Market Close: Volatile session with no clear direction

Market ended almost flat after witnessing some volatile session but was largly range bound throughout the day. Indices opened on a positive note but quickly slipped into the red zone as investors preferred to book profits at high levels. Absence of any positive cues saw the markets trade largely in the negative zone. Cautious approach by the investors also impacted the indices, which kept the bourses volatile. The market is all about greed and fear. There was greed couple of weeks back and now there is fear stalking on the street. There are some who believe that this time its different but really.. even we dont know and expect only time to tell us that. Sugar, Consumer durables and reality sectors outperformed with some value buying while those from the FMCG, Cement and Auto sectors were out of favour. Selective small and mid caps were able to attract buyers. European indices continued to trade in red.

Sensex closed lower by 16 points at 15000.91. Weighing on the Sensex were losses in ACC (990.3,-2 percent), HDFC (1941.3,-2 percent), Grasim (2878.7,-2 percent), HLL (200.05,-2 percent) and BHEL (1687,-1 percent). Losses were restricted by gains in NTPC (172.75,+3 percent), ONGC (853.95,+1 percent), HDFC Bk (1146.95,+1 percent), Hindalco (153.95,+1 percent) and Bharti Tele (857.75,+1 percent).

JK Tyres closed higher by 4% . For the June ended quarter, the company reported a sluggish top line growth as it witnessed a growth of just 4% YoY. The EBIDTA margins and the Bottom line levels for the quarter improved significantly on account of lower input costs. The proximity to OEM?s (Original Equipment Manufacturers) resulted in lower top line growth. The threat from Chinese imports have increased considerably for the company on account of higher dependence on OEM?s. JK has aggressive capex plans worth Rs.1,200 cr to boost up its presence in the industry. However, We believe that other players are better placed compared to JK. Do read our not to be published shortly on JK Tyres to know more.

Videocon is one of the largest electronic goods manufacturers in the country with the market share of 20%. Videocon has many brands under its kitty to cater to different segments of the industry. Brands owned by the company include Akai, Kelvinator, Sansui, Electrolux etc. The other business of the company include Glass manufacturing, Color picture tube manufacturing. and Oil and Gas exploration. Indian consumer goods is dominated by the Korean giants like LG and Samsung. The other big threat to the Videocon?s consumer durables business is from organized retail. The deep pockets of the organized retails entails them the pricing power. That will impact margins in the consumer durables business in the coming quarters. Do read our note on the company to know other investment arguments against Videocon. The stock was up by almost 3%.

The Company saw its Net Profit up by 46.7% At Rs 486.7 Cr Vs Rs 331.8 Cr (QoQ). Total Revenue was up marginally 2.2% At Rs 1,612 Cr Vs Rs 1,577.1 Cr (QoQ). The company had a Forex Gains of Rs 250 Cr which saved the company as its net profit increased. Rupee appreciation and marginal rise in expenses saw its Operating profit dropped by 5.3% to Rs 347.4 crore, while operating margin contracted by 170 basis points (bps) sequentially to 21.6%. Q4 saw 100 bps Impact due to rupee appreciation. Overall Dependence on US business has gone down by 2%. Forward cover stood at $1.1 bn at the end of June 07. The company?s BPO business continued to be more profitable than its consolidated IT services segment. For the year ended June 2007, consolidated net profit stood at Rs 1354.9 crore, up 75.1% against the previous fiscal. Consolidated revenue grew by 37.5%. to Rs 6,033.6 crore Operating profit for the year increased by 37.4% to Rs 1,337 crore while operating margins remained unchanged at 22.2%. Equity stands at 132.74 cr while the stock at its cmp of 316 trades at 16 times. The stock was up by almost 4% in the early trades but ended flat but in green.

Technically Speaking: Markets followed a volatile trend till the end of the today but within a narrow range. Sensex witnessed an intra day high of 15,070 and low of 14,965. Advances marginally outnumbered Declines. Volume for the day stood at Rs.4,030 cr. Sensex has failed to cross above the key resistance of 15060--15090 for the second consecutive day. On the lower side, a close below 14700 could bring in another downtrend upto 13600--13700 levels. The trend is sideways to down for now. Keep reading us for more views on the market.