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Wednesday, April 04, 2007
Citigroup - Week Ahead
China. We expect the Chinese government may introduce more policy measures to shrink trade surplus, but it will take a while to set in
India. Similar to trends in recent months, we expect industrial production growth to remain in the double-digit range
Korea. Steady job growth likely to continue
Malaysia. The export number suggests a further consolidation of the industrial production trend
Philippines. Export growth in February may correct to 12% yoy, following slower electronic exports
Singapore. 1Q07 GDP flash estimate will likely come in at about 6%, as manufacturing holds up despite tech slump
Taiwan. Exports likely continued to decelerate in March on weak tech demand, while imports likely bounced back on rising energy imports
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Citigroup - Stock Market Country Selection
Tactical Market Allocation
Brazil moves up sharply into the top quintile, largely due to much-improved short-term price momentum. Austria also moves into this top group, boosted by stronger analyst coverage and improving long-term price momentum. The UK slips down the ranking as the model chooses to select shortterm price momentum over the more flattering yield-gap measure.
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FII: – Rs 170 cr; MF – Rs 105 cr
FII Gross purchases Rs 2237.50 Cr, Gross Sellers Rs 2407.40 Cr, Net Sellers Rs 169.90 Cr.
MF Gross Purchases Rs 279.34 Cr, Gross Sellers Rs 384.30 Cr, Net Sellers Rs 104.96 Cr.
Our View:
FII’s are sellers despite the market ended in green. Looks like the investors are cautious ahead of the result season.
Close : Get some help from global footsteps !!
Extending yesterdays recovery, the market cashed in on positive note taking cues from strong global markets as well as low crude prices. Global markets were firm. Asian stocks extended their rally after reassuring US housing data and falling oil prices boosted investors appetite for risk. Europe markets traded mixed. Metal shares advanced today, after metal futures rose on the London Metal Exchange. Though the market remained in the green throughout the day, it suffered from volatility in the mid sessions. IT companies traded mixed after the Rupee moved below 43 versus the Dollar. Banking, Pharma and Sugar stocks were in demand. Cement traded subdued for the day. Investors are still worried about high inflation. The inflation data will be released tomorrow instead of Friday. Stock exchanges will remain closed for a public holiday on Friday.
As per some reports, the mutual fund (MF) industry grew nearly by 41% in FY07 to Rs 3,26,328 cr as against Rs 2,31,045 cr in FY06. With this, the industry has now grown around 142% since March 2004 when its assets under management (AUM) stood at Rs 1, 34,839 cr. Reliance MF topped the chart with an AUM of Rs 46,306 cr followed by ICICI Prudential (Rs 37,869 cr), UTI MF (Rs 35,488 cr), HDFC MF (Rs 28,357 cr) and Franklin Templeton (Rs 22,018 cr).
Sensex closed up by 162 points at 12786.77. It was helped up by gains in HDFC (1497.25,+5 percent), NTPC (160.95,+4 percent), BHEL (2352.8999,+4 percent), Dr Reddys (745.65,+4 percent) and Wipro (549.15,+3 percent). Restricting the gains were Hero Honda (643.9,-2 percent), Grasim (2063.8999,-2 percent), Maruti (745.45,-1 percent), Satyam (453.05,-1 percent) and RCVL (397.8,-1 percent).
Arcelor-Mittal and Birlas are in the final leg of Sesa Goa takeover. Both the companies have a distinct edge over the other and they are may be joined by other foreign companies like Vedanta Resources and Brazilian miner CVRD. Sesa Goa is India?s largest private exporter of iron ore. The bids by Aditya Birla Group and Arcelor Mittal are believed to have quoted near to Rs 2000 per share for the 51% stake owned by Mitsui. This is much below the range of Rs 2500 per share that prevailed in the second round of bidding. The main reason for lower range was the Budget proposal to levy a duty of Rs 300 per tonne on iron ore exports. While speculation is still on that Mitsui may choose to call the top two contenders to Tokyo for a final round of negotiations but this was however not confirmed. Sesa Goa's annual production is about 9 mtpa. The company is known to have iron ore reserves in excess of 150 million tonne. The company also has a prospective license for Jharkhand-based mines.
Cement companies declined in an overall strong market after the government abolished 16% countervailing duty and an additional 4% customs duty on portland cement with immediate effect. Government expects cement manufacturers, in the larger interest of consumers and for checking inflation to take appropriate measures for moderating cement prices. Cement stocks had a sluggish day with some buying interest seen in the mid sessions but most of the stocks closed in red.
Ashok Leyland?s dropped 1.6% to Rs 35.50, after its vehicle sales in March 2007, fell 1.6% to 8,444 units from 8,577 units a year earlier. Domestic sales dropped 1.9% to 7,936 units from 8,087 in the same period a year ago. Exports rose to 508 units from 490 a year earlier. The monthly sales numbers of most of the companies have been declared and are low. Most numbers have been below the market expectation. The rise in interest rates is likely to adversely impact the sale of cars in the country. The same is also substantiated by the lower loan offtakes reported by some of the automobile finance companies. According to ICICI Bank, which has the largest market share in automobile loans, the growth in passenger car sales is expected to fall to 10% to 12% YoY in FY08, compared to 24% YoY in FY07. This may also lead to pricing pressures in the automobile industry and defer the launch of new models.
Technically Speaking: Markets traded ranged but in green. Sensex touched intraday high of 12835 and low of 12691. Market turnover stood at Rs 3218 cr. Overall breadth was in favor of Advances, where the Advance was 1548 against the Decliners of 946. A strong Advance Decline ratio in the markets gives an indication for more upside. Yet a strong resistance on Sensex lies at 12830. Support is now at 12650.
Sensex gains amid lacklustre trades
The Sensex continued its upmove for the second consecutive session. Taking a cue from the strength in the international markets the domestic market resumed on a firm note at 12691, up 66 points. The revival of buying interest in metal, capital goods and banking stocks led the rally and the Sensex touched the day's high of 12835. Cement stocks had a weak outing on reports that the government has decided to cut import duty on cement to control the rising cement prices. The index was range-bound with a positive bias in the afternoon. The Sensex slipped towards the close and touched an intra-day low of 12691. The Sensex bounced back and closed the session with gains of 162 points at 12787. The Nifty closed at 3733, up 43 points.
The breadth of the market was positive. Of the 2,559 stocks traded on the BSE, 1,581 stocks advanced, 899 stocks declined and 79 stocks ended unchanged. Except the BSE Auto Index and the BSE FMCG Index, all the other sectoral indices closed with gains. The BSE CG Index gained 2.23% followed by the BSE HC Index (up 2%), the BSE CD Index (up 1.99%) and the BSE Metal Index (up 1.79%).
Heavyweights led the upsurge in the market. HDFC soared 5.15% at Rs1,497, NTPC surged 4.48% at Rs161, BHEL was up 4.39% at Rs2,353, Dr Reddy's gained 3.68% at Rs746, Wipro added 2.80% at Rs549, Cipla vaulted 2.10% at Rs229, ICICI Bank jumped 2.06% at Rs821, Tata Steel gained 1.95% at Rs438 and Bharti Airtel was up 1.76% at Rs748. Select counters, however, finished on a weak note. Hero Honda shed 2.27% at Rs644, Grasim dropped 1.92% at Rs2,064, Maruti Udyog declined 1.39% at Rs745 and Satyam Computer lost 1.23% at Rs453.
Capital Goods stocks rallied sharply. Praj Industries surged 10.04% at Rs390, Crompton Greaves jumped 6.80% at Rs196, Jyoti Structures added 5.94% at Rs171, Bharat Electrical advanced 4.46% at Rs1,581 and Alstom Projects gained 3.63% at Rs390. Areva, ABB and Punj Lloyd were up around 2% each.
Over 85.66 lakh IFCI shares changed hands on the BSE followed by Rana Sugars (48.13 lakh shares), Reliance Petroleum (37.45 lakh shares), India Bulls Real Estate (37.23 lakh shares) and NTPC (36.05 lakh shares).
Value-wise HDFC Bank registered a turnover of Rs112 crore on the BSE followed by Renuka Sugar (Rs98 crore), India Bulls Real Estate (Rs98 crore), Mindtree (Rs95 crore) and ACC (Rs95 crore).
Sensex adds 162 points
The Sensex's recovery from Monday’s steep fall on the back of RBI's liquidity tightening measure lasted for the second successive day, thanks to the revival across global markets. Domestic bourses have been closely tracking the trend in the global markets, lately.
The 30-share BSE Sensex jumped 162.19 points (1.28%), to settle at 12,786.77. The S&P CNX Nifty gained 42.60 points (1.15%), to end at 3,733.25. The Sensex shot up 170 points on Tuesday (3 April), after having tumbled 617 points on Monday (2 April) due to the RBI’s surprise hike in a short-term interest rate.
The market-breadth was strong. Against 1,548 scrips rising on BSE, 946 had declined. Also, 91 stocks were unchanged. Gainers outpaced losers by a ratio of 1.63:1.
The BSE clocked a turnover of Rs 3218 crore, compared to Tuesday’s Rs 2886 crore.
As per provisional data, FIIs were net sellers to the tune of Rs 45 crore today.
Asian stocks extended their rally on Wednesday, with Australia, Singapore and South Korea hitting record highs, inspired by a reassuring US housing data and falling oil prices.
US stocks closed sharply higher on Tuesday, as a drop in oil prices soothed worries about inflation and news of an unexpected rise in home sales raised hopes that the housing market was stabilising. The rally took the Dow and S&P 500 to their highest levels since 27 February 2007. The Dow Jones Industrial Average gained 128 points (1.03%), to 12,510.30. The tech-laden Nasdaq Composite Index had advanced 28.07 points (1.16%), to 2450.33.
Oil prices extended a near 2% sell-off in New York overnight, as dealers waited for US data, which is expected to show a mild drop in fuel inventories. US light crude for May delivery fell 18 cents to $64.46 a barrel, following a $1.30 slide on Tuesday after Britain and Iran said they were willing to use diplomacy to end a standoff.
Index heavyweight Reliance Industries (RIL) gained 1.6% to Rs 1364, on reports that it was planning to set up two gas-based projects.
PSU power equipment major Bhel surged 4% to Rs 2349, extending gains from Tuesday's reported 42% growth in provisional net profit for the year ended 31 March 2007.
Housing finance major, HDFC, gained 5% to Rs 1495. The scrip had declined 6.3% in the past two days, after raising the lending rate by 75 basis points to counter the hike in a short-term rate by the Reserve Bank of India (RBI).
Banking scrips advanced ahead of the weekly inflation data, which is due to be released on Thursday. ICICI Bank gained 1.6% to Rs 817.50 and State Bank of India rose 0.5% to Rs 931.80. India's wholesale price inflation rate is expected at 6.29% for the 12 months to 24 March 2007, falling from an annual rise of 6.46% a week earlier. The data will be released on Thursday (5 April), instead of on Friday. Stock exchanges will remain closed for a public holiday on Friday.
Pharma stocks were in demand. Dr Reddy’s Lab gained nearly 4% to Rs 747, drawing inspiration from the rally in its ADR on Tuesday. Cipla gained 2.4% to Rs 229.50.
IT bellwether Infosys gained 1.4% to Rs 1993. The stock had eased in morning trade from the early gains, as the rupee today hit its highest level in nearly eight months. Infosys’ FY 2008, which it will unveil along with Q4 March 2007 results, on 13 April 2007, is the next major trigger for the market. In a recent pre-guidance report on Infosys, Merrill Lynch placed a short-term 'sell' on the Sensex heavyweight, expecting a conservative guidance from the company due to an uncertain US economic outlook, the appreciation of the rupee versus the dollar and other client-specific issues. Merill Lynch expects Infosys to give an EPS growth guidance in the early 20s.
HCL Tech rose 3% to Rs 287, after the company said its board will meet on 16 April 2007, to take on record Q3 March 2007 results. The board will also consider the payment of a third interim dividend for FY 2007 (year ending 30 June 2007).
Cement shares remained subdued. Grasim lost 2.4% to Rs 2053 and Gujarat Ambuja Cements shed 0.2% to Rs 105.15. ACC was up 1.8% at Rs 718. The government's decision on Tuesday to do away with countervailing duty (CVD) of 16%, and an additional customs duty of 4% on portland cement with immediate effect, worsened sentiment about cement companies, which were already reeling under government pressure for curbing prices. However, the actual import of cement is unlikely to take place in a big way due to high transportation costs, and poor infrastructure at the ports to handle bulk cement.
Ashok Leyland dropped 1.6% to Rs 35.50, after its vehicle sales in March 2007, fell 1.6% to 8444 units from 8577 units a year earlier. Domestic sales dropped 1.9% to 7,936 units from 8,087 in the same period a year ago. Exports rose to 508 units from 490 a year earlier.
UTI Bank dropped nearly 2% to Rs 456.20, after Chairman & Managing Director (CMD), P J Nayak, offered to quit at the end of his current term, on 31 July 2007. UTI Bank said that the Reserve Bank of India (RBI) had declined an approval to UTI Bank’s earlier proposal to appoint Nayak as CMD for two years, commencing 1 August 2007. RBI has proposed that the office of chairman and managing director should be bifurcated into two in accordance with the recommendations of the Dr Ganguly Group Report on Corporate Governance and to comply with international best practices. The board of UTI Bank will meet on 17 April 2007, in this regard.
Metal shares advanced, after metal futures rose on the London Metal Exchange on Tuesday. Sterlite Industries jumped nearly 7% to Rs 466.95, Hindustan Zinc jumped 8% to Rs 619 and Hindalco gained 0.4% to Rs 129.65. Copper futures rose 3.8%, and Zinc futures jumped 3.6%.
ABB gained nearly 2% to Rs 3510, after the company said its board will meet on 26 April 2007, to take on record un-audited financial results for Q1 March 2007.
Public sector steel giant, Steel Authority of India (Sail), gained 0.45% to Rs 111.65, after the board of directors gave their in-principle approval for a Rs 11260 crore expansion plan. The investment will nearly double capacity at the firm's Bhilai steel plant to 7 million tonnes a year. The state-run steel maker, which plans to raise its total output from 14 million tonnes to 23 million by 2010, said it produced 12.6 million tonnes of saleable steel during FY-2007.
Some offshore oil services firms were in demand. Aban Offshore gained nearly 4% to Rs 2132.05, South East Asia Marine Engineering & Construction jumped 5% to Rs 185.20, and Dolphin Offshore advanced 4% to Rs 187.
Multiplex operator, Cinemax India, rose 1.5% to Rs 122.85, after ICICI Prudential Life Insurance Company said on Tuesday it had mopped up 1.94 lakh shares of Cinemax India through the open market on 28 March 2007, taking its cumulative holding to 14.31 lakh shares (5.11%).
Mahindra & Mahindra dropped 2.64% to Rs 708.50, a day after Mahindra Renault, a joint venture between Mahindra & Mahindra (M&M) and Renault, on Tuesday launched the Logan budget-priced car range in India. The Logan will roll out from M&M’s plant at Nashik, which has been upgraded with an installed capacity of 50,000 units annually.
Eicher Motors dropped 2.5% to Rs 228.05. The company has posted 20% growth in vehicle sales in March 2007, at 3,730 units. Domestic sales grew 18% to 3,283 units and exports rose 37% to 447 units.
IFCI rose 1.1% to Rs 31.75, even after RBI said on Tuesday no further purchases of shares in IFCI by foreign funds will be allowed without their prior permission. The foreign fund holding in IFCI has reached the 22% limit, RBI informed.
JSW Steel lost 1.8% to Rs 470.10. The company today said it had posted a growth of 20% in crude steel production for Q4 March 2007. The company said it had recorded higher production in all product segments, except galvanised products.
Poweryourtrade.com Trading Calls
Buy Aptech at Rs 221. Stop Loss at Rs 215 (Intra-day Call)
Buy NTPC and remain invested for a target of Rs 199 and 266. Keep room to accumulate at Rs 147 or below when it comes. (Delivery based Call)
Buy CESC at current price and on dip to Rs 346 and remain invested for a target of Rs 475 and 646. Long term stop loss at Rs 290. (Delivery based Call).
Poweryourtrade.com Trading Calls
Ashwani Gujral
Sell Kesoram Industries with stop loss of Rs 325 for target of Rs 250
Sell Birla Corporation with stop loss of Rs 200 for target of Rs 170
Deepak Mohoni
Buy CESC below Rs 384 with stop loss of Rs 376; This is a day-trading recommendation
Buy Zee News below Rs 38.50 with stop loss of Rs 37.75; This is a day-trading recommendation.
Rajat K Bose
Sell India Cement with stop loss above Rs 160.50 for target of Rs 152-146-141. This is a day-trading recommendation.
Buy Bajaj Hindustan with stop loss below Rs 197 for target of Rs 212-219-223. This is a day-trading recommendation.
Edelweiss - Daily Market Outlook 4th April, 07
Market Snapshot
After Mondays agony, the markets bounced back yesterday and barring the initial volatility, the bears never really appeared in a position to do an encore. The Sensex opened 49 points higher at 12,504 backed by smart gains in the Asian markets. With the bulls continuing to put up a strong resistance, markets managed to hold onto their gains during the final hour of trade. The BSE Sensex closed at 12,621 (up 166 points) while the NSE Nifty closed at 3,691 (up 57 points).
The NSE and BSE cash volumes were unchanged compared to the previous day at INR 68 and INR 29 bn respectively. The F&O volumes were lower at INR 232 bn.
Sentiment Indicators
The Implied Volatility (IV) across Nifty strikes has increased to 28-29% levels. The WPCR of Nifty Options decreased to 0.7 compared to the previous day while the 5 day average is 0.88.
Outlook
The markets are expected to open strong on the back of positive global cues. We expect that if markets are able to sustain the positive move, we might see lot of short covering fueling the rally further, as Nifty Futures Open Interest didn’t see any significant decline in yesterday’s trade. There has been some short covering on NIFTY and single stock futures yesterday, and we expect the rally to get intensified today after strong set of home sales data in US.
Cement sector might see some renewed selling after news that government might remove CVD on the import of Portland cement. This is bad for the cement sector as it will pull down the prices and dampen the sentiment further. Stock specifically, we might see some selling in Jet and Oriental Bank of Commerce and buying in Sterlite and RPL, on the back of index rebalancing.
After being net sellers on Monday, FIIs were net buyers to the tune of INR 892 cr in index futures and INR 292 cr in single stocks future.
The Nifty staged a strong pullback from its 200 DMA and the process could continue today as well. The Nifty showed some resistance at the 3700 level yesterday and if that level is crossed the first resistance would be at 3736 followed by 3750. On the lower side the support is at 3668. However, the underlying trend continues to be bearish and we believe that it is a matter of time before fall resume.
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Upturn may continue
After yesterday's pullback the market bias remains positive. The overnight gains in US markets and the major Asian indices like NIkkei, Hang Seng, Kospi, Straits Times and Jakarta Composite are trading with gains at nearly 1% each. The falling crude oil prices may help the investor sentiment remain bullish. However, the government's decision to control the rising cement prices by introducing cut in import duty may hurt the cement stocks today. The investors should remain cautious as intra-day volatility can not be ruled out. Among the domestic indices, the Nifty could test higher levels of 3725 and may dip to 3635 on the downside. The Sensex has a likely support at 12500 and may face resistance at 12800.
US indices jumped on Tuesday in a broad-based rally as investors welcomed falling oil prices and encouraging signs from the troubled housing market. While the Dow Jones was up by 128 points at 12510, the Nasdaq ended 28 points up at 2450.
All the Indian floats ended with gains on the US bourses. MTNL and Dr Reddy's rose over 5% while Infosys, Satyam, , Wipro gained over 3-4% each and Tata Motors, CICI Bank, HDFC Bank, VSNL and Patni Computers gained over 1-2% each.
Crude oil prices fell as the UK planned peaceful talks with Iran on the release of its hostages. While the Nymex light crude oil for May delivery slipped by $1.30 at $64.64 a barrel. In the commodity space, the Comex gold for June series moved down by $1.80 to settle at $669.70a troy ounce.
Intra-day Stock Ideas
NIFTY (3690) SUP 3667 RES 3727
BUY NATIONALUMI (233)
SL 229 T 240, 242
BUY PSL (200)
SL 196 T 208, 210
SELL CEAT (106.4)
@ 108 SL 111 T 99, 97
SELL TULIP (602)
@ 606 SL 611 T 594, 592
SELL ACC (703)
@ 707 SL 711 T 692, 689
Market Watch & Insider Trades
Insider Trades:
Cinemax India Limited: ICICI Prudential Life Insurance Company has purchased from open market 194984 equity shares of Cinemax India Limited on 28th March, 2007.
The Great Eastern Shipping Co. Limited: Mrs.Asha V Sheth, Director has purchased 10000 equity shares of The Great Eastern Shipping Co. Limited on 29th March, 2007.
Prime Securities Limited: Mr. N Jayakumar, President has purchased from open markets 15000 equity shares of Prime Securities Limited on 30th March, 2007
Market Volumes:
The turnover on NSE was down by 1.7% to Rs67.45bn. BSE PSU index was the major gainer and gained 2.16%. BSE Oil & Gas index (up 1.86%), BSE Technology index (up 1.57%), BSE FMCG index (up 1.33%) and BSE Capital Good index (up 1.12%) were among the other major gainers.
Volume Toppers:
IFCI, SAIL, Sakhti Sugar, IVRCL Infrastructure, Balrampur Chini, Rana Sugar, NTPC, Bajaj Hindusthan, R Com, Renuka Sugar, Indiabulls, Satyam Computer, HLL, ITC, Bank of India, Gujrata Ambuja, Idea Cellular, Reliance industries, Sterlite industries and Infosys.
Lower Circuit:
Ansal Infrastructure, Unitech, Simplex Infrastructure, Atlanta, Dawn mills, Mefcom Agro, Shree Precoated and DS Kulkarni.
Delivery Delight:
Aptech, Bajaj Hindustan, Bank of India, BHEL, Gammon India, Glenmark, Hero Honda, HLL, Infosys, IVRCL Infrastructures, Jet Airways, NTPC, Praj Industries and SAIL.
Brokers Recommendation:
Patni Computers - Buy from Citigroup with target price of Rs463
BHEL – Buy from Prabhudas Liladhar with target price of Rs2633.
Long Term investment:
Colgate.
Major News Headlines:
Govt scraps CVD and SAD on cement to curb prices
BHEL FY07 provisional profit at Rs23.85n and provisional revenues at Rs187bn
BHEL plans to make new oil rigs for ONGC
Orchid Chemical to enter Canadian generic formulations market
Renault to sell Logan in JV with M&M
Hershey to buy 51% stake in Godrej Beverages
Indian Hotels unit to acquire Hotel Campton Place
Petron Engineering wins Rs190mn order from Reliance Petroleum
Stock Talk - KPIT Cummins Infosystems Ltd.
KPIT Cummins Infosystems Ltd.
Visit Note
We met Mr. Sanjay Sinha, Head – Business Development & Investor Relations and Karthik Krishnan, Manager – Investor Relations to get an update of the recent business developments and to check management’s preparedness and confidence for achieving revenue and earnings target under its Mission 2010.
Under the Mission 2010, the company has set a target of achieving US$250mn in revenues and US$40mn in earnings by FY10. This calls for a CAGR of ~35.5% in
revenues from FY07E US$100mn and ~50.5% in earnings from FY07E
US$11.6mn over FY07-10. Management has clarified that it should not be construed as a formal guidance as it actually defines the general direction of growth of the company.
STRATEGY INPUTS FOR THE DAY
We are the World
Personal transformation can and does have global effects. As we go, so goes the world, for the world is us. The revolution that will save the world is ultimately a personal one.
With the world markets in the pink of health, local bulls may find courage to continue the recovery after Monday's mayhem. However, cement stocks may not be that lucky with the Government firing the fresh salvo in the tussle with the cement producers over high prices. Still, the fact that the Centre is willing to consider rolling back the dual excise duty structure is a positive development. Crude oil prices too are down slightly following some cooling in the tension between Iran and the UK. In short, we are looking at another bright start, and perhaps a good day buoyed by the positive global sentiment. Having said that, all the concerns and anxiety over rising interest rates and its impact on the economy still remain intact. So do worries about the state of the US economy.
In a few days though, investors will have to deal with a lot of results. On the whole, India Inc should come out with a strong report card. But, its the future earnings growth that needs to be looked at in the context of the monetary tightening measures and a likely slowdown in economic growth. One thing is for sure that the market this year will be highly volatile with regular bouts of buying and selling. A stock specific approach should be the way to go. For long-term investors, any further dips will provide them with an opportunity to buy fundamentally sound stocks.
FIIs were net sellers of Rs60.1mn (provisional) in the cash segment yesterday. In the F&O segment, they were net buyers to the tune of Rs14.28bn. Foreign funds offloaded stocks worth Rs4.74bn on Monday. Mutual Funds pumped in Rs635.6mn on the same day.
RPL and Sterlite enter the Nifty today. OBC and Jet Airways make their way out.
US stocks closed sharply higher on Tuesday on the back of lower oil prices and an unexpected rise in pending home sales. The Standard & Poor's 500 Index had its second straight gain. Google's biggest jump since March 6 gave the Nasdaq Composite Index its fourth consecutive advance.
The Dow Jones Industrial Average added 128, or 1%, to 12,510.30. The blue chip benchmark is now 1% shy of recouping all of its decline from the global equity sell-off that began Feb. 27. The S&P 500 rose 13.22, or 0.9%, to 1437.77. The Nasdaq increased 28.07, or 1.2%, to 2450.33.
Crude oil futures fell 2% to $64.64 a barrel in New York. Oil has pulled back after reaching a six-month high last week. The front-month crude contract was quoting flat at $64.65 a barrel in extended trading in Asia.
Prime Minister Tony Blair said that the UK will try to negotiate with Iran over the release of 15 captive British naval personnel, easing concern that oil shipments will be disrupted.
US treasury prices slipped, raising the yield on the 10-year note to 4.66% from 4.64% late on Monday. In currency trading, the dollar rose versus the euro and the yen. COMEX gold for June delivery fell $1.80 to settle at $669.70 an ounce.
European shares gained. The pan-European Dow Jones Stoxx 600 index rose 1% to 379.29. The UK's FTSE 100 index closed up 0.6% at 6,366.10, the French CAC-40 rose 1.2% to 5,711.91 and the German DAX Xetra 30 gained 1.6% to 7,045.56, a level not seen since the end of February.
Latin American markets finished higher. In Mexico, the IPC finished up 177 points, or 0.6%, at 29,348.09. In Brazil, the Bovespa rose 691 points, or 1.5%, to end at 46,288.16. Argentina's Merval index rose 0.6%, to close at 2,114.62. Also, Chile's IPCA gained 0.9% to a close at $2,967.54.
Asian stocks advanced for a second day on Wednesday after falling oil prices and an unexpected increase in home sales boosted confidence in the outlook for the US economy, the region's biggest export market. Toyota and Samsung Electronics led gains.
The Morgan Stanley Capital International Asia-Pacific Index gained 1.1% to 146.04 as of 10:43 a.m. in Tokyo. All 10 industry groups advanced. Japan's Nikkei 225 Stock Average climbed 1.5% to 17,504.89.
Indexes in South Korea, Singapore and Australia were set for record highs, while Taiwan's Taiex is poised to recover all of its losses since a five-day global selloff in equities in late February. All other benchmarks in the region advanced.
Australia's S&P/ASX 200 Index rose as the central bank refrained from raising interest rates to a decade high. BHP Billiton led resources shares higher after copper prices climbed to a five- month high in New York.
The yen traded near the lowest in five weeks against the dollar as traders borrowed cheaply in Japan to invest in U.S. and European stocks.
Some of the money that has been sitting on the sidelines started coming back into the global equity markets during the fourth week of March, says Emerging Portfolio Fund Research (EPFR). All of the major equity and fixed income fund groups tracked by EPFR posted net inflows for the week with four of them – US, Global, Western Europe and Asia ex-Japan Equity Funds – taking in over $1bn apiece.
The combined Emerging Market Equity Funds took in net inflows of $2bn, their first weekly inflow since mid-February and their second strongest week this year. Sentiment towards China, whose equity market correction in late February had a domino-like effect around the world, also took a turn for the better, according to EPFR.
HOW MARKET FAREDCement may crumble sentiment
The Bulls made a smart come back on bourses as both the key indices recovered partially after yesterday’s slaughter. The markets had a one-way upward trend today, initially it was a bit uncertain but the key indices strengthened as the session progressed. The rally was led by Technology stocks. Oil & Gas, Capital Good and FMCG stocks also followed suit. However, the Mid-Cap and the small cap index under performed but managed to close in green. The frontline stocks like BHEL, HLL, Infosys, ONGC, Reliance Industries and Tata Steel aided the markets to close higher.
Finally, the 30-share benchmark Sensex regained 169 points to close at 12624. NSE Nifty also gained 57 points to close at 3690.
BHEL spurred by over 4.5% to Rs2254 after the company announced its FY07 provisional result with net profit at Rs23.85n and revenue at Rs187bn and also announced that it would spend Rs32bn to raise capacity. The scrip was the top gainer among 50-scrip’s of NSE Nifty touching an intra-day high of Rs2283 and a low of Rs2150 and recorded volumes of over 10,00,000 shares on NSE.
JSW Steel gained some momentum towards the fag end, the scrip edged higher by 0.8% to Rs478 according to reports the company increased the export price of steel by Rs1,500-Rs2,500 per tonne for various grades. The scrip touched an intra-day high of Rs483 and a low of Rs470 and recorded volumes of over 2,00,000 shares on NSE.
ACC ended on a flat note at Rs704 after hitting an intra-day high of Rs718. The Company announced that its March cement sales were up by 3.42% at Rs1.81mn. The scrip touched an intra-day low of Rs692 and recorded volumes of over 10,00,000 shares on NSE.
Sterlite Industries witnessed huge intra-day gyrations. After hitting the low of Rs420 the scrip gained by 0.3% to finally close at Rs427. The scrip touched an intra-day high of Rs433 and recorded volumes of over 8,00,00 shares on NSE.
Indian Hotels edged lower by 0.6% to Rs139. The company announced that its unit would acquire Hotel Campton Place. The scrip touched an intra-day high of Rs143 and a low of Rs138 and recorded volumes of over 17,00,000 shares on NSE.
Technology stocks were in the limelight led by heavy weights like Wipro which gained by 3% to Rs534, Satyam computer was up by 2.8% to Rs460 and Infosys added 2.1% to Rs278. HCL-Tech, Mastek and Moser Baer were the major gainers among the Mid-Cap stocks.
Select Real Estate stocks fell in a market that partially recovered. Unitech was locked at 5% lower circuit to Rs349.70, Indiabulls also lost over 5% to Rs382, Parsvnath was down by 0.6% to Rs239 and Akruti Nirman declined 2.3% to Rs404.
Cement stocks witnessed fresh buying. Grasim surged by over 2% to Rs2102, Gujarat Ambuja advanced 1.7% to Rs105, India Cement gained 1.3% to Rs156 and ACC was flat at Rs704.
Telecom stocks rang with gains. Reliance Communication advanced by 1.4% to Rs402, Bharti Airtel gained by 0.6% to Rs733 after the Enterprises and the world’s largest retailer, Wal-Mart Stores, would sign a legal agreement for their joint retail venture this month and MTNL added 0.6% to Rs143.
Auto stocks also gained momentum on back of fresh buying. Hero Honda, M&M, Tata Motors and Maruti were among the major gainers.Market to extend recovery on firm global bourses
The market is likely to extend Tuesday’s recovery tracking firm global markets, drop in crude oil prices and on decent to strong gains in Indian ADRs on Tuesday (3 April). However, it remains to be seen whether volumes pick up along with the recovery in share prices.
Volumes have declined on the bourses at the onset of this month. Volumes were low when the Sensex had tanked 617 points on Monday 2 April caused by RBI’s surprises hike in short term interest rate and CRR. Volumes remained muted when the market recovered on Tuesday 3 April. The volume of shares of 16.3 crore on BSE on Monday and 15.85 crore on Tuesday was much lower than the average daily volumes of 21.85 crore shares in March 2007 and 31.31 crore shares in February 2007.
Stocks in Asia climbed on Wednesday (4 April), with exporters leading the way after a rise in US home sales soothed concerns about the outlook for the key US market. Key benchmark indices in Japan, Hong Kong, South Korea, Singapore and Taiwan were up by between 0.5% to 1.7%
US stocks closed sharply higher on Tuesday as a drop in oil prices calmed worries about inflation and news of an unexpected rise in home sales raised hopes the housing market is stabilizing. The rally took the Dow and S&P 500 to their highest levels since 27 February 2007. Dow Jones Industrial Average gained 128 points or 1.03% at 12,510.30. Tech laden Nasdaq Composite index advanced 28.07 points or 1.16% at 2,450.33.
Indian ADRs put a strong showing on Tuesday. Key ADRs rose between 2.2% to 5.12%.
Of late, there is lack of clear direction with regard to FII inflows as there have been alternate days of inflow and outflow. FIIs were net sellers to the tune of Rs 473.50 crore on Monday, the day when Sensex had tumbled 617 points following RBI rate hike. They were net buyers to the tune of Rs 840.80 crore on Friday (30 April), the day when Sensex had risen 92 points.
The Reserve Bank of India (RBI) lifted its short-term lending rate by 25 basis points to 7.75%, its highest in nearly 4-½ years, after markets had closed on Friday (30 March) to fight inflation. It also raised the cash reserve ratio (CRR), or proportion of cash banks have to hold with the central bank on deposit, by half a percentage point to 6.5% in two stages to siphon out Rs 15500 crore from the banking system.
The major trigger for the market is FY 2008 (year ending 31 March 2008) guidance by IT bellwether Infosys, which will unveil its FY 2008 guidance along with the Q4 March 2007 results, on 13 April 2007. In a recent pre-guidance report on Infosys, Merrill Lynch placed a short-term 'sell' on the Sensex heavyweight expecting a conservative guidance from the company due to an uncertain US economic outlook, the appreciation of the rupee versus the dollar and other client-specific issues. Merill Lynch expects Infosys to give EPS growth guidance in the early 20s.
The Bank of England announces its decision on rates on Thursday (5 April).
Anagram - Daily Call
Notwithstanding yet another grenade lobbed into the cement manufacturer’s tent by the Government, stocks are likely to open higher taking cue from the international markets, which rose in unison Tuesday. The party continues in Asia with the Nikkei cruising with gains of 250 odd points this morning.
Yesterday’s 169 point rise in the Sensex is to be seen just as a corrective step of the 626 point fall we had Monday. Technically, unless the gap between 12811 and 12984 is closed , the markets will remain in bearish trend. Some short covering is seen in the morning. But later expect reality check
to set in.
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Anand Rathi - Daily Strategist
The NIFTY futures saw a drop in OI 2.85% with prices positive indicating that as market opened high and not ready to go below 3600 levels weak shorts covered their positions and forced price to remain above 3650 levels. We feel that till the market doesn't go below 3600 levels we may not see aggressive short positions in the nifty futures and longs liquidating their positions. The FIIs bought index futures to the tune of 892 crs versus last day's sale of 1432 crs indicating short covering by them whereas heavy buyers in index options indicating hedged positions built up by them. The PCR has come up form 0.82 to 0.87 levels indicating some buying support emerging in the market. The volatility has come down from 29.90 to 28.65 levels indicating some buying support may emerge at lower levels in the market.
Among the Big guns, ONGC saw rise in OI to the tune of 4.07% with prices positive to the tune of 2.14% indicating built up of long positions aggressively indicating strength in the counter whereas RELIANCE saw drop of OI to the tune of 0.35 % with prices positive indicating that shorts covered their positions and fresh positions built up in the counter indicating strength in the counter.
In the TECH front, INFOSYSTCH saw fall of OI with rise in prices indicating lot of short covering is seen in this counter with no fresh buying emerging indicating rally may exhaust once short covering ends .TCS ,SATYAMCOMP& WIPRO saw fresh built up of long positions indicating strength may remain in these counters.
In the BANKING counters, SBIN, ICICIBANK saw rise in OI with prices almost flat indicating that both bulls and bears were aggressive in these counters indicating that bears were aggressive in these counter though market recovered indicating weakness in these counters.
In the metal pack TATASTEEL, Saw fall in OI with price positive indicating shorts covering in their positions in the counter SAIL saw fresh built up in OI with rise in price indicating fresh buying emerging in the counter indicating further strength in the counter. HINDALCO&NALCO saw fresh built up in long positions indicating strength in the counter whereas STER saw built up of huge OI with prices flat to negative indicating sharp movement is expected in this counter.
Considering the overall scenario and the markets behavior the market may show some volatility before taking any sharp and directional movement .If it remains below 3600 levels we may see fresh short positions being built up in the market. Traders are advised not to go aggressively short on the market unless important support level of 3600 is breached and any position taken today should be with strict stop losses to be adhered too.
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Anand Rathi - Daily Technical Note
Nifty and Sensex have exhibited a bullish candlestick.
Technically, one may use the level of 3550 (Nifty) and 12300 (Sensex) as the stop loss level.
Nifty faces resistance at 3820 and Sensex at 12825.
BSE Smallcap and BSE Midcap exhibited a candlestick with a small real body.
CNX IT has gained ground.
In the Punter's zone we have a BUY in Ranbaxy & Gujrat Ambuja with a SELL in S.B.I.
In the Technical call section, we have a BUY in M&M & Divi;s Lab with a SELL in TCS.
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Wall Street rallies on lower oil price and strong consumer data
Dow’s 128 point gain erases its lackluster Q1 performance taking it to positive territory for the year
Wall Street rallied on Tuesday with US stocks getting a good lift from lower oil prices and strong consumer data. Apparent easing tension between UK and Iran led to crude prices below $65/bbl today, a 2% drop. This, coupled with reassurance about stabilization in the housing market, lifted market sentiments today after the second quarter made a slow start yesterday. Airline stocks were the biggest beneficiaries of the oil price drop. Financial stocks, a group that also struggled in the first quarter, were higher on the day. Technology, which also turned positive for the year, was another source of notable support.
29 out of 30 stocks closed higher today. P&G was the sole loser with a tiny drop of 12 cents. For the day (3 April, Tuesday) the Dow Jones Industrial Average closed higher by 128 points at 12510.3, Nasdaq higher by 28.07 points at 2450.33 and S&P 500 higher by 13.22 points at 1437.77. Altria, Home Depot, Boeing and 3M were the main Dow winners. With today’s gain, Dow is positive for the year.
Stocks extended early gains after the National Association of Realtors said that its pending home sales index, a measure of future U.S. home buying, rose 0.7% in February. However, the index is down 8.5% year on year, and the NAR said that sales may be experiencing "some fallout from a decline in subprime lending." Early sentiment also got a boost from rallies in overseas market.
Good housing erases subprime worries for the moment, chain store sales data boosts Retailers
After the second quarter kicked off slowly yesterday, after a discouraging ISM report, today stocks rallied within an hour after market opened today. The National Association of Realtors said pending home sales rose 0.7% in February to 109.3 following a revised 4.2% drop in January. The report eased the worst of fears that a housing crisis will develop and the same also alleviated concerns that the subprime mortgage meltdown will add to the huge inventory of properties already on the market.
Of the nine other sectors trading higher, Consumer Discretionary was paced the way as its 1.5% advance lifted the sector into positive territory for the year. Retailers got a big boost following a report that showed chain store sales for the week ending 31 March rose 4.9%, the fastest pace in two months. Homebuilders which this year's worst performing S&P industry group was among today's biggest winners following the upbeat housing report.
Home Depot was the leading blue-chip with a 2.4% gain among Dow components as signs of stability in housing lured bargain hunters to the beaten-down retailer. Among technology shares, Google rose 3% after news the Internet search giant will sell television ads through a partnership with EchoStar Satellite and Astound Cable, a small Internet provider in Northern California. eBay jumped 2.4% after Bear Stearns raised its earnings estimate for the online auctioneer.
Crude-oil futures for light sweet crude for May delivery closed at $64.64/barrel (lower by $ 1.3/barrel or 1.97%) on the New York Mercantile Exchange. Crude prices fell today as tensions between Iran and UK eased partially. Today’s closing prices were lowest in almost a week.
Trading volumes showed 1.6 billion shares exchanging hands on the New York Stock Exchange and 1.9 billion on the Nasdaq stock market. Advancing issues outpaced decliners by 3 to 1 on the NYSE and by 19 to 9 on the Nasdaq.
February Factory Orders and March ISM Services data are expected tomorrow. On the earnings front, Best Buy and Circuit City feature among the main companies that will come out with earnings report.
Citigroup - Cement Sector
Another Adverse Policy Measure
This move will have an adverse impact on sentiment on the cement industry, which has already been affected by the cut in import duty from 12.5% to nil in January 2007, and an increase in the excise duty in the budget. While there is hardly any impact on near-term cement profitability due to the positive demand supply dynamics of the industry, we believe the repeated actions by the government are attempts to take away the last leg of pricing upside before the next large batch of cement capacities comes in.
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Citigroup - India Technicals
Trading Around 200 dma
The bounce can further inch toward the 20 dma at 3728 where stiff resistance can be expected. Support is at the 200 dma at 3635, break of which will see index decline toward the 3555.
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