Thursday, March 15, 2007
Bulk Deals to Watch
15-MAR-2007,EIMCOELECO,Eimco Elecon (India) Ltd.,HDFC TRUSTEE CO LTD A/C HDFC GROWTH FUND,BUY,205000,216.00,-
15-MAR-2007,EIDPARRY,EID Parry Ltd.,HOUSING DEVELOPMENT FINANCE CORP LTD,SELL,999867,125.25,-
15-MAR-2007,EIMCOELECO,Eimco Elecon (India) Ltd.,INDIA CAPITAL FUND LTD,SELL,206261,216.04,-
15-MAR-2007,TUBEINVEST,Tube Investments Ltd,HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED,SELL,1250000,54.65,-
Sharekhan Investor's Eye dated March 15, 2007
PULSE TRACK
-
Infrastructure Index up 8.7% for January 2007
STOCK UPDATE
Elder Pharmaceuticals
Cluster: Apple Green
Recommendation: Buy
Price target: Rs508
Current market price: Rs372
Elder strikes it again!
Elder Pharmaceuticals (Elder) has entered into an in-licencing alliance with M/s. Laboratorios Farmaceuticos Rovi, S.A. (Rovi) of Spain to market advanced heparins (anti-thrombotics) in India for treatment and prevention of thrombo-embolic venous diseases like deep vein thrombosis and pulmonary embolism.
VIEWPOINT
Sical Logistics
Sical to demerge non-core businesses
We attended Sical Logistics' conference call to discuss the de-merger of its non-core businesses. We present below the key takeaways from the call.
- Sical Logistics will be de-merging its non-core businesses, namely the trading (building material), coffee plantation and vehicle service businesses, into a new company called Sicagen.
- Sical Logistics is already in the process of selling its other non-core businesses for a consideration of Rs100 crore (of which Rs45 crore has already been realised). After the proposed de-merger and sale, Sical Logistics will become a core logistic company.
- The de-merger will be a mirror split of the existing company whereby the equity shareholders will receive shares in Sicagen in the ratio of 1:1.
- The assets of the new company will range between Rs300 and Rs350 crore. This will include loans and advances sanctioned by Sical Logistics to its subsidiaries.
- The management expects a top line of Rs270 crore and a profit after tax of 3-4 crore for Sicagen in FY2008.
Close: Flame of hopes cooled by waves of selling !
Post the deep fall yesterday, Indian markets started off strong on the back of global stability and traded ranged in green but ended on a flat note. At the previous trading hour indices consolidated the gains which posted earlier. Profit booing seen in index heavy weights and sectors like Automobile, Banks, Engineering, FMCG, Energy and PSU. Some of the companies have declared the advance tax numbers which seems to be good, expect the market to bounce back. But the worry is inflation, expected to be around 6.20%-6.30% for this week. That?s not particularly good; this will be a constant worry for the markets. Asian Markets ended in green, European Markets currently trading strong.
Quarter 4 Advance Tax numbers: SBI Rs 690 cr vs Rs 1036 cr (yoy), ACC Rs 160 cr vs Rs 50 cr (yoy), Century Tex Rs 24 cr vs Rs 30 cr (yoy), Hindalco Rs 265 cr vs Rs 171 cr (yoy), Grasim Rs 200 cr vs Rs 105 cr (yoy).
Sensex closed up by 14 points at 12543.85. It is helped up by gains in Dr Reddys (674.9,+4 percent), ITC (147.35,+3 percent), Infosys (2078.2,+3 percent), Hindalco (130.65,+2 percent) and TCS (1236.2,+2 percent). Restricting the gains are SBI (921.9,-3 percent), HDFC (1513.55,-3 percent), Tata Motors (725.85,-3 percent), ACC (731.65,-2 percent) and RCVL (390.65,-2 percent)
French nuclear reactor maker Areva has raised its offer for REpower to 140 euros per share after seizing more than 30% of the German wind-turbine maker for which a bid has also been placed by Indian wind turbine maker Suzlon Energy. Areva announced it and agreed to acquire additional shares of REpower Systems AG for a purchase price of 140 euros per REpower share. The move comes after REpower recommended an offer worth 126 euros per share from Suzlon which had in turn trumped a previous offer from Areva worth 105 euros. This is a big negative for Suzlon, because this means Suzlon will continue to bid higher and this bid is important for Suzlon.
The Metal stocks ended in green. The JSW group plans to diversify from its metals business into manufacture and marketing of cement. This marks the second recent diversification for the Jindal group. The mine to metals group is examining the feasibility of setting up a cement plant at a cost of Rs130 cr at its steel facility in the Bellary district of Karnataka. The move to diversify into cement in addition to mining and metals, ports and industrial gases is an attempt by the Jindals to capitalize on the growth of the core and manufacturing sectors in an economy growing at more than 9% per annum. The cement foray will also allow the group to utilize a by product of steel making slag, which comprises impurities that are removed while converting ore to steel in furnaces. With the proposed expansion of its steel plant, the company will be producing more slag. This waste product is currently sold at Rs 250 per tonne to other cement makers in the area. With more slag available in the future, the company wants to use it to manufacture a higher value added product to boost its margins and revenues. JSW Steel has been in a massive expansion phase having outlined plans to invest Rs 620 cr over the next couple of years for a variety of projects. JSW ended marginally up and its peer Tata Steel ended marginally up, SAIL ended up 2.38%.
Energy stocks ended in mix for the day. ONGC is planning to enter into a comprehensive technical collaboration deal with British Petroleum (BP) for deepwater exploration blocks held by the latter. BP has also offered its expertise to ONGC for jointly undertaking the exploration and development of the coal bed methane (CBM) blocks held by ONGC. BP will help ONGC develop an understanding of the likely potential for exploring deepwater blocks by re-processing its seismic and well data. Any future commercial participation will be based on the results of this study. Following the joint study and subject to government approval, BP and ONGC will jointly develop and explore the GK-DW-1 block in the Kutch basin where the two have already chalked out a work programme. The deal highlights the fact that ONGC lacks sufficient expertise in the exploration of the deep-water blocks. However, with BP's collaboration the exploration and development activity will speed-up for ONGC. The stock ended marginally down and its peer RIL also closed marginally down.
Technically Speaking: It was a ranged session for the whole day before closing. Sensex touched intraday high of 12789 and low of 12510. Sensex is moving in a range of 12900 and 12500. A breakout on either side could give a big move. Resistance lies at 12714, 12891. Support at 12435, 12333. Market turnover stood at Rs 3824 cr. Overall breadth was in favor of Advancers where the Advancers stood at 1458, Decliners stood at 1112.
Anand Rathi - Tayo Rolls
Promoted by TATA group along with couple of foreign promoters, wherein TATA's hold 38% while foreign promoters hold around 12% stake. Company is predominantly engaged in manufacture of all kind of ROLLS for steel mills. This is kind of one stop shop for the steel mills to source roll requirement and is market leader in India. Present Roll making capacity is 13,500 MTs, which will be raised to 17,000 MTs by 2008.
Company exports around 30% of the Rolls to developed markets like Europe and USA, where due to high cost, quite a few such facilities are being closed down and company is exploiting the opportunity being a high quality roll maker. Company's clients list includes players like - POSCO, CORUS, Thyssen, China Steel, SSAB etc
Company is targetting FIVE FOLD GROWTH IN FIVE YEARS in roll business. After the acquisition of CORUS by TATA group, it could be legitimately expected that exports to this European player will grow from this TATA company
For the March'07, company is likely to report EPS of Rs 20-21, there by discounting this earnings by just 6 times, which is very attractive for a TATA company with high growth potential.
In our view at current price of Rs 123, its strong Buy with significant potential. One can Buy with stop loss of 110 to look for target of RS 175 in medium term and Rs 220 in long term.
Download here
Sharekhan Investor's Eye dated March 14, 2007
Alphageo India
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs270
Current market price: Rs202
Bags Rs60-crore contract from ONGC
Alphageo India has bagged a 3D (three-dimensional) survey contract worth Rs60 crore from Oil & Natural Gas Corporation (ONGC). With this order in hand, the company is likely to opt out of the low-margin 2D (two-dimensional) survey order of Oil India Ltd (OIL) which is worth around Rs20 crore. Thus, the effective increase in the order backlog works out to Rs40 crore.
ITC
Cluster: Apple Green
Recommendation: Buy
Price target: Rs200
Current market price: Rs142
VAT on cigarettes
Key points
- ITC has been underperforming the market for quite some time owing to fears of the implementation of the value added tax (VAT). We believe the stock would continue to underperform till clarity emerges on how VAT would be implemented and how the subsequent price hike would affect the company's volumes.
- Historical data shows that whenever there has been a price hike in the range of 10-12%, cigarette volumes have dipped. We believe that a 12.5% VAT may result in a 8-10% price hike across segments. Consequently, we may see lower growth or no growth in volumes in 2008.
- We believe that with VAT getting implemented, our earnings per share (EPS) estimate for FY2008 would change by 9% from Rs8.8 to Rs8, which is still a 9.6% growth over the FY2007 EPS. At the current market price of Rs142, the stock is quoting at 17.7x its FY2008E EPS and 10.7x FY2008E enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA). We maintain our Buy recommendation on the stock with a revised price target of Rs200.
Lupin
Cluster: Apple Green
Recommendation: Buy
Price target: Rs670
Current market price: Rs570
Building momentum in EU business
Lupin, together with its French Regulatory agent Venipharm, has received the marketing approval for generic Cefpodoxime Proxetil 100mg tablets in France. Cefpodoxime Proxetil is a cephalosporin antibiotic used to treat a variety of bacterial infections. Lupin's Cefpodoxime Proxetil tablets would be the generic equivalent of Sanofi-Aventis's Orelox tablets. The sales of Orelox tablets in France are close to 75 million euros as per IMS. The patent on Sanofi's Orelox is due to expire in August 2007 in France.
MUTUAL FUND: INDUSTRY UPDATE
Weak global sentiment weighs on equity AUMs
The AUM for equity funds declined by 6.4% to Rs137,412 crore in February 2007. The fall in the AUM was largely due to the market meltdown seen towards the end of the month.
Download here
Market wipes out early gains; ends 14 points ahead
The Sensex experienced a trend reversal during the day. The benchmark index, which after opening higher at 12,655.94, had surged to 12,789.81, eased as selling began in full-swing. Offloading continued till the barometer index touched a low of 12,510.75, a fluctuation of 279.06 points.
Volatility was the trademark of today's session, which experts opine the domestic market will suffer through March 2007. According to them, healthy corporate results in April should usher in some stability.
The 30-share BSE Sensex settled 14.23 points higher, at 12,543.85, while the S&P CNX Nifty rose 2.50 points, at 3,643.60.
In the past few days, the domestic bourses had slipped because of weakness in the global markets.
The market-breadth, a measure of the overall health of the market, was positive, yet not as strong as in the earlier part. Against 1,458 shares advancing, 1,112 declined. A total of 75 scrips remained unchanged. The BSE Small-Cap Index closed at 6,368.18, up 44 points (0.70%), while the BSE Mid-Cap Index ended at 5,280.79, up 34 points (0.66%).
The BSE cash turnover amounted to Rs 3826.13 crore while the NSE F&O turnover was Rs 26715.87 crore.
Among the 30-Sensex pack, 17 declined while the rest had advanced.
Pharma major Dr Reddy’s Labs was the top gainer, up 5.53% to Rs 682, as 1.23 lakh shares changed hands in the counter on BSE. The company has pulled out of the race to acquire the generic drugs unit of Merck. The German drugmaker recently said it may sell the generics division to focus on high-margin branded pharmaceuticals and chemicals, to help cut debt from its $13.3 billion Serono acquisition.
Merck's generics business is expected to cost at least 4 billion euros ($5.3 billion), according to people close to the sales process. Too big a size, the transaction too large and the timing not right are the various reasons Dr Reddy’s Labs has put forward for quitting the race.
Cigarette major ITC rose 3.40% to Rs 147.70, on high volumes of 20.65 lakh shares, after striking a high of Rs 150.85. The stock surged on reports that its food unit is likely to bid for Patak's, UK, which is valued at about 200 million pounds ($387 million). Patak's, a 50-year-old family-owned company, makes a range of ready-to-eat Indian foods, cooking sauces, snacks, spices and pickles, and is also a supplier to shops and restaurants worldwide.
ITC, which derives more than half its revenue from cigarettes, is keen to strengthen the portfolio in the food segment. The firm sells ready-to-eat food, confectionery, biscuits and snacks.
Reliance Industries (RIL) was down 0.61% to Rs 1277.20, on a volume of 11.45 lakh shares. The stock had eased from an intra-day high of Rs 1310. There are reports that it is looking at buying a stake in France's Carrefour, the second-largest retailer after Wal-Mart. This will catapult India's largest private sector group to the ranks of the world's top retailers. RIL was looking at the possibility of buying the 13% stake held by the Halley family, Carrefour's largest shareholder, although talks have not yet been initiated.
Reports that RIL had inched closer to signing a memorandum of understanding (MoU) with the $49 billion US-based Dow Chemicals, to set up a joint venture (JV) company for the latter to transfer assets from its commodity plastics and chemicals business to the JV, also spurred buying in the heavyweight counter.
Another report says RIL withdrew its bid to take over Super Bazar as the government does not amend laws. Super Bazaar, a cooperative market in the heart of central Delhi, was built 33 years ago with an area of more than one lakh square feet. Mukesh Ambani had offered Rs 288 crore to revive the store.
State-run GAIL (India) said it will jointly bid with RIL at the auction for oil and gas blocks, when India holds it next time. GAIL expected RIL to give it rights to transport gas from a block in Madhya Pradesh.
Software pivotals were in demand following a near 1% rise in the tech laden Nasdaq Composite Index on Wednesday. The BSE IT Index rose1.88%. It was the top gainer among the sectoral indices on BSE.
Infosys gained 3.32% to Rs 2086, Wipro rose 0.86% to Rs 560 and TCS gained 2.43% to Rs 1243.
Satyam Computer advanced 0.10% to Rs 433, on reports it was looking at acquiring a telecom or technology consulting firm in the United States or in Europe, for up to $50 million.
Top gainers among secondline IT shares were KPIT Cummins Infosystems (up 6.32% to Rs 134.60), Rolta (up 1.73% to Rs 352.20), Aztec Software (up 3.78% to Rs 115.35), Ramco Systems (up 3.7% to Rs 134), and Polaris Software (up 1.83% to Rs 169.50).
Larsen & Toubro (L&T) gained 0.08% to Rs 1487, after the company said on Thursday a consortium, including the firm, had secured a contract of Rs 1400 crore for the expansion of the Vizag Steel plant of Rashtriya Ispat Nigam. L&T's share of the project is around Rs 810 crore.
State Bank of India (SBI) was the top loser, down 3.15% to Rs 917.70, on a volume of 7.70 lakh shares. As per reports, SBI has paid an advance tax of Rs 690 crore as the fourth and last installment versus Rs 1036 crore paid in the fourth installment last year. The lower advance tax has raised concerns that its Q4 March 2007 financial performance may be uninspiring.
SBI, however, was not the only nationalised bank to weaken, the BSE Bankex itself declined 1.23%. Canara Bank (down 3.76%), Bank of India (down 3.43%), Bank of Baroda (down 1.88%) and Punjab National Bank (down 2.01%) also eased.
ACC (down 2.63% to Rs 727.90), HDFC (down 2.58% to Rs 1515) and Tata Motors (down 2.30% to Rs 728) followed SBI in that order.
Bhel slipped 1.03% to Rs 2009.20. There are reports that a consortium of Siemens and Bhel was awarded a contract by the Power Grid Corporation of India. The share of Siemens Power Transmission and Distribution is 170 million euro in the latest order received by the consortium. While Siemens will provide a new HVDC transmission system to transport energy generated from Barh power plant in Uttar Pradesh to New Delhi, with low loss from the pooling stations at Balia, Uttar Pradesh, to Bhiwadi, Rajasthan, Bhel will supply transformers and components of AC switchgears.
Maruti Udyog (MUL) rose 1.11% to Rs 800, after the company increased prices of cars across all models. MUL has announced a price hike across all models, and across all cities, which becomes effective from 15 March 2007 and ranges between Rs 258 and Rs 1017. The hike is in response to an increased cess announced in the Union Budget 2007-08.
Shares of metal producers advanced on renewed buying anticipating prices of their products to firm up further. The BSE Metal Index gained 1.34%. SAIL (up 2.48%), Hindustan Zinc (up 3.19%), Sterlite Industries (up 1.22%), Jindal Stainless (up 1.95%), Hindalco (up 1.21%), Tata Steel (up 0.65%) and Jindal Steel and Power (up 0.90%) had gained in this pack.
Suzlon Energy lost 2.74% to Rs 1016.95, after French nuclear reactor maker, Areva, raised its stake in German wind-turbine maker REpower, along with raising the offer price, to 140 euros a share, 11.1% higher than Suzlon’s 126 euro per share. The scrip of Suzlon Energy had touched a high of Rs 1088, during the day.
Suven Life Sciences surged 4.96% to Rs 152.35, after the company fixed 2 April 2007, as record date for the stock-split and a bonus issue. Suven Life Sciences’ members had on 10 March 2007 approved splitting each equity share of face value Rs 2 into two shares of Re 1 each. Members also approved a 1:1 bonus issue of shares at the same meeting.
MICO rose 0.34% to Rs 3260, after it posted a net profit of Rs 64.96 crore for the December 2006 quarter compared with Rs 63.13 crore in the December 2005 quarter. Total income has increased from Rs 871.27 crore to Rs 1056.78 crore. Bosch, the German auto components giant, will invest Rs 900 crore in its Indian subsidiaries over two years. A bulk of the investment will be in Motor Industries Company (MICO) -- the Bosch flagship in India.
Kirloskar Brothers surged 3.60% to Rs 390, after it received orders worth Rs 344 crore from the Andhra government for constructing pumping stations at Vasanthavada, Peddavagu Project, and Bandarugudem Tank. The job includes electro mechanical and hydro mechanical works as well as site development for the Indira Sagar Lift Irrigation Project (Polavaram).
All Asian markets were trading with gains. The Nikkei Average rose 1.10% on Thursday, led by exporters such as Canon Inc, as concerns about their earnings receded following a recovery in US stocks and the yen's retreat against the dollar. The Nikkei closed up 183.50 points, at 16,860.39. The broader TOPIX Index rose 1.15%, to 1,694.18.
The Hang Seng Index was up 132.51 points (0.70%), at 18,969.44.
US stocks posted modest gains on Wednesday, as worries eased about losses for firms operating in the subprime mortgage sector -- which lends to borrowers with a weaker credit history -- might spill over into the wider economy and slow growth. The Dow Jones Industrial Average gained 57.44 points (0.48%), to settle at 12,133.40. The Nasdaq Composite Index advanced 21.17 points (0.9%), to 2,371.74.
The Sensex had plunged 453.36 points (3.4%) on Wednesday (14 March 2007) as part of a global crash brought about by deepening US mortgage-lending crisis. Key Asian share indices had dived 2 - 3% on Wednesday.
Oil prices edged above $58 on Thursday, after a drop in US gasoline inventories raised concerns over supplies ahead of the summer driving season and with OPEC expected to maintain supply curbs.
FIIs were net sellers to the tune of Rs 861.40 crore on 14 March 2007.
US crude stood 15 cents up, at $58.31 a barrel, while London April Brent crude, due to expire on Thursday, was up 8 cents at $61.14.
Gains were limited as the market remained cautious ahead of an OPEC meeting on Thursday, to decide production policy and as heavy maintenance shutdowns at US refiners kept US crude prices below London's Brent crude, an unusual discount between the two international benchmarks.
Trading on the bourses was halted at 11:45 IST for sun outage. The trading time has been extended by 45 minutes till 16:15 IST. This schedule is applicable till 19 March 2007.
Market ends flat
The market saw an impressive pull-back in line with its Asian peers in the morning trades. After yesterday's massacre, the market resumed on a very strong note with a gap of 126 points at 12656. The recovery was led by the information technology and banking stocks, which had taken heavy beating yesterday but gained over 2% today. While the action in several counters held the market firm above the 12650 levels in the first half of the trading session, the index notched up further gains in the afternoon to touch the day's high of 12790. However, the index eased on profit taking and the weakness in select heavyweight, auto and banking stocks dragged the index down to touch an intra-day low of 12510 towards the close. Finally, the Sensex ended the session at 12544 with gains of 14 points, while the Nifty added two points to close at 3639.
The breadth of the market was positive. Of the 2,631 stocks traded on the BSE, 1,472 stocks advanced, 1091 stocks declined and 68 stocks ended unchanged. Among the sectoral indices, the BSE IT index rose by 1.88% followed by the BSE FMCG index (up 1.74%), the BSE Metal index (up 1.34%) and the BSE Teck index (up 1.02%) while the BSE Bankex index slipped 1.23%.
Heavyweights led the upsurge in the market. Among the other major gainers Dr Reddy's shot up by 4.43% at Rs675, ITC increased by 3.15% at Rs147, Infosys moved up by 2.93% at Rs2,078, Hindalco jumped 2.11% at Rs131, TCS gained 1.87% at Rs1,236 and NTPC moved up by 1.19% at Rs141. Select counters, however, finished on a weak note. SBI shed 2.70% at Rs922, HDFC dropped 2.67% at Rs1514, Tata Motors declined by 2.59% at Rs726 and ACC lost 2.13% at Rs732.
IT scrips rallied sharply. Mphasis surged by 2.44% at Rs279, Tech Mahindra jumped by 1.37% at Rs1,454 and I-flex Solutions added 1.20% at Rs1,850. The banking stocks bore the brunt of the bears today. Canara Bank lost 3.76% at Rs183, SBI tumbled 2.70% at Rs922, BOI slipped 2.11% at Rs137, UTI Bank was down 1.83% at Rs469 and Bank of Baroda dipped 1.68% at Rs196.
Volume-wise, over 1.48 crore Idea Cellular shares changed hands on the BSE followed by Reliance Communication (30.88 lakh shares), India Cements (28.90 lakh shares), ITC (20.68 lakh shares) and Parsvanath Developers (18.04 lakh shares).
Value-wise, Reliance Industries registered a turnover of Rs148 crore on the BSE followed by Idea Cellular (Rs136 crore), Reliance Communication (Rs123 crore), Infosys (Rs74 crore) and Satyam (Rs74 crore).
Ashwani Gujral
Sell HDFC Bank with stop loss of Rs 960 for target of Rs 760. Short term call valid for maximum 1 week.
Sell ICICI Bank with stop loss of Rs 860 for target of Rs 700. Short term call valid for maximum 1 week.
Deepak Mohoni
Short sell SRF above Rs 116 with stop loss of Rs 118.5. This is a day-trading recommendation.
Buy Zee Entertainment below Rs 235 with stop loss of Rs 230; This is a day-trading recommendation
Rajat K Bose
Buy ABB with stop loss below Rs 3453 for target of Rs 3620. This is a day-trading recommendation
Buy Bajaj Auto with stop loss below Rs 2504 for target of Rs 2554-2580-2605. This is a day-trading recommendation
Anand Rathi - Daily Fundamental Snippets
PSL secures order worth US$ 21 mn for RIL - K.G. Basin pipeline project.
Siemens Ltd's Siemens Power Transmission and Distribution (PTD) and consortium partner Bharat Heavy Electricals Ltd (BHEL) have been awarded an order by the Power Grid Corporation of India Ltd.
Jagran Prakashan Ltd has revised its advertising rates for Dainik Jagran.
Elder Pharmaceuticals Ltd has entered into an alliance with M/s. Laboratorios Farmaceuticos Rovi, S.A. of Spain.
Nagarjuna Construction Company Ltd has secured various orders totaling Rs 348 crores.
Biocon Ltd's subsidiary Syngene has entered into a research partnership with Bristol-Myers Squibb.
Qingtongxia Aluminium Group has proposed to set up an alumina mining and processing joint venture for a 5-billion-yuan ($651 million) in India with Ashapura Minechem Co.
ITC Ltd's food division will invest Rs 150 crore in the next two years.
Gayatri Projects Ltd has secured 4 new orders aggregating to Rs 192 crores.
Download here
Edelweiss - Daily Market Outlook 15th March, 07
Market Snapshot
The sell-off on Wall Street and the Asian markets saw the Sensex open with a negative gap of 289 points at 12,694. The index soon dropped to a low of 12,504 - down 479 points from the previous close. Lack of buying interest saw the Sensex finally close with a loss of 453 points (3.5%) at 12,530.Nifty lost 3.4% to close at 3641.
The NSE and BSE cash volumes were slightly higher compared to the previous day at INR 86 bn and INR 43 bn respectively. The F&O volumes were also higher at INR 316 bn.
Sentiment Indicators
The Implied Volatility (IV) across Nifty strikes has slightly decreased to 34% levels. The WPCR of Nifty Options increased to 1.07 compared to the previous day while the 5 day average is 0.93.
Outlook
The markets are expected to open with a positive gap on the back of recovering global cues and expected short covering in the domestic markets. However, the pullback can be short lived as more shorts can come in with investors shorting the Nifty above the level of 3730.
FII’s have been net sellers to the tune of INR 15,000 Mn in Index futures and only INR 2,800 Mn in stock futures in the last two trading sessions. The cautious outlook observed in taking new positions in single stocks will continue as the markets wait for a clear direction. Nifty OI is at all time high with 39.9 Mn shares underlining of which nearly 8% of the fresh position got built yesterday. Nifty futures discount got expanded from 12pt to 42points yesterday indicating aggressive shorts getting built up. We expected short covering to be witnessed if market sustains above the opening gap.
Though we are bearish on the cement segment we recommend buying in some specific counters like India Cement, Grasim, and ACC on the back of short covering at current levels.
Yesterday, the Nifty managed to sustain above the 3627 despite falling a few ticks below that level intraday. As mentioned earlier the markets will continue to be sandwiched between the levels of 200 DMA and 13 DMA and a clear cut direction would emerge only after one of the averages is breached decisively. Until then the Nifty will remain to be range bound.
The range between 3623 continues to be important and immediate support for the Nifty followed by 3591. The current resistance levels for Nifty are at 3701 and 3758.
Download here
Thanks Yash
Firm global indices signal positive outlook
Major Asian indices like Nikkei, Hang Seng, Kospi, Straits Times and Jakarta Composite are trading with gains of more than 1% each. However, caution should be maintained on account of the prevalance of a intra-day volatility. Action could be seen in banking and cement stocks. Among the local indices, the Nifty could test higher levels around the 3680 level and has a support in the 3580-3450 range. The Sensex on the downside may slip to 12450 and may face resistance at 12650.
US indices rebounded on Wednesday on the view that fears of the sub-prime mortgage problem spreading were overblown. While the Dow Jones soared by 57 points at 12133, the Nasdaq advanced by 21 points at 2371.
The Indian ADR pack had a mixed outing on the US bourses. ICICI Bank led the upmove and gained over 2% while, HDFC Bank, MTNL, VSNL and Dr Reddy's Lab flared up over 1-2% each. Among the laggards Satyam, Wipro, Tata Motors, Infosys, Patni Computers and Rediff fell over 1% each.
Crude oil prices gained strength after slipping in the last few sessions. While the Nymex light crude oil for April series rose by 23 cents at $58.16 a barrel. In the commodity space, the Comex gold for April delivery slipped by $6.90 to settle at $642.50 an ounce.
Domestic bourses may track recovery in Asian markets
The domestic bourses have been taking cue from global markets over the past few days. The market here may follow closely on the heels of a recovery witnessed across Asia. The Sensex had plunged 453.36 points (3.4%) on Wednesday (14 March 2007) as part of a global crash brought about by deepening US mortgage-lending crisis. Key Asian share indices had dived 2 - 3% on Wednesday.
All the Asian markets were trading in the green on today, tracking a recovery on Wall Street on Wednesday. A falling yen also encouraged investors to look for bargains and pick up shares in exporters. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore, China and Taiwan were up between 0.9 - 1.7%.
US stocks posted modest gains on Wednesday, as worries eased that losses for firms operating in the subprime mortgage sector -- which lends to borrowers with a weaker credit history -- might spill over into the wider economy and slow growth. The Dow Jones Industrial Average gained 57.44 points (0.48%), to settle at 12,133.40. The Nasdaq Composite Index advanced 21.17 points (0.9%), to 2,371.74.
FIIs pressed heavy sales on Wednesday, the day when the Sensex had plunged 453 points. As per provisional data, FIIs were net sellers to the tune of Rs 541 crore on that day. They were net sellers to the tune of Rs 84 crore on Tuesday (13 March 2007), the day when the benchmark Sensex had risen 80 points. A drop in FII volumes on Tuesday (as reflected in daily gross purchases and gross sales figures for the day).
FIIs were net sellers to the tune of Rs 1104 crore in index-based futures on Wednesday. They were net sellers to the tune of Rs 192 crore in individual stock futures on the same day. Nifty March 2007 futures settled at 3,599.55 on Wednesday, a steep discount of 41.55 points compared to the spot Nifty closing of 3,641.10.
Mutual funds continued sales of equities on Tuesday (13 March 2007). But their outflow of Rs 13.48 crore on Tuesday was much lower than Monday (12 March)’s Rs 146 crore. The outflow was still higher at Rs 384 crore on Friday (9 March 2007).
US oil rose 18 cents to $58.34 a barrel on Thursday, as drops in gasoline inventories in the world's top consumer raised concerns of a supply crunch ahead of the summer driving season.
Investsmart - Morning Call
Market Grape Wine :
In House :
Nifty at a support of 3605 & 3565 levels with resistance at 3668 & 3715
levels .
Markets to open with positive Bias with profit booking at higher levels not
ruled out .
Buy : Indiacement above 158.8 target 167 s/l 154
Buy : Prajind above 365.7 target 380
Buy : ACC in F&O
Buy : IciciBank in F&O above 825 target 842
Out House :
Sensex at a support of 12456 & 12393 levels with resistance at 12654 &
12786 levels .
Praj expected to get two big orders from American companies market BUZZ .
Buy : RIL & RelCap
Buy : Gail & ONGC
Buy : ACC , Indiacement & CenturyTextile
Buy : Polaris & Mphasis
Buy : PRAJ & Gitanjali
Buy : EKC & Skumar
Buy : Aban & SesaGoa
Buy : Maruti & Telco
Dark Horse : Praj , SesaGoa , Centextile , SkumarSyn , Glenmark , ACC ,
UNITECH
Bullet for the Day : Unitech & Skumarsyn with strict stop loss .
Positional Bullet : Prajind stop loss of 342 taregt 440 march end .
Anand Rathi - Daily Strategist - Mar 15
The NIFTY futures saw a rise in OI 8.12% with prices down by indicating that 4.24%as bears took charge as market opened with gap which forced bulls to run for cover their positions as market tanked looking at global clues We feel that till the market doesn't sustains above 3750 levels we may not see aggressive short covering and fresh money coming in the market .The nifty futures discount increased aggressively as short positions along with huge fresh selling happened The FIIs were sellers in the futures to the tune of 1281 crs .The PCR has come down from 1.07 to 0.91 levels indicating support in the falling market .The volatility has come up to 33.80 from 28.80 levels indicating the panic in the market.
Among the Big guns, ONGC saw gained OI to the tune of 7.74% with prices coming down by 3.20% indicating short positions again built with huge selling of long liquidations whereas RELIANCE saw gain of OI to the tune of 0.09 % with prices coming down by 3.03 % indicating that the counter saw lot of fresh selling in the market.
On the TECH front, TCS, SATYAM, WIPRO saw RISE of OI with sharp drop in prices indicating lot of short positions being built seen in these counters performing in line with market whereas INFOSYS saw with fall in price indicating lot of fresh selling in the counter.
The BANKING counters saw OI increase with prices in most of the stocks in the negative as finally bears were on a rampage ir-respective of whether P.S.U'S or P.V.T banks. Either we saw short positions being built or longs being squared in the rest apart from genuine selling in most of the stocks.
The metals across the board TATASTEEL, SAIL ,JSWTEEL , HINDALCO Saw rise in OI with price fall indicating that their was just carnage in the sector indicating weakness in the counters .
Considering the overall scenario and the markets crash the market may move further down today and we would see bulls running for cover if the market sustains below the critical level .Traders are advised not to go long on the market as we maintained yesterday and any position taken today should be with strict stop losses to be adhered too.
Download here
STRATEGY INPUTS FOR THE DAY
Bulls may float around
Float like a butterfly, sting like a bee – Muhammad Ali.
The words seem to hold true not just in a boxing ring but also on the bourses. The little time the bulls get they are floating around like a butterfly, causing damage to no one but themselves. The bears on the other hand are able to sting and literally suck the blood out of counters at one go aided by a host of negative factors.
After a weak Wednesday things are once again looking up globally. Markets in the US and Asia have rallied. As a result, we should have a better opening and a much improved trading session.
There is always a chance of some cooling as the undertone still remains nervous owing to the current volatility in global markets. In the domestic market, we have lingering worries about high inflation rate and a possible tightening by the central bank going ahead. Earnings will start trickling in from the first week of April. The flash lines of advance tax numbers in the media shortly will also move sentiment though they are not the most accurate indicators of corporate earnings.
And of course despite some correction from the top, the Indian market still looks expensive vis-a-vis other emerging markets. Much of the positive news on earnings is already reflected in stock prices. At best, we should have a range bound and choppy market in the near term. Citigroup sees the Sensex between 14700-16000 by the end of the year. But again, these projections should be taken with a pinch of salt. The best strategy right now is to use every rally to sell and stay in cash for better times ahead. For long-term investors, another opportunity to enter for the long haul.
FIIs were net sellers to the tune of Rs5.41bn (provisional) in the cash segment yesterday. In the F&O segment, they pumped in Rs12.82bn. On Tuesday, foreign funds offloaded stocks worth Rs840mn. Mutual Funds were net sellers at Rs134.8mn on the same day.
US stocks rebounded on Wednesday, paced by banks and homebuilders, amid renewed belief that the sub-prime mortgage trouble may not be as large as previously thought.
Countrywide Financial, the biggest US mortgage lender, posted its first advance in five days. Energy and technology companies helped the Dow and S&P 500 recover from earlier declines of more than 1% after oil prices climbed.
The Dow Jones rose 57.44, or 0.5%, to 12,133.40. The Nasdaq Composite Index increased 21.17, or 0.9%, to 2371.74. The S&P 500 added 9.22, or 0.7%, to 1387.17 after earlier dropping to 1363.98, a four-month low.
All three major benchmarks were highly volatile moving back and forth throughout the session. Stocks were hit the hardest in the early afternoon, with the Dow losing more than 130 points before clawing back and turning higher late in the session.
US light crude oil for April delivery rose 23 cents to settle at $58.16 a barrel on the New York Stock Exchange, seesawing after a mixed weekly oil inventories report. The front-month contract was up 16 cents at $58.32 a barrel in extended trading in Asia.
COMEX gold for April delivery fell $6.90 to settle at $642.50 an ounce. Treasury prices slipped, raising the yield on the 10-year note to 4.53% from 4.49% late Tuesday. In currency trading, the dollar fell versus the euro and rose versus the yen.
European shares suffered heavy losses. The French CAC 40 closed down 2.5% at 5,296.22, the German DAX 30 gave up 2.7% to 6,447.70 and the UK's FTSE 100 fell 2.6% to 6,000.70. The pan-European Dow Jones Stoxx 600 index dropped 2.5% to 352.53.
In the emerging markets, the Bovespa in Brazil gained 1.2% to 43,280 while the IPC index in Mexico rose 0.5% to 26,719 and the RTS index in Russia tumbled 2% to 1779.
Asian stocks rebounded from the biggest drop in more than a week on speculation that rising US mortgage delinquencies won't hurt demand in the region's biggest export market. Canon and Hyundai led the gains in regional exporters.
Toyota led a rally in Japan's Nikkei after the yen weakened against the dollar, boosting the value of exporters' overseas sales. BHP Billiton advanced as nickel prices rose to a record for a third day and crude-oil prices snapped a four-day decline.
The Morgan Stanley Capital International Asia-Pacific Index added 1% to 141.78 at 11:59 a.m. in Tokyo. The benchmark yesterday dropped 2.5%, the biggest loss since March 5. Indices in markets open for trading climbed by at least 1%, except in New Zealand and the Philippines.
Market Watch & Insider Trades
Insider Trades:
Maruti Udyog Limited: Life Insurance Corporation of India has purchased from open market 79400 equity shares of Maruti Udyog Limited on 5th March, 2007
Educomp Solutions Limited: Shantanu Prakash, Managing Director has sold in open market 75000 equity shares of Educomp Solutions Limited on 13th March, 2007
The Great Eastern Shipping Co. Limited: Bharat K. Sheth, Deputy Chairman & Managing Director has purchased from open market 100000 equity shares of The Great Eastern Shipping Co. Limited on 8th March, 2007
Market Volumes:
The turnover on NSE was up by 6% to Rs86.70bn. BSE Bank index was the major loser and lost 4.14%. BSE Technology index (down 3.98%), BSE Capital Good index (down 3.31%), BSE PSU index (down 3.06%) and BSE Oil & Gas index (down 2.96%) were the other major losers.
Volume Toppers:
IFCI, ITC, Mindtree, Parsvnath, India Cemnets, Gujarat Ambuja Cements, SAIL, R Com, TTML, Ashok Leyland, IDBI, IDFC, HLL, HCC, Satyam Computers, IVRCL Infrastructures, NTPC, Tata Steel, Unitech and Century Textiles.
Lower Circuit:
Crisil, GTN Industries, Nelco, Shah Alloys, Atlanta, PBA Infrastructure, Country Club, Steel Stripes.
Delivery Delight:
Bajaj Auto, Biocon, D S Kulkarni, Gitanjali Gems, Mphasis BFL, Sesa Goa, Unitech and Essar Oil.
Brokers Recommendation:
Hindalco – Sell from Merrill Lynch
Maruti – Buy from Merrill Lynch
Long Term investment:
ICICI Bank
Major News Headlines:
Moody's says India's budget lacks 'market-oriented' reforms
Jan infrastructure output rises 8.7%
RIL may buy stake in Carrefour's parent: report
Siemens-BHEL consortium bags Power Grid order
PSL bags order worth US$21mn from RIL
WWIL Board to meet on Mar 20 to consider rights offer
BPCL to acquire stake in 2 North Sea oil blocks
Jagran Prakashan raises ad rates of Dainik Jagran
Strides Arcolab gets 2 NDA approvals from USFDA
Gayatri Projects gets orders worth Rs1.92bn
Nagarjuna Constructions secures orders worth Rs3.48bn
Uttam Galva to raise cold-rolled steel prices
Biocon unit Syngene in reserach partnership with Bristol Myers
HOW MARKET FARED
Uncertain times to continue
Bulls were again pushed on the back foot as the markets witnessed a brutal downfall today led by heavy selling witnessed in the Banking, Technology, Capital Good and Metal stocks. Markets started off with a big gap on the lower side following subdued global cues. The key indices never managed to recover its losses as wide based selling dragged the benchmark Sensex to hit an intra-day low of 12504.10 closing near the days low. Benchmark Sensex fell over 400 points wiping off all gains of last couple of trading sessions. However, Select stocks like recently listed Mind Tree, again out performed, India Cement and ACC also locked in some gains towards the end. Finally, the 30-share benchmark Sensex plunged 453 points to close at 12529. NSE Nifty lost 129 points to close at 3641.
Tech Mahindra declined nearly by 4% to Rs1436. According to reports the company may win a $250 million order from a European telecommunications company. The scrip touched an intra-day high of Rs1475 and a low of Rs1411 and recorded volumes of over 14,00,000 shares on NSE.
BPCL was down 2.7% to Rs295. The company announced that they would acquire stake in North Sea oil blocks. The scrip touched an intra-day high of Rs358 and a low of Rs281 and recorded volumes of over 3,00,000 shares on NSE.
Strides Arcolab pared its intra-day gains on back of selling pressure. The scrip fell by 0.4% to Rs328. The company received 2 NDA approvals from US FDA for two new drugs applications. The scrip touched an intra-day high of Rs334 and a low of Rs322.
Uttam Galva slipped 2% to Rs30. The company announced that it would raise long term Cold-rolled steel prices by 22%. The scrip touched an intra-day high of Rs31 and a low of Rs29 and recorded volumes of over 92,000 shares on NSE.
Banking stocks were the major losers, the index fell by over 4%. Frontline stock led the down fall ICICI Bank declined by over 5.5% to Rs829, SBI dropped 3.3% to Rs948 and HDFC Bank fell 2.8% to Rs932. Bank of India, OBC and Canara Bank were the major losers among the Mid-Cap stocks.
Auto stocks continued to be in reverse gear led by fall in the index heavy weights like Tata Motors which declined 3.8% to Rs743, Hero Honda dropped 3% to Rs677, M&M lost 1.5% to Rs749 and Maruti was down 1.2% to Rs791.
Metal stocks also lost their shine on back of selling pressure. SAIL was down 4.6% to Rs100, Tata Steel declined 3.3% to Rs429, Nalco dropped 1.2% to Rs228 and Hindalco slipped 1.8% to Rs128.
Telecom stocks also were under the bear attack. Bharti Airtel dropped by over 4.5% to Rs729, R Com was down by over 4.5% to Rs398, VSNL declined 3% to Rs365 and MTNL lost 2.2% to Rs138.
Anand Rathi - Daily Technical Note
Nifty and Sensex have exhibited bearish candlesticks.
Technically, one may use the level of 3550 (Nifty) and 12300 (Sensex) as the stop loss level.
Nifty faces resistance at 3780 and Sensex at 13100.
BSE Smallcap and BSE Midcap Indices have exhibited a bearish candlestick.
CNX IT has exhibited a bearish candlestick.
In the Punter's zone we have a buy in SATYAM COMP , JET AIRWAYS & sell ONGC.
In the technical zone we have a buy in HCL - TECH , AURO PHARMA & TATA MOTORS.
Download here
Subscribe to:
Posts (Atom)