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Tuesday, January 09, 2007

STRATEGY INPUTS FOR THE DAY


Listing day…Can Cairn reduce the pain?

When we long for life without difficulties, remember that oaks grow strong in contrary winds and diamonds are made under pressure

After a dip, bulls will latch on to global cues for bouncing back. Oil is trading under $56 per barrel. US and Asian markets are up though the Hang Seng is down over 100 points. Selling by FIIs in December and now in January could be a concern. Results, especially that of the IT top guns, are anxiously awaited. Though most of the positive on the earnings front is in the prices, the market will still take some cues from the results. On the other hand, rising inflation could play spoilsport as it could mean another hike in interest rates. We expect some rebound early this morning. Trading may turn volatile thereafter.

The big story will of course be Cairn India as its shares get listed. The stock is expected to dip below the issue price of Rs160 in early trade. The big concern is on the cost of transporting oil through pipelines to MRPL. Then there are stories doing the rounds of how ‘rivals’ have so far managed to partly sabotage the issue and would look at humbling it on its debut. The brave hearted can take an intra day contrary call with strict stop losses at lower levels. Don’t latch on to it till the concerns lessen a little.

Ranbaxy could be in the thick of things amid reports that it is bidding for the generics business of Merck KGaA, Germany.

Geometric Software might advance after a business channel reported that Godrej & Boyce has sold its 18.5% stake in the software firm to Wipro Infotech. IT shares will continue to be in the limelight ahead of Infosys' results on Thursday. Meanwhile, reports say that TCS is close to announcing the much-awaited ADR issue. The company will announce its Q3 results on January 15.

Aurionpro Solutions is also likely to gain after the company said that Auroscient Outsourcing, a wholly owned subsidiary of the company, has got an outsourcing contract from Citibank for three years.

Atlanta and Praj Industries could be in action as they will announce their results today.

FIIs were net sellers of Rs7.88bn (provisional) in the cash segment yesterday. In the F&O segment too, they were net sellers at Rs9.57bn. On Friday, foreign funds were net buyers of just Rs9mn. However, Mutual Funds pumped in Rs154.8mn on the same day.

US stocks managed modest gains on Monday, as investors welcomed lower oil prices, a spate of mergers and some bullish analyst comments on the technology sector. However gains were limited amid higher bond yields and ongoing concerns about Federal Reserve policy.

The Dow Jones was up 25.48 at 12,423.49, while the S&P 500 added 3 points at 1,412.84, and the Nasdaq rose 3.95 points to 2,438.20.

US light crude oil prices for February delivery fell 22 cents to settle at US$56.09 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 55 cents down at US$55.44 per barrel in extended trading in Asia.

Treasury prices fell, lifting the yield on the benchmark 10-year note to 4.65% from 4.64% late on Friday. In currency trading, the dollar fell versus the euro and the yen. COMEX gold for February delivery rose US$2.50 to settle at US$609.40 an ounce.

European markets couldn't hold early gains. The pan-European Dow Jones Stoxx 600 index ended 0.1% lower at 365.38. The UK-based FTSE 100 dropped 0.4% to 6,194.20, while the German DAX Xetra 30 rose 0.2% to 6,607.59 and the French CAC-40 gained a fraction of a percentage point to close at 5,518.59.

Stocks rose across the Asia Pacific region early on Tuesday, with stock benchmarks in Japan and Australia leading the advance on the back of gains in Sony and BHP Billiton. Elsewhere in the region, stocks also rose in South Korea, Singapore, New Zealand, Malaysia and Taiwan. But, the market in Hong Kong declined.

Key emerging markets finished higher. The Bovespa in Brazil rose 1.4% to 42,829 while the IPC index in Mexico and Russia's RTS index added 0.6% each to 26,281 and 1921.

Among the Indian ADRs, Patni was up close to 4%, ICICI Bank advanced nearly 2% and MTNL surged by 5.8%.

Shares of Onwards Technologies hit the upper circuit yesterday amid market grapevine that Taneja Aerospace would acquire a majority stake in the software firm.

Major Bulk Deals:
Fidelity has picked up Astra Microwave but Emerging Markets has sold the scrip; Prudential ICICI MF has bought Esab India; Reliance Capital has purchased TV Today but ICICI Bank Treasury has sold the stock.

Market Volumes:
The turnover on NSE was down by 13% to Rs76.2bn. BSE Technology index was the major loser and lost 2.29%. BSE Metal index (down 1.84%), BSE FMCG index (down 1.37%), BSE Auto index (down 1.23%) and BSE Bank index (down 1.00%) were the other major losers.

Volume Toppers:
IFCI, TTML, MTNL, R Com, Hindalco, ITC, HLL, DCB, SAIL, Indiabulls, HCC, Satyam Computer, Polaris, Infosys, Ranbaxy, RIL, Hindustan Motors and Rain Calcining.

Delivery Delight:
Abhishek Industries, Adlabs Films, Alstom Projects India Ltd, BASF India, Canara Bank, Geometric Software and MTNL.

Upper Circuit Filters:
Flex Industries, Zandu Pharma, Heritage Food, Gitanjali Gems, Champagne Industries, Electrotherm, Rajesh Exports, Vakran Software and Taneja Aerospace.

Brokers Recommendations:
Aban Offshore – Buy from Citigroup with target of Rs1700

Long Term Investment:
MTNL

Major News Headlines:
Infosys BPO, HVS International to offer hospitality solutions
BHEL gets Rs3.8bn order from Punjab SEB
Marico Board to consider third interim dividend on Jan 19
Pratibha Industries gets Rs3.3bn order
Nagarjuna Constructions gets orders worth Rs2.6bn
Kilburn Engineering gets orders worth Rs280mn