LISTING OF PERSISTENT SYSTEMS LTD - GREY MARKET PREMIUM

Shares of Persistent System are going to be listed on 06.04.2010. The current Grey Market premium is said to be around Rs.100.00 per share.

NTPC – AN INTERESTING OPPORTUNITY

The stock is has broken a long term downtrend and closed just above the 50-day moving average. However, the break-out has not been decisive and one requires following up the stock action in the next few days. If there is any decisive technical break out, NTPC may move towards its next targets of 215, 225 and 235.

As per the technical chart, NTPC is in an interesting point.

The stock is having a strong support around 185-196 levels and one can keep stop loss limits around these levels.


With best wishes

Areva T&D India Ltd - Technical Break Out

The Company belongs to Electric Utilities Industry. It has given an important technical break out in the last week.

DQ Entertainment – Listing on 29 March 2010

Allotment in the Block Buster IPO stock DQ Entertainment has been done last week and the listing is to be on 29.03.2010. There are strong expectations of a good amount of premium on listing. Grey market websites indicate a premium up to Rs.60.00 per share.

With best wishes

Persistent Systems Ltd – IPO – Invest at Cut-off

Persistent Systems is a pure play Outsourced software Product Development (OPD) services company. The company is different from other IT companies as it caters to Independent Software Vendors (ISV) as well as smaller product development companies. Persistent Systems offers its customers OPD services that help them reduce time-to-market, better the quality of their products, improve predictability and reliability of the engineering process and helping them lower their over-all product engineering costs. As a result, client stickiness is higher than other IT companies.

Investment Arguments

Healthy balance sheet

Aggressive expansion plans

Continued interest from VC firms

Dedicated client base

Key Risks

Dependence on US market

Expiry of tax holidays


I feel that the company has the management expertise and the necessary cash to pave the path for aggressive growth in the years to come. Persistent Systems continuously spends in R&D to better its technical skill sets. It appears to be attractively priced considering the potential upside due to capacity addition and earnings in the long term. Even from a long-term perspective also, the company can provide significant returns.

I feel that one can invest in this company at cut-off price (Price Band Rs.290-310)

NMDC LTD – SUBSCRIBE AT LOWER BAND PRICE

NMDC Ltd, a navaratna Public Sector Company, has come out with a Follow-on Public Offer. The issue details are hereunder.

Issue Period - March 10, 2010 to March 12, 2010
Issue Size - 33,22,43,200 Equity Shares
Issue Type - 100% Book Building
Face Value - Rs. 1/-
Price Range - Rs.300 to Rs.350
Tick Size - Re. 1/-
Market Lot - 20 Equity Shares
Minimum Order Quantity - 20 Equity Shares
Maximum Subscription Amount for Retail Investor - Rs.100000
IPO Market Timings - 10.00 a.m. to 5.00 p.m.

The pricing is considered to be aggressive and the market would have been happier had the price been fixed in the range of Rs.250-Rs.300. There has been a poor response for the issue so far.

I am of the view that one can look into the issue with a long term perspective and bid at the lower band price considering the facts that NMDC is a low cost producer of Iron Ore having strong competitive advantages and the prospects of the iron ore industry which will benefit from a strong economic growth. The company is having a high RoNW and consistent growth in earnings. Future plans of NMDC to indulge in steel and power production, though associated with risks, may add to the earnings of the company.

Happy Investing

Disc: The ideas on market are for sharing purpose only. Investments should be done on own risk.

Unanswered Questions Remain!

It is still a big question whether the global economy will return to its glorious past as was in 2006 & 2007. But, stock markets are now quite convinced so and returned to their peak levels of 2007, if not 2008. Many individual stocks have gone even above their life time high levels tested in those years.

Generally, stock markets are the leading indicators and can visualize the future to some extent. However, stock market need not be 100% correct in its every assumption. Even though, there are certain greenshoots visible in the global economy, it is too early to assume that economic life will turn back to its glorious past any time soon.

Hence, it is prudent to be cautious in the future rallies of the stock market. One should take position in equity market only after visualizing the probability of global economy returning to normalcy, the ability of the individual companies to survive unscathed till that time and the earnings of the company once the normalcy returned.

As many would have noticed, Nifty crossed the all-important resistance level of 4730 levels last week comfortably thanks to the surge in giant caps like Reliance, SBI and ICICI Bank. However, broader market did not rally once after this remarkable success was achieved as anticipated by many analysts. In fact, there was a huge profit booking in the smaller stocks even while the giant caps were hitting their new highs for the year 2009.

I expect the same trend to continue in the coming week also. I suggest the traders to exercise caution while picking the smaller stocks which have run up miles since March 2009. 4700 points for Nifty can be taken as a pivot point while taking trading positions in larger stocks.

Wishing a great week ahead!