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MORNING VIEW

Nifty likely to open flat on global cues. Nifty is facing strong support at 5850 level and strong resistance at 5960 level.

Nifty Spot Levels

Support
5870 - 5825
Resistance
5940 - 6028








NIFTY PCR:
1.14
NIFTY IMPLIED VOLATILITY:
18.5
MARKET WIDE OPEN INTEREST:
Rs144,850 Cr & Rs 610 cr got reduced in OI
NIFTY CALL:
Added 29 lakh shares
NIFTY PUT:
Shedded 11.20 lakh shares
MAJOR OI GAINERS
Hexaware Technologies (42%), Axis Bank (35%), IRB Infrastructures (23%), Allahabad Bank (21%) and Union ank of India (11%)
MAJOR OI LOOSERS
Power Finance Corporation (-15%), KS Oils (-14%), Indian Bank (-11%) and HCL Technologies (-10%)

The US markets ended with modest gains helped by the financials after an early drop on the back of the dollar's rally. The treasuries hit six month highs on fears that the economy would heat up under the tax plan considerations.


DATA TO BE ANNOUNCE TODAY

Currency

Forecast
Previous
GBP
Trade Balance
-8.1B
-8.2B
GBP
Official Bank Rate
0.50%
0.50%
USD
Unemployment Claims
426K
436K
USD
Wholesale Inventories m/m
0.90%
1.50%
USD
Natural Gas Storage
-83B
-23B
USD
Treasury Currency Report




 
ITC (REco: BUY; Cmp: Rs 167; Tgt: Rs. 191)

  • The government in its cabinet meeting on Tuesday (December 7, 2010) decided to retain the existing pictorial warnings on cigarette and bidi packages for a year and review the same in December 2011. The decision came a week after large tobacco players (including ITC and Godfrey Phillips) stopped the production of cigarettes due to the uncertainty surrounding the implementation of pictorial warnings.

  • The cigarette business contributes around 50% to ITC’s top line and bottom line both and the cash generated from the business is utilised to strengthen the future of the company’s other businesses (which are at a nascent stage). With the government deciding in favour of the cigarette manufacturers, the concerns regarding the cash-cow business of ITC are over. Also, the company’s other businesses such as that of hotels, agri-products and non-cigarette fast moving consumer goods are expected to maintain their strong growth momentum in the coming quarters. Hence, we believe this a good time to enter the ITC stock. At the current market price the stock trades at 26x its FY2011E earnings per share (EPS) of Rs6.4 and 21.9x its FY2012E EPS of Rs7.6. We maintain our Buy recommendation on the stock with a price target of Rs191.




Allied Digital Services (REco: BUY; Cmp: Rs 177; Tgt: Rs. 326)

  • ADSL’s management has indicated that growth will accelerate through both organic and inorganic routes as expansion in the RIMS space will be the top priority of the company in the coming year. On the other hand, ramping up the newer areas of growth like Cloud Computing, VDI, mobile mobility service and green data centre will be at the forefront of the management’s priorities. 
We remain positive on the long-term sustainability of the company’s business model, with incremental thrust from the management on the high-margin RIMS business and a gradual decline in the low-margin segments. At the current market price of Rs177, the stock trades at 6x FY2011 and 5x FY2012 estimated earnings. We maintain our Buy recommendation on the stock with a 12-month price target of Rs326. At our price target, the stock will be valued at 9xFY2012E earnings.