Daily Market Strategy - Don't just aim
Next in importance to having a good aim is to recognize when to pull the trigger.
The pre-budget rally which we mentioned seems to be well underway. The bulls are ignoring all warnings about expensive valuations and an imminent correction. Even the spiraling inflation and the consequent hardening of interest rates have not had any impact on the bulls. The stronger than expected GDP estimate for FY07 yesterday added fuel to the fire. The aim of those who come into the market can't be anything more than making money. But set your goals and then aim. With markets having run up substantially, it pays to rejig not just your portfolio but also ensure that your assets are comfortably allocated.
FIIs have pumped in $366.4mn in three sessions starting Feb. 2 till Feb. 6. Yesterday, overseas investors were net buyers of Rs5.43bn (provisional) in the cash segment. In the F&O space, they were net buyers at Rs3.41bn. As long as FIIs keep the money tap open, it will pour gains. Having said that, one should 'bear' in mind irrational exuberance can lead to heavy losses and a lot of heartburn. For today, we see the momentum continuing at least at the start. But, beware of any cooling at higher levels.
Global cues remain mixed. In the US, the Nasdaq managed some gains while the Dow closed flat. Oil prices have come off after hitting $60 per barrel. In Asia, the Nikkei in Tokyo is up slightly while other indices are in the red. The Hang Seng has slid by nearly 300 points. Asian benchmarks open for trading fell, except in Australia and China. Metal prices on the London Metal Exchange (LME) fell overnight. A measure of six metals traded on the LME, including copper and zinc, was down 1.1%.
The Cabinet Committee on Economic Affairs (CCEA) will meet today. A proposal for disinvesting 10% Government stake in Rural Electrification Corporation (REC) and 5% each in Power Grid Corporation of India Ltd (PGCIL) and National Hydroelectric Power Corporation (NHPC) is expected to be considered.
We mentioned about NIIT Technologies and a couple of stocks in this column. NIIT hit a high of Rs460 after opening at Rs406. Today some more intra-day action is expected as the company announces its entry into the insurance vertical later in the day. Pyramid Saimira has been on a one-way journey upwards. While market expectations are that the counter could cross Rs700 in the near term, we advice extreme caution as the stock has run up significantly in a short period.
Satyam could witness some action on reports that it has bid for 20 contracts worth about $2bn. The new orders are expected to be announced post April 1, 2007. Wipro's Chief Strategy Officer was quoted as saying that the company expects to close at least one acquisition in the current quarter. GlaxoSmithKline Consumer Healthcare (GSKCH) said that it plans to acquire nutritional and over-the-counter (OTC) medicinal brands, businesses and technologies.
Shares of Global Broadcast News will get listed on the BSE and NSE today. The IPO of Mudra Lifestyle, Vijayeswari Textiles and Oriental Trimex will open today. The IPO of SMS Pharmaceuticals will close today. So far, it hasn't received a good response.
Abbott India will announce its results for the year ended November 30, 2006 and recommend dividend. FAG Bearings, Oswal Spinning and Rain Commodities will also declare their results today. Berger Paints will announce an interim dividend. Diamond Cables' Board will meet today to consider expansion into HT Power Cables.
Major Bulk Deals:
Morgan Stanley has bought Aftek; Merrill Lynch has picked up Cambridge Technology while Reliance Vision Fund has sold the stock; Deutsche Securities has purchased Ceat; Macquarie Bank has sold Crew BOS; Bear Stearns has sold Country Club; Templeton MF has bought Federal Bank; Morgan Stanley has picked up Lloyd Electric; Reliance Capital has picked up Orient Paper; HDFC Prudence Fund has bought Punj Lloyd while New York Life Investment has sold it; Goldman Sachs has sold RPG Transmission but has picked up Sujana Metal.
Insider Trades:
Mahindra & Mahindra Ltd: Mr. Nadir B Godrej, Director has purchased from open market 9500 equity shares of Mahindra & Mahindra Ltd on 2nd February, 2007.
Market Volumes:
The turnover on NSE was up by 5% to Rs103.3bn. The BSE Metal index was the major gainer and gained 2.19%. BSE Auto index (up 1.48%), BSE Technology index (up 1.45%) and BSE Bank index (up 1.35%) were among the other major gainers.
Delivery Delight:
ABB, APIL, ACC, Bajaj Auto, Bata India, Cipla, Greaves Cotton, HDFC Bank, Hero Honda, Hindalco, Hindustan Motors, Infosys Technologies, Jet Airways, L&T, Nicholas Piramal, Prism Cement, Reliance Capital, Shasun Chemicals, Siemens, Taneja Aerospace, Unitech and Wipro.
Volume Toppers:
IFCI, Aftek Ltd, SAIL, IndusInd Bank, IDBI, IDFC, Reliance Communication, Shree Ashtavinyak, Hindustan Motors, Hindalco, Ashok Leyland, Indiabulls, Unitech, Syndicate Bank and NTPC.
Upper Circuit Filters:
Goldstone Technologies, Auto Industries, Pyramid Saimira, Kew Industries, Swan Mills, Anant Raj Industries, BPL, HOV Services and Taneja Aerospace.
Long Term Investment:
Bata India
Major News Headlines:
Taneja Aerospace forms JV with France's TAT for Aircraft MRO
Cabinet gives initial approval on chip-making incentives
BSEL Infra secures order worth Rs21bn
Jupiter Bioscience receives order from Bachem AG
Subex Azure to raise $200mn via GDRs, bonds
Reliance Life Sciences buys GeneMedix of UK
Lupin gets USFDA approval for Sertraline
Northrop, BEL to explore joint production opportunities
M&M makes bid to buy Punjab Tractors