike in gas prices, FDI approvals for telecom are key trigger in the longer run.
We continue with the stock specific selection as frontline stocks have taken the lead in the momentum market. We like are M&M, Maruti, RIL, HDFC, L&T, Lupin, Infosys, ITC and Hindalco.

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Anand Rathi Retail Research

What we like this month..?

Picks of the Last month Reco Price High after Reco Last month Pick Lupin (June 2013) 759 855 Bata India (May 2013) 776 898 Natco Pharma (April 2013) 444 467.0 Rallis India (March 2013) 126 147.0 Cummins India (Feb 2013) 502 525.0 LIC Housing (Jan 2013) 289 291.7 Sun Pharmaceuticals Inds (Dec) 715 1084.0 ING Vysysa Bank (Nov) 471 667.0 BASF (Oct) 665 781.0 Tata coffee (Sep) 993 1673.9 Bayer Cropscience (Aug) 922 1495.0 This month Pick Yes Bank (July 2013) 467 477

CMP 843 882 461.0 140.0 453.0 228.0 1075.0 620.0 543.0 1002.0 1472.0 475

% returns Status till date as on today 11.07 Open 13.66 Open 3.83 Open 11.11 Open -9.76 Open -21.11 Open 50.35 Booked 31.63 Open -18.35 Open 0.91 Open 59.65 Booked 1.71
Open

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Anand Rathi Retail Research

Pick of the month Yes Bank

Target :- 12mon Rs.700 & 18mon Rs.800
Rs. In crs
NII PAT NIM (%) ROA (%) ROE (%) PB (x) CAR (%) CASA (%) GNPA (%) NNPA (%)

CMP 467

FY13
2,218.8 1,300.7 2.9 1.5 24.8 2.7 18.3 19.0 0.2 0.0

FY12
1,615.6 977.0 2.8 1.5 23.1 2.8 17.9 15.0 0.2 0.1

FY11
1,246.9 727.1 2.9 1.5 21.1 2.8 16.5 10.3 0.2 0.0

FY10
788.0 477.7 2.3 1.6 20.3 2.8 20.6 10.5 0.3 0.1

FY09
509.3 303.8 2.4 1.5 20.7 0.9 16.6 8.7 0.7 0.3

Consistent performer - The bank has shown a 5 yr CAGR growth of 45.8% in NII and PAT growth of 45.4% in the same period. ROE has been consistently above 20% for last 5 years and 24.8% is the highest among the peers. Earlier bank had large exposure towards bulk deposits which were high cost deposits, but now it is shifting its focus to CASA deposits which will lead to declining in cost and improving the margins for the bank. CASA has improved to 19% for FY13. Bank has total of 430 branches as on FY13.

It is also one of the bank which is also giving 6% on the savings account.
Market cap for the bank is Rs. 16,804crs and promoter holding is 25.72% which gives a free float of Rs. 12,603crs. A probable candidate for entering the index, Nifty.

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Anand Rathi Retail Research

Nifty Monthly View

NIFTY (5811), Nifty made low of 5566 in June NIFTY after making all time high of 6357 in January 2008, made higher low consistent basis. Nifty 2252 in higher low compared with April low of 5477 and if October 2008, 4531 in December 2011 then 4770 was higher high has to be made then 6229 can be low in June2012 and freak low 4888 made in October crossed. Nifty on daily chart has made inverse Head 2012, in year 2013 low 5477 made in April and recent & Shoulder and close above 5920 could give 280low made in June is 5566. 300points rally. Nifty below 5566 on closing basis only would be major concern for uptrend. Nifty also Market normally takes more time to consolidate while has positive Island reversal if holds Rally can be once break-out is given needs less time to reach desired really fast. levels, now Nifty has entered 66th Month of consolidation and any month we cross 6357 which is all Nifty High for 2008 6357 which is all time high while time high we would take 1/3rd of the time to double 2010 high is 6338 and post which 6229 almost itself from all time high. making 6200-6350 as supply zone.

Nifty Monthly Chart

Nifty Weekly Chart

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Anand Rathi Retail Research

Sensex Monthly View

SENSEX (19325) is still same levels as previous month, with Positive Island reversal & Inverse head & Shoulder formation seen. Sensex holding 18925 and crossing 19700 then rally of 1000Points(20700) could take just 3-5weeks. Sensex below 18467 on closing basis only can stop the uptrend. Sensex after making high of 20443 which is last 32 Months high has started to correct and till Sensex holds 18450 things looks positive, Sensex Range 18450 - 21000. Sensex made all time high 21206 in January 2008.
Sensex Monthly Chart

Sensex has consolidated for 66months and each time we have seen correction Sensex has made higher low which indicate higher base formation and this pattern has made Triangle pattern in Monthly charts which is powerful and once 21206 is crossed in 1/3rd of time Sensex can double. Sensex low of October2008 is 7697, March2009 low 8047, December 2011 low 15135 and June2012 low 15748, till now low of 2013 made in April 18144 and recent low 18467 made in June2013 and till that doesnt breach market is really strong.

Sensex Weekly Chart

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Monthly views
View Trigger Levels

Anand Rathi Retail Research

What we said in Last Month

Nifty

Market would be in the range of 5560 - 6229 levels

NIFTY (5811), Nifty made low of 5566 in June higher low compared with April low of 5477 and if higher high has to be made then 6229 can be crossed. Nifty on daily chart has made inverse Head & Shoulder and close above 5920 could give 280-300points rally. Nifty below 5566 on closing basis only would be major concern for uptrend. Nifty also has positive Island reversal if holds Rally can be really fast. SENSEX (19325) is still same levels as previous month, with Positive Island reversal & Inverse head & Shoulder formation seen. Sensex holding 18925 and crossing 19700 then rally of 1000Points(20700) could take just 3-5weeks. Sensex below 18467 on closing basis only can stop the uptrend.

Range bound

Sensex

Range Bound Move b/w 1845020900

Range Bound

Be stock specific and accumulate stock with good fundamentals for a longer time horizon. Tata Coffee Cummins India Torrent Pharma

Accumulate good quality stocks

Stock specific movement

Target 1950, Time Horizon 1 Year Target 558, Time Horizon 1 Year Target 990, Time Horizon 1 Year

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Anand Rathi Retail Research

THANK YOU
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