Sharekhan Eagle Eye (equities) for January 02, 2007

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Sharekhan Investor's Eye dated December 29, 2006

Genus Overseas Electronics
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs270
Current market price: Rs204

A Rs75-crore order from RSEB

Key points

• With the recent order win of Rs75 crore from the Rajasthan State Electricity Board for the supply of single- and three-phase electronic energy meters (EEMs), the order book of Genus Overseas Electronics (Genus) has increased to Rs510 crore, which is approximately 2.2x its FY2006 sales.
• Genus is a leading manufacturer of tamper-proof EEMs, the demand for which is soaring because of the high transmission and distribution losses of the state electricity boards.
• We expect the company's revenues to grow at a CAGR of 39% during FY2006-08 on the back of the execution of its current order book.
• The order flow is expected to remain robust with the government's mission of "Power to all by 2012", and focus on 100% metering and replacement of old mechanical meters with EEMs fueling the growth.

Bajaj Auto
Cluster: Apple Green
Recommendation: Buy
Price target: Rs3,300
Current market price: Rs2,619

Pulsar 220cc launched in Pune

Key points

• Bajaj Auto Ltd (BAL) has launched Pulsar 220 DTS-Fi in Pune. The national roll-out would take place by February 2007. This premium segment offering, priced at Rs84,000 (ex-showroom Pune), will be sold through BAL's Probiking network.
• BAL is looking to reduce its dependence on the 100cc segment. The company has plans to revitalise its Pulsar brand by launching its upgraded versions and following the same up with the launch of a 200cc Pulsar model in Q4FY2007. This launch would be in line with the management's strategy of focusing on the executive and premium motorcycle segments, where profitability is higher as compared with the entry segment.
• BAL's profitability was affected in Q2FY2007 due to the price reduction of Platina, an entry-level model. The company derives a large part of its profits from the entry segment. Though subsequently the price of Platina has been increased twice, the company's performance may not improve much in Q3FY2007 due to the higher selling costs being incurred.
• Though the profit margins are likely to remain subdued for a couple of quarters, the volume growth is expected to remain strong. The management has claimed that the company is on its way to recording its highest ever quarterly volume during the October-December quarter.
• At the current market price of Rs2,619, the stock discounts its FY2008E earnings by 17.3x and quotes at an enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBITDA) of 10.5x. Based on our sum-of-parts valuation we maintain our Buy recommendation on the stock with a price target of Rs3,300.

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Research Desk - Indiainfoline

PSL Ltd
BUY CMP Rs203

PSL, is the largest manufacturer of high grade large diameter Helical Submerged Arc Welded (HSAW) pipes in India. The company has 11 Pipe Mills in Chennai, Kandla and Daman, with an annual capacity of 1.1MTPA. It manufactures pipe of sizes varying from 16" to 120" diameter with wall thickness ranging from 5mm to 25mm.

It complies to API (American Petroleum Institute) standards for oil, gas and water transmission for both onshore and offshore projects. Other business segments of PSL include pipe coating, induction pipe bending and sacrificial anode manufacturing.

Huge investments planned in production and refining crude oil and natural gas, has become imperative to support infrastructure inorder to enable efficient and reliable supply to the end users. Pipelines being the cheapest mode of transport have become the preferred choice by all.

Demand from oil and gas coupled with water transportation will be areas where pipe manufacturers will capitalize. With the infrastructure sector booming and development of new markets for steel pipes, the future of steel pipe industry looks bright.

The company has a strong order book of Rs13.6bn with an order from Middle East. These orders will be executed within the next 12 months. Some of the major orders bagged by PSL include three orders from GAIL worth Rs6.4bn, Reliance for Rs1bn and one from UAE worth Rs810mn, which will be executed during the current financial year.

SEBI order impact on the Gammon group

We spoke to Mr. Parvez Umrigar, Managing Director of Gammon Infrastructure Projects Ltd (GIPL) to seek clarification on the recent order issued by the Securities and Exchange Board of India (SEBI). The following are the key take-aways:

Gammon India and Mr. Abhijit Rajan are not allowed to sell shares of GIPL for a period of three years from the date of allotment in the public issue of GIPL. There are however, no restrictions on GIPL to raise money from the market. The IPO of GIPL, as stated by Mr. Umrigar, is on track as per schedule. GIPL is a debt free company with a networth of around Rs2.5bn. It can leverage if it wants but plans to strengthen its networth further before raising any more debt. Plans for GIPL are unaffected by the SEBI order.

Gammon India Ltd (GIL) and Mr. Abhijit Rajan cannot access the capital market directly or indirectly for one year from date of the order. Mr. Umrigar mentioned that GIL is comfortably placed with a networth of over Rs10bn and negligible net debt/equity ratio. The management of GIL has an internal target of not raising money through equity issuance till March 2009, which means that the company will not be constrained financially, by the SEBI verdict.

Mr. Umrigar also said that even if GIL de cides on raising money (which it has no plans for currently), it could do so by borrowing from banks or through the private equity route. The working of GIL is unaffected and the management maintains its target of 35% turnover growth conservatively and stretch target of 50% during FY06-08. GIL plans to become a US$1bn company during FY09. The company plans on contesting the SEBI order.

We had recommended a BUY on GIL in our construction sector report dated October 18, 2006 (India Under ‘Construction’) at Rs385 with a target price of Rs454. Our target price was achieved and the stock hit a high of Rs487 on December 05, 2006. The last 13 trading sessions have seen a sharp fall and with the declaration of the SEBI order, the GIL stock has predictably taken a beating this morning - down 7.7%, CMP Rs379 (December 22, 2006: 12.05pm).

We believe that this fall presents an opportunity for long term investors to enter a leader in the construction space with a long track record, order book/FY06 sales of 6.7x and high expected growth rate in topline. The stock trades at a P/E of 24.3x FY07E and 16.5x FY08E EPS, adjusted for value of BOT investments. We recommend a BUY and our revised target price of Rs476 represents an upside of 25.6% in one year.

DOMESTIC NEWS & GLOBAL NEWS

Inflation rises to 5.43%

India's inflation, based on the Wholesale Price Index (WPI), rose to 5.43% in the week ended December 16 owing to a rise in the prices of manufactured products, the Government said on Friday. Economists had been looking for a reading of around 5.28%. Inflation was 5.32% in the previous week and 4.62% in the year-ago period. The WPI rose by 0.05% to 207.8 from 207.7 in the previous week. The index for Primary Articles (weight: 22%) declined by 0.1% to 211.8 from 212.1 in the previous week. The index for Fuel, Power, Light & Lubricants (Weight 14.23%) remained unchanged at its previous week's level of 322.6. The index for Manufactured Products (Weight 63.75%) rose by 0.2% to 180.8 from 180.5 in the previous week. Meanwhile, the Government revised upwards the inflation rate for the week ended October 21, from a provisional figure of 5.41% to 5.61%. The final WPI for the same period stood at 208.8 compared to the preliminary level of 208.4.

Govt mulling FDI in select areas of retail

Foreign investors could get a new year's gift from the Government. The bounty could come in the form of FDI in various areas of the organised retail. According to newspaper reports, the Commerce & Industry Ministry is preparing a detailed policy on further liberalisation of the retail sector. The official announcement on the same is likely to come before the budget. The Government is considering allowing 51% FDI in retailing of sports goods, electronics goods and building equipment, the papers report. Since there are no small manufacturers or retailers in these areas, the Government might permit FDI in both the front-end and in the back-end operations. Also on the anvil is a plan to allow multi-brand outlets in these areas. What is not clear, however is that whether the Government will allow FDI in these areas through the automatic route or through the Foreign Investment Promotion Board (FIPB). Another caveat is that the Government will have to get the green signal from the Left parties before going ahead with any such move.

Govt awards LOI for two UMPPs

The Government awarded the Letters of Intent (LOI) for awarding the first two Ultra Mega Power Projects (UMPPs) to the successful bidders, namely Tata Power Co. Ltd. and Lanco Infratech Ltd. Union Power Minister Sushil Kumar Shinde handed over the LOI to the consortium of Globeleq Singapore Pte. Ltd and Lanco Infratech Ltd. for Sasan UMPP in Madhya Pradesh while Tata Power bagged Mundra UMPP in Gujarat. Bids for these projects were received earlier and the successful developers were selected on the basis of lowest quoted tariff. The process of selection of successful developer for other UMPPs namely, Krishnapatnam (Andhra Pradesh) and Tiliaya (Jharkhand) is expected to be completed by April 2007. Request from Jharkhand for an UMPP is also under consideration. The Government of India has envisaged a capacity addition of 100,000 MW to meet its mission of ‘Power For All by 2012’. Achievement of this target requires the development of large capacity projects at the national level to meet the requirements of a number of states. The Government is working together for the development of 9 UMPPs through tariff-based competitive bidding.

No pulling out from Singur: Ratan Tata

Despite the controversy surrounding land acquisition in Singur, the Tata Group will not take a backward step on the proposed one-lakh car project, said Ratan Tata, the chairman of the group. The issue snowballed into a political hot potato, with Trinamool Congress leader Mamta Banerjee going on a hunger strike (which she ended later in the week) and the BJP backing her opposition to the proposed car factory. But notwithstanding the local resistance and political pressure, Ratan Tata has made it clear that the group intends to go ahead with its plans for the new plant in West Bengal. "I think the West Bengal government has been very steadfast in its support of the project and I think it would be wrong for us to say that we will pull out and go," he told NDTV 24x7 in an interview, to be telecast on Saturday at 10 pm.

Anil Ambani confirms interest in Hutch Essar
Reliance Communications Ltd. (RCL) officially confirmed that it is interested in buying Hutchison Telecommunication International Ltd.'s (HTIL) 67% stake in Hutchison Essar, a joint venture between the Essar Group and HTIL. "RCL, as part of its overall growth strategy, is continuously examining several organic and inorganic growth opportunities. Hutch Essar is one such situation," Anil Ambani, Chairman of RCL said. "A potential combination of this nature could create compelling value for all shareholders of RCL." Ambani said that his company has exclusive financial support from leading international banks and financial institutions to acquire Hutch Essar. "Frankly, we have lost count of how many private equity players have lined up behind us," the junior of the two Ambani brothers told a news conference in Mumbai. "The vast majority of the top 10 players are with us." RCL will need funds to fend off competition from Vodafone, the world's largest mobile-phone company, and Essar Group, which controls a 33% stake in Hutch Essar, India's fourth-largest wireless company. According to reports, Vodafone and the Ruias of Essar Group have put forward their indicative prices which value Hutch Essar between US $16.5bn and US $18bn. This is substantially lower than the US$21bn sought by HTIL. Essar has the first right of refusal, or the right to be first offered the option of buying HTIL's stake in Hutch Essar.

S&P affirms Reliance ratings

Standard & Poor's (S&P) affirmed its long-term foreign and local currency ratings on Reliance Industries Ltd. (RIL) at 'BBB', indicating investment grade. The affirmation reflects RIL's dominant competitive position, the relatively stable medium term prospects for its core refining and petrochemical businesses, and an overall moderate financial profile of the company, the global credit rating agency said in a statement. The ratings, with stable outlook, factor in the likelihood of timely completion of its ongoing projects, specifically the new refinery at Jamnagar. It is also underpinned by the expectation that RIL would pursue its non-core businesses, specifically the retail foray, in a phased-out manner, as an accelerated investment strategy can weigh on the company's overall credit p rofile, S&P said.

The ratings remain constrained by RIL's exposure to highly cyclical industries, large capital commitments in its refining, exploration and production businesses, and uncertainties in developing its reportedly large gas reserves, it added.

Dr. Reddy's wins nod for generic Zofran

Dr. Reddy's Laboratories Ltd. announced that the USFDA had granted final approval for it's Abbreviated New Drug Application (ANDA) for Ondansetron Hydrochloride Tablets, in 4mg, 8mg, 16mg and 24mg strengths. As the first company to file an ANDA containing a paragraph IV certification for this product, the company has been awarded a 180-day period of marketing exclusivity, Dr. Reddy's said. The company will commence the shipment of this product shortly, it added. Dr. Reddy's Ondansetron Hydrochloride Tablets are the AB-rated generic equivalent of GlaxoSmithKline's Zofran tablets, a product indicated for the prevention of nausea and vomiting associated with cancer treatment. The brand product has annual IMS sales (June 2006 MAT) of about US$639mn. "With six product introductions to date in the current year, we are making good progress in building a sustainable base generics business with potential upsides in the US in the medium term," said G.V. Prasad, Vice-Chairman and CEO of Dr. Reddy's.

Wockhardt launches Ondansetron injection in US

Wockhardt Ltd. said that its US subsidiary launched Ondansetron injection, the first working day after the patent for the product expired on Dec. 24. Ondansetron is the generic version of GlaxoSmithKline's Zofran injection and is used in controlling nausea and vomiting following cancer chemotherapy. It is the largest selling anti-emetic product in the world. Sales of Zofran injection in the US during the 12 months ended Sept. 30, 2006, were US$628mn. According to the online magazine Drug Topics, Zofran was the 20th most expensive brand-name drug used in hospitals in the US in 2005, with total costs of US $839.26mn. Ondansetron injection is manufactured at the USFDA-certified sterile formulation plant at Waluj in Aurangabad. Wockhardt has two other sterile formulation plants approved by USFDA in India and the UK. "This is Wockhardt's eighth product approval from USFDA in 2006 and the third injection product in the US market," said Wockhardt Chairman Habil Khorakiwala. "We now market 15 products in the US, with 10 of them launched during 2006."

Indian Hotels buys Amalgam Foods

Indian Hotels Co. Ltd. said that Residency Foods & Beverages Ltd. (RFBL), an associates company, has picked up 80.6% stake in Kochi-based Amalgam Foods & Beverages Ltd. (AFBL) for Rs 180mn. Residency Foods is an existing associate company of Indian Hotels with interest in the food & beverages business. The acquisition has been made by Residency Foods in a related line of activity, namely foods. Residency Foods is an unlisted company in which Indian Hotels holds a 25% stake. Amalgam Foods is part of the Rs2.5bn sea food exporter Amalgam Group and has a portfolio of frozen ready-to-eat products under the Sumeru brand. The company is currently selling its products through 2,000 outlets across the country.

Bajaj Hindusthan FY06 net up 36% yoy

Bajaj Hindusthan Ltd. reported a 36% increase in net profit at Rs1.91bn for the financial year ended September 30, 2006. The company's net profit during 2004-05 stood at Rs1.4bn. Total revenue stood at Rs14.87bn for the year 2005-06 versus Rs8.55bn in the previous year, registering a growth of 74%. The company has recommended a dividend of 60%. Bajaj Hindusthan's sugar sales volume increased 57% during the year to 720,798 tons. "The results could have been much better but for higher cane prices, lower recoveries due to earlier start of the crushing season and the Government's ban on exports, which impacted the domestic sugar realisations," Chairman and Managing Director, Shishir Bajaj said. He said that the expansion of the company's subsidiary Bajaj Hindustan Sugar and Industries Ltd. (BHSIL) was on schedule and crushing was expected to start at 40,000 tons crushed per day (TCD) in the next crushing season.

Japanese industrial output hits new record

Japan's industrial production rose to a new record in November, buoyed by increased demand for it's cars, consumer electronics, liquid crystal displays and game consoles in the global market. Factory output rose by a seasonally adjusted 0.7% from a month earlier. The average estimate of economists was for an increase of 1%. The industrial production index climbed to 108.6, the highest ever as measured by the 2000 base year. The rise followed a 1.6% gain in October from September. Year-on-year, output rose 4.8% in November, the 16th consecutive month of increase. Manufacturers' output - the core component of production - is expected to rise a further 0.7% in December but would slip 0.8% in January. The trade ministry maintained its assessment on industrial output, saying that it is on a rising trend. Despite a rebound in production and shipments, the inventory index rose a sharp 1.4% from the previous month to 97.2 in November, an all-time high. Record production, combined with recent reports that showed rising inflation and a drop in the jobless rate, may prompt the Bank of Japan to hike the lowest interest rates among Group of Seven (G7) countries as soon as next month. Central bank Governor Toshihiko Fukui and his policy board are scheduled to conclude their next rate meeting on January 18.

Taiwan quake affects undersea cables

Telecom and Internet services across South East Asia was badly affected after a major earthquake hit southern Taiwan on Dec. 26. The quake, measuring 7.1 on the Richter scale, damaged at least eight undersea fibre-optic cables that connect Asia with the rest of the world. The damage to the undersea cables disrupted voice as well as data traffic and hit business in the region. However, by the weekend, most telecom operators recovered most of their voice services and Internet access. China Network Communications and PCCW said they have normal voice services. Japan's Softbank Corp. said 83% of its affected 152 corporate lines had recovered. The improvement in telecom services was due to operators rerouting traffic overland to Europe, then to the US, or via Southeast Asia to the US. Repairing the broken submarine cables may take two to three weeks.

Apple under scanner for stock options grant

Shares of Apple Computer fell on renewed concerns over the company's stock-option granting practices. A California legal publication said that CEO Steve Jobs had hired a lawyer to represent him in federal inquiries and that some officials may have falsified documents. London-based Financial Times reported that CEO Steve Jobs was handed 7.5mn stock options in 2001 without the required authorization from the Apple's board. The FT report said that records purported to show a full board meeting had taken place to authorize the stock options were later falsified. The story didn't say who falsified the report. Jobs later surrendered his options before they were exercised, implying that he did not gain any direct benefit from them, FT reported. A spokesman for Apple said that the company had handed over the results of its previously announced internal probe to the Securities and Exchange Commission (SEC).

IBM, Siemens bag mega IT deal

International Business Machines (IBM) and Siemens announced that they had won a US $9.3bn deal to modernize the German military's technology. The 10-year project, codenamed Herkules, foresees the modernization of the computers and communication networks for the German armed forces. According to a statement from the military, that covers more than 140,000 computer workstations, 7,000 servers, 300,000 telephones and 15,000 mobile phones. Siemens Business Services and IBM's German unit jointly will hold 50.1% of a company being founded with the German government, named BWI Informationstechnik, to carry out the project. The federal government will hold the remaining 49.9%. IBM will be responsible for modernising the data centres, while SBS will take care of PCs, servers and phone systems at more than 1,500 locations around Germany.

Pfizer wins Viagra copycat case in China

Pfizer won a trademark case in China blocking drugmakers in the Middle Kingdom from copying its Viagra impotence pills' blue diamond shape. A Beijing court ordered the three companies to pay a US$38,000 fine to Pfizer, stop producing the blue, diamond-shaped pills and print a public apology in a Chinese legal newspaper. This is the second intellectual property victory in China this year for New York-based Pfizer. In June, the same court sided with Pfizer in overturning a 2004 decision by China's patent and trademark office that had invalidated Viagra's patents. Pfizer has a separate lawsuit filed in China that would block companies from using Viagra's Chinese name. Viagra is one of the world's most copied drugs, according to the World Health Organization (WHO). Viagra was used by 23mn men and had worldwide sales of US $1.6bn last year.

INVESTMENT STRATEGY & TOP PICKS - 2007

Market eyes earnings

It's all in the past, new dawn begins
Beautiful dawn - lights up the shore for me.
There is nothing else in the world,
I'd rather wake up and see

What a ride we've had in 2006, the Sensex recorded a whopping 47% gain. However, it's all now in the past as we come towards the end of the year and a new dawn begins on Dalal Street. Investors must be whispering the above lines softly because they must be hoping that New Dawn begins with the bulls and continues through the year. However, the market trend will depend more on the earnings season, which will kick off next month. Then we have the budget in February. The outlook remains a bit cloudy against this backdrop. Indices are near their all-time highs and valuations are expensive. So, one should adopt a cautious approach at these levels. With so much action expected to take place on Dalal Street we might see markets moving in a range. Looking at the long-term picture, India's growth story is likely to continue backed by strong economic growth in the last four years. Valuations, remains the only hitch, so some correction on the way is not ruled out. The Sensex and the Nifty are set to breach greater milestones this year. And of course, knee jerk crashes is something we are getting used to.

Picks for 2007

Buy Tech Mahindra
for target of above Rs 2,000

Buy TCS
for target of above Rs 1,650

Buy L&T
for target above Rs 1,900

Buy India Cements
for target of above Rs 300

Buy Reliance Industries
for target of above Rs 1,500

MARKET MOOD

Bulls bid cheerful good buy to 2006

The markets recovered well from last week's fall to close higher, led by gains in Wipro, TCS, ACC, Grasim and HDFC Bank. Despite churning of portfolios on account of December F&O expiry and overall choppiness in the market, the indices closed the last trading week of the year with gains. The rally could be attributed to a smooth roll over in the derivate segment of the market and short covering. Nifty rollover was to the tune of around 75.84%, while market wide rollover to January F&O series was around 83.65%. Buying was seen across-the-board, but counters like Auto, Capital Goods, Cement, Bank, IT and select mid-cap stocks stood out. The benchmark BSE Sensex closed 2006 at 13787, recording a weekly gain of 2.34% or 315 points and the NSE Nifty added 2.46% or 95 points to close at 3966.4. Both the indexes recorded their fifth yearly advances.

Capital Goods stocks rose on the back of value buying. L&T rose over 3% to Rs1442, while Siemens gained 1.2% to Rs1134. Punj Lloyd surged over 4% to Rs1029 after the company won contract by Horizon Terminals worth Singapore US $49.7mn and BHEL was up by 0.9% to Rs2289.

Auto stocks were in top gear during the week ahead of the proposed price increases in January. Hero Honda raced ahead by over 4.5% to Rs762, Tata Motors rose by over 4% to Rs900. Bajaj Auto was up 2.3% to Rs2618 and Maruti edged higher by 0.2% to Rs927.

Short covering boosted IT stocks ahead of their results. Index heavy weights led from the front, with Wipro adding over 8% to Rs604, TCS climbed over 7% to Rs1218. Satyam was up 3.8% to Rs483 and Infosys added 3.6% to Rs2240. Among the Mid-Cap stocks i-flex rallied over 10% to Rs1947 and Mphasis BFL was up 4.6% to Rs303.

Banking stocks were in the limelight with frontline stocks leading the way. HDFC Bank rose 5.8% to Rs1069, ICICI Bank advanced 4.1% to Rs890 and SBI gained 2.8% to Rs1245.

Select sugar stocks advanced after the Government allowed companies to export sugar as production reached peak. Shree Renuka Sugar was up by over 5.5% to Rs446, Bajaj Hindusthan advanced by over 2.6%. The company reported a 36% increase in net profit at Rs1.91bn for the financial year ended Sept 30, 2006. Total revenue stood at Rs14.87bn for the year 2005-06 versus Rs8.55bn in the previous year. However, Simbhaoli Sugar lost over 5% to Rs58 and Sakhti Sugar fell 3.3% to Rs98.

Value buying was also seen in mid-cap stocks. These set of shares have lagged the large caps in recovering from the lows seen in May and June. Now with frontline stocks appearing overvalued, investors are slowly shifting their attention towards the mid-cap stocks. Indiabulls rallied over 13% to Rs659, Polaris rose 4.9% to Rs172, BEML jumped over 9% to Rs1015 and Thermax was up 6.5% to Rs387.

Indiainfoline - TOP STORIES

Rupee touches 10-month high


The rupee hit a 10-month peak against the dollar on Friday as banks bought the local currency to meet their mandated cash reserve needs for the year-end following a recent directive from the Reserve Bank of India (RBI). The rupee rose for the seventh consecutive day to 44.2175 per dollar in early morning trade on Friday, the highest since Feb. 10. It has gained 2% this year against the dollar. Banks have been selling dollars in order to meet their CRR requirements with the RBI amid a severe liquidity crunch that has sent the call money rate to a six-year high. Banks have also borrowed funds from the RBI to meet daily reserve requirements for the past two weeks after the central bank raised the amount banks need to set aside as cash from deposits. The RBI on Dec. 8 hiked the Cash Reserve Requirement (CRR) by 50 basis points to 5.50%. Banks borrowed Rs 361bn from the central bank on Dec. 28 to meet daily cash reserve needs, a record high, signaling a severe cash crunch in the banking system.

External debt rises in Q2

At the end of September 2006, India's external debt stood at US$136.5bn compared to US$132.2bn at the end of June 2006, the Government said. The rise in external debt outstanding in the second quarter was essentially brought about by a rise in external commercial borrowings, NRI deposits and short term debt. Long-term debt outstanding at US$125.9bn showed an increase of US$2.8bn over the earlier quarter. Under long-term debt, multilateral debt rose by US$493mn, which was partly offset by a drop in bilateral credits by US$ 100mn. Export credit outstanding rose by US$165mn. At US$32.46bn, commercial borrowings were higher by US$1.36bn over the preceding quarter. While Rupee debt remained broadly at the same level as at the end of the first quarter, NRI deposits rose by US$912mn to US$36.56bn. Short-term debt increased by 16.2% over the quarter to US$10.58bn on account of a rise in trade credits.

NRI deposits accounted for 26.8% of the total debt as at September 30, 2006, followed by multilateral debt at 24.6% and commercial borrowings at 23.8%. The share of bilateral debt was 11.5%. Export credit and Rupee debt accounted for 4.1% and 1.4%, respectively. The share of short-term debt was 7.8%. India’s foreign currency reserves stood at US$165.3bn at the end of September 2006. Foreign currency assets were US$158.3bn as on September 30, 2006 providing a cover of around 116% to total external debt. US dollar continued to be the major currency of denomination in India’s external debt portfolio. The share of US dollar in the country's external debt increased further from 45.4% at the end of March 2006 to 46.7% as at September 30, 2006.

Market may extend rally

The market is expected to continue its ongoing rally after settling with gains for the fifth straight year. It finished the calendar year 2006 on a strong note, with the benchmark BSE Sensex gaining 46.7%. It had also struck an all-time high of 14,035.30 on 6 December 2006.

The near term trigger for the bourses is Q3 December 2006 results. Market men expect quarter ended December 2006 to be strong in terms of earnings growth. Strong advance tax payments corroborate the view that Q3 results will be strong. Cement companies and oil firms have paid substantially higher advance tax in the third installment of 15 December 2006. State Bank of India, Tata Steel, Reliance Industries (RIL), Hindalco, L&T, and Cipla have paid substantially higher advance tax in the third installment. The Q3 results will start trickling in from 11 January 2007.

FIIs continued to mop up Indian stocks betting that earnings growth of India Inc will remain strong. The net FII inflow in 2006 totaled $8 billion compared to a record inflow of $10.7 billion in 2005. FIIs mopped up Indian equities notwithstanding concerns about stretched valuations of Indian equities.

Mutual funds bought shares worth a net Rs 11,453 crore for April-December 2006.

BSEL Infrastructure Realty and LML will be announcing their results in the forthcoming week.

Sensex rallies 315 points

The market rallied during the week, as buying for index pivotals resumed, after a sharp fall on the back of a surprise hike in CRR announced on 8 December 2006, after completion of trading.

The BSE Sensex advanced 315.17 points for the week ended Friday (29 December 2006) to 13,786.91, while the S&P CNX Nifty rose 95.25 to settle at 3,966.40.

The market was closed on 25 December 2006 on account of Christmas.

The Sensex surged 236.60 points on 26 December 2006, to settle at 13,708.34, on strong buying in IT scrips anticipating robust December quarter results.

The Sensex gained a further 151.35 points to end at 13,859.69, on 27 December 2006, on account of short-covering ahead of the December futures contracts expiry (28 December 2006).

On 28 December 2006, the BSE Sensex slipped 13.35 points to 13,846.34, amid volatility at the close, due to expiry of December 2006 derivatives contracts.

The Sensex declined 59.43 points to 13,786.91, in late-trading on 29 December 2006, under selling pressure.

Infosys Technologies rose 3.27% to Rs 2,243, after it scheduled a board meeting on 11 January 2007, to consider Q3 December 2006 results. It is also believed to be in talks with ten global banks for its banking software – Finacle. Reports speculate big deals are likely to materialise in a couple of months. The company foresees big opportunity in the software replacement market in the US and Europe, apart from plans to enter the Latin American market. The company announces its Q3 December 2006 results on 11 January 2007.

Reliance Industries (RIL) gained 0.43% to Rs 1,270. It is reportedly planning an investment of Rs 5,000 crore for gassification of lignite in south Gujarat. The project will be a joint venture between (RIL) and Gujarat Mineral Development Corporation (GMDC). The private sector oil refiner is said to be negotiating with GMDC, and scouting for lignite reserves in south Gujarat.

ITC jumped 4.87% to Rs 176.35, after the FMCG major said it had struck an agro-alliance with Marubeni Corp, a Japanese trading house. Under the alliance, both companies will consider joint exports of Indian-made soyabean cake and maize grains for livestock feed, Marubeni said in a statement. The tie-up is aimed at expanding the trade of food and other agricultural products between India and Japan.

Dr Reddy’s Lab gained 0.87% to Rs 811, after it received final approval from the U.S. Food and Drug Administration for cholesterol-lowering simvastatin tablets. Simvastatin is the generic equivalent of Merck & Co. Inc.'s blockbuster drug Zocor.

Reliance Communications (RCL) rose 0.48% to Rs 470.60. It is examining the opportunity in mobile operator Hutchison Essar and a potential combination could create compelling value for all shareholders. Chairman Anil Ambani also told a news conference the company had received commitments from global bankers for financial support for any potential bid. Ambani said there was no certainty on the timing of a bid and declined to say how much the firm will offer, saying it will remain within a conservative limit. Meanwhile, RCL plans to invest $1.5 billion to expand capacity of its Flag Telecom submarine cable network.

State Bank of India rose 2.47% to Rs 1,245.35. It executed a 50 bps hike in prime lending rate to 11.5% with immediate effect.

Indiabulls Financial Services surged 12.82% to Rs 652. The company announced 9 January 2007 as a record date for its demerged real estate business, now under Indiabulls Real Estate (IREL). The stock will stay in the no-delivery period on BSE from 2 January 2007 to 8 January 2007, for the demerger.

On 28 December 2006, Ess Dee Aluminium settled at a premium, at Rs 238.75, compared to its IPO price of Rs 225 per share. The stock listed at Rs 260 on BSE.

XL Telecom settled at a discount, at Rs 136, compared to the issue price of Rs 150 per share. The stock listed at 18.06% premium, at Rs 177.10, on 28 December 2006.

On 29 December 2006, Nissan Copper settled at a sharp 230.25% premium at Rs 128.80 on BSE on high total volumes of 6.11 crore shares. The shares were issued at Rs 39 per share in the recently concluded IPO. The stock debuted at Rs 40 on BSE and hit a high of Rs 135.70, and dipped to a low of Rs 40 for the day.

The Reserve Bank of India permitted foreign investment up to 49% in stock exchanges, paving the way for New York Stock Exchange (NYSE) to expand into Asia's best performer.

The Reserve Bank of India also said that foreigners could hold up to 49% in depositories and clearing corporations.

Under the new rules, foreign direct investment will be limited at 26%, while foreign portfolio investments will be capped at 23% in all such entities, the central bank said. It, however, said portfolio investments will be allowed only through the secondary market. The stock exchange also plans to list shares on its own trading floor.

Media reports indicate the New York Stock Exchange is eager to pick up a stake in BSE.

The wholesale price index rose 5.43% in 12 months to 16 December, higher than the previous week's annual rise of 5.32% due to an increase in manufactured product prices, data showed on Friday (29 December). The annual inflation rate was 4.62% during the corresponding week of the previous year.

The market has ended calendar 2006 on a strong note, with the Sensex gaining 46.7% to settle at 13,786.91, which a less than 200 points off its all-time closing high of 13,972.03 of 7 December 2006. It had struck an all-time high of 14,035.30 on 6 December 2006. The S&P CNX Nifty gained 39.8% for the calendar year 2006. The market settled with gains for the fifth straight year. Banking, telecom, IT and cement shares hogged the limelight in 2006.

The Nikkei 225 index finished just 0.01% higher, at 17,225.83, on 29 December 2006. That marked its highest close since early-May. The benchmark ended 2005 at 16,111.43.

Sensex corrects, drops 66 points

Partly reflecting the global market trend and an anticipated correction from the recent run-up to higher levels, the market today took a beating on the back selling pressure. Within seconds after opening slightly above its previous close at 13873, the Sensex slipped into the red and witnessed selling by mid-morning trades to touch the day's low of 13770, down 159 points from the day's high. Although the market remained in negative territory through the trading session, selective buying in afternoon trades trimmed the losses of the index. The Sensex finally wrapped up the session with losses of 59 points at 13757 while the Nifty dropped 7 points to close at 3964.

But the breadth of market was positive. Of the 2,696 stocks traded on the BSE, 1,407 stocks advanced, 1,218 stocks declined and 74 stocks ended unchanged.

Among the sectoral indices, the BSE CD index advanced 2.34% at 3574, the BSE CG index gained 1.12% at 9090 and the BSE Metal index was up 0.85% at 9040. While, BSE HC, Auto and Metal index ended with steady gains. However, BSE FMCG, Bankex, IT, Oil&Gas, PSU and TEck index closed with marginal loss.

Among the steep falls, HLL dropped 1.70% at Rs217, Gujarat Ambuja declined 1.57% at Rs141, Reliance Communication lost 1.24% at Rs471, Satyam Computers shed 1.12% at Rs484 and Cipla was down 1.01% at Rs251. ITC, ICICI Bank, HDFC Bank, ONGC and Bajaj Auto ended on the weaker side. DR Reddys, ACC and Tata Steel, however, bucked the downtrend and moved up 1% each at Rs811, Rs 1,086 and Rs482, respectively. TCS, SBI, Herohonda Motors, L&T, Maruti Udyog and NTPC also ended in the green.

Other than the Sensex stocks, the major laggards were J&K Bank sheds 5.59% at Rs620, Sun TV moved down 3.38% at Rs1,430 and FDC, Alok industries, IGate Global, Oriental Bank, Shipping Corporation and I-Flex have dipped 2% each. Among the gainers, DLink India added 12.87% at Rs93, Ramco System advanced 9.98% at Rs223, GTL gained 9.40% Rs146, Bharat Earth Movers, Titan Industries, Bombay Dyeing and Mphasis reported gains of above 6-7% each.

Himadri Chemicals at Rs340, KSB Pumps at Rs680, Aditya Birla at Rs1,252, Mahindra & Mahindra at Rs909.95, ICI India at Rs439, Oscar Investments at Rs160, Modern India at Rs181.40 and Simplex Trading at Rs97.70 touched all-time highs on the BSE.

SAIL was the most actively traded counter on the BSE with trades of over 18.53 lakh shares on the BSE followed by Parsvnath (17.52 lakh shares), Reliance Communication (14.52 lakh shares) and GTL (14.42 lakh shares).

Reliance Industries recorded a turnover of Rs96.10 crore followed by Parsvnath (Rs79.36 crore), Sobha Developers (Rs68.67 crore) and Bombay Dyeing (Rs67.40 crore).

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Hold Parsvnath Developers: Shah

Gaurang Shah of Geojit Financial Services is of the view that one should hold on Parsvnath Developers .

"As far as the real estate and the development story goes, ofcourse we are quite comfortable that the performance will improve going forward, a lot will depend upon where the land banks are situated, whether they are in the heart of the city or outskirts of the city and if there is any correction coming in, our view is that the land banks which are in the heart of the city might be affected a lot but as far as Parsvnath is concerned, if anybody has got the shares at IPO price or has got entered at lower levels should hold on and should enter at current levels also in a staggard way, quite comfortable and the descent returns from about six-eight months perspectives is expected."

Nissan Copper ends with 230% premium

Great day for Nissan Copper, which listed at Rs 40 on the BSE and went upto Rs 135.70 as it witnessed buying interest through the day. It was one of the great performers like Tantia Construction, which rose by more than 300% on the listing day in the year 2006. Nissan Copper gained over 248%.

Institutional investors had a lot of appetite for the stock during the day. Though the issue was oversubscribed 4.7 times, it received tremendous response from investors despite volatility in the markets.

On the BSE, the share closed at Rs 128.80, up 230.26%, with volumes of 6,11,22,553 shares. It touched an intraday high of Rs 135.70 and an intraday low of Rs 40.

On the NSE, the share ended at Rs 123.30, up 216.15%, with volumes of 6,99,69,755 shares. It touched an intraday high of Rs 136.90 and an intraday low of Rs 39.

The company entered capital market with an initial public offering, IPO of 64.10 lakh shares of Rs 10 each aggregating to Rs 25 crore.

The funds raised are for the expansion of the company's copper product manufacturing capacities.

The total cost of the project is Rs 35 crore of which Rs 10 crore is part-funded by State Bank of India by way of a term loan.

Sensex up 47% in 2006

The market ended calendar 2006 on a strong note, with the Sensex settling at 13,786.91, less than 200 points off its all time closing high of 13,972.03 of 7 December 2006.

It rose 46.7% for the calendar year.

The S&P CNX Nifty gained 39.8% for the calendar year 2006.

Banking, telecom, IT and cement shares hogged the limelight in 2006.

After a sharp setback witnessed in May-June 2006 due to fears of rise in US interest rates, the market staged a solid rebound and key indices struck lifetime highs in December 2006.

Strong corporate earnings growth remained the key driver of the uptrend in share prices.

FIIs continued to mop up Indian stocks betting that earnings growth of India Inc. will remain strong in a booming Indian economy. The net FII inflow in 2006 totaled $8.2 billion compared to a record inflow of $10.7 billion in 2005. FIIs mopped up Indian equities notwithstanding concerns about stretched valuations of Indian equities.

Mutual funds bought shares worth a net Rs 11453 crore for the 9-months period April-December 2006.

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Number of FIIs in India crosses 1000

The number of foreign institutional investors (FIIs) registered with the Securities and Exchange Board of India (Sebi) crossed the 1,000 mark.

The total number of FIIs having their offices in India has now increased to 1,030. In the beginning of calendar year 2006, the figure was 813.

As many as 217 new FIIs opened their offices in India during the current calendar year. This is the highest number of registrations by FIIs in a year till date. The previous highest was 209 in 2005.

As many as 37 foreign entities registered with the market regulator till December 28, highest ever single month registrations by the FIIs since their entry into Indian market in 1993. In the last two months, 57 new FIIs opened their offices, while the last six months’ figure was 102 as against 92 in 2005.

The net investments made by the institutions during 2006 was $9,185.90 million against $9,521.80 million in 2005.

In 1993, Pictet Umbrella Trust Emerging Markets’ Fund, an institutional investor from Switzerland, was the only FII to enter the Indian market.

While in 1994, no new registrations were reported, between 1995 and 2003, an average of 51 new FIIs opened their shops in the country each year. The number of new registrations with the Sebi increased to 144 in 2004 and 209 in 2005.

Out of 1,030 FIIs from 42 different countries, as many as 388 FIIs are from the US, 167 from the Great Britain, 73 from Luxembourg, 51 from Singapore, 35 each from Australia and Hong Kong, 32 from Canada, 29 from Ireland, 27 from Netherlands, 25 from Mauritius, 22 from Switzerland and 20 from France.

Sensex suffers 59-point loss

The market kept on declining throughout the day, after a firm opening as selling pressure continued pulling the Sensex below the 13,800 mark.

The 30-shares BSE Sensex lost 59.43 points to 13,786.91. It had opened higher at 13873.03, following a smooth rollover from December 2006 derivatives contracts to January 2007 contracts. It also touched an intra-day high of 13,929.10 at 10:03 IST, as buying continued. The Sensex had slipped to a fresh low of 13770.06, in late afternoon session.

The S&P CNX Nifty lost 4.15 points or 0.10% to 3966.40

India's wholesale price index rose 5.43% in the 12 months to 16 December, higher than the previous week's annual rise of 5.32% due to an increase in manufactured product prices, data showed on Friday. The annual inflation rate was 4.62% during the corresponding week of the previous year.

The total turnover on BSE amounted to Rs 3419 crore as compared to Rs 4193 crore on Thursday.

The market breadth was strong on BSE with 1386 shares advancing, as compared to 1233 shares that declined. 71 shares were unchanged.

Among the Sensex pack, 22 declined while the rest advanced.

FMCG major HLL was the top loser, down 1.82% to Rs 216.30 on 13.47 lakh shares.

Reliance Communications (RCL) declined 1.34% to Rs 471 on 14.19 lakh shares. It said on Thursday, it is examining the opportunity in mobile operator Hutchison Essar and that a potential combination could create compelling value for all shareholders. Chairman Anil Ambani also told a news conference the company had received commitments from global bankers for financial support for any potential bid. Ambani said there was no certainty on the timing of a bid and declined to say how much the firm would offer, saying it would remain within a conservative limit. Meanwhile, RCL plans to invest $1.5 billion to expand capacity of its Flag Telecom submarine cable network.

Tata Motors (down 1.36% to Rs 893), ONGC (down 1.20% to Rs 867) and Gujarat Ambuja Cements (down 1.15% to Rs 141.90) were the other losers.

Index heavyweight Reliance Industries (RIL) was down 0.52% to Rs 1270 on 7.45 lakh shares. It has slipped from high of Rs 1288.40

Tata Steel was the top gainer, up 1.76% to Rs 484.90 on expectations there will be further consolidation in the steel industry. Meanwhile, Tata group chairman Ratan Tata was quoted as saying in an interview that the Tata group sees a limit to how far it can stretch to buy Anglo-Dutch steel-maker Corus Group Plc without compromising shareholders' interests.

Dr Reddy’s Lab gained 1.43% to Rs 811 after it received final approval from the U.S. Food and Drug Administration for cholesterol-lowering simvastatin tablets. Simvastatin is the generic equivalent of Merck & Co. Inc.'s blockbuster drug Zocor.

Cement major ACC gained 1.05% to Rs 1085 on 1.65 lakh shares. It moved in range of Rs 1072.10 -1098.90.

The BSE Bankex slipped 0.20%, or 14.29 points, to 7085.73. Private sector banking shares witnessed renewed-buying interest while state run banks finished lower. Punjab National Bank (down 1.30% to Rs 506), SBI (up 0.75% to Rs 1245.35), Kotak Mahindra Bank (up 5.35% to Rs 399.90), Indian Overseas Bank (down 0.30% to Rs 111.70), Bank of Baroda (down 1.82% to Rs 240.15), Oriental Bank of Commerce (down 2.46% to Rs 226.30), HDFC Bank (down 0.86% to Rs 1069.70), Canara Bank (down 0.15% to Rs 275), Bank of India (up 0.80% to Rs 207), and ICICI Bank (down 1.10% to Rs 889).

The National Stock Exchange (NSE) added 26 new stocks in the F&O list from today. The new entrants in the F&O segment are Aban Offshore, Amtek Auto, Bajaj Hindustan, Balrampur Chini Mills, Bata India, Bharat Earth Movers, Bombay Dyeing, Crompton Greaves, Gateway Distriparks, GTL, Gujarat Alkalies & Chem, Hindustan Construction, Hinduja TMT, Jaiprakash Associates, JSW Steel, Kotak Mahindra Bank, Lupin, Mcdowell & Company, Nagarjuna Constrn., Praj Industries, Shree Renuka Sugars, Sesa Goa, Triveni Engg. & Inds, Tata Teleservices (Maharastra), UltraTech Cement and Voltas.

The near term trigger for the bourses is Q3 December 2006 results. Market men expect December 2006 quarter to be another strong quarter in terms of earnings growth. Strong advance tax payments corroborate the view that Q3 results would be strong. The Q3 results would start trickling in from 11 January 2007.

The Nikkei 225 index finished just 0.01% higher at 17,225.83. That marked its highest close since early May. The benchmark ended 2005 at 16,111.43. Tokyo's Nikkei share average ended 2006 with a 6.9% gain for the year, marking its fourth straight year of growth and its longest bull run in nearly two decades.

US stocks finished marginally lower on Thursday as investors sold off recent outperforming stocks to lock in some profits ahead of the year-end. The Dow Jones industrial average declined 9.05 points, or 0.07 percent, to end at 12,501.52. The Standard & Poor's 500 Index dipped 2.11 points, or 0.15 percent, to finish at 1,424.73. The Nasdaq Composite Index dropped 5.65 points, or 0.23 percent, to close at 2,425.57.

As per provisional data, FIIs were net sellers to the tune of Rs 1022.55 crore on Thursday 28 December, the day when Sensex had lost 13 points. FIIs were net sellers to the tune of Rs 368 crore on Wednesday 27 December, the day when Sensex had surged 151 points.

Oil rose as some analysts and traders said they expect U.S. crude inventories to have dropped last week because of disruptions to shipping. Crude oil for February delivery rose as much as 39 cents to $60.73 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for February settlement gained 28 cents to $60.80 a barrel on the London-based ICE Futures exchange.

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Kotak - Allcargo

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Motilal Oswal Reports

Bombay Dyeing

Cadila

Cement

IVRCL

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Mahindra & Mahindra

Patel Engineering

Tech Mahindra

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Sharekhan Highnoon dated December 29, 2006

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Sharekhan Commodities Buzz dated December 29, 2006

Soy bean: Positive
Arrivals of beans in Madhya Pradesh declined considerably. Strong sentiments for edible oil are expected to firm up demand at few places. However, solvent extraction units continued regular offtake of beans in bulk so as to suffice for buffer stocks for the next fortnight. The CBOT soy bean futures have also been positive this weak due to favourable export data for the USA.

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Edelweiss - PCG DAILY MARKET CALL 29-DEC-2006

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PowerYourTrade Trading Calls

Ashwani Gujral

Buy HDFC Bank with a stop loss of Rs 1020 for a target of Rs 1150

Buy ICICI Bank with a stop loss of Rs 860 for a target of Rs 1050

Deepak Mohoni

Buy Tech Mahindra below Rs 1700 with stop loss of Rs 1675. This is a day-trading recommendation.

Buy Gateway Distriparks below Rs 208 with stop loss of Rs 204. This is a day-trading recommendation

Rajat K Bose

Buy Hero Honda with stop loss below Rs 753 for a target of Rs 774

Buy HCL Technologies with stop loss below Rs 627 for a target of Rs 640

Karvy - Anant Raj

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The First Call (Daily Technical Note)

Nifty and Sensex have lost nominal ground. Use the level of 3930 (Nifty) and 13,700 (Sensex) as the stop loss level for long positions. Nifty faces resistance between 4000-4050 level and Sensex between 14,000 -14,100 levels.

BSE Mdicap has exhibited a near doji candlestick. BSE Smallcap Index has exhibited a bearish candlestick. CNX IT has gained further ground.

In the Punter's zone we have a buy on Bata India, Bank of India and Grasim.

In the Technical call sectio we have a buy on Tata Motors, Nicholas Piramal and Ashok Leyland.

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THE STRATEGIST ( DF 291206 )

On the last day of the December contract, Nifty futures gained OI to the tune of 4.22% with prices falling by 0.09%. Further Nifty saw average rollover of 76%. On the fourth consecutive day, FIIs were net buyers with a positive inflow of Rs. 247.12 crs (Rs. 731.25 crs). The PCR-OI witnessed a 6 points drop from 1.36 to 1.30 and the PCR Volatility at 0.84, experienced a small increase of 0.03 pts.

Among the Big guns, ONGC saw a 3.46% gain in OI with prices rising by 0.25% and a very healthy rollover at 77%, indicating bullishness in the stock. On the other hand, RELAINCE experienced a built-up in short positions with OI rising by 13.12% and prices falling by 1.45%. The rollover position for RELIANCE was at 76%.

The TECH sector saw a comfortable rollover position with the sector recording an average rollover of around 82% to the NEXT and FAR month contracts. Amongst the TECH majors, INFOSYS saw some built-up of short positions with OI rising by 8.60% with a marginal fall in price of 0.20% and the rollover position, at a comfortable 79%. HCLTECH, TCS and WIPRO closed on a positive note with rise in prices along with healthy rollover rates.

The METAL front experience major rollovers with the average rollover rates standing at 85%. There was bullishness in JINDALSTEEL, BHARATFORGE, JSTAINLESS & SAIL, all recording very healthy rollover rates with rising prices.

On the BANKING front, the BANKNIFTY saw a high 17.34% built-up in OI with a marginal rise in price. Banking major SBI saw a 6.73% rise in OI with prices falling by 1.24% indicating built-up of short positions in the counter. Similarly IDBI, PNB, UTIBANK, IOB & UNIIONBANK experienced significant increase in OI with fall in prices.

The AUTO sector performed very well with many counters closing in blue. ESCORTS, HEROHONDA, ASHOKLEYLAND, TVSMOTORS all experienced increase in OI with significant rise in prices and healthy rollover rates above 80%. We continue to remain bullish on the AUTO sector.

Even though the PCR-OI has fallen marginally and PCR-VOL showing some rise, we feel the markets will be steady.

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Daily Fundamental Snippets

Reliance Communications has planned to build the world's largest Internet protocol (IP) network over submarine cable systems with an investment of $1.5 billion (Rs 7,000 crore) in the next 3 years.

Punjab National Bank (PNB) and UTI Bank has hiked benchmark prime lending rates.

Thermax is setting up a plant in the People's Republic of China for manufacturing absorption chillers with an investment of $8 million.

Gammon India has emerged as leading bidder for the Rs 1,200 crore offshore container terminal at the Mumbai Port Trust (MbPT).

Varun Shipping has signed a memorandum of agreement (MoA) for acquiring a very large gas carrier (VLGC) with a capacity of approximately 76,644 cbm.

Bajaj has launched its powerful motorcycle, Pulsar 220 DTS-Fi, in Pune.

Bajaj Hindustan Ltd (BHL) has recorded a 36 per cent jump in net profit to Rs 190.83 crore during the financial year ending September 30, 2006 against Rs 140.39 crore registered during the same period last year. The company's revenue has gone up 74 per cent to Rs 1,486.8 crore during FY 2006 against Rs 854.8 crore last year.

Lanco Infratech Ltd has entered into a memorandum of understanding with Jharkhand Government for a 2,640 MW mega coal-based power plant.

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Aditya Birla Nuvo - Idea Cellular IPO - Impact Analysis

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Constantia - Market Grape Vine

Market Grape Wine :

In House :

Infrastructure , Power & Telecom stocks to be in limelight today .

Markets to be very side ways with low volumes witha firm opening with
positive bias .

Buy : Mphasis & RComm

Buy : BOB & EssarOil

Buy : Zee in F&O

Sell : Cesc below 308 in F&O

Nifty at a support of 3940 & 3908 levels with resistance at 3997 & 4020
levels

Buy : AppoloTyre in Cash

Sell : Suzlon below 1294

Buy : Polaris above 166.8

Out House :

Wishing u All a very Happy & Properous new Year .

Sensex at a support of 13786 & 13696 levels with resistance at 13898 &
13949 levels .

Buy : RIL & RComm

Buy : IBulls , TechM , GDL , Voltam , EKC & Divis funds active buyers

Buy : M&M & Telco

Buy : Polaris , Mphasis & I-Flex

Buy : BombayDye , RIIL & Gesco

Buy : Aban , SesaGoa & GtOffsshore

Dark Horse : IBulls , Gitanjali , EKC , GDL , Voltam , TechM , ACE &
SesaGoa

Bullet for the Day : McDowell & TITAN & GlenMark

TGIF : Thank God Its Friday : Last day of the Year stay invested and enjoy
the New Year

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Indiabulls IM tips

As said markets remained volatile on the day of expiry, due to which a DOJI pattern has been made indicating uncertainity and directionlessness, which could lead to further consolidation in the markets in the days to come. Expect an upthrust above 4008 levels to create new highs, failing which consolidation cannot be ruled out

Investors & Day Traders : Jackpot for the new year 2007 !!! Grab Speciality Papers Limited at 09:55 am and earn millions in coming days. After going through the speciality of Speciality Papers you will say real gem at current levels ⦠Yes very cheap valuations + Fantastic results + Major breaking news to be out anytime will take the stock from the current price of Rs. 45 to Rs. 58. Crossover and close above this will take stock to Rs. 72 and Rs. 90 in coming days. Gift for the year 2007. Just buy 10,000 to 25,000 shares at the opening bell & forget. You will be rewarded heavily

HERO HONDA : Last close 759.15 Wise people very much behind this counter. Still not acheived its upper target. Huge accumulation in this stock is over since last two days and the stock is ready for a long jump anytime. Currently the MACD is bullish since it is trading above its signal line. Remain invested keeping stop loss of Rs.748. Upper sideâ¦.Non stop rally will take this to Rs.771...maybe today itself, Cross over will take this to Rs.784 mark.

BOM DYEING : Last close 715.50 Highly bullish in short-term, and bullish in mid-long term. Ready to explode any moment. Best stock for short term tradersâ¦Buy keeping stop loss of Rs.705 for an upper target of Rs.740 were minor selling not ruled out, Cross over will take this to Rs.769.

TATA TEA : Last close728.50 Worst seems to be over now. Divergence: The security price has set a new 14-day low while the RSI has not. This is a bullish divergence. Buy at the opening bell keeping stop loss of Rs.717. Upper sideâ¦Expect it to zoom toRs.746, Cross over will take this to Rs.760.

BANK OF INDIA : Last close 205.35 Buy on decline keeping stop loss of Rs.200 for an upper target of Rs.211, Cross over will take this to Rs.218 mark

BANK OF BARODA : Last close 244.60 Buy in panic keeping strict stop loss of Rs.240. Upper sideâ¦Expect it to zoom to Rs.249, Cross over will take this to Rs.255 mark.

JINDAL STEEL : Last close2222.60 This stock is going to explode today itself. Stock will zoom to Rs.2248 and Rs.2275. Best stock for day traders. Buy at the opening bell keeping stop loss of Rs.2188.

VOLTAMP @ 686 BUY IT`S SMALL QUANTITY KEEPING A STRICT STOP LOSS OF Rs. 674.50 FOR A TARGET OF Rs.700 AND 706. IT CAN BECOME EVEN ROCKET OF THE DAY.............

5 Intra-day Stock Ideas

NIFTY (3979) SUP 3952 RES 3982

BUY NATCOPHARM (139.6)
SL 135 T 147, 149

BUY NAGARCONST (209.10)
SL 204 T 217, 220

BUY WOCKPHARMA (349)
SL 344 T 357, 360

SELL GMRINFRA (351.35)
@ 354 SL 358 T 344, 341

SELL UTIBANK (456.40)
@ 459 SL 463 T 449, 446

STRATEGY INPUTS FOR THE DAY

New scrips in futures, new future in scrips

Year's end is neither an end nor a beginning but a going on, with all the wisdom that experience can instill in us.

For those in the market, Wisdom and experience comes with a high price or huge loss. As the sun sets on calendar year 2006, the bulls have reason to celebrate and a day’s movement need not hold much weight. For today, the outlook is one of cautious optimism as global markets are mixed and the bulls will be eager to break into a party to ring in the new year.

The last derivative settlement of the year 2006 went off smoothly, with market-wide rollover at nearly 84%, and Nifty rollover at 75%. This is much higher than last month. Also, the Nifty January futures closed yesterday at an 18-point premium to the underlying Spot Nifty. The cost of carry has also gone up for the market as a whole as well as for the Nifty. This indicates that the bulls are willing to hold long positions at a much higher cost. However, a much sharper increase in the cost of carry will mean that the market is getting into overbought territory. That will be the time to cash out. One will have to keep a close eye on the F&O segment today, as the NSE will add 26 new scrips in its derivative segment.

The market has rebounded smartly in the last few sessions after the sudden and steep crash earlier this month. Over the next few days, the trend is likely to be volatile as investors await latest quarterly results and the budget. Also, the strategy adopted by FIIs in the new year will have a bearing on the near-term direction of the market.

The long-term outlook for India remains strong due to the stupendous economic growth in the last four years. However, valuations also have to be taken into account while making investment decisions. On this count, India is clearly the most expensive among the emerging markets. As a result, there could be some correction once the Sensex and the Nifty breach the 14k and 4k mark again.

FIIs were net sellers of Rs10.22bn (provisional) in the cash segment yesterday. In the F&O segment, they pumped in Rs2.47bn. On Wednesday, they withdrew Rs3.68bn from the cash segment, taking their net outflow for the month to Rs26.18bn. Mutual Funds were net buyers of Rs3.91bn on the same day.

The shares of Nissan Copper will get listed on the stock exchanges today.

Core Projects is likely to gain as it reportedly close to a couple of acquisitions in the US.

Reliance Communications could be in the thick of things as the company has officially admitted to having an interest in buying Hutchison Telecom International's stake in Hutch Essar.

Cement prices are likely to rise further due to a tight demand-supply mismatch notwithstanding the massive investments announced by domestic producers on capacity build-up, says a financial daily. Prices in Mumbai have risen by Rs5-10 to Rs235-240 per 50 kg bag in the last couple of months and are expected to go up further by Rs15-20 to Rs260 per bag.

Select sugar stocks were in momentum yesterday after the Government allowed sugar producers to sell 4.1mn metric tons of the sweetener in the domestic market in the first Quarter of 2007 as production is expected to reach a record.

US shares closed lower on Thursday amid light trading on Thursday as negative news from Apple and rising bond yields offset upbeat economic news.

The Dow Jones fell by 9 points to 12,501.52. The blue chip index had ended the previous session above 12,500 for the first time. The broader S&P 500 was down 2 points to 1,424.73 and the Nasdaq dropped 5 points to 2,425.57.

The S&P 500 and the Nasdaq would log annual gains for the fourth year in a row. For the Dow, it will be the third in the last four years. The blue-chip average saw a slight decline in 2005.

US financial markets were closed on Monday for Christmas and will be closed next Monday for New Year's Day. The market is also likely to be closed next Tuesday to honor former President Gerald Ford, who died Tuesday night.

The Federal Reserve said late on Thursday that it delayed the release of the minutes from its December policy meeting to Wednesday from Tuesday. Other economic reports due Tuesday include the December ISM index, a national read on manufacturing.

US light crude oil for February delivery rose 19 cents to settle at $60.53 per barrel on the New York Mercantile Exchange. The price of oil fluctuated after the weekly energy inventory report showed a big decline in oil reserves and a jump in gasoline stockpiles. The front-month contract was trading 22 cents lower at $60.31 a barrel in extended trading in Asia.

Treasury prices slumped on encouraging economic reports, raising the yield on the benchmark 10-year note to 4.68% from 4.65% late on Wednesday. COMEX gold rose $6.60 to settle at $636.90. In currency trading, the dollar fell versus the euro and rose against the yen.

Among the Indian ADRs, Patni was up 1.9%, Tata Motors shed 1.8%, Dr. Reddy's gained 1.1%, HDFC Bank climbed 2.9% and ICICI Bank rose 2.7%.

European stocks struggled to find direction and closed virtually unchanged. The German DAX Xetra 30 closed flat at 6,611.81. The French CAC 40 slipped 0.1% to finish at 5,533.36, and the UK-based FTSE 100 lost 0.1% to 6,240.90.

In the emerging markets, the Bovespa in Brazil was down 0.1% to 44,473 while the IPC index in Mexico gained 0.4% to 26,295 and the RTS index in Russia surged by over 2% to 1910.

Asian stocks were set to complete the fourth consecutive year of gains on Friday. Exporters such as Canon rose after better-than-expected US consumer confidence and home sales reports.

The Morgan Stanley Capital International Asia-Pacific Index rose 0.3% to 140.64 at 10:29 a.m. in Tokyo. Japan's Nikkei 225 Stock Average gained 0.3% to 17,274.97. The Hang Seng in Hong Kong fell by 55 points to 19,946.

All markets in the region advanced. Japan, Australia and New Zealand will have shortened trading hours in the last trading day of 2006. Indonesia and South Korea are closed.

MSCI's regional index has risen 15% this year. Four years of gains in Asia is the longest winning streak since the measure was launched in 1988. The benchmark has climbed 21% since its low for the year on June 13, as oil prices fell from record high and the US Federal Reserve stopped raising interest rates.

Insider Trades:
AIA Engineering Limited: HDFC Trustee Company Limited A/C - HDFC MF Monthly Income Plan - Long Term Plan has purchased from open market 35540 equity shares of AIA Engineering Limited on 21-DEC-2006.

Market Volumes:
The turnover on NSE was up by 41% to Rs99.67bn. BSE Pharma index was the major loser and lost 0.89%. BSE Capital Good index (down 0.60%), BSE Oil & Gas index (down 0.49%) and BSE Consumer Durable index (down 0.14%) were among the other major gainers. However, BSE FMCG index gained 0.51%.

Volume Toppers:
Ashok Leyland, R Com, Hindalco, Indiabulls, NTPC, TTML, Century Textile, Gujarat Ambuja, Tata Steel, MTNL, SAIL, Balrampur Chini, Indian Hotel, IVRCL Infrastructure, Tech Mahindra and Parsvnath Developers.

Delivery Delight:
Adlabs Films, Alok Industries, Arvind Mills, Ashok Leyland, Bajaj Hindustan, Bank of India, Balrampur Chini Mills, BPCL, Century Textiles, Grasim Industries, Gujarat Ambuja Cements, HDFC Bank, HCL Technologies, Hero Honda, Jaiprakash Associates, Reliance Capital, Zee Telefilms, TCS and Tata Tea.

Upper Circuit Filters:
Flex Industries, Texmaco Ltd, Renuka Sugar, AIA Engineering, Educomp Solution, Phoenix Mill, Nesco, Anant Raj Industries and Prajay Engineering.

Brokers Recommendations:
SREI Infrastructure Finance - Buy from Emkay with a price target of Rs70
Cadila - Buy from Angel Broking with price target of Rs335

Long Term Investment:
TCS

Major News Headlines:
Bajaj Hindusthan Q4 net at Rs382mn; gross sales at Rs3.88bn (up 31%)
Hindustan Constructions bags order worth Rs2.5bn
Ranbaxy Group inks pact with Aegon for Insurance, AMC biz
Thermax to set up plant in China
NTPC to sign deal for Sri Lanka project on Friday
Reliance Communication unveils mega plans for FLAG

HDFC Bank - Buy List

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Thanks Manish

How Market Fared

New year begins for bulls

The bulls lost some ground. After surging nearly 400 points in the week the key indices slipped for the first time in the week on account of the F&O expiry. The key indices ended with moderate loss as selling pressure was witnessed in the frontline stocks like Reliance industries, SBI, ABB, Tisco, BHEL and L&T dragging the markets to close in red. The BSE Pharma index lost 0.89% and BSE Oil & Gas index was down 0.49%. Finally, the BSE benchmark Sensex slipped 13 points to close at 13846. NSE Nifty was down 4points to close at 3970.

PNB edged lower 0.4% to Rs513. The company revised benchmark Prime lending rate to 11.75% p.a. effective from January 1, 2007. The scrip touched an intra-day high of Rs520 and a low of Rs505 and recorded volumes of over 5,00,000 shares on NSE.

Reliance Industries lost 1.5% to Rs1274. According to reports the company has planned to invest as much as 50 billion rupees in a lignite gasification project in the western Indian state of Gujarat. The scrip touched an intra-day high of Rs1303 and a low of Rs1268 and recorded volumes of over 40,00,000 shares on NSE.

Lupin gained 2% to Rs615 as the company announced it ended an agreement with Cornerstone BioPharma Inc. to develop an anti-infective treatment for selling in the U.S. The scrip touched an intra-day high of Rs625 and a low of Rs604 and recorded volumes of over 83,000 shares on NSE.

Sugar stocks rose after being on the side lines for long, as Government allowed sugar producers to sell 4.1mn metric tons of sweetener domestically in first Quarter of 2007 as production is expected to reach a record. Balrampur Chini advanced 2.1% to Rs84, Sakhti Sugar was up 1.1% to Rs101 and Dhampur Sugar has added 0.5% to Rs94. Bajaj Hind gained 1.6% to Rs218 after the company declared its Q4 result with net profit at Rs382mn and gross sales at Rs3.88bn (up 31%) and the board of Directors also recommended Dividend of 60%.

Metal stocks ended lower on back of selling pressure. Tisco lost 1% to Rs476, Sterlite Industries was down 0.5% to Rs533, Hindustan Zinc shed 0.5% to Rs828 and National Aluminum slipped 0.7% to Rs214 and Hindalco edged lower by 0.2% to Rs174.

Technology stocks pared their intra-day gains. Mid-Cap stocks like Tata Elxsi, NIIT Ltd and i-Flex were among the major losers. Among the heavy weights Satyam Computer slipped 0.7% to Rs489 and Infosys lost 0.2% to Rs2248.

Telecom stocks today were a mixed bag. Reliance Communication advanced 0.5% to Rs477, and MTNL gained 0.5% to Rs145. However, VSNL lost 2.25 to Rs405 and Bharti Airtel was down 0.2% to Rs630.

Pharma stocks witnessed profit booking. Cipla slipped 2.7% to Rs254; Sun Pharma declined 1.2% to Rs974, Glaxo was down 1% to Rs1158 and Dr Reddy's Lab slipped 1% to Rs800.


The bulls lost some ground. After surging nearly 400 points in the week the key indices slipped for the first time in the week on account of the F&O expiry. The key indices ended with moderate loss as selling pressure was witnessed in the frontline stocks like Reliance industries, SBI, ABB, Tisco, BHEL and L&T dragging the markets to close in red. The BSE Pharma index lost 0.89% and BSE Oil & Gas index was down 0.49%. Finally, the BSE benchmark Sensex slipped 13 points to close at 13846. NSE Nifty was down 4points to close at 3970.

PNB edged lower 0.4% to Rs513. The company revised benchmark Prime lending rate to 11.75% p.a. effective from January 1, 2007. The scrip touched an intra-day high of Rs520 and a low of Rs505 and recorded volumes of over 5,00,000 shares on NSE.

Reliance Industries lost 1.5% to Rs1274. According to reports the company has planned to invest as much as 50 billion rupees in a lignite gasification project in the western Indian state of Gujarat. The scrip touched an intra-day high of Rs1303 and a low of Rs1268 and recorded volumes of over 40,00,000 shares on NSE.

Lupin gained 2% to Rs615 as the company announced it ended an agreement with Cornerstone BioPharma Inc. to develop an anti-infective treatment for selling in the U.S. The scrip touched an intra-day high of Rs625 and a low of Rs604 and recorded volumes of over 83,000 shares on NSE.

Sugar stocks rose after being on the side lines for long, as Government allowed sugar producers to sell 4.1mn metric tons of sweetener domestically in first Quarter of 2007 as production is expected to reach a record. Balrampur Chini advanced 2.1% to Rs84, Sakhti Sugar was up 1.1% to Rs101 and Dhampur Sugar has added 0.5% to Rs94. Bajaj Hind gained 1.6% to Rs218 after the company declared its Q4 result with net profit at Rs382mn and gross sales at Rs3.88bn (up 31%) and the board of Directors also recommended Dividend of 60%.

Metal stocks ended lower on back of selling pressure. Tisco lost 1% to Rs476, Sterlite Industries was down 0.5% to Rs533, Hindustan Zinc shed 0.5% to Rs828 and National Aluminum slipped 0.7% to Rs214 and Hindalco edged lower by 0.2% to Rs174.

Technology stocks pared their intra-day gains. Mid-Cap stocks like Tata Elxsi, NIIT Ltd and i-Flex were among the major losers. Among the heavy weights Satyam Computer slipped 0.7% to Rs489 and Infosys lost 0.2% to Rs2248.

Telecom stocks today were a mixed bag. Reliance Communication advanced 0.5% to Rs477, and MTNL gained 0.5% to Rs145. However, VSNL lost 2.25 to Rs405 and Bharti Airtel was down 0.2% to Rs630.

Pharma stocks witnessed profit booking. Cipla slipped 2.7% to Rs254; Sun Pharma declined 1.2% to Rs974, Glaxo was down 1% to Rs1158 and Dr Reddy's Lab slipped 1% to Rs800.