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Tuesday, May 15, 2007
Market Close: Struggling to cross 14k !
After yesterday strong close, market looked good to carry on the trend however started the day on a low. But it crossed the 14k mark thereafter. Not much support was seen from the global cues as the Asian markets traded mixed in the early sessions but soon lost grounds and ended in negative territory while European indices also followed them. Sensex had a volatile day with no clear direction to where it was headed. In the mid sessions the IT stocks started to feel the brunt of profit booking as the rupee continued its upward march and was quoted at 40.83 against the Dollar. However, some dollar buying by oil refinery companies in later stage to moped up dollar at lower levels.
Profit booking was on the cards for most of the sessions as the market nudged itself at high level. Market saw some patchy attempts by the bulls to push the indices into the positive. Sensex remained in the red zone for most of the time. Selective Banking and Steel stocks displayed strength while selling pressure was seen across the board with selective Pharma and Engineering stocks were out of investors favor. Selective Mid caps and Small caps have did well.
Sensex ended down by 37 points at 13929.33. Weighing on the Sensex were losses in Satyam (452.15,-2 percent), ONGC (890.45,-2 percent), Wipro (534.1,-2 percent), Infosys (1972.55,-1 percent) and RCVL (475.3,-1 percent). Losses were restricted by gains in BHEL (2518.8999,+3 percent), ICICI Bk (887.1,+2 percent), SBI (1226.65,+2 percent), HDFC Bk (1010.15,+1 percent) and Hero Honda (697.8,+1 percent).
Refrigeration and Cooling Equipment company, Voltas ended the day up marginally after reporting a 405.30% growth in net profit in the last quarter ended in March 2007 to Rs 120 crore compared with net profit of Rs 24 crore in the previous year. Sales rose to Rs 721 crore, from Rs 514 crore. Net profit jumped to Rs 186 crore in the year ending March 2007 from Rs 70.5 crore in FY 2006. Sales were up to Rs 2400 crore from Rs 1853 crore. Voltas reported that it booked a profit of almost Rs 78 crore from the sale of a unit Simtools boosting its net profit in Q4 March 2007. The company's electro mechanical projects and engineering divisions expanded more than 50% each, but the commercial refrigeration and airconditioning division grew just 11% in Q4 March 2007. Voltas also reported that its outstanding order book rose nearly by a fifth to Rs 2190 crore in FY 2007. Cooling product segment showed breakeven. We will update you on this one in detail soon.
Suzlon Energy, India's largest manufacturer of wind power equipment closed lower by 9%. Suzlon Energy reported unexpected results lower than the market expectations. The company's consolidated net profit declined 3.4% to Rs 359 crore in Q4 March 2007 while the consolidated total income jumped Rs 2962 crore from Rs 1560 crore. Operating margins fell by a huge 900 basis points during the quarter on a YoY basis. Net profit moved up 13.7% to Rs 864 crore for the year ending March 2007 from Rs 759 crore in FY 2006. Total income soared to Rs 8082 crore from Rs 3915 crore in FY 2006. Suzlon Energy's order book position stood at Rs 9,486 crore, comprising of Rs 1408 crore domestic orders and Rs 8,078 crore export orders. Suzlon has been in bidding war with France's Areva for acquiring German wind turbine maker REpower. The company recently said that it and its partners hold 30.92% in takeover target REpower, slightly larger than French rival Areva's stake in the target company. Suzlon has offered 150 Euros per share, valuing REpower at around 1.2 billion euros ($1.6 billion) while Areva has offered 140 euros per share.
Technically Speaking: Markets traded in a volatile manner with no clear direction where it was headed for. Sensex touched an intraday high of 14024 levels and low of 13885 levels. Volumes were good as the market churned almost Rs. 4131cr. Overall breadth was in favor of Advances, where the Advances were 1314 against Declines of 1270. Market has been finding very difficult to sustain above the 14,000 mark since the past few weeks. Sensex is finding good resistance at 14030. The uptrend is intact unless 13750 levels are not broken. Support exists at 13865 and 13820 levels while the Resistance is seen at 13950 and 14030. Above 14030 levels, the sensex might do up to 14400 levels, which could be our final target for the current rally.
Edelweiss - Chennai Petroleum - refining margins rebound; result update Q4FY07; upgrade to Buy
Chennai Petroleum (MRL IN, INR 231, upgrade to Buy)
Chennai Petroleum's (CPCL) Q4FY07 numbers were above expectations. Net profit increased by 434% Y-o-Y and 678% Q-o-Q due to a rebound in refining margins.
CPCL reported GRMs of USD 6.42/bbl in Q4FY07 compared to USD 2.65/bbl in Q4FY06 and USD 2.95/bbl in Q3FY07. The increase in reported GRMs were inline with increase in regional refining margins (Edelweiss India refining margins were up at USD 5.6/bbl from USD 4.08/bbl in 4QFY06 and USD 2.84/bbl in 3QFY07). For FY07, CPCL reported GRMs of USD 5.0/bbl, up from USD 4.37/bbl reported in FY06.
We are revising our FY08 and FY09 EPS estimates upwards by 16% and 34% to INR 34.7/share and INR 35.2/share, respectively. We have increased our forecast for regional GRMs as we believe that time and cost overruns in new refinery capacity addition worldwide will help sustain GRMs in FY08 and FY09. We estimate CPCL to report GRMs of USD 4.97/bbl in FY08, up from our previous estimate of USD 4.23/bbl.
We are upgrading the stock to 'BUY' from 'ACCUMULATE' as at CMP of INR 231, the stock trades at 6.7x and 6.6x our FY08 and FY09 EPS estimates with a FY08 dividend yield of 5.3%. On an EV/EBITDA basis, CPCL trades at 4.5x and 4.0x our FY08 and FY09 estimates, which is at a steep discount to the international refining and marketing companies' median at 6.9x and 6.2x FY08 and FY09 consensus estimates.
Edelweiss - Chennai Petroleum - refining margins rebound; result update Q4FY07; upgrade to Buy
Sensex drops 37 points
A day after the Sensex gained 170 points on sustained all-round buying, the market was gloomy amid a range-bound trend during intra-day trades. The Sensex saw the strong optimism vanish after adding 58 points to touch the day's high of 14023. Yet another day the Sensex could not sustain above 14000 level. The market moved in a range for most part of the morning session but eased in the afternoon on sustained selling in information technology (IT) and oil stocks to touch the intra-day low of 13885. Buying at lower levels among front-line stocks helped the Sensex to trim the losses towards the close and the index wrapped up the session at 13929, down 37 points. The Nifty shed 14 points and closed at 4120.
The broader market, however, continued to remain in the green. Of the 2,679 stocks traded on the BSE, 1,330 stocks advanced, 1,271 stocks declined and 78 stocks ended unchanged. Most of the sectoral indices ended in the red except the BSE Bankex, which was the biggest gainer and moved up by 1.65% at 7191. The BSE IT index slipped 1.34% at 4873, the BSE Oil & Gas index dropped 0.87% at 7291 followed by the BSE Teck index (down 0.69% at 3661) and the BSE Auto index (down 0.48% at 4997).
Among the laggards, Satyam Computer was down 2% at Rs452, Wipro declined by 1.80% at Rs534, ONGC shed 1.80% at Rs890, Infosys dropped 1.48% at Rs1,973, Reliance Communication lost 1.43% at Rs475 and Reliance Industries fell 1.42% at Rs1,598. However, select heavyweights attracted decent buying support. BHEL surged 2.54% at Rs2,519, ICICI Bank rose 1.96% at Rs887, SBI jumped 1.73% at Rs1,226, HDFC Bank added 1.43% at Rs1,010, Hero Honda moved up by 1.12% at Rs698 and Bharti Airtel gained 1.04% at Rs833.
Select IT stocks witnessed considerable selling pressure. Teledata Informatics dropped 4.76% at Rs67, Aztecsoft lost 2.38% at Rs88, Patni Computers declined by 2.20% at Rs480, Rolta India slipped by 2.06% at Rs440 and I-Flex Solutions was down 2.03% at Rs2283.
Banking stocks, however, were in the limelight. Oriental Bank surged 3.11% at Rs207, Canara Bank jumped 3.02% at Rs237, Punjab National Bank soared 2.10% at Rs546 and UTI Bank gained 1.90% at Rs535.
Over 3.69 crore Reliance Natural Resources shares changed hands on the BSE followed by Petronet LNG (94.31 lakh shares), IFCI (86.05 lakh shares), Reliance Petroleum (84.83 lakh shares) and Nagarjuna Fertilizers (70.94 lakh shares).
Indiabulls Real Estate topped the value list with a turnover of Rs131 crore on the BSE followed by SBI (Rs123 crore), Reliance Natural Resources (Rs113 crore), Reliance Industries (Rs99 crore) and Educomp Solutions (Rs86 crore).
Sensex sheds 49 points in volatile trade
The Sensex settled on a weak note tracking negative cues from global markets. It was highly volatile throughout the day’s trading session. All the Asian markets were weak, while European markets were trading mixed. The Hang Seng was down 0.53%, while the Japanese Nikkei 225 index slipped 0.93%.
Back home, the BSE 30-share Sensex lost 49.49 points to 13,916.37, as per provisional closing. It had opened lower at 13,948.91, but immediately advanced higher as buying resumed to strike a high of 14,023.86.
The Sensex has been finding very difficult to sustain above the 14,000 mark, in the past few weeks. Fresh selling has emerged at every higher level.
The firm opening was due to the spillover of the buying binge that had resulted in a 169.70-point rally on Monday, 14 May 2007. The benchmark index slipped to a low of 13,885.46, in early afternoon session of trade.
The total turnover on BSE amounted to Rs 4131 crore, advancing from Rs 3327 crore in the late -afternoon session.
The market breadth was just about positive on BSE, with 1,314 shares advancing as compared to 1,270 shares declining, while 81 shares remained unchanged
Among the Sensex pack, 18 slipped while the rest moved higher.
Frontline IT pivotals stayed weak throughout the day’s trading session, as the rupee continued its upward march and was quoted at 40.83/84 against US currency in late morning deals on weak dollar overseas and sustained dollar selling by exporters, despite capital outflows.
Satyam Computers, down 2.24% to Rs 451.05, was the top loser, with 3.77 lakh shares changing hands on the counter.
Wipro (down 1.89% to Rs 533.60), Infosys (down 1.66% to Rs 1969) and TCS (down 0.90% to Rs 1238) were not spared either.
A rise in the rupee directly impacts revenue and profit of IT firms, which derive a lion’s share of revenue from exports to the US.
PSU oil exploration major ONGC lost 1.52% to Rs 893 while auto major Bajaj Auto declined 1.20% to Rs 2634.
Index heavyweight Reliance Industries (RIL) was down 1.48% to Rs 1596.45 on 6.13 lakh shares. It slipped from a high of Rs 1623.25 following reports that it has got a tax benefit of Rs 376.17 crore in 2002-03 because of unreasonable concessions due to under-assessment by tax authorities, as per a report of the Comptroller and Auditor General (CAG) of India, which was tabled in Parliament on Monday, 14 May 2007.
State-run engineering major Bhel advanced 2.66% to Rs 2522, and was the top gainer. It plans to enhance its manufacturing capacity to 15,000 MW per annum with total investment of around Rs 3,200 crore during the Eleventh Plan (2007-2012).
Shares from the banking and financial pack witnessed buying interest on market rumors that CRR (cash reserve ratio) may be slashed by 50 basis points shortly. Private sector banking major ICICI Bank edged up 1.87% to Rs 886.30, while SBI gained 1.51% to Rs 1224 and HDFC Bank rose 1.44% to Rs 1010.10.
RNRL soared 5.70% to Rs 31.55 on huge volumes of 3.65 crore shares. it was included n F&O segment from 14 May.
Over the next few months, the progress of the June-September monsoom will hold the key. The Indian meteorological department on Monday, 14 May 2007, forecast annual monsoon rains would arrive in Kerala on 24 May 2007. The weather office said last month that this year's monsoon rains were likely to be 95% of the long-term average, with a five per cent margin of error. The annual monsoon is vital for India's economic health as it provides the main source of water for agriculture, which generates more than a fifth of gross domestic product (GDP).
Some important March 2007 quarter results are scheduled this week and the market will take its cue from how these results turn out. Bajaj Auto and Tata Steel report Q4 results on Thursday, 17 May 2007. The board of Bajaj Auto will also consider proposal to split the company into two. Tata Motors and Dr Reddy’s Laboratories unveil Q4 results on Friday, 18 May 2007.
FIIs pressed sales of Rs 336.20 crore on Friday, 11 May 2007, which was their biggest daily outflow this month so far. It was also their biggest daily outflow since 2 April 2007.
As per provisional data, FIIs were net sellers of Rs 85-crore equities on Monday, 14 May 2007. Domestic institutional investors were net buyers of Rs 1.79-crore equities on Monday.
US blue-chip stocks rose on Monday, 14 May 2007, with the Dow Jones industrial average gaining 20.56 points, or 0.15%, to end at 13,346.78. During the session, the Dow hit an all-time high of 13,383.76.
The Standard & Poor's 500 Index was down 2.70 points, or 0.18%, at 1,503.15. The Nasdaq Composite Index dipped 15.78 points, or 0.62%, at 2,546.44.
Oil extended gains seen in the past three sessions on concerns about supply disruptions. But forecasts of higher US oil stockpiles are limiting gains, with London Brent up 12 cents to $66.95 a barrel, while US crude rose 18 cents to $62.64.
India's central bank bought $2.3 billion in intervention in March, sharply lower than its record dollar purchases in February, the Reserve Bank of India's (RBI) monthly bulletin showed on Monday.
The March intervention took the RBI's dollar purchases to $22 billion since the start of November 2006. It bought a record $11.9 billion in February alone to check the rupee's rise.
India's foreign exchange reserves were $204 billion on 3 May, rising $26.8 billion in 2007, of which $9.4 billion had come since early March. Traders said a large part of this year's increase was due to the RBI's dollar purchases.
Before November last year, the RBI had not intervened since May 2006. In the fiscal year that ended on March 31, the central bought a total of $26.8 billion in intervention.
It bought a $8.14 billion in the financial year to March 2006, down from $20.85 billion in 2004/05.
SSKI - Welspun Gujarat, SBI, Emco
SSKI - Welspun Gujarat's Q4FY07 results (Outperfomer): Profits beat estimates
Anand Rathi - Daily Strategist, Daily Fundamental Snippets, Daily Tech Note
The NIFTY futures saw a drop in OI to the tune 2.70% with prices opened high and closing at 4140 levels indicating long positions being built up in the market at lower levels which forced bears to cover their positions .The nifty futures closed at 6 points premium to spot nifty indicating long positions built up in the market and short covering seen in the market. The FII buyers index futures to the tune of 716crs and buyers in index options to the tune of 196crs. The PCR has come up from 1.14to 1.18 indicates some buying may emerge at lower levels in the market. The IV is around 23.95 levels indicating some volatile trading sessions ahead. Among the Big guns, ONGC saw 3.39% drop in OI with prices recovering from lows and closing near day's high indicating some buying may be seen in the counter and shorts covering their positions. Whereas RELIANCE saw 0.53 % drop in OI with prices coming up from lows indicating buying emerging in the counter at lower levels indicating strength in the counter. The counter may see further built up of positions before taking any sharp and directional move which in turn may help to get clue about market's direction. In the TECH front, INOFSYSTCH saw rise in OI with prices coming down indicating selling pressure emerging in these counters suggesting some weakness may be seen in these counters .TCS, SATYAM, WIPRO saw drop in OI with prices coming down and closing near day's low indicating longs liquidating their positions as there was pressure in overall IT pack. In the BANKING counters, all the majors saw buying with OI either going up or down indicating we saw short covering as well long positions built up in the BANKING counters .SBIN saw 11.48% rise in OI with prices closing on higher side indicating fresh money coming in the counter and fresh long positions built up suggesting further strength in the counter. .ICICIBANK saw drop in OI with prices up indicating long positions built up in the counter .HDFCBANK saw drop in OI with prices almost flat indicating selling pressure emerging in the counter at higher levels thus suggesting some weakness may be seen in the counter. In the metal pack TATASTEEL & SAIL saw heavy built up in OI with price closing at day's high indicating huge buying seen in these counter suggesting further strength may be seen in these counters. HINDALCO & NALCO saw drop in OI with prices almost flat indicating liquidation of positions by both bulls and bears. STER saw rise in OI with prices coming up indicating long positions built up in this counter. We feel that the volume and built up in OI suggests that market may show some consolidation before taking any sharp movement on either side. Market may show weakness only if it closes below 4100 levels where we may see fresh short positions built up in the market .Market may show strength if it closes above 4150 levels where we may see fresh long positions built up in the market and short covering in the market .One should trade with strict stop losses to be adhered too.
Daily Strategist
Daily Fundamental Snippets
Daily Tech Note
Investsmart - Morning Call
Market Grape Wine :
In House :
Nifty at a support of 4105 & 4078 with resistance at 4153 & 4180 levels .
Buy : Crompton Greaves above 227.25 target 236 s/l 222
Buy : JSwSteel above 611 target 625 s/l 604
Buy : Buy : Orchid Chem in F&O above 274 target of 285 s/l 270
Buy : OBC above 204
Out House :
Markets at a support of 13858 & 13786 levels with resistance at 14041 & 14114 levels .
Buy : RIL & RelCap
Buy : SBIN & IciciBank
Buy : IDBI & Nagarjuna bullet
Buy : Siemens & BajajAuto
Buy : Skumar & GujNreCoke
Buy : JSW , Tisco & sail
Buy : IBulls & Praj
Dark Horse : IBUlls , Praj , SKumar , GuNreCoke , EduComp , BajajAuto & Siemens
Bullet for the day : SKumar , Educomp & EKC with strict stop loss
Market may open negative
The market may resume weak following a slide in Asian indices and dwindling net FII inflows in the domestic market.
After a solid start of the week the market is likely to take a break today on the back of mixed global cues. Uncertainty is likely to prevail on lack of fund buying in the domestic market and the trend in the international markets. A fall in Asian indices in the ongoing trades may see the market resume on a weak note and could slip further during intra-day trades on sharp volatility. Among the local indices, the Nifty may slip to 4120 and 4085 while on the upside it could test 4180 to 4217 level. The Sensex has a likely support at 13700 and could test higher levels at 14300.
Tech and financial stocks slumped Monday, dragging down the Nasdaq composite and limiting gains for the Dow industrials. While the Dow Jones was up 21 points at 13347, the Nasdaq ended 16 points lower at 2546.
Most of the Indian ADRs ended weak on the US bourses. Dr Reddy's slumped over 8% while Infosys, Satyam, Tata Motors, Wipro, HDFC Bank, Patni Computers and MTNL ended in the red with steady losses. However, ICICI Bank gained over 4% and VSNL closed with the marginal gains.
Crude oil prices in the international market edged higher, with the Nymex light crude oil for June delivery rising by 9 cents at $62.46 a barrel. In the commodity segment, the Comex gold for June series slipped $2.20 to settle at $670.10 an ounce.
STRATEGY INPUTS FOR THE DAY
Speed breakers ahead...don't be ignorant
Ignorant men don't know what good they hold in their hands until they've flung it away.
After enjoying a 'Marvelous Monday' the bulls could face a few speed-breakers today as global cues are not that encouraging. The ongoing consolidation will continue with intra-day gyrations and stock specific movement due to the paucity of immediate triggers. The rupee continues to pose major challenges for exporters, especially for IT companies. FII inflows have turned volatile. One positive thing for the market could be stability in interest rates and a gradual drop in headline inflation. Also, the monsoon is likely to hit Kerala a week earlier on May 24, though its progress and spatial distribution remains a mystery as always. Global equity markets are also more or less on firm footing. Still, concerns remain over the US, Chinese and Japanese economies besides the global imbalances. We expect a cautious to lower opening and a choppy day ahead.
Thermax will be under pressure amid reports that US-based Purolite has filed a corporate espionage suit against the Pune-based engineering company. But remember this case has been on for some time. Dabur India is also likely to face some resistance as a financial daily reports that its proposed acquisition of Singapore-based Unza has hit a roadblock. The political drama unfolding in Tamil Nadu will continue to weigh on Sun TV. Pyramid Saimira Theatre might gain amid reports that a London-based media and entertainment group will invest Rs1bn in the digital theatre company's asset management arm. HDFC and Sparsh BPO could be in action as reports say the home finance major is all set to make an exit from Intelenet Global Services, the BPO firm it founded with TCS. Intelenet owns 51% stake in Sparsh. Keep an eye on Suzlon as it has announced its results.
FIIs were net sellers of Rs853.2mn (provisional) in the cash segment yesterday while the domestic institutional investors were net buyers at Rs17.9mn. In the F&O segment, foreign funds pumped in Rs7.92bn. FIIs were net sellers to the tune of Rs3.36bn in the cash segment on Friday. Mutual Funds were net buyers at Rs752mn on the same day.
On Wall Street, technology and financial stocks slumped on Monday, dragging down the Nasdaq Composite index and limiting gains for the Dow Jones Industrial Average. The S&P 500 lost 2.7 points, or 0.2%, to 1503.15. The Nasdaq slipped 15.78 points, or 0.6%, to 2546.44. The Dow rose 20.56 points, or 0.2%, to 13,346.78.
The undertone was less upbeat, as investors welcomed the majority stake sale in Chrysler to a private equity firm, but were reluctant ahead of a slew of economic reports. Tuesday's CPI data and its inflation-tracking component will kick off a busy week that includes reports on manufacturing, housing and consumer sentiment.
Also, investors decided to take it a bit easy after the recent rally, which had sent the Dow to an all-time high and lifted the S&P 500 and Nasdaq to more than six-year highs.
US light crude oil for June delivery rose 9 cents to settle at $62.46 per barrel on the New York Mercantile Exchange. The front-month contract was quoting 18 cents higher at $62.64 a barrel.
COMEX gold for June delivery fell $2.20 to settle at $670.10 an ounce. Treasury prices slipped, lifting the yield on the 10-year note to 4.69% from 4.67% late on Friday. In currency trading, the dollar slipped against the euro and rose against the yen.
European shares ended lower. The pan-European Dow Jones Stoxx 600 index declined 0.2% to 388.96. The German DAX Xetra 30 fell 0.3% to 7,459.61, the French CAC-40 lost 0.4% at 6,026.42 and the UK's FTSE 100 slipped 0.2% to 6,555.50.
Major Latin American markets also ended down. Mexico's IPC slumped 292 points, or 1%, to 29,766.33, edging back from its record of 30,058.75 set on May 11. In Brazil, the Bovespa tumbled 392 points, or 0.8%, to 50,510.76.
Asian markets were trading mixed this morning. The Nikkei in Tokyo was down 121 points while the Hang Seng in Hong Kong advanced 54 points to 21,033. The Kospi in Seoul added 3 points to 1609 and the Straits Times in Singapore shed 10 points to 3490.
Profit booking likely
It was bulls’ day out as strong global cues boosted the domestic markets to end on a firm note. Further Met department announced that the monsoon rains would arrive at Kerala on 24th May lifting the sentiments of the investors on D-Street. Markets witnessed all round buying across the sectors with Banking index leading from the front, others like Metal, Oil & Gas and Capital Good indexes followed suit. Finally, the 30-share benchmark Sensex 169 points to close at 13965. NSE Nifty was up 57 points to close at 41354.
The Dow Jones had a triple-digit gain on Friday, The Dow climbed 111.09 points or 0.8% to 13,326.22
Asian markets rose for the first time in three days this morning following a tepid reading on wholesale inflation. The Nikkei in Tokyo was up 124 points at 17,678 while the Hang Seng in Hong Kong shot up by 511 points to 20,979.
SBI, Glaxo and Tata Steel were the major gainers, however Dr Reddy’s Lab, Dabur and Britannia were the major losers among the 50-scriop’s of NSE Nifty.
Shah Alloys surged by over 5.5% to Rs88 after the company announced its plans to enter Automobiles Manufacturing. The scrip touched intra- day high of Rs89 and a low of Rs85 and recorded volumes of over 23,000 shares on NSE.
TV18 gained by 1% to Rs721 after the company announced that they have entered in accord with Infosys BPO. The scrip touched intra- day high of Rs745 and a low of Rs721 and recorded volumes of over 20,000 shares on NSE.
ITD Cementation surged by over 2.5% to Rs525 after the Board of Directors of the company announced that it would consider rights issue of equity shares on 21st May. The scrip touched intra- day high of Rs540 and a low of Rs482 and recorded volumes of over 8,000 shares on NSE.
Cadila edged higher by 0.5% to Rs323 after the company purchased out Joint Venture stake in Sarabhai Zydus Animal Health. The scrip touched intra- day high of Rs327 and a low of Rs322 and recorded volumes of over 16,000 shares on NSE.
EKC rallied by over 7% to Rs1170 after the company announced that they would consider stock split and plans to raise funds on 21st May. The scrip touched intra- day high of Rs1180 and a low of Rs1107 and recorded volumes of over 4,00,000 shares on NSE.
IVRCL Infrastructure surged by over 2% to Rs314 after the company secured Rs3.83bn order. The scrip touched intra- day high of Rs318 and a low of Rs312 and recorded volumes of over 12,00,000 shares on NSE.
Banking stocks ended with smart gains. Index heavy weight ICICI Bank was up by 2.6% to Rs870 and HDFC Bank edged higher 0.4% to Rs995. Canara Bank, Union Bank and OBC were the major gainers among the Mid-Cap stocks.
FMCG stocks witnessed buying interest. Frontline stock HLL gained by over 3.5% to Rs192, Tata Tea was up by 2% to Rs796, Marico advanced by 1.7% to Rs58 and Colgate added 0.5% to Rs370.
Capital Good stocks also were on the move. Praj Industries surged over 6% to Rs498, L&T was flat at Rs1687, Gammon advanced by 3.8% to Rs346 and BHEL advanced 0.5% to Rs2451.
Pharma stocks had a fair session. Matrix Labs rose over 11.5% to Rs224 on optimism it will receive more orders from its biggest shareholder, Mylan Labs agreed to buy Merck KGaA's generic-drug unit in Europe, Aurobindo Pharma was up by over 4.5% to Rs722, Glaxo advanced 4% to Rs1242 and Apollo Hospital added 2.5% to Rs491.
Insider Trades:
Network 18 Fincap Limited: Reliance Capital Limited has purchased from open market 2555003 equity shares of Network 18 Fincap Limited on 10th May, 2007
Indus Fila Limited: Reliance Long Term Equity Fund - Scheme of Reliance Mutual Fund has sold in open market 184375 equity shares of Indus Fila Limited on 7th May, 2007
Indo Rama Synthetics (India) Limited: HDFC Mutual Fund:- i) HDFC Equity Fund, ii) HDFC Growth Fund, iii) HDFC Prudence Fund has purchased from open market 185000 equity shares of Indo Rama Synthetics (India) Limited on 10th May, 2007.
BSE Bank index was the major gainer and gained 2.45%. BSE Oil & Gas index (up 2.31%), BSE PSU index (up 2.16%), BSE Metal index (up 1.95%) and Capital Good index (up 1.12%) were among the other major gainers. However, BSE Auto index lost 0.04%.
Volume Toppers:
Nagarjuna Fertilizer, RNRL, RPL, IFCI, TTML, Balrampur Chini, DCB, Hotel Leela, Dena Bank, IB Real Estate, SAIL, R Com, Dish TV, Idea, Hindalco, PFC, Tata Steel and MTNL
Upper Circuit:
LOK Housing, K Sera Sera, Goldstone Technology, Tele Data Informatics, Garnet Construction, Tera Software, DCHL, Mercator Lines, Sparsh BPO and Thomas Cook
Delivery Delight:
ABB, APIL, ACC, Aurobindo Pharma, BILT, Balrampur Chini, Bank of India, BEML, BPCL, CEAT, Chambal Fertilisers, Cipla, GAIL, Grasim, HDFC Bank, Hindalco Industries, HDFC, India Cements, IOC, IDBI, LIC Housing Finance, Punjab National Bank, Reliance Capital and SBI.
Abnormal Delivery:
Titan Industries, India Cements, GAIL, Federal Bank, UTI Bank, Bombay Dyeing, Tata Tea, I-Flex Solutions, SCI, CEAT and SAIL.
Stock Futures with largest increases in OI:
Bongaigaon Refinery, Dr Reddy's Laboratories, Patni Computer, Indian Oil Corp, Indian Bank, Nagarjuna Fertilizers, RPL, Dabur India, Corp Bank and Cummins India.
Stock Futures with Decreases increases in OI:
Chennai Petroleum Corp, Cipla, Nagarjuna Construction, Triveni Engg, GAIL India, Crompton Greaves, HLL, Maruti, Bajaj Hindusthan and Zee Telefilms.
Results Today:
Havells India, Su-Raj Diamonds, Sun Pharma, TTML and VSNL.
Results Corner:
LIC Housing Finance Q4 profit at Rs891.4mn (up 115%), revenue at Rs4.54bn (up 28%).
Brokers Recommendation:
SBI – Buy from Merrill Lynch with target of Rs1400.
Long Term investment:
Patel Engineering.
Major News Headlines:
Shah Alloys plans to enter automobiles manufacturing
TV18 ties up with Infosys BPO
ITD Cementation Board to consider rights issue on 21st May
IVRCL gets Rs3.83bn order
Cadila buys out JV stake in Sarabhai Zydus Animal Health
Reliance Capital acquires 5% stake in Network 18
Punj Lloyd gets contract from GAIL worth Rs1.22bn
Sterlite plans to raise as much as $2bn in the US to fund new power plant
Man Industries to list FCCBs on Singapore Exchange
Nitin Fire Protection Industries IPO Analysis
Nitin Fire Protection Industries, promoted by Nitin M Shah alias Sanghavi, was incorporated in 1995 in Maharashtra to manufacture fire extinguishers. The company presently provides fire protection, and safety and security by offering end-to-end turnkey solutions. This business is carried through two wholly owned subsidiaries and one partnership concern.
The other business of high-pressure seamless cylinders is presently carried through wholly owned subsidiary Eurotech Corporation, which outsources the manufacture of these cylinders to China. CNG gases are transported to CNG stations through CNG cascades. The company also manufactures these cascades.
Recently, Nitin Fire Protection Industries floated another wholly owned subsidiary Nitin Cylinders to set up a manufacturing unit of high pressure seamless cylinders at the Vizag special economic zone (SEZ) primarily to cater to the export market. The company has planned a capacity of 5,00,000 units per annum at this plant, which will come up in two phases. The first phase of 2,50,000-unit capacity is scheduled to commence production in May 2007, while the second phase is scheduled for commissioning by October 2007. The total cost of this expansion is estimated at Rs 118.08 crore. The company is coming out with an initial public offer of equity shares to partially finance this expansion.
The high-pressure seamless cylinders primarily cater to the industrial, medical, fire-fighting and beverages segments. However, with the advent of CNG as an alternative eco-friendly automotive fuel, a new segment has opened up, which is growing rapidly in India as well as globally.
To further benefit from the evolving market for CNG applications, Nitin Cylinders also intends to make and sell fuel dispensers. It has entered into an MoU for technology transfer with Kraus Global Inc., Canada, and for the supply of its proprietary products in India, Bangladesh and the UAE.
Nitin Fire Protection Industries picked up a 10% stake in the consortium along with petroleum giants such as GSPC (20%), Gail (20%), HPCL (20%,), BPCL (10%), Hallworthy (10)% and Silverware (10%) for the exploration and prospecting of crude oil block RJ-ONN-2004/1, admeasuring a contract area of 4,613 sq. km, in Rajasthan. The cost of operating the oil block is estimated at about US$ 30.67 million out of which the company's share works out to US$ 3.07 million (over Rs. 13 crore).
Strengths:
- Operating from SEZ will help in effectively tapping global markets for high pressure seamless cylinders.
- The demand for high-pressure seamless cylinders to carry CNG will continue to grow at a high rate due to the global shift to CNG as an automotive fuel.
- The business of CNG cascades and the tie-up for manufacturing CNG fuel dispensers for domestic markets hold immense potential for future with a number of city gas distribution projects planned. The availability of natural gas is expected to double in the next two years.
Weaknesses:
- Will need to establish its brand image and marketing network in the export markets.
- Foray into oil exploration looks diversionary and may lock up funds in unrelated business.
Valuation:
The price band for the IPO is Rs 171 to Rs 190, which translates into a P/E of 21.0x at the lower band and 23.3x at the higher band on the consolidated EPS (on post-IPO equity) of Rs 8.2 for the year ended March 2007. Around 51% of the consolidated profit comes from the fire protection business and the balance from the cylinder business. The proposed project is in the cylinder business. The nearest comparable company in the cylinder business is Everest Kanto Cylinders, which already commands substantial market share in this business, is currently trading at Rs 1168, with P/E of 37.6 times consolidated nine-month annualised EPS. The strong financial and stock market performance of Everest Kanto after listing is likely to augur well for Nitin Fire Protection in the short termMerrill Lynch - ONGC, Asian Paints, Autos/Two Wheelers, Telecom Services, Oil Refining & Marketing
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