Hold short position with a stop loss of 17530. Cover short position at 16594-15938. Exit long and sell on rise to 17013-17250 with a stop loss of 17532. If lower range of 1694 or below is attained first and then 17013, in that case you can avoid selling.

Last week, the Sensex opened at 17195.51, attained a high at 17432.33 and fell to a low of 16776.72 before it finally closed the week at 16831.08 thereby showing a net fall of 356 point on a week-to-week basis.

Weekly resistance will be at 17013, 17250 and 17532. Weekly support will be at 16594 and 15938.

EBIDTA margins for Q4FY12 stood at 19.5% showing an increase of 136bps on Y-o-Y basis. This was mainly on account of more than proportionate increase in realisation as against an increase in cost of production. On per bag basis the cost of production for Q4FY12 rose by 10.1% Y-o-Y to `178, whereas realisation grew by 12% Y-o-Y to `221. The power & fuel costs which accounted for 35.2% of the total expense rose by 26.8% Y-o-Y for Q4FY12 on per bag basis and the freight costs which accounted for 23.5% of total expenditure rose by 13.0% Y-o-Y on per bag basis.

• Net sales for Q4FY12 grew by 11.8% Y-o-Y to `11,185 mn. This was mainly driven by higher realisation. However, owing to sluggish demand in southern India especially Andhra Pradesh volumes for Q4FY12 remained flat at 2.53 mn on Y-o-Y basis.

• EBIDTA margins for Q4FY12 stood at 19.5% showing an increase of 136bps Y-o-Y. However, margin declined by 141bps Q-o-Q.

• Net profit for Q4FY12 grew by 17.4% Y-o-Y to `649 mn. The strong growth was attributable to stable pricing in south.

Support will be at 17010-16920. Resistance will be at 17530-17664-18040. A rise and close above 17664 may show a rise towards 18040. Till 18524 is not crossed on a sustained basis in time to come, the overall bias remains for a lower top to break the support of 16900.

A breakdown below 16900 may show a slide toward 16250-15800 at least and may be to an outer extent to 15135 and 14732-14100.

Sell further on fall below 16900 with the high of the day stop loss or 17530, whichever is higher at the point of breakdown.

Expect higher range of 17599 and 18119 to be tested if 16900 is not violated immediately.

A close above 5330 could mean a test of the 5410 level and a overcome of that level could mean a sharp upside while weakness could become more apparent only on a decisive close and sustained close below the 5155 level. Support comes in at the 5224, 5155 levels while resistance comes in at the 5330, 5410 levels.

SENSEX important level is 17664. A breakout and close above the same with a stronger positive candle may stage a strong near term to short term rally. Similarly, the low of 16921, may trigger off a sell off. Currently sideways into traingular movement creating the pain of up down movement on alternate days or gap up or gap down without providing intra-day trading movement. The moves come with spike and could not be caught.Thanks to DJIA which recovered strongly from the support and so do FTSE.

Nifty cash now hits the gap of 5287-5305. High made till now is 5299.70, next gap is at 5338-5344. The 50 day average is at 5337. The recent peak is at 5378. A sustained rally is need to take off these resistances. Stochastic has hit the oversold 2 day back and still not yet hit overbought which leave some scope to test these resistance mentioned earlier or above

The rupee is expected to be weak on the dollar’s strength & weak equity market cues. The range for the day is seen between 51.50 – 51.85/USD.

Liquidity, the key tailwind for the rally in Jan-Feb may remain benign globally. We expect easing by the RBI and the growth momentum to improve gradually through FY13.

Earnings depression is likely to persist this quarter. During the earnings season, we watch out for surprise breadth, the pace of increase in capital costs, notably interest costs and companies that exhibit pricing power. Even though earnings may outperform the narrow market on topline growth, they are likely to underperform on the bottomline

Last week being just 3 days trading, it opened at 17429.96, attained a high at 17664.10 and fell to a low of 17382.38 before it finally closed the week at 17486.02 and thereby showed a net rise of 81 points on a week to week basis.

The Sensex has a shadow in the higher range, which may offer resistance henceforth. Resistance will be at 17664-17687-17772. Support will be at 17136-17008-16920. Volatility between 17772 and 16920 is likely to be seen.

Support zone the key to protect the slide. The Indian stock market will have to hold its breath as it will have to go through two nights of global markets. A significant fall or rise in the next two trading days in global markets could affect and impact the market strongly.

The retracement levels of 16828 and 16453 may be under pressure. Which of these levels will work as a support for a bounce cannot be defined currently. When these levels arrive during market time, we need to check if any recovery or bounce is seen from either of the support level mentioned. Nothing much has changed in relation to the previous week and the support henceforth. The support zone is still the key for any possible rise from the support zone.

Correction in USD/INR pair (Spot) to 48.60 was witnessed till February 2012, which saw a faster

As both the FTSE and DJIA show intention of correction, it is important to see how the Sensex reacts to the likely correction or sideways market in both these global indices along with the USD/INR spot. In the last few days, we had seen EURO/INR and GBP/INR rising which means INR is weakening against these currencies on the back of a pullback.

Inflows are clearly being witnessed now and it appears to be confused, leading to sideways and choppy behaviour on Indian stock markets.

The trend which we saw from December 2011 to February 2012 is not seen now and a sideways corrective phase in being witnessed either to create a base for the next rise of Wave c of Wave B of Wave C or Wave B is complete at 18523 and sharper slide is in the offing. Therefore, support zone is the key from hereon.

The week closed with ambiguity and much depends on global markets weekly closing of Dow Jones Industrial Average (DJIA) and Financial Times Stock Exchange (FTSE). Support for DJIA is at 13000 and as we write the current update at 8.47 pm (IST), DJIA is at 13038. If Thursday�s (5 April 2012) closing is below 13000, then expect weakness in DJIA and it may lead to a deeper correction. A rally and outperformance was witnessed since October 2010. The Indian market in relation to DJIA has underperformed. The FTSE has violated the support of 5800-5700 as we write this weekly update. The FTSE now appears to show weakness for a deeper correction. Another weaker closing on Thursday would seal the deeper correction. FTSE outperformance was seen from August 2011 against the Indian market. FTSE had made this bottom of the current rally in August 2011, DJIA made the bottom in October 2011 and Sensex made the bottom in December 2011. So, clearly, international markets outperformed and whenever a correction is seen in these global indices, the Sensex had tended to slide or open with gap down.

CMP : Rs. 78

BSE 532400 NSE KPITCUMM

KPIT Cummins India is a leading technology solutions partner for global Manufacturing corporations with special focus on Automotive, Energy & Utilities, Industrial Equipments, and Semiconductor industries. Our Information Technology solutions help our customers run their businesses more efficiently.

Our 6700+ strong team works at the forefront of technologies and processes to help global corporations become efficient, integrated and innovative enterprises.

The company has increased its full year revenue growth guidance range from $275 mn- $285 mn to $285 mn- $291 mn (excluding revenue of $14 mn from SYSTIME in Q4FY12). The revised revenue guidance implies revenue growth of 2.5%-5% on QoQ basis in Q4Y12 on organic basis as compared to subdued growth expected by the management of other India based IT companies. Moreover, revenue flow from PACCAR deal will start largely from Q1FY13E onwards which will provides high revenue growth visibility upto Q1FY13E.

EBITDA margin improved by 166 bps QoQ to 15.3% in Q3FY12 against our expectation of increase in margin by 215 bps QoQ. The increase in margin was lower than expectation as major portion of incremental revenue growth was contributed by SAP service line which has around half of the company’s average EBITDA margin.

The company reported forex gain of Rs.9.8 crore in Q3FY12 against our projection of forex loss of Rs.0.8 crore. Hence, inspite lower than expected EBITDA margin, forex gain in Q3F12 led net profit margin in line with our estimation.

Power systems drives net sales growth
Net sales increased by 26.3% YoY to Rs 3,028 cr, led by power system segment. Power system segment increased by 33.3% to Rs. 2,068.9 cr and constituted 68% of sales as CG executed/closed long tailed international orders. Industrial segment also registered strong sales growth of 24.7% during the quarter.

50 mn Euro negligible margin order erodes operating margins to 6.5%.
For Q3FY12, Operating margins declined sharply to 6.5%, a 815 bps YoY on account of sharp increase in raw material cost. Raw material cost as a % of sales increased by 777 bps. Raw material cost increased sharply as CG closed negligible margins orders. Management commented there are no such orders in the current order backlog. So such thin margins are unlikely to repeat. However, in current difficult market conditions management commented it would try to adhere to its EBIDTA margin guidance of 8% to 10%, (which they had earlier revised downwards in Q1Fy12 from ~13%). We believe margins going ahead still remain a concern.

At CMP of Rs. 145 Crompton Greaves is trading at P/E of 20.2x its FY12 EPS and 11.8x its FY13E. Considering macro headwinds in power sector and intense competition in the areas CG operates, we assign a multiple of 12x its FY13 earnings and recommend HOLD on the stock with a price target of Rs 147.

Currently the company is taking up restructuring its business operations. Firstly the company proposes to merge Pratibha Pipes & Structural (PPSL), a group company into the company and secondaly hiving off the entire manufacturing operations including the SAW pipes division of PIL into a 100% wholly owned company, which is yet to be incorporated by way of slump sale. Each share of Rs 10 face value of PSPL will get six fully paid up equity shares of Rs 2 each of
PIL. Appointed Date for the Scheme is April 1, 2012. The swap ratio is calculated with valuing each share of PPSL at Rs 676 and that of PIL at Rs 110. Promoters of PIL has 84% stake in PPSL.

Post conversion of Compulsorily convertible participatory preference shares& post merger the promoter stake will increase to 55%.ag 52.26 before merger . Last year company issued Compulsorily Convertible Participatory Preference Shares of Rs. 92/- (Rupees Nine Two only)
each aggregating to Rs. 50,00,00,036/- on Preferential basis to PE Investor i.e. Van Dyck, Mauritius. & it has also done QIP at rs 82 to various FII &mutual funds

Company has done well for the 3rd qtr as , Net profit of company rose 34.75% to Rs 19.08 crore in the quarter ended December 2011 as against Rs 14.16 crore during the previous quarter ended December 2010. Sales rose 44.21% to Rs 395.20 crore in the quarter ended December 2011 as against Rs 274.05 crore during the previous quarter ended December 2010. Seeing to strong order position, investors can take benefit of current fall & accumulate this share with medium to long term view at current price of 45/46 or on dips.

The Nifty has defied logic and also the laws of gravity to convert its 7 trading session sideways movement into a consolidation and has gone on to gain further ground. Its rather obvious that scrip specific movements are taking place but his has not made any difference whatsoever on the Nifty and despite the speed and quantum of the rise, there aren’t any reversal signs yet. A correction might not materialise till there is a downward breach of the of the 5505 level. Support comes in at the 5505, 5410 levels while resistance comes in at the 5614, 5699 levels.