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Friday, December 08, 2006


Net FII inflows hit US$50bn

Cumulative FII investment into the equity market crossed US$50bn since foreign investors were allowed to enter the local capital market back in early 1990s. This year, FIIs have pumped in close to US$8.5bn, with US$2bn coming in November. Last year, they had poured in US$10.7bn, with US$2bn coming in December. So, if the bulls are to carve out yet another record, foreign funds will have to bring in another US$2bn this month. Foreign funds have been net buyers this year except for May, when the market took a beating. The trend started reversing slowly from July onwards as the market recovered from the carnage in May and June. Not much money came into the market in July. But, in the next three months, foreign funds poured in US$1bn each. The icing in the cake came in November, when FIIs pumped in US$2bn.

Danone may exit JV with Wadias: report

The tussle between the Wadia family and French food major Groupe Danone is getting uglier. Danone is reportedly considering pulling out of the equal joint venture or buying out the Indian partner's stake in Associated Biscuits International Holding, the holding company of Britannia Industries. Earlier in the week, the Wadia family won the first round in the fight with Danone. The Bombay High Court asked the French dairy products major not to sell the shares of Avesthagen, a Bangalore-based bionutritional company. Danone was asked not to sell its stake in the company till the next hearing, which is scheduled for January 31, 2007. Danone acquired a 5% stake in Avesthagen for US$5mn a few days ago, prompting the Wadias to move the High Court claiming that the move violated the joint venture agreement signed by the two companies in 1995. The court case over Avesthagen is the latest in a series of issues that are threatening to rock the joint venture between the Wadias and Danone. The two are fighting over the use of Tiger brand by Danone in international markets, besides the consolidation of Britannia results with Danone. According to the agreement between the Wadias and Danone, any new opportunity in the food and beverages business had to be brought before the JV first. Only if the Wadias reject the new business opportunity, could Danone go ahead on its own. The Wadias allege that when the opportunity was presented before the JV, a Danone director opposed the resolution, thwarting their participation. They also say that Danone and Avesthagen conspired to keep them out.

MRPL objects to Cairn IPO disclosure - paper

The mega IPO of Cairn India has turned a little controversial. MRPL objected to some of the disclosures made by the Indian arm of the British oil & gas explorer in the issue prospectus. MRPL has written to capital market regulator SEBI, objecting to what describes as "partial disclosure of facts" by Cairn, which it says impacts its credibility. "The DRHP states that Cairn’s production schedules for crude may get delayed due to MRPL's failure to keep its commitment on building the pipeline. But this does not represent all the facts," ONGC Chairman R.S. Sharma said. "MRPL is under no liability to build the pipeline. We had offered to build it provided we could recover the cost through the discounts," he said. Moreover, the DRHP does not mention that Cairn and MRPL had signed a joint letter dated June 30, 2005, to build a well-head refinery at Barmer. Cairn as the operator of the Rajasthan field has maintained that it is ready to offer its crude to any company nominated by the Government. MRPL has been designated as the nominated company which would offtake the crude from these fields. However, ONGC has maintained that it would be ready to buy the crude from Barmer only if it is economically feasible. Separately, Cairn India continues to be dogged by demands for discounts on crude from its Barmer fields. After ONGC, which has a 30% interest in Cairn India's Rajasthan field, Indian Oil Corp also sought an opportunity cost for buying the waxy oil. According to reports, IOC has sought a discount of US$8-10 a barrel. Cairn India aims to launch India's biggest IPO on Dec. 11 for up to US$1.4bn.

Reliance close to buying Adani Retail: report

Looks like the planned entry of Wal-Mart in the country has sparked off the much-awaited scramble for scale. And, what better way to attain that than through acquisitions. Reliance Retail, the wholly-owned subsidiary of Reliance Industries Ltd., is close to acquiring Gujarat-based Adani Retail for about Rs1-1.1bn. The Adani group has reportedly fixed a price tag of Rs2bn for its retail chain. Though Adani group officials claimed they were in talks with four parties - Reliance, Tatas, Aditya Birla Group and an unidentified private equity player - reports said negotiations with RIL had reached an advanced stage. If it goes through, the deal would give Reliance Retail access to 54 retail locations across nine cities in Gujarat. Reliance Retail is reportedly also in advanced stages of talks for acquiring Maratha Stores, a Mumbai-based local co-operative store chain. According to reports, what’s attracting the company is the real estate that the relatively unknown retail chain has. Maratha Stores has a chain of around 20 outlets in various catchment areas of Mumbai. In aggregate, it has close to 75,000 sq ft of retail space. Separately, retailers Subhiksha and Landmark have categorically denied newspaper reports that they are up for sale and that they are in talks with Reliance Retail for selling out to the Mukesh Ambani-controlled company.

Tata Motors project...Singur sinks deeper into trouble

Tata Motors' dream one-lakh-car project continues to face obstacles. The controversy surrounding the company's land acquisition process at Singur, in West Bengal turned violent. Activists of a Maoist organisation ransacked a Tata Motors showroom in Kolkata. Meanwhile, the fencing work on the Singur land, where Tata Motors plans to build its production facility for the one-lakh-car project, continued amidst tight security. West Bengal Chief Minister Buddhadeb Bhattacharjee said in the assembly that the land would be handed over to the Tatas this month. In related news, Trinamool Congress leader Mamata Banerjee began an indefinite fast at Dharmatala area, demanding immediate halt in land acquisition at Singur and withdrawal of police force from there. On Sunday, Banerjee had served a 24-hour ultimatum to the state government and said that she would go on an indefinite fast if the land acquisition process was not stopped. BJP president Rajnath Singh was arrested near Dankuni and allowed to go free immediately afterwards by the police on his way to Singur, where the Prohibitory orders continued to be in force. Social activist Medha Patkar, who again tried to go to Singur, was also stopped at Nasibpur. Despite her plea that she should be allowed to meet the farmers there, police refused to let her proceed to Singur.

i-flex shares jump as Oracle hikes offer price

Oracle Corp. raised the open offer price for i-flex Solutions Ltd. for a second time. The world's second-largest software maker also agreed to purchase an additional 35% of the company's stock. At Rs2,100, the new offer is 42% higher to i-flex' earlier offer of Rs1,475 and 20% up from the closing price of Rs1,751 on Dec. 7. The bid is scheduled to expire on Dec. 23 and won't be raised again, California-based Oracle said in a statement. "This is the last opportunity for i-flex shareholders to tender their shares to Oracle," Chief Executive Officer Larry Ellison said. Oracle already owns a 43% stake in the Mumbai-based i-flex. The bid comes about two weeks after Oracle postponed its plan to buy more i-flex shares. On Nov. 22, the company said that it would raise the per-share price and add an interest payment to compensate for the delay. On April 14, Oracle offered to buy about 16.6mn i-flex shares for Rs1,475 each, an 11.6% premium over i-flex's closing price the previous day. On Nov. 22, when Oracle announced the delay, it said that it would buy an additional 2,320 shares.

Mysore Cements...SEBI seeks higher open offer

Capital market regulator SEBI asked HeidelbergCement AG to increase its offer for buying an additional 20% stake in Mysore Cements Ltd. by 25% to Rs72.50 per share. The capital market regulator wants HeidelbergCement to raise the open offer because the German company paid non-compete fees to the promoters of Mysore Cements, effectively raising the offer price, a financial daily reported. The German firm had bought a majority stake of 50.1% from the S. K. Birla group, promoters of the Bangalore-based Mysore Cement for US$100mn in July. The public offer, at Rs58 per share was supposed to open on Sept 6 and close on Sept 25. On July 9, Mysore Cements announced that it would issue up to 66.5mn shares, representing 42.08%, to HeidelbergCement on a preferential basis at Rs54 a share. HeidelbergCement was to buy 13.4mn shares, totaling 8.48%, from the promoters at Rs58 a share, which excluded non-compete fees of Rs14.50 per share. HeidelbergCement took management control of Mysore Cements by subscribing to the preferential offer and also got a place on the company’s board of directors. HeidelbergCement is likely to contest SEBI's view on this matter in the Securities Appellate Tribunal (SAT). HeidelbergCement said it is preferring an appeal before SAT, seeking to set aside the SEBI direction for revising its open offer.

IPOs and pre-issue placement

Aditya Birla Group’s Idea Cellular Ltd. filed the Draft Red Herring Prospectus (DRHP) with SEBI for its forthcoming IPO. The company is planning to raise Rs25bn through the maiden public issue, which also has a green shoe option of Rs 3.75bn. The company is also considering a pre-IPO placement not exceeding 15% of the issue The issue proceeds will be utilised towards expanding services in new circles, NLD operations, as well as launch in Mumbai, redemption of preference shares, general corporate purposes and issues expenses.

The Cabinet Committee on Economic Affairs gave its approval to the IPO of shares by National Hydroelectric Power Corporation (NHPC). The Government will sell up to 24% of NHPC's share capital in one or more tranches from the domestic/external markets. The issue proceeds will be used for enabling the PSU to met the capacity addition targets. The present authorized capital of NHPC is Rs150bn and the paid up share capital is Rs103.49bn.

Fortis Healthcare Ltd. would raise up to US$33.33mn by issuing equity shares to Quantum (M) Ltd. and Blue Ridge Ltd. Partnership and Blue Ridge Offshore Master Ltd. Partnership (Blue Ridge) in a pre-IPO placement. The company will issue a maximum of 5.96mn shares to Quantum and Blue Ridge each at a price equal to the IPO price. The shares to be issued to Quantum and Blue Ridge will be subject to a lock-in after the IPO, as per SEBI regulations.

Maruti launches Zen Estilo

Maruti Udyog Ltd. launched the Zen Estilo in the highly competitive B segment. The company has chosen interesting colours like Purple Fusion, Champagne Beige, Virgin Blue and Olive Green for Zen, to go with the car's stylish image. The cheapest version of the car will have a showroom price of Rs 319,403 in New Delhi.

Toyota, Skoda to hike prices

Toyota Kirloskar Motor is considering an increase in prices of all its products. While the exact quantum of the increase is yet to be finalized, it could be between 1-2% of the vehicle cost. The company said the increase had been necessitated by several cost adjustments that the company had done this year across all products due to rising input costs. SkodaIndia has also decided to hike prices due to the rising input costs. A hike of Rs15000 is expected across all models, with effect from 1st January 2007.

Action heats up in aviation

GMR Infrastructure Ltd. has announced the master plan for the re-development of the Indira Gandhi International Airport in New Delhi. Delhi International Airport Pvt Ltd (DIAL), a Public Private Partnership, has been mandated to operate, manage and develop the Delhi airport. The master plan envisages the construction of a new integrated passenger terminal (Terminal 3) to cater to both domestic and international traffic. This terminal will be ready before the Commonwealth Games in 2010. In its first phase, the airport would be capable of handling 37mn passengers per annum. The airport is being designed with an ultimate capacity of 100mn passengers per annum.

Airbus said that it would invest US$1bn in India in various businesses over the next decade. The company also increased its forecast for new plane orders by India and predicted that the country is set to become the world's fastest-growing air travel market in the next decade. The Toulouse, France-based firm said that India would need 1,100 planes, valued at US$105bn until 2025.

Jet Airways India Ltd signed a contract with CAE, a world leader in providing simulation and training solutions to commercial airlines, for supply of Boeing 777-300ER (Extended Range) and Airbus A330 simulators. The company said that the move is in preparedness for the induction of wide bodied aircraft into the company's fleet next year.

Air India received the delivery of the first of its planned purchase of 68 Boeing jetliners. The digitally designed Boeing 737-800 aircraft is part of the largest commercial airplane order in India's civil aviation history placed by Air India in Dec 2005. The brand new aircraft will be joining the existing fleet of B 737-800's of Air India Express, a low-cost airline subsidiary of Air India. The delivery of the second B737-800 is expected by the third week of December, followed by three more aircrafts in January 2007.

The Government may allow foreign investors to own a larger stake in cargo airlines to help ensure optimum freight capacity. Union Civil Aviation Minister Praful Patel said that overseas investors may be able to own as much as 74% of Indian cargo airlines compared with the existing 49%. The Government may also make similar changes for helicopter and some aircraft-chartering businesses, he added. The country will need a total of 500 freighters within 10 years, Patel said.

Big Deals

Blackstone Group LP and Texas Pacific Group are reportedly planning to make a bid for Hutchison Essar, the Joint Venture (JV) between India's Essar Group and Hong Kong-based Hutchison Telecommunications Ltd. The Wall Street Journal (WSJ) has said that the offer from the two private equity majors could be as high as US$8bn, excluding debt. Blackstone might partner with Reliance Communications Ltd., the newspaper said.

Indian Oil Corporation Ltd. acquired a 12.5% stake in the Trans-Anatolian Pipeline Company (TAPCO), which is laying a crude oil pipeline between Turkey's Black Sea port of Samsun to the Mediterranean coast town of Ceyhan. According to reports, the price of the acquisition will be decided once the equity structure of the project, estimated to cost US $1.5bn, is finalised. The 550-km Samsun-Ceyhan pipeline will carry 1.5mn barrels of oil a day, or 70mn tons a year, when completed by 2009-10.

UTV Software Communications Ltd entered into an arrangement with Indiagames Ltd for acquisition of controlling stake in the Mumbai-based mobile and online gaming company for Rs680mn. UTV would also be acquiring majority stake in UK-based Ignition Entertainment Ltd., a company involved in developing console games for Rs600mn. UTV said that it has initiated development of animation movie projects with total investments to the tune of Rs1.35bn over a period of next three years.

Opto Circuits India Ltd. signed a Letter of Intent (LoI) to acquire a medical equipment company in Western Europe The all-cash deal is estimated to have cost Opto Circuits Rs720mn, and will be closed in the next few weeks. The company said the transaction is subject to financial and legal due-diligence. The target company designs and manufactures a wide range of balloon catheter assemblies and related products for coronary, renal and other applications and is a profitable company.

The Mahindra Group announced the sale of the Cable Accessories Division of Mahindra Engineering & Chemical Company Ltd. to 3M Electro & Communication India Pvt. Ltd. The Cable Accessories Division of Mahindra Engineering is a leading supplier of cable accessories, including electrical cable jointing kits. It employs approximately 70 people.

Tata Power bags 7 licenses for defense contracts

Tata Power Company Ltd. received seven licenses for its Strategic Electronics Division (Tata Power SED) from the Government. These licenses enable Tata Power SED to be the prime contractor to the Ministry of Defense for designing, development, manufacturing, assembling and upgrading mission critical systems in seven core areas of Defense Strategic Electronics. Earlier this year, Tata Power SED secured orders for Pinaka Multi Barrel Rocket Launcher System from the Indian Army and Futuristic Automatic Data Handling System for Air Defence from the Indian Air Force. "Over the next five years these licenses open a domestic addressable market of over Rs200bn for Tata Power SED," said Rahul Chaudhry, CEO of Tata Power SED.

RIL awarded two blocks in Yemen

Reliance Industries Ltd. (RIL) reportedly won two exploration blocks, block 34 and 37, in Yemen with partner Hood Oil. The company is likely to sign the production sharing contract early next month. The two blocks measuring about 7,500 sq km were amongst the seven fields offered during the second round of licensing. Yemen short-listed 34 of the 63 international oil companies under the third round of licensing. The final results will be announced on Dec 20. RIL already has a stake in the onshore block 9 in Yemen. It has discovered oil in this block and test production has started.

Japan's economy grows slower than forecast

The Japanese economy grew at a much slower pace than previously forecast in the July-September quarter, as spending by corporates and consumers slowed in the world's second-largest economy. The GDP grew by 0.2% in the quarter ended September 30, the Cabinet Office said, revising down its previous estimate of a 0.5% growth. On an annualized basis, Japan's US $4.7 trillion economy - expanded by 0.8% instead of the more robust 2% previously reported. The new figures showed a drop in corporate investment in new factories and equipment. Consumers also spent less than previously thought, particularly on home purchases, the Government said. Overall, domestic demand shrank during the quarter instead of the small growth that was previously reported, the latest government data showed. Only strong growth by exports kept the Japanese economy on track. The slower than expected GDP growth may force the Bank of Japan (BOJ) to defer the proposed hike in its key interest rate until next year. Bond yields were little changed on speculation that the central bank will wait for its quarterly Tankan business confidence survey next week before deciding whether to raise borrowing costs.

Australian economy slows

Australia's economy grew at its slowest pace in three years in the third quarter. The GDP rose by 0.3% from the previous quarter, the Bureau of Statistics said. Economists had forecast an increase of 0.4%. The lower than expected GDP figure has been attributed to a drop in business investment and weakness in agriculture output following the nation's worst drought in a century. The GDP grew by 2.2% in the three months ended Sept. 30 from a year earlier. Economists had estimated 2% annual growth. The economy grew at a revised 0.5% pace in the second quarter from the first. Business spending cut 0.2% from the GDP in the third quarter while agriculture knocked off 0.3% from growth. By contrast, consumer spending and net exports each contributed 0.4% to growth. Separately, a slowing economy, in part triggered by three interest-rate increases since May, prompted the Reserve Bank of Australia to keep its benchmark rate unchanged. The central bank raised its overnight cash rate target by a quarter percentage point in May, August and November, taking the rate to a six-year-high 6.25%.

ECB hikes key rate for 6th time in 2006

The European Central Bank (ECB) hiked its key interest rate for the sixth time in the year, to pre-empt any escalation in inflation as the European economy continues to accelerate. The ECB lifted its key interest rate to 3.5% from 3.25%. The bank is concerned about too much money sloshing around in the system for companies and consumers to spend. The EU central bankers in Frankfurt are going for gradual tightening of monetary policy as money supply is rising at an 8.5% rate. One of the main reasons for the latest hike by ECB is that the euro has been rising steadily against the dollar. With the EU economy being largely led by exports, it is only natural that Europe’s central bankers are a bit more getting edgy. With every rise in the euro, exports get more expensive and growth is harder to sustain. The big question now is whether another rise is likely as the eurozone economy strengthens. Meanwhile, the Bank of England (BOE) kept interest rates unchanged. Economists last week had unanimously forecast that the British central bank would leave rates at 5%. The outlook, however, is less clear and much will depend on the level of wage settlements in the crucial New Year pay round

Failed drug trials rattle Pfizer

Pfizer's share price tumbled after the largest pharmaceutical company in the world said that it had stopped development of Torcetrapib, its most promising drug. Pfizer invested US$800mn and spent 15 years developing Torcetrapib. Pfizer stopped the drug's final clinical test because 82 people taking it died during the trial, compared to 52 in the control group not taking the drug. When this information came in, Pfizer stopped the trials. The company also stopped developing the compound. Torcetrapib was supposed to help people fend off the risk of heart attacks by boosting levels of HDL (good) cholesterol - and insulate Pfizer from its generic competition. "We understand the challenge that this represents and we will respond quickly and aggressively to it," CEO Jeffrey Kindler said. He is under pressure to find a replacement for his company's blockbuster cholesterol drug Lipitor, which generated US$12bn in 2005 and could face generic competition by 2010. Meanwhile other important Pfizer drugs, such as Zoloft, Norvasc, and Zyrtec, have patents expiring next year. Patent expirations will cost Pfizer US$14bn in annual sales between 2005 and 2007, according to Lehman Brothers. Former CEO Hank McKinnell had forecast that torcetrapib could bring in a potential US $30bn in annual revenues. Lehman Brothers downgraded Pfizer to underweight from overweight. Pfizer said it was keeping previous revenue forecasts, including a return to revenue growth for 2009, but its plan for transforming the company will now be accelerated. It is still aiming to introduce around six new products a year starting in 2010.

NTL opts out of race for ITV

NTL dropped plans for a £4.7bn bid for ITV, dashing Sir Richard Branson's hopes of controlling the UK's largest commercial broadcaster. BSkyB's James Murdoch's acquisition of a 17.9% stake in ITV just a week after NTL signaled its desire to start merger talks, scuttled the cable group's plans. The high price BSkyB paid for ITV shares, put a full bid out of the reach of debt-laden NTL. NTL, however, is pressing ahead with its regulatory objection to Sky's stake in ITV. It reserves the right to make a fresh approach for the commercial broadcaster should another bidder emerge or Sky sell all or a material part of its stake in ITV. NTL has moved the Office of Fair Trading and Ofcom, the British media and telecom regulator, to complain about BSkyB's swoop on ITV. Ofcom is already investigating whether BSkyB's stake represents a change in control that might affect ITV's programming.

Separately, in a development could end two years of wrangling between billionaires Rupert Murdoch and John Malone, News Corp. decided to buy back the 19% voting capital held by Malone's Liberty Media in the third-largest US media firm. New York-based News Corp will exchange its 39% of California-headquartered DirecTV Group, pay US$550mn in cash and contribute three regional sports networks to the deal. The DirecTV shares will be bought by Liberty at slightly more than US$21, a discount to their current level, to reflect the cash and assets being added to the deal. For News Corp shareholders, the transaction is similar to a huge share buy-back. Liberty lawyers are completing due diligence on the sports television networks, after which a deal could be finalised as early as next week.

Hard Rock sold to Florida’s Seminole Tribe

The Seminole Tribe of Florida said it had acquired Hard Rock International, the music-themed chain of restaurants, hotels and casinos, from the Rank Group of Britain for US $965mn. This is one of the largest purchases ever by an American Indian tribe. The sale signals the exit of the Rank Group from the restaurant industry, as it seeks to focus on its casino operations amid disappointing earnings. It is also the Seminoles’ largest acquisition yet in gambling. The tribe, which currently draws about 90% of its income from gambling, has sought in recent years to diversify its revenue streams. The Rank Group put Hard Rock up for sale this summer. Founded in 1971 in London, Hard Rock employs about 7,000 at 124 restaurants in 45 countries, as well as at seven hotels, two casinos and two concert venues. The company also owns what it says is the world’s largest collection of rock memorabilia, including items from Elvis, Bob Dylan and Madonna. For the year through June, Hard Rock reported revenue of £133.7 million (US$262.5mn), and profit before interest and taxes of £18.9mn (US$37.1mn).


Bulls & bears may lower volume

Last week the decibel levels were higher as bulls were literally screaming on the street. However, they stretched their vocals a bit too far and finally ended up sore this Friday. The fall today brought a temporary halt to a 6-week winning streak on Dalal Street. We had been advising caution for many weeks as the bulls are trading at dizzy heights for quite some time now. There is no need to panic as funds are waiting on the sidelines to invest in the fastest growing economy in the world. Investors need to remember, that any fall won't be too sharp, as it provides opportunity to those having some cash to buy fundamentally sound scrips. Adopt a sector specific approach as from now on the trend after would hinge on the strength of the upcoming quarterly results and expectations from the Union Budget. For the near term, a slew of policy announcements will dictate the direction for the market. Volumes will also play an important role in deciding the trend for the market. When volumes are less, wilder swings could also be expected occasionally.


What could have been an impressive week for the bulls ended in a whimper. The Sensex crossed the 14k mark but closed well below it due to profit booking. Many observers have been predicting a correction for some time. So, a fall on the bourses was always on the cards. Friday’s sharp dip didn’t took anyone by surprise. Almost all the major index constituents were left battered and bruised. Key indices snapped a six-week winning streak, as investors preferred to book some gains after the recent rally. Is this the beginning of some cooling off or are the bulls gearing up to strike back with vengeance remains to be seen.

The market struggled for direction through the week. Some stocks managed to keep the index up but broadly speaking, the bulls lost momentum towards the end of the week. Capital Goods, Power and Sugar stocks were in the limelight along with select Metal and Pharma stocks. L&T, BHEL, REL, Tata Motors and Tata Steel stood firm in a choppy week, saving the bulls the blushes. Hero Honda, Bajaj Auto, HLL, ACC and Tata Power were among the major losers. Finally, the BSE Sensex closed at 13799, lower by 45 points or 0.3% after touching a new all time high of 14035.30. The NSE Nifty lost 36 points or 0.9% to close the week at 3962.

Sugar stocks were the focus of attention after a long time following reports that Indonesia was in the process of inviting tenders for importing 2 lakh tons of sugar. Reports that India is likely to relax the ban on exporting sugar this month also boosted the sugar scrips. Sakhti Sugar jumped 10.7% to Rs113.7, Balrampur Chini shot up 10.3% to Rs90. Bajaj Hindustan advanced 7.9% to Rs255, Renuka Sugar was up 6.7% to Rs530 and Uttam Sugar added 4.7% to Rs146.

Capital Goods and Power stocks were also in momentum. L&T rose 5.2% to Rs1451, BHEL advanced 4.5% to Rs2636 and ABB gained 3.7% to Rs3828. Auto stocks witnessed profit booking barring Tata Motors. The scrip rose 2.8% to Rs866 during the week. The company’s November total vehicle sales rose 43% to 49061 units. Hero Honda fell over 3.6% to Rs743, Bajaj Auto was down 3.6% to Rs2469. Maruti declined 2% to Rs932 and TVS Motors lost 5.6% to Rs93.

Cement stocks also fell during the week on back of profit booking. ACC declined 2.3% to Rs1105; Gujarat Ambuja was down 1.6% to Rs141, India Cement slipped 3.1% to Rs230 and Birla Corp fell by over 7.4% to Rs338. L&T rose by over 5.2% to close the week at Rs1451 after scaling a high of Rs1490 and a low of Rs1384. L&T attracted buying interest after the company and Tata Power applied for the Rashtriya Udyog Ratna status in order to bid for government's defence contracts. Hindalco advanced 4.6% to Rs179 during the week. Idea Cellular announced its plans to raise up to Rs25bn from IPO. Hindalco holds around 10% stake in the company, which propelled the stock higher.

SBI considering public issue next fiscal

State Bank of India (SBI), the country's largest commercial bank, is all set to tap the primary market without diluting the stake held by the reserve Bank of India (RBI). SBI chairman O.P. Bhat said that the bank might tap the equity market in 2007-08 once the SBI Act is amended. "For raising Tier I capital we are awaiting approval for the bill....we would not be able to do so before next financial year," Bhat said. He said that SBI will raise capital according to its requirement. "It does not mean that there is going to be a dilution in RBI's stake in the bank," Bhat said, adding that the Tier-I capital will be raised through a public offer. The SBI Act stipulates that RBI's stake in SBI should not go below 55%. The bill to amend the SBI Act will soon be tabled in Parliament to allow RBI's minimum stake to fall to 51%.

Separately, Finance Minister P. Chidambaram said that the Government intends to take over the central bank's stake in SBI and that the move would not come in the way of the bank's proposed public issue. He said that SBI had a capital adequacy ratio of 12.63% as on Sept. 30, well above a minimum regulatory requirement of 9%. "Further, the bank has a number of avenues, irrespective of its ownership, to strengthen its capital like raising fresh equity, issue innovative perpetual debt instruments, issue various capital instruments to shore up its Tier II capital," he told the parliament. "Hence, transfer of RBI shareholding in SBI to the Government would not in any way adversely impact the capital raising ability of the bank," the Finance Minister added.

The Centre is planning to buy RBI's stake in SBI, which is valued at Rs290bn. Vinod Rai, Secretary in the Ministry of Finance indicated that the Government's stake could reduce to 51% in SBI, if it bought the stake from the RBI as per the plan. The RBI holds 59.73% of SBI, but has proposed transferring that to the Government as it feels that it is inconsistent for it to be a bank owner and a regulator.

GSM subscriber base tops 100mn mark

The total GSM-based subscriber base in India crossed the 100mn mark in November, the Cellular Operators Association of India (COAI) announced. GSM service providers have set a new record by adding 5mn new users in November. This is even higher than the 4.7mn subscribers added in October. India has now joined the super-elite club of countries having more than 100mn GSM subscribers well ahead of expectations. In terms of the GSM subscriber base, India is now placed third after China and Russia.
Rank Country GSM subscriber base in Million (Nov’06)
1 China 401.7
2 Russia 152.2
3 India 100.7

T.V. Ramachandran, Director General of COAI stated that GSM technology has been the primary engine of growth in telecom in India and will continue to be the major contributor to the growth in teledensity in the coming years as well. He also said that the sharp spurt in overall mobile growth has been due to forward looking policies of the Government and enabling regulations.

Hutchison Essar Ltd., the joint venture between the Essar Group and Hutchison Telecommunications International Ltd., said it added a record one million subscribers in November as the company expanded its service across the nation. The New Delhi-based company's number of users rose to 23.3mn last month. The company gained users as call rates for cellular phones fell by between 5% and 7% in the past year. Bharti Airtel added 1.65mn new users, taking its total to 30.26mn.

Company wise market share in November 2006

Name of company Total Sub Figures % Market Share
Bharti Airtel 30262269 30.03%
BSNL 22975201 22.80%
Hutchison Essar 22274580 22.10%
IDEA 11841154 11.75%
Aircel 4237834 4.20%
Reliance Telecom 3409792 3.38%
MTNL 2375026 2.36%
Spice 2357493 2.34%
BPL 1052699 1.04%
All India 100786048 100.00%

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Market slides sharply

The market succumbed to heavy selling on hectic profit booking in most of the front-line counters. The Sensex began the trading session with a positive gap of 36 points at 13972 and moved up to touch an intra-day high of 14010. The index soon lost ground and slipped sharply as the session progressed. Although the market recouped some of its losses in the afternoon, a fresh bout of selling saw the index slip below the 13800 mark to touch the day's low of 13757. The Sensex finally ended the session with losses of 173 points at 13799 while the Nifty shed 53 points to close at 3952.

Leading the slump Tata Motors shed 2.85% at Rs867. HLL dropped 2.73% at Rs234, Reliance Industries declined 2.53% at Rs1,267, ACC tumbled 2.48% at Rs1,105, ONGC dipped 2.41% at Rs841, Satyam slipped 2.11% at Rs457, Hindalco was down 2.07% at Rs180 and Bajaj Auto closed weaker by 2.03% at 2,649. Reliance Communication, Tata Steel, Hero Honda, HDFC Bank, TCS, Maruti Udyog and Wipro also closed in negative territory. Bucking the weak trend, Reliance Energy gained 2.42% at Rs555 and Dr Reddy’s advanced 2.33% at Rs775. SBI, Grasim Industries, Gujarat Ambuja, and Ranbaxy closed in positive territory.

i-flex surged 17.01% at Rs2,049, Polaris Laboratories soared 8.74% at Rs147, Geometric Software added 7.08% at Rs121 and Rolta India gained 4.29% at Rs264. Gujarat Industries Power, Mphasis BFL, IndusInd Bank, Asahi India and Indo Rama advanced 2-3% each.

The market breadth was negative on the BSE. Of the 2,655 stocks traded, 1,581 stocks declined, 1,016 stocks advanced and 58 stocks ended unchanged. The BSE Oil & Gas index was the major loser among the sectoral indices and shed 2.21%. The BSE Metal index declined 1.74% and the BSE Auto index was down 1.58%.

Over 35.32 lakh Reliance Communication shares changed hands on the BSE followed by Sterling Biotech (23.15 lakh shares), Parsvnath (21.69 lakh shares) and Polaris (21.01 lakh shares).

Reliance Communication clocked a turnover of Rs168.60 crore on the BSE followed by HDFC (Rs149.40 crore), Reliance Industries (Rs143.87 crore) and i-flex (Rs139.37 crore).

173-point debacle

The market extended its fall as selling intensified during the later half of the session. Shares from auto, metals, oil & gas suffered the most.

The 30-shares BSE Sensex plunged 172.54 points, or 1.23%, to settle just below the 13,800 mark at 13,799.49. It opened with an upward gap of 35.64 points, at 14,007.67. It also hit a high of 14,009.56, but began declining as profit-booking emerged. The fall accentuated in the second half of the day, and the Sensex tumbled to a low of 13,756.86.

The S&P CNX Nifty lost 63.30 points (1.58%), to 3,952.05.

The market-breadth was weak on BSE, with over 1.5 losers for every gainer. Against 1,606 shares that declined, 967 advanced. Just 57 shares remained unchanged.

The total turnover on BSE amounted to Rs 4,061 crore.

Among the 30-Sensex pack, 27 declined while the only 3 of them managed some gains.

Tata Motors was the top loser, down 3.44% to Rs 861.50, on 3 lakh shares. It had tumbled from an intra-day high of Rs 897.

ACC (down 2.95% to Rs 1,100), Hindalco (down 2.86% to Rs 178.15) and HLL (down 2.75% to Rs 233.75) were the other losers from the Sensex family.

Reliance Communication slipped 2.30% to Rs 445.85, after a block deal of 22.74 lakh shares was struck in the counter at Rs 454 per share. The counter clocked 35.27 lakh shares on BSE.

Index heavyweight Reliance Industries (RIL) lost 2.68% to Rs 1,265.90, on a volume of 11.20 lakh shares. The stock has slipped sharply from an intra-day high of Rs 1,310.

State Bank of India (SBI) lost 0.31% to Rs 1,342. As per reports, SBI intends to start operations in Israel by March 2007. The government-run moneylender also wants to enter Pakistan. The bank is expanding into countries, where India's trade and investment is set to grow in future.

NTPC declined 0.46% to Rs 151, as buying continued, after Merrill Lynch raised price target on the scrip, to Rs 180. In a recent report dated 5 December 2006, Merrill Lynch has raised its earnings estimates for NTPC. Its revised price target of Rs 180 on NTPC, is based on a discounted cash flow (DCF) analysis.

Reliance Energy was the top gainer, up 1.96% to Rs 552.65, on 3.02 lakh shares. The stock moved in a broad range of Rs 567.90 - Rs 541.

Grasim (up 0.06% to Rs 2750) and Dr Reddy’s (up 1.50% to Rs 769) were the other survivors of the market carnage.

Two block deals were struck on EIH counter of 2.76 lakh shares each at Rs 110 and Rs 107.25, respectively. The stock was down 0.80% to Rs 105.15 on a total volume of 7.97 lakh shares.

The Nikkei average fell 0.34% on Friday as weaker-than-expected machinery orders data hit machinery stocks such as Fanuc Ltd., while Sanyo Electric Co. Ltd. dropped on a cellphone battery recall. The Nikkei slipped 55.54 points to close at 16,417.82, after booking a six-week closing high on Thursday.

Hong Kong’s Hang Seng index lost 103 points (0.55%), to 18,739.99.

India's wholesale price index rose 5.30% in the 12 months to 25 November, lower than the previous week's annual rise of 5.45% due to a fall in food and energy prices, data showed on Friday. The annual inflation rate was 4.48% during the corresponding week of the previous year.

Profit-booking is likely to continue after India’s premier index, the BSE Sensex, rallied a little over 48% in this calendar year, as foreign funds purchased heavily, and the cumulative inflow from whom, in 2006, has reached $8.4 billion compared to a record inflow of $10.7 billion in 2005. Of these, $2 billion was pumped only a month -- November 2006.

The selling pressure may also remain as a section of the market feels that investors may consolidate positions ahead of a record initial public offering of Cairn Energy's Indian subsidiary - Cairn India. The IPO, which will be India's biggest so far, is scheduled to open on 11 December, and is expected to raise up to $1.4 billion.

The European Central Bank had raised its key interest rate a quarter of a point to 3.5% on Thursday, despite strength in the euro that some analysts say could stunt economic growth and hurt the crucial export sector.

FIIs bought shares worth a net Rs 244 crore on 6 December, the day when the Sensex had risen 11 points. However, mutual funds sold shares worth a net Rs 177 crore the same day.

US stocks fell on Thursday as investors locked in profits ahead of jobs data on Friday that may show further weakening in the economy and hurt corporate earnings. The Dow Jones industrial average dropped 30.84 points, or 0.25%, to end at 12,278.41. The Standard & Poor`s 500 Index declined 5.61 points, or 0.40%, to finish at 1,407.29. The Nasdaq Composite Index slid 18.17 points, or 0.74%, to close at 2,427.69.

Oil prices rose in Asian trade, after the latest attack on an oil installation in Nigeria, and on growing expectations that OPEC will cut production further, dealers said. New York's main contract, light sweet crude for January delivery, was up 39 cents at $62.88 while Brent North Sea crude for January delivery rose 32 cents to $62.89.

Sharekhan Investor's Eye dated December 07, 2006

Tata Consultancy Services
Cluster: Evergreen
Recommendation: Buy
Price target: Rs1,325
Current market price: Rs1,192

Orders galore

Key points

  • Large orders bagged: Tata Consultancy Services (TCS) has bagged seven large outsourcing deals in the past six weeks, amounting to a combined value of over $500 million. The clients are from diverse industry domains and geographies.
  • Boosting the Chinese operations: TCS has secured a $100-million order from the Bank of China, which is one of the largest outsourcing deals from China to an Indian vendor. Moreover, the induction of the global technology major Microsoft Corporation as a strategic investor with a 10% stake in its Chinese subsidiary, TCS China, also augurs well for the company's growth plans in China.
  • Maintain Buy call: At the current market price the stock trades at 29.3x FY2007 and 23.3x FY2008 estimated earnings. We maintain our Buy call on the stock with price target of Rs1,325.

Television Eighteen India
Cluster: Emerging Star
Recommendation: Buy
Price target: Under review
Current market price: Rs895

TV18 enters stock broking business

Key points

  • Web18, a subsidiary of TV18 India, has entered into a partnership with Ambit and Centurion Bank of Punjab (CBoP) to pursue stock broking business. In this venture Ambit and Web18 will hold a 40% stake each whereas CBoP will hold a 20% stake. It will leverage the partners' complementary strengths.
  • This deal puts Web18 in a completely new line of business which allows it to put its niche Internet properties to good use. Given the market's thumbs-up to the deal (evident from the surge in CBoP price), the new TV18 stock is also expected to trade higher by Rs45-60.
  • Earlier TV18 had acquired CRISIL Marketwire. Our estimates and the price target do not reflect the acquisition and the latest deal with Ambit and CBoP. After the listing of TV18 (new) and gaining clarity from the management we will be revising our estimates and price targets.
  • We remain bullish on TV18 in view of the company's compelling properties and the ability of its management to monetise the same.
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Kotak Reports - Panacea Biotec & EKC

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Sharekhan Highnoon dated December 08, 2006

The Nifty slipped and tested the 10-DMA support at 3976 in early trades...

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Macquarie - ICICI Bank

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Sharekhan Commodities Buzz dated December 08, 2006

Soy oil: Hold positions
Soy oil futures displayed a similar pattern as soybeans. The prices closed near the day's high. The recovery in the CBOT prices also helped the counter. The prices of palm oil were also trading in positive territory this morning after a long correction. The demand in the spot markets was moderate amidst regular supplies.

Download here Trading Calls

Buy Reliance Industries with a stop loss of Rs 1275 for target of Rs 1400

Buy ICICI Bank with stop loss of Rs 850 for target of Rs 900

Buy PBA Infra below Rs 144 with stop loss of Rs 142; This is a day-trading recommendation.

Sell Hero Honda above Rs 748 with stop loss of Rs 760; This is a day-trading recommendation.

Buy JP Associates with stop loss below Rs 698 for target of Rs 739.

Buy ACE with stop loss below Rs 364 for target of Rs 405 Trading Calls

Buy SBI at Rs 1363-1353. Stop Loss at Rs 1343 (Intra-day Call)

Buy Jaiprakash Associates at Rs 719. Stop Loss at Rs 699 (Intra-day Call)

Buy Siemens at Rs 1199. Stop Loss at Rs 1185. Target of Rs 1226 and 1270 (Delivery-based Call)

Buy ACC above Rs 1140, Resistance at Rs 1153, above which short term target of Rs 1160. (Intra-day Call) Trading Calls

Buy Bayer CropScience around Rs 269.05. (Its an Investment call)

Buy Areva T&D around Rs 1033.05 with stop loss of Rs 1010. (Its an Intra-day call)

Buy GVK Power around Rs 299.50 with stop loss of Rs 292. (Its an Intra-day call)

Daily trend of FII/MF investment in equities

On Dec 06, 2006, FIIs were net buyers of stocks to the tune of Rs244.20 crore (purchases worth Rs2,119.20 crore and sales of Rs1875.10 crore) while domestic mutual funds were net sellers of stocks to the tune of Rs177.37 crore (purchases worth Rs394.81 crore and sales of Rs572.18 crore).

Emkay - Morning Notes + Cairn IPO

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5 Intra-day Stock Ideas

NIFTY (4015) SUP 4000 RES 4028

BUY M&M (848)
SL 843 T 858, 860

130 T 142, 145

BUY BILT (114.60)
SL 111 T 120, 122

SELL HDFC (1565)
@ 1570 SL 1585 T 1540, 1535

@ 281 SL 285 T 270, 267


Watch out...It's time to unwind a little

You can't turn back the clock. But you can wind it up again.

Timing the market is wishful thinking. But taking time off when the indices are at unstable heights may allow you to breathe freely. After propelling the Sensex past the 14,000 mark, the market has struggled to move ahead. We expect the market to open flat and see some red ticks owing to weak global cues. Last Friday was a cracking day for the bulls. Will they crack today? And even if the market corrects, keep an eye on your favorite counters and slowly start lapping them at lower levels. For the time being, ignore where the indices go, unless you are trading on the Nifty.

FIIs too appear to have started some selling. On the F&O side, the Nifty December futures closed at a discount yesterday. At the same time, the open interest has increased, indicating that some short positions are being created. Even global markets have not been kind this week amid concerns about the strength of the US economy and the weakness in the dollar.

This may just be the beginning of some cooling that quite a few analysts have been waiting for. Though the key indices have not corrected much, on an intra-day basis, there has definitely been some profit booking at higher levels. In addition, the broader market has remained subdued. May be the bulls are feeling jaded and fatigued after the five-month rally. Also, the year-end factor may come into play as we approach the Christmas. The trend after that would hinge on the strength of the quarterly results and expectations from the Union Budget. So, the time looks ripe for the much-talked about correction. Having said that any fall won't be too sharp, and will provide opportunity to those having some cash to buy fundamentally sound scrips.

FIIs were net sellers to the tune of Rs1.53bn (provisional) in the cash segment yesterday. In the F&O segment, they offloaded securities worth Rs2.81bn. However, on Tuesday and Wednesday they pumped in Rs6.77bn in the cash segment. Mutual Funds were net sellers of Rs1.77bn on Wednesday.

We mentioned about UTV yesterday. The company may again be in the spotlight as it has picked up two gaming companies, one in Mumbai and the other from UK. UTV closed yesterday at Rs277. i-flex is expected to advance as Oracle has announced a revised open offer of Rs2,100 per share. The stock ended yesterday at Rs1,751. Britannia could come under pressure amid reports that Danone is considering either exiting the equal joint venture with the Wadias or buying out the Indian partner's stake in the holding company, Associated Biscuits Holding. Britannia finished nearly 2% down yesterday at Rs1,130.

Bayer CropScience is reportedly considering selling its 84-acre freehold land at Kolshet, Thane. The German company has already got the land valued and is reportedly close to striking a deal with a large corporate house. Yesterday, the stock was locked at the 10% upper circuit at Rs269. SBI is another stock to keep an eye on, as its chairman OP Bhatt says that the public sector bank is considering a fresh public issue next fiscal. IOC has picked up 12.5% stake in Turkey's Samsun-Ceyhen crude oil pipeline project.

US stocks fell on Thursday in anticipation of Friday's jobs report. Toll Brothers and Ryland Group dropped the most in almost two months after Credit Suisse downgraded the US housing industry.

The S&P 500 finished down 5.61, or 0.4%, at 1407.29, extending its decline from a six-year high two days ago. The Dow Jones slipped 30.84, or 0.3%, to 12,278.41. Apple Computer had its biggest tumble in four months, weighing on the Nasdaq, which lost 18.17, or 0.7%, to 2427.69.

US light crude oil prices for January delivery added 30 cents to settle at $62.49 per barrel on the New York Mercantile Exchange. The front-month contract was 37 cents higher at $62.86 a barrel in extended trading in Asia this morning.

COMEX gold rose $1.10 to $637 an ounce. Treasury prices were little changed, with the yield on the benchmark 10-year note at 4.48%, roughly where it stood late on Wednesday. In currency trading, the dollar was little changed versus the euro and yen.

Among the Indian ADRs, Wipro was down 2%, Satyam gave up 1.6%, Tata Motors climbed 2.7%, Dr. Reddy's rose 1.1%, ICICI Bank advanced 1.7% and MTNL added 0.8%.

London stocks closed higher. The FTSE 100 closed up 0.7% at 6,131.50. The markets were little moved by the decision of the Bank of England to keep rates on hold. European stocks closed higher. The German DAX Xetra 30 rose 0.7% to 6,413.03 and the French CAC-40 added 0.5% to 5,379.21. The pan-European Dow Jones Stoxx 600 gained 0.6% at 356.03.

In the emerging markets, the Bovespa in Brazil was down 0.4% at 42,909 while the RTS index in Russia rose 0.65% to 1848.

Asian stocks were down Friday morning amid concern that a weaker dollar will reduce profits of companies that rely on US sales. Samsung Electronics led the decline after the won this week rose to a nine-year high.

Mizuho Financial and Seven & I Holdings, Asia's largest retailer by market value, dropped in Japan after the world's second-largest economy grew at less than half the pace the government had forecast in the last quarter.

The Morgan Stanley Capital International Asia-Pacific Index dropped 0.4% to 137.59 as of 11:25 a.m. in Tokyo. The measure, which closed yesterday at its highest since May 12, is set for a 0.7% gain this week.

South Korea's Kospi index dropped 1.4%. Japan's Nikkei 225 Stock Average was little changed. The Hang Seng in Hong Kong was down 55 points at 18,787.

Major Bulk Deals:
HSBC Financial has sold Allianz Securities, SBI MF has sold Global Vectra Helicorp, Fidelity has bought Mcnally Bharat, ABN AMRO Bank has sold Monnet Isapt, Reliance Capital has picked up Nahar Spinning while Prudential ICICI MF has sold it, Bear Stearns has sold WS Industries.

Insider Trades:
ITC Ltd: Anup Singh (Wholetime Director) has sold in open market 3000 equity shares of ITC Ltd on 1st December, 2006.

Aptech Limited: Pramod Khera, Managing Director has sold in open market 10000 equity shares of Aptech Limited on 4th December, 2006.
Nava Bharat Ventures Limited: Shri P. Punnaiah, Director has sold in open market 8000 equity shares of Nava Bharat Ventures Limited on 5th December, 2006.

Mphasis Limited: Jaithirth Rao, Chairman has sold in open market 170581 equity shares of Mphasis Limited on 4th December, 2006.

Market Volumes:
The turnover on NSE was down by 14% to Rs74.80bn. BSE Capital Good index was the major gainer and gained 1.14%. BSE Bank index (up 0.79%), BSE Oil & Gas index (up 0.78%), BSE Metal index (up 0.63%) and BSE Auto index (up 0.35%) were among the other major gainers.

Volume Toppers:
Ashok Leyland, IDBI, SAIL, IDBI, Reliance Industries, IVRCL Infrastructure, Hindalco, Satyam Computer, Indiabulls, Action Construction, Gujarat Ambuja, Unitech, JP Associates, Hindustan Motors, NTPC, Zee Telefilms and HLL.

Delivery Delight:
ABB, APIL, Ballarpur Industries, BEL, BHEL, D S Kulkarni, Dr Reddys, Everest Kanto Cylinder, Hindalco Industries, ICICI Bank, India Infoline, Indiabulls, Jaiprakash Associates, Mangalam Cement, Punj Lloyd, Siemens, SBI and Yes Bank.

Upper Circuit Filters:
Ambalal Sarabhai, GTC Industries, Peninsula Land, Adani Enterprises, NEPC India, Subhash Projects and Hindoostan Spinning.

Brokers Recommendations:
IPCL – Outperformer from ENAM
Grasim – Outperform from Macquarie Research
Patel Engineering – Buy from Man Financial

Long Term Investment:

Major News Headlines:

IOC buys 12.5% stake in Trans-Anatolian pipeline company
Aurobindo Pharma to mull plan to merge 2 units with itself on 15th December
Maruti denies reports its developing a new mini car
Bayer Diagnostics fixes 22nd Dec as Record Date for payment of Interim Dividend
IDBI seeks regulatory permission to open new branches
ORG Informatics raises $10mn from GDR sale
IOC Board to meet on Dec 22 to consider interim dividend
Satyam to launch software engineering campus in Malaysia
Gokaldas Exports to set up new production facility in Hyderabad
Mazda wins Rs17.5mn order from Jindal Poly Films
Gail to consider interim dividend on 20th December

Indiainfoline - NEWS ROUND UP

Retailers Subhiksha and Landmark have categorically denied newspaper reports that they are up for sale and that they are in talks with Reliance Retail for selling out to the Mukesh Ambani-controlled company. A financial daily had reported that RIL is looking to acquire smaller retailers like Subhiksha and Landmark to take on the proposed Bharti-Wal-Mart combine.

Centurion Bank of Punjab Ltd, the Ambit RSM Group and the TV-18 Group are forming an equity broking venture in India. The businesses will be managed by a professional Board chaired by Rana Talwar. The bank said that the initiative would enable the bank to offer an increasing array of sophisticated financial products to its mass affluent and high net worth customers.

JP Morgan Chase has invested $60mn in a Mumbai based realty project being developed by Lodha Builders through its real estate investment arm. The investment, being touted as the largest ever in a Mumbai-based realty company's project, has reportedly been made in a premium residential property at Mahalaxmi.

Idea Cellular Ltd., part of the Aditya Birla Group, has filed the Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for its forthcoming Initial Public Offering (IPO) of equity shares. The cellular service provider plans to raise as much as Rs 25bn through the maiden public issue. The IPO also has a green shoe option totaling Rs 3.75bn. The company is also considering a pre-IPO placement not exceeding 15% of the issue.

Glenmark Pharmaceuticals' US arm has signed another supply and marketing agreement with Lehigh Valley Technologies, Inc. [LVT] for the manufacturing and marketing of 7 products for the US market. As per the agreement, LVT will develop and manufacture the products. These products will be filed with the FDA under Glenmark’s name and marketed exclusively by Glenmark in the United States. The company expects to launch these products starting FY09.

State Bank of India is likely to come out with a public issue in the next financial year, the bank's Chairman O P Bhat said on Thursday. The raising of Tier I capital would be undertaken once the SBI amendment Bill is approved by the Parliament. The Chairman also said that the bank is planning to raise Tier II capital of Rs20bn by March in this financial year.

Essar Steel has completed the expansion of steel manufacturing capacity at its Hazira Complex in Gujarat, India to 4.6mn tonnes. The expansion project was completed in 18 months with an investment of Rs19.75bn. The expansion makes Essar Steel India's largest producer of flat steel in the private sector, accounting for close to 23% of the country's flat steel capacity.

Indiainfoline - DS Kulkarni

DS Kulkarni Ltd.

CMP Rs431.90


Pune continues to maintain itself as one of the best IT/ITES business destination. D.S. Kulkarni with major presence in the Pune market is harnessing its strong market understanding, which should result in revenue and profit CAGR of 57% and 100% respectively over FY06-09. Land bank of Rs170 per share makes it’s further attractive for investment. We have a BUY rating on the stock.

Pune exemplifies our investment theme of population migration leading to rising real estate prices. With huge upcoming IT/ITES demand, better road connectivity to Mumbai, many professional educational institutions and weekend destination would continue to keep Pune real estate prices on the rise. We rate Pune as one of the most attractive Tier II cities for real estate development. DSK, who is among the top 3 players in this market, is expected to be one of the biggest beneficiaries of the real estate boom.

DSKDL with strong understanding of the Pune market having recognized the changing market dynamics has altered its business plan to accommodate high value apartment and villas, which would form more than 40% of the revenues. This apart it is also developing an IT park (8% of the total revenues), which should maintain housing demand in DSK Vishwa. We expect this to improve gross margins significantly over the next three years.

The company has its hands full with 13 under development projects, which would contribute towards 100% profit CAGR over the next three years. We have not factored in the revenues from its US subsidiary which could contribute 10-15% from FY08 onwards.

The company has developed more than 3mn sq ft over the past 10 years and has plans to develop another 9mn sq ft over the next 4 years. While the company has the necessary processes in place to manage growth, execution remains the biggest concern.

How Market Fared

Capital good for bulls

The bulls once again closed flat in a choppy trading session. The markets ended flat for second straight day as volatility and profit booking has held the bulls from marching ahead. However, strong buying in capital good stocks and some fresh buying in Banking and Auto index saved the markets from sliding into deep red. Select heavy weights like ABB, Reliance, ICICI Bank, BHEL, Satyam Computer and FMCG major HLL recorded smart gains. While Hero Honda, GAIL and HDFC were the major losers among the 50-scrips of NSE Nifty. Finally, the BSE benchmark Sensex closed flat at 13972, adding 23 points. NSE Nifty closed flat at 4015.

GMR Infrastructure advanced 1.4% to Rs393 after the company unveiled the master plan for re-development of Delhi airport. The scrip touched an intra-day high of Rs398 and a low of Rs383 and recorded volumes of over 15,00,000 shares on NSE.

Glenmark edged lower 0.7% to Rs570. The company signed supply accord with Leigh Valley Technologies. The scrip touched an intra-day high of Rs594 and a low of Rs562 and recorded volumes of over 7,00,000 shares on NSE.

Ballarpur Industries surged over 1.5% to Rs114 as according to reports the company will probably increase prices in January. The companies may increase prices by about 1,000 rupees a ton, taking the average price of paper products to about 44,000 rupees a ton. The scrip touched an intra-day high of Rs116 and a low of Rs112 and recorded volumes of over 1,00,000 shares on BSE.

Capital Good stocks were on hopes of in the limelight as Indo-US nuclear deal likely to be signed this weekend. ABB, Punj Lloyd, Siemens, BHEL and L&T were among the major gainers.

FMCG stocks continued their downward trend. Britannia slipped 2.7% to Rs1112, Colgate was down 1.1% to Rs378, Cigarette major ITC declined 0.8% to Rs186 and McDowell edged lower 0.2% to Rs867.

Technology stocks were down on back of profit booking. Index heavy weights like Infosys lost 1.1% to Rs2223 and Wipro was down 1% to Rs584. While among the Mid-Cap stocks, Mphasis BFL fell 1.9% to Rs250, NIIT Ltd declined 1.6% to TRs434 and Moser Baer lost 1.3% to Rs255.

Metal stocks were back in action after slipping in the previous trading session. Hindalco rose by over 3% to Rs183, Tisco edged higher by 0.2% to Rs493, National Aluminum was up 0.5% to Rs217 and SAIL added 0.3% to Rs86.

Networth Stock - Market Musing

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Market may remain volatile

After witnessing a sharp intra-day volatile trend due to lack of clarity may see the market remain edgy and move on the either side of the zone. Overnight fall at the US markets coupled with a bearish Asian indices trend in the present trades could drag down the local indices in early trades. The Nifty could test higher levels at 4030 and may find supports at 4000 or 3976, while the Sensex has a likely support at 13850 and may face resistance at 14028.

US indices slipped for the second straight session on Thursday ended with modest losses. While the Nasdaq declined 18 points to 2428, the Dow Jones was down 31 points at 12278.

Indian floats largely had a mixed outing on the US bourses. Tata Motors was the major gainer and rose 2.72% followed by Dr Reddy's soars 1.68%, ICICI Bank, MTNL and VSNL ended with steady gains. Among the laggards Rediff and Satyam computers slumped over 2% each while Satyam and HDFC Bank, were down over 1% each. However, Infosys and Patni Computers remained unchanged.

Crude oil prices in the overseas market gained with the Nymex light crude oil for January series advanced by 30 cents to close at $62.49 a barrel and the London Brent crude raised by 62 cents at $59.46 per barrel. In the commodity space, the Comex gold for February delivery gained by $1.10 to settle at $637 respectively.

Market may hold firm on sustained FII inflow

The market may remain steady to firm on the back of sustained FII buying. But the upside may be capped by subdued to weak trend in Asian markets.

IT stocks may hog limelight after Oracle raised open offer hike for i-flex sharply to Rs 2100 per share from Rs 1475 per share.

The market sentiment remains firm due to strong FII inflow, continued strong economic growth data and healthy corporate earnings. A lot of money is said to be waiting on the sidelines to enter the market at correction. Very few got an opportunity to ride the latest rally, it being a sharp and swift rally with the Sensex having risen 10% in a little over a month.

FIIs bought shares worth a net Rs 244 crore on 6 December, the day when Sensex had risen 11 points. Cumulative FII inflow in 2006 has reached $8.4 billion compared to a record inflow of $10.7 billion in 2005.

But mutual funds turned sellers on 6 December. They sold shares worth a net Rs 177 crore on that day compared to their inflow of Rs 398 crore in three trading sessions between 1 December to 5 December.

Asian stocks fell on Friday, with Seoul shares slipping to a near four-week low, while the US dollar was little changed as investors waited for data from Japan and the United States for clues on interest rates. Key benchmark indices in Hong Kong, Japan, South Korea, and Taiwan were down by between 0.06% to 1.4%.

US stocks fell on Thursday as investors locked in profits ahead of jobs data on Friday that could show further weakening in the economy and hurt corporate earnings. The Dow Jones industrial average dropped 30.84 points, or 0.25 percent, to end at 12,278.41. The Standard & Poor's 500 Index declined 5.61 points, or 0.40 percent, to finish at 1,407.29. The Nasdaq Composite Index slid 18.17 points, or 0.74 percent, to close at 2,427.69.

Oil rose slightly to $62.79 a barrel, trading in a narrow range ahead of OPEC's meeting next week to decide whether to cut output further.

IDBI Capital - Heritage Foods

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IDBI Capital - Morning Alert

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Karvy - Morning Report

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XL Telecom Subscription Details

QIB - 9.84

HNI/NII - 10.89

Retail - 7.1

Employees - 0.97

Overall - 8.68

Citigroup - India Economics

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Thanks Bharat

IPO - Sharekhan - Cairn India

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IPO - Networth Stock - Cairn India

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Business Today - Money Column

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Tech View - Dec 8 2006


Sensex closed in green marginally up by 22 points at 13972 levels with average volume of Rs 3787 cr.

A choppy session witnessed on 3rd consecutive days as Sensex opened up and slipped towards days low at 13915 levels and again managed to hit days new high at 14002 levels. At the end it managed to give positive close by 22 points.
Sensex closed in green marginally up by 22 points at 13972 levels with average volume of Rs 3787 cr.

A choppy session witnessed on 3rd consecutive days as Sensex opened up and slipped towards days low at 13915 levels and again managed to hit days new high at 14002 levels. At the end it managed to give positive close by 22 points.

Sensex has formed a Green candle which indicates the sign of pullback rally i.e. the weakness in the trend will remain as it is as long as Sensex holds below 13990 levels. The Empty bearish candle which was created on 5th of this month still has importance for bearish scenario. To nullify the importance of this candle Sensex must hold above 13990 levels for next day. If it does then 14180 level could be seen or else correction could be witness to 13760 or more.

Daily strategy: - If opens up and hold below 14040 levels then sell for the T1 of 13820 with Sl of 14080 levels.
Support 1) 13950 2) 13910 3) 13860 4) 13760

Resistance 1) 13990 2) 14040 imp 3) 14180 4) 14260 will nullify the rules of Irregular pattern.

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Sensex closes at record high

The market continued its winning streak today and the barometer BSE Sensex closed at a record high. A divergent trend was witnessed in various constituents of the Bombay Stock Exchange (BSE)'s benchmark index.

The Sensex rose 23.03 points (0.17%), to settle at 13,972.03, a record closing high. The S&P CNX Nifty ended flat at 4,015.35.

The market had firmed up in late-trading, when the Sensex had risen as many as 53.72 points, to a high of 14,002.72 at 15:01 IST. But it failed to sustained higher level, and eased at the fag end of the trading session. The Sensex fluctuated within a narrow range during mid-morning and afternoon trade. In early-trade, the benchmark index was gripped by high volatility.

Though the barometer index has been exceeding 14,000 in intra-day trade for the last three trading sessions, it has failed to close above that level. On the other hand, the Nifty has succeeded in staying afloat the 4,000 mark in the same three sessions.

The market-breadth, however, has failed to meet the same high standards set by the key indices. The advance-decline ratio was negative even today. For 1,286 shares that declined on BSE, 1,283 shares rose. Just 68 scrips were unchanged. The market-breadth weakened during the course of the trading. There was an advance-decline ratio of 1.45:1 at about 11:20 IST. On Wednesday, the breadth was weak with a decline-to-advances ratio of about 1.75:1.

The BSE clocked a turnover of Rs 3,787 crore, lower than Wednesday’s Rs 4,561 crore.

The BSE index is up more than 48% this year, the best-performer in the Asia-Pacific region. The Sensex has surged over 10% in a little over a month, in what has been a liquidity driven rally with strong FII inflow. The market sentiment remains firm due to strong FII inflow, continued strong economic growth data and healthy corporate earnings. A lot of money is said to be waiting on the sidelines to enter the market at a correction. Very few have had an opportunity to ride the latest rally, which has been extraordinarily sharp and swift.

In today's trade, Reliance Industries rose 1.4% to Rs 1,298.45. A report by brokerage CLSA said, RIL’s recently submitted revised field development plan indicated potential crude reserves of 1.6 billion barrels in the block. It said, the oil find was in addition to RIL’s previous similar discovery in another exploration block KG-III-6. Recently, there were unconfirmed reports that RIL is close to acquiring Adani Retail. If this acquisition materializes, it will provide RIL with retail infrastructure and real estate for Gujarat operations. Hindalco Industries rose 3% to Rs 183.30. The stock rose for the second day in a row following reports that China’s aluminium imports are rising.

NTPC rose 2.3% to Rs 151.50. The stock rose in late-trading. In a recent report dated 5 December 2006, Merrill Lynch has raised the price target on the scrip, to Rs 180. Its revised price target is based on a discounted cash flow (DCF) analysis. The brokerages have raised their earnings estimates for NTPC.

Tata Motors (up 1.2% to Rs 892) firmed up in the last one hour of trade after being subdued for the most part. Early this week, the stock had surged on the back of strong sales for the month just gone by.

Bhel rose 1.6% to Rs 2,665. The stock hit Rs 2,668, a life high for the scrip.

Infosys shed 1.1% to Rs 2,220.

Bharti Airtel dropped in volatile trade. The stock shed 1.5% to Rs 637.10. In early-afternoon trade, the stock had lost as much as 1.9% to a low of Rs 634, after reports filtered in that it had added more than 1.35 million users in the month just gone by. It had later recovered to Rs 644 at 14:17 IST ( a fall of 0.4% for the day) on rectification that it added 1.65 million new users in November 2006.

Reliance Communications shed 1.6% to Rs 455. It added 1.35 million new subscribers in November (CDMA plus GSM based).

Two-wheeler makers were subdued-to-weak. Hero Honda lost 2.2% to Rs 750 and Bajaj Auto lost 0.6% to Rs 2,692.

Housing finance major HDFC shed 1.4% to Rs 1,566.

HDFC Bank rose 1% to Rs 1,100. ICICI Bank rose 0.3% to Rs 874. ICICI Bank today said its international assets will grow to 25% of its total assets, from the current 16% in two years as Indian corporates continue to expand overseas.

State Bank of India rose 0.4% to Rs 1,343.90. The country's largest bank could raise fresh equity capital in the fiscal year starting next April, once the banking law is amended, Chairman O P Bhatt said on Thursday. He added that the state-run lender was waiting for the government to change legislation, allowing it to raise various types of capital with more ease.

Gujarat Ambuja Cements rose 1% to Rs 141.50. Holcim, the world's second-largest cement maker, is looking to raise its stake in Gujarat Ambuja Cements, a newspaper quoted a Holcim official in a report. Last month, the Swiss major raised its stake in GACL from 14.8% to 18.4%, by acquiring shares from GACL founders.

Power equipment makers rose on renewed buying. ABB surged 6% to Rs 3,905, Areva T&D added 5% to Rs 1,033.05, Alstom Projects gained 3.4% to Rs 461, EMCO gained 3% to Rs 734 and Siemens rose 2.5% to Rs 1,190. Bhel gained 1.6% to Rs 2,665. The stock hit Rs 2,668 a lifetime high for the counter.

Great Eastern Shipping lost 1.2% to Rs 227.05. It said on Thursday, it had signed a contract to buy a product tanker of 29,998 dead-weight tonnage. The tanker is expected to join its fleet in the fourth quarter of fiscal year 2006/07.

Bayer CropScience jumped 9.5% to Rs 268, as expectations of land sale triggered a surge in the counter. In August 2006, Bayer CropScience decided to discontinue operations at the Thane plant. The company has about 50-60 acres in Thane, which it is likely to sell.

Royal Orchid Hotels rose 2.3% to Rs 190 after it signed an exclusive territorial agreement with Ramada World Trade, to manage and develop hotels under the Ramada brand, in India. Ramada, a part of Wyndham Group World-wide, runs about 900 hotels across 25 countries.

Marico lost 0.6% to Rs 546.50. A block deal of 1 lakh shares was executed in the scrip on BSE, at Rs 550 per share.

Export house Adani Enterprises surged 5% to Rs 232.50, after data showed Reliance Mutual Fund bought 43.3 lakh shares of the company on Wednesday in a block deal on BSE. Foreign fund Lotus Global Investment sold 52 lakh shares in the block deal, which was executed at a little over Rs 200 a piece.

Shreyas Shipping & Logistics jumped 20% to Rs 121.55, after the company disclosed plans to raise up to Rs 150 crore for buyouts in India or abroad, or for investments in logistics companies. The company's board will meet on 9 December, to consider these proposals.

Centurion Bank of Punjab rose 4.6% to Rs 30.95, after it said its board had approved investing in an equity broking venture, Ambit RSM Group and TV-18 Group being the other stake holders.

Granules India rose 4.3% to Rs 91.80, after the drug maker agreed with Dutch firm PharmaMatch B.V. to jointly develop, manufacture and market formulations in the European market.

Jewellery maker Classic Diamonds (India) rose 2.9% to Rs 484.70 on reports that the company plans to raise $20 million overseas, to fund acquisitions.

Aban Offshore rose 0.9% to Rs 1,161, after the company said it had incorporated a wholly-owned subsidiary in Singapore, Aban Holdings on 6 December 2006.

Mazda rose 2.5% to Rs 186, after the company secured an order worth Rs 1.75 crore from Jindal Polyfilms.

Garments maker Gokaldas Exports lost 1.1% to Rs 632. The company said on Thursday, it is setting up a production facility in Hyderabad for Rs 25 crore.

SREI Infrastructure Finance lost 0.8% to Rs 49. The company today said T Rowe Price Associates and its affiliates sold 1.16% stake in it, lowering their shareholding in the company to 3.67%