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Monday, January 15, 2007
FII & MF Figures
FII Gross purchases Rs 2633.10 Cr Gross Sellers Rs 2426.10 Cr Net Buyers Rs 45.50 Cr.
MF Gross Purchases Rs 1087.24 Cr Gross Sellers Rs 450.14 Cr Net Buyers Rs 637.10 Cr
Our View:
Thats a big dampener to see the FII numbers. Markets had a huge run up on Friday of over 400 points. The MFs were buyers and they seem to be turning the tide now. But Indian market sentiment is driven by FIIs and this low FII number is certainly not heartening.
IPO Investing or Playing Lottery
In a few days from now, SEBI is likely to change some of the rules that govern how shares are distributed between different categories of applicants in companies' new issues (IPOs).
Currently, the major reserved blocks are 5 per cent exclusively mutual funds, 45 per cent for qualified institutional buyers (which also includes mutual funds). The exclusive reservation for mutual funds is likely to be doubled to ten per cent. Looking ahead to the kind of money that Indian companies are planning to raise through IPOs during 2007, the five per cent increase translates to a pretty big number. By many accounts, this year could see up to Rs 20,000 crore being raised - this means that mutual fund investors could collectively subscribe to Rs 2,000 crore of IPO stocks instead of Rs 1,000 crore if their fund managers wanted to.
During the current stock market boom, getting an IPO allotment has generally been perceived to be like winning a lottery by investors. Over the last four years, over Rs 30,000 crore has been raised in IPOs and there has hardly been any issue that did not present an immediate opportunity to make a profit. However, making an IPO investment has also been like buying a lottery ticket.
Most people I speak to seem to calculate the IPO returns that they get on the basis of the money that is actually used up for buying allotted shares (if any) eventually. However, your actual investment is inevitably higher since you are not going to be allotted shares for the entire amount you invested. Moreover, in a booming market, there's also the opportunity cost of not deploying the money elsewhere. These factors actually reduce the real excess returns that IPO investment yields substantially.
Do IPOs actually make sensible investments for the retail investor? The fact is that most retail investors invest in IPOs with only a cursory evaluation of which company 'feels' like a good one. And whether they are conscious of it or not, this 'feel' has more to do with how well the company has managed its presence in the media. What passes for an evaluation of an IPO quality is effectively an evaluation of its ad agency and PR agencies' efficiency. The mechanics of an IPO's pricing in boom time is such that this works out, mostly. However, if you are going to play it like a lottery then the logical way of maximising your gains is to apply for every single IPO and sell your entire allotment soon (or immediately) after listing.
Results Calendar - Jan 16 2007
| Jan 16 2007 | Asahi Fibres Ltd |
| Jan 16 2007 | Baroda Extrusion Ltd |
| Jan 16 2007 | Batliboi Ltd |
| Jan 16 2007 | Can Fin Homes Ltd |
| Jan 16 2007 | ETC Networks Ltd |
| Jan 16 2007 | Explicit Finance Ltd |
| Jan 16 2007 | Ficom Organics Ltd |
| Jan 16 2007 | G L Hotels Ltd |
| Jan 16 2007 | H T Media Ltd |
| Jan 16 2007 | Jubilant Organosys Ltd |
| Jan 16 2007 | Jyoti Ltd |
| Jan 16 2007 | K S Oils Ltd |
| Jan 16 2007 | Kamanwala Housing Construction Ltd |
| Jan 16 2007 | Lok Housing & Constructions Ltd |
| Jan 16 2007 | Multiplus Holdings Ltd |
| Jan 16 2007 | Patel Engineering Ltd |
| Jan 16 2007 | Paushak Ltd |
| Jan 16 2007 | Prime Securities Ltd |
| Jan 16 2007 | Prism Cement Ltd |
| Jan 16 2007 | S S Organics Ltd |
| Jan 16 2007 | Shardul Securities Ltd |
| Jan 16 2007 | Siro Plast Ltd |
| Jan 16 2007 | State Bank Of Travancore |
| Jan 16 2007 | Swastika Fin-Lease Ltd |
| Jan 16 2007 | Tripex Overseas Ltd |
| Jan 16 2007 | Vinyl Chemicals (I) Ltd |
| Jan 16 2007 | Walchand Peoplefirst Ltd |
| Jan 16 2007 | Wipro Ltd |
Close: Another high on momentum.. !
Market started the week with a firm and continued the rally from where it ended last week. Sensex consolidated the gains made in the mid session and touched an all-time high, which then traded ranged through out the day. Global cues helped the Indices to trade in positive territory. There was some profit booking was seen at higher levels in energy and telecom heavyweights and the indices slipped a bit. Buying was seen in Small and Mid caps. Energy, FMCG, Software, Telecom and aluminium sectors were in favor of the investors. Asian indices ended firm while Europe traded in Green.
Sensex ended up by 73 points at 14129.64. It was helped up by gains in TISCO (485.7,+4 percent), HDFC Bk (1091.75,+3 percent), Ranbaxy (430.5,+2 percent), L & T (1499.75,+2 percent) and Guj Ambuja (143.6,+2 percent). Restricting the gains were Maruti (905.85,-2 percent), BHEL (2221.6499,-2 percent), Hero Honda (733.6,-1 percent), ICICI Bank (957.7,-1 percent) and ONGC (916.3,-1 percent).
Telecom sector traded mixed. According to a leading business daily India's top international telecoms provider Videsh Sanchar Nigam Ltd is in talks to buy Sri Lankan private telecom operator Suntel for an undisclosed sum. VSNL Global, the international arm, recently won licenses to provide international long distance and Internet services in Sri Lanka, and wanted to enter the outbound voice traffic, data and enterprise business. Suntel is a joint venture backed by Sri Lanka's National Development Bank, Sweden's Overseas Telecom AB, Metrocorp Pvt Ltd, Hong Kong's Townsend Ltd and International Finance Corp, its Web site showed. VSNL, which earns three-quarters of its revenue abroad, holds 26 % in South Africa's second national fixed phone operator Neotel, and had also acquired Teleglobe International Holdings Ltd and Tyco International's global undersea fibre optic cable network. Which will help them capture Srilankan telecom market and it plans to leverage its success in this Srilankan market. The stock ended up around (7%) along with its peers TATA Tele (4.11%), RCOM (0.31%) and Bharti (0.35%).
Energy stocks traded mixed with the pack of gainers being led by Cairn India. According to a leading business daily, ONGC and Cairn India reached an agreement to transport crude oil from Barmer district of Rajasthan to Gujarat. The pipeline investment that is expected to be US$ 340 m will be shared in the ratio 70:30. The pipeline whose completion time is expected to be around 12 months will first connect facility in Viramgam. Smaller pipeline connecting to the coast, or Reliance and Essar with refineries in Jamnagar will also be built. The companies are in talks with various refiners to sell the Rajasthan crude at a slight discount to the Brent crude. This will help them diversify their customer base thus reducing the dependence on a single large customer. This was a big point of contention and this seems to have been resolved. The stock ended up 4%, with its peers Petronet LNG (3%) and Rel petro (1.34%).
TCS has delivered good results on the face of it. So this should help the sentiment for tomorrow. However a good part of that has already been discounted so big gains are unlikely to be sustained and some profit taking would be the order of the day. Later in the week we have the Japanese central bank which will take a call on the interest rates. We think this could be a dampener so its better to play cautious.
Technically Speaking: Market continues to trend up. Volumes were pretty good at Rs.4677 cr. Advances outnumbered the Declines as there were 1749 advances against 913 declines. Sensex touched an intra day high of 14202 and low of 14103. To maintain the Bull Run, Market has to sustain 14070 levels if it does not then we could see 13800 levels.
IPO - Akruti Nirman
Akruti Nirman, part of the Akruti group founded by Hemant M. Shah and Vyomesh M. Shah, is primarily a developer of commercial and residential properties. Its key focus area has been real estate development on slum rehabilitation land in Mumbai. Since 1989, it has developed nearly five million sq ft of building area, of which approximately 4.8 million sq ft have been developed on land made available for development through participation in slum rehabilitation projects. As part of its growth strategy, the company is planning to expand into Pune and Bangalore, and intends to expand its business into other cities, particularly where it sees future potential for slum rehabilitation.
To financing its existing projects; land acquisition, repayment of loans and meeting general corporate expenses, Akruti Nirma is coming out with an IPO.
Strengths
- End November 2006, Akruti Nirman had development rights of over 1,17,63,000 sq ft of land area, primarily located in Mumbai. Of this, 80,26,000 sq ft represents slum-rehabilitation land owned by the applicable slum rehabilitation authorities and 37,37,000 sq ft acquired or leased from third parties. The company says it will be able to develop approximately 1,32,56,000 sq ft of saleable or lettable building area on these lands, in addition to generating 2,93,000 sq ft of transferable development rights (TDRs). There is very good potential for slum-rehabilitation projects in Mumbai (like Dharavi slums) and other cities.
- Steps have been initiated to acquire development rights of over a further 16,54,000 sq ft of land area, primarily located in Mumbai. Of this, the company says it will be able to develop approximately 31,22,000 sq ft of saleable or lettable building area and generate 4,51,000 sq ft of TDRs. In addition, it has entered into an agreement with a third party to acquire TDRs representing approximately 26,13,000 sq ft of area, if such TDRs are allocated to the third party by the government of Maharashtra.
- Knight Frank, CB Richard Ellis and Trammell Crow Meghraj had performed a property valuation on 15 September 2006 of the company’s projects under development and projects for which it has taken steps to acquire development rights. The valuation puts the net present value of the share of 35 projects being undertaken at Rs 3742.7 crore.
- The land bank and valuation do not include DLF Akruti Info Park project in Pune scheduled for completion in June 2012. This consists of eight buildings, aggregating approximately 50,00,000 sq ft of saleable/lettable commercial space in the prime location of Hinjewadi, Pune. The company has a 33% share in this project.
- The principal financial advantage to the company as part of the slum rehabilitation schemes is that it is not required to pay substantial, one-off land purchase costs at the beginning of each project to acquire the use of such land.
Weaknesses
- Slum rehabilitation projects generally have long gestation and other associated risks.
- Taking into account the cost of constructing an additional building to house slum dwellers and other rehabilitation expenses, the average cost of construction works out to about Rs 2200-2500 per sq ft for the company as compared with about Rs 1500 per sq ft for other players.
- A number of steps still need to be taken for certain projects to finalise the relevant documentation. The right to develop remains subject to a number of conditions, and their satisfaction may be outside the company’s control. In addition, some projects also require the company to acquire TDRs, which it does not yet own, to develop fully the relevant project to the extent assumed in the valuation reports.
Valuation
On the basis of FY 2006 earning, EPS works out to Rs 9.5. Annualised EPS based on eight months ended November 2006 is Rs 3.3. The sharp fall in profit in the current financial year was mainly because some of the projects scheduled to be completed in FY 2007 had been delayed due to recently introduced environmental clearance norms.
Also, up to FY 2006 Akruti Nirman was following the completed building project method of revenue recognition. Income was recognised of buildings intended for sale only when construction was completed and occupation certificate for the building issued by the relevant governmental authority. From the current financial year, the company has adopted the percentage of completion method of revenue recognition. Thus, its financials for the eight-month period ended November 2006 are not comparable to the financial statements for the previous five years. On a comparative basis, revenue and profit in the latest eight months would have been significantly lower than the reported figures.
Akruti Nirman is offering shares at Rs 475-Rs 540. On the basis of valuations of 35 projects given in the prospectus, the NAV per share of the company works out to Rs 604. On the basis of FY 2006 earning, the PE will be in the range of 49.8-56.6 at the offer price. The medium/small real-estate construction sector is currently enjoying PE of 34 times FY 2006 earning. While other real-estate companies are likely to see a big jump in profit in the current year, going by the trends in the first eight months, Akruti Nirman can see a fallMarket gains amid volatility
The market ended firm above 14100 on strong gains in metal, capital goods, consumer durables and information technology stocks. The market held firm above the 14100 level for almost the entire trading session as strong US and Asian markets created a perfect platform for the bulls to pursue buying. Undeterred by the slowdown in foreign institutional investor inflows, the Sensex resumed 54 points higher at 14110 and advanced further on substantial buying support. Buying in heavyweight, capital goods, metal, information technology and oil stocks saw the index touch an intra-day high of 14202 amid considerable volatility. The Sensex finally wrapped up the session with gains of 73 points at 14130 while the Nifty closed at 4078, up 26 points.
The market breadth was positive. Of the 2,717 stocks traded on the BSE, 1,764 stocks advanced, 912 stocks declined and 41 stocks ended unchanged. All the sectoral indices ended in positive territory. The BSE Metal index was the major gainer and soared 2.67% followed by the BSE CG index (up 1.51%), the BSE CD index (up 1.19%) and the BSE HC index (up 0.96%).
Front-line stocks once again led the rally. Tata Steel was in the forefront and gained 3.92% at Rs486. Among the other major gainers Ranbaxy surged 2.26% at Rs430, L&T advanced 2.19% at Rs1,499, Gujarat Ambuja added 1.84% at Rs144, Reliance Industries was up 1.83% at Rs1,365 and ACC jumped 1.34% at Rs1,084. Cipla, Satyam Computers, HLL, Infosys and Hindalco notched up marginal gains. However Maruti Udyog was down 1.62% at Rs906 while BHEL shed 1.57% at Rs2,222.
Metal stocks witnessed strong buying support. SAIL rallied sharply by 10.15% at Rs100, Jindal Saw vaulted 9.35% at Rs438, Jindal Steel was up 2.90% at Rs2,227 and Hindustan Zinc gained 2.31% at Rs825.
Over 83.18 lakh SAIL shares changed hands on the BSE followed by Cairn India (39.24 lakh shares), Ispat Industries (36.89 lakh shares), IDBI (29.95 lakh shares) and Dabur India (28.20 lakh shares).
Value-wise Reliance Industries registered a turnover of Rs165 crore on the BSE followed by TCS (Rs142 crore), SAIL (Rs80 crore), BHEL (Rs75 crore) and Reliance Communication (Rs70 crore).
Profound faith in RIL behind rally
The market kept its upward momentum intact, advancing on the third consecutive day, with the BSE Sensex and NSE Nifty index finishing at their all-time highs. The benchmark index has advanced 767.49 points in these three days, from a close of 13,362.16 on 10 January 2007.
Much of today's rally materialised after index heavyweight Reliance industries (RIL), advanced to an all-time high of Rs 1372.30.
The 30-shares BSE Sensex advanced 73.11 points, at 14,129.65. It had opened strong, extending gains from Friday, and surged to strike an all-time high of 14,202.12, as buying continued. The benchmark index had also dipped to a low of 14,103.12, earlier.
The S&P CNX Nifty rose 25.95 points to 4,078.40. It also struck an all- time high of 4,099.65 during intra-day trade.
The market-breadth was strong on BSE, as buying happened across small-cap and mid-cap counters. On BSE, there were close to 2 gainers for every loser. For 1,749 shares advancing, 913 declined and 45 remained unchanged.
The total turnover on BSE amounted to Rs 4677 crore.
Among the 30-Sensex pack, 18 advanced while the rest declined.
Tata Steel was the top gainer, up 4.36% to Rs 487.80, following reports that the steel major may soon put in a new bid for Corus. As the 30 January 2006 deadline, set by the UK Takeover Panel nears, the market expects an announcement anytime. Tata Steel will need to beat the 515 pence-per-share bid made by its Brazilian rival, Companhia Siderurgica Nacional (CSN), on 11 December 2006. The Indian major revised its bid to 500 pence per share from 455 pence, which CSN pipped within hours. A newspaper citing sources in investment banking circles said Tata Steel’s bid may go up as high as 550 pence, “but not necessarily in one go’’.
HDFC Bank gained 2.70% to Rs 1092, on a volume of 2.90 lakh shares. Two block deals of 62,904 shares at Rs 1086.10 per share and 82,287 shares at Rs 1091.60 per share, were struck in the counter on BSE in early trade. The stock also struck a high of Rs 1096.
Index heavyweight Reliance Industries (RIL) advanced 1.93% to Rs 1366 on a volume of 12.13 lakh shares. The market is rife with rumours that the company will announce a stock-split along with its quarterly results on Thursday.
India's top private oil refiner, Reliance Industries, is expected to report on Thursday, a 26% rise in quarterly earnings due to strong margins from petrochemicals. Analysts estimated Reliance's petrochemical margins in October-December to increase by more than 35% from a year earlier, helped by higher product prices and a drop in raw material costs. Analysts forecast 39.5% rise in net sales to Rs 25300.40 crore.
L&T (up 2.69% to Rs 1507.20), Ranbaxy Laboratories (up 2.26% to Rs 430.50) and REL (up 1.61% to Rs 533.25) were the other gainers.
Tata Motors rose 0.66% to Rs 947. Media reports that the company may bid for Daewoo Automobile, Romania.
ITC gained 0.38% to Rs 172, on a volume of 17.41 lakh shares. It had recovered from a low of Rs 169.05. A block deal of 10.31 lakh shares was executed in the counter at Rs 171.40 per share, by 10:09 IST.
Maruti Udyog was the top loser, down 1.72% to Rs 904.90, on a volume of 2.48 lakh shares.
ICICI Bank (down 1.56% to Rs 955), Bhel (down 1.59% to Rs 2221) and Hero Honda (down 1.37% to Rs 732.95) were the other losers.
Reliance Communications (RCL) was down 0.81% to Rs 430.25. It plans to list its wholly-owned Flag Telecom unit on the London Stock Exchange to raise $500-$550 million, according to newspapers. Reliance Communications will dilute up to 24% stake in the undersea cable unit, a newspaper said citing unnamed sources. Another newspaper said, the company will begin procedures related to an initial public offering in February. RCL recently revealed it will invest $1.5 billion in increasing Flag Telecom's network capacity.
ONGC slipped 0.93% to Rs 916.25. The company will offer stakes in its deepwater blocks off the east coast to Brazil's Petrobras, Italy's ENI, Norway's Norsk Hydro and Malaysia's Petronas, Chairman RS Sharma said Friday. He also said that the state-run explorer earned $42 - $45 a barrel for crude sold to state-run refiners in the December 2006 quarter. ONGC will report December 2006 quarter earnings on 30 January 2007.
CMC jumped 28.66% to Rs 898, after the company reported a 69% jump in net profit for December 2006 quarter. CMC’s consolidated net profit jumped 69% in December 2006 quarter, to Rs 20.40 crore (Rs 12.07 crore). Consolidated sales jumped 44% to Rs 298.63 crore (Rs 207.25 crore). For April-September 2006, CMC’s net profit rose 26% to Rs 48.50 crore (Rs 38.59 crore). During the same period, consolidated revenue rose 30% to Rs 790.69 crore (Rs 609.24 crore).
State run steel major Sail surged 10.10% to Rs 99.80, extending Friday’s rally triggered by the steel minister’s statement of massive expansion proposed at the company. Steel minister Ram Vilas Paswan said on Friday that the Steel Authority of India (Sail) will invest Rs 100,000 crore to raise capacity from 14.6 million tonnes per annum to 40 mtpa by 2020. Sail had earlier announced scaling up capacity to 23.8 mtpa by 2010.
Cairn India jumped 5.11% to Rs 141.80, amid reports of reaching an agreement with ONGC to build a $340-million pipeline to transport crude oil from Rajasthan to Gujarat. ONGC and Cairn will share the cost of the pipeline project in 70:30 ratio. The new arrangement will also mark Cairn India’s involvement in the mid-stream segment of the petroleum business in the country. As per reports, Cairn and ONGC will first build a 340-km line to Indian Oil Corp’s (IOC) Viramgam pipeline terminal in Gujarat. The construction will take 12-18 months.
Ispat Industries rose 20% to Rs 15.42. The company had recently entered a memorandum of understanding (MoU) with the Chhattisgarh Government for setting up a coal-based 600 Mw power project in Janjgir, Champa district, for Rs 2,500 crore. Recently, the company also signed an agreement with the Maharashtra Government for expansion of capacity to manufacture steel at its integrated steel complex located at Dolvi.
Uttam Galva Steels jumped 12.32% to Rs 41.95, after the company raised galvanised steel prices by Rs 1,500 a tonne to Rs 50,000 per tonne on Monday. The hike in domestic zinc prices appear to have triggered the move by the company to raise zinc prices. Zinc is a key raw material in the manufacture of galvanized steel.
Geometric Software Solution surged 4.25% to Rs 141.25, after it unveiled a net profit growth of 254% for Q3 December 2006 to Rs 8.29 crore in Q3 December 2006, compared to Rs 2.34 crore in Q3 December 2005. Total income has increased from Rs 31.84 crore to Rs 52.98 crore.
Videsh Sanchar Nigam (VSNL) rose 6.74% to Rs 465, on reports that it is in talks to buy a telecom operator, Suntel, in Sri Lanka. Suntel is a joint venture backed by Sri Lanka's National Development Bank, Sweden's Overseas Telecom AB, Metrocorp, Hong Kong's Townsend and International Finance Corporation (IFC). VSNL Global, VSNL’s international arm, recently won licences to provide international long distance and Internet services in Sri Lanka, and wanted to enter the outbound voice traffic, data and enterprise businesses, a newspaper said, quoting company sources. The company, however, shot down the reports.
Tata Sponge Iron spurted 20% to Rs 124.80, after the company reported a 193% surge in net profit in December 2006 quarter. Tata Sponge Iron reported a 192.9% surge in net profit to Rs 7.06 crore in December 2006 quarter. Net sales rose 98.9% to Rs 82.13 crore (Rs 41.29 crore).
Sterlite Industries lost 0.80% to Rs 536.50, after its Q3 December 2006 consolidated net profit jumped to Rs 1293 crore, compared to Rs 395 crore in Q3 December 2005. Net sales increased to Rs 6814.3 crore (Rs 3511.4 crore).
Indian Oil Corporation declined 1% to Rs 478.15. There are reports that it has put plans for an Indonesian foray into the freezer. However, the company is likely to continue with its lubricant distribution business in Indonesia. Indian Oil was looking at launching its retail outlets in Indonesia by floating a fully-owned subsidiary. If the plans had materialised, it would have been Indian Oil's third retail venture overseas.
SREI Infrastructure Finance advanced 3.95% to Rs 55.35, after it announced it will shortly enter into a strategic partnership with the European Bank for Reconstruction and Development. The strategic partnership comprises an investment by the EBRD in the equity of SREI Russia, and extension of credit lines to support the company's business overseas.
Tayo Rolls surged 12.80% to Rs 154.70, after the company performed well in Q3 December 2006. Tayo Rolls posted a net profit of Rs 4.04 crore in Q3 December 2006, compared with the net profit of Rs 0.01 crore in Q3 December 2005. Net sales rose to Rs 45.25 crore from Rs 37.41 crore.
Rajesh Exports rose 5% to Rs 455.75, after it posted a net profit growth of 57.71% to Rs 28.12 crore in Q3 December 2006 compared to Rs 17.83 crore in Q3 December 2005. Net sales rose to Rs 1872.45 crore from Rs 1294.02 crore.
Rallis India slumped 3.87% to Rs 287, after it reported a net profit of Rs 8.70 crore in December 2006 quarter compared to a net profit of Rs 8.56 crore in December 2005 quarter. Net sales rose to Rs 172.19 crore (Rs 166.26 crore).
All the Asian and European markets were trading in the green.
The Nikkei 225 index rose 0.9% on Monday, with investors buying exporters such as electronic parts maker Kyocera Corp., following gains on Wall Street and a softer yen. Nikkei jumped 152.91 points, to 17,209.92.
Hong Kong’s Hang Seng index advanced 455.15 points (2.32%), to 20,068.56.
FIIs were net buyers to the tune of Rs 159 crore on Thursday (11 January), when the Sensex rallied 269 points. As per provisional data, FIIs were net buyers to the tune of Rs 397 crore on Friday (12 January), the day when the benchmark index spurted 426 points. FIIs were net buyers to the tune of Rs 919 crore and Rs 86 crore in index-based futures and individual stock futures, respectively, on 12 January 2006.
Mutual Funds were net sellers to the tune of Rs 250 crore in equity on 11 January 2006.
US stocks rose for a third day on Friday, driving the Dow to another record high as energy shares rebounded on oil prices. Data showing surprisingly robust December retail sales underscored optimism about economic growth also aided the upmove. US retail sales grew in December at the fastest pace since July. The Dow Jones industrial average rose 41.10 points, or 0.33%, to end at 12,556.08. The Standard & Poor's 500 Index advanced 6.91 points, or 0.49%, at 1,430.73. The Nasdaq Composite Index was up 17.97 points, or 0.72%, at 2,502.82.
Oil prices rose above $53 a barrel Monday amid reports that OPEC may hold an emergency meeting to reverse the 13% plunge in oil prices this year. Light, sweet crude for February delivery gained 31 cents to $53.30 a barrel in electronic trading on the New York Mercantile Exchange in Singapore.
Crude oil futures plummeted as low as $51.56 Friday, the lowest in 19 months, before closing at $52.99 a barrel, up $1.11, on news that producer cartel, OPEC, was considering an emergency meeting and new production cuts.
PowerYourTrade Trading Calls
Ashwani Gujral
Buy Sesa Goa with stop loss of Rs 1645 for target of Rs 2045
Buy Hinduja TMT with stop loss of Rs 650 for target of Rs 950
Deepak Mohoni
Buy 3i Infotech below Rs 235 with stop loss of Rs 229.50; Its an intra-day recommendation
Short sell Bajaj Hindustan above Rs 210 with stop loss of Rs 214; Its an intra-day recommendation.
Rajat K Bose
Buy Ranbaxy Laboratories around the last close with stop loss below Rs 414.80 for target of Rs 435
Buy Reliance Industries around last close with stop loss below Rs 1326 for target of Rs 1363
Brokers bullish on Bharti Airtel, KS Oils, RIL
Sharekhan has puted buy rating on Bharti Airtel; with a target of Rs 780
Prabhudas Lilladher has kept buy rating on KS Oils
Prabhudas Lilladher has kept outperfomer rating on Monnet ispat
Prabhudas Lilladher has kept outperfomer rating Tech mahindra; with a target of Rs 1900
Glodman Sachs has kept buy rating on RIL; with a target of Rs 1660
Edelweiss has maintained sell rating on Praj Industries
Key indices may strike fresh record highs; TCS results eyed
The market is likely to extend gains from Friday’ s record high on the back of firm global markets and resumption of FII buying after their recent heavy sales.
FIIs were net buyers to the tune of Rs 159 crore on Thursday 11 January, the day when Sensex had risen 269 points. As per provisional data, FIIs were net buyers to the tune of Rs 397 crore on Friday 12 January, the day when Sensex had spurted 426 points. FIIs were net buyers to the tune of Rs 919 crore in index-based futures on 12 January. They were net buyers to the tune of Rs 86 crore in individual stock futures on that day.
The earnings season has started upbeat with Infosys, HDFC Bank and UTI Bank unveiling strong numbers last week. The key results today are TCS and HCL Tech. Eight brokerages expect a between 4.4% to 13.9% sequential growth in TCS’ December 2006 quarter consolidated net profit as per US GAAP at between Rs 1035.30 crore and Rs 1128.80 crore, compared to a net profit of Rs 991.50 crore in September 2006 quarter. These eight brokerages expect a between 6.2% to 8.2% sequential growth in TCS’ Q3 consolidated revenue as per US GAAP at between Rs 4759.30 crore to Rs 4848.90 crore.
As regards HCL Tech, seven brokerages have forecast a between 1.1% to 6.6% sequential growth in HCL Tech’s consolidated US GAAP net profit in December 2006 quarter at between Rs 253 crore to Rs 266.80 crore, compared to a net profit of Rs 250.20 crore in September 2006 quarter. These seven brokerages expect a between 3.3% to 7.9% sequential growth in HCL Tech’s consolidated US GAAP revenue in December 2006 quarter at between Rs 1425.20 crore to Rs 1488.60 crore compared to revenue of Rs 1379.50 crore in September 2006 quarter
Industrial production rose 14.4% in November 2006 from a year earlier, far higher than market expectations due to a strong surge in manufacturing output, government data showed on Friday. Output growth for October 2006 was revised down to an annual 4.4%, from a previously reported 6.2%. Manufacturing production, which represents more than 75% of industrial output, rose 15.7% in November from a year earlier, compared with a provisional 6% annual growth in October.
On the flip side, inflation rose further as per latest data. Data on Friday showed inflation rising at 5.58% in the 12 months to 30 Dec 2006, higher than previous week's annual rise of 5.48% due to a rise in food and fuel prices, data showed on Friday. The figures were slightly lower than estimated 5.6%.
Asian stocks climbed on Monday led by technology issues, encouraged by strong data on Japanese machinery goods orders, US retail sales and encouraging company results. The Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.06% to 0.9%.
US stocks rose for a third day on Friday, driving the Dow to another record high as energy shares rebounded with oil prices and data showing surprisingly robust December retail sales underscored optimism about economic growth. US retail sales grew in December at the fastest pace since July. The Dow Jones industrial average rose 41.10 points, or 0.33 percent, to end at 12,556.08. The Standard & Poor's 500 Index advanced 6.91 points, or 0.49 percent, at 1,430.73. The Nasdaq Composite Index was up 17.97 points, or 0.72 percent, at 2,502.82.
Benchmark US crude oil futures rose 24 cents to $53.23 a barrel in Globex electronic trading on Monday, extending gains from Friday as traders price in the risk that OPEC will cut supply to try to arrest a price slide of about 15 percent since the start of the year.
5 Intra-day Stock Ideas
NIFTY (4052) SUP 4001 RES 4109
BUY GEOMETRIC (135.65)
SL 131 T 143, 145
BUY HCC (160.3) SL 156 T 168, 170
BUY CIPLA (255.20)
SL 250 T 264, 267
BUY RANBAXY (421.25)
SL 416 T 430, 433
SELL PIONEEREMB (270.80) @ 273
SL 277 T 262, 260
STRATEGY INPUTS FOR THE DAY
Bulls optimistic of new heights
Optimism is a cheerful frame of mind that enables a tea kettle to sing though it's in hot water up to its nose.
The markets may be overheated but nevertheless the bulls are singing. The music only promises to be louder. Market buzz is that the Nifty could test the 4,300 levels shortly. Can someone disconnect the power before that. Let's wait and watch. On the broader side, the market will continue to be driven by the news flow, particularly the results. Today, we have TCS and HCL Tech coming out with their earnings for the latest quarter. Both the results, which are expected to be good, will be out only after the markets are closed.
FIIs too have resumed their buying spree after the recent sell-off. Global cues are quite encouraging. Markets in the US, Europe and Latin America ended higher on Friday and Asian markets are also on fire this morning. Crude is trading under $54 per barrel. We expect the market to open higher, buoyed by last week's turnaround and the firm trend in global markets. However, with the Sensex and the Nifty quoting at all-time highs, we will see higher intra-day gyrations.
Other prominent companies to announce their results include: Geometric Software, AztecSoft, Tulip IT, Concor, Anant Raj Industries, Dalmia Cement, IPCL, Venus Remedies, RPG Transmission South India Bank and J&K Bank.
Sterlite Industries could rise after posting strong results. KS Oil is likely to announce a 30% increase in revenue guidance tomorrow. Shree Precoated Steel is another counter which is likely to see heightened activity. Ramsarup Industries' Board will meet today to consider issue of FCCBs / ADRs / GDRs; future expansion plans and increase in Authorised Capital.
Another stock to watch out for is Nestle India. The FMCG giant is likely to declare a bonanza for shareholders. Sesa Goa is likely to continue its bull run amid reports that Arcelor Mittal could end up buying the iron ore producer. Orchid Chemicals might gain. A financial daily reports that the Chennai-based company is looking for an acquisition in Europe.
Cairn India could rise amid reports that ONGC has agreed to share the cost of building the pipeline to evacuate crude from the company's Rajasthan blocks. According to a financial daily, the crude is likely to be sold to Reliance Industries and Essar Oil in Gujarat. ACC is likely to advance. A financial daily reports the cement major is planning to sell its 40% stake in a local joint venture to Germany's Almatis.
US stocks jumped on Friday, sending the Dow Jones Industrial Average to its second straight record close after a rally in technology and commodity shares. The Dow added 41.10 points to 12,556.08 while the S&P 500 was up 6.91 points to 1,430.73 and the Nasdaq advanced 17.97 points to 2,502.82. US financial markets will be closed on Monday for the Martin Luther King Jr. Day national holiday.
In European markets, UK's FTSE 100 closed up 0.1% to 6,239. The pan-European Dow Jones Stoxx 600 added 0.5% to 371.86. Germany's DAX Xetra 30 rose 0.3% to 6,705.17 and the French CAC-40 added 0.1% to 5,617.20.
In emerging markets, the Bovespa in Brazil gained 1% at 43,094 while the IPC index in Mexico added 0.3% to 26,324 and the RTS index in Russia advanced 0.2% to 1797.
Asian markets are going great guns this morning. The Nikkei in Tokyo is up 187 points at 17,244 while the Hang Seng in Hong Kong surged 295 points to 19,909. The Kospi in Seoul is flat at 1388 and the Straits Times in Singapore added 11 points at 3020.
Major Bulk Deals:
CLSA has bought Denso India while Templeton India has sold it; Morgan Stanley has picked up IFCI; UBS has purchased Ion Exchange and Shah Alloys; HSBC has bought KEI Industries but has sold Paramount Communications; Bear Stearns has purchased Radha Madhav Corp; Videocon Industries has picked up Vimal Oil.
Market Volumes:
The turnover on NSE was up by 1.47% to Rs100bn. BSE Bank index was the major gainer and gained by 6.79%. BSE Oil & Gas (up 2.77%), BSE PSU index (up 2.75%), BSE Capital Good index (up 2.24%), BSE Metal index (up 2.09%) were among the other major gainers.
Volume Toppers:
IFCI, Tata Teleservices, Reliance Communication, SAIL, Balrampur Chini, Cairn India, MTNL, ITC, Bajaj Hindusthan, Essar Oil, Bank of India, Ashok Leyland, Reliance Industries, Satyam, IDFC, Polaris, DCB, Indiabulls, HCC and Deccan Aviation.
Upper Circuit Filters:
Flex industries, Zandu Pharma, Havell's India, Shyam Telecom, Mercator Lines, Mcnally Bharat and Atlanta.
Brokers Recommendations:
Hindustan Zinc - Buy from Man Financial with target of Rs1050
Reliance Communication - Underperform from Kotak with target of Rs375
Long Term Investment:
Sobha Developers
Major News Headlines:
November Industrial Production rises 14.4% from year ago
ONGC’s overseas arm, has been invited by Denmark's Maersk Oil to participate in bidding for buying 30% stake in two Caspian Sea blocks
India, Malaysia, Philippines, Brunei ease flight restrictions
UTI Bank Q3 profit at Rs1.85bn (up 40%) and total income at Rs14.7bn (up 60%)
India to review Gasoline, diesel prices by January 31
Essar Group to invest Rs105bn in SEZ
Gati signs MOU with CREIL
Reliance to invest Rs670bn in Gujarat
Raipur Alloys sign agreement to install 600 MW power plant
Subex Azure to consider interim Dividend on 29th Jan
Marico Board approves splitting each share into 10
Mefcom Agro Industries approves free share plan, the ratio for the same would be decided later
Gateway Distriparks signs agreement with Punjab Conware
Sobha Developers wins order from BF Utilities
How Market Fared
Another big rally on D-street
Strong Global cues and sharp fall in the crude oil prices compelled the markets to start off with a flyer. The bulls had a historic day as they performed extremely well leaving the bears far away. Further later in the day impressive November Industrial Production numbers which rose by 14.4% from year ago aided the key indices to close above their respective highs. The bulls recovered all its losses slashing through its all time highs entering in a new territory as Banking, Technology and Metal indexes leading from front with Bank index gaining 6.5%. Finally, the BSE benchmark Sensex surged by 425 points to close above its all time high at 14056. NSE Nifty advanced 110 points to close at a new peak of 4052.
SAIL surged by over 4.9% to Rs90 after the company announced that they would spend about Rs1 Trillion on expansion. The scrip touched an intra-day high of Rs91 and a low of Rs86 and recorded volumes of over 88,00,000 shares on NSE.
Marico rallied over 6% to Rs567 after the Board of Directors of the company approved splitting each share into 10. The scrip touched an intra-day high of Rs599 and a low of Rs534 and recorded volumes of over 97,000 shares on NSE.
Hindustan Zinc surged 3% to Rs807 after the company announced its Q3 result with net profit at Rs13.35bn (up 305%) and revenues at Rs25.4 (up 173%). The scrip touched an intra-day high of Rs825 and a low of Rs799 and recorded volumes of over 2,00,000 shares on NSE.
JP Associates advanced 2.6% to Rs725 after the company announced its Q3 result with net profit at Rs1.02bn (up 73%) and total income at Rs9.3bn (up 13%) and to pay Rs2 as mid-year dividend. The scrip touched an intra-day high of Rs741 and a low of Rs715 and recorded volumes of over 18,00,000 shares on NSE.
Banking stocks were the star performers after the cabinet in New Delhi approved a plan to allow the central bank to lower the limit of government bonds lenders must hold. Heavy weight ICICI Bank surged nearly 9% to Rs972, HDFC Bank jumped 7.2% to Rs1068 and SBI surged over 6% to Rs1219. Bank of India rose by over 7.5% to Rs206, OBC advanced 6.6% to Rs225 and Bank of Baroda was up by 6.6% to Rs240 were the major among the Mid-Cap stocks.
Metal stocks also were among the major gainers as metal prices on LME firmed up. Sterlite Industries rose by 1.9% to Rs539, Hindalco gained 1.4% to Rs170, Tisco was up by 1.3% to Rs468 and National Aluminum added 1.1% to Rs212.
Pharma stocks also recorded healthy gains. Cipla advanced 3.5% to Rs225, Dr Reddy’s Lab gained by 2.3% to Rs809, Sun Pharma rose 1.7% to Rs1030 and Aurobindo Pharma added 1.5% to Rs727.
The Capital Good stocks also ended with smart gains. BHEL, Siemens, L&T and ABB were among the major gainers.
Well, for the bulls the earnings season has got off to a bright start with Infosys registering relatively moderate results in Q3 FY07, which were just in line with expectations. However, it remains to be seen whether they can hold on to these gains or again the bulls may start to feel dizzy at the top. There’s no point in getting euphoric as all the good news have started to trickle in at the same time. The bulls still have a long way to travel through the earning season, which has just started.
Market may advance further
Following the Fridays sharp turnaround that saw the Sensex cross the 14000 mark during intra-day trades, the market may register more gains on the back of a bullish sentiment. Also the rising FII inflows coupled with strong ongoing Asian Indices is also likely to weigh positively on the sentiment. Among the key domestic indices, the Nifty could test higher levels at 4110 -4150 while it has a likely support at 4020 on the downside. The Sensex has a likely support at 13980 and could face resistance at 14150.
US indices registered gains, with the Dow Jones closing above the level at 12556, up 41 points, while the Nasdaq moving up by 18 points to close at 2503.
The Indian ADR pack also rallied sharply on the US bourses. HDFC Bank led the upmove and zoomed nearly 7.34% while ICICI Bank, Infosys and Patni Computers flared up over 2-4% each. Satyam, Wipro, Dr Reddy, Tata Motors, MTNL, VSNL and Rediff rising over 1% each.
The Nymex light crude oil for february delivery raised by $1.11 to close at $52.99 a barrel, while the in the commodity segment, the Comex gold for February 07 delivery advanced $13 to settle at $626.90 an ounce.
Results to be announced today are Axis Capital Markets (India) Ltd, Aztecsoft Ltd, Bajaj Auto Finance Ltd, Bliss GVS Pharma Ltd, Dalmia Cement (Bharat) Ltd, Fine Line Circuits Ltd, JHS Svendgaard Laboratories Ltd, Kamdhenu Ispat Ltd, Krishna Lifestyle Technologies Ltd, L T Overseas Ltd, Madhusudan Leasing & Finance Ltd, Madhusudan Securities Ltd, Maharashtra Scooters Ltd, Nicco Parks & Resorts Ltd, Rajesh Exports Ltd, RPG Transmission Ltd, Sanwaria Agro Oils Ltd, South Indian Bank Ltd, Sundaram Multi Pap Ltd, Suryodaya Plastics Ltd, Triveni Engineering and Industries Ltd, Tulip IT Services Ltd, Typhoon Holdings Ltd, Venus Remedies Ltd, Wipro Ltd.
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