J street vol-209 weakly research report

Index

Market View 1

Company Update 2

Around theEconomy 3

Knowledge Korner 3

Mutual Fund 4

Forex Corner 5

Report Card 6

Positional Call Status 7

Editor & ContributorMargi Shah

Special ContributorsAshesh TrivediVimul SolankiSagar Soni

For suggestions, feedbackand [email protected]

Market View:

Approach must be to remain select ive

Las t Saturday, we have sa id that cau t ious opt im ism is requ i red in the

market . W e have seen very h igh vo la t i l i t y in the market las t week . Ins t i -

tu tes are a lso h igh ly se lec t ive in the i r inves tment s t ra tegy a t p resent . As

we go beyond 8100 n i f t y , the e lement of h igh vo la t i l i t y comes in . The P/E

at th is leve l r ises to more than 20. The t ra i l ing one year forward P/E is a t

h is tor ic average of 17 .5

I t i s in terest ing to no te a repor t by Morgan Stan ley wh ich was announced

af te r meet ing key po l icy makers, bus iness leaders , cred i t ra t ing agenc ies

and o ther key personne l and the Mod i governments ’ agenda to re inv igora te

the Ind ian economy. As per repor t , the government is t r y ing to f i x p roduc-

t iv i t y g rowth . Accord ing to the f i rm there are f ive h igh pr ior i t y a reas for the

government for the economic po l icy .

1 . Fast t rack ing inves tment approva l process.

2 . Improv ing bus iness env i ronment lead ing to lower s t ressed assets .

3 . Tweak ing government expend i tu re and imp lement ing GST.

4 . The renewed focus on aadhar and f inanc ia l inc lus ion dr ive .

5 . To remain cogn izant about cont ro l l ing in f la t ion .

These f ive po in t agenda is go ing to lead the po l icy of the government . At

in te rnat iona l leve l , the po l icy s tance of f ed remained unchanged lead ing to

normalcy in the g loba l market . The no refe rendum by Scot land is a lso

pos i t i ve fo r the marke t . Now a l l eyes are on po l icy meet ing by RBI on 30 t h

September . T i l l than remain h igh ly se lec t ive in the marke t .

Kamal JhaveriMD- Jhaveri Securities

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Vol.: 20922nd September, 2014

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Company Basics

BSE ID 509631

NSE Symbol HEG

EQUITY (` in Cr.) 39.96

MKT.CAP (` in Cr.) 1331.47

Financial BasicsFV (`) 10.00EPS (`) 24.98P/E (x) 13.34P/BV (x) 1.44BETA 0.5221RONW (%) 12.29

sShare Holding PatternHolder's Name % HoldingForeign 8.56Institutions 10.68Promoters 58.78Non Prom. 0.00Public & Others 13.51Government 0.00

Company overview : HEG Ltd, a premier company of the LNJ Bhilwara group, is today India's leading graphiteelectrode manufacturer. HEG produces two grades of graphite electrodes - High Power & Ultra High Power -used in manufacturing steel through the Electric Arc Furnace (EAF) route. It has one of the largest integratedGraphite Electrode plants in the world. The company exports over 80% of its production to more than 25 coun-tries of the world.HEG has increased its production capacity and has become a significant global producer ofquality UHP grade electrodes for EAF application. To improve competitiveness and operating efficiency, HEG hasa Captive Power Plant totaling more than 77 MW. HEG has a diversified customer portfolio - ArcelorMittal, Nucor,POSCO, Emirate Steel Ind, Dongkuk Steel,Severstal, SAIL, Tata Steel, Jindal Group etc.Investment rational :Needle coke prices softening a big positive:Needle coke accounts for the single largest direct cost in the manufacture of graphite electrodes. In 2013 and2014, needle coke prices declined and are expected to soften further in 2015 on the back of capacity additions inthis segment. Going forward, needle coke availability may not be a critical issue considering the planned installa-tion of two new units in China and Korea.Steel demand expected to raise both in domestic and international markets and could boost Graphitedemand: In 2014, World Steel Association expects to see continued recovery in global steel demand with the de-veloped economies overall returning to positive growth. At the same time they are expecting slower growth inChina. With risks within the developed world receding there is some uncertainty emerging from developing coun-tries due to unresolved structural issues, political instability and volatile financial markets. All in all, despite eco-nomic conditions for the global steel industry remaining uncertain and challenging, they are forecasting furthergrowth for steel demand in 2014.Captive power generation provides self sufficiency:Power is a critical unit in the manufacture of graphite electrodes; captive power generation provides a competitiveadvantage that is consistent and low cost power supply. HEG has a captive power generation capacity of 77.5MW of which 64 MW generated through two thermal power plants and 13.5 MW through a hydroelectric powerplant. These facilities are equipped to support increased operations. About 89% of the thermal power produced isused in house for the production of graphite electrodes while power generated at its hydroelectric power plant islargely sold on a merchant basis, thus improving realizations per unit and business liquidity. The captive powergeneration will continue to be a major source of support to enhance organizational profitability.

Valuation : Currently, HEG is trading at `316. We Recommend “Accumulate” with ,assigning targetmultiple 10x FY17E with target price of `349.

Company Update : HEG Limited.

Vol.: 20922nd September, 2014

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Weekly Market Recap : On the second day of Chinese President Xi Jinping's three-day visit to India, China and India on Thursday, 18 September 2014,

announced that China will invest $20 billion in India over the next 5 years. The annual rate of inflation based on the monthly wholesale price index (WPI) decelerated to 3.74% in August 2014, from 5.19% in

July 2014. India's merchandise exports registered a small increase of 2.35% at $26.95 billion in August 2014 over August 2013, data released

by the government after trading hours on Monday, 15 September 2014, showed. Imports rose 2.08% at $37.79 billion in August 2014over August 2013. The trade deficit increased to $10.83 billion in August 2014, from $10.68 billion in August 2013.

The US Federal Reserve at the end of a two-day policy meeting on Wednesday, 17 September 2014, maintained a commitment tokeep US interest rates near zero for a "considerable time". In a statement after a two-day meeting, it announced a further $10 billionreduction in its monthly purchases, leaving the program on course to be shuttered next month.

Market Eye Week ahead : The market may remain volatile as traders roll over positions in the futures & options (F&O) segment from the near month September

2014 series to October 2014 series.

Developments from Prime Minister Narendra Modi's US tour from September 27-30 will be closely watched. Narendra Modi will meetUS President Barack Obama at the White House on 29-30 September 2014.They will discuss ways to accelerate economic growth,bolster security cooperation, and collaborate in activities that bring long-term benefits to both countries and the world.

In global economic data, the US Bureau of Economic Analysis (BEA) will release its third estimate of Q2 GDP estimate on Friday, 26September 2014.

As monsoon approaches its retrieval, cumulative rainfall during this year's monsoon has so far up to 18 September 2014 been 12%below the Long Period Average (LPA).

KEY EVENTS/FACTORS TO WATCH

1. Mon. : ECB President Mario Draghi's speech on European economy2. No fixed day - Borrowing calendar for second-half3. Fri - Foreign exchange reserves data, U.S. annualized Q2 GDP Data

Bought Deal A bought deal is one form of financial arrangement often associated with an Initial Public Offering. It occurs when an underwriter, such

as an investment bank or a syndicate, purchases securities from an issuer before a preliminary prospectus is filed. The investmentbank (or underwriter) acts as principal rather than agent and thus actually "goes long" in the security. The bank negotiates a price withthe issuer.

In investment banking, a securities offering where an investment bank commits to buy the entire offering from the client company. Abought deal eliminates the financing risk for the company, which is able to ensure that it raises the intended amount of funds from thesecurities offering; however, the client firm will likely get a lower price by taking this approach.

Around The World

Vol.: 20922nd September, 2014

Knowledge Corner :

Mutual Fund Corner

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Source : - www.valueresearchonline.com

—– Fund—– CNX Nifty(Rebased to 10,000)

Fund Name

Scheme Name ICICI Prudential Balanced Advantage Fund

AMC ICICI Prudential Asset Management Company Ltd

Type Equity-oriented

Category Open-ended and Hybrid:

Launch Date December 2006

Fund Manager Manish Gunwani & Manish Banthia

Net Assets(` In crore ) Rs. 2076.0 crore as on Jun 30

History 2011 2012 2013 2014

NAV (Rs) 12.90 17.20 19.08 23.70

Total Return (%) -8.77 33.33 10.93 24.21

+/- VR Balanced 9.35 10.79 4.55 1.01

Rank (Fund/Category) 3/28 5/29 5/31 49/61

52 Week High (Rs) 14.69 17.26 19.09 23.72

52 Week Low (Rs) 12.78 12.86 16.00 18.47

Net Assets (Rs.Cr) 149.61 182.86 691.73 1278.04

Expense Ratio (%) 2.40 2.40 2.82 -

Fund Performance v/s S&P CNX Nifty

Top 10 Sector Break-UpsFund (%)

Financial 18.79

Energy 8.30

Automobile 7.12

Technology 6.41

FMCG 3.52

Healthcare 3.49

Diversified 1.83

Chemicals 1.16

Metals 0.62

Engineering 0.41

Fund StyleInvestment StyleGrowth Blend Value

Large

Medium

Small

Capitalization

Composition (%)Equity 44.99

Debt 38.01

Cash 16.99

Risk AnalysisVolatility MeasuresStandard Deviation 10.63

Sharpe Ratio 1.06Beta 0.78R-Squared 0.86Alpha 5.31

Vol.: 20418th August, 2014Vol.: 209

22nd September, 2014

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Commodity Corner

USD/INR

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Forex Corner

EUR/INR

GBP/INR

JPY/INR

Market Eye Week ahead :

For this week, above 60.91 keep view for exit long positions in USDINR pair. On upside above 60.91 near term rise till61.03 – 61.24 and then 61.57 can be possible targets for traders holding long position.

If close below 60.91 and sustain then support can be seen at 60.70 - 60.49 – 60.15. From medium to long term view, thisweek USDINR pair likely to remain range bond “bound” medium term investors can take long position for 61.03 – 61.24 -61.57 targets. If breaks 60.91 then expect 60.70 - 60.49 – 60.15 as stabilization zone for dollar from long term.

Level S2 S1 CP R1 R2 WRV High Low Close

USD/INR 60.49 60.7 61.03 61.24 61.57 60.97 61.36 60.81 60.91

Level S2 S1

JPY/INR 54.69 55.35

CP

56.34

R1

57

R2

57.98

WRV

58.41

High

57.33

Low

55.68

Close

56.01

Level S2 S1

GBP/INR 97.97 98.85

CP

99.91

R1

100.8

R2

101.86

WRV

100.9

High

100.97

Low

99.03

Close

99.74

Level S2 S1EUR/INR 77.58 77.98

CP78.71

R179.1

R279.83

WRV80.33

High79.44

Low78.32

Close78.38

Market Recap :

Vol.: 20922nd September, 2014

Scotland's decision to stay in the United Kingdom alsoeased investor concerns on Friday after a recent run ofglobal political obstacles.

The Indian rupee rose on Friday, boosted by strong for-eign fund flows into markets, although the local currencyfell against the dollar for the week.

The rupee hit a one-month low on Monday, it has steadilyrisen since then on optimism that hefty foreign fund flowswill better help it weather any volatility related to potentialU.S. Federal Reserve rate hikes.

Foreign funds have bought debt and equity worth nearly$3.61 billion so far in September, as per regulatory data,bringing their total for the year to $33.66 billion.

With few domestic factors next week, traders say foreignfund flows will determine the rupee's direction ahead of theReserve Bank of India's policy review on Sept. 30.

Traders long and holding the same can keep the stop loss at 8050-8015. Weakness and correction may be set in for nearterm to short term on fall below 8050-8015. On fall and close below 8050-8015 further correction till the levels till 7955-7920-7850 of can be seen. Subsequently, deeper correction will be seen. Traders may look for rise to 8170-8210-8245 toexit long.

Trend in investment by foreign portfolio investors (FPIs), trend in global markets, trend in other global emerging markets,the movement of rupee against the dollar and crude oil price movements will dictate near term trend on the domesticbourses.

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J Street Recommendations Report Card

Top Fundamental Stocks

Stocks Rec. Date CMP on Rec. CMP TargetAbsoluteReturn @

CMPStatus

HEG 15/09/2014 333 316 349 -5% Accumulate

All Cargo Logistics 05/08/2014 260 239 342 -8% Buy

GDL 19/08/2014 256 245 348 -4% Buy

Ashok Leyland 04/08/2014 35 40 42 13% Accumulate

PTC India Fin. Ser. 07/07/2014 39 47 45 19% Accumulate

M & M Fin. Serv. 05/07/2014 273 282 33 3% Accumulate

PFC 05/07/2014 323 246 390 -24% Accumulate

Adani Port 05/07/2014 280 285 347 2% Accumulate

L & T 05/07/2014 1750 1535 1866 -12% Buy

KEC Inter 05/07/2014 139 110 123 -21% Buy

ONGC 05/07/2014 415 405 530 -2% Buy

Federal Bank 05/07/2014 127 126 144 -1% Buy

TCI 05/07/2014 225 219 243 -3% Buy

ITDCEM Ltd 16/06/2014 329 466 375 42% Profit Book

It's not important whether you are right or wrong, It’s about how much money you make when you're right and howmuch you lose when you're wrong.”

Vol.: 20922nd September, 2014

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J Street Short Term Call Status

Sr.No. DATE STOCK

BUY/SELL

RANGETRIGGER

PRICETGT SL STATUS CMP

% RE-TURN

1 07/08/14 BIOCON BUY467.50-472.50

470.00 492-526 451 TGT1 492 4.68

2 08/08/14 BANKBARODA SELL 878-886 867.00 832-768 917 SL 917 -5.45

3 09/08/14 HEXAWARE BUY143.50-145.50

145.00151.25-

159138 TGT2 159 9.66

4 12/08/14 CROMPGREAV BUY 197-199 198.00 207-221 190.5 SL 190.5 -3.795 13/08/14 BPCL BUY 585-591 596.50 614-647 565 TGT2 647 8.47

6 14/08/14 ADANIPORTS BUY271.50-274.50

273.00 285-301 262 TGT2 301 10.26

7 18/08/14 NTPC BUY 141-142.50 141.75 148-156 136 PB 143.5 1.23

8 19/08/14 TATACOMM BUY 359-362.50 360.75 377-397 347 TGT2 397 10.05

9 20/08/14 SRTRANSFIN BUY 917-928 928.00965-1063

874 TGT1 965 3.99

10 21/08/14 HCLTECH BUY 1545-1560 1552.501621-1755

1494 TGT1 1621 4.41

11 22/08/14 KTKBANK BUY 126-128 127.80 133-141 121 TGT1 133 4.07

12 25/08/14 HDFCBANK BUY 838-847 842.50 880-927 810 OPEN - -

13 26/08/14 ITC BUY 346-350 348.00 363-383 334 TGT1 363 4.31

14 27/08/14 PETRONET BUY 181.50-184 182.75 191-201 174.8 TGT2 201 9.99

15 28/08/14 ASIANPAINT BUY 611-618 618.00 642-677 590 TGT2 677 9.55

16 02/09/14 RELIANCE BUY 1005-1015 1013.101055-1112

970 OPEN - -

17 03/09/14 NMDC BUY172.50-174.50

174.20181.50-

191166 TGT1 181.5 4.19

18 04/09/14 COALINDIA BUY 373-376.50 374.50 391-412 360 SL 360 -3.87

19 05/09/14 HDFC BUY 1070-1081 1075.001123-1184

1035 SL 1035 -3.72

20 08/09/14 NTPC BUY 141-143 141.00 148-156 136 SL 136 -3.55

21 09/09/14 GODREJIND BUY 351-355 351.00 369-388 339 SL 339 -3.42

22 12/09/14 BANKBARODA BUY 915-924 919.50961-1012

884 TGT1 960.8 4.49

23 15/09/14 UNIONBANK BUY 212-214.50 213.25 223-235 204.5 TGT1 223 4.57

Vol.: 20922nd September, 2014

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J Street Short Term Call Status

Sr.No. DATE STOCK

BUY/SELL

RANGETRIGGER

PRICETGT SL STATUS CMP

% RE-TURN

24 16/09/14 FEDERALBK BUY126.50-128.50

126.50 134-141 122 SL 122 -3.56

25 17/09/14 SSLT BUY 282.50- 284.00 296-312 273 OPEN - -

26 18/09/14 ZEEL BUY 287.50-291 289.00302.50-

318277 TGT1 302.5 4.67

27 19/09/14 BANKINDIA BUY 293-296.50 294.00 308-324 282 OPEN - -

28 22/09/14 TCS BUY 2685-2715 2696.00 2822- 2591 OPEN - -

Vol.: 20922nd September, 2014

One call on daily basis is given keeping view of short term trading on closing basis. Time frame and expected % of return is also mentioned with the suggested call. This call are purely given on technical trading system generated by the Technical Research Desk. Generally Expected Return on investment is 5-6 % with time horizon of 6-7 days. Profit Booking update is considered if on an average expected return exceed 3.50-4.00 % against the

Expected return of 5-6% Risk- Reward ratio percentage wise depends on the volatility of stock Normally it stands ( 3 : 9)

STAUTS CALLS RATIO

TA+PB 20 66.67

SL+EXIT 10 33.33

TOTAL 30 100.00

AVERAGE RETURN 2.59

TOTAL RETURN 85.42

Vol.: 20922nd September, 2014