Market Close: weak and volatile as expected ahead of FNO expiry

Market saw selling pressure throughout the day. Sensex traded volatile swinging in both directions but was mostly in the red zone. Not much support was seen from global markets as all Asian and European markets were in negative zone except China which remained in the positive territory. Investors were cautious ahead of expiry of June 2007 derivatives contracts and the market may be volatile also tomorrow. Some buying was seen in the IT on the back of some Rupee weakness which traded at Rs 41 against the Dollar. Auto, Metal and PSU sectors were out of favor and attracted selling pressure. Mid and Small caps gained marginally as investors preferred to play safe while went on for profit booking in the heavyweights.

Sensex ended down by 70 points at 14431.06. Weighing on the Sensex were losses in NTPC (150.2,-2 percent), RCVL (514.95,-2 percent), Rel Energy (578.2,-2 percent), ACC (829.8,-2 percent) and Tata Motors (671.9,-2 percent). Losses were restricted by gains in Satyam (468.05,+3 percent), TCS (1133,+1 percent), Hero Honda (675.75,+1 percent), Infosys (1936.2,+1 percent) and Dr Reddys (653.65,+1 percent).

Tata Power jumped as it announced the acquisition of 30% equity stakes in major Indonesian thermal coal producers, PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia as well as related trading companies owned by PT Bumi Resources Tbk. Tata Power in order to complete the acquisition has taken a loan facility from a group of banks led by Barclays Bank for $ 950-million. As part of the purchase, Tata Power has signed an offtake agreement with KPC which entitles it to purchase about 10.1 million tonnes of coal per annum for an initial period upto 2021 which is extendable thereafter. This purchase supports the company's upcoming power projects on the West Coast of India comprising 7,000 mega watt (MW) which is to be developed over the next 5 years. These projects will require approximately 21 million tonnes of imported coal and these acquisitions would serve well.

Austin Engineering the manufacturer of specialty bearings reported good results. Ebidta margins up 400 bps despite higher exports (50% o f revenues). The rupee was strong and that would have hit into the margins as well. At the current market price of Rs 101, stock trades 6 times of FY 2006-07 earnings. Future seems to be good but the only risk in the business is slow down globally and an appreciating Rupee. We remain positive on this company The stock ended up by almost 2%. We had a research note here.. Do read.

KazStroyService PLC has made an open offer to the shareholders of Petron Engineering Construction Ltd to acquire 1,507,680 fully paid up equity shares of Rs 10 each or 20% of the share capital at Rs 180 per share. The offer opens on August 14 and closes on September 3 with the specified date being June 25. The shares ended the day marginally down.

Technical Speaking: Markets traded in a volatile manner as the F&O expires tomorrow. Sensex touched an intraday high of 14520 levels and low of 14407 levels. Volumes were good as the market churned almost Rs. 4685cr. Overall breadth was in favor of Declines, where the Declines were 1355 against of Advances 1266. Sensex held on to our support level of 14420 and closed slightly higher. We maintain that the level of 14400--14420 will play a crucial role in tomorrow's expiry, below which we might move, upto 14315 and 14170 levels.