Search Now


Friday, March 02, 2007

Sensex ends below 13,000 on late selling

A sell-off gripped the market in late trading, and the Sensex plunged below the psychological 13,000 level. Index heavyweight Reliance Industries (RIL) dived and so did IT scrips, cement producers, banks and telecom shares.

The Sensex's provisional closing was 12,841.04, a fall of 318.51 points.

The market-breadth turned weak in late trading following the Sensex’s sharp fall from a strong breadth earlier during the day. Against 1,717 shares declining on BSE, 890 rose. Just 51 shares were unchanged. Losers outpaced gainers by a ratio of 1.9:1. At 11:30 IST the adv/dec ratio was over 2:1.

The BSE clocked a turnover of Rs 3993 crore.

Reliance Industries shrunk 4% to Rs 1312. A strong 13.8 lakh shares changed hands in the counter on BSE. RIL has a 11.3% weightage in Sensex. The company today called a board meeting on 10 March 2007, to consider the payment of interim dividend for FY 2007 (year ending 31 March 2007). The company has also set 22 March 2007, as a record date for paying interim dividend. The company’s announcement comes after the finance minister raised dividend distribution tax to 15% from 12.5% in Union Budget 2007-08. Paying dividend before the end of this financial year will ensure that RIL pays the existing 12.5% tax on dividend distribution.

IT shares drifted lower. IT major TCS lost 4% to Rs 1205, Infosys shed 2.8% to Rs 2093 and Wipro lost 3.4% to Rs 569. IT pivotals had surged on Thursday, recovering from Wednesday’s fall, under the reckoning that their earnings will be impacted only to a small extent following an increase in tax after the Budget.

The recovery in banks following lower inflation proved short-lived. State Bank of India lost 4.5% to Rs 1005. The stock rose as much as 2.1% to Rs 1074.90 at 12:13 IST following a dip in inflation. HDFC Bank lost 3.3% to Rs 948, and ICICI Bank shed 0.4% to Rs 851.90. The wholesale price index rose 6.05% in the 12 months to 17 February 2007, sharply lower than previous week's annual increase of 6.63% due to a fall in fuel and food prices. The figure was lower than an expected 6.25%.

Engineering & construction major L&T lost nearly 5% to Rs 1465. The stock had bounced back from the lower level on Thursday due to the Union Budget’s thrust on infrastructure.

PSU power equipment major Bhel lost 4% to Rs 2082.

Cigarette major ITC lost 3% to Rs 167. The Budget did not bring cigarettes under value added tax as was feared. Instead, excise duty on cigarettes was hiked by 5%.

Cement shares resumed their slide. Grasim lost 3.9% to Rs 2070, ACC lost 2.4% to Rs 855 and Gujarat Ambuja Cements shed 1.1% to Rs 110.50. In early trade, cement shares had firmed up.

Telecom shares, too, edged lower. Bharti Airtel lost 3.3% to Rs 703 and Reliance Communications shed 2.9% to Rs 415.50.

European markets slipped into the red after an initial firm trend. London’s FTSE 100 Index was down 0.2%, and CAC 40 Index in France was down 0.3. Asian markets were mixed. Chinese shares rose across the board on Friday, led by real estate, as profit-taking in highly valued financial shares eased after this week's massive selling. The Shanghai Composite Index was up 1.2%. But Japan’s Nikkei 225 average was down 1.3%. Hong Kong’s Hang Seng was up 0.4%.

Although the US market ended in the red on Thursday (1 March), it finished well off lows thanks to an upbeat US manufacturing report, which assuaged some concerns about the world's largest economy. The Dow Jones industrial average closed down 34.29 points, or 0.28%, at 12,234.34. The Standard & Poor's 500 Index finished down 3.65 points, or 0.26%, at 1,403.17. The Nasdaq Composite Index fell 11.94 points, or 0.49%, at 2,404.21

FIIs stepped up selling Indian stocks on the day of the Budget, on Wednesday (28 February 2007). FIIs pressed sales worth a massive Rs 1644.30 crore on that day. Their net outflow was Rs 415.70 crore on Tuesday (27 February 2007). The FII outflow was Rs 582.10 crore on Monday (26 February 2007).

FIIs were net sellers to the tune of Rs 483 crore on Thursday (1 March 2007), the day when the Sensex rose 221 points. They were net sellers to the tune of Rs 59 crore in index-based futures on the same day.

Global crude oil prices remained firm and Nymex crude hovered at above $62 a barrel level.

Kotak - Glaxo Smithkline

Download here

Thanks Dunbaka

Sharekhan Commodities Buzz dated March 02, 2007

Download here

Sharekhan Highnoon dated March 02, 2007

Download here

Stratfor - Global Market Brief: China's Engineered Drop

By George Friedman

China's Shanghai Composite Index tumbled 8.84 percent Feb. 27, its largest fall in a decade. Its sister index, the Shenzhen Composite Index, fell 8.54 percent. The size of the drop in China is not significant in and of itself. On a number of occasions during the past year, the Shanghai Stock Exchange has experienced 5 percent plus daily reductions, and it has already boomed and busted once this decade.

But that hardly means the development is insignificant. The fall is important both for how it happened and what it triggered.

How it Happened

This was an engineered drop.

The Chinese government has become increasingly concerned about levels of investment in its economy or, more accurately, the sheer amount of money that is chasing projects. State firms with limitless access to subsidized capital from state banks have used that access to launch thousands of nonprofitable firms. This glut in "investment" money drives up the cost of commodities and adds industrial capacity without actually producing anything of much use, making life more difficult for the average Chinese and unduly harming relations with foreign powers that face a glut of otherwise noncompetitive Chinese goods.

This penchant for overinvestment has now spread to the stock market in two ways. First, the same politically connected government officials who started dud companies are taking out loans to buy shares, or are using shares they already hold as collateral for new loans. Second, ordinary Chinese citizens have started borrowing -- sometimes against their homes -- in order to play the market. In January, the number of total traders on the Chinese exchanges grew by 1.38 million, an increase of 134 percent from a month earlier, while stock turnover was up 700 percent from a year earlier.

The net result is an absurd stock surge with no basis in fundamentals. At present, some Chinese banks now have price-to-earnings ratios higher than financial behemoths such as Deutsche Bank and Chase, despite deplorable management and a history of highly questionable lending policies.

For the past few months, the government has been working to drive down this speculative investing. On Feb. 26, China's State Council launched a new "special task force" that accurately could be referred to as the "get-those-idiots-to-stop-borrowing-to-gamble-on-the-stock-exchanges" team. Its express goal is to get the Chinese domestic security brokers to lay off such speculative decision-making, while also putting a crimp in the source of the subsidized capital.

Day one started by the script, and Beijing is likely quite pleased with the way things are going (or at least it was until its actions unintentionally triggered a global meltdown). Also, since the Shanghai exchange is actually still up 3 percent for the past week despite suffering its largest drop in a decade, the State Council probably hopes for more drops in the days ahead.

What it Triggered

But the rest of the world took a different lesson. Why the Chinese stock crash occurred was unimportant to the outside world, only that it did -- and that it affected everyone else.

For the first time, China has become the trendsetter in the global stock community. Normally, the U.S. exchanges -- especially the S&P 500 index and the Dow Jones Industrial Average -- set the tone for global trading patterns. Not on Feb. 27. This time, China led Asia to a wretched day. The wider the contagion spread, the more margin calls were forced to be called in. (If an account's value falls below a minimum required level, the broker will issue a margin call for the account holder to either deposit more cash or sell securities to fix the problem.)

As the drops snowballed, Europe filed in dutifully behind, mixing the China malaise with its own nervousness about overextended markets in Central Europe and the former Soviet Union. By the time markets opened in the United States -- where investors already were fretting about the subprime mortgage markets -- the only question remaining was how far U.S. markets would descend. In the end, the Dow dropped by the most since the fall triggered by the 9/11 attacks.

So why has this not happened before now? As China's market capitalization has increased, its links to the global system have increased apace. These links have developed very quickly, and with few controls. The Shanghai exchange, for example, more than tripled in total value in 2006 to more than $900 billion -- and much of the rapid-fire initial public offerings (IPOs) of Chinese banks on the Hong Kong and other international exchanges are not included in that little factoid. Indeed, China's mainland exchanges are only the tip of the iceberg -- and they certainly do not include foreign firms that are heavily invested in the mainland.

Two years ago, China's market capitalization was too small for its problems to impact the global system. Now, between ridiculous foreign subscriptions to IPOs, irresponsible corporate policies and irrational valuations all around, that capitalization is to a level -- around $1.3 trillion -- where its integration with the global system via funds and margins makes China a sizable chunk of the international financial landscape. The insulation that once protected international exchanges from Chinese policies is gone, which makes the international system more vulnerable to Chinese crashes.

Feb. 28 and Beyond

Follow-on crashes can come from one of three places.

First, the Chinese believe their exchanges are massively overvalued (hence the engineered crash). They will do this again, and are not (yet) particularly concerned with the international consequences. China planned to dampen its own stock market, not the world's markets. Along with the rest of the world, Beijing did not expect the contagion effect to be so extreme. Yet, for now at least, China's own exchanges are its primary concern, and it will act according to that belief.

Second, everyone else now is going to chew on the fact that Beijing did this intentionally. They will either agree with the Chinese that the exchanges are overvalued and that additional measures are needed, or they will be terrified that Beijing did this intentionally and not care about the reasons. Whether what is sold is a domestic Chinese firm or a foreign firm invested in China does not matter much. Neither does it matter if the stock is on an exchange in China or abroad. Either way, the reaction will be the same: Sell.

Third, trading in 800 of the 1,400 stocks on the Shanghai exchange was suspended during the sudden drops Feb. 27; they have a lot farther to fall, even without any engineered drops caused by panicky selling.

Considering the flaws on which the Chinese system is based, this certainly will not be the last engineered drop. In theory, the move will make foreign investors far more cautious before diving into the Chinese system, but as longtime Stratfor readers know, we have been wrong on the timing of that particular development before.

Download here

Thanks Sulagna

Sharekhan Daring Derivatives for March 02, 2007

Download here

Motilal Oswal - Union Budget 2007-08: highlights and sectoral impact

Download here

Thanks Ramesh

Edelweiss - Daily Market Outlook 2nd March, 07

Market Snapshot

Yesterday, markets made further inroads into the positive in the final trading hour backed by sustained buying activity across index heavyweights to close well above breakeven. While software, steel and telecom stocks led the rally, FMCG and cement stocks lost ground. Global markets, while the Asian indices closed a mixed bag. The BSE Sensex closed at 13,160 (up 222 points) while the NSE Nifty closed at 3,811 (up 65 points).

NSE cash volumes were slightly lower compared to the previous day at INR 81 bn while BSE cash volumes were marginally better at INR 40 bn. The F&O volumes were also lower at INR 315 bn

Sentiment Indicators

The Implied Volatility (IV) across Nifty strikes has reduced to 26-27% levels. The WPCR of Nifty Options decreased to 0.89 compared to the previous day while the 5 day average is 0.90.


Yesterday’s pull back happened on low volumes and the market breadth remained largely in favor of the declines. The market is expected to be range bound in today’s session, taking cues from global indices. A lot of market players are waiting on sideline for clear signal to emerge. With concerns of a slowdown in the US economy, market participants are jittery to take fresh positions in the short term.

Nifty, which saw significant short buildup in the previous few trading sessions, saw the OI remaining unchanged in yesterday’s trading session. However there was significant activity in the Nifty futures during the day signaling participants riding on intra day movement without taking directional call on the broader market movement.

IT, FMCG and select pharma stocks such as Auro Pharma are expected to outperform the broader market. However we suggest the investors taking long positions in the market to hedge their positions by shorting Nifty futures.

Nifty’s support levels are at 3757 and 3702. The resistance level for Nifty is at Nifty at 3853.

Download here

Thanks Yash


Download here


Nothing Concrete...bulls hope to cement gains

For sleep, riches, and health to be truly enjoyed, they must first be interrupted.

The interruption for the bulls has taken its toll and the hope is that the worst is behind them. Short-covering lifted key indices following the crash on Wednesday. But, we still can't say that the bulls are in somewhat safe zone. FII inflows have turned negative. Concerns remain on inflation and interest rates. Watch out for the inflation data to be released at noon. A financial daily says the WPI-based inflation for the latest week is down to 6.05% from 6.63%. Also, there has been some slowdown in manufacturing (PMI) as well as the overall economic activity (Q3 GDP numbers). Exports in January were also down sharply. We have to see how the economy behaves in the ensuing months.

Global markets have not been doing well of late. Oil is holding on to the $61 per barrel mark. Fund flows to emerging markets have not been encouraging in he past 2-3 weeks. This trend will have to reverse going ahead to improve the sentiment across the globe, including India.

Separately, the dust has still not settled on the budget and we will continue to see specific action in sectors like IT, Cement, Retail and Construction among others. Those who have enough patience can be ready to make an entry in fundamentally sound companies.

As for today, we expect a cautious opening and another choppy day. Chances are bulls will try and chart their own territory and to some extent ignore the global cues for a day. Don't plunge in till some stability is seen. Be geared for some sideways movement in the coming weeks.

FIIs were net sellers to the tune of Rs4.83bn (provisional) in the cash segment yesterday even as the Sensex rose by more than 200 points. In the F&O segment, they offloaded stocks worth Rs8.67bn. On the Budget day the foreign funds pulled out a whopping Rs16.44bn from the cash segment. On the other hand, Mutual Funds pumped in Rs2.43bn on the same day.

Hindalco will be in focus as its Board meets today to consider a preferential issue to the promoters for funding the big-ticket acquisition of Novelis.

Zensar Technologies could gain after the company said that Japan's Fujitsu will sell its entire stake in the company to the RPG Group, the promoter of the company.

LT Overseas is another stock to keep an eye on as its Board will decide on acquiring/investing in Dawat Foods Pvt. Ltd.

Nitco Tiles' Board will consider merging Shark Properties Pvt Ltd into the company and Nitco Realties into Motivation Properties. It will also discuss a plan to increase the investment ceiling for FIIs, up to 49% of the paid-up capital.

Jaiprakash Associates' Board has increased the limit of investment by FIIs in the company to 45% of the paid-up capital. Heritage Foods India has commissioned three more Retail Stores in Andhra Pradesh.

US stocks closed in the red yet again, in the wake of a rise in jobless claims and a lower forecast for semiconductor sales. The Dow Jones Industrial Average was down as much as 209.09 points, or 1.7%, before recovering to close 34.29 points lower. The S&P 500 Index retreated for a sixth time in seven days, while the Nasdaq Composite Index slumped to a two-month low.

The Dow slipped 0.3% to 12,234.34. The S&P 500 fell 3.65, or 0.3%, to 1403.17. The Nasdaq decreased 11.94, or 0.5%, to 2404.21, its lowest since Dec. 22.

Former Federal Reserve Chairman Alan Greenspan says that a recession in the US is possible, though not probable, this year as excess inventory is being reduced quickly. Earlier this week, he had said he couldn't rule out a recession this year.

After the close Dell reported quarterly earnings that topped estimates on lower quarterly revenue that missed estimates. Shares declined in extended-hours trading.

US light crude oil for April delivery rose 21 cents to settle at $62 a barrel on the New York Mercantile Exchange. The front-month contract was 18 cents lower at $61.82 a barrel in extended trading in Asia.

Treasury prices edged higher, lowering the yield on the benchmark 10-year note to 4.55% from 4.56% late on Wednesday. In currency trading, the dollar gained against the euro and slumped versus the yen, with the Japanese currency surging as traders rushed to pay back yen loans following comments from Japan's finance official. COMEX gold for April delivery fell $7.40 to settle at $665.10 an ounce.

Stocks across Europe dropped for a third day amid growing concerns over the US economy and the unwinding of the yen carry trade. The UK's FTSE 100 closed down 0.9% at 6116.00. The index is down 5% since Monday's close. The French CAC 40 fell 1.1% to 5,458.40 and the German DAX 30 gave up 1.1% to 6,640.24. The pan-European Dow Jones Stoxx 600 index finished down 0.8% at 361.96.

In Asia this morning, the Nikkei was down 168 points to 17,285 while the Hang Seng in Hong Kong was up 151 points at 19,497. The Kospi in Seoul was up 3 points at 1420.

The Morgan Stanley Capital International Asia-Pacific Index slid 0.6% to 142.63 at 12:16 p.m. in Tokyo. It is down 3.6% in the past five days, the most since the week ended July 14. Other regional markets declined, except in China, New Zealand, Indonesia and Thailand.

South Korea's Posco gained after Warren Buffett, the world's second-richest man, said that Berkshire Hathaway Inc. owns 4% of the company.

In emerging markets, the Bovespa in Brazil fell by 0.9% to 43,516 while the IPC index in Mexico was flat at 26,647 and the RTS index in Russia plunged 3.3% to 1797.

Intra-day Stock Ideas

Nifty (3811) S3778 R3844

BUY Rel Capital (632.80)
SL 627 T 642, 644

BUY R Com (428.70)
SL 424 T 436, 439

BUY Rolta (326.80)
SL 322 T 335, 338

SELL Chennia Petro (191.10)
SL 195 T 181, 179

SELL 3i Infotech (257.75)
SL 261 T 249, 245

Market Watch & Insider Trades

Insider Trades:
Bajaj Auto Finance Ltd: Mr. Dipak Poddar, Managing Director has sold in open market 60000 equity shares of Bajaj Auto Finance Ltd on 23rd February, 2007.

Esab India Ltd: HDFC Mutual Fund:- a) HDFC Children's Gift Fund - Investment Plan, b) HDFC Prudence Fund has purchased from open market 164000 equity shares of Esab India Ltd on 27th February, 2007.

TV Today Network Limited: Reliance Capital Limited has purchased from open market 6918327 equity shares of TV Today Network Limited on 28th February, 2007.

Market Volumes:
The turnover on NSE was down by 20% to Rs100.6bn. BSE Technology index was the major gainer and gained 3.36%. BSE Bank index (up 2.75%), BSE Consumer Durable index (up 2.04%) and BSE Capital Good index (1.84%) were among the other major gainers. However, BSE Auto index lost 0.77%.

Volume Toppers:
IFCI, Indian Bank, IDFC, SAIL, ITC, R Com, India Cement, IVRCL Infrastructure, Nagarjuna Construction, HCC, TTML, Satyam Computer, HLL, Ashok Leyland, Balrampur Chini, Reliance Industries, Indiabulls, Tata Steel and Firstsource.

Upper Circuit Filters:
Shah Alloys, Goldstone Technology, Fedders Lloyd, Electro Therm, Flawless Diamond, Jay Bharat Textile, Ansal housing and IOL Broadband.

Delivery Delight:
Adlabs Films, Amtek India, Bank of India, Cadila Healthcare, GTC Industries, Gujrat State Petronet, GVK Power, IFCI, Jain Irrigation, Kirloskar Brothers, LIC Housing, Mysore Cements, Opto Circuits, Patni Computer, Radiko Khaitan, Reliance Capital, Siemens, Suzlon, TVS Motor and Wockhardt.

Brokers Recommendation:
HLL – Buy from Motilal Oswal with target of Rs240.

Long Term investment:
Indotech Transformers.

Major News Headlines:

Tata Motors Feb sales up 19%

M&M Feb sales up 19%, tractor sales up 5.2%

Hero Honda Feb sales up 11.9%

Bajaj Auto Feb sales down 1.7%

Maruti Feb sales up 53%, to raise prices from 15th March

TVS Feb sales up 10%

Wochhardt board to consider interim dividend on March 8

JSW Steel raises Hot-rolled Coil prices by Rs1200 per ton

Colgate Board to mull second Interim Dividend on March 9

Union Bank may earn Rs350mn in interest on Cash Reserves

Govt to provide Rs13bn grant to IFCI

From the Research Desk -Budget FY08...The Day After

FMCG Industry

Key Announcements

Packed biscuits of maximum retail sale price (MRP) not exceeding Rs50 per kg fully exempted from excise duty.

Excise duty on food mixes (including instant food mixes) fully exempt from excise duty.

Customs duty on food processing machinery has been reduced from 7.5% to 5%.

Crude as well as refined edible oils exempt from the additional CV duty of 4%.

Customs duty on crude sunflower oil has been reduced from 65% to 50% and on refined sunflower oil from 75% to 60%.

A Special Purpose Tea Fund launched for re-plantation and rejuvenation of tea. Similar financial mechanisms to be announced for coffee.

Excise duty on parts of footwear reduced from 16% to 8%.


Positive for Marico, Bata, organized biscuit manufacturers like Britannia, ITC and food-processing companies like ITC, Nestle, HLL, Dabur, MTR Foods.

How Market Fared

Is the worst over?

Markets witnessed sharp recovery in the later half of the trading session as bulls made a solid comeback managing to recover early losses. Both the key indices closed with healthy gains with benchmark index accumulating over 200 points and NSE Nifty gaining over 60 points. Technology stocks led the rally with Bank and Capital Good stocks contributing to the rally. All the key indices closed in green except for Auto index which closed 0.77% lower. Finally, the 30-share benchmark Sensex surged 221 points to close at 13159. NSE Nifty spurred 65 points to close at 3811.

Maruti pared its intra-day gains on back of selling pressure towards the end. The scrip was marginally down 0.2% to Rs840. The Company registered its February sales at 62999 units (up 53%). An also announced that it would raise Car prices from 15th March. The scrip touched an intra-day high of Rs870 and a low of Rs825 and recorded volumes of over 12,00,000 shares on NSE.

M&M slipped 0.8% to Rs805. The company’s February Vehicle sales was up 19% at 13746 units and tractor sales at 7003 units (up 5.2%). The scrip touched an intra-day high of Rs817 and a low of Rs790 and recorded volumes of over 10,00,000 shares on NSE.

JSW Steel advanced by over 2.5% to Rs480 after the company raised Hot-rolled Coil prices by Rs1200 per ton. The scrip touched an intra-day high of Rs495 and a low of Rs466 and recorded volumes of over 10,00,000 shares on NSE.

IFCI spurred by over 10% to Rs30 after Government announced that it would provide Rs13bn restructuring package to IFCI. The scrip touched an intra-day high of Rs30 and a low of Rs25 and recorded volumes of over 16,00,00,000 shares on NSE.

Technology stocks were in the limelight. Frontline stocks Satyam Computer surged over 4% to Rs432, Wipro spurred over 4% to Rs585 and Infosys advanced 3% to Rs2140. Mphasis BFL, NIIT Ltd and Rolta were the major gainers among the Mid-Cap stocks.

Metal stocks also recovered towards the end on back of value buying. National Aluminum surged by over 3% to Rs21, JSW Steel rose over 2.5% to Rs480, Tata Stel was up by 2% to Rs451and Sterlite Industries added 1.5% to Rs477.

Pharma stocks also were back in good health on back of fresh buying. Wockhardt Pharma surged by over 9% to Rs385, Sun Pharma advanced 2.8% to Rs955, Ranbaxy gained 1.5% to Rs342 and Lupin has added 1.5% to Rs608.

Sugar stocks also ended with smart gains. Renuka Sugar surged by over 5% to Rs317, Balrampur Chini advanced 2.1% to Rs60 and Sakhti Sugar was flat at Rs66.

Select Real Estate stocks pared their early gains on back of selling pressure. Century Textile slipped 0.7% to Rs537 and Parsvnath was down by 1.3% to Rs276. However, Bombay Dyeing gained 1% to Rs555.

IDBI Capital - Morning Alert

Download here

Recovery may continue

In the short term, domestic bourses will track global bourses. The Japanese currency yen is trading near a 10-week high against the US dollar after a sell-off in emerging-market stocks prompted some investors to cut carry trades, where they borrow cheaply in Japan and invest in countries with higher yields. Risky high-yielding investments financed with yen have continued to lose favor since a massive decline in the main Chinese stock index on Tuesday (27 February) and worries about the US housing market on Tuesday drove US blue chips on the same day to their biggest daily decline since the Sept. 11, 2001, attacks. Investors are watching global stock markets intensely for indications of investor appetite for risk.

Asian markets were mostly in the green on Friday (2 March 2007). Key benchmark indices in Australia, China, Hong Kong, South Korea and Taiwan were up by between 0.01% to 1.2%. But Japan’s Nikkei 225 average was down 1.3%.

Though the US market ended in the red on Thursday (1 March), it finished well off its lows thanks to an upbeat US manufacturing report, which assuaged some concerns about the world's largest economy. The Dow Jones industrial average closed down 34.29 points, or 0.28 percent, at 12,234.34. The Standard & Poor's 500 Index finished down 3.65 points, or 0.26 percent, at 1,403.17. The Nasdaq Composite Index fell 11.94 points, or 0.49 percent, at 2,404.21

FIIs stepped up selling of Indian stocks on the day of the announcement of the budget on 28 February. FIIs pressed sales worth a massive Rs 1644.30 crore on that day. Their net outflow was Rs 415.70 crore on Tuesday 27 February. The outflow was Rs 582.10 crore on Monday 26 February.

FIIs were net sellers to the tune of Rs 483 crore on Thursday, the day when Sensex had risen 221 points. They were net sellers to the tune of Rs 59 crore in index-based futures on that day. They were net buyers to the tune of Rs 554 crore in individual stock futures.

Bargain-hunting triggered a recovery on the domestic bourses on Thursday as Sensex jumped 221 points. IT shares led the rally under the reckoning that their earnings will be impacted only to a small extent following an increase in tax in the Budget. On the budget day on 28 February, it was IT, cement and construction stocks which had led sharp fall of 541 points in Sensex following increase in taxes on these sectors in the budget.

The weekly inflation data is due today. Analysts are expecting a decline in inflation following a slew of measures taken by RBI and the government to check price pressures.

T The next major trigger for domestic bourses is Q4 March 2007 results. Traders are likely to start building positions based on results expectations.

Emkay - Morning Notes, Union Budget Extracts

Download here

Market may move sideways

Yesterday's bounce after steep fall in the last two session has renewed the optimism amongst the investors. However caution should be maintained on presence of sharp intra-day volatility. The dwindling FII inflows is another cause of concern. Among the local indices, the Nifty could test higher levels at 3850 and on the downside it has support at 3780. The Sensex has a likely support at 13050 and may face resistance at 13200.

US indices posted a small decline after a big early drop on Thursday. While the Dow Jones lost 34 points to close at 12234, the Nasdaq ended 11 points lower at 2404.

Indian ADR losers pipped gainers on the US bourses. Tata Motors and Rediff fell sharply over 2% while MTNL, Satyam, Wipro, HDFC Bank and ICICI Bank declined over 1% each. Patni Computers rallied sharply and soared over 2% while and Infosys ended with steady gains.

Investsmart - Morning Call

Market Grape Wine :

In House :

Nifty at a support of 3730 & 3710 levels with resistance at 3850 & 3880
levels .

Markets to remain under pressure at higher levels with negetive Bias .

Hindalco board meets likely the counter to be under pressure .

Out House :

Sensex at a support of 13013 & 12800 levels with resistance at 13292 &
13335 levels .

Maintain strict stop loss as markets to be very choppy and volatile .

Inflation expected to be 6.17% to 6.22 % likely .

Buy : RIL & RelComm

Buy : Infy & Satyam

Buy : IciciBank & UTIBank

Buy : Polaris & Mphasis


Buy : NIITTech

Buy : IVRCL , HCC & NagarConst at dips

Buy : Glenmark , Gitanjali , Adalbs , NDTV & TvToday

Dark Horse : Infy , Polaris , Gitanjali , Rnrl , IFCI , Satyam , UtiBank ,
GlenMark & PrajInd

TGIF : Thank God its Friday : Markets at a corrective mode buy good scripts
with 3 months prespective and be invested .

Thanks Yash

Anagram - Daily Call

Download here

Investors and Scientists - Chetan Parikh

In a great book, "The only three questions that count", the author, Ken Fisher, writes about investing and scientific inquiry.

“When I was a kid, if you wanted to be a scientist they made you take Latin or Greek. I was a good student generally and took Latin not because I wanted to be a scientist—I didn’t—but because I couldn’t figure out the benefit of my other options, Spanish or French. Since no one speaks Latin, I forgot almost everything immediately thereafter, except the life lessons in which Latin abounds—like Caesar distinguishing himself by leading from the front of his troops, not the rear as most generals did (and do). It’s maybe the most important single lesson of leadership.

Another lesson: The word science derives from the Latin scio—to know, understand, to know how to do. Any scientist will tell you science isn’t a craft; rather, it’s a never-ending query session aimed at knowing. Scientists didn’t wake up one day and decide to create an equation demonstrating the force exerted on all earthly objects. Instead, Newton first asked a simple question like, “I wonder what the heck makes stuff fall down?” Galileo wasn’t excommunicated and immortalized for agreeing with Aristotle. He asked, “What if stars don’t work like everyone says? Wouldn’t that be nuts?” Most of us would see the best scientists of all time, if we could meet them face-to-face, as maybe nuts. My friend Stephen Sillett, today’s leading redwood scientist, changed the way scientists think about old growth redwoods and trees in general by shooting arrows with fishing lines tied to them over the tops of 350-foot-tall giants, tying on a firmer line, and free-climbing to the tops. He found life forms and structures up there no one ever knew existed. Dangling off those ropes 350 feet from terra firma is nuts. Nuts! But he asked the questions: What if there is stuff in the very tops of standing trees that isn’t there when you cut them down? And if there is, would it tell you anything about the trees? In the process, he discovered much no one had ever known existed. Why am I telling you this?

Because most of what there is to know about investing doesn’t exist yet and is subject to scientific inquiry and discovery. It isn’t in a book and isn’t finite. We just don’t know it yet. We know more about how capital markets work than we did 50 years ago, but little compared to what we can know in 10, 30 and 50 years. Contrary to what the pundits and professionals will have you believe, the study of capital markets is both an art and a science—one in which theories and formulas continually evolve and are added and adjusted. We are at the beginning of a process of inquiry and discovery, not the end. Its scientific aspect is very much in its infancy.

Scientific inquiry offers opportunities ahead as we steadily learn more about how markets work than we ever imagined we could know previously. What’s more, anyone can learn things now that no one knows but in a few decades will be general knowledge. Building new knowledge of how capital markets work is everyone’s job, whether you accept that or not. You’re part of it, whether you know it or not. By knowingly embracing it you can know things others don’t—things finance professors don’t know yet. You needn’t be a finance professor or have any kind of background in finance to do it. To know things others don’t, you just need to think like a scientist—think freshly and be curious and open.

As a scientist, you should approach investing not with a rule set, but with an open, inquisitive mind. Like any good scientist, you must learn to ask questions. Your questions will help you develop hypotheses you can test for efficacy. In the course of your scientific inquiry, if you don’t get good answers to your questions, it’s better to be passive than make an actionable mistake. But merely asking questions won’t, by itself, help you beat the markets. The questions must be the right ones leading to an action on which a bet can be made correctly.”

Investsmart - Budget 2007-2008

Download here

Budget Analysis - UBS, DB, ENAM, Morgan Stanley

Download here

If you are looking for other BUDGET reports, click on the Budget SEARCH label below!

FII: - Rs 415 cr, MF + Rs. 348 cr

FII Gross purchases Rs 3048.70 Cr Gross Sellers 4693 Cr Net Sellers Rs 1644.30 Cr.
MF Gross Purchases Rs 1224.73 Cr Gross Sellers Rs 981.25 Cr Net Buyers Rs 243.48 Cr.

Our View:

These numbers reflect the selloff and the global disenchantment with emerging markets. The budget did not help at all. Provisional sell figure of over 400 crores for FIIs means more cautious note tomorrow.. though the closing momentum of today may be seen tomorrow as well in the early session.

Close: Post Budget chaos continues

here was no clear direction in the initial trading sessions as to where the market was headed after a volatile start and was followed by choppy sessions. Buying / Short covering was seen in final trading session after buying activity picked up at lower levels before ending the day in green. Steel stocks traded strong as Hot Rolled coil prices were hiked. Support from the Global front was lacking as volatility in Chinese markets continued to send jitters to investors Global investor. Asian Indices ended in Red while the European indices were in positive.

Sensex closed higher by 221 points. The Gainers for the day were Satyam (436, +6%), TCS (1,253, +5.43%), HDFC Bank (980, +5.08%), Wipro (586, 4.48%). While restricting the Gains were Bajaj Auto (2517, -3.82%), ACC (875, -2.78%), Gujarat Ambuja (113, -2.54%), Hindalco (137, -2.26%).

The monthly sales numbers of the Auto companies were released by the respective companies. Sales of Hero Honda stood at 2.8 lakh units up 12% yot. The numbers were good in a competitive two wheeler segment. Market share touched 40% in November. No price hike is planned by the company. In fact the papers today talked of a price cut. The stock slid by a percent down for the day. Bajaj Auto also slipped down on negative numbers.

TVS Motors reported a 6% jump in motorcycle sales during February at 70,155 units compared to 66,391 units in the same month last year. The company reported a 10% increase in its total two-wheeler sales at 1,20,110 units during the month against 1,08,923 units during February 2006. TVS expects to launch a new model this month month and expects stronger growth in the segment during the year. TVS sold 19,937 units of gearless scooters 'TVS Scooty' in February compared to 16,052 units in the same month a year ago, an increase of 24%. The company's exports grew by 33% in February at 8,017 units. The numbers have been above the expectations and the decent growth is seen in the exports. TVS too slipped lower for the day.

Bajaj Auto the arch rival of Hero Honda in the Two Wheeler segment also reported a negative growth of 2% on Yearly basis. Sales of motorcycles fell to 1,71,780 units from 175,256 units. While the over all sales of all two-wheelers fell 3% to 1,74,220 units from 1,79,880 units. Company continued to grow in the three-wheeler segment. Sales in this segment increased by 8% and stood at 27,992 units against 25,896 units in the same month previous year. However, Stock was smashed down by 4% for the day.

Cement companies were hammered on increase in excise duty by 50%. Unlikely that cement will sell below 190 per bag. The price hike will be passed on screamed the papers.. but clearly the manufacturers are on the backfoot given the FMs unhappiness on the price increase.

Technically Speaking: Declines out numbered the Advances and there were 1435 declines against 1140 advances. The volume for the day stood at Rs. 4097 cr. The resistance for the day was between 14,227-14,401 levels while support lied at 12,945-12737 levels. Sensex is moving towards 13,300 levels which could be a pull back. As of now Bulls have clearly showed strength at 12,800 levels.

Sharekhan Investor's Eye dated March 01, 2007


  • Q3FY2007 GDP up by 8.6%


Bharat Electronics
Cluster: Apple Green
Recommendation: Buy
Price target: Rs1,715
Current market price: Rs1,550

Budget positive for BEL

The budgetary allocation for the defence sector has been pegged at Rs96,000 crore for 2007-08, which amounts to a growth of 7.9% over the earmarked figure of Rs89,000 crore in the last year’s budget. The same is 11.6% higher than the Rs86,000 crore shown in the revised estimate for 2006-07. The growth in the total defence allocation is in line with the trend seen in the past couple of years.

The huge jump in the capital outlay for equipment is likely to benefit a company like Bharat Electronics Ltd (BEL), which has emerged as one of the key suppliers of electronic and other high tech equipment to the defence forces. This coupled with the order backlog of around Rs7,300 crore (as on December 2006) and a strong traction in civilian business provides a reasonably strong revenue growth visibility for the company. Moreover, the recent alliances with leading defence contractors would also add to the overall growth in revenues over the coming years.


GlaxoSmithKline Pharmaceuticals

Powered by rich product pipeline of parent
GlaxoSmithKline Pharmaceuticals (Glaxo), for the full year CY2006, reported a marginal revenue growth of 4.6% to Rs1,552.92 crore. The growth was lower because the company had divested its low-margin animal healthcare business during Q3CY2006. The operating profit margin (OPM) expanded by 180 basis points to 30.6%, resulting in an 8.6% rise in the net profit to Rs545.5 crore. The full year numbers are not strictly comparable with those of the previous year, as the company had divested its animal healthcare business during Q3CY2006.



Two-wheelers in low gear

  • Bajaj Auto’s February sales were disappointing, the same declined by 1.2% year on year (yoy).
  • Hero Honda Motors’ performance continued to be steady. It recorded a growth of 11.9% yoy in February 2007, with sales of 280,515 vehicles.
  • After a dismal performance in the last two months, growth in TVS Motors’ sales was in line with the industry growth. The company sold 120,110 vehicles, recording a growth of 10.3%.
  • Maruti Udyog reported a growth of 53.3% for February 2007. The growth rate appears high due to a low base in February 2006 in anticipation of an excise duty cut in the last budget.
  • Mahindra and Mahindra’s February sales were good, however the growth rate seems to have slowed down in comparison with the earlier months.
Download here