Weekly Close: Large cap's in rampage again!

In between the clouds of worries over P notes indices hovered to new high at the end of the week. There was a bit of caution ahead of SEBI meet with FIIs on P notes. Lack of clarity on P notes saw some outflow of fund but interest continued from domestic fund though many of them are on the sideline to get in. Quarterly Results added to the sentiments. Banking and Capital goods were the major index driver. L&T and Suzlon were the star performer for the week with their results. SBI gained on some rights issue. On the second last day SEBI announced that sub-account holders can not issue P-notes. As per the rule they will have to register first and then invest. It had some impact in the start, but, markets recovered strongly. But we think this would affect incremental views almost immediately. The date to decide the assets under control is a month back and that means that the extra $ 2-3 bn which has come in October created some winding down already.

On Political front: For now politics also seems to be on kind. Govt. is seems ready to miss the nuclear bus. Elections have been delayed for another 18 months and that?s probably good news in terms of stability. However it may not be on the policy front.

There are 2 major events scheduled next week i.e the RBI credit policy and Fed Meet which could drive the market. US Indices traded ranged with Crude hovering over $91 a barrel and mixed economic data. Fall in orders for Durable goods as well the raise in Jobless claim dampened the sentiments while jump in new home sales brought in some relief. The Market hopes Fed to cut rate by 50 bps. While in India there no cut expected as of now. Let wait and watch these events.

Crude rallied for the week as it crossed $90 a barrel which could push the panic button. The airlines are biggest hit really. They were hoping for good occupancy and some benign prices. Negatives also seen for Paint and Tyre companies.. On the Currency front, Rupee continues to trade below $40 a Dollar.

Sensational week in the market with Sensex Closing above 19200 levels. Sensex and Nifty both Zoomed over 10% for the week.

Sensex Weekly Gainers were LNT (28.51%), SBI (25.39%), REL (25.33%), BHEL (18.67%),Tata steel (16.83%), ICICIBank (16.21%), HDFC bank (13.61%) and Hindalco (11.22%). Losers for the week are TCS (-2.97%), Infosys (2.94%), Bajaj Auto (0.34%), Drreddy (0.38%), , Wipro (0.22%).

Companies which we tracked have shown phenomenal results: Apollo Tyres which managed to delivery super profits in rough conditions. Topline grew by 10% on yoy basis to Rs 847 cr. Net profits grew by whopping 164% on yoy basis to Rs 51 cr v/s 19.3cr last year same quarter. The number came out marvellous even though the rubber remained in the range of Rs86-Rs92. It gave good result on the economies of scale with the Dunlop South Africa as well increasing its capacity to 710 Tonne /per day and including South Africa?s capacity to 890/per day.

Blue Star India ltd reported good sets of numbers with topline line growth of 46% yoy from Rs 376 cr last year to Rs 548 cr for the quarter ended September 30, 2007. The company?s net profit for the quarter grew 150% to Rs 46 cr. Segment wise performance for the company was impressively in all 3 lines of business. The central and packaged airconditioning business accounted for 73% of total revenues during the quarter. The revenues from this segment grew by 48% during the quarter while the PBIT profits increased by a substantial 105%. Margins also improved significantly from 10.2% last year same quarter to 14.2% this quarter. The order book position as on September 30, 2007 stood at Rs 1031 cr. With healthy order book and a good outlook we see Blue Star heading for a good year. But can it take the same for the coming years, well we will have to wait and see. Do keep an eye here we will update you more here.

Kewal Kiran clothing Ltd (KKCL) reported a healthy result for the quarter ending September 2007 The company managed to achieve top line growth of 10% from Rs 42 Cr to Rs 46 Cr YOY. KKCL?s flagship brand ?KILLER? has contributed 50% towards total sales and in total sold 0.82 million pieces this quarter. EBIDTA margin for the quarter was same at 24%. Net margin was also in line with the last corresponding quarter at 17%. Domestic sales contributed almost major part more than 95%. Net realization per garment witnessed a growth of 6% to Rs 562 per garment (QoQ) basis KKCL now has about 75 retail stores which accounted for 20% of its revenues and intends to open 16+ more stores which will be opened before Diwali. We believe that branding is key success factor for these products but whether KKCL will continue to retain this brand image as many other well known brands are entering into the growing market that has to been seen further. Valuations are expensive at this price. We will update you more here.

Austin Engineering Ltd reported a flat result for the 2nd quarter FY07. The revenues grew by 3% to Rs 17.58 cr and the net profits grew by 14% to Rs 1.64 cr on yoy basis. The Ebidta margins stood at 18%, higher by 100 bps and the Ebidta profits grew by 13% to Rs 3.21 cr on yoy basis. The higher efficiency and better economies of scale helped the company to maintain margins. We had a word with the management and they informed us that plant had been shut down for one week due to flood in the city. As a result of this company?s sales slipped. Valuation seems to be attractive at the current market price of Rs 126, the stock trades at 7 times of trailing earnings. We are positive on company and its business; one can enter that stock at dips looking at long term prospects.

Technically Speaking: Sensex has shown tremendous strength in this week, closing at the all time high. The strength is still mostly concentrated in the large caps. We see sensex reaching the 20k figure soon. The immediate resistance are seen at 19475 and 19610. And Support seen at 18830 and 18545..