1 January 2007
Bulls eye
Market can show magic in this coming yearTechnology stocks have been one of the best performers. We continue to have an Over Weight rating on the sector as we believe it will see better days going forward.
Our optimism stems from the fact that most frontline companies continue to post good results and are expected to continue to do so over the next few quarters. Most companies have given good earnings guidance for the current financial year.
Generic indicators such as IT spend data, license revenue growth, results of US-based IT consulting companies, data related to salary increases for IT employees in the US & UK all point to a cyclical up-tick in IT spends. Indian software companies have also shown a strong increase in their fresh development revenues on the back of this development.
Going forward, we expect volume growth to continue to be the key revenue driver, although pricing should be stable. We believe that stocks should continue their recent out performance, given the strong underlying growth numbers.
However, the key threat is the rupee appreciation.
r the main magical strick is in the hands of IT stocks,
With robust growth in demand and limited capacity additions, cement prices which have been on the upmove and are expected to rise further. The tightening of the demand supply situation will enable the cement majors to continue enjoying pricing power.
. Cement majors recently hiked prices to the tune of Rs 5-10 in Southern Market and a hike of Rs 2-5 in the western market. The huge investments planned in the infrastructure sector are likely to keep the demand at a high level and with limited capacity additions in the coming years, cement majors are likely to witness margin improvements. The outlook for the sector is positive.
Indian steel industry, being the backbone of Indian economy, has flared well with Higher steel prices at global levels as well as price hike by domestic players. The current scenario indicates that the higher realization to continue for the current year. Higher realization and increase in volume on the back of expanding capacities would aid topline expansion for steel companies. The steel prices are expected to rule at current levels on the back of increasing demand from domestic as well as overseas market. Further, raw material prices are also ruling high. In this scenario, the integrated players would benefit the most. We recommend accumulating Tata Steel and Jinddal Stainless on every decline. Global aluminium prices are on upbeat and are expected to continue the trend. Hindalco and Nalco have increased aluminium prices by Rs4, 000 per tonne. Further with the rising demand, we expect the prices to rule firm at the current levels which would help companies to post better topline growth in coming years. Zinc is also moving northward and Hindustan Zinc has increased its prices by Rs3, 600 per tonne.
Our optimism stems from the fact that most frontline companies continue to post good results and are expected to continue to do so over the next few quarters. Most companies have given good earnings guidance for the current financial year.
Generic indicators such as IT spend data, license revenue growth, results of US-based IT consulting companies, data related to salary increases for IT employees in the US & UK all point to a cyclical up-tick in IT spends. Indian software companies have also shown a strong increase in their fresh development revenues on the back of this development.
Going forward, we expect volume growth to continue to be the key revenue driver, although pricing should be stable. We believe that stocks should continue their recent out performance, given the strong underlying growth numbers.
However, the key threat is the rupee appreciation.
r the main magical strick is in the hands of IT stocks,
With robust growth in demand and limited capacity additions, cement prices which have been on the upmove and are expected to rise further. The tightening of the demand supply situation will enable the cement majors to continue enjoying pricing power.
. Cement majors recently hiked prices to the tune of Rs 5-10 in Southern Market and a hike of Rs 2-5 in the western market. The huge investments planned in the infrastructure sector are likely to keep the demand at a high level and with limited capacity additions in the coming years, cement majors are likely to witness margin improvements. The outlook for the sector is positive.
Indian steel industry, being the backbone of Indian economy, has flared well with Higher steel prices at global levels as well as price hike by domestic players. The current scenario indicates that the higher realization to continue for the current year. Higher realization and increase in volume on the back of expanding capacities would aid topline expansion for steel companies. The steel prices are expected to rule at current levels on the back of increasing demand from domestic as well as overseas market. Further, raw material prices are also ruling high. In this scenario, the integrated players would benefit the most. We recommend accumulating Tata Steel and Jinddal Stainless on every decline. Global aluminium prices are on upbeat and are expected to continue the trend. Hindalco and Nalco have increased aluminium prices by Rs4, 000 per tonne. Further with the rising demand, we expect the prices to rule firm at the current levels which would help companies to post better topline growth in coming years. Zinc is also moving northward and Hindustan Zinc has increased its prices by Rs3, 600 per tonne.
by erectusplus at 13:38:00 |
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