Market Close: Clouds of worries hover!

After yesterdays blood bath, jitters continue across the globle markets. US markets once again tumbled and hit two months low due to fears of recession which put brakes across the other markets. After a cautious start Indian indices traded extremely volatile for the day. It was a sea saw session; there was no clear direction for the indices were it was heading. Indices swing on both the sides and made inroads into negative region at the end. In mid trades indices bounced back from lows as heavy selling in index heavy weights continued and failed to sustain the higher levels. Looking at asian market except Hang Seng, most of the Asian markets ended in red while Europe continues to trade in green.

Sectors like Aviations, Refineries, and Pharma stocks attracted investors and managed to close in green. Selling was seen in Banking, Metals, Capital Goods and Realty stocks. Mid caps and Small caps also witnessed the selling pressure, which out performed the frontline stocks.

Sensex ended down by 182 points at 19079.641. Weighing on the Sensex are losses in HLL (211.2,-3 percent), L & T (3967.8,-3 percent), HDFC (2812.3,-2 percent), ICICI Bk (1140.65,-2 percent) and RIL (2728.8501,-2 percent). Losses are restricted by gains in Cipla (215.75,+4 percent), ITC (197.85,+2 percent), NTPC (232.4,+2 percent), Ranbaxy (410,+1 percent) and Maruti (1019.65,+1 percent).

ABG Shipyard bagged repeat order of Rs 1000 cr from international client. This enhances the earnings visibility for the company but also reaffirms its execution capabilities. The new project would take ABG's order book to Rs 8,277 cr, about 12 times the company's revenues for FY07. Further, the orders include five 54,000 Dead weight tonnage (DWT) bulk carrier vessels. ABG Shipyard has 12 such orders for a limited number of customers. Similar specification for small bulk carrier vessels (32,000-54,000 DWT) is likely to result in economies of scale thereby strengthening profit margins. The Surat facility expansion, expected commissioning of new facility in Dahej by April 2008 and the acquisition of Vipul Shipyard are all expected to bolster the company?s ability to execute orders. ABG has plans to raise about Rs 800 cr through private placement. The funds would be used for expansion of its existing shipyard at Surat and new shipyard on the sea front, which will be capable of building very large sized and all types of vessels. Valuation seems to be expensive at the current market price of Rs 907 the stock trades at 36 times of trailing earnings. The business scenario is extremely good, but the risk to the business is subsidy. If Government discontinues the subsidy Indian players won?t be able to compete in global scenario. Still there is no clarity about this, weather the Govt will continue or may bring down.

Housing Development and Infrastructure (HDIL) has planed to enter the entertainment sector under the brand name Broadway. HDIL will invest close to Rs 1000 cr to fund its organic as well as inorganic expansion in the country's multiplex market. HDIL's new venture will offer films through its multiplexes and will have a range of gaming centres with food court that will be managed by Broadway. HDIL will set up its first Broadway theatre in Vasai, Mumbai suburb. This will be followed with the opening of the Broadway entertainment centre at Kandivli somewhere around mid-January next year. The multiplex will have four screens by the end of the current fiscal. The company plans to set up over 150 theatres in major cities by the end of the fiscal 2009. HDIL entertainment is scouting for acquisition in the theatre chain business and talks are on with various firms in the industry. The business seems to be good but there are many players in multiplex business, unfortunately it leads to competition. All the players are expanding the capacity the key to the business is location, where it is situated. The Company has a great advantage that the cinema halls will be owned and which will reduce the rental cost which has hit big players in this business. But Entering a new business is not a venture to be entered in. The stock closed down by 1.34%.

Technically Speaking: It was an extremely volatile session, Sensex traded in negative bias with no clear direction and ended in red. Sensex touched intraday high of 19,375 and low of 19,009. Overall breadth was in favor of Declines, where the Advances stood at 1236, while Declines at 1631. The turnover was pretty good at Rs 8007 cr. Sensex is finding buying support near 19,005 levels but traders should remain cautious as we expect it could go up to 19,500 only as a pullback rally and look to exit longs on pullback. Sensex support lies at 19,005 and 18,860 levels. The Resistance lies at 19,300 and 19,620.