Market Close: Sheds after 17k..

An historic session for Indian market as Sensex crossed 17000 levels successfully. It was stunning day where Sensex zoomed to over 17000 mark in opening trade. It took just 6 days to move from 16000 to 17000. However, the indices could not sustain at higher levels ahead of FNO expiry, closed with modest gains. Markets started the day on a fair note but indices displayed a volatile session. After touching all time high indices could not sustain and profit booking engulfed to bring it down. Auto, FMCG, Capital Goods, FMCG, Energy and Realty stocks ended in red. Despite the Rupee appreciation investors preferred to buy IT stocksahead of their results and the Banking stocks were also in favor. More interest was seen in mid and small caps compared to front line stocks and outperformed the day. Reliance Industry the Oil major reported that the company is likely to close Reliance Fresh stores in UP, Noida and Ghaziabad, as result of this stock slipped to end 3.36% down. Asina Indices ended in green but China closed in red while Europe trading in green.

Sensex Ended up by 22 points at 16921.391. It was helped up by gains in Satyam (431.3,+5 percent), Wipro (454.6,+4 percent), TCS (1041,+4 percent), HDFC (2476.8999,+3 percent) and Infosys (1824.3,+3 percent). Restricting the gains are Rel Energy (1026.2,-6 percent), RIL (2321.95,-3 percent), Maruti (962.25,-3 percent), NTPC (191.5,-2 percent) and HDFC Bk (1374.75,-2 percent).

L.G.Balakrishnan & Bros Ltd (LGB) is a leading manufacture of wide range of Auto components. The company has 5 manufacturing plants located at Coimbatore, Dindugal, Karur, Bangalore and Mysore. LGB manufactures Automobile Transmission and Industrial chains and Rubber Belts which are used in two and four wheelers and sold under the popular brand name 'ROLON'. LGB delivered healthy results for Q1. The Revenues grew by 9% to Rs 121 cr from Rs 111 cr on yoy basis. The Bottom line enhanced by 31% to Rs 3.4 cr from Rs 2.6 cr on yoy basis. The Ebidta grew by 14% to Rs 17 cr vs Rs 15 cr on yoy. The Ebidta margins unchanged at 14%. Valuation seems to be attractive at current market price of Rs 27, the stock trades at 10 times trailing earnings. Future seems positive for long term though near term risk exists from the slow down in Auto sector demand. The high interest cost will hit the company's bottom-line. LGB could see pressure on margins on account of intense competition and price of steel, the key raw material. We are positive about this chain and sprocket business. There are over 40 mn motorcycles on the road and the chains and sprocket set needs to get replaced every 30-40 months. This business should keep growing. For those with a long term view point it may make sense to accumulate.

The Essar Group has placed an order for ABG Shipyard for 6 supramax bulk carriers at an investment of $210 million (Rs 840 cr). These bulk carriers are of 54,000 dwt each priced at $35 mn each (Rs 140 cr). Essar informed that it would have cost more $ 25 mn (Rs 100 cr) if it placed to other oversea yards. The vessels will be delivered between December 2009 and March 2011. The current order book for ABG is Rs 6340 cr. The order book to sales is 9 times. At current market price of Rs 649, stock trades at 27 times of trailing earnings. ABG is leader in industry and continues to dominate, but the valuations are too high at this level. The global ship industry is more competitive compared to Indian shipbuilders. The cost is 20% more compared to other countries like China, Korea and Japan. That?s why Govt is providing subsidy of 30% to encourage the ship manufacturers. But the question is whether the Govt will continue the subsidy or not?. We expect it to continue if not extended then the Indian shipbuilders will be impacted heavly.

Technically Speaking: It was a volatile session for the whole day before closing. Sensex touched intraday high of 17074 and low of 16887. Overall breadth was in favor of Advances, where the Advances stood at 1485, while Declines at 1244. The turnover was good at Rs 7786 cr. Sensex faced some profit booking above 17000 levels. The trend is still up and we look for immediate target of 17300. Support is at 16875.