Market Close: Fed cut gave opportunity for profit taking!

Indian indices got some boost from Fed rate cut as it opened strong to see new high. However, indices could not sustain the highs and displayed a volatile session for the day. Indices lost the strength from beginning as profits taking at high level kept indices down in red. Reacting to the rate cut Nifty crossed 6000 mark and hit all time high in the early sessions. At mid session indices fell in to red and traded on both the sides, some value buying at lows helped the indices to recover from negative region. The final hours of trading selling pressure on the indices pushed it to red and ended with modest losses. Broadly speaking it was a roller coaster ride for Indian indices. Crude made new high of $96 + a barrel as a result the ATF was increased which saw Airline stocks to slip. Also Paint, Tyres to feel the pinch of higher crude prices but MRF traded strong for the day. UP high court has ordered Sugar mills to pay 25% of the cane arrears with 6 months while lucknow court ordered the mills to pay arrears with 5-6 weeks also saw some weakness in the sugar stocks. Global markets traded mixed with Asian markets closing mixed while Europe is trading in red.

Sensex closed lower by 160 points at 19,678. Supporting were the gains in ONGC (+6.68%), L&T (+3.31), ICICI Bank (+3.15%), HDFC Bank (+1.99%) and Reliance Communication (+1.98%). Restricting the gains were he losses in (-6.55%), Bharti Airtel (-6.32%), Hindalco (-6.27%), Maruti (-5.80%) and Reliance Energy (-5.35%).

Monthly sales number of many auto companies were reported with some being on the better half while some being subdued. Maruti reported its sales for the month of October at 69,415 units vs 60,163 units, up by 16% on yoy basis. Sales were higher by 3% on monthly comparison also with sales in the previous month stood at 67,448 units. Sales have picked up in this month due to the reason of Dasherra and also would see some good numbers next month due to Diwali. Mahindra & Mahindra reported 44% increase in vehicle sales at 24,679 units in October from 17,109 units sold in October 2006. Domestic auto sales including utility vehicles, light commercial vehicles and three-wheelers rose 46% to 23,578 units from 16,173 units on yoy basis. Exports rose to 1,101 units from 936 units. M&M sold 2,214 units of Logan in October. The company has shown decent growth even with the credit crunch and some slow down in the industry but on the tractors side it showed some slow down. The company sold 11,186 tractors in October, down from 13,384 units in the year ago same period. In two wheelers TVS Motor reported its October sales up 13% to 129,614 units compared on mom basis and 9% down by yoy basis. Motorcycle sales stood at 67,752 units from 92,328 units, while scooterettes rose 23% to 28,119 units. Exports increased by 53 % to 11,046 units on mom basis.

McNally Bharat Engineering Company Ltd (McNally) reported flat results for Q2 FY2007. The top line grew by 2% to Rs 115 cr while the bottom line grew by 28% to Rs 6 cr on yoy basis. The Ebidta profit grew by 26% to Rs 8.3 cr while the Ebidta margins were higher by 140 bps to 7.2% on yoy basis. Despite the flat growth the net profit has been improved, due to less tax payment as the company will be under the payment of MAT for this year. However, top line in this quarter has been flat due to low supply billing in Project division. The delay in receipt of steel orders from RINL and IISCO also postponed the billing to next quarter. Future looks bright, the major investments in steel and power sector going to boost the company?s revenues. McNally has order book of Rs 1414 cr comprising of Rs 1354 cr in project and Rs 60 cr in product business. Valuation seems to be high at the current market price of Rs 230, the stock trades at 27 times of trailing earnings. We are positive on company and its business; one can accumulate at dips for long term investment prospects.

Technically Speaking: It was a volatile session for the whole day before closing in red. Sensex touched intraday high of 20,204 and low of 19,634. Overall breadth was in favor of Declines, where the Advances stood at 908, while Declines at 1820. The turnover was pretty good at Rs 11,432 cr. Sensex Resistance lies at 20,040 and 20,400 levels and A stong support lies at 19600 if slips below we could see 19200 levels. IF sensex trading near 19700 above levels then sensex could see new high shortly.