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Tuesday, January 02, 2007
Close: Year starts of Green.
The New Year session today started off with cheerful momentum and buying interest was seen across all the sectors across board. It also included mid and small caps. Sustained buying across sectors like Auto, Cement, Construction, Engineering, Power and Fertilize helped the indices to close at the high point of the day. The Asian indices ended strong while Europe traded mixed.
Sensex closed up by 155 points at 13942.24 helped up by gains in Satyam (508.35,+5 percent), Bajaj Auto (2738.75,+5 percent), Maruti (969.25,+5 percent), Tata Motors (929.9,+3 percent) and Hero Honda (784.15,+3 percent). Restricting the gains were TISCO (478.4,-1 percent), Dr Reddys (805.95,-1 percent), HDFC (1620,0 percent), RCVL (470.75,0 percent) and HDFC Bk (1068.7,0 percent). topnew.gif (1104 bytes)
Auto shares reacted to their numbers.. while others in anticipation. Performance started off well !
Reliance Fresh, the vegetable and fruits store brand of Reliance Retail, will open as many as 75 outlets in Madhya Pradesh starting April this year. The stores, which represent the front-end of Reliance's farm-to-fork project, would be opened in cities like Indore, Bhopal, Gwalior and Jabalpur under the first phase. The retail initiative will help farmers as they would be able to sell their produce directly to Reliance thus saving on transportation expenses, adding that Reliance would also provide farmers valuable tips on new techniques. This will help the company venture into newer regions where it has no presence and diversify its revenues. Reliance closed up by 1%. But really all this talk sounds good on paper. We believe that the years of transportation of farm produce has not been able to sell at the prices being talked off in an environment being envisaged. Clearly the economies of scale in this kind of business are limited. We believe its not right to get carried away by this yet and would be better to wait for the results. The cost of power, manpower, real estate is shooting. Its certainly a daunting task to make money against a vegetable vendor who has none of these associated costs.
State-owned power major National Thermal Power Corporation Ltd (NTPC) signed an agreement with the Sri Lankan Government and Ceylon Electricity Board (CEB) for setting up a 500 megawatt coal-based power project at Trincomalee with an investment of 500 million dollars. The project, expected to commence operations from 2011, would be developed through a joint venture company between NTPC and CEB, both having 50 per cent stake in it. The project would be funded with a debt equity ratio of 70:30. Being a coal-based power plant, the cost of generation is expected to be substantially lower by about 50 per cent of the power generated from diesel and other liquid fuel. Power from the plant will be sold in Sri Lanka. This will help the company project into newer regions where it has no presence and expand its revenues. The Power stocks closed a mixed bag while NTPC closed up by 1%.
It was a day for reporting of the auto companies. Maruti had a fantastic sale and so did Bajaj Auto. The stocks reacted to that positively. Hero Honda flared up too and thats surprising. Telco is expected to post fantastic CV sales helped by ACE but the stock has been already bouyant.
Technically Speaking: It was a bull session for the whole day before closing. Sensex touched intraday high of 13990 and low of 13780. Overall breadth went in favor of Advancers where advancers stood at 740 and Decliners at 240. The Resistance level was at 13990 -14030 while Support at 13780 -13740 levels. Market turnover stood good at Rs 3380 cr.
Sensex may gain about 800 points
A build up of long positions is likely on expectations of favourable policy announcements in the budget. We can expect the Sensex to put on around 800 more points before the budget. There however would be some pressure on the bourses post budget on account of profit booking and squaring of long positions by investors. There has been some strain on the operating margins of auto companies due to higher metal prices but a likely excise relief to the sector might compensate this. Mahindra and Mahindra looks good on technicals and should cross the Rs.1000 mark in a couple of sessions. Indian Hotels is another stock that’s looking really good.
Prior budget, we can see a Rs.60 to 70 appreciation in Blue Star and a round about Rs.100 appreciation in Tata Elxsi. There are also talks in the market about Anil Ambani buying a stake in Satyam from group chairman Ramlinga Raju. The stock’s already shot up quite a bit and it would notch up further gains if something actually materializes on this front.
A flying start for the New Year
The market witnessed sharp rally on the first trading session of calendar year 2007, as buying momentum continued for index pivotals. Auto, cement and IT stocks were in demand.
The 30-share BSE Sensex settled with gain of 155.33 points (1.13%), to 13,942.24. Sensex had surged to hit a fresh intra-day high of 13,980.54, in late afternoon trade. Earlier today, it opened higher at 13,827.77. Its low for the day was at 13,797.44.
The Sensex is near is all time high of 14,035.30, which was struck on 6 December 2006.
The S&P CNX Nifty crossed the crucial 4,000 mark, and was up 41 points 4007.40
The market breadth was strong with around 3 gainers for every loser. On BSE 1868 shares advanced, as compared to 650 that declined, while 62 shares were unchanged. The BSE Small-Cap Index rose 1.62% while the BSE Mid-Cap Index advanced 1.14%.
Among the 30-Sensex pack, 25 advanced while the rest declined.
Frontline IT stocks witnessed renewed buying interest, in anticipation of robust December quarterly results. The BSE IT Index rose 1.83% or 96.48 points to 5369.04. Satyam Computers was the top gainer, up 5.04% to 508.35.
TCS (up 2.46% to Rs 1248.55), Infosys Technologies (up 1.43% to Rs 2272.45) and Wipro (up 1.15% to Rs 611.50) edged higher.
Auto shares witnessed renewed buying interest, after they came out with strong monthly sales figures for December 2006. The BSE Auto Index was the top gainer among sectoral indices, gaining 3.22% or 177.54 points to 5696.04. Bajaj Auto jumped 4.58% to Rs 2,738.75. The company’s sales in December rose 24% to 2,14,928 units from a year ago. Sales of motorcycles rose 26% to 1,87,063 units, while those of all two-wheelers grew 21% to 187,179 units. Sales of three-wheelers were up 50% at 27,749 units. Exports more than doubled to 39,385 from 18,534 units a year ago.
Maruti Udyog advanced 4.52% to Rs 969.25. The rally was triggered after the company said it sold 56,985 vehicles in December, a 23.7% rise from a year earlier. Maruti’s Indian sales rose 26.3% in December 2006 to 54,640. Maruti’s domestic sales in A2 segment comprising of Alto, Wagon-R, Zen, and Swift rose 35.6% to 38,461 units in December 2006. Domestic sales in A3 segment that includes Baleno and Esteem declined 13.5% to 2,127 units. Total exports fell 17% to 2,345 units.
Hero Honda advanced 3.61% to Rs 789.90. The company reported a marginal increase in bike sales in December 2006 to 2.45 lakh units. The company sold 7,287 units of its scooterette - Pleasure during the month, which was launched earlier in the year.
Tata Motors rose 3.30% to Rs 929.90.
Ranbaxy Laboratories gained 1.67% to Rs 398.40 after it was granted final USFDA approval to manufacture & market Atenolol Tablets. Atenolol is indicated in the management of hypertension.
Banking shares saw renewed buying. SBI (up 0.66% to Rs 1,25.10) and ICICI Bank (up 0.72% to Rs 896.85) moved higher.
Index heavyweight Reliance Industries (RIL) rose 0.89% to Rs 1,281.65.
Tata Steel was the top loser, down 0.81% to Rs 478.40.
Post demerger of the real estate division, Indiabulls Financial Services (IFSL) settled at Rs 305.25 on 51.29 lakh shares. The stock debuted on BSE at Rs 321 following the demerger of its real estate division into a separate company, compared to Friday closing price of Rs 659.65. IFSL stock is now in the no-delivery period. The no-delivery period is till 8 January 2007.
Mahindra & Mahindra surged 5.55% to Rs 956.10 after the company said on Tuesday vehicle sales for December rose 38% to 15,132 units from 10,953 units a year earlier. It hit a high of Rs 949.50 which is a lifetime high for the scrip. Mahindra & Mahindra (M&M) also said its tractor sales rose 21% in December 2006 to 6,759 units.
Nagarjuna Construction rose 2.26% to Rs 219.70 after the company said it had won new orders worth Rs 255 crore.
McNally Bharat Engineering Company gained 5% to Rs 156.10 after the company said on Tuesday it had received an order worth Rs 92.31 crore from Utkal Alumina International Ltd. for its alumina refinery project.
Allcargo Global Logistics rose 10% to Rs 1168.40 on news the company was buying Thomas Cook India’s Hindustan Cargo subsidiary for Rs 8.91 crore. Hindustan Cargo is predominantly into an airfreight and logistic business. The deal would be funded through internal accruals.
Aban Offshore jumped 18.32% to Rs 1,636, after it said the group will bid 135 Norwegian crowns a share for Sinvest, valuing its Norwegian peer at $1.3 billion.
TVS Motor lost 2.46% to Rs 85.15, after its December two-wheeler sales fell 4% to 1,03,188 units from 1,07,412 units a year earlier. TVS Motor’s bike sales fell 14.5% in December 2006 to 58,756 units from 68,724 units a year earlier, while sales of scooterettes rose 3.50% to 16,616 from 16,051 units. The company said exports rose 17% to 7,088 units.
US equity markets will remain closed until Tuesday (2 January 2007).
Among Asian markets Hang Seng (up 1.73%), Jakarta Composite (up 1.72%), Taiwan Weighted (up 1.24%) and Seoul Composite (up 0.06%) edged higher while European markers were trading on firm note with FTSE 100 gaining 1.07% while the CAC 40 rose 1.17%.
The next major trigger for the market is Q3 December 2006 results, which are already factored into share prices. What market players will be closely watching is outlook issued by managements for Q4 March 2007 and FY 2008 (year ending 31 March 2008).
Foreign institutional investors (FIIs) are in profit-booking mode. Their net sales in December 2006 totaled Rs 3,667.40 crore. This included a huge outflow of Rs 2,814 crore in a single trading session on 4 December 2006, because FIIs reported money received from shares tendered in the sponsored ADR issue of Infosys.
US stocks slipped on Friday, the last trading day of 2006, as investors exited positions before an unplanned four-day weekend, but the Dow still finished near its lifetime high, capping off what has been a bullish year for all three major indexes. The Dow Jones industrial average fell 38.37 points, or 0.31%, to 12,463.15. The Standard & Poor's 500 Index declined 6.43 points, or 0.45%, to 1,418.30. The Nasdaq Composite Index dropped 10.28 points, or 0.42%, to 2,415.29
Nifty settles above 4,000
The market witnessed sharp rally on the first trading session of calendar year 2007, as buying momentum continued for index pivotals.
The 30-share BSE Sensex settled with gain of 155.33 points (1.13%), to 13,942.24. Sensex had surged to hit a fresh intra-day high of 13,980.54, in late afternoon trade. Earlier today, it opened higher at 13,827.77. Its low for the day was at 13,797.44.
The Sensex is near is all time high of 14,035.30, which was struck on 6 December 2006.
The S&P CNX Nifty crossed the crucial 4,000 mark, and was up 41 points 4007.40
Among the 30-Sensex pack, 25 advanced while the rest declined.
Frontline IT stocks witnessed renewed buying interest, in anticipation of robust December quarterly results. Satyam Computers was the top gainer, up 5.04% to 508.35.
TCS (up 2.46% to Rs 1248.55), Infosys Technologies (up 1.43% to Rs 2272.45) and Wipro (up 1.15% to Rs 611.50) edged higher.
Bajaj Auto jumped 4.58% to Rs 2,738.75. The company’s sales in December rose 24% to 2,14,928 units from a year ago. Sales of motorcycles rose 26% to 1,87,063 units, while those of all two-wheelers grew 21% to 187,179 units. Sales of three-wheelers were up 50% at 27,749 units. Exports more than doubled to 39,385 from 18,534 units a year ago.
Maruti Udyog advanced 4.52% to Rs 969.25. The rally was triggered after the company said it sold 56,985 vehicles in December, a 23.7% rise from a year earlier. Indian sales rose 26.3% in December 2006 to 54,640. Maruti’s domestic sales in A2 segment comprising of Alto, Wagon-R, Zen, and Swift rose 35.6% to 38,461 units in December 2006. Domestic sales in A3 segment that includes Baleno and Esteem declined 13.5% to 2,127 units. Total exports fell 17% to 2,345 units.
Hero Honda advanced 3.61% to Rs 789.90. The company reported a marginal increase in bike sales in December 2006 to 2.45 lakh units. The company sold 7,287 units of its scooterette - Pleasure during the month, which was launched earlier in the year.
Tata Motors rose 3.30% to Rs 929.90.
Ranbaxy Laboratories gained 1.67% to Rs 398.40 after it was granted final USFDA approval to manufacture & market Atenolol Tablets. Atenolol is indicated in the management of hypertension.
Banking shares saw renewed buying. SBI (up 0.66% to Rs 1,25.10) and ICICI Bank (up 0.72% to Rs 896.85) moved higher.
Index heavyweight Reliance Industries (RIL) rose 0.89% to Rs 1,281.65.
Tata Steel was the top loser, down 0.81% to Rs 478.40
US equity markets will remain closed until Tuesday (2 January 2007).
Asian markets were trading with gains. Hang Seng (up 1.73%), Jakarta Composite (up 1.72%), Taiwan Weighted (up 1.24%) and Seoul Composite (up 0.06%) edged higher. European markers were trading on firm note with FTSE 100 gaining 1.07% while the CAC 40 rose 1.17%.
US equity markets will remain closed until Tuesday (2 January 2007).
The next major trigger for the market is Q3 December 2006 results, which are already factored into share prices. What market players will be closely watching is outlook issued by managements for Q4 March 2007 and FY 2008 (year ending 31 March 2008).
Foreign institutional investors (FIIs) are in profit-booking mode. Their net sales in December 2006 totaled Rs 3,667.40 crore. This included a huge outflow of Rs 2,814 crore in a single trading session on 4 December 2006, because FIIs reported money received from shares tendered in the sponsored ADR issue of Infosys.
US stocks slipped on Friday, the last trading day of 2006, as investors exited positions before an unplanned four-day weekend, but the Dow still finished near its lifetime high, capping off what has been a bullish year for all three major indexes. The Dow Jones industrial average fell 38.37 points, or 0.31%, to 12,463.15. The Standard & Poor's 500 Index declined 6.43 points, or 0.45%, to 1,418.30. The Nasdaq Composite Index dropped 10.28 points, or 0.42%, to 2,415.29
Sensex inches closer to 14000
The market showed no signs of cooling off and remained extremely bullish on across-the-board buying support through the day. Spearheaded by the robust gains in several heavyweights, the Sensex commenced firm above the 13900 mark and soon surpassed 13950. Maintaining its upward bias the Sensex notched up gains as buying in auto, information technology and consumer goods stocks lifted the index to an intra-day high of 13980. The Sensex finally signed off at 13942, up 155 points, while the Nifty rose 41 points to close at 4007.
The breadth of the market was extremely positive. Of the 2,634 stocks traded on the BSE, 1,901 stocks advanced, 679 stocks declined and 54 stocks ended unchanged. On the sectoral front, the BSE Auto index advanced 3.22% at 5696 followed by the BSE IT index (up 1.83% at 5369), the BSE Teck index (up 1.38% at 3701), the BSE CG index (up 1.16% at 9196) and the BSE CD index (up 1% at 3608).
Among the gainers Satyam surged 5.04% at Rs508, Bajaj Auto soared 4.58% at Rs2,739, Maruti advanced 4.52% at Rs969, Tata Motors jumped 3.29% at Rs929, Hero Honda added 2.86% at Rs784, TCS was up 2.46% at Rs1,249, Hindalco advanced 2.18% at Rs178 and Gujarat Ambuja added 2.05% at Rs144. Ranbaxy Laboratories, Grasim, Infosys , NTPC, Wipro, and L&T also ended with strong gains. However, Tata Steel, Dr Reddy’s, HDFC, Reliance Communication, HDFC Bank and HLL inched marginally lower.
Several auto and auto ancillary stocks clocked significant gains. Mahindra & Mahindra zoomed 5.55% at Rs956, Hind Motors added 1.91% at Rs35, Ashok Leyland advanced 1.76% at Rs46, Cummins gained 1.75% at Rs282, Escorts was up 1.30% at Rs113 and Bharat Forge added 1.12% at Rs367.
Over 1.95 crore Nissan Copper shares changed hands on the BSE followed by Silver Line (1.22 crore shares), IFCI (1.18 crore shares), Pentium (76.05 lakh shares) and India Bulls (51.28 lakh shares).
Bihar Caustic at Rs54.40, Flex Industries at Rs144.30, Wartsila India at Rs371.15, Hanil Era at Rs19.55, Carol Info at Rs56.65, Shaw Wallace at Rs150.40 and Orient Paper at Rs511.75 hit their upper circuits during the day.
PowerYourTrade Trading Calls
Buy Aban Lloyd with a stop loss of Rs 1300 for a target of Rs 1600
Buy Mphasis BFL with a stop loss of Rs 285 for a target of Rs 360
Buy HCL Technologies with stop loss below Rs 632 for a target of Rs 676
Buy Asian Paints with stop loss below Rs 728 for a target of Rs 755
STRATEGY INPUTS FOR THE DAY
New year, old story
The undertaking of a new action brings new strength.
The party time is over. Don't worry, we are (hopefully) not talking about the bull run on the bourses but the new year revelry. New action and new strength will revolve around the quarterly numbers initially and later the budget. Equities had yet another good year in 2006 with the Sensex clocking a 47% gain despite the crash in May and June. But, that is behind us now and it's time to take a fresh guard for the year ahead. The long-term outlook is upbeat, given the strong growth momentum in the Indian economy. Take a fresh look at your portfolio. A lot of stocks, especially the large caps are looking fairly or even overvalued in some cases. At the same time, outside the frontline basket, there are plenty of opportunities available for long-term investing. Carefully cherry pick these stocks.
In the near term, the trend of the market will be determined by quarterly results. IT companies will be in focus for the next few days, as they will be among the first ones to announce their Oct-Dec quarter earnings. The first half of the current fiscal year has been pretty good, in fact much better than expected. It remains to be seen if India Inc manages to maintain the tempo in the rest half of the year. On the whole, the results are expected to be good, but one should always dig deep to look for trends ahead. Don’t be surprised by negative surprises here and there.
The next big hyped up event, which may later turn a non-event, would be the budget. Market will keep an eye on sector-specific tax sops. One will also have to see how the Government manages its finances. The buoyancy in corporate earnings and the strong economy has led to a fast-clip growth in tax revenues for the Government. As a result, there may well be a positive surprise on the fiscal deficit front. But, whether the Government manages to maintain the same momentum next year is anybody's guess.
Quite a few markets around the world may still be shut for new year holiday. So, there isn't much in the form of global cues. We expect a cautious opening after last week's rally. Most players would prefer to stay on the sidelines before the first batch of results kick in. Also, one will have to watch out for the trend in overseas inflows. Last year, FII inflows were less than 2004. How much allocation foreign funds would give to India will be known over the next few days. Generally, activity picks up only after the budget. Some see 17k on the Sensex by the end of the year while others are more conservative and expect the benchmark BSE index to be at point 15k. Concentrate on stocks in your portfolio rather than get carried way by the daily movement in the indices.
Auto and cement shares will remain in the limelight as they declare their monthly sales figures. Maruti is likely to gain as it has reported strong growth in volume last month. In two-wheeler category, Bajaj Auto has posted good numbers while Hero Honda and TVS have disappointed. IFCI is likely to be in the thick of things with a financial newspaper reporting that the troubled state-run FI may get a strategic investor soon. Stocks like SAIL, ACC, Gujarat Ambuja, BILT and JK Paper may get hit as the Government is considering scrapping the subsidised supply of coal to companies in steel, cement and paper sectors. Century Textiles, Vardhman Industries and Gulf Oil could attract some attention due to their reported foray into real estate business.
FIIs were net sellers to the tune of Rs69.4mn in the cash segment on Friday. In the F&O segment, they were net buyers at Rs357.3mn.
Major Bulk Deals:
Reliance MF has picked up Bosch Chassis Systems India; Deutsche Securities has bought Crew BOS while Blackstone Asia has sold the stock; Merrill Lynch has purchased Diana Tea Company; Morgan Stanley has bought JB Chemicals; Gujarat Fluorochemicals has sold Mount Everest Mineral Water; Bank of New York has sold Nissan Copper; Merrill Lynch has purchased Selan Exploration; UBS Securities has picked up Shah Allows.
US stocks fell on Friday, but all the three major indexes posted stronger than expected gains for the year. All three of them clocked the best annual gain since 2003. US stocks rose more than expected in 2006 after the Federal Reserve halted two years of monetary tightening and crude prices fell 22% from a July record. The S&P 500 gained 14%, the Dow rose 16%, and the Nasdaq increased 9.5%. Today, US markets will remain shut as a mark of respect for former President Gerald R. Ford. For the week, the S&P 500 gained 0.5% and the Dow added 1%. The Nasdaq added 0.6%.
European stocks closed lower on Friday. The pan-European Dow Jones Stoxx 600 lost 0.3% to 365.26. In London, the FTSE 100 closed 0.3% lower at 6,220.80. The German DAX Xetra 30 slipped 0.2% to 6,596.92. Not all national markets were lower, however, with the French CAC 40 gaining 0.2% to 5,541.76.
Insider Trades:
Aurionpro Solutions Limited: Mr. Sandeep Daga, Director has sold in open market 9695 equity shares of Aurionpro Solutions Limited on 26th December, 2006.
Gujarat Ambuja Cement Ltd: Shri P B Kulkarni (Director) has sold in open market 12000 equity shares of Gujarat Ambuja Cement Ltd on 27th December, 28th December and 29th December 2006.
Market Volumes:
The turnover on NSE was down by 31% to Rs75.56bn. BSE FMCG index was the major loser and lost 0.94%. BSE Oil & Gas index (down 0.44%) and BSE Technology index (down 0.28%) were among the other major losers. However, BSE Consumer Durable index gained 2.34%.
Volume Toppers:
Nissan Copper, IFCI, SAIL, Indiabulls, XL Telecom, HLL, Parsvnath, GTL, HCC, Polaris, Essar Oil, Triveni Engineering, NTPC, Mphasis BFL, India Cements, IVRCL Infrastructure and Nagarjuna Construction.
Delivery Delight:
ABB, APIL, ACC, Bajaj Hindustan, Bata India, BEML, Bombay Dyeing, Canara Bank, Crompton Greaves, Gateway Distriparks, Mahindra Gesco, Nagarjuna Construction, NIIT Tech, Polaris, Praj Industries, Prism Cement, SAIL, Strides Arcolab, Thermax, Titan Industries and TV Today.
Upper Circuit Filters:
Ramco System, Texmaco Ltd, Atlanta, Educomp Solutions, Anant Raj Industries, IOL Broadband, Ganesh Housing and Nirlon.
Brokers Recommendations:
SAIL - Buy from Man Financial with a target price of Rs124
Long Term Investment:
L&T
Major News Headlines:
Hindustan Zinc cuts prices by Rs3200 to Rs2,21,500
Aurobindo Pharma acquires Pharmacin International in Netherlands
SBI plans to raise Rs20bn by March
State Bank of Mysore raises PLR to 12% from 11.5%
Unichem gets nod to sell generic Mobic in US
From Research Desk - Arihant Foundation and Housing Ltd.
Arihant Foundation and Housing Ltd.
BUY
CMP: Rs520
Chennai and its suburbs are fast turning into a hot spot for the IT/ITES sector. Skilled labour along with quality Grade A & B space is driving demand for real estate. Arihant Foundation and Housing Ltd (AFHL) with 2 IT Park projects and 15 residential projects in hand is well poised to benefit from the pick up in Chennai real estate demand. We expect the company to report 76% revenue and a 116% profit CAGR over F9/05-08 period respectively. We initiate coverage with a BUY rating and price target of Rs602, implying a 64% upside.
Most IT companies have started setting up shop in tier II cities due to the dwindling cost competitiveness in tier I cities. Chennai offers them with quality grade A & B real estate with abundant skilled manpower. We expect Chennai to fast grow into the next outsourcing destination in line with Hyderabad and Pune.
With 17 in hand projects, AFHL is well poised to benefit from the growth in the property boom in the Chennai market. 15 of the 17 projects are residential in and around the Central Business District (CBD) and Old Mahabalipuram road (OMR), while the remaining 2 are IT parks in the upcoming Ambattur and OMR area.
The company is fast adding size and has planned two townships, one out of which is a 50:50 JV with a national developer. We view the company’s slow evolvement in bringing bigger projects in its fold as a positive sign towards revenue
sustainability. We estimate revenue CAGR of 76% over F9/05-F9/08.
Most old projects with low gross margins (GM) are expected to get completed in F9/06. New projects would improve GMs by 500bps in F6/07 to 37%, which is still 5-7% lower than current prevalent. This would aid a profit CAGR of 116% over F9/05-F9/08.
A major portion of the future revenues, 27% in F9/07 and 65% in F9/08 are expected to come from new projects, which are either recently commenced or would be launched in the next 8-12 months. Delays in launch and execution,
could impact profitability and there by valuations.
How Market Fared
Range bound market likely
The last trading session of the year came to a disappointing end as selling pressure was witnessed in the Technology, Oil & Gas and FMCG stocks. Weak inflation numbers which was 5.43% in week ended Dec 16 against expectation of 5.38% and Indian overseas loan number which rose 3.2% to $136.5bn also aided the down fall marking a subdued end to a whole year of gains. After trading almost flat for most part of the day the key indices lost ground as heavy weights like FMCG major HLL, ICICI Bank, Satyam Computer, RIL and Infosys witnessed profit booking finally closing lower. The benchmark BSE Sensex however, rose 46% in the year 2006 making a journey from 10,000 mark to 14,000 level and Nifty also pierced the 4000 mark during the year. Finally, the BSE benchmark Sensex slipped 59 points to close at 13786. NSE Nifty was down 4 points to close at 3966.
NTPC edged higher 0.5% to Rs136 after the company signed a deal for Sri Lanka project. The scrip touched an intra-day high of Rs137 and a low of Rs135 and recorded volumes of over 25,00,000 shares on NSE.
Reliance Industries edged lower 0.3% to Rs1270. S&P affirmed BBB rating of the company stating their outlook Stable. The has touched an intra-day high of Rs1287 a low of Rs1265 recorded volumes of over 22,00,000 shares on NSE.
Nissan Copper made an impressive debut on the bourses; the scrip opened at Rs39 and surged by over 200% to Rs123. The company entered the capital market with an initial public offering of around Rs25crore. The scrip touched an intra-day high of Rs136 and a low of Rs39 and recorded volumes of over 6,00,00,000 shares on NSE.
FMCG stocks witnessed profit booking. Index heavy weight HLL, Tata Tea, ITC and Colgate were among the major losers.
Banking stocks were also on the receiving end on back of selling pressure. ICICI Bank fell by 1.3% to Rs891, HDFC Bank was down 1.2% to Rs1067. While among the Mid-Cap stocks Bank of Baroda, OBC and PNB were the major losers.
The Auto stocks stood firm throughout the day as according to reports India may lower customs taxes on automobile parts to as much as 7% to bring the tariffs in line with those in Southeast Asia. Hero Honda was up 0.5% to Rs763, Maruti gained 0.7% to Rs929 and Eicher Motors surged overt 4% to Rs634.
Cement stocks also recorded smart gains as reports stated that cement prices are likely to rise further due to a tight demand-supply mismatch notwithstanding the massive investments announced by domestic producers on capacity build-up. Prices in Mumbai have risen by Rs5-10 to Rs235-240 per 50 kg bag in the last couple of months and are expected to go up further by Rs15-20 to Rs260 per bag. ACC gained % to Rs1086, Grasim was up 0.2% to Rs2801, Mangalam Cement added 1.6% to Rs201 and Kakatia Cement rose 1% to Rs104.
Mid-Cap Technology stocks recorded smart gains. Mphasis BFL surged over 7% to Rs305, Polaris advanced over 5% to Rs172, Mastek was up 4.3% to Rs370. However, heavy weight Satyam Computer and Infosys were on the receiving end.
Market may remain range bound
Trading may be listless with most Asian markets remaining closed on Tuesday. US equity markets too remain closed until Tuesday (2 January 2007).
The next major trigger for the market is Q3 December 2006 results. While strong Q3 results are already factored in share prices, market players will be closely watching what the company managements have to say about outlook for Q4 March 2007 and FY 2008 (year ending 31 March 2008).
Foreign institutional investors (FIIs) are in profit booking mode. FIIs pressed sales worth a net Rs 1049.70 crore on Thursday 28 December, the day when Sensex had declined 13 points. Their net sales in December 2006 totaled Rs 3667.40 crore. This included a huge outflow of Rs 2,814 crore in a single trading session on 4 December 2006, because FIIs reported money that they had received from shares they tendered in the sponsored ADR issue of Infosys.
As per provisional data, FIIs were net sellers to the tune of Rs 7 crore on Friday 29 December, the day when Sensex had lost 59 points. FIIs were net sellers to the tune of Rs 88 crore in index-based futures on that day. They were net sellers to the tune of Rs 172 crore in individual stock futures on that day.
Asian markets were mostly in the green on Tuesday (2 January 2007). Key benchmark indices in Hong Kong, Taiwan and South Korea were up by between 0.1% to 1.2%. Stock markets in China, Japan and Singapore were closed.
US stocks slipped on Friday, the last trading day of 2006, as investors exited positions before an unplanned four-day weekend, but the Dow still finished near its lifetime high, capping off what has been a bullish year for all three major indexes. The Dow Jones industrial average fell 38.37 points, or 0.31 percent, to 12,463.15. The Standard & Poor's 500 Index declined 6.43 points, or 0.45 percent, to 1,418.30. The Nasdaq Composite Index dropped 10.28 points, or 0.42 percent, to 2,415.29.
Market may witness volatile trading
Intra-day volatility may see the market swing both ways and hold back the local players from taking fresh positions. The weak FII participation in the last few sessions is also weighing on the sentiment. The Nifty may witness resistance at 3980 on the upside while the near-term strong support at 3935 is seen on the downside. The Sensex has a likely support at 13750 and could witness resistance at 13840.
US indices ended with loss on Friday, While Dow Jones lost 38 points at 12463, the Nasdaq was up 10 points at 2415.
Indian ADRs largely had a negative outing on the US bourses. Among the laggards ICICI Bank moved down 1.67%, MTNL sheded 1.55% and Infosys, Satyam, Wipro, Dr Reddy's, Tata Motors and HDFC Bank declined 1% each, while VSNL advanced 2.4% while VSNL and Patni Computers ended at higher levels.
In the commodity segment, the Comex gold for the february series gained $1.10 to settle at $638 an ounce. The Nymex light crude oil for February delivery jumped 52 cents to close at $61.05 a barrel.
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