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Tuesday, August 28, 2007

Tuesday Twist...Some profit booking likely


Our main business is not to see what lies dimly at a distance but to do what lies clearly at hand.

Monday's momentum resurrected the bulls. FII's opened their taps and liquidity flowed into the bourses. The Left leaders are prepared to have a joint mechanism at the political level to address the concerns and evaluate the implications" of the nuclear deal. Latest forecasts by international weather models indicate that the southwest monsoon may get active during the first week of September. But all that was yesterday.

Welcome to a new day which has less promises for the bulls. US indices fell after a disappointing existing home sales report. Dow and Nasdaq shed over half a percent each. But Asian stocks have revived erasing an earlier decline. Profits at China Life Insurance Co. and Foster's Group Ltd. resurrected hopes that regional earnings growth can withstand a US slowdown. The yen rose on speculation banks will report more credit-market losses, prompting traders to pare higher-yielding investments funded by loans in Japan.

Expect a cautious opening. Monday's momentum could bring a spurt at start but be prepared for profit booking. Select counters will continue to excel while a host of them may see some selling.

Dr. Reddy's could gain on reports that it may buy US-based Bradley Pharmaceuticals Inc. for as much as $300mn. Nicholas Piramal India Ltd on Monday said it planned to spin off its novel drug discovery unit as part of a restructure of its research and development. The board would meet on Aug. 31 to consider the proposal. Canara Bank will make an open offer for 51% stake in Can Fin Homes, a housing finance company.

The Nifty (August) future discount decreased to 7.3 points from 12.2 points and shed 13.81 lakh shares in open interest. Oil prices were steady at above $72 on Tuesday, with U.S. refinery shutdowns reviving supply concerns, just as the summer driving season draws to a close.

Vikas WSP was back on the bourses after six years ending the day’s session at Rs 36.22 on the BSE. Transactions in the stock were suspended in 2001 amidst allegations on misreported figures.

Shipping stocks could see some action as the new shipping policy is expected to be announced shortly and is awaiting Cabinet nod.

The proposals of ICICI Bank and State Bank of India to float holding companies for their insurance and asset management business may face regulatory hurdles, going by the Reserve Bank of India’s views expressed in a discussion paper on holding companies released on Monday. The Reserve Bank of India (RBI) expressed concern about aspects of bank and financial holding company structures in a discussion paper published with a view to reviewing how suitable they are for India. The RBI said the pace of growth in financial services had led banks to experiment with holding company structures not yet familiar in India

Reliance has delayed plans to open hundreds of supermarkets in the north and east of India days after Uttar Pradesh shut 10 stores following protests from small traders.

State Bank of India, said its board has given go ahead to the merger of State Bank of Saurashtra with itself.

Virinchi Technologies Ltd has informed BSE that the Board of Directors of the company approved the issue of Foreign Currency Convertible Bonds (FCCBs) up to $20 million and the
issue of preferential shares

The corporate credit rating of Tata Power Co. Ltd and its $300 million senior unsecured bonds have been lowered to BB- from BB+ on Friday by Standard and Poor’s Rating Services.

Reliance Industries is in advance talks with Concor for providing access to several infrastructural facilities, including 60 terminals across the country

Reliance Energy Ltd’s 4,000MW Raigad project may get delayed as the Bombay High Court put a stay on the construction activities

GAIL has sought a price review of gas produced by consortium of Reliance Industries Ltd, BG Group, UK, and ONGC from Panna-Mukta and Tapti fields

NIIT Technologies is scouting for acquisitions in the travel and transport spaces

Jet Airways is in talks with various airlines to offer connectivity from India to Europe and North Africa

Usha Martin has acquired DE Ruiter Staalkabel BV, Netherlands, through its wholly owned subsidiary for €3mn

RBI sanctioned the amalgamation of Lord Krishna Bank with Centurion Bank of Punjab

Hindustan Motors plans to launch premium segment sports utility vehicles in the price range of Rs1.5-2.5mn from the Mitsubishi stable within the next six months

Japan's Kobe Steel is likely to invest Rs6.2bn to build an iron nugger plant in Goa

IPCA labs and Central Drug Research Institute have entered into a collaborative-cum-license agreement for further development of compound 99/411

Venus Remedies signed an agreement with Pharma Match R&D BV, Amsterdam, for jointly preparing, registering and marketing an EUE-CTD dossier for a carbapenem injectible

Punjab Chemicals
and Crop Protection Ltd (PCCPL) has acquired the Netherlands-based Pegevo Beheer BV for €39.5mn.

Bulls were back on top after global markets recovered smartly in recent times following Fed decision to cut its discount rates and expectations of a further reduction in September. Key indices continuously gained ground throughout the day led by index heavyweights like RIL, ICICI Bank, L&T and Reliance Communication. Volumes also increased as turnover in NSE Cash segment rose 9.3% and in F&O segment increased by 21.7%.

Among the 30-scrips of Sensex 28 of them ended in green and only 2 finished in negative terrain. Ambuja Cement and Cipla were the two losers. Finally, the BSE 30-share Sensex closed at 14,842 surging 417 points. NSE Nifty added 112 points to close at 4302.

Reliance Industries advanced by 3.2% to Rs1833 on reports that it is entering the construction business. The scrip touched an intra-day high of Rs1840 and a low of Rs1792 and recorded volumes of over 20,00,000 shares on NSE.

Northgate Technologies gained by 3% to Rs1237 after the company announced that they would set up a subsidiary called Social Media India Ltd., to tap the online advertising and other internet transaction services industry. The scrip touched an intra-day high of Rs1250 and a low of Rs1214.

ICICI Bank advanced by over 6% to Rs883 after RBI announced on August 24 that overseas investors can buy more shares in ICICI after the overseas investment in the bank fell below the 74% limit. The scrip touched an intra-day high of Rs887 and a low of Rs852 and recorded volumes of over 62,00,000 shares on NSE.

L&T advanced by 3.3% to Rs2533 the nation's biggest construction and engineering company plans to spend Rs20bn on expansion this year. The scrip touched an intra-day high of Rs2539 and a low of Rs2450 and recorded volumes of over 6,00,000 shares on NSE.

SBI spurred by over 6% to Rs1815 after they announced that it approved the merger of State Bank of Saurashtra with itself. The scrip touched an intra-day high of Rs1835 and a low of Rs1762 and recorded volumes of over 8,00,000 shares on NSE.

Realty stocks were the pick of the day as the index was the top gainer rising over 5%. DLF gained 2.5% to Rs577, Unitech surged by over 7.5% to Rs491, Akruti gained by 2% to Rs517 and Sobha added 2.5% to Rs759.

Power stocks sparked up led by gains in Suzlon as the scrip was up by 3% to Rs1270, Tata Power gained by 1.7% to Rs690, Reliance Energy advanced by 3.7% to Rs762 and NTPC added 2.5% to Rs167.

Banking stocks were among the major gainers as the index surged by 4%. Index heavyweight, ICICI Bank surged by over 6% to Rs88, SBI spurred 6% to Rs1554 and HDFC Bank advanced 2.5% to Rs1119.

Auto stocks also were in top gear. TVS Motors jumped by over 6% to Rs60, Maruti gained by 5.5% to Rs833, Tata Motors surged by over 3% to Rs675 and M&M added 3% to Rs658.

For the near term, the action is likely to be more stock specific based on corporate announcements. However, the mood is still jittery as the bulls, having burnt their fingers badly, are thinking twice before making a fresh investment commitment. One can understand the dilemma the bulls are facing, as FIIs have pulled out heavily in last few trading sessions. On the other hand, the Mutual Funds have grabbed the opportunity and have aggressively picked up stocks This reverse strategy adopted by the two group of institutions could also be keeping many investors guessing on the near-term direction of the market.

Fund Activity:

FIIs were net buyers of Rs6.9bn (provisional) in the cash segment on Friday and the local institutions pumped in Rs1.9bn. In the F&O segment, FIIs were net sellers at Rs5.1bn. On Thursday, foreign funds bought Rs4.1bn from the cash segment.

Major Bulk Deals:

HSBC Financial Services sold Futura Poly. Newly-listed Take Solutions was bought by Matrix Equitrade and Reliance Mutual Fund.

Lower Circuit:

IOL Broadband and Empire Industries, Bellary Steel.

Upper Circuit:

Atlanta, Bartronics, Asian Electricals, Tourism Finance, Zuari Industries, ETC Networks, Amaraja Batteries, Ganesh Forgings, Kothari Products, Goderej Industries, Prime Focus, Yashraj Industries, Bilcare, Era Construction, Bag Film and Prakash Industries

Delivery Delight (Rising Price & Rising Delivery):

Cummins India, Hero Motors, ICICI Bank, M&M, Punj Lloyd

Abnormal Delivery:

Reliance, IVRCL, Arvind Mills, Hero Honda Motors and Shree Cement.

Major News & Announcements:

TCS
signs pact for IT, Infrastructure services with Hawaiian Airlines.

Omax Auto Board to consider Right Issue on September 1

Swaraj Mazda Board approves right issue to raise Rs1.2bn

Parsvnath secures redevelopment project for Mahim Bus terminus
GMR Infra gets 180MW Bajoli Holi Project

McNally Bharat gets Rs898.6mn from Mazagaon Dock

KLG Systel acquires 51% of Atlantis lab

Punjab Chemical unit to acquire Pegevo Beneer Stock

Usha Martin acquires business of DE Ruiter Staalkabel B.V, Netherlands

Venus Remedies starts venture with Pharma Match R&D B.V,

Subex Azure has bagged a contract from Global Vision Telecom in Nigeria to deploy its telecom solutions for a CDMA network in Congo
McNally Bharat Engineering Company Ltd, has secured an order from Mazagon Dock for supplying a crane valued at Rs898.6mn
Gati Ltd has entered into an agreement with Kausar India Ltd (KIL) for acquisition of 2mn shares at Rs72.8 per share
Bhushan Steel and Strips Ltd plans a four-fold expansion from present capacity of 1mn tons in the next five years for an
investment of over Rs150bn in 10 years
Fortis Healthcare is investing Rs8bn to set up a seven-star 950-bed medicity in Gurgaon
JSW Steel is planning to expand its capacity to 30mn tons in next ten years
Swaraj Mazda board has approved a Rs1.2bn rights issue