Market Close: Volatile on Credit policy..

Great rally yesterday, Indices finally crossed the 20k mark in the early sessions. Indices touched all time high in early trades After the RBI meet indices witnessed profit bookings. Sensex lost its ground in the mid sessions and fell in the red zone after RBI raised the Cash Reserve Ratio (CRR) by 50 basis points to 7.5% but left the other rates unchanged. Indices some how managed a solid recovery after the initial fall as buying intensified in the heavy weights. But, the recovery was short lived as the market plunged down in negative zone during the final hour. Auto, Banking and IT stocks heavy profit taking while selective Capital goods and Metal stocks gained investors interest. Mid cap and Small cap both end marginally down. Asian markets ended in mix, while Europe followed the same mixed trend.

The central bank raised the CRR by 50 basis points to 7.5 % in its move to suck out the excess liquidity in the system, but kept its key lending rates unchanged. RBI also left the reverse repo and repo rate unchanged. Now everybody has its eyes on the Fed to see whether it cuts the interest rates or not. Market is expecting a cut of 25 bps but Crude at over $ 93 is a looming risk. So all eyes on FED meet?

Sensex ended at 19,779 lower by 199 points. Supporting the sensex were the gains in REL Energy (+4.20%), BHEL (+1.72%), L&T (+0.64%), NTPC (+0.45%) and Bharti Airtel.(+0.15%). Restricting the gains were the losses in Maruti (-8.12%). M&M (-6.36%), TATA Motors (-4.23%) and SBI (-2.26%).

Reliance Energy reported that it would transfer its infrastructure projects to a separate, wholly-owned subsidiary for which it has already obtained the approval of the board. The board has approved a proposal to further unlock overall shareholder value by transferring its infrastructure projects to a separate 100% subsidiary, subject to compliance with applicable laws. The infrastructure projects include roads, bridges, metro rail and real estate. The announcement comes on the heels of REL's plans to list another subsidiary Reliance Power to raise an estimated Rs 12,000 crore. REL has already transferred its power projects to Reliance Power. The stock was top gainer for the day and ended up by 4.20% at close.

ABG Shipyard reported good results for Q2 FY07. The revenues grew by 26% to Rs 212 cr and the bottom line grew by 26% to Rs 34 on yoy basis. The Ebidta profit enhanced by 33% to Rs 64 cr and Ebidta margins stood at 30% higher by 100 bps on yoy basis points. Decrease in Raw Material helped Ebidta margins to improve by 100 bps. Valuation appears rich at the current market price of Rs 740 the stock trades at 29 times trailing earnings. The worry to the business is subsidy issue; still the Govt has not taken any decision which got over in the month of August 2007. We expect the subsidy to continue if not Indian ship builders are not cost competitive in global scenario. As of now ABG order book is at Rs 7200 cr, of which 70% is for export. Expect a detailed note on this. The stock performed well on healthy result and ended up by 5%.

Technically Speaking: Market trades volatile for the whole day after the credit policy issue. Sensex traded between an intraday high of 20238 and low of 19694. The breadth was in favor of decline as there were 1760 declines against 1217 advances. The volume for the day stood at Rs.10949 Cr.