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Wednesday, May 09, 2007

Market snaps three-day losing streak


The market was able to snap its three days of losing streak and posting a marginal gain as buying resumed. In the last three days, it had slipped 312.75 points, from 14,078.21 on 3 May to 13,765.46 on 8 May 2007.

The sharp recovery today was triggered by value buying at lower levels and strong global markets.

Japan's Nikkei average gained 0.52% on Wednesday, 9 May 2007, to its highest close since the global equity sell-off in February 2007, as Kawasaki Kisen Kaisha jumped following an upbeat earnings report, prompting investors to buy shares in other shipping firms. The Nikkei rose 91.28 points to 17,748.12, its highest close since 27 February 2007.

Hong Kong’s Hang Seng index was up 0.62% or 128.72 points to 20,835.07

US stocks closed flat on Tuesday as investors locked in profit after five straight sessions of gains in blue chips, a day before Fed's meeting on interest-rate policy. The Dow Jones industrial average dipped 3.90 points, or 0.03%, to end at 13,309.07, after falling as much as 75 points.

The Standard & Poor's 500 Index slipped 1.76 points, or 0.12%, to finish at 1,507.72. But the Nasdaq Composite Index edged up 0.80 point, or 0.03%, to close at 2,571.75.

The improved sentiment forced traders to cover their short positions. Bears dominated the first half of the session, but sporadic buying since the afternoon session saw the bulls emerging victorious. Banking, auto and metal stocks led the recovery.

The 30-shares BSE Sensex settled 16.05 points higher at 13,781.51, after surging to 13,806.37. Earlier, the Sensex had opened weak at 13,709.95 as profit booking continued for the fourth straight session, pulling the benchmark index below the 13,700 mark to a low of 13,612.04.

The NSE Nifty gained 2.30 points to 4,079.30

The market breadth, which indicates the overall health of the market, recovered from the initial weakness arising from selling in small-cap and mid-cap stocks. On BSE, 1,396 shares declined as compared to 1161 that advanced. Prices of 102 stocks remained unchanged.

The BSE Mid-Cap Index ended at 5,792.15, gaining 12.33 points, or 0.21%, while the BSE Small-Cap Index lost 20.65 points, or 0.30%, to 6,918.60.

The total turnover on BSE amounted to Rs 4081.17 crore while the F&O turnover on NSE stood at Rs 31001.77 crore. Total market wide turnover amounted to Rs 43464.21crore, which is higher than Rs 40,927.59 crore on Tuesday.

The Sensex has been moving in a trading range of 13,700 and 14,300 points since the past few weeks and a breakout on closing basis, either way, is likely to provide future direction.

Traders are seen to be refraining from building fresh positions ahead of the crucial US Federal Reserve’s meeting today evening (IST). Fresh short positions in the futures and option (F&O) segment are said to have been built up on Tuesday, 8 May 2007, as the basis (the spread between futures and spot market) turned negative.

Among the 30-member Sensex pack, 21 advanced while the rest declined.

Meanwhile, the government has not taken any decision to allow foreign direct investment (FDI) in the retail sector, Finance Minister P Chidambaram told the Rajya Sabha today.

FDI was only permitted for cash-and-carry, wholesale and single brand retail.

FDI inflow of $13.5 billion in 2006-07 was the highest-ever.If retained earning and swap deals were to be included, FDI would be $19 billion.

India’s largest commercial bank State Bank of India (SBI) advanced 3.85% to Rs 1123 on 8.44 lakh shares, and was the top gainer. The stock surged after market rumors that CRR may be slashed shortly. ICICI Bank (up 1.25% to Rs 852) and HDFC Bank (up 0.71% to Rs 997) were the other gainers from the banking space.

Led by SBI, the BSE Bankex advanced 1.46% at 6,851.35, and was the top gainer among the sectoral indices on BSE. Federal Bank (up 5.31%), Bank of Baroda (up 2.93%), Canara Bank (up 1.98%), and PNB (up 1.81%), advanced.

Bike maker Hero Honda followed with a gain of 3.46% to Rs 703. The BSE Auto Index closed at 5,007.06 up 0.54%.

REL (up 2.81% to Rs 520), Tata Steel (up 2.11% to Rs 564.80), and Bajaj Auto (up 1.65% to Rs 2575), were the other gainers.

Ranbaxy Laboratories gained 1.35% to Rs 393.95. The pharma major is planning to invest around Rs 60 crore to upgrade the recently acquired Be-Tabs Pharma units in South Africa. With the revamp of the Be-Tabs facilities, the company expects to lead the way for generics manufacturing in South Africa, says a company statement. The acquisition substantially strengthens the basket of products that Ranbaxy brings to the market, specially in the acute and over the counter product streams.

Index heavyweight Reliance Industries (RIL) rose 0.27% to Rs 1598 on 6.38 lakh shares. It staged a smart recovery from a low of Rs 1577.25

IT major TCS was the top loser, down 2.04% to Rs 1242, on renewed selling. TCS, a leading global IT services, business solutions and outsourcing firm, announced its tie-up with Microsoft Corporation to deliver RFID (radio frequency identification) solutions to global companies. It launched an initiative to develop RFID solutions built on Microsoft BizTalk

Other shares from the IT pack were not spared either. Infosys (down 0.89% to Rs 1985) and Satyam Computers (down 1.12% to Rs 451.35) also declined. The BSE IT Index declined 0.92% at 4,887.62, and was the top maximum loser among the sectoral indices on BSE.

Cipla (down 1.77% to Rs 207.80), HLL (down 1.34% to Rs 191.90), and ONGC (down 1.21% to Rs 911), declined

Fears of backlash from the US pulled ONGC down by 1.31% to Rs 911, despite subsidiary ONGC Videsh, leading a consortium of Indian companies, striking large oil and gas reserves in a block in Iran.

Fortis Healthcare, which listed today, settled at Rs 100, a discount over the IPO price of Rs 108 per share. The stock debuted at Rs 105, and surged to a high of Rs 109.10. Its low for the day was Rs 97.90. On BSE, 1.38 crore shares changed hands in the counter.

Fortis Healthcare had priced its 4.59-crore equity shares at Rs 108. The price band for the IPO was Rs 92 to Rs 110 per share. The issue, which had opened for subscription on 16 April 2007 and closed on 20 April 2007, was subscribed 2.78 times. The qualified institutional buyers (QIB) portion was subscribed 2.72 times, non-institutional portion 1.74 times and the retail portion 3.26 times

TRF jumped 10% to Rs 684.85 after it reported a 147% growth in net profit in Q4 March 2007 to Rs 10.03 crore in Q4 March 2007. Sales rose 78.49% to Rs 141.61 crore. Net profit jumped 185.29% to Rs 20.17 crore in the year ended March 2007. Sales surged 60.33% to Rs 347.20 crore.

Biscuits maker Britannia Industries surged 5.1% to Rs 1450.50, extending its recent rally. The government has exempted from excise biscuits whose retail price does not exceed Rs 100 per kilo gram from the earlier proposal of excise exemption for retail price up to Rs 50 per kg. These changes were announced on 3 May 2007, when the Finance Bill 2007-08 was passed in Lok Sabha.

SKF India rose 4.94% to Rs 383.45. The stock rose ahead of its analyst meet scheduled later in the day. Last month, SKF India reported a 63% growth in net profit to Rs 36.66 crore in Q4 March 2007. Net sales rose 22% to Rs 359.82 crore.

Gas transmission firm GAIL (India) dropped 4.37% to Rs 280.40 even as it reported a 66.33% growth in net profit to Rs 680.73 crore in Q4 March 2007 as against Rs 409.26 crore in Q4 March 2006. Sales rose 6.11% to Rs 3883.41 crore, from Rs 3659.81 crore. Net profit rose 3.32% to Rs 2386.67 crore in the year ended March 2007 as against Rs 2310.07 crore during the previous year ended March 2006. Sales declined 1.86% to Rs 16047.18 crore, from Rs 16351.29 crore.

Dena Bank surged 6.65% to Rs 36.90 on reports that Canara Bank is contemplating a takeover and has reportedly appointed Ernst & Young to explore the possibility of acquiring Dena Bank. The chairmen of the two banks are said to be meeting shortly after which the matter would be taken up by the respective boards. The government holds a 73% stake in Canara Bank and 52% in Dena Bank.

State-run Syndicate Bank gained 4.80% to Rs 79.75 after it reported a 911.6% surge in net profit to Rs 104.30 crore in Q4 MArch 2007, from Rs 10.31 crore in Q4 March 2006. Total income edged up to Rs 1930.40 crore, from Rs 1255.06 crore. Advances grew 42%, whereas deposits were up only 4.4%. The bank's net profit jumped 33.47% to Rs 716 crore in the year ending March 2007. Total income increased to Rs 6659 crore, up 44.36% from FY 2006. Its capital adequacy ratio (CAR) stood at 11.74%. The gross non-performing assets (NPA) declined to 2.95%, from 4% in FY 2006. The net NPA was also down to 0.76%, from 0.86%.

Mid-Day Multimedia declined 5.70% to Rs 44.65,extending its fall triggered by the loss in Q4 March 2007. A couple of days ago, the company had reported net loss of Rs 2.89 crore in Q4 March 2007 compared to a net loss of Rs 0.36 crore in Q4 March 2006. Net sales rose 12.80% to Rs 27.85 crore (Rs 24.69 crore). Net profit fell 86.40% to Rs 1.10 crore in FY 2007 (year ended March 2007) compared to a net profit of Rs 8.09 crore in the previous financial year. Net sales rose 1.10% to Rs 105.94 crore (Rs 104.34 crore).

Tamil Nadu Newsprint & Papers gained 0.41% to Rs 85.45 after disclosing plans to set up a 400-tonne a day cement plant and an information technology park on surplus land. Kalindee Rail Nirman Engineers was up 1.10% to Rs 175 after it net profit surged to Rs 3.67 crore in Q4 March 2007 as compared to Rs 95 lakh in Q4 March 2006. Net sales rose to Rs 82.5 crore (Rs 40 crore).

Kirloskar Brothers edged up 2.81% to Rs 350 following its joint ventures with various firms bagging Rs 1338.90-crore contracts.

A crucial US Federal Reserve’s meeting today is scheduled in the evening (IST) today. It looks certain that Fed will hold interest rates steady when it meets and will likely restate worries on inflation, even while nodding to weak growth and an easing of price pressures.

The US central bank has held the benchmark overnight borrowing costs steady at 5.25% for six consecutive meetings stretching back to August 2006.

The Bank of England is seen lifting rates to 5.5% on Thursday, a move that would put British interest rates above those in the US for the first time since January 2006. The European Central bank (ECB) is expected to hold its rates steady at 3.75% on Thursday,10 May 2007, but signal a hike in June 2007.

FIIs remained in buying mode on the bourses on Monday, 7 May 2007. FIIs were net buyers of Rs 96.70 crore of equities on Monday, 7 May 2007. Domestic institutional investors were net sellers of Rs 124.54-crore equities on Tuesday, 8 May 2007.

Oil prices rebounded to above $65 a barrel on Wednesday, 9 May, as new attacks on Nigeria's oil industry deepened supply losses, interrupting a six-session losing streak that had driven prices to their lowest level since 26 March. London Brent crude was up 6 cents to $65.60 a barrel