11 March, 2010

       

It was yet another listless session for the equities. Nifty failed to breakout on either side as it traded between 5090 and 5135. Metals were sluggish from the very beginning but heavyweights like Hero Honda, RIL and HDFC kept the indices afloat. ITC, IDFC and cement counters also supported the indices. RIL was the biggest gainer amongst the heavyweights as it gained almost 1.5% on improved volumes. IT stocks were also under pressure and only TCS managed to close in the positive territory amongst the heavyweights. Overall, most of the sectors witnessed mixed trend with the exception of Cement. Finally, Nifty ended the day at 5116, up almost 15 points.

 

In the short term, Nifty has clearly marked breakout points at 5085 on the downside and 5140 on the upside. Above 5140 Nifty could target 5220 in coming days. IDFC is again moving towards 166-167, the level that has provided stiff resistance on past few occasions. Above 167 strong breakout is expected that could take the stock higher to around 185-188. Century Textiles is likely to target Rs 543-545 and the pattern breakout is suggesting even higher levels of around 570-575. RIL is showing accumulation pattern and is a strong buy on dips candidate. Short-term targets of around 1045-1050 are seen while positional trades could fetch much higher returns. Others that look positive are McLeod Russell, DLF, Aban, APIL, Educomp and Reliance Cap (above 818).

 

LOW RISK / LOW RETURN

NOTE : IN CASES WHERE CASH LEVELS ARE GIVEN, BUY/SELL FUTURES WHEN THE CASH PRICE CROSSES THE BUY ABOVE/SELL BELOW LEVEL IN CASH

 

SCRIP	STRATEGY	STOP LOSS	TARGET	HOLDING PERIOD
ICICI BANK CASH	SELL BELOW Rs.908	917.50	901/893	2-3 DAYS
BHEL CASH	BUY ABOVE Rs.2457	2419	2487/2520	6-7 DAYS
BATA CASH	BUY ABOVE Rs.244	-	254/264	4-5 DAYS

 

LOW RISK / HIGH RETURN

TIME FRAME – THREE  to SIX MONTHS

 

JUBILIANT ORGANOSYS ( JOL)

Present Price – Rs.346.25

Projected Price – Rs.425

 

JOL has diversified businesses across pharmaceutical and nutritional products, pharma outsourcing services, industrial & agriculture chemicals and polymers. JOL is well placed to address growth opportunities in each business segment. Diversification, scale and vertical integration are JOL’s key strengths.

 

The major growth driver is increased traction in the contract manufacturing business through execution and signing of new contracts, pick-up in radiopharmaceutical sales and disclosure on orderbook positions across the businesses.

 

 

JOL has a leadership position in pyridine and its derivatives. The company has strong chemistry experience of more than 25 years and offers a basket of 150 products,  including various derivatives of pyridine and picolines. In an effort to expand its product offering, JOL acquired a 100% stake in Specialty Molecules in FY09 for INR200mn. Speciality Molecule has a strong position as the manufacturer of halogenated pyridine derivatives that uses the niche technology of halogenation.

 

 

Jubilant’s acquisition of Hollister-Stier and Draxis has increased its presence in sterile injectables & non sterile products and has given it entry into niche radiopharmaceutical segment.

 

Its CMO business of North America has secured new manufacturing contracts from 3 leading global pharma and biopharmaceutical companies. Its DDDS business has renewed its agreement with Lily for a period of 5 years and signed new Drug Discovery contracts with 2 pharmaceutical companies.

 

Through diversification, we think JOL has substantially de-risked its business model and seeded itself well for growth opportunities across segments. Scale and vertical integration, particularly in industrial chemicals and pyridines, have helped the company attain cost Competitiveness.

 

JOL is a play on multiple themes:

 

1. Pharmaceutical R&D and manufacturing outsourcing.
2. Growth opportunities in Pyridines; Vitamin B3 on account of cost competitiveness.
3. Expanding healthcare and generic opportunities.

 

On the technical front, the chart pattern is looking very attractive and it can be bought at current levels and at all declines.

 

FUTURES	LTP	S1	S2	S3	R1	R2	R3	STRATEGY
NIFTY FUT	5123	5089	5061	5035	5137	5161	5188	Buy above R1
BANK NIFTY	9110	9070	9019	8970	9166	9203	9245	Sell below S1
CNXIT	5903	5880	5845	5810	5960	5995	6045	Trade both sides

 

Disclaimer: The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. Readers using the information contained herein are solely responsible for their actions. The information and views contained herein are believed to be reliable but no responsibility or liability is accepted for errors of fact or opinion. Editors may or may not have trading or investment positions in the securities mentioned herein.