Sensex
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Buy > 151.7, SL 150.75
Marketappear poised upwards. Keep near low as SL and if in good profit, Carry forward…
Abe
ABANs problems may seem huge, hence it also down in near term near 30%. Like buy on rumor and sell on news in case of a rally, I guess one should apply he theory vice versa. Hence a small quantity can be bought and held for LT. A Co like ABAN will not go down under that soon, even on credit worries…..
I still believe it has high Intrinsic value..
Presently a contrarian buy signal is on…..
Keep near low as SL and buy w/ 650 as SL. Or wait for some time till signals emerge…..
In spite of bad news in papers today, it is less than 1% down today…..
Abe
Aban Offshore-Weak Footing, Huge Debt Investors need to note that BP has lost $ 90 Bn in market cap, in one month since the Deepwater explosion that sank their rig in the Gulf of Mexico. Puny Aban stands no chance, either in terms of competitiveness or financial strength to avoid a liquidation or a financial sell-off. Indian managements are not at all equipped to run professionally global operations, even though their financial advisors keep selling them such ideas. Look at Wockhardt-another disaster story and Biocon, another struggler to which can be added Shasun Chem. Uncertainties continue. With cashflow under pressure - one less rig after Aban Pearl sank and lower dayrates on recent contracts - uncertainty over Aban's earnings have heightened. We slash utilization assumptions for FY11-12 (including adjustment for Aban Pearl) and lower earnings estimates. In addition, there is little clarity about debt repayment and insurance claims. We downgrade Aban. n One-offs suppress 4Q earnings. Aban reported consolidated profit of Rs393m, which was below our estimates mainly due to exceptional costs on forex losses and diminution in value of equity investments by its foreign subsidiary. n Clarity on debt repayment yet to emerge. While Aban Pearl's destruction has sliced into FY11-12e earnings, we believe the company's debt repayment ability has also been affected. The company's announcement points to possible equity dilution in the near term in order to strengthen cashflows. n Lowering earnings. We lower FY11/12 earnings estimates by 37%/38%, adjusting for Aban Pearl and more conservative assumptions on other rig utilization rates. n Valuation. The higher discount against peer group is to account for renewed cashflow problems amidst higher leverage. Key risks: volatility in prices of crude, rig rates. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
| FYI Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
Attachment(s) from Maverick
5 of 5 File(s)
Stocks can be a hard habit to kick. After all, from 1982 through 2000 during the biggest bull market in U.S. history, the market spoiled investors with annual returns that often topped 20% a year and setbacks that were only temporary and relatively mild. Hey, who couldn't get hooked on that? The NASDAQ, home of the darlings of the tech world like Cisco, Microsoft, Intel and eBay, has been an even better way to lose money; it's still down 55% from its peak in 2000. That's like giving somebody $100 ten years ago and having them give you back $45 ten years later. Nobody's going to retire doing that except the guy taking your money! Just look across the Atlantic at the boiling cauldron of currency and debt troubles called Europe. The bailout of Greece—and the likely bailouts of Spain, Portugal, Ireland and maybe more nations—shows that the global economy is still wrestling with serious problems that will sabotage economic growth for many years to come. The massive stimuli that have propelled GDP growth recently are temporary. Don't expect the rosy numbers to continue for the rest of 2010. Excess inventories will keep housing subdued. In fact, I now believe that there are over one million housing units in inventory that have been hidden from the "official" housing inventory numbers reported by the government. This overhang will push the housing market lower in the months to come. Besides housing problems, vacant commercial real estate and excess industrial capacity portend weak plant and equipment spending. Exports depend on economic growth abroad much more than on the dollar. And U.S. consumer retrenchment will subdue the growth of the many foreign export-led economies, including China. Also, the buck looks ready to rally. So don't count on a V recovery. That would require the U.S. consumer to return to their profligate free-spending ways. We continue to believe, however, that they have reached a watershed and after a quarter-century borrowing-and- And labor markets will remain depressed due to consumer retrenchment- I believe that the recession will probably stretch into late-2010, and will only end if the massive fiscal stimulus results in job creation. That will disappoint stock optimists and probably be followed by a slow, jobless recovery. In this atmosphere, deflation will likely be chronic. So my advice is to take profits in stocks now while you still can. Here is the situation that we now face: Government spending and borrowing are what kept the economy from going completely into a ditch in the past year, but the longer term impact of all of this government aid and growth in the size of government will choke our economic growth for several years to come. It's tempting to conclude that the fallout from the financial crisis and housing bust are behind us, but what we now face is a period of economic stagnation similar to what we went through in the late 1970s under Jimmy Carter. Years of Stagnation Six forces will slow U.S. and global economic growth in the next decade. First and foremost is retrenchment by American consumers. Also at work will be financial sector deleveraging, weak commodity prices, increased government regulation and economic involvement, protectionism and deflation. The combination of these forces should result in 2% annual growth in real GDP. That's considerably less than the 3.3% needed to keep the unemployment rate steady. We'll see it leap from a tad below 10% this year to 23.2% in 2018. Dangerous Levels of Government Dependence High and chronically rising unemployment is clearly unacceptable politically and will spawn massive federal job-creating projects—and many more Americans who are dependent on the government for major parts of their income. They already numbered 58.2% of the population in 2007. From 1950 to 1980, those with their feet planted firmly in the government feeding trough swelled from 28.7% of the population to 61.2% as state and local aid programs brought on tens of millions of new food stamp recipients. By 2018, 67.3% of the population will be financially dependent on government. Think about that for a moment. If the livelihood of two-thirds of the U.S. population relies on government money, what does this imply about the size of our national debt...or for that matter the solvency of the U.S. government? Private sector job growth will continue to be restrained by globalization and outsourcing abroad. In contrast, U.S. governmental bodies have no foreign competition and no incentives to promote productivity or efficiency. I've noted many times over the years that government productivity ranks with military intelligence, vegetarian vampires, beloved mothers-in-law, congressional ethics, postal service, jumbo shrimp, tax simplification, airline food, wild game management, the usual suspects, and working vacations in the realm of great oxymorons. What's amazing, and perhaps speaks well of Americans' conservative fiscal instincts, is that the river of government goodies isn't already a flood with more than 50% of the population on the receiving end. Why haven't voters already voted themselves more handouts? And what will it be like if the ratio climbs above 60%? Will the threat of runaway deficits and worries over an increasingly government-controll Our investment themes continue to center around a further weakness in housing and the deepening recession that is now the longest since World War II. The collapse in house prices eventually will benefit rental apartments and manufactured houses. We also believe that a faltering economy will put more pressure on profits and stocks, and initiate chronic deflation, supporting lower Treasury yields. We expect the dollar to rally as economic weakness abroad exceeds that in the U.S. and as commodities resume their weakness. Increased government regulation and economic involvement here and abroad are the normal results of severe economic and financial problems. By curtailing risk-taking and efficiency, they will impede economic growth. With most nations still zealous to produce and export while the U.S. is no longer the big importer, protectionism is a serious threat, too, especially with sluggish global business activity. Just look at the trade war that has erupted between the U.S. and China over tyres.I hope you get the picture. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
Buy and hold reliance w/SL 1000
Buy at own risk…
Things have changed rather quickly for the stock market. Up until two weeks ago it was very difficult for a technical analyst to make a bearish argument. All over the world the big indexes were trending upwards, exhibiting no signs of technical weakness. Trend-following indicators were rising, too. And indicators based onmarket breadth, like the advance-decline line and the number of stocks making 52-week highs or lows, were healthy. Last but not least the chart patterns showed no signs of deterioration. To uncover any clues that risks had grown considerably, you had to look at indicators outside the realm of technical analysis ... Especially worrisome were monetary and sentiment indicators.Money supply had stopped increasing. Hence liquidity was drying up. At the same time fund managers became more bullish than ever before ... A few short weeks ago mutual fund cash levels reached a record low of 3.4 percent, according to Jason Goepfert, president ofSentimenTrader. The old record of 3.5 percent was set in the summer of 2007 at the very end of a cyclical bull market off the 2003 lows. Back then it took fund managers 4½ years to get fully invested. But since the panic lows of March 2009, they only needed one year to accomplish the same thing! The Chart Pattern Is Clear What are all these indicators telling us now after last week's stock market plunge? Well, valuation is still very high, and monetary indicators are clearly negative for stocks. Longer-term sentiment indicators haven't changed for the better. And the charts are showing very ominous patterns — patterns that look like potential topping formations. In the chart of the S&P 500 below I've drawn the lower boundary of that potential topping formation. This picture is as clear as it gets: If prices break below this lower boundary, the huge rally off the March 2009 low is over and the bear market is back.
When Will the Breakout Occur? Or Perhaps It Won't ... I say that because a topping formation is not confirmed until prices break below the lower boundary. If prices don't fall below the lower boundary, then the potential topping formation is either taking more time to play out, or it may turn out to be a frightening consolidation during an ongoing bull run. Right now the arguments for an eventual — rather than an immediate — breakout are solid. The above mentioned valuation, monetary, and sentiment indicators strongly argue against a continuation of this huge rally off the March 2009 lows. But the technical indicators haven't sounded the alarm yet. Rarely do bear markets begin without a marked deterioration of market breadth or a tiring of trend-following indictors. Therefore, the scenario of an immediate market plunge is unlikely, especially since momentum indicators are extremely oversold right now. They seem to say that a short-term rally could soon start from current levels. During such a rally the still missing technical deterioration could easily develop. In an ideal scenario prices would rise back to token new highs, unconfirmed by the breadth indicators, to finally signal the end of this medium-term up trend, which in the bigger picture is nothing more than a huge bear market rally anyway. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
