Indiainfoline - Strategy Inputs of the Day

Bulls may cook up gains!

The winner is the chef who takes the same ingredients as everyone else and produces the best results.

Despite Tuesday’s profit booking, a healthy correction still appears to evade the market. The ingredients are there for both the bulls and bears. Choose your ingredients or stocks to the extent you can digest. We are not sure if the men in blue will bounce back from two back-to-back losses in South Africa. But, the bulls seem to leave Tuesday’s blues behind and are set to rebound immediately. The weather around seems fine with Asian markets up sharply this morning. On Wall Street, US stocks closed with slim gains. What may be of some concern to various categories of investors is yesterday's provisional FII figure. The foreign funds offloaded shares worth Rs4.39bn in the cash segment. On the derivative side, they were net sellers to the tune of Rs22.94bn. Having said that, the December Nifty futures shut shop with a 17-point premium, indicating that the immediate undertone remains positive. This may be a good sign as traders are reluctant to go short on the Nifty despite the steep fall in the cash segment. Market wide rollover is at 47%, while the same in Nifty futures stands at 41%. We expect trading to remain volatile ahead of tomorrow's expiry of F&O contracts. The key indices will open firm on positive global cues and could end in the green, provided fresh buying kicks in, especially from FIIs.

Gujarat NRE Coke may be in action as the company now has a listed presence on the australian Stock Exchange in the form of Gujarat NRE Resources NL. Last week, the shareholders of Zelos Resources NL passed the resolution giving effect to Gujarat NRE Coke taking a controlling (85%) stake in the company, which is now being renamed.

Jindal Saw is likely to gain as it has posted a net profit of Rs475.68mn for the quarter ended Sept 30, 2006 compared to Rs241.37mn for the same quarter last year. For the reporting quarter, total income (net of excise) is up 98% at Rs11.40bn. FDC might attract some attention as it has received the permission to market its product Flucanazole in the United Kingdom.

PSU oil companies will be under pressure as the Government is all set to cut fuel prices at the retail level. Steel companies may also fall amid reports that local producers are likely to cut prices in December. Exide Industries is being seen benefiting from the company's foray into the insurance sector, through investment in ING Vysya Life Insurance Co. Another stock to look out for is Apollo Hospitals due to a series of initiatives being taken up by the company.

Bangalore-based Bal Pharma has entered the $60-bn Japanese pharma market with its bulk drug products Ebastine (used in antihistamines) and Gliclazide (an anti-diabetic bulk active).

US stocks closed with marginal gains on Tuesday as investors shrugged off a spate of weak economic reports and remarks from Federal Reserve Chairman Ben Bernanke. Investors resumed buying following the prior day's sharp losses. But, worries about the state of the economy and a spike in oil prices kept investors on the edge.

The Dow Jones closed up 14 points at 12,136, rebounding from a morning low of 12,072. The S&P 500, meanwhile gained 4 points to 1,386, while the Nasdaq added 6 points to 2,412.

In a speech prepared for delivery before the National Italian American Foundation in New York, Bernanke said the world's largest economy is roughly slowing at the pace the central bank had expected this summer, reflecting the slowdown in the housing market.

He also said that inflation has moderated of late, due in part to the decline in oil and gas prices. However, the level of the so-called "core" inflation, which excludes food and energy prices, has remained "uncomfortably high."

Treasury bond prices rose on a growing optimism that the Fed is likely to cut rates next year. The advance lowered the yield on the 10-year note to 4.50% from 4.53% late on Monday.

US light crude oil for January delivery rose 67 cents to $60.99 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 16 cents higher at $61.15 per barrel in after-hours electronic trading in Asia.

The dollar dropped 0.1% against the euro but it rose 0.1% against the yen. Gold for January delivery closed down $3.30 at $637.30.

European shares closed lower for the fifth day in a row on Tuesday, as weakness in the dollar and profitability concerns surrounding Barclays and Nokia depressed sentiment. The pan-European Dow Jones Stoxx 600 index fell 0.3% to 349.69.

The German DAX Xetra 30 closed down 0.3% at 6,281.68, while the French CAC-40 lost 0.1% to 5,306.24. The UK's FTSE 100 shed 0.4% to 6,025.90.

Asian stocks rose Wednesday morning, led by Toyota and Samsung Electronics, after Japan's industrial production rose to a record and Fed chief Bernanke said that US economic growth will pick up next year.

The Morgan Stanley Capital International Asia-Pacific Index rose 1.4% to 134.12 as of 11:15 a.m. in Tokyo. Markets rose around the region, except in China and the Philippines.

Japan's Nikkei 225 Stock Average added 158 points to 16,013 while the Hang Seng rose 68 points to 18,707. The Kospi in Seoul put on 10 points to 1422 while the Straits Times in Singapore was up 64 points to 18,704.

In the emerging markets, the Bovespa in Brazil gained 0.3% to 41,043 while the IPC Index in Mexico lost 0.4% to 24,344 and the RTS index in Russia gained 0.10% to 1728.

Major Bulk Deals:
E*Trade Mauritius has picked up 4.5% stake in IL&FS Investsmart from fidelity; UBS has bought a big chunk of IDFC shares; Jpmsi Copthall has purchased GVK Power; Sundaram MF has bought Rane Holdings while Templeton MF has sold the stock.

Insider Trades:
Surana Telecom Ltd: Sunita Surana, Promoter has purchased from open market 26011 equity shares of Surana Telecom Ltd from 16-JUN-2006 TO 24-NOV-2006.

Results Today:
Viceroy Hotels and Shriram Transport Finance

Market Volumes:
The turnover on NSE was up by 3.5% to Rs82.58bn. BSE Technology index was the major loser and lost 2.02%, BSE Metal index (down 1.63%), BSE Bank index (down 1.45%), BSE PSU index (down 1.11%) and BSE Auto index (down 0.82%) were among the other major losers.

Volume Toppers:
IFCI, IDFC, India Cements, Hanung Toys, Ashok Leyland, Lanco Infratech, IVRCL Infrastructure, R Comm, Hotel Leela, Arvind Mills, JP Associates, Adani Enterprises and Amar Remedies.

Delivery Delight:
Ashok Leyland, Aurobindo Pharma, Bharti Airtel, CEAT, Century Textiles, CESC, D S Kulkarni, Grasim, HCL Infosystems, Hero Honda, IVRCL Infrastructures, Maruti, Punj Lloyd, Sun Pharma, Tata Tea and Yes Bank.

Brokers Recommendations:
Wipro – Hold from Angel Broking
Sterlite Industries – Buy from Emkay

Long Term Investment:
India Cements

Major News Headlines:

Sadbhav Engineering JV gets Rs2.97bn order
IVRCL Infrastructures wins orders worth Rs3.88bn
Orient Ceramics approves 5:4 bonus issue
Dabur Pharma wins ANDA nod for cancer drug
Natco Pharma unveils lung cancer treatment
Karur KCP bags export orders worth $1.65mn