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Thursday, August 09, 2007

Bulls persist, investors resist


By persisting in your path, though you forfeit the little, you gain the great.

The bulls appear to be on the rampage thanks to the soothing remarks from the American central bank which has lifted the s entiment across the globe. The Dow posted a triple-digit gain while the Nasdaq was up 2%, on the back of Cisco's strong earnings. Stocks also rose in Europe and other emerging markets. Asian markets have opened higher as well.

We are looking at yet another good day for the bulls. However, some degree of caution is warranted following the steep appreciation from the lows of February-March. Lack of breadth in evident in the current rally as only a handful of shares are pushing the main indices. Switch to a stock specific approach and don't get too carried away by the headlines (including ours) about the daily movement in the indices.

Investors may also be debating on the impact of the revised ECB norms. Though its good for export-centric sectors like IT in the near term, some are worried about its fallout on the capex plans of Indian companies.

Shares of realty major Omaxe will be listed on the bourses. The Omaxe issue was heavily subscribed. So, the stock is likely to do well. Premium heard on the street is Rs90-100 and may be a little above that.

Tata Tea should be in the limelight as a business newspaper reports that it is now eyeing US-based beverage firm Arizona. According to the paper, the Tata Group company is likely to mount a $2bn bid for Arizona. Telecom companies will be in action amid reports that the regulator TRAI is toying with the idea of scrapping the 10% cap on cross holdings in two operators in a single circle.

Phoenix Mills has reportedly sold a 25% stake to a clutch of investors for Rs13bn. India Glycols could be under pressure as a financial daily says that European authorities have found high level of dioxin in the shipment of guar gum from the Indian company. Steel and Cement shares could gain from a report that the Railways will not impose the 15% peak season surcharge on freight cost.

Public sector banks will attract attention as a newspaper report says that the government could allow them to go for stock split. Shoppers' Stop is another stock that might gain amid a report that the K Raheja Group has lined up a war chest of Rs15bn on hypermarkets and convenience stores. Jai Corp, which has been hitting upper circuits off late, may continue its good run as its Board is to consider a bonus today.

Supreme Petro is likely to rise ahead of its results. Its Board will also consider the merger of subsidiary viz. SPL Polymers with the company. Greaves Cotton has inaugurated its Light Engines Manufacturing Unit at Aurangabad. This unit will manufacture twin cylinder engines and transmission packs. Aegis Logistics' Board will meet on August 10, to consider the scheme of arrangement for acquisition of an undertaking.

Modern Dairies is likely to be in the limelight amid a report that Reliance Industries is likely to acquire an equity stake in the Haryana based company. The stock has more than doubled in the last month. It was up 5% yesterday.

US shares rallied on Wednesday, with the Dow Jones Industrial Average registering a triple-digit gain after Cisco raised its sales forecast and concerns eased on the crisis in the subprime mortgage and credit markets.

Merrill Lynch and Morgan Stanley helped lead the Standard & Poor's 500 Index higher for a third day after a Citi analyst recommended buying the shares. Cisco, the world's largest maker of computer-networking equipment, climbed to a six-year high after saying demand for Internet gear increased.

The S&P 500 rose 20.78 points, or 1.4%, to 1497.49. The Dow Jones gained 153.56 points, or 1.1%, to 13,657.86. The Nasdaq Composite Index added 51.38 points, or 2%, to 2612.98, its biggest advance since October.

Stocks were up for most of the session, but retreated a little in the last half hour of trading amid market rumors that investment banking titan Goldman Sachs may make an announcement related to one of its hedge funds.

Also helping drive stocks higher were signs that recent troubles in the credit markets were subsiding. President George W. Bush and Treasury Secretary Henry Paulson both sought to sooth worries over the subprime mortgage turmoil, stating that the US economy was on a sound footing.

Treasury prices slumped as investors poured into the stock market, lifting the yield on the benchmark 10-year note to 4.86%, up from 4.77% late on Tuesday.

Oil prices retreated on a surprise decline in gasoline inventories in the weekly US inventory report. US light crude for September delivery fell 22 cents to $72.20 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 18 cents higher at $72.33 a barrel in extended trading in Asia.

The dollar edged lower against the euro and climbed versus the yen. COMEX gold for December climbed $4 to $686.30 an ounce.

European shares advanced for a second straight session. The pan-European Dow Jones Stoxx 600 index advanced 2% to 381.18. The UK's FTSE 100 closed up 1.4% at 6,393.90, the German DAX rose 1.3% to 7,605.94 and the French CAC-40 advanced 2.3% to 5,749.29.

Major Latin American markets also rose. Brazil's Bovespa climbed 2.7% to 55,241.37 and Mexico's IPC rose 1.2% to 30,595.07. Chile's benchmark IPSA index closed up 1% at 3,287.87 and Argentina's Merval rose 1.7% to 2,158.44.

Most Asian markets were trading sharply higher this morning. The Nikkei in Tokyo jumped by 212 points to 17,240 while the Hang Seng in Hong Kong climbed by 153 points to 22,689. The Kospi in Seoul was up 9 points at 1913 and the Straits Times in Singapore gained 111 points at 3413.

The Morgan Stanley Capital International Asia-Pacific Index added 0.8% to 153.67 at 10:42 a.m. in Tokyo, with more than two stocks advancing for each that fell. All 10 industry groups included in the benchmark advanced. All Asian markets open for trading advanced.


Momentum likely to continue

Benchmark Sensex once again managed to settle above the 15300mark led by gains in the IT, Banking stocks following the tightening of ECB norms, which will result in lesser dollar inflows. Bulls kept their flag high right from the opening bell following overnight gains in the US Markets and firm Asian and European Markets. The rally was also backed by a sharp jump in volume and improvement in market breadth. Fed’s decision to keep interest rates steady at 5.25% also boosted the sentiments on D-Street aiding Sensex to hit a high of 15340 finally closing at 15307 and NSE-50 added 105 points to close at 4462.

Bharti Airtel gained by 1.2% to Rs886 after unit of India's biggest mobile-phone service provider Bharti Telemedia, plans to start a DTH satellite television service by March 2008. The scrip touched an intra-day high of Rs890 and a low of Rs878 and recorded volumes of over 4,00,000 shares on NSE.

IFCI was down by 1.8% to Rs64 after RBI said overseas investment in shares of the company has reached 22% trigger limit, two percent below the buying limit. The scrip touched an intra-day high of Rs67 and a low of Rs64 and recorded volumes of over 5,00,00,000 shares on NSE.

Opto Circuit gained by 1.5% to Rs450 after reports stated that the company would set up SEZ near Mysore. The scrip touched an intra-day high of Rs456 and a low of Rs438 and recorded volumes of over 4,00,000 shares on NSE.

Axis Bank (formerly know UTI Bank) was up by 2% to Rs625 after the company formed Venture with Shinsei Bank for Asset Management The scrip touched an intra-day high of Rs631 and a low of Rs613 and recorded volumes of over 7,00,000 shares on NSE.

PVR gained by 2.6% to Rs214 after the company announced that it would open multiplexes in Ludhiana and New Delhi on August 10. The scrip touched an intra-day high of Rs219 and a low of Rs205 and recorded volumes of over 31,000 shares on NSE.

PSL advanced by 2% to Rs329 after the company announced yesterday won order of Rs1.65bn from IOC. The scrip touched an intra-day high of Rs338 and a low of Rs327 and recorded volumes of over 67,000 shares on NSE.

IT were in limelight as rupee declined the most in two months on concern, capital inflows from abroad will slow after the government imposed curbs on overseas borrowings by Indian companies. Index heavyweight Infosys led from front as the scrip was up nearly by 5% to Rs1967, Satyam Computer surged by 3.5% to Rs479 and TCS advanced by 4% to Rs1152. Polaris, Mastek, HCL Tech were the major gainers among the Mid-Cap stocks.

Textile stocks also were in momentum on back of tightening in ECB norms. Among the Textile stocks, BRFL rallied by over 7% to Rs217, Arvind Mills advanced 3% to Rs45 and Century Textile added 1.5% to Rs721

Fertilizers stocks recorded smart gains after Prime Minister Dr. Manmohan Singh said that he existing subsidy system may have to be reviewed in the future, the government is committed to the present system and will ensure that adequate funds are available to meet the requirements this year. Nagarjuna Fertilizers surged nearly by 6% to Rs25, Chambal Fertilizers was up by 2%to Rs34 and Deepak Fertilizer has added 3% to Rs105.

Auto stocks were in top gear led by gains in the index heavyweights like Hero Honda gained by 4% to Rs679, M&M was up by 1.7%to Rs689, Tata Motors edged higher 0.3% to Rs658 and TVS Motors added 1.8% to Rs57.

Capital Good stocks were also trading higher. ABB surged by 1.8% to Rs1135, Gammon India gained by 2.5% to Rs451, BHEL was up by 2.4% to Rs1712 and L&T added 1.5% to Rs2492.

Realty stocks continued its northward journey as the index added 1.77%. DLF gained by 2%to Rs600, Parsvnath was up by 3.7% to Rs342; Unitech advanced by 1.7% to Rs527 and Sobha added 2% to Rs851
.

Fund Activity:

FIIs were net buyers of Rs869.6mn (provisional) in the cash segment yesterday. While the local institutions pumped in Rs2.16bn. In the F&O segment, FIIs were net buyers at Rs25.27bn. On Tuesday, foreign funds offloaded stocks worth Rs1.24bn from the cash segment. Mutual Funds were net sellers at Rs52mn on the same day.

Major Bulk Deals:

Merril Lynch has bought Arihant Foundation while Bear Steans has sold the stock;
Merrill Lynch has picked up Cinemax while Bear Stearns has sold it; UBS Securities has
purchased Genus Overseas from Bear Stearns; UBS has bought Hexaware from Bear
Stearns, Reliance Capital has purchased Hinduja TMT; Goldman Sachs has sold Sujana
Metal and Merrill Lynch has sold Suryachakra Power.

Insider Trades:

Vimta Labs Limited: SBI One India Fund has purchased from open market 459633 equity shares of the company on 6th August, 2007.

Lower Circuit:

Murli Industries and Marathon Nextgen.

Upper Circuit:

Tanla, Hindustan Organics, ETC Networks, Ganesh Forgings, Shree Ashtavinyak,
Atlanta, Jai Corp, Hindustan Oil Exploration, Radha Madhav, Balasore Alloys, Swan
Mills, Flawless Diamond, Tanla, Global Broadcast, Bank of Rajasthan, ERA Construction,
Taneja Aerospace, ION Exchange, IID Forgings and BF Utilities.

Delivery Delight (Rising Price & Rising Delivery):

Sun Pharma, Sintex, M&M, Gujarat NRE Coke, Maruti, Ranbaxy, TCS, Cummins, BILT,
Andhra Bank and ABB.

Abnormal Delivery:

Reliance, Ultratech, Sintex, NDTV, Yes Bank, Chennai Petroleum and Jindal Steel.

Major News & Announcements:

PM Singh says Fertilizer Subsidy system may be reviewed in Future

Finance Minister says, India has no plans to further regulate 'participatory notes'

Tata Power to invest Rs26bn this year for expansion

Reliance Communication completes 5% private placement in Reliance Telecom Infrastructure

RIL's Mumbai economic Area to be reduced – Reports

PVR to open multiplexes in Ludhiana and New Delhi on August 10

JSW Steel to buy Land in Mumbai for Rs7.5bn – Reports

ESS DEE Aluminum to sell 1.41mn shares to Morgan Stanley at Rs575 per share

UTI and Shinsei Bank forms Venture for Asset Management

Opto Circuit to set up SEZ near Mysore