Trading views on nifty- www.niftyviews.com
Published on Sunday, June 14th, 2009 at 1:51 PMAuthor: niftyviews (39 Articles)
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Dear Friends,
Few people know that Anil Agarwal started as a copper scrap dealer in Mumbai way back in late 1970,s. His big break came when he acquired a jelly filled cable unit from the King of Nepal that later became Sterlite industry. Agarwal convinced syndicate bank to lend him 6mln rupees to secure control over the company. Once he acquired control of the company he sold the copper inventory for 20 mln rupees in a matter of two weeks and returned the loan. Thus the legend was born. Anil Agarwal last week was again in headlines for buying Dempo group interests in their mining assets in Goa for 1750 crs. Taking 145 crs working capital into consideration the acquisition comes at approx 4X FY09 EBITDA of 417 crs. I believe two points should be noted in this context that can’t be written off. One dempo and sesa goa will have synergies going forward. The second and a bit more interesting one is Dempo has been historically known as one of the oldest private sector iron ore exporters. It is an iron ore exporter since 1941. I really fail to understand the reasoning behind the exit of family business by a group known for nothing more then iron ore exports. Yes they own Goa carbon, a bse listed CPC manufacturer but only time will tell who will have the last laugh the DEMPO’s or the Vedanta group.
Coming back to Nifty as I have mentioned before Nifty is retracing its down move from January 2008. Similarly many small cap stocks have used this opportunity to retrace the down move of January 2008. Rnrl,Jp hydro,Ifci,Dish Tv,Ttml,ISPAT IND,WWIL and Nagarfert to name a few. Traders should know once the retracement ends downmove will be ferocious in these stocks. One more interesting fact is that the squeeze observed in Nifty was after an Upper circuit so the short covering after a 300-400 point fall will be missing. Technically we say that the base is missing in the market. As of now the condition is opposite with too little money chasing too many stocks. Large caps have become fully valued and over valued in many cases. News coming from sources indicate that some companies who have announced large QIP in last few weeks are finding it difficult to place the same as they are no more in FNO. At the same time there is a distinct division of opinion observed in hard selling fund managers and investment bankers. It is a classical context for me to take some more money off the table. As of now my fund deployment is restricted to old economy companies and Gold. Gold is seeing an intermediate dip and can take support at 920$ or 875$. Worth watching ahead. Watch for weakness below 4540 spot levels in Nifty.
NIFTY RESISTANCE 4711,4635
NIFTY SUPPORT 4540,4411
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