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Wednesday, March 21, 2007
Market Close: third day of upmove in low turnover !
Sensex had a nervous morning. As the sessions progressed cautious buyers were seen across sectors. Global cues did not hold out much as markets continued to waver between positive sentiment and negative. Indices traded ranged initially but then the direction was only one lead by banking. Banking stocks were on a roll in the last hour as renewed buying interest was seen after the government said the current cash squeeze in the system would ease in the next few days. Mid and Small caps did not do as well and the move was largely lead by index heavyweights. Most Asian markets closed in the green while the European indices were also trading in green.
Rupee hit a new high of Rs. 43.48 vs the Dollar. Everyone is waiting for the RBI to intervene. A strong rupee is good for the software firms. Volumes on the bourses have drastically dropped over the past few days, largely as the conviction is lacking. Volatility is expected to increase with expected expiry of derivatives next week.
For the first time in history, the government's net direct tax collections have crossed the figure of Rs 2,00,000 crore. Net direct tax collections were Rs 2,05,000 crore as reported on the Online Tax Accounting System. The net direct tax collections are expected to be Rs 2,25,000 crore till March 15 this fiscal. The final figure will be out in a couple of days after all the data are processed online. This is really good news.
Sensex closed up by 240 points at 12945.88. It was helped up by gains in ICICI Bk (870.35,+6 percent), HLL (190.75,+4 percent), Bharti Tele (761.75,+3 percent), Rel Energy (491.1,+3 percent) and SBI (982.15,+3 percent). Restricting the gains were Guj Ambuja (106.45,-4 percent), HDFC (1543.4,-1 percent), Ranbaxy (332.2,-1 percent), Grasim (2105.8,-1 percent).
Nestle India reported its results for the December quarter registering a growth of 18% YoY in its topline as compared to the same period last year. The company's bottomline however declined by 2.8% YoY excluding the extraordinary items. The fall in bottom line is a result of increased provisioning for contingencies that has been made for two years during the December quarter. For CY06, the company reported a growth in its topline of 24% YoY and a bottomline growth of 2% YoY. The topline has grown mainly on the back of increased volumes and price hikes during the year. Nestle India also said that the profits for the quarter and year ended December 2006 were adversely impacted by a steep increase in prices of commodities, higher operating costs associated with upgraded formulations and manufacturing processes of the infant nutrition products. The stock ended flat, while its peers Britannia (down 2%) and Tata Tea (down 1%) ended negative.
Telecoms counter were active post the regulating body TRAI slashed ADC (Access Deficit Charges) rates. ADC rates slashed to Rs. 2,000 cr from Rs. 3,200 cr by TRAI. The Amendment is to come in affect from April1. As a result of that per min ADC reduced to zero from Rs. 0.80 per min on al out going ILD (International Long Distance Calls) and Rs. 1 from Rs.1.60 per min on incoming ILD. The major gainers due to this amendment are Rcom, Tata Tele services, Bharati Airtel which closed higher.
Reliance Energy surged almost 3% on reports that the company was pursuing tie-ups with US companies. The company plans to get into the nuclear energy market. The Indo-US civil nuclear deal calls for massive investment as India can add up to 20,000 - 40,000 Mw of nuclear generation capacity, which Reliance Energy does not want to miss out on. Apart from nuclear energy, the company also came out with aggressive growth plans for wind energy. Besides this news there was also another reason for the surge as the company has reportedly bagged a contract for developing the Trichy - Dindigul National Highway four-laning project to be undertaken on a build-operate-transeferr (BOT) basis.
Technically Speaking: Markets traded weak in the initial sessions but bounced back later in the day. Sensex touched intraday high of 12964 and low of 12664. Market turnover was low at Rs 2716 cr. Overall breadth was in favor of Decliners, where the Advancers were 1154 to Decliners of 1391. Sensex has closed very near its resistance of 12970. If the sensex fails to cross above this in the recent rally then we might head back to 12300 and there is are crucial sessions ahead.
FII: + Rs. 137 cr, MF + Rs. 140 cr
Mkt Sources:
FII Gross purchases Rs 1630 Cr, Gross Sellers 1494 Cr, Net Buyers Rs 136 Cr.
MF Gross Purchases Rs 413 Cr, Gross Sellers Rs 273 Cr, Net Buyers Rs 140 Cr.
Our View:
Signs are positive but nothing much to crow about, Markets expected to remain ranged.Markets are expected to be ranged between 12300 - 13300 and we are heading the upper band heading towards the upper end of the range.
Citigroup - India Wireless
ADC Cut on Expected Lines – Driver of Growth, Not Margins
USE THE PASSWORD: http://deadpresident.blogspot.com
Buoyancy lifts Sensex above 12900
The market continued its upward bias for the third consecutive session as the Sensex notched up gains of 240 points during the day. The Sensex opened with a positive gap of 30 points at 12736 and remained range-bound after a few initial hiccups till early afternoon trades. The strengthening of the rupee against the dollar triggered a negative sentiment for the second consecutive day in the information technology and pharma stocks, dragging the Sensex to an intra-day low of 12664. The market bounced back smartly on buying in banking stocks on the finance minister's announcement that the current liquidity crunch will ease in the next few days. The buoyancy in heavyweight, banking and fast moving consumer goods stocks saw the index surge to an intra-day high of 12965. The Sensex finally ended the session with gains of 240 points at 12946, while the Nifty added 67 points closed at 3765.
However, the breadth of the market was negative. Of the 2,622 stocks traded on the BSE, 1,376 stocks declined, 1,153 stocks advanced and 93 stocks ended unchanged. Among the sectoral indices the BSE Bankex jumped 4.04% at 6545 followed by the BSE FMCG Index (up 2.26% at 1666), the BSE Teck Index (up 1.77% at 3567) and the BSE PSU Index (up 1.74% at 5733).
Most of the heavyweights closed at higher levels. ICICI Bank notched up gains of 5.64% at Rs870, HLL soared 3.67% at Rs191, Bharti Airtel surged 3.15% at Rs762, Reliance Energy advanced 3.14% at Rs491, SBI added 3.10% at Rs982, BHEL gained 2.90% at Rs2,103, ITC advanced 2.80% at Rs145 and ONGC was up 2.80% at Rs813. Among the laggards Gujarat Ambuja dropped 4.01% at Rs106, HDFC slipped 1.44% at Rs1,543 and Ranbaxy shed 1.23% at Rs332. Grasim, Dr Reddy's and Bajaj Auto closed marginally lower.
Banking stocks were in the limelight and closed with strong gains. Bank of Baroda vaulted 6.71% at Rs213, Centurion Bank Of Punjab soared 6.25% at Rs37, Oriental Bank surged 4.11% at Rs177 and UTI Bank advanced by 3.93% at Rs481. Punjab National Bank, Indian Overseas Bank, Union Bank, Canara Bank and Bank of India gained over 3% each. Among the fast moving consumer goods stocks Proctor & Gamble, Dabur India, Godrej Consumer, Colgate gained 1-3% each.
Reliance Industries clocked a turnover of Rs84 crore on the BSE followed by Reliance Communications (Rs78 crore), ICICI Bank (Rs63 crore), SBI (Rs54 crore) and Infosys (Rs53 crore).
Market off the leash, soars 240 points
The market advanced throughout the day, except the odd blip in early afternoon trade, as buying coupled with short-covering in the derivatives segment, continued. Shares from the banking, FMCG, IT and metals segment contributed to gains. All BSE sectoral indices settled with gains.
The 30-share BSE Sensex 239.94 points (1.89%), to settle at 12,945.88, while the S&P CNX Nifty gained 66.95 points (1.81%), to finish at 3,764.55.
The benchmark index had seen sporadic buying in the fag hours of the day’s trade, and had also surged to a high of 12,964.94, helped by strong purchases in index pivotals. The Sensex opened positive, at 12,735.91, but had soon slipped into the red, to 12,664.33.
The BSE cash turnover was Rs 2717.98 crore, while the market-wide turnover was Rs 41331.34 crore.
The market-breadth, a measure of the health of the broader market, turned negative after a strong opening. On BSE, 1,376 shares declined, 1,153 advanced and 99 remained unchanged. The BSE Mid-Cap Index ended at 5,341.13, up 9.7 points (0.18%), while the BSE Small-Cap Index settled at 6,369.64, gaining 14.4 points (0.23%), from its previous close.
In the 'A' group, 142 shares advanced and 69 shares declined, while 3 scrips remained unchanged. In the 'B1' Group, 304 shares advanced and 383 shares declined, while 24 shares remained unchanged. The 'B2' group had 364 winners, 474 losers, and 42 unchanged. While only 74 shares advanced, 25 shares declined and a lone share remained unchanged from the BSE 100 Index.
In the BSE 200 Index, against 132 stocks that advanced, 66 declined. Only 2 scrips remained unchanged from this pack.
The BSE 500 Index showed 280 advancers and 208 decliners. A total of 12 shares also remained unchanged in this pack.
Among the 30-Sensex pack, 24 advanced while the rest declined.
There was renewed buying for shares from the banking space. The BSE Bankex, which was the top gainer among sectoral indices, gained 3.96%. ICICI Bank surged 5.35% to Rs 868, on a volume of 7.45 lakh shares, and was the top gainer. The private bank's ADR had gained 1.2% to $38.62 on Tuesday, while state-run State Bank of India gained 3.31% to Rs 984.15. HDFC Bank rose 1.35% to Rs 967. Its ADR had gained 2% to $67.70 on Tuesday.
Other gainers from the banking pack included Centurion Bank of Punjab (up 7.30% to Rs 36.90), Bank of Baroda (up 7.20% to Rs 214), Punjab National Bank (up 3.91% to Rs 452.20), UTI Bank (up 3.37% to Rs 478) and Bank of India (up 3.29% to Rs 156.85).
Reliance Energy advanced 3.12% to Rs 491, on reports that the company was pursuing tie-ups with US companies. A strong 2.46 lakh shares were traded in the counter on BSE today. The firm plans to get into the nuclear energy market. The Indo-US civil nuclear deal calls for massive investment, as India can add up to 20,000 - 40,000 Mw of nuclear generation capacity, which Reliance Energy does not want to miss out on. Apart from nuclear energy, the company has also chalked out aggressive growth plans for wind energy.
Besides, the Anil Ambani-controlled Reliance Energy (REL) has reportedly bagged a contract for developing the Trichy–Dindigul National Highway four-laning project to be undertaken on a build-operate-transeferr (BOT) basis.
Stretching over 88 km in Tamil Nadu on NH-45, the project was floated by the National Highways Authority of India (NHAI) in December 2006 at a cost of around Rs 576 crore. The Reliance Energy scrip had advanced 4% on Tuesday (20 March 2007) to Rs 476.15.
Hero Honda rose 2.63% to Rs 652. The stock had eased on Tuesday on reports that Honda Motorcycle & Scooters India, a wholly-owned subsidiary of Japan’s Honda proposes to foray into the entry-level 100-cc motorcycle segment. Hero Honda currently generates over 75% of its sales volume from the entry-level segment.
IT shares advanced in anticipation of robust set of March quarter results and some large order wins. As a result, the BSE IT Index shot up 1.38%. Satyam Computer (up 1.84% to Rs 453.90), TCS (up 1.24% to Rs 1268), Wipro (up 1.52% to Rs 582) and Infosys (up 2.12% to Rs 2098) were some of the frontline scrip in the sector to post gains. Each of these stocks was trading with losses in the morning.
FMCG pivotals were in demand, with the BSE FMCG Index advancing 2.26%. cigarette major ITC rose 2.77% to Rs 144.85, on high volumes of 24.38 lakh shares. The stock had tumbled over the past few days due to worries that the government may bring cigarettes under the net of Value Added Tax (VAT).
FMCG major Hindustan Lever surged 4.46% to Rs 192.20. Recent reports said the company had hiked prices of its detergent brands, Surf Excel Blue and Surf Excel Quick Wash.
Index heavyweight Reliance Industries (RIL) advanced 1.59% to Rs 1342, on a volume of 6.34 lakh shares. It had staged a smart recovery from a low of Rs 1307.50.
Cement major Gujarat Ambuja Cements was the top loser, down 4.20% to Rs 106.25, on a volume of 20.11 lakh shares. India Cements (down 4.6% to Rs 164.75), Birla Corporation (down 3.38% to Rs 200.20), UltraTech Cement Company (down 2.85% to Rs 775), and Shree Cement (down 2.55% to Rs 996.75) were the other losers.
HDFC (down 1.66% to Rs 1540), Ranbaxy (down 1.52% to Rs 331.25) and Grasim (down 1.30% to Rs 2096.70) were the other prominent losers.
Global consulting and IT major MindTree Consulting topped the value chart with a turnover of Rs 204.70 crore. The newly-listed firm was followed by Reliance Industries (Rs 84.50 crore), Reliance Communications (Rs 78.60 crore), ICICI Bank (Rs 64 crore) and SBI (Rs 54.35 crore).
While IFCI led the volumes table at around 1.07 crore shares, Centurion Bank of Punjab clocked 51 lakh shares, Jagjanani Textiles posted 34 lakh shares, Tele Data Informatics counter had 33.40 lakh shares and AMD Metplast clocked 30.35 lakh shares on BSE.
Jet Airways rose 5.75% to Rs 670.10. It was the fourth-biggest gainer from the 'A' group. The stock surged today on reports that despite possibility of domestic airlines withdrawing the congestion charge of Rs 150 per ticket, they were likely to hike basic fares. Reports suggest that the Directorate General of India has asked all scheduled airlines to withdraw the Rs 150 per ticket congestion charge.
Drug maker Merck tumbled 7.5% to Rs 411.55, and was the biggest loser from 'A' group today. The stock’s fall was due to the scrip turning ex-dividend (dividend Rs 30 per share).
Rajesh Exports rose marginally to Rs 375.40, after its board approved a joint venture with Kerala-based Muthoot Pappachan Group for retailing the company's products across southern India. The Muthoot Pappachan Group is one of the largest non-banking financial company in the south, with operations spread across the five states in that region.
The Muthoot Pappachan Group has 450 outlets spread over Kerala, Karnataka, Tamil Nadu, Maharashtra and Andhra Pradesh. Under the tie-up, the company will manufacture "Shubh Muthoot" pure gold coins of 1,2,4,8 and 20 gms. "Shubh" is a brand owned by Rajesh Exports.
Suzlon Energy was up 0.26% to Rs 993. German wind turbine maker REpower Systems threw its support on Tuesday behind French nuclear reactor group Areva's sweetened 140-euro-per-share takeover offer. Areva's offer values REpower at around 1.14 billion euros ($1.5 billion) and topped a recommended offer worth 126 euros a share from Suzlon Energy. Suzlon had said last week it was still considering its next step. Areva last week raised its offer from 105 euros per share to top Suzlon's bid. Areva had to make a full takeover offer for REpower after amassing a stake of more than 30%.
Nestle India dropped 1% to Rs 900, on reporting 15.7% fall in net profit for the December 2006 quarter.
After trading hours on Tuesday (20 March 2007), Nestle India reported a 15.7% fall in net profit in the December 2006 quarter to Rs 62.46 crore compared to a net profit of Rs 74.16 crore for the quarter ended 31 December 2005. Total Income (net of excise) for the December 2006 quarter rose 18.3% to Rs 743.59 crore from Rs 628.54 crore in the year ago quarter.
Nestle India said profits for the quarter and year ended December 2006 were adversely impacted by a steep increase in prices of commodities, higher operating costs associated with upgraded formulations and manufacturing processes of the infant nutrition products.
IT education bigwig NIIT rose 0.40% to Rs 690, after it struck a partnership with US-based EMC Corporation to offer training in information storage technology. Training will be offered in India and 31 other countries, where NIIT has its network of education centres, a company statement said. Financial details of the partnership were not available.
All European indices were trading with gains, and most Asian ones had ended with gains. Hong Kong's Hang Seng Index rose 0.82% and Japan's Nikkei 225 Index advanced 0.90%.
US stocks rose on Tuesday, as a series of takeover deals bolstered investor confidence and offset apprehension about the latest Federal Reserve rate-setting meeting. The Dow Jones industrial average ended up 61.93 points, or 0.51%, at 12,288.10. The Standard & Poor's 500 Index closed 8.88 points, or 0.63%, in front at 1,410.94. The Nasdaq Composite Index finished up 13.80 points, or 0.58%, at 2,408.21.
As per provisional figures, FIIs were net buyers to the tune of Rs 187.87 crore on 21 March 2007.
Foreign institutional investors (FIIs) turned buyers on Tuesday (20 March 2007), to the tune of Rs 136.30 crore.
The Fed's policy-making Federal Open Market Committee began its two-day meeting on Tuesday. The Fed is expected to hold its benchmark rate steady at 5.25%, but investors will focus on its statement on the outlook for the economy and future interest rate policy.
The next major trigger for the domestic bourses is Q4 March 2007 earnings, reports of which by corporates will start next month. Market men will closely watch what company managements have to say about the outlook for FY 2008.
The undercurrent on the bourses remains cautious due to high inflation and rising interest rates. Strong industrial production data released early last week makes a strong case for the Reserve Bank of India (RBI) to raise interest rates at its annual policy review for FY-2008 on 24 April 2007. Industrial output rose 10.9% in January 2007 from a year earlier. The wholesale price index rose 6.46% in the 12 months to 3 March 2007, up from the previous week's annual increase of 6.10% due to higher edible oil and naphtha prices.
The long-term India story remains intact. India’s long-term growth drivers are a favourable demography (large share of young population), robust domestic consumption and an acceleration in infrastructure creation.
Edelweiss - Daily Market Outlook 21st March, 07
Market Snapshot
On Tuesday the Sensex opened with a positive gap of 102 points at 12,747. The index pared gains in early noon deals, and dropped to a low of 12,675. A fresh round of buying, thereafter, saw the index rally to a high of 12,799 - up 154 points from its previous close. The index, however, pared gains towards the close and finally settled with a gain of 61 points at 12,706. Nifty settled with a gain of 19 points to close at 3697.
The NSE and BSE cash volumes were significantly higher compared to the previous day at INR 60 bn and INR 29 bn respectively. The F&O volumes were also higher at INR 275 bn.
Sentiment Indicators
The Implied Volatility (IV) across Nifty strikes has slightly decreased to 28-29% levels. The WPCR of Nifty Options decreased to 0.96 compared to the previous day while the 5 day average is 1.04.
Outlook
The markets are expected to open slightly positive gaining strength from positive global cues and promising US housing starts data. We expect that still lot of short positions is in the system, which will accentuate the rally further, if NIFTY stabilizes at these levels. A clear bullish signal however requires a close above 3721.
The cement stocks rallied yesterday after positive news concerning tax breaks came in. We expect the cement counters to gain further as more short covering will come in at current levels. Metals stocks can see some buying lead by Hindalco and, Sterlite as metals prices were up at LME. The strengthening of rupee might raise concerns for IT stocks however we continue our long term view on Infosys, Satyam to be strong.
As we mentioned yesterday the 13 DMA at 3721 acted as a major resistance to the Nifty. We maintain that clear resistance would emerge only if the Nifty closes above that level. As long as the Nifty sustains above 3675 the bulls have a chance to stage a pullback. The immediate support for the Nifty is at 3675 and 3648. Nifty faces an resistance at levels of 3725 and 3750.
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Investsmart - Morning Call
Market Grape Wine :
In House :
Nifty at a support of 3675 & 3640 levels with resistance at 3725 & 3755
levels .
Sell : Praj below 375 target 362 s/l 379
Sell : RComm : below 396 target 387 s/l of 401
Sell : Infy below 2050 target of 2015 s/l of 2065 levels .
Buy : CanBk above 188.5 target 196 s/l of 185
Out House :
Sensex at a support of 12616 & 12545 levels with resistance at 12786 &
12898 levels .
Buy : RIL & RelCap
Buy : ACC , Grasim & IndiaCem
Buy : Polaris & Mphasis
Buy : Bharti & IciciBank
Buy : EKC , Voltam & Gujfluro
Buy : Centextile & Praj
Buy : Aban & SesaGoa
Dark Horse : Aban , Mphasis , Skumar , IDEA , SesaGoa , Centextile &
Unitech
Bullet fot the Day : Praj ( stop loss of 372 ) & Titan stop loss of 818
Market Watch & Insider Trades
Insider Trades:
Alfa Laval India Ltd: Franklin Templeton Mutual Fund (through its various schemes) has purchased from open market 502794 equity shares of Alfa Laval India Ltd on 14th March, 2007
EID Parry India Ltd: Murugappa Group (Promoters) has purchased fro open market 1000000 equity shares of EID Parry India Ltd on 15th March, 2007.
Market Volumes:
The turnover on NSE was up by 18% to Rs60.56bn. BSE Bank index was the major gainer and gained 1.18%. BSE Pharma index (up 1.13%), BSE PSU index (up 0.86%), BSE Oil & Gas index (up 0.76%) and BSE Metal index (up 0.53%) were the other major gainers.
Volume Toppers:
ITC, SAIL, India Cement, R Com, Idea Cellular, Gujarat Ambuja, Satyam Computer, TTML, IVRCL Infrastructure, Bank of India, Hindalco, HLL, IDFC, Ranbaxy, Jayshree Tea, Rolta, Abishek Mills, Maruti and Tata Steel.
Upper Circuit:
GMR Industries, Harrison Lalyalam, Alps industries, McLeod Russel and Tanla
Delivery Delight:
ABB, Adlabs Films, ACC, Bajaj Hindustan, Bank of India, BEML, Bharat Forge, BPCL, Bombay Dyeing, Canara Bank, Century Textiles, Crompton Greaves, Grasim Industries, HDFC Bank, Hindalco, HPCL, ICICI Bank, India Cements, IVRCL Infrastructures, Jet Airways, M&M, Maruti, NDTV, Opto Circuits, Praj Industries, Ranbaxy, Reliance Capital, Satyam Computer and SBI.
Brokers Recommendation:
AIA Engineering – Buy from Kotak with tgt of Rs1510
Long Term investment:
Sun Pharma
Major News Headlines:
Rupee rises to an 18-month high
Ranbaxy opts out of Merck unit bid: reports
MSK Projects led group gets road orders of Rs5.9bn
Bharti to launch services in Sri Lanka next fiscal year
IVRCL to pay Rs2.28bn for Noida Land
Wockhardt gets USFDA nod to sell painkiller
Jubilant Organosys signs international contracts worth US$60mn
Global cues need not always be followed Doubt is part of all religion. All the religious thinkers were doubters. Market may move sideways
The market may exhibit optimism after registering the steady gains in yesterday's trades. The overnight gains in US markets and mixed Asian indices in morning trades may put pressure on the domestic indices. The current net outflows from the market and rise in international crude oil prices remains a cause of concern. The market may witness sideways movement during intra-day trades. The Nifty could test higher levels between 3722 and 3750 and may dip around 3640, while the Sensex has a likely support at 12550 and may face resistance at 12750.
US indices gained Tuesday, rising for a second straight session as investors welcomed a strong report on housing and the start of the two-day Federal Reserve policy meeting. While the Dow Jones advanced by 62 points at 12288, the Nasdaq was up 14 points at 2408.
Among the Indian ADRs MTNL ended weak out of 11 floats trading on the US bourses. Satyam, ICICI Bank, HDFC Bank and VSNL gained over 1-2% each, while Infosys, Tata Motors, Rediff, Patni Computers, Wipro and Dr Reddy's were up with steady gains.
The Nymex light crude oil for April delivery rose 14 cents to close at $56.73. In the commodity space, the Comex gold for April series gained $4.70 to settle at $653.90 a troy ounce.
STRATEGY INPUTS FOR THE DAY
Global cues need not always be followed
Doubt is part of all religion. All the religious thinkers were doubters.
The markets have off late been religiously following just global cues and discounting any positives that may be in the Indian market. This time around there seems to be selling or rather to an extent some basket selling taking place at higher levels. Going by Tuesday's movements looks like some more pressure could develop at higher levels. So remain cautious as the indices swing wildly. The market is expected to be rangebound and lackluster with low volume. The next big development is going to be the latest quarterly results. Till then, we'll have the intermittent bouts of buying and selling with no clarity on direction.
FIIs were net buyers of Rs1.47bn (provisional) in the cash segment yesterday. However, on Monday they offloaded stocks worth Rs2.5bn. In the F&O segment yesterday, foreign funds pumped in Rs5.66bn. Mutual Funds were net buyers of Rs330.7mn on Monday.
US stocks gained on Tuesday, rising for a second straight session as investors welcomed a strong report on housing starts.
Consumer and utility shares lifted the S&P 500 to its best two-day gain since August after a home construction report reassured investors that the world's largest economy is growing without fueling inflation.
Duke Energy rose the most this year, while Wal-Mart posted its biggest gain in a month, pushing the Dow Jones Industrial Average to its second straight advance. The Nasdaq Composite closed at its March high, led by SanDisk and Juniper Networks.
The S&P 500 rose 8.88, or 0.6%, to 1410.94. The Dow increased 61.93, or 0.5%, to 12,288.10. The Nasdaq added 13.80, or 0.6%, to 2408.21.
New housing starts in the US climbed more than expected in February, easing concern that a housing slump is slowing economic growth. The government also said building permits fell.
Investors awaited the outcome of the two-day policy meeting of the Federal Reserve. The central bank is widely expected to keep rates on hold for a sixth consecutive meeting, maintaining its federal funds rate target at 5.25%. However, traders will focus on the accompanying statement for hints on whether the Fed is inclined to cut rates should the US economy turn weaker.
The dollar fell against the yen and euro, surrendering early gains on fresh concerns over the US subprime-lending market and after a news that China will stop stockpiling foreign-exchange reserves.
US light crude oil for April delivery rose 14 cents to settle at $56.73 a barrel in volatile trading on the New York Mercantile Exchange. The front-month contract was quoting 30 cents higher at $59.55 a barrel in extended trading in Asia.
COMEX gold for April delivery rose $4.70 to settle at $659 an ounce. Treasury prices rose, lowering the yield on the 10-year note to about 4.54% from 4.56% late on Monday.
European shares turned higher. The pan-European Dow Jones Stoxx 600 index climbed 0.7% at 366.89. Banking stocks were up 0.9% after ABN Amro and Barclays confirmed that they were in merger talks. The UK's. FTSE 100 closed up 0.5% at 6,220.30, the German DAX Xetra gained 0.4% to 6,700.29 and the French CAC-40 added 0.8% to 5,503.27.
Most Asian markets were up for a third day on Wednesday, with Australia and Singapore leading the region higher. Investors bought BHP Billiton and other resource-related shares following gains in base-metal prices. Sydney's S&P/ASX 200 was up 0.3% at 5,896.10 in morning trading while Singapore's Straits Times Index was up 0.7% at 3,137.11.
Japanese financial markets are closed for a public holiday. Hong Kong's Hang Seng was down 16 points at 19,340 while the Kospi in Seoul advanced 6 points to 1437. The H-share index, a gauge of Hong Kong-listed shares in China companies, was up 0.3%.
In the emerging markets, the Bovespa in Brazil rose 1.5% to 44,350 while the IPC index in Mexico surged 1.9% to 27,407 and the RTS index in Russia was down 0.8% to 1831.
In metals, copper prices extended a rally to a three- month high on optimism that demand for the metal will rise in the US following the housing report
HOW MARKET FARED
Rally fizzles out
Markets ended in positive territory for the second straight day although the markets gave up some gains towards the end finally closing near the days low. Once again global cues directed the key indices at open today lower oil prices also aided the market to open in green. The Banking, Pharma, Aviation and Cement stocks led from the front and the Mid-Cap and the small cap stocks also contributed.
Further, decision of Bank of Japan to keep the interest unchanged also lifted the sentiment on D-Street aiding the benchmark Sensex to hit an intra-day high of 12798.80. Finally, the 30-share benchmark Sensex gained 60 points to close at 12705. NSE Nifty was up 18 points to close at 3697. MTNL, Infosys and Britannia were the major losers however, Ranbaxy, REL and BPCL were the major gainers among the 50-scrip’s of NSE Nifty.
Ranbaxy was in the limelight after a very long time the scrip jumped by over 6% to Rs336 on reports that the company has opted out of Merck unit bid because of higher valuations. The scrip was the top gainer among the 50-scrip’s of NSE Nifty touching an intra-day high of Rs343 and a low of Rs318 and recorded volumes of over 23,00,000 shares on NSE.
Jet Airways was flying higher as US light crude oil for April delivery fell 52 cents to settle at $56.59 a barrel on the New York Mercantile Exchange. The scrip surged by over 8% to Rs632 touching an intra-day high of Rs639 and a low of Rs584 and recorded volumes of over 4,00,000 shares on NSE.
Oil & Gas refinery stocks were on the move. BPCL nearly by 4% to Rs319, IOC spurred over 3.5% to Rs419 and HPCL advanced by 2.5% to Rs264. Oil exploration stocks also were up Reliance Industries gained 0.7% to Rs1322.
Metal stocks were a mixed bag. Hindalco surged by over 3.6% to Rs133, Sterlite Industries rose 1% to Rs445 and Hindustan Zinc was up 1% to Rs569. However, Tata Steel lost 1.5% to Rs423 and
Auto stocks were under some pressure. Hero Honda declined 0.8% to Rs635, Bajaj Auto slipped 0.6% to Rs2501, Tata Motors edged lower by 0.4% to Rs769 and TVS Motors declined 1% to Rs62.
Technology stocks witnessed profit booking as India's Rupee rises for fourth day to an 18-month high. Heavy weight Infosys slipped 1.5% to Rs2055, Wipro was down by 0.9% to Rs573, Rolta declined 3.5% to Rs254 and HCL Tech dropped 0.6% to Rs301.
Market may extend gains; low volumes may cap upside
The uptrend on the domestic bourses may continue today with most Asian markets in the green. China's main index whose sharp drop late last month triggered a global flight from risk and sent equity markets tumbling -- hit an all-time high. Japanese markets were closed on Wednesday for a holiday.
US stocks rose on Tuesday, as a series of takeover deals bolstered investor confidence and offset apprehension about the latest Federal Reserve rate-setting meeting. The Dow Jones industrial average ended up 61.93 points, or 0.51%, at 12,288.10. The Standard & Poor's 500 Index closed up 8.88 points, or 0.63%, at 1,410.94. The Nasdaq Composite Index finished up 13.80 points, or 0.58%, at 2,408.21.
Volumes on the bourses have dropped over the past few days, partly due to a decline in FII volumes and partly due to advance tax payments. The call money rate at which banks lend funds to each other, jumped to 60% on Tuesday (20 March 2007), its highest since January 1998.
Daily volumes on BSE have dropped since the middle of March. It had hovered in 17.6 - 20.8 lakh shares a day from 12 March to 20 March compared to 22.94 - 29.57 lakh shares a day from 1 March to 9 March.
FII volumes as reflected in their daily gross purchases and gross sales figures have markedly declined in the past few days even as there lacks clear direction regarding their inflows. Gross purchases aggregated Rs 1056.60 crore and gross sales aggregated Rs 1306.50 crore on Monday (19 March 2007). Earlier in March, the daily gross purchases and gross sales figures fluctuated in the Rs 2000 crore to over Rs 3000 crore range.
At the net level, FIIs were net sellers to the tune of Rs 250 crore on Monday, the day when the Sensex had surged 215 points in a rally across Asian markets. As per provisional data released by NSE, FIIs were net buyers to the tune of Rs 147 crore on Tuesday (20 March 2007), the day when the Sensex rose 61 points in volatile trade.
The Fed's policy-making Federal Open Market Committee began its two-day meeting on Tuesday. The Fed is expected to hold its benchmark federal funds rate steady at 5.25%, but investors will focus on its statement on the outlook for the economy and future interest rate policy.
Back home, volatility may rise over the next few days ahead of the expiry of the March 2007 derivative contracts next Thursday (29 March 2007). With the market scheduled to remain closed next Tuesday (27 March) for a public holiday, only six trading sessions are left before the expiry of the March 2007 contracts.
The next major trigger for the domestic bourses is Q4 March 2007 earnings, reports of which by corporates will start next month. Market men will closely watch what company managements have to say about the outlook for FY 2008.
The undercurrent on the bourses remains cautious due to high inflation and rising interest rates. Strong industrial production data released early last week makes a strong case for the Reserve Bank of India (RBI) to raise interest rates at its annual policy review for FY-2008 on 24 April 2007. Industrial output rose 10.9% in January 2007 from a year earlier. The wholesale price index rose 6.46% in the 12 months to 3 March 2007, up from the previous week's annual increase of 6.10% due to higher edible oil and naphtha prices.
The long-term India story remains intact. India’s long-term growth drivers are a favourable demography (large share of young population), robust domestic consumption and an acceleration in infrastructure creation.
Market Close: Continues to look for direction !
Markets had a positive second consecutive day backed by strong value buying in Cement, Pharma, Airlines and Oil stocks. Markets opened on a strong note following positive global cues and falling crude prices. The Mid-Cap and the small caps also moved and helped the markets trade positive. Indices did slip in mid session but selective banking stocks especially the index major SBI rallied and helped indices back up in strong green. IT stocks traded weak on the back strong trade by Indian Rupee which touching an 18 month new high and was below 43.75 against the Dollar, the highest since Sept 2005.
Global markets were mixed with Asian closing up while European indices trading in red due to concerns over surprisingly high inflation in UK for February.
Sensex ended up by 61 points at 12705.94. It was helped up by gains in Ranbaxy (336.35,+6 percent), Rel Energy (476.15,+4 percent), Grasim (2124.1499,+4 percent), Guj Ambuja (110.9,+3 percent) and Hindalco (132.85,+3 percent). Restricting the gains were BHEL (2043.85,-2 percent), Infosys (2054.3999,-2 percent), TISCO (424.1,-1 percent), Wipro (573.3,-1 percent) and Hero Honda (635.3,-1 percent). It was a low volume day as well and that is not confidence driving still.
Ranbaxy rallied after it opted out of Round-II in the bid for Merck's generic business and cited stretched valuations for the same. Ranbaxy was the only Indian company in the race for Merck in Round-II after Dr Reddy's had officially pulled out of the race on similar grounds. Merck's acquisition at 15 times of EBITDA would not have been EPS accretive for Ranbaxy over the next four-five years. The stock surged by 7%. Expect some more here.
A leading business daily reported that the steel industry has asked the government to place a competitive restriction on iron ore exports at 90 MT for the current year in a move to conserve this key raw material required by the steel industry. The industry has also asked for a 15% reduction on the cap on iron export every year until the exports are brought to zero. India currently exports close to 100 MT of iron ore mostly to China. Restricting exports is a long-standing demand of the steel industry, which feels that iron ore needs to be preserved to meet the capacity expansion plans of the indigenous steel sector. In the budget the government has already tried to address the issue of iron ore exports by imposing export duty. However, when the steel industry reaches a capacity of 200 MTPA, it will require 350 MT of ore. Sail and Tisco traded weak. Both were slated for downtrades for today in our hunters pick. Do read that.
According to a leading business daily, the government has imposed a seven-months ban on new flights to and from Delhi and Mumbai. The ban would apply to any new flight that an airline wants to operate during the peak hours. The government has sought this measure in order to keep congestion at these airports at the bare minimum levels owing to the lack of infrastructure to handle the 'movement' along these airports. An aircraft 'movement' refers to the take-off or landing of a flight. The problem of congestion is also compounded by the fact that there is a shortage of trained air traffic controllers in the country. The ban will affect all the domestic airlines that had anticipated increasing their capacity on the Delhi-Mumbai route in anticipation of the forthcoming summer season. Less competition in the holiday season was seen as a positive and so also lower crude prices. Airline stocks were up with Jet up by 9%.
Technically Speaking: Yoyo trading for the day. Advances Declines ratio stood at 1:1. Today's Trading witnessed low volume at Rs. 2,841 cr. Resistance for the Sensex lies at 12,674, 12798 levels while the Support lies at 12,640 12,595 levels. Sensex has faced a major resistance at 12800. This will be a level to watch in the coming days. On the lower side supports are at 12650 and 12525.
FII: - Rs 250 cr, MF + Rs 33 cr...
Mkt Sources:
FII Gross purchases Rs 1057 Cr, Gross Sellers 1306 Cr, Net Sellers Rs 249 Cr.
MF Gross Purchases Rs 242 Cr, Gross Sellers Rs 208 Cr, Net Buyers Rs 33 Cr.
Our View:
FIIs sellers for yesterday is a surprise. Markets had jumped yesterday and there was hope that this was on the back of FIIs being buyers. But not to lose hope.. The futures buying and selling has its impact.. All in all, expect markets to be ranged...
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