Market Close: Sub prime worries hits India too!

Firm global cues fueled the Indian indices to continue yesterdays euphoria, but profit booking oflate kept the indices down and closed in deep red. Asian markets closed mixed. Indian indices started the day on a strong note and traded ranged till mid session. But the news on BNP Paribas, France's biggest bank freezing 3 Asset Backed Funds on US Subprime losses saw some volatility there after. As result of this European markets opened in red and weighed on Indian indices too. Sensex lost more than 500 points from days high. All the sectors closed in red, Consumer Durables, Oil & Gas, FMCG and IT were the worst hit. Mid and Small caps were also not spared from the selling pressure and ended in line with frontline indices.

Globally Speaking: Some reports suggest that the Chinese government has begun a concerted campaign of economic threats against the United States and has hinted that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation. For now it is just warning. Lets see how this pans out and how market will react to this.

Sensex closed down by 208 points at 15100.15. Weighing on the Sensex are losses in Hindalco (156,-4 percent), SBI (1649.6,-3 percent), Rel Energy (757.9,-3 percent), Ranbaxy (371.6,-3 percent) and Satyam (467.1,-3 percent). Losses are restricted by gains in Dr Reddys (638,+1 percent), BHEL (1733.05,+1 percent), Cipla (188,+1 percent), ICICI Bk (890.25,+1 percent) and Wipro (478,+0 percent)

Orbit Corp. sold the land to JSW for a super Rs 300 crore profits. OCL is a niche real estate company with a business of redevelopment of dilapidated buildings. OCL has 15 projects in hand with a saleable area of 1,1 lac square feet. and no land bank. OCL is the only company to offer warranties against defects in construction. The story about the sale was doing rounds and the speculators were expecting Rs 900 crores as well. So in a sense the sale price news is a let down. However all in all its a good deal for orbit but these kinds of profits do not entail a P/E multiple as its a one time gain. One needs to see the sustainable business value and that most likely has been surpassed in the recent rally. As result of this the stock rallied up by 14%, closed at Rs 450.

Last week in South India cement prices increased by Rs 3-5 per bag. The major players in south like ACC, India Cement, Kesoram and Madras Cement are the major beneficiaries. Due to huge demand even in the monsoon season one can again expect the price to be hiked in coming months. ACC reported almost 15% yoy growth in July month's despatches. The company's production has grown by 11% in July to 1.63 mn tonne from 1.47 mn tonne a year ago. During January - July, the company's production was at 11.84 mn tonne against 11.15 mn tonne in the same period a year ago and despatches rose to 11.84 mn tonne from 11.10 mn tonne as compared to same period a year ago. Due to strong demand even in mansoon season we expect the companyes to deliver good resutl in coming quarters. We are positive on this sector, one can look for down side for investment opportunities. All the cement stocks ended in red. ACC closed down by 2.41%, India Cement down by 3.23%.

Technically Speaking: Sensex started the day on a strong note but late panic selling session saw it end in deep red. Sensex touched an intraday high of 15542 and low of 15062. Market turnover was good at Rs 5036 cr. Overall breadth was in favor of Declines, where the Advances to Declines ratio stood at 1:1.6. Sensex looking to retest supports near 14850-14900. Medium term trend will turn negative if the supports of 14700-14735 is broken