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Tuesday, November 28, 2006
Market declines on weak global cues
Market traded in the red throughout the day’s trading session, tracking weak global markets. The volatility was high ahead of expiry of November contracts this Thursday (30 November), where open positions are quite large.
The 30-shares BSE Sensex lost 171.64 points (1.25%) to 13,601.95. It moved in a range of 13,577.38 and 13,691.12.
The S&P CNX Nifty lost 45.70 points (1.15%) to 3923.20.
The total turnover on BSE was Rs 4049 crore, which was lower as compared to Rs 4441 crore on Monday (27 November).
Market breadth was weak. 1072 shares advanced as compared to 1465 that declined on BSE. 83 remained unchanged. In early trade, the breadth was much weaker. The BSE Small-Cap index lost 45 points to 6,531.39 while the BSE Mid-Cap index declined 34.57 points to 5,651.21.
Among the Sensex pack, 25 declined while the rest advanced.
Frontline IT stocks were the worst hit on profit booking, with the BSE IT index declining the most among sectoral indices, by 2.43% or 125.69 points to 5044.49. Satyam Computers (down 2.91% to Rs 451), Wipro (down 2.27% to Rs 588) and Infosys (down 2.79% to Rs 2165) declined.
Majority of the Indian ADRs ended in the red on Monday in a weak US market. Infosys ADR lost nearly 3% to $51.98, Satyam Computer ADR shed 3.2% to $22.99 and Wipro ADR lost 1.9% to $15.25. Also the rising rupee against the US dollar added to investors’ concerns for IT companies which derive a lion’s share of their venue in dollar terms. The rupee hit a two-week high on Monday 27 November.
Other major losers from Sensex pack were NTPC (down 2.79% to Rs 149.65), Reliance Energy (down 3.12% to Rs 529) and Reliance Communications (down 3.25% to Rs 471).
Index heavyweight Reliance Industries (RIL) lost 0.28% to Rs 1248.25 on 10.30 lakh shares. It declined from its intra-day high of Rs 1279.95. There are reports that RIL will sell piped gas at discount to LPG.
Hero Honda was the top gainer, up 1.62% to Rs 745 on 6.64 lakh shares. The stock rose following reports that the government is considering cut in oil prices. An announcement regarding fuel prices will be made in parliament on Wednesday 29 November.
Grasim (up 0.65% to Rs 2711), SBI (up 1.37% to Rs 1294.10) and Gujarat Ambuja Cements (up 0.38% to Rs 143.70) were the other gainers.
The BSE Metal Index declined 1.7% to settle at 8,921.50 on selling pressure. Hindustan Zinc (down 4.73% to Rs 926.50), SAIL (down 3.05% to Rs 85.75), JSW Steel (down 2.65% to Rs 323.50), Sterlite Industries (down 1% to Rs 545), Hindalco (down 1.72% to Rs 176.65) and Tata Steel (down 1.42% to Rs 475.40) were among the losers.
Among the side counters Donear Industries jumped 6.28% to Rs 165 on high volume of 70.80 lakh shares while Amar Remedies surged 20% to Rs 63.15 on high volume of 29.82 lakh shares.
Godfrey Phillips surged 10% to Rs 1140.55, on reports that the company is planning to issue bonus shares to reward investors in the next few months and at a ratio of 4 shares for 1 held. However, at the fag end of the trading session, the company denied rumours of bonus issue and stock split.
Force Motors rose 0.80% to Rs 421 after the company’s board approved the transfer of assets and liabilities of the heavy commercial vehicles division to its subsidiary Man Force Trucks. The company also approved investment of Rs 100 crore as equity capital in this subsidiary.
IVRCL Infrastructures & Projects gained 0.41% to Rs 412.60 after the company bagged orders worth Rs 388 crore from the irrigation department of the Andhra Pradesh government. The orders will be executed along with its joint venture partners, the company said.
Sadbhav Engineering advanced 2.45% to Rs 494.20 and PBA Infrastructure gained 2.64% to Rs 142 after Sadbhav Engineering said its joint venture with PBA Infrastructure has secured a construction contract worth Rs 297 crore. Sadbhav has a 51% stake in the joint venture and PBA holds 49%.
Torrent Power (TPL) the umbrella company of the newly amalgamated generation, transmission and distribution businesses of the Torrent Group settled at Rs 70.70 on BSE on high volumes of 1.30 crore shares. The stock was listed at Rs 60 on BSE. The stock hit a low of Rs 55.50 and high of Rs 76.30. Three companies Torrent Power AEC (TPAL), Torrent Power SEC (TPSL) and Torrent Power Generation (TPGL) were merged in TPL as a part of a scheme of arrangement. TPL’s equity capital is Rs 472.44 crore with face value of Rs 10 each.
Natco Pharma rose 1.60% to Rs 118.05 after it launched Pemnat (pemetrexed) for treatment of lung cancer.
TVS Motor was down 1.25% to Rs 98.90. As per reports, the company plans to invest $100 million over the next 3 year to set up a production base in Indonesia.
Eicher jumped 5% to Rs 131.80, the maximum permissible level of the day, after the company said it is considering delisting from BSE and NSE. Eicher has put up a board meeting on 28 November to consider proposal received from Eicher Goodearth, the promoters to initiate a voluntary delisting of the shares of the company from BSE and NSE in accordance with the provisions of the SEBI (Delisting of Securities) Guidelines, 2003.
Ashok Leyland rose 0.92% to Rs 44.05 on reports that it has tied up with French Company for supply of armoured vehicle in India.
Mirc Electronics lost 0.92% to Rs 21.45 after its Q2 September 2006 net profit slipped to Rs 10.5 crore as compared to Rs 11.5 crore in Q2 September 2005. Net sales rose to Rs 399.5 crore (Rs 316.5 crore).
DMC Vaults jumped 10% to Rs 20 after the company said has agreed to acquire FSI for 4,50,000 square feet at Rs 100 per square feet for development and construction of residential flats at Alwar, Rajasthan.
Rasandik Engineering Industries jumped 12% to Rs 146.35 after Reliance Mutual Fund acquired 1.4 lakh shares on Monday in a block deal on BSE at Rs 120. The stock had risen 13.7% on Monday to Rs 130.65 boosted by the block deal. Foreign fund Melchior Indian Opportunities was the seller.
Oil prices rose in Asian trading hours on geopolitical worries and hopes that OPEC will make further cuts in production. The New York Mercantile Exchange's main contract, light sweet crude for January delivery, rose $0.17 to $60.49 a barrel. Brent North Sea crude for January delivery gained $0.16 at $60.60.
All the European and Asia/Pacific markets were trading with losses except New Zealand’s NZX 50 which was up marginally by 0.02%.
The Nikkei average edged lower by 0.19% on Tuesday as losses in Honda Motor Co. and other blue-chip stocks were mostly offset by gains in Softbank Corp. and recently battered stocks such as banks. The Nikkei closed down 30.12 points at 15,855.26
Hang Seng index declined sharply by 2.94% or 564.48 points to 18639.53
US stock indexes sank on Monday, registering their worst day in months, amid concern about Google Inc.'s valuation and doubts about holiday spending after a disappointing sales estimate from Wal-Mart Stores Inc. In addition, downward pressure on the dollar for a fourth straight day hurt demand for US investments, while a rise in crude oil prices above $60 a barrel added to concerns about consumer spending. The Dow Jones industrial average fell 158.46 points, or 1.29%, to end at 12,121.71. The Standard & Poor's 500 Index lost 19.05 points, or 1.36%, to finish at 1,381.90. The Nasdaq Composite Index slid 54.34 points, or 2.21%, to close at 2,405.92.
Mutual funds were net sellers for the second day in a row on Friday 24 November. Mutual funds sold shares worth a net Rs 212.73 crore on 24 November compared to their outflow of Rs 276.24 crore on 23 November.
Sensex plummets 172 points
Sensex Open:13691 High:13691 Low:13577
The market received a pounding and erased most the gains accrued last week. The Sensex resumed 83 points below its previous close at 13691 and moved down to touch an intra-day low of 13577. The market languished in negative territory through the rest of the session and the Sensex closed with losses of 172 points at 13602. The Nifty also ended in the red at 3922, down 47 points.
The market breadth was weak. Of the 2,636 stocks traded on the BSE, 1,463 stocks declined, 1,091 stocks advanced and 82 stocks ended unchanged. Barring the BSE IT index, all the sectoral indices ended at lower levels. The BSE Teck index fell 2.02%, the BSE Bankex dipped 1.45%, the BSE Metal index shed 1.63% and the BSE PSU index was down 1.11%.
Among the draggers, Reliance Communication dropped 3.11% at Rs418, Satyam Computers shed 3.08% at Rs450, Reliance Energy tumbled 2.84% at Rs531, Infosys declined 2.71% at Rs2,167 and NTPC was down 2.66% at Rs150. Wipro at Rs586, ICICI Bank at Rs862, Cipla at Rs255 and Tata Motors at Rs811 were down around 2% each.
Select index heavyweights managed to register decent gains. SBI rose 1.32% at Rs1,293, Hero Honda gained 1.22% at Rs742, Grasim was up 0.81 at Rs2,715, Maruti Udyog added 0.33% at Rs913 and Gujarat Ambuja was marginally up at Rs143.
IT stocks came under sharp hammering. Megasoft slumped 6.47% at Rs105, Mascom Global lost 4.46% at Rs8, Kernex Micro declined 4.04% at Rs181, GTL tumbled 3.65% at Rs123, Cranes Software was down 3.81% at Rs105 and HCL Technologies closed weaker by 3.26% at Rs620. Prithvi Info, Geometric Software, Hexaware, Subex Azure and Visual Software dipped 2-3% each.
NTPC clocked huge volumes of over 47.25 lakh shares followed by Lanco Infra (26.84 lakh shares), Adani Enterprises (24.68 lakh shares), India Cements (17.07 lakh shares) and Sterlite Optical (16.70 lakh shares).
Reliance Industries clocked a turnover of 129.49 crore on the BSE followed by Jaiprakash (Rs85.46 crore), Punj Lloyd (Rs77.20 crore), NTPC (Rs71.92 crore) and Reliance Capital (Rs64.81 crore).
How brokers turn small investors into traders
Cut-throat competition among broking houses has resulted in brokerage rates falling to ridiculously low levels over the past few months. This is partly-good news for the small investors. But what is not so good for these investors is that brokerages are trying their best to make them trade as frequently as possible in order to make up for the low-broking charges. It may be in the form of a persuasive customer service representative, or a burst of SMS and e-mail messages.
Broking business is getting competitive by the day, with one broker claiming to charge less than the competitor. But, in the end all charge more or less the same, often billing small retail investors through other charges. A few small retail investors ET spoke to mentioned that their trading frequency had certainly increased.
Mumbai-based Rasik Shah, a 42-yearold small retail investor, who has been investing in equities from the past 10 years said, “Every time I call my broker (one among the top three retail brokerages), the customer service representative would not allow me to hang up the call unless I bought or sold something. And they are so convincing that one actually bites the bait.”
Bharat Dave, 37-year-old executive said, “We receive an overload of information from our broker on our mobiles, emails. And often we are lured to buy into their recommendations for a short timeframe .” Over the past one year, brokerage charges have almost halved to around 15-20 paise for Rs 100 worth of delivery trades and 3-5 paise for Rs 100 worth of intra-day trades. Also, retail investors are a fickle lot. They come rushing in hordes during a booming market, and then vanish for months when the market corrects. So, brokerages have no option but to extract the maximum possible brokerage out of them when the going is good.
Almost all brokerage houses go a step further by offering small retail investors margin trading facility. Margin trading is the use of borrowed money to buy securities with the expectation of magnifying profits. It can lead to greater returns, but is also very risky. Brokerage houses, often, are more than happy to offer you margin. Sometimes these margins go up to fivetimes your portfolio size and are offered at interest rates as high as 18% per annum.
ET tried to speak to brokers. They denied the charges that they are converting small retail investors into traders. In fact, brokers mentioned that since they have the expertise through dedicated high quality research, they are offering a better chance for small retail investors to make money free of cost.
According to Gaurav Mashruwala, a certified financial planner, “The greed of quick returns is luring many small retail investors into trading. Investment in equities should be for the very long term, where returns are high and risks are lower. When one does day-trading , the probability of returns are very low, but the risks are very high. So, ideally, small retail investors must avoid getting into this trap of churning stocks very often.”
Sensex plunges 172 points
Market traded in the red throughout the day’s trading session, tracking weak global markets. The volatility was high ahead of expiry of November contracts this Thursday (30 November), where open positions are quite large.
The 30-shares BSE Sensex was down 171.64 points (1.25%) to 13601.95. It moved in a range of 13577.38 and 13691.12.
The S&P CNX Nifty lost 45.70 points (1.15%) to 3923.20
The total turnover on BSE was Rs 4049 crore
Market breadth stayed negative on BSE with 1072 shares advancing as compared to 1465 that declined. 83 remained unchanged. In early trade, the breadth was much weaker.
Among the Sensex pack, 25 declined while the rest advanced.
Frontline IT stocks were the worst hit on profit booking. Satyam Computers (down 2.91% to Rs 451), Wipro (down 2.27% to Rs 588) and Infosys (down 2.79% to Rs 2165) declined. IT pivotals witnessed an across the board fall following decline in their ADRs on Monday. Also the rising rupee against the US dollar caused concern for IT companies, which derive a lion’s share of their venue in dollar. The rupee hit a two-week high on Monday 27 November.
Other major losers from Sensex pack were NTPC (down 2.79% to Rs 149.65), Reliance Energy (down 3.12% to Rs 529) and Reliance Communications (down 3.25% to Rs 471).
Index heavyweight Reliance Industries (RIL) lost 0.28% to Rs 1248.25 on 10.30 lakh shares. It declined from its intra-day high of Rs 1279.95. There are reports that RIL will sell piped gas at discount to LPG.
Hero Honda was the top gainer, up 1.62% to Rs 745 on 6.64 lakh shares. The stock rose following reports that the government is considering cut in oil prices.
Grasim (up 0.65% to Rs 2711), SBI (up 1.37% to Rs 1294.10) and Gujarat Ambuja Cements (up 0.38% to Rs 143.70) were the other gainers.
Among the side counters Donear Industries jumped 6.28% to Rs 165 on high volumes of 70.80 lakh shares while Amar Remedies surged 20% to Rs 63.15 on high volumes of 29.82 lakh shares.
Oil prices rose in Asian trading hours on geopolitical worries and hopes that OPEC will make further cuts in production. The New York Mercantile Exchange's main contract, light sweet crude for January delivery, rose $0.17 to $60.49 a barrel. Brent North Sea crude for January delivery gained $0.16 at $60.60.
All the European and Asia/Pacific markets were trading with losses except New Zealand’s NZX 50 which was up marginally by 0.02%.
The Nikkei average edged lower by 0.19% on Tuesday as losses in Honda Motor Co. and other blue-chip stocks were mostly offset by gains in Softbank Corp. and recently battered stocks such as banks. The Nikkei closed down 30.12 points at 15,855.26
Hang Seng index declined sharply by 2.94% or 564.48 points to 18639.53
US stock indexes sank on Monday, registering their worst day in months, amid concern about Google Inc.'s valuation and doubts about holiday spending after a disappointing sales estimate from Wal-Mart Stores Inc. In addition, downward pressure on the dollar for a fourth straight day hurt demand for US investments, while a rise in crude oil prices above $60 a barrel added to concerns about consumer spending. The Dow Jones industrial average fell 158.46 points, or 1.29%, to end at 12,121.71. The Standard & Poor's 500 Index lost 19.05 points, or 1.36%, to finish at 1,381.90. The Nasdaq Composite Index slid 54.34 points, or 2.21%, to close at 2,405.92.
Mutual funds were net sellers for the second day in a row on Friday 24 November. Mutual funds sold shares worth a net Rs 212.73 crore on 24 November compared to their outflow of Rs 276.24 crore on 23 November.
Indo Tech Transformers: Sharekhan Stock Idea dated November 28, 2006
Indo Tech Transformers
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs280
Current market price: Rs199
Powered by power reforms
Key points
- The fortunes of Indo Tech Transformers are all set get transformed, thanks to India’s mission to achieve power for all by 2012. As part of this programme the government plans to almost double the country’s installed power generation capacity from 115,000MW to 200,000MW by the end of the 11th Five-Year Plan.
- This initiative is expected result in an additional demand of around 570,000MVA of transformer capacity over FY2005-12 or of 80,000MVA per year. Another 15,000MVA of demand is expected from the replacement market every year, leading to a total annual demand of 95,000MVA. That is a huge opportunity for the transformer industry whose annual capacity stands at a mere 75,000MVA.
- Indo Tech already stands to gain from this opportunity, as it has built a strong relationship with the SEBs in the south over the years. Now to make the most of this demand explosion, it is tripling its capacity from 2,450MVA to 7,450MVA.
- Indo Tech has signed an MoU with DuPont (USA) to set up a 100MVA plant to manufacture dry-type transformers for industrial and corporate customers. These transformers are higher in realisation and installed in the basement of hotels, IT parks, malls etc. We believe this will further boost the top line of the company.
- As a result of these initiatives we expect its revenues and net profit to grow at CAGR of 52% and 49% respectively over FY2006-08E.
- At the current market price of Rs199, the stock is quoting at 8.6x its FY2008E EPS and 4.8x its FY2008E EV/EBIDTA. Considering the future growth potential of the company and the stock’s attractive valuations, we recommend a Buy on the stock with a price target of Rs280.
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Market battered
The market continues to dip as relentless selling pressure across sectors and heavyweights have wiped out over 150 points from the Sensex. The weakness in IT, banking and tech stocks has dragged the index to an intra-day low of 13589. Currently, the Sensex is down 176 points at 13598 and the Nifty has declined 48 points at 3921.
Among the techs Megasoft has dropped 5.36% at Rs103, Infotech Enterprises has shed 3.76% at Rs297, GTL has lost 3.49% at Rs123, Mascon Global has slipped 3.31% at Rs8, Geometric Software has lost 3.20% at Rs115 and Hexaware Tech is weaker by 3.07% at Rs180.
On the other hand I-gate Global has notched up gains of 5.43%, GMDC has surged 4.86% and Ramco System has advanced 3.91%. HCL Infosys, Syngenta, Punj Lloyd and Sun Pharmaceuticals are also trading in positive territory.
Of the 2,551 shares traded on the BSE, 1,505 shares have declined, while 974 shares have advanced.
Market breadth recovers from early trade
Although the market breadth was negative, it has recovered from that of opening session, as buying support emerged for small-cap and mid-cap stocks.
At 12:35 IST, the barometer index was down 96.82 points (0.71%) to 13676.88. After declining to an intra-day low of 13588.51 in early trade, the Sensex recovered smartly as buying support emerged at lower level. It moved in a range of 13588.51 and 13690.67. Weakness across global bourses and fall in Indian ADRs on Monday weighed on the bourses in early trade.
The total turnover on BSE was Rs 2029 crore
Market breadth was negative with on BSE with 1044 shares advancing as compared to 1285 that declined. 77 remained unchanged. In early trade, the breadth was quite weak.
Among the Sensex pack, 22 declined while the rest advanced.
Frontline IT stocks were the worst hit on profit booking. Satyam Computers (down 1.95% to Rs 455.45), Wipro (down 2.68% to Rs 586) and Infosys (down 1.94% to Rs 2184) declined. IT pivotals witnessed an across the board fall following decline in their ADRs on Monday. Majority of the Indian ADRs ended in the red on Monday in a weak US market. Infosys ADR lost nearly 3% to $51.98, Satyam Computer ADR shed 3.2% to $22.99 and Wipro ADR lost 1.9% to $15.25. Rising rupee against the US dollar is a cause for concern for IT companies, which derive a lion’s share of their venue in dollar. The rupee hit a two-week high on Monday 27 November.
Index heavyweight Reliance Industries (RIL) rose 0.85% to Rs 1262.45 on 4.73 lakh shares. It has recovered from its low of Rs 1242.20 in early trade. There are reports that RIL will sell piped gas at discount to LPG.
Hero Honda was the top gainer, up 0.82% to Rs 739.10 on 81025 shares.
Among the side counters, Sadbhav Engineering jumped 5.86% to Rs 510.85 and PBA Infrastructure gained 2.6% to Rs 142 after Sadbhav Engineering said its joint venture with PBA Infrastructure has secured a construction contract worth Rs 297 crore. Sadbhav has a 51% stake in the joint venture and PBA holds 49%.
Torrent Power the umbrella company of the newly amalgamated generation, transmission and distribution businesses of the Torrent Group was trading at Rs 69 on BSE. The stock was listed on the bourses today. The stock hit a low of Rs 55.50 and high of Rs 76.30. Early volumes in the scrip were a huge 58.64 lakh shares on BSE. Torrent Power (TPL) is the umbrella company of the newly amalgamated generation, transmission and distribution businesses of the Torrent Group. Three companies Torrent Power AEC (TPAL), Torrent Power SEC (TPSL) and Torrent Power Generation (TPGL) were merged in TPL as a part of a scheme of arrangement. TPL’s equity capital is Rs 472.44 crore with face value of Rs 10 each.
Natco Pharma rose 2.62% to Rs 119.25 on reports that it has launched Pemnat (pemetrexed) drug for treatment of non-small cell lung cancer.
TVS Motor was down 0.75% to Rs 99.40. As per reports, the company plans to invest $100 million over the next 3 year to set up a production base in Indonesia.
US stock indexes sank on Monday, registering their worst day in months, amid concern about Google Inc.'s valuation and doubts about holiday spending after a disappointing sales estimate from Wal-Mart Stores Inc. In addition, downward pressure on the dollar for a fourth straight day hurt demand for US investments, while a rise in crude oil prices above $60 a barrel added to concerns about consumer spending. The Dow Jones industrial average fell 158.46 points, or 1.29%, to end at 12,121.71. The Standard & Poor's 500 Index lost 19.05 points, or 1.36%, to finish at 1,381.90. The Nasdaq Composite Index slid 54.34 points, or 2.21%, to close at 2,405.92.
Mutual funds were net sellers for the second day in a row on Friday 24 November. Mutual funds sold shares worth a net Rs 212.73 crore on 24 November compared to their outflow of Rs 276.24 crore on 23 November.
Water is India`s greatest challenge: FM
While funds are being given to cities to help address their water problems, he doubts whether the Govt has a good national policy on water
Water poses the greatest challenge to India, according to Finance Minister P. Chidambaram. "We waste an enormous amount of water. That has to stop," he told the gathering at the opening of the World Economic Forum's 22nd India Economic Summit, on Monday in New Delhi. While funds are being given to cities to help address their water problems, he doubted whether the Government had a good national policy on water.
While Chidambaram called for greater investment in desalination plants to address shortages in coastal areas, other panelists called for policies to improve the nation's aquifers, modernize irrigation and discourage the growth of water-intensive crops in dry areas. Others suggested that new mechanisms need to be devised to make sure that water consumers bear the true cost of this vital resource. "India has earned the right to dream big in this arena," said Ralph R. Peterson, Chairman and CEO, CH2M HILL Companies, USA.
A range of imposing hurdles lie along India's path to development, including the need to transform its swelling population of young people into a skilled pool of labour and to prevent the scourge of AIDS from sapping their productivity, said Chidambaram. Yet, the very diversity of the Indian nation and the vigour of its democracy are potential wellsprings of the innovation needed to mitigate these risks and turn India into a world leader in solving such problems, he added. "Every risk is an opportunity for innovation and change," said the Finance Minister. "Risk gives the impetus to bring about technological change. Therefore, I would regard these risks not merely as risks but as opportunities to move ahead at a swifter pace."
Energy, and oil in particular, is another area in which India is particularly vulnerable, the panelists said. India is at least lucky, said Mohamed A. Alabbar, Chairman, Emaar Properties, United Arab Emirates, in that it lies within a pipeline of the world's most energy-rich region, the Middle East. But given the rising cost of energy imports, India cannot hesitate to pursue alternative forms of energy, the panelists said, and to reduce energy waste. "Our intensity of energy usage has to come down," said R. Seshasayee, Managing Director, Ashok Leyland.
But panelists also blamed speculation in oil for higher volatility in prices that discourage investment in alternative energy supplies. Chidambaram said high oil prices and high volatility are robbing India of at least 1% of economic growth a year. "The world must come to terms with this fact that oil-producing countries are exploiting the requirements of oil-consuming countries," he said, suggesting that the two sides work together to keep oil prices within a range of US$ 40 a barrel.
What India cannot accept, Chidambaram said, are demands of the West to curb its energy use in order to reduce global environmental damage, implying that it is hypocritical for developed countries to make such demands of developing nations. Instead, he said, Western nations should make sure that India and other developing countries have access to cleaner energy, environmentally friendly technologies and funding.
Still, panelists said the problem of how to ensure that India's growth does not come at the expense of the environment would require tackling the social dimension of growth. Nandan M. Nilekani, President, CEO and Managing Director, Infosys Technologies, stressed the need to shape India's urbanization in a more environmentally friendly way, while Seshasayee noted that protecting the environment would mean reducing the burden placed on it by the rural poor. "Poverty and environmental degradation are very closely linked," he said.
Improving education remains a priority for India. However, the Government has to ensure that it's growing population of young people become a demographic dividend and not a demographic liability. Seshasayee emphasized the need to reduce attrition in India's primary and secondary schools, while Nilekani recommended improving the quality of education in India's universities.
Fortunately for India, there is a growing willingness to address and discuss the country's problems with HIV and AIDS infection. The Government has publicly broached the topic, admitting that India has an HIV problem. But arresting the pandemic will require overcoming traditional taboos. "We have to be more open about sex," said Chidambaram.
India's growing income disparity is another long-term problem, but panelists were confident it would not translate into social unrest among its growing young population, saying the nation's often parlous democracy provided a palliative. "If you don't have democracy, there is a grave danger of social unrest," said Chidambaram. "But our democracy is a great pressure valve."
Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, concluded the opening plenary, saying "In today's complex world with enormous challenges and tremendous risks, you survive best by being in the driver's seat and not being driven. Our discussions at the India Economic Summit have shown us that India is definitely becoming more and more a master of its own destiny and a driver of global geo-economic and geo-political agendas."
Poweryourtrade.com Trading Calls
Buy Havells with a stop loss of Rs 300 for target of Rs 344/375
Buy Gitanjali Gems with stop loss of Rs 200 for target of Rs 260
Sell Tata Steel above Rs 480 with stop loss of Rs 489; This is a day-trading recommendation.
Sell Hindustan Lever above Rs 239 with stop loss of Rs 242; This is a day-trading recommendation.
Global indices may weigh
The market is likely witness volatility during intra-day trades and may succumb to selling pressure amid overnight weakness in the US indices and the bearish looking Asian indices in the ongoing trades. Among the key domestic indices, the Nifty could get support at 3930 and a slip below this level may see it dip further to 3906, while on the upside, the index has a key resistance at 3985. The Sensex has a likely support at 13625 and could test higher levels of 13780.
US indices ended weak on Monday amid fresh rise in crude oil prices and worries of rising interest rates. While the Dow Jones dropped by 158 points to close at 12122, the Nasdaq ended 54 points lower at 2406.
Indian floats, too, witnessed selling pressure and largely ended at lower levels. Rediff tumbled over 4.49% at $17.64, DR Reddy,s declined 3.61% at $16.01, Satyam Computers down by 3.28% at $22.99 and Infosys slipped 2.95% at $51.98 while MTNL, HDFC Bank, ICICI Bank and Wipro lost above 1-2% each. VSNL, however, only clocked modest gains. Patni Computers remains unchanged.
Crude oil prices moved up, with the Nymex light crude oil for January delivery rising by $1.08 to close at $60.32 a barrel. In the commodity space, the Comex gold for February series added $11.70 to settle at $647.10 respectively.
Indiainfoline - News Roundup
Mahindra & Mahindra Ltd. (M&M) has entered into an agreement to acquire a 66% stake in DGP Hinoday Industries Ltd. The company would acquire the shares from the existing shareholders, DG Piramal Group and India Private Equity Fund Mauritius. Hitachi Metals holds the balance 34% equity stake in Hinoday. The acquisition marks the entry of the company into the sophisticated SG Iron casting space.
Bharti Group is entering into a partnership with Wal-Mart Stores Inc., the world's largest organised retailer, for its proposed entry into the high-profile retail sector in India. Wal-Mart and Bharti will set up a 50:50 joint venture (JV) to open hypermarkets and neighborhood stores across India, Bharti chairman Sunil Mittal said. Bharti will fully own the front-end retail network.
Cairn India has set the price band of its forthcoming Initial Public Offering (IPO) at Rs160-190 per share. Last week, the company made a killing ahead of its planned mega IPO, by mopping up US$822mn in pre-issue placement. It sold 11.88% stake or 209.67mn shares at Rs176.48 per share to Malaysia's oil & gas major Petronas, Videocon and Blackrock-Merrill Lynch.
Emaar MGF and Accor have formed a Joint Venture (JV) to bring the Formule 1 brand of budget hotels to India. The new venture, Budget Hotels India Pvt. Ltd. has planned investments of US$300mn over the next 10 years. Emaar is a partnership between global property developer Emaar Properties and MGF Developments.
Mahindra & Mahindra Ltd. (M&M) has entered into an agreement to acquire a 66% stake in DGP Hinoday Industries Ltd. The company would acquire the shares from the existing shareholders, DG Piramal Group and India Private Equity Fund Mauritius. Hitachi Metals holds the balance 34% equity stake in Hinoday. The acquisition marks the entry of the company into the sophisticated SG Iron casting space.
Bharti Group is entering into a partnership with Wal-Mart Stores Inc., the world's largest organised retailer, for its proposed entry into the high-profile retail sector in India. Wal-Mart and Bharti will set up a 50:50 joint venture (JV) to open hypermarkets and neighborhood stores across India, Bharti chairman Sunil Mittal said. Bharti will fully own the front-end retail network.
Cairn India has set the price band of its forthcoming Initial Public Offering (IPO) at Rs160-190 per share. Last week, the company made a killing ahead of its planned mega IPO, by mopping up US$822mn in pre-issue placement. It sold 11.88% stake or 209.67mn shares at Rs176.48 per share to Malaysia's oil & gas major Petronas, Videocon and Blackrock-Merrill Lynch.
Emaar MGF and Accor have formed a Joint Venture (JV) to bring the Formule 1 brand of budget hotels to India. The new venture, Budget Hotels India Pvt. Ltd. has planned investments of US$300mn over the next 10 years. Emaar is a partnership between global property developer Emaar Properties and MGF Developments.
NTPC Ltd. has decided to submit a proposal to the Government of Sri Lanka for setting up a 900 MW Coal/LNG based power plant in Sri Lanka. The proposal is still under discussion, and the company is likely to sign a Memorandum of Agreement (MOA) with the Government of Sri Lanka shortly, the public sector power generation major said in a statement.
DLF Limited (DLF) and WSP Group plc (WSP), a leading design and engineering consultancy firm, have entered into a joint venture. The partnership between DLF and WSP will be staffed by design professionals from both India and overseas and will undertake the execution of a large number of DLF's mega projects across the country as well as providing services to others.
TVS Motor Co. Ltd. plans to invest up to US $100mn in Indonesia over the next three years to set up a manufacturing facility that will cater to Southeast Asia. The unit of TVS Motor would have the capacity to manufacture 300,000 motorcycles a year. The company had made an initial investment of US $43mn in the Indonesian arm
Corus Group Plc postponed its extraordinary general meeting (EGM) in order to give Brazil's Companhia Siderurgica Nacional SA (CSN) enough time for submitting its counter bid. Corus, whose Board has already agreed to be acquired by India's Tata Steel Ltd., will delay the shareholders' meeting to Dec. 20, from Dec. 4, the London-based steelmaker said in a regulatory filing.
Indiainfoline - STRATEGY INPUTS FOR THE DAY
Wal-mart…Monday effective, Tuesday affective
High expectations are the key to everything. – Sam Walton
Wal-Mart’s Sam Walton’s words hold true especially for the market and today it could be the key for a downfall. Call it the Wal-Mart effect. The long-awaited entry of the retail giant in India was greeted favorably by the bulls, with the key indices making new highs. However, in an ironic twist, the US market tumbled overnight, thanks partly to Wal-Mart's weaker than expected sales forecast for the month, including the Thanksgiving holiday shopping weekend. The dollar's weakness against major currencies was another major factor that led to the steep fall in US stocks. Not surprisingly, the world markets have reacted to the slump on Wall Street. India too looks all set for a weak opening in line with the global trend.
However, with FIIs pumping up the volume in November (they have poured in close to $2bn this month so far), the local bulls will hope to bounce back if not today at least before the expiry, on Thursday. The F&O rollover is also said to be going smooth, and is unlikely to face major hiccups. The only threat in the future could come in the form of a possible slowdown in foreign capital inflows. Till then, the bulls will continue to hold sway over the bears though the latter may muster up some courage to show its mettle occasionally. Avoid your shopping spree, keep cash in hand and by no means use your credit card to shop for now.
FIIs were net buyers of just Rs9.1mn (provisional) in the cash segment yesterday. In the F&O segment, they pulled out Rs1.51bn. On Friday, foreign funds pumped in Rs9.95bn in the cash segment. With this, their net investment in November so far stands at $1.95bn. For the year, their net inflows are $8.79bn. Mutual Funds were net sellers of Rs 2.13bn on Friday.
Torrent Power is going to be re-listed today post a restructuring. Godfrey Phillips could gain amid market grapevine that the KK Modi and Philip Morris joint venture may be looking at a bonus and possibly a split. Artson Engineering has been buzzing of late. Tata Projects has reportedly completed the due diligence and is likely to be taking a final view on the proposal of acquiring the controlling stake in Artson.
NTPC is likely to pick up a 49% stake in the state-owned Transformers and Electricals Kerala Ltd. (TELK). This will mean the Kerala Government will retain the controlling stake in the company. Chennai based Surana Industries Ltd. is reportedly setting up a new integrated steel complex to manufacture special steels mainly to cater to the needs of the automobile sector with an estimated investment of around Rs4.73bn.
Shares of US retailers sank after Wal-Mart said that monthly sales declined for the first time in 10 years. Nokia retreated as a lower US currency threatened the value of its dollar-denominated sales. Higher oil prices also hurt US stocks.
The S&P 500 lost 19.05, or 1.4%, to 1381.90. The Nasdaq dropped 54.34, or 2.2%, to 2405.92. Both indexes had their biggest declines since June 5. The Dow Jones slid 158.46, or 1.3%, to 12,121.71, its steepest fall since July 13. A 2.7% fall in Boeing and a 2% decline in IBM weighed on the blue chip benchmark.
US light crude oil for January delivery rose $1.08 to settle at $60.32 a barrel on the New York Stock Exchange. The font-month contract was quoting 17 cents higher at $60.49 a barrel in extended trading in Asia this morning.
Treasury bond prices inched higher, lowering the yield on the 10-year note to 4.53% from 4.55% late on Friday. In currency trading, the dollar slumped to a 20-month low versus the euro and rose modestly versus the yen. COMEX gold rose $11.70 to settle at $647.10 an ounce.
Among the Indian ADRs, Infy was down close to 3%, Wipro lost 1.9%, Satyam slumped 3.3%, Tata Motors shed 1.9%, Dr. Reddy's declined 3.6%, HDFC Bank dropped 2.2%, ICICI Bank dived 2.4% and MTNL gave up 3.4%.
European shares dropped sharply, with continued weakness in dollar-sensitive stocks such as SAP offsetting better-than-forecast results from Bayer. The German DAX Xetra 30 lost 1.8% to 6,298.17, pressured by major exporters to America. The pan-European Dow Jones Stoxx 600 index declined 1.5% at 350.60. The French CAC-40 shed 1.5% to 5,308.65. London's FTSE 100 lost 1.2% to 6,050.10.
In the emerging markets, the Bovespa in Brazil slumped by 2% to 40,914 while the IPC Index in Mexico shed 1.4% to 24,442 and the RTS index in Russia gained 0.3% to 1727.
Asian markets plunged Tuesday morning on the back of the weak closing in the US market. Toyota and Samsung Electronics led declines among exporters amid worries that the region's biggest overseas market is slowing down. The OECD yesterday cut its forecast on US economic growth and retail sales in Japan fell for a second month.
The Morgan Stanley Capital International Asia-Pacific Index dropped 0.9% to 132.07 as of 10:51 a.m. in Tokyo. Japan's Nikkei 225 Stock Average slid 180 points to 15,705 while the Hang Seng in Hong Kong was down 306 points at 18,897.
Major Bulk Deals:
ABN AMRO Bank bought Eveready Industries and HSBC Financial sold it; Deutsche Securities sold IOL Broadband; Macquarie Bank has picked up K Sera Sera; HSBC Financial has purchased Lok Housing; Reliance Capital has bought Rasand Engineering; Blackstone has sold Shiv-vani Oil; HSBC MF has bought Viceroy Hotels while Kotak Mahindra MF has sold it; CLSA has picked up HDFC Bank from Crown Capital; BNP Paribas has bought Hindustan Motors; Morgan Stanley has purchased S Kumars Nationwide.
Market Volumes:
The turnover on NSE down by 2.7% to Rs79.73bn. BSE Consumer Durable index was the major gainer and gained 2%. BSE Bank index (up 0.83%), BSE Technology index (up 0.62%), BSE Metal index (0.60%) and BSE PSU index (up 0.43%) were among the other major gainers. However, BSE Pharma index lost 0.26%.
Volume Toppers:
IFCI, NTPC, Zee Telefilms, Hindalco, ITC, SAIL, Hanung Toys, Gujarat Ambuja, India Cements, Hindustan Motors, Nagarjuna Construction, Ashok Leyland, Info Edge, Voltas, Gitanjali Gems, MTNL and IFCI.
Delivery Delight:
Apollo Tyres, Arvind Mills, ACC, Century Textiles, Colgate, Crompton Greaves, D S Kulkarni, Gammon, Godrej Industries, Gujarat Ambuja Cements, Havells India, Hindalco, Hindustan Zinc, ICICI Bank, Indian Hotels, Maharashtra Seamless, Mangalam Cement, Nagarjuna Construction, NIIT Ltd, Punj Lloyd, Reliance Capital, Sintex Industries, Strides Arcolab, Sun Pharmaceuticals, TCS, VSNL and Wipro.
Brokers Recommendations:
NIIT Tech - Buy from Man Financial
ICICI Bank - Hold from Angel Broking
Long Term Investment:
HDFC Bank
Major News Headlines:
Tata Power Q2 net at Rs2.02bn (up 61%), income at Rs12.79bn (up 16.5%)
BHEL gets captive power plant order for Rs1.29bn
Mukesh Ambani expects to continue finding gas in KG Basin
Biocon expects Phase-3 trials of Arthritis drug in 18 months
Hindustan Constructions plans to raise money
Sun TV approves merger of Gemini TV, Udaya TV with itself
TV Today promoters plan English daily in Delhi
Mcleod Russel Board to consider absorbing Doom Dooma Tea Co.
Unity Infrastructure gets 75% share of Amritsar Airport Project
Lok Housing to raise funds up to $200mn
UTV form JV with Astro Multimedia
Goa Carbon to enter power generation business
NTPC to submit proposal to Sri Lanka Govt for setting up power plant
Domestic bourses may take cue from weak global markets
A much-needed correction may set in today as domestic bourses may take cue from weakness across global bourses. The near term trend on the bourses would be determined by the extent of rollover to December 2006 contracts from November contracts ahead of expiry of November contracts this Thursday (30 November). Derivatives positions are quite large.
The market has witnessed a solid surge over the past few weeks and the rally has materialized without any worthwhile correction. Sensex has risen 46.5% this year, making it Asia's best performing market.
Asian shares fell on Tuesday as fears about lacklustre holiday spending in the key US market and a weak dollar prompted investors to sell technology exporters such as Canon and Samsung Electronics. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 0.5% to 1.8%. Barring Taiwan, key benchmark indices in four other above mentioned markets were down by over 1% each.
US stock indexes sank on Monday, registering their worst day in months, amid concern about Google Inc.'s valuation and doubts about holiday spending after a disappointing sales estimate from Wal-Mart Stores Inc. In addition, downward pressure on the dollar for a fourth straight day hurt demand for US investments, while a rise in crude oil prices above $60 a barrel added to concerns about consumer spending. The Dow Jones industrial average fell 158.46 points, or 1.29 percent, to end at 12,121.71. The Standard & Poor's 500 Index lost 19.05 points, or 1.36 percent, to finish at 1,381.90. The Nasdaq Composite Index slid 54.34 points, or 2.21 percent, to close at 2,405.92.
Worries about consumer spending in the United States were exacerbated as oil prices climbed further above $60 a barrel after forecasts of a cold spell in the US Northeast and as a key OPEC member held out the prospect of further supply cuts. NYMEX crude for January delivery rose 15 cents to $60.47 a barrel, building on Monday's gains.
Meanwhile, large daily FII figures indicate that there have been simultaneous entries and exits. This in turn indicates of different strategies being adopted by various FIIs operating in India. This also suggests churning of portfolios. On a net basis, there has been stepping up of inflow by FIIs over the past two months. Their inflow totaled Rs 9372.80 crore in November 2006 (till 24 November). The inflow was Rs 8013 crore in October 2006. The inflow was Rs 1145 crore in July, Rs 4643.10 crore in August and Rs 5425 crore in September. The cumulative inflow for calendar 2006 has totaled $8.5 billion. The inflow was a record $10.7 billion 2005.
Mutual funds were net sellers for the second day in a row on Friday 24 November. Mutual funds sold shares worth a net Rs 212.73 crore on 24 November compared to their outflow of Rs 276.24 crore on 23 November.
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