F&O expiry; birth of budget swing
There is nothing new under the sun but there are lots of old things we don't know.
It happens every month and most market players are all too familiar regarding what to expect on F&O expiry. The swing, most of it unnecessary will now be blamed on budget expectations. Given the long weekend ahead and uncertainty about the near-term direction of the market, we may see the indices continuing to swing wildly on an intra-day basis. The action will remain stock specific and in some cases, sector centric. Also, with less than a week to go for the RBI credit policy review, concerns over spiraling inflation and its fallout on interest rates might prove to be a spoil sport.
FII inflows have not been great in the first month of the new year. There has been some heavy selling by Mutual Funds in the past couple of days as well. Inflows from overseas investors have to improve substantially to take the market up sharply from these levels. This may take a while to happen, as FIIs could be waiting for the budget, as are all the other players.
Global cues are mixed. One big worry could be the sudden rebound in oil prices to the $55 per barrel mark. In equity markets, US stocks rose last night while in Asia the scene is pretty lackluster. We expect a cautious to higher opening and another volatile trading ahead. Some more short-covering in the derivative segment could help lift the market before we break for the extended weekend.
We've had two straight months of consolidation. This trend may continue for some time and the key indices could remain rangebound with a positive bias. Some observers are also talking about a possible pre-budget rally. But, as always FII inflows will continue to be the trump card, before the budget or after the budget.
Steel stocks were in the limelight on Wednesday and outperformed the key indices with the BSE Metal index rising over 3% on speculation that rising profit at U.S. producer Steel Dynamics Inc could provide an improved outlook for the industry. Q4 net income for the Steel Dynamics, the fifth-largest U.S. steelmaker rose by 68%.
Major Bulk Deals:
Citigroup Global has bought Asian Hotels; Franklin Templeton MF has picked up Hindalco; Deutsche Securities has purchased IFCI while Morgan Stanley has sold it; BNP Paribas has bought KEI Industries but Emerging Capital has sold the stock; CLSA has picked up Kotak Mahindra Bank; Goldman Sachs has purchased Pitti Laminates; Citigroup Global has sold Venus Remedies.
Insider Trades:
Usha Martin Limited: HSBC Global Investment Funds - A/c HSBC Global Investment Funds (Mauritius) Limited has purchased from open market 500000 equity shares of Usha Martin Limited on 17th January, 2007.
Mercator Lines Limited: Mr. Anil Khanna, Director sold in open markets 2000 equity shares of Mercator Lines Limited on 18th January, 2007.
Results Today:
Apollo Tyres, Arvind Mills, Aurionpro Solutions, BHEL, Century Textile, Century Enka, Crompton Greaves, Cummins India, Federal Bank, Four Soft, GE Shipping, Hindalco, Hindustan Motors, Kale Consultants, Mawana Sugars, Moser Baer, MRF, Pantaloon Retail, Renuka Sugar, Titan, Tata Coffee, Union Bank of India, TVS Motors and Uttam Galva.
Market Volumes:
The turnover on NSE was up by 2% to Rs81.87bn. BSE Metal index was the major gainer and gained by 3.72%. BSE Capital Good index (up 1.52%), BSE PSU index (up 1.34%) and BSE Bank index (up 0.95%) were among the other major gainers. However, BSE Auto index lost 1.10%.
Volume Toppers:
IFCI, SAIL, IDFC, KPIT Cummins, Gujarat Ambuja, Indiabulls, Reliance Communication, Ashok Leyland, Essar Steel, IDBI, Tata Steel, TTML, Cairn India, Balrampur Chini, Hindalco, Ispat Industries, Aptech and ITC.
Upper Circuit Filters:
Crisil, Heritage Foods, Radha Madhav, Fedders Lloyd, Aurionpro Solutions, Crest Animation, Electrotherm, Ganesh Housing, Goldiam International and BF Utilities.
Delivery Delight:
Amtek Auto, Aptech, Bank of Baroda, BEL, BHEL, Cambridge Solutions, Crompton Greaves, Infotech Enterprises, IDFC, Jain Irrigation, Jyoti Structures, L&T, ONGC, Sesa Goa and Tisco.
Major News Headlines:
Tata Steel Singapore subsidiary hikes stake in three of its own units
Bombay Dyeing Q3 net profit at Rs72.1mn (down 72.5%), sales at Rs1.07bn (down 60%)
HDFC Q3 profit at Rs3.56bn (up 25%), total income at Rs14.58 (up 38%)
XL Telecom to declare interim dividend on 27th January, 2007
Max India recommends splitting each share into five
Tata Power in pact with Chhattisgarh State for 1000MW Plan
GMR Infra Q3 group profit at Rs532.6mn (up 49%), revenue at Rs3.68bn (up 67%)
Savita Chemicals to give two bonus shares for every three held
Bank Of Baroda Q3 profit at Rs3.29bn (up 63%), total income at Rs27.2bn (up 33%)
Maruti to invest Rs2500 crores in Diesel plant
OBC Q3 net profit at Rs1.82bn (up 27%) and total income at Rs14.47bn (up 23%)
IOB Q3 profit at Rs2.47bn (up 25%), total income at Rs16.72bn (up 28%)
Indian Regulator cuts roaming charges by 22% to 56%
BHEL wins contract for 1000 MW plant
Apollo Hospital Q3 net at Rs179mn (up 6%), sales at Rs2.34bn (up 27%)
L&T gets order worth Rs3.55bn
Brokers Recommendations:
Jain Irrigation - Buy from CLSA with target of Rs450
NALCO - Outperformer from Man Financial with target of Rs249.
Long Term Investment:
Sterlite Industries