Friday, July 3, 2009



Adani Enterprises (AEL) is redefining its business model and scale of operations. Moving away from low capex, lumpy and low-margin trading to capex heavy and high margin annuity businesses, AEL is emerging as an infrastructure conglomerate Rs421bn of revenues by FY12E). AEL plans to invest Rs300bn+ across sectors with 90% in power generation and coal mining by FY12. Commencement of power generation (total capacity of 6,600MW) and coal mining (75m tonnes at peak) imparts visibility of scale to what were ‘just potential opportunities’. While near-term risks pertain to execution and financial leverage, we derive comfort from AEL’s track record 8x revenue scale-up since FY02) and entrepreneurial vision. With current projects valued at Rs1,105-1,279 per share, and further upside likely as planned projects gain visibility as also from scale-up beyond the existing plans, we maintain Outperformer.

In quest of scale: AEL is transitioning from a Star Trading House (power, coal, agri, precious metals, scrap, etc) to an infrastructure conglomerate (power generation, coal mining, city gas distribution, oil & gas exploration, agri logistics, etc). A marked shift is underway from asset light businesses to asset creation, lumpy trading to annuity model and 5-6% margins to a 40%+ margin profile.

Power and coal businesses at the core: AEL is executing 6,600MW of power plants with 330MW capacity going on stream immediately and 1,320MW by FY10. In coal mining business, Indonesian mines with annual extract of 10m tonnes are operational and Indian mines (65m tonnes by FY16) would commission in FY11. Power generation and coal mining would account for 25% of revenues and 80% of EBITDA by FY12.

Execution the key; we see a winner: As AEL enters uncharted territories and creates scale

Rs421bn by FY12), execution will hold the key. However, timely commissioning of Mundra Port and power plants, position as India’s third largest power and largest coal trader, and promoters’ entrepreneurial acumen infuse confidence. Power would be the largest value creator with pre-money valuation of Rs204bn (Rs242bn post money). We value AEL’s existing projects at Rs1,105-1,279 per share (Rs688-862 for power and Rs221 for coal mining). Further upside could accrue as AEL capitalizes on the massive government thrust on infrastructure.

To see full report: ADANI ENTERPRISES


Opportunity to reduce deficit

As widely covered in the press, Government is expected to announce list of candidates for disinvestment program shortly for reducing the fiscal deficit. In this note, we attempt to look at business profiles (including financial snapshots) of likely companies in the expected disinvestment initiative. Disinvestment can be in the form of (a) offer for sale in unlisted companies (through IPO or direct stake sale to strategic investor) and (b) divestment

in listed companies.

In the interim budget for 2009-10 (announced in Feb-09), Government indicated that fiscal deficit for FY10E is likely to be ~Rs3.32 trn (~5.5% of estimated GDP) on account of continuation of major government schemes such as National Rural Employment Guarantee scheme (NREGS), Jawaharlal Nehru National Urban Renewal Mission (JNURM) and
implementation of Sixth Pay Commission. With declining direct/indirect taxes and continued expenditures, disinvestment program would assume more importance to reduce the deficit.

Except 2004, no major disinvestment in past: As shown in Exhibit 1 in report, we find that most significant amount of Rs155bn was raised in FY04, when fiscal deficit was 4.5% of GDP. Disinvestment program in FY04 (which included offer for sale of petroleum companies) was undertaken by the then ruling BJP government.

Plenty of options available at the moment: We enclose profile of likely companies for the ensuing disinvestment program. As seen in Exhibit 2 in report, the total net sales /net profit of all listed government companies are Rs 13.7/1.1 trillions respectively while unlisted government companies have net sales/profits of Rs4.0/0.3 trillions respectively.

To see full report: DISINVESTMENT


What are insiders doing?
Insider sales hit a nine-month high in May as markets recovered and June will also be a month of high insider selling. Interestingly insider buying which had tapered off after Sept-08 revived partly in Jan-09 and Mar-09. The complete lack of insider selling over Sept-08 and April-09 is likely reflective of the poor demand/ liquidity for equities as the credit crunch hit the markets very badly. To quote from our Regional Watchdog report: “Stocks that have outperformed but seen large insider sales could face more downside potential if markets correct.” Bharti, DLF, L&T, ITC, Kotak Bank, Shriram Transport, HDFC and HDFC Bank are among the companies
that have seen relatively large insider selling in Apr-09 to Jun-09.

Record insider selling in the region…
Our Regional Watchdog report covers trades by directors/ significant shareholders and buybacks above US$0.1m for companies with market cap of US$1bn or more.
Insider selling in the region accelerated in May as market rally continued, hitting record US$2.2bn (a 4x increase from April) – the highest since Sept-08.
The spike in sales betrays a likely lack of confidence in the current rally.

…Similar trend in India
The Indian data shows that insider buying was strong during Sept-08 and then again in Jan-09 and Mar-09.
Insider selling which was virtually absent during Sept-08 to Apr-09, has significantly picked up in May-09 and Jun-09.
Even removing the big deals in May – the selling by promoters of DLF and Suzlon the insider selling in May and Jun will be the highest in the last ten-months.

Interesting buying and selling by insiders
We looked at the buying and selling by insiders in the top 25 companies by market cap (excluding PSUs) and a few other companies where notable insider transactions were seen.
Stocks that have seen a notable increase in insider selling in recent weeks/ months are Bharti, DLF, L&T, ITC, Kotak Bank, Shriram Transport, HDFC and HDFC Bank.
ICICI Bank, which had witnessed large selling by insiders in the Jan-08 to Jul-08 period, has seen some buying in early May after a long period of lull. Jindal Steel Power has seen buying in Nov ’08 and in Apr ’09.
It is not just insider selling that increased. Corporate India’s equity raising plans suggest that equity supply in FY10 can exceed that in any year other than FY08.

See inside for charts and tables and for details refer to Krishnan’s strategy note

To see full report: MARKET STRATEGY



We upgrade Tata Steel to BUY from Hold, with revised target price of Rs501/share. Though near-term earnings uncertainty persists in Corus, we expect proactive cost-cutting measures (via overhead reduction & reorganisation of unprofitable UK centres) to reap dividends, once capacity utilisation picks up. Notwithstanding the weak margin outlook, domestic operations would continue churning Rs50-55bn annual cashflows. Comfortable liquidity position (~US$2bn), resetting of debt covenants to be retested over FY12-13 and no near-term repayment obligation in Corus will help Tata Steel manage cashflows better.

Tata Steel’s Q4FY09 results were lower than Street expectations on account of: i) sharp drop in domestic realisations and ii) steep decline in prices as well as volumes in its European operations. Consolidated topline declined 22% YoY and 21% QoQ to Rs264bn. Consolidated Q4FY09 EBITDA stood at (Rs154mn) due to ~Rs7.3bn inventory write-down at Corus. Tata Steel’s India operations saw lowerthan- expected results, with EBITDA down 40% YoY (I-Sec: down 31%) to Rs14.5bn; EBITDA margin sharply dipped to 22%. Adjusting for ~Rs5.8bn
extraordinary gains, Corus registered EBITDA loss of Rs13.5bn (I-Sec: Rs35bn loss). We are trimming our FY10E & FY11E consolidated profit estimates 84% & 1% respectively. This is on the back of reduction in FY10E & FY11E Corus’ sales and realisations estimates 49% & 40% and 26% & 19% respectively.

Corus to reap benefits from cost-cutting measures in next upcycle. i) Sharp pricing decline due to higher spot exposure, ii) absence of raw-material contracts prolonging the cost pressure and iii) current 50-53% capacity utilisation led to recurring EBITDA loss of US$76/te in Q4FY09. However, cost optimisation programmes will spurt earnings, once capacity utilisation increases. Also, resetting of covenants and absence of prepayments coupled with hedging & carbon-credit gains on reduced production will help better management of Corus cashflows.

Domestic pricing pressure; long-term fundamentals intact. Q4FY09 domestic realisations dipped 20% QoQ despite 68% QoQ increase in volumes. This resulted in muted 22% EBITDA margin, which will remain the flavour of FY10E. However, despite the weak margin outlook, domestic operations will continue generating annual cashflows of Rs50-55bn, adequate for funding the 3mnte brownfield at Jamshedpur.

Valuations. The stock trades at reasonable FY11E P/E & EV/EBITDA of 5.4x & 5.4x respectively. Upgrade Tata Steel to BUY with revised target price of Rs501/share (target FY11E EV/EBITDA of ~5.9x, which is at 10% discount to global peers).

To see full report: TATA STEEL


First Positive Move toward Decontrol

Quick Comment: The Indian Government has revised petrol and diesel prices upwards by Rs 4/litre (US$ 10/bbl) and Rs 2/litre (US$6/bbl), respectively. The country has revisited retail pump prices after a gap of six months. The government has, however, left LPG and kerosene prices unchanged. With the above price increase, we estimate the total subsidy burden for the
country will fall by US$4bn on an annualized basis from US$9.4bn previously to US$5.4bn, assuming crude oil prices average about US$70/bbl for F2010. We believe the weighted average crude basket for India increased from US$57/bbl to US$62/bbl.

Key beneficiaries:1) Upstream companies (Oil & Natural Gas Corp. (ONGC.BO, UW, Rs1052.6) & GAIL (India) (GAIL.BO, OW, Rs287.85): Since the overall subsidy in the system reduces, upstream companies would be positively impacted as they have to share a lower subsidy burden. 2) Downstream companies (Hindustan Petroleum (HPCL.BO, OW,
Rs311.25), Bharat Petroleum (BPCL.BO, OW, Rs453.7), and Indian Oil Corp. (IOCL.BO, OW,
Rs541.2): With the price rise, we estimate that downstream companies would reduce losses on sales of petrol and diesel to Rs0.5/litre (US$1.0/bbl) on petrol and Rs 0.25/litre(US$0.9/bbl) on diesel sales. They were earning Rs 4.5/litre and Re 2.25/litre on petrol and diesel, respectively, before the price cut. However, losses on sales of kerosene and LPG would still continue.

Estimate impact on wholesale price inflation will be
about 45 basis points: We estimate the price increase will have a direct impact of about 21 basis points on wholesale price inflation, which was at -1.14% YoY during the week ending June 13, 2009. This price rise could have a cascading impact of approximately the same magnitude that could be felt in the next 3-4 months.

To see full report: INDIA OIL & GAS


Company Background & its Business Structure
Incorporated in 1998, IRB Infrastructure Developers Ltd. (IRBD) is an infrastructure development & construction company in India with significant experience in the roads & highways sector. Its infrastructure development business involves the construction, development and operation of infrastructure projects. IRBD currently has 10 operational BOT (Build, Operate & Transfer) projects in its portfolio, while 2 BOT projects are in the construction phase. Its construction business complements the infrastructure development business & involves engineering, procurement & construction work (EPC) for construction projects and operations and maintenance on a contractual basis. IRBD has moved up the value chain & recently ventured into the field of real estate development.

IRBD came out with an IPO of Rs. 9.44 bn in February 2008 with an objective to invest in its subsidiaries & for pre-payment & repayment of its existing loans. Most of the work in both in the infrastructure development business and construction business is won on a competitive bidding basis. IRBD’s clients are usually Government entities (National Highways Authority of India,

Maharashtra State Road Development Corporation, etc.) that award project specific contracts to bidders based on certain eligibility requirements. These eligibility requirements generally include project experience, engineering capabilities & financial strength. IRBD may enter into project-specific joint ventures with other companies to meet these requirements or to further
enhance its credentials. In the Surat-Dahisar project (awarded to IRB in April 2008), IRB has entered into an agreement with Deutsche Bank as a financial partner, which has a 10% equity stake in the project.

Economically beneficial arrangements with respect to certain BOT projects
Under the concession agreements relating to the Pune - Solapur road BOT project and the Pune - Nashik road BOT project, the Ministry of Shipping, Road Transport & Highways (MoSRTH) has undertaken that the Government of India will not construct & operate either on a BOT basis or otherwise a competing project facility, either toll free or otherwise, during the
concession period; except where the fee charged for vehicles using such facility is in excess of 133% of the fee being charged for the vehicles using the roads under IRBD’s concession agreements with the MoSRTH.

Moving up the value chain – Real Estate Developer
IRBD has ventured in the real estate business through its 66% subsidiary Aryan Infrastructure Investments Pvt Ltd (AIIPL). IRBD plans to setup an integrated township alongside the Mumbai-Pune expressway. The proposed township would be spread over 1,400-1,450 acres. Of this, around 60% would be residential and the rest will be developed for commercial activities. The company has a land bank of 1,250 acres and has proposed to acquire the balance 150-200 acres in the next 6- 8 months for its proposed township. The total cost of 1,250 acres acquired amounts to Rs. 1.9 bn. This has been funded through internal accruals. With influx of major IT companies in and around the main city of Pune, we believe that the Real Estate venture could be a major growth driver for the company going forward. However, the entire development is expected to complete over the next 8 to 10 years. This would be in partnership with a developer. No revenue is expected to flow for the next 2 to 3 years. With the current downturn in the real estate cycle, the company has decided to go slow on this project. Also, the company decides to sell the land bank acquired, it could still be profitable as it could fetch Rs. 40-45 lacs per acre almost three times the cost of acquisition, which was Rs. 15 lacs per acre).

Healthy Order Backlog involving large projects like Surat-Dahisar, Surat-Bharuch & Kolhapur
IRB group’s current order book stands at Rs. 59 bn, which has increased from Rs. 23.25 bn as on December 31, 2007. This is mainly on account of two projects awarded in FY09 viz; Surat-Dahisar (awarded in April 2008) & Kolhapur project (Awarded in March 2008).

To see full report: IRB INFRASTRUCTURE


Going strong…

Tulip Telecom reported its Q4FY09 consolidated results, which were in line
with our estimates on the topline front. The topline at Rs 467.7 crore was 2.48% lower than our expectation of Rs 479.6 crore. The company recorded a growth of 12.8% and 5.9% YoY and QoQ, respectively. The EBITDA margin at 21.4% improved marginally by 52 bps YoY and by 156 bps QoQ. PAT for the quarter stood at Rs 106.7 crore, up 114.9% YoY and 60.9% QoQ, primarily aided by other income of Rs 57.9 crore.

Highlight of the quarter
The company has almost completed its fibre network roll out in Mumbai and Delhi. It is currently in the process of stabilising the network. The SWAN project for the West Bengal government is also on the verge of completion. We expect it to add to revenues from Q3FY10 onwards. Similar projects for Assam and MP are currently under implementation. The company repurchased and cancelled FCCBs of the face value US$33.39 million, according to the RBI circular, at a discount. This resulted in savings of Rs 730.3 million and was included in other income. It has decided a dividend payout of Rs 4/ share.


The stock has appreciated over 187% over the past two months. At the CMP of Rs 848, it is trading at 10.5x and 9.4x its FY10E and FY11E diluted EPS respectively. We value the stock at 10.0x FY11E EPS to arrive at a target price of Rs 906. We are downgrading it the stock to HOLD from OUTPERFORMER.

To see full report: TULIP TELECOM


Results boosted by other income: Unitech’s 4QFY09 revenues were down 66% YoY to Rs3.9b (v/s our estimate of Rs4.4b) and reported net profit was down 25% YoY to Rs2.7b (v/s our estimate of Rs696m). The results were boosted by (i) sharp jump in other income, which was Rs3.6b as against Rs115m in 4QFY08 and Rs587m in 9MFY09, and (ii) tax write-back of Rs20m.

Successful balance sheet recapitalization has reduced leverage: Unitech has raised ~US$575m (~Rs27b), by issuing fresh 342m shares, resulting in dilution of 16.7% pre dilution. As a result, promoter holding in Unitech would decline to ~44% v/s ~51% earlier. Unitech’s net Debt/ Equity would also decline from ~1x (pre second QIP) to ~0.4x now. Unitech has in the last few months managed to successfully recapitalize its balance sheet by 1) successfully
raising equity and ii) asset sale of ~Rs10b. This has significantly lowered the solvency risk and improved its financials.

Accelerated launches since March 2009: After a gap of 6-8 months, Unitech made a slew of residential launches, largely in the affordable housing segment. Since March 2009, it has launched ~14msf of residential projects in Gurgaon, Chennai, Mohali, Kolkata and Mumbai, and has sold ~3.2msf. The company plans to launch ~30msf of new projects, largely in the affordable housing vertical, and is confident of selling ~20msf in FY10 itself.

Valuation and view: We have upgraded our NAV estimate to Rs83/share from Rs66/share, to account for (i) accelerated launch of projects, ii) reduction of WACC and cap rates, and (ii) 5% CAGR in real estate prices vs zero increase earlier. The stock trades at 1.9x FY11E adjusted BV of Rs44/sh and at 1x its FY11E NAV of Rs83/share. While the macro outlook has turned positive for Unitech, we believe the stock is fairly valued. Maintain Neutral.

To see full report: UNITECH



Given the lack of clarity on segmental results, what we decipher from TV18’s results is as under:

• TV18 has majorly disappointed on numbers with consolidated revenues of Rs4.9bn, operating loss of Rs1.2bn and net loss of Rs1.7bn in FY09.

• In FY09 in absence of IPOs and cut down of advertising by BFSI players, news broadcasting revenues have declined
by 13.5% at Rs2.9bn. With fix cost structures, operating profits are down by 77% at Rs317m.

• Internet business revenues have grown by mere 17% at ~Rs650m (also impacted by lower revenues from Operational losses is estimated at ~Rs660m, driven by launch expenses of

• Newswire18 revenues is expected to have doubled at ~Rs230m and losses at ~Rs80m

• TV18 has during the year acquired 44% stake in Infomedia18. Infomedia18 is estimated at ~Rs1.2bn for the period
since 20th August 2008 and the operating losses at ~Rs500m. TV18 has significantly scaled down Infomedia18’s business and is focusing on the business directory services on print, voice and web platforms.

• While Q4FY09 was expected to be the worst quarter for the year FY09, we are negatively surprised by the sharp increase in cost structure. During Q4FY09, TV18 reported revenues of Rs1.36bn, operating loss of Rs1.27bn (Rs120m in Q3FY09) and net loss of 1.2bn (Rs227m in Q3FY09). Continued capital market turmoil in Q4FY09 and no Union budget resulted in 36% decline in revenues of news broadcasting business.

• One time expenditure during the quarter includes Rs120m as provision against lapsed warrants in Infomedia18,
Rs200m towards ESOP re-pricing and Rs100m towards bad debt.

• However overall operating expenditure during Q4FY09 is up from Rs1.4bn in Q3FY09 to Rs2.6bn.

• Rs70.8m of share of losses in associates pertains to 2.5 months of 20%+ stake in IBN18

• Other income during the year stood at Rs1.1bn, while gross interest cost stood at Rs1.2bn. Other income includes
option premium gain on Viacom18 and Rs270m of gains on sale of some shares of the aggregate 5.26m shares transferred to a Trust.

To see full report: TV 18

>Price hikes put China's oil demand recovery at risk

Sydney - China's fuel demand has rebounded since hitting a low in January, but an unprecedented double hike in pump prices in a month could derail that recovery if consumers scale back their gasoline and diesel use.

Analysts say June will be an important month for testing the boundaries of Chinese fuel demand elasticity, after Beijing followed a 6-7% rise in gasoline and diesel prices on June 1 with an 8-10% hike four weeks later.

China's move shows its confidence that costlier fuel won't trigger social instability, even though it will eat further into profit margins of low-income, and sometimes volatile, groups like taxi drivers and farmers.

Gasoline and diesel prices in some regions of China are now near heights reached in summer 2008, when crude oil futures peaked above $147 a barrel.

"On a psychological level I think we are beginning to arrive at the point now where consumers will start counting their fuel costs and maybe rein back spending," said Tom Grieder, Asia-Pacific energy analyst for consultancy IHS Global Insight.

This will be the case particularly if users believe that crude prices will keep on rising, he said.

Nymex crude soared 40.7% in the second quarter, the biggest quarterly percentage gain since the quarter ended September 28, 1990, during which time Saddam Hussein's Iraq invaded Kuwait. Year to date, oil is up 56.7%.

China isn't alone in Asia in taking action at the pump. Pakistan will raise local fuel prices by around 12% Wednesday, a senior government official said this week.

India's Essar Oil Ltd. (500134.BY), which operates about 1,250 filling stations, hiked gasoline and diesel prices in June. More price changes are on the cards, with Indian fuel retailers set to lift jet fuel by about 6.5% from Wednesday.

And Wednesday, Vietnam came in with a more modest 5% rise in fuel prices, but this was its third rise since early May.

Paul Ting, president of research firm Paul Ting Energy Vision LLC, said there were signs in the market that Chinese oil demand is being hit.

"The most important is the fact that there were already price discounts taking place in China in June," Ting said, citing evidence from independent fuel retailers and others.

"Any time you have to give 'trinkets' such as eggs and soft drinks away to sell fuel suggest a very competitive market," he said.

Faster, Higher, Stronger
China's fast-growing economy has been a key driver of crude oil prices in recent years, but the world's second-largest energy consumer has felt the impact of the U.S. and major trading partners in Europe sliding into recession.

The International Energy Agency on Monday cut its global oil demand growth outlook for the next several years. It sees China's 2009 oil use shrinking by 0.4%.

Others are more bullish. In a June 19 report, Citigroup oil and natural gas analyst Graham Cunningham forecast China's 2009 oil demand will grow 3% to 8.1 million barrels a day.

"In the second half of 2009, we expect oil demand growth to be supported by rising stimulus spending, which will be weighted towards energy-intensive Western China development and infrastructure spending," Cunningham said in the report.

China's gasoline use has received considerable support in recent months from government policies aimed at shoring up the country's auto industry. These include subsidies and a purchase tax cut on small cars.

Auto sales in China rose 34% in May from a year earlier to 1.12 million units, the China Association of Automobile Manufacturers said. In the first five months of this year, sales rose 14.3% from the same period of 2008.

Relatively low inflation has been supportive to oil demand, as it means Chinese consumers aren't feeling the pressure elsewhere in their budgets. China's consumer price index fell 1.4% in May from a year earlier, the fourth straight month of drops.

Seasonal factors have been at play in underpinning demand, with farmers having little option earlier in the year than to keep buying diesel to for farm machinery at the start of the planting season.

However, much will depend on the National Development and Reform Commission, China's economic planning agency, and its commitment to stick with the fuel pricing mechanism that it introduced at the start of January.

Under this reform, domestic fuel prices may be adjusted when the moving average of a basket of international crudes changes more than 4% over a period of 22 working days. The reforms guarantee refiners a 5% profit margin as long as crude prices are below $80 a barrel.

"If crude rises above $80 per barrel I think the NDRC will become much more cautious to implement further raises due to the potential impact on social stability and may step in and provide subsidies to soften the cost for consumers," said Grieder, of IHS Global Insight.

Damien Ma, China analyst at Eurasia Group, expects the NDRC will keep raising prices, not least because a fuel consumption tax introduced late last year has generated a great deal of revenue for Beijing at a time when it needs to fund its fiscal expansion.

"As tax remittance from other sources drop, Beijing may view these types of consumption-based taxes as a good way to pad central coffers. It also dovetails with the sustainability goal of curbing pollution," Ma said.

Any sudden weakness in domestic demand will present China's refiners with a dilemma: lower runs and squeeze profit margins or keep output high with surplus supply diverted overseas or stockpiled.

China's export options look limited, despite strong volumes shipped overseas in May and April, as it's unclear how much excess supply neighboring countries can take without a meaningful pickup in their economies.

Analysts said refiners would most likely speed up plans to raise commercial stockpiles of oil products. PetroChina Co. (PTR), China Petroleum & Chemical Corp. (SNP) and China National Offshore Oil Corp. are spending billions of yuan on new storage tanks around the country.

Data on China's crude and refined product stock levels typically is issued by state news agency Xinhua in the first few days of each month and May data are due imminently.

"If fuel prices are going to rise this is a good strategy as it will save (refiners) costs over the longer term," Grieder said.



FY2010 Union Budget: Strong on paper: We expect FY2010 Union Budget to deliver something for all, without a serious attempt to control rising costs. It is likely to push up social spending. increase subsidies and provide for infrastructure investment. The government may attempt to meet the likely higher spending through additional revenues(tax roll backs and disinvestment). We expect budget to be temporarily positive for equity, bond and currency markets.

Headline fiscal numbers may be positive but follow through action more relevant.

Tax cuts roll-back, asset sales and licensing revenues to support inclusive growth.

Key expectations and impact on market and sectors.

Market is fully valued hence, recommend defensive stance

To see full report: ECONOMY


The Dollar index based on the available data show the fall has been a corrective pattern of A-B-C which can be converted into W-X-Y pattern with Wave W complete.

The current rise can be for Wave X.

Wave X will be a corrective structure with 3 wave pattern which can get carried up towards the 102 from current level of 80.50.

The above indicated Wave structure is valid till the low of 71 is not violated.

Alternative count structure can be more bullish that what was indicated above. Corrective wave structure gets complete at 71 with A-B-C structure and new up move and impulse has already began. Minor degree Wave 1 is complete and Wave 2 is in progress.

Dollar index moved down from 121.29 (2001) to 71(2008). In the same period of the world equity indices have shown a rise had made new highs during the same period broadly.

In the same period Crude Oil also showed a rally which had directly correlation to the equity markets.

In the same way HG COPPER on Comex showed a rally in the same period from 60$ to 426$. Only difference is that made a top six month later. Similar tendency has been seen in other metals.


On the whole, we can see direct correlation between the financial and commodity market against the dollar index.