Bulls search for direction
Direction is more important than speed. We are so busy looking at our speedometers that we forget the milestone.
Euphoric bulls seem to be losing conviction at higher levels. Though close to the Sensex' all time high, the bulls now seem to be asking for directions after having raced ahead this far. On Tuesday, the key indices managed marginal gains after a dull and choppy day. Late surge in a few index heavyweights like Reliance Industries and Bharti Airtel did the trick for the bulls. The Nifty hit another lifetime high and the Sensex took another step towards a new historic peak. The market breadth was negative though, with the small- and mid-cap counters cooling off after the recent rally. The near term outlook remains positive on the back of the renewed spurt in FII inflows and benign global markets though rising oil prices are a cause for concern.
Today we expect a cautious opening and another volatile day as the bulls seem to be losing steam at higher levels. Having said that if foreign money keeps pouring in the current rally may sustain for some more time, at least till the Sensex nears 15k. There is a case for a healthy correction but going by the strong undercurrent that may still take a while. Still, one must be prepared for the worst case scenario. As a result, some profit booking is warranted at every rally.
FIIs were net buyers of Rs341bn (provisional) in the cash segment yesterday while the domestic institutions pumped in Rs1.28bn. In the F&O segment, FIIs were net sellers to the tune of Rs3.21bn. On Monday, FIIs pumped in Rs4.78bn in the cash segment. Mutual Funds brought in Rs3.14bn on the same day.
The derivative contracts in NAGARFERT, ARVINDMILL, IFCI and JPHYDRO have crossed 95% of the market-wide position limit and are currently in the ban period.
The IPO of Time Technoplast has been subscribed 4.8 times.
ICRA may see some action as the credit rating agency declares its results today. Nicholas Piramal is expected to witness some buying over the next few days. Bata India may attract some attention amid reports that the company is in talks with Reliance Retail for a strategic alliance. We must add here that the company has denied any such move.
Tata Tea may continue to hog the limelight as newspaper reports say the company is considering various options with regard to its 30% stake in Glaceau. Fortis may continue to hog the limelight amid the ongoing tussle between the management and renowned cardiac surgeon Dr. Naresh Trehan.
Bhushan Steel may rise as a business daily reports that it will buy a 15% stake in Australian exploration company Bowen Energy.
On Wall Street, the Nasdaq Composite index rose on Tuesday, ending at a new six-year high. But, the S&P 500 index and the Dow Jones Industrial Average couldn't quite manage new all-time records. M&A news and falling oil prices helped support stocks, but gains were capped by the recent rally.
Financial and real-estate companies led most US stocks higher for a third day after Treasury Secretary Henry Paulson said that the slump in housing is largely over.
The Dow fell by 2.93 points to 13,539.95. The S&P 500 finished flat at 1524.12. The Nasdaq added 9.23 points, or 0.4%, to 2588.02, aided by Intel. The Nasdaq posted its third consecutive gain.
After the close, Alcan's Board asked the company's shareholders to turn down a $28bn unsolicited offer from Alcoa, saying the amount was too low.
US light crude oil for June delivery fell $1.30 to $64.97 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 12 cents higher at $65.63 a barrel in extended trading in Asia.
COMEX gold for June delivery fell $3.90 to settle at $659.90 an ounce. Treasury prices slipped, raising the yield on the 10-year note to 4.83% from 4.78% late on Friday. In currency trading, the dollar gained versus the euro and the yen.
European stocks ended mixed. The pan-European Dow Jones Stoxx 600 index rose 0.1% to 393.41. The German DAX Xetra 30 closed up 0.5% at 7,659.39. The French CAC-40 finished virtually unchanged at 6,089.72 while UK's FTSE 100 slipped 0.5% to 6,606.60.
In the emerging markets, the Ibovespa in Brazil fell by 0.4% to 52,208 while the IPC index in Mexico gained 0.3% to 30,802 and the RTS index in Russia shed 0.3% to 1860.
Asian markets were trading mixed this morning. The Nikkei in Tokyo was up 60 points at 17,740 while the Hang Seng in Hong Kong was flat at 20,837. The Kospi in Seoul added 2 points at 1645 and the Straits Times in Singapore advanced 7 points to 3547.
The Morgan Stanley Capital International Asia-Pacific Index rose 0.4% to 150.00 at 11:42 a.m. in Tokyo, adding to a two-day, 1.4% rally. The benchmark is less than 0.1% below a record close of 150.12 set May 9. Benchmarks in Malaysia and the Philippines declined. Other markets open for trading advanced.
Markets ended on a flat note as the key indices were unable to find any specific direction throughout the trading session. After registering a positive open the markets instantly lost ground as markets cooled off on back of selling pressure in the index heavy weights like Bajaj Auto, SBI, Infosys and ONGC. However, markets gained momentum towards the fag end of the session as frontline stocks like Reliance Communication, ACC, BHEL and Reliance Industries aided support lifting the key indices to close with a positive bias.
BSE Capital Good, FMCG and Pharma index led from front however, bank and IT dragged. Even the Mid-Cap and the small cap index ended flat except for select scrip’s like BRFL, Educomp Solution, Aftek Ltd and Ceat Ltd which completely outperformed the indices. Finally, the 30-share Sensex ended flat at 14417 gaining 35 points. NSE-50 Nifty gained 17 points ending flat at 4278.
ABB gained by 1.4% to Rs4343 after the company announced that they have won order of Rs2.89bn for Delhi Metro. The scrip touched intra- high of Rs4368 and a low of Rs4211 and recorded volumes of over 65,000 shares on NSE.
Reliance Communication surged by over 3% to Rs523 after the company announced hat they would cut roaming rates by 70%. The scrip touched intra- high of Rs526 and a low of Rs505 and has recorded volumes of over 82,00,000 shares on NSE.
Bharat Forge gained 1.9% to Rs340 after the company announced its Full Year result with profit at Rs2.41bn (up 16%) and net sales atRs18.6bn (up 17%) and also would pay dividend of Rs3.5 per share. The scrip touched intra- high of Rs344 and a low of Rs335 and recorded volumes of over 16,00,000 shares on NSE.
Motherson Sumi rallied by over 19% to Rs133.15 after the company would consider bonus share plan on 26th May. The scrip touched intra-high of Rs133.50 and a low of Rs109 and recorded volumes of over 4,00,000 shares on NSE.
EKC gained momentum towards the fag end of the session the scrip wiped off all its losses and closed at Rs1155 gaining 0.8%. The company announced that it would split each share into five. The scrip touched intra- high of Rs1177 and a low of Rs968 and recorded volumes of over 5,00,000 shares on NSE.
Pharma stocks looked in good health led by gains in Sun Pharma, the scrip gained by over 2.3% to Rs1090, Dr Redy’s Lab was up by 0.6% to Rs662, Cipla edged higher by 0.2% to Rs208 and Cadila advanced 1.5% to Rs334.
Capital Good stocks were a mixed bag. Gammon India gained by 1.4% to Rs400, BHEL was up by 1.9% to Rs2679 and Punj Lloyd advanced 1.5% to Rs183. However, L&T marginally dropped by 0.2% to Rs1733.
Technology stocks yet again witnessed a selling pressure as the dollar continues to weaken against the India rupee currently at Rs40.55 per dollar. Index heavy weight Infosys slipped by 0.8% to Rs1946, Moser Baer was down by over 3.5% to Rs442, HCL Tech dropped 1.6% to Rs344 and Mastek declined 3.6% to Rs305.
FMCG stocks were a mixed bag. ITC slipped by 0.2% to Rs170, Marico lost 2.4% to Rs58. however, HL has gained by 0.6% to Rs194, Tata Tea was up 4.5% to Rs878 and McDowell added 5.7% to Rs1244.
Insider Trades:
Aptech Limited: UBS Securities Asia Limited - A/C Swiss Finance Corporation (Mauritius) Ltd has sold in open market 457128 equity shares of Aptech Limited on 16th May, 2007
The Great Eastern Shipping Co. Limited: Bharat K. Sheth, Deputy Chairman & Managing Director has purchased from open market 32683 equity shares of The Great Eastern Shipping Co. Limited on 17th May, 2007
Gujarat Ambuja Cement Ltd: Shri P B Kulkarni, Director has sold in open market 14000 equity shares of Gujarat Ambuja Cement Ltd on 16th May, 2007.
Sectoral Movement:
BSE Capital Good index was the major gainer and gained 0.56%, BSE FMCG index (up 0.50%), BSE Pharma index (up 0.43%) and BSE IT index (up 0.46%) were among the other major gainers. However, BSE Bank index lost 0.28%.
Volume Toppers:
RNRL, TTML, SAIL, RPL, Balrampur Chini, Gujarat NRE, R Com, Zee News, Reliance Capital, IDFC, Ashok Leyland, Cairn, Balaji Telefilms, NTPC, Reliance Industries, Voltas and Century Textile.
Upper Circuit:
Raj Tele, Goldstone Tech, Global Broadcast, GHCL, Gujarat NRE, Shyam Tele, Texmaco, KEI Industries, Mefcom Agro and MLL
Delivery Delight:
Apollo Tyres, ACC, BEL, Century Textiles, Grasim Industries, Hero Honda, HDFC, Tata Chemicals, Tata Power and UTI Bank.
Abnormal Delivery:
Moser Baer, BILT, Bajaj Auto, Polaris Software, Punjab Tractors, Andhra Bank, Sundram Fasteners, Federal Bank, ONGC and Escorts.
Stock Futures with largest increase in OI:
Ansal Property, Indian Overseas Bank, R Com, OBC, EKC, Satyam Computer, United Spirits and VSNL.
Stock Futures with largest decrease in OI:
Corp Bank, Indian Bank, Jindal Stainless, Sobha Developers, Rajesh Exports, Bajaj Hindusthan and Titan.
Results Today:
Divi's Lab, Gemini Communication, KS Oils, Matrix Labs, MRO TEK, Munjal Showa, NIIT Tech, ORG Informatics, Karur Vysya Bank, PNB, Swaraj Engines and Torrent Pharma.
Results Corner:
Bharat Forge Full year profit at Rs2.41bn (up 16%), Full Year net sales atRs18.6bn (up 17%) and to pay dividend of Rs3.5 per share
Brokers Recommendations:
Bharti Airtel – Buy from CLSA with target of Rs915
EKC – Book Profits from Kotak
Long Term investment:
HCL Tech
Major News Headlines:
Tata Steel gets nod from Vietnam Govt to build steel plant
TV18 and Viacom announce 50:50 joint venture in India, called Viacom-18
R COM cuts roaming charges by 43% on incoming calls
Polaris signs agreement with Ementor, Denmark
ABB wins order of Rs2.89bn for Delhi Metro
i-flex Consulting wins order from Public Bank
EKC to split each share into five
Motherson Sumi to mull bonus share plan on 26th May
Calsoft to acquire 51% stake in Aspire Communications