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Thursday, April 05, 2007

STRATEGY INPUTS FOR THE DAY


Book profits at every gain

The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next.

The sentiment is swinging more than the weather which promises to make the bulls and bears sweat alike. Beaten down stocks could see buying and outperformers could see correction. Neither technical nor fundamental reasons come into play sometimes. Short to medium term traders continue booking at every gain as the near term trends remain choppy.

We expect a cautious to positive opening on the back of marginal gains in the US stocks and a mixed opening in Asian markets. Local sentiment may get a temporary boost from news that Iran has released the 15 British navy personnel. Oil prices cooled off a little following the development in the middle east. It may turn out to be a choppy and dull session before Friday's holiday.

FII inflows are quite volatile these days and Mutual Funds have been selling. Concerns over inflation, hardening interest rates and their combined impact on the Indian economy and corporate profits will remain at the back of investors' minds. The upcoming earnings season may throw up some nasty surprises. As a result, the bulls may have to endure some more pain going forward and stability may not return on the street for another couple of months.

Renuka Sugars may see some weakness in F&O while IDBI Bank could see some buying. Plethico Pharma could attract some attention as it is reportedly looking at buying a stake in a retail pharmacy company in the CIS region. Jet Airways might be in focus following the mass exit of some key personnel. HLL may also be in action after selling Sangam Direct to the Wadhawan Group. Morepen Labs could perk up amid reports that Standard Chartered's private equity arm is eyeing a stake in the troubled drug maker after Avenue Asia walked out of a deal. IT companies will continue to hog the limelight ahead of their earnings and guidance.

US technology shares sent the Dow Jones Industrial Average and Nasdaq Composite Index to their fifth consecutive gain on an improved profit forecast for Microsoft. Shares of the software giant rose the most in two weeks after an upgrade from Citigroup. Others like Oracle and Cisco climbed to a five-week high and lifted the Standard & Poor's 500 Index to its third straight advance. The Dow added 19.75 points, or 0.2%, to 12,530.05. The Nasdaq rose 8.36 points, or 0.3%, to 2458.69. The S&P 500 finished flat at 1439.37.

US light crude oil for May delivery fell 26 cents to settle at $64.38 a barrel on the New York Mercantile Exchange after Iran's president pardoned and pledged to release the 15 British sailors and marines being held. The front-month contract was quoting 17 cents down at $64.21 a barrel in extended trading in Asia.

Treasury prices gained, lowering the yield on the 10-year note to 4.65% from 4.66% late on Tuesday. In currency trading, the dollar fell versus the euro and the yen. Gold futures climbed to close at a five-week high, underpinned by weakness in the dollar and physical demand. Gold for June delivery rose $7.70 to close at $677.40 an ounce on the New York Mercantile Exchange. It climbed to $681 earlier, its strongest intraday level since March 1.

European shares posted modest gains. The pan-European Dow Jones Stoxx 600 index inched 0.1% higher to 381.23. The French CAC-40 closed up 0.5% at 5,739.01, while the German DAX Xetra 30 added 0.4% to 7,073.91 and the UK's FTSE 100 finished virtually flat at 6,364.70.

US and most European markets will be closed tomorrow for Good Friday.

Asian markets are mixed this morning, barring the one in Hong Kong. The Nikkei was down 78 points at 17,467 while the Hang Seng in Hong Kong surged by 207 points to 20,209. The Kospi in Seoul fell by 3 points to 1479 and the Straits Times in Singapore added 8 points to 3341.

HOW MARKET FARED

Cooling at higher levels

The markets rose for second straight trading session as bulls extended their gains. Strong global cues boosted the markets at open. Further gains in the Capital Goods, Bank, Metal and Pharma stocks lifted the benchmark index Sensex to hit an intra-day high of 12835.36. However, selling pressure in the FMCG and the Auto stocks dragged the markets to pare some early gains. Yet, strong buying in scrip’s across the sectors held the key indices firm to close in positive terrain.

BHEL continued its up trend accompanied by NTPC and Zee Telefilms. Sugar stocks again gave sweet returns. The small cap index fared well however the Mid-Cap index underperformed. Finally, the 30-share benchmark Sensex gained 162 points to close at 12786. NSE Nifty also gained 42 points to close at 3733.

Garware Offshore ended flat at Rs188. The company received a letter of Intent of award of contract from ONGC. The scrip touched an intra-day high of Rs190 and a low of Rs184 and recorded volumes of over 1,00,000 shares on NSE.

Satyam Computer fell by 1.7% to Rs453. The company announced that it has launched a 4,500 square-foot development center in South America. The scrip touched an intra-day high of Rs490 and a low of Rs450 and recorded volumes of over 35,00,000 shares on NSE.

ICSA India pared its intra-day gains by 0.6% to Rs1015. The Company announced that they secured work order for a total contract value of Rs.231.7mn from Chief General Manager / Projects, Visakhapatnam. The scrip touched an intra-day high of Rs1043 and a low of Rs1015 and recorded volumes of over 9,000 shares on NSE.

Air Deccan surged to higher altitude after Managing Director of the company G R Gopinath announced that they may turn to profit by December Quarter. The scrip surged nearly by 5% to Rs92 touching an intra-day high of Rs92 and a low of Rs88 and recorded volumes of over 2,00,000 shares on NSE

SAIL gained by 1% to Rs112 after the Board of Directors of the company gave an ' in-principle' approval to a proposal for the modernisation and capacity expansion of Bhilai Steel Plant (BSP) to 7mn tons (MT) of crude steel per annum. The scrip touched an intra-day high of Rs113 and a low of Rs111 and recorded volumes of over 54,00,000 shares on NSE

Capital Good stocks were in the limelight. BHEL again surged by over 4% to Rs2353, ABB was up by 2.4% to Rs3527, L&T advanced by 1.3% to Rs1549 and Siemens added 1.3% to Rs1050.

Auto stocks witnessed selling pressure. Hero Honda dropped by 2.8% to Rs639, M&M was down 2.1% to Rs711, Maruti fell 1.4% to Rs745 and TVS Motors edged lower by 0.8% to Rs56.

FMCG stocks also were on the receiving end. HLL lost by 1.2% to Rs197, Dabur was down 0.5% to Rs92, ITC declined 0.9% to Rs148 and Britanna dropped 1.6% to Rs1210.

Telecom stocks continued to trade higher. Bharti Airtel advanced 1.8% to Rs747, VSNL gained 1.6% to Rs401 and MTNL added 1.4% to Rs145. However, Reliance Communication dropped 1% to Rs397.