Close: profit taking to the fore yet again !

Market today started firm but could not sustain above 14000 as profit booking set in. Market reached a new high in the morning but selling and profit taking was intense with good volumes. Markets remained ranged as the trading session progressed to finally end in Red as the selling pressure intensified in final trading hour. There was not much support from the global markets as well as the major Asian Indices ended in red. European indices seem to follow the Asian trend and are trading in red. The reason / excuse was the selloff in the US post not so good economic news on Housing which seems to be dampening growth and worried statements by the Fed about inflationary pressures. Crude was down and so were the metals which had this selloff across board.

Selling Pressure remained dominant in Auto, Banking, Cement and Software stocks while Buying was seen in Textile, Media, fertilizer and Energy stocks.

Sensex closed down by 143 points at 13871.71. Weighing on the Sensex were losses in ITC (168.9,-4 percent), Hero Honda (755,-3 percent), Hindalco (174.9,-3 percent), Satyam (501.95,-3 percent) and Wipro (605.8,-2 percent). Losses were restricted by gains in Dr Reddys (826.3,+2 percent), L & T (1493.2,+1 percent), Rel Energy (530,+1 percent), Tata Motors (947.1,+1 percent) and Ranbaxy (413.45,+0 percent).

The Hero Group is planning to launch electric three-wheelers and expanding its core portfolio of bicycles and two-wheelers. The group is expected to partner UK-based Ultra Motor, its technical collaborator for electric bicycles and scooters, for its three-wheeler venture. It is likely to launch the new vehicles either by the end of the year or early next year. The group, which has so far invested about Rs 50 crore on the new facilty for electric vehicles in Ludhiana, could expand it further for the three-wheeler venture. There has been a sudden interest in electric bikes post the launch of the yo bikes by Electrosteel casting. The Hero group is intending to use its synergies of distribution and brand for making its presence felt here. Its a big market in China. However the 3 wheeler entry is a threat for Bajaj Auto. Bajaj Auto however had its demerger value unlocking lined up. We are positive on Bajaj auto but we believe that better opportunities would be available as competitive scenario becomes tougher.

Auto major Mahindra and Mahindra (M&M) clocked a 38% rise in total sales volumes in December, 2006 at 15,132 vehicles compared to 10,935 in the same month last fiscal. In the farm equipment sector, it registered a 21% growth in tractor sales at 6,759 in December as against 5,597 vehicles in the same month last year. In the auto sector, while domestic sales volumes were up 39% at 14,557, exports sales witnessed 11% growth at 575 vehicles for the December month. The utility vehicle sales, which registered a 34% growth in the month at 11,274 as against 8,414 vehicles in December 2005-06 fiscal, was one of the major contributors to the sales volumes. Its flagship utility vehicle Scorpio witnessed a 22% growth in volumes at 3,152 in December, 2006 as against 2,576 in the same month last year. The three-wheeler sales also witnessed a robust growth of 64% at 2,559 as against 1,559 in December of last fiscal. The December domestic tractor sales volumes were up 22% at 6,104, while exports were up at 11% at 655. The numbers were good but selling across board had the stock down. The Stock closed down by 1.05%.

Even in a market like this there was action in many mid cap and small cap stocks. There were stocks like Antifrcition bearings, Carborundum Universal, Eveready, Zenith, Aftek etc. So really the action was there and running. However the run down is more global in nature. Markets tend to be choppy when they are turning and certainly Markets are not trending now. We are ahead of 3 Q results and of course the budget in another 7 weeks so really markets are unlikely to give up big way.

Technically Speaking: Market traded in a ranged manner. Sensex rallied between the channels of 13748 - 13641 level. However, the breadth had been in the favor of Advances as they were 1525 advances against 1085 declines. Volumes were decent at 4508 cr. Sensex sees resistance between 14011-14167 level and support is seen at 13780 levels. Even 13500 is possible as per our Elliotist. But we will take it as it comes.