Dead Presidents! - India Equity Research: May 24, 2007

Thursday, May 24, 2007

Market Close: Global markets slip and India follows..

Another weak session for the day from start. Global cues were subdued for the day with no support for the Indian Markers. Former Commmented on the overheated the Chinese market which saw weakness across all the Indices. Indian indices started the day in subdued note but in green and lost its strength from beginning of the day. Indices faced intense selling pressure which intensified at the final hpours of trading. Bank stocks ended in red on fears of CRR hike, which we think wont happen. Steel stocks were under pressure because of statement by Steel Minister that companies should not hike prices as of now. Tata Steel was the major looser. The rising Crude impacted Refineries which witnessed profit booking. Heavy selling pressure was seen across the board except the selective stocks in IT, FMCG and Cement ended in green. Selective Mid and Small caps managed to trade up but as of all succumbed to selling. Asian markets ended in red, so do the European markets which are trading in red.

FIIs numbers were positive and that's really a surprise. We believe that this positive numbers were on back of rally in selected counters like Educomp where FII holdings were just about reaching the caution limit of 24% the maximum permissible. We believe that FIIs probably were falling head over heals over each other trying to catch it before it gets into the restricted list. Tomorrow inflation numbers will be declared?very important thing to keep a watch for. Let see how markets pan out.

Sensex closed down by 145 points at 14218.11. Weighing on the Sensex are losses in TISCO (631.6,-4 percent), Rel Energy (551.15,-3 percent), RCVL (493.75,-3 percent), ACC (857.95,-3 percent) and HDFC (1754.95,-3 percent). Losses are restricted by gains in NTPC (162.35,+4 percent), HLL (201.25,+1 percent), Satyam (456,+1 percent), Tata Motors (712,+1 percent) and Infosys (1936.6,+1 percent).

Bharti Airtel has joined the league of top ten global telecom operators with a subscriber base of over 40 mn in a single country. The company has been able to increase its market share by over 2.5% yoy in FY07 on the back of network expansion, better distribution and increased affordability. At a market share of over 23%, Bharti is ahead of its closest rival RCOM by over 9 mn users and over Hutchison Essar (to be renamed Vodafone Essar soon) by 11 mn. It is worth noting that it took Airtel 11 years to reach the 20 mn mark, but just 14 months to add the next 20 mn. According to the company, reduction in recharge voucher denominations over a period of time, lifetime validity schemes and expansion network have helped Bharti to achieve this feat. Telecom stocks ended in mixed. Bharti closed down by 1.8% and its peer RCom ended down by 4%, Tata Tele was down by 0.9%. Idea closed up by 1.64%, MTNL ended in flat.

SAIL board has approved pump in close to Rs 100 bn for the modernization and capacity expansion of its Rourkela Steel Plant. This project will more than double the hot metal production to 4.5 mn tonnes from the current 2 mn tonnes and is expected to be over by 2010. The project would also include setting up of a new blast furnace and reconstructing and upgrading one of the existing ones. Buoyed by a strong steel cycle, the company has reported spectacular results for FY07 and in order to keep the growth engine chugging, it has decided to invest in a big way in new capacities. But the worry is from Govt in pricing decisions. Steel stocks closed in mixed. SAIL closed up by 1.38% and its peer Tata Steel ended down by 4% and JSW Steel closed down by 2%.

ABG Shipyard to acquire Vipul Shipyard. With this acquisition the company would be able to enhance its shipbuilding capacity from the present 32 to 40 vessels on modular basis in future. This is a strategic acquisition for ABG considering the location of Vipul, which is adjacent to the existing shipbuilding facility of ABG at Surat and is a move to augment its resources for further consolidation of shipbuilding capacity in the growing segments of offshore, coastal shipping and other avenues of shipbuilding. ABG Shipyard has signed a Memorandum of Understanding to this effect pursuant to which a large portion of Vipul's land with good waterfront would be added to ABG's resources along with a slipway and other plant and equipment for shipbuilding. Deal amount is undisclosed. The stock closed marginally down.

Technically Speaking: It was a bearish session for the whole day before closing. Sensex touched intraday high of 14389 and low of 14174. Resistance lies at 14326, 14465 and Support lies at 14110 and 14034 levels. Market turnover was pretty good at Rs 4343 cr. Overall breadth was in favor of Declines, where the Advances stood at 1017, Declines stood at 1546.

Market slumps on heavy unwinding

The market settled the day with sharp losses following a late sell-off in index pivotals. Profit booking continued for the second straight day. The market was barely able to sustain itself in the positive territory. Weak global markets played spoilsport.

Asian markets were trading weak, while all the European markets declined. The Hang Seng index lost 0.22% and the Nikkei 225 index slipped 0.05%. The Shanghai Composite lost 0.54%.

The BSE 30-share Sensex dipped a sharp 145.15 points to 14,218.11. Ever since it opened today, 24 May 2007, on a bearish note at 14,344.70, it kept on hitting fresh intra-day lows as fresh selling emerged at every small rise, with the last low being recorded at 14,174.05. Its high for the day was at 14,389.66

The National Sock Exchange’s Nifty ended 4,204.90, down 41.30 points or 0.97% from its previous close.

The market, going great guns in the past five trading sessions (from 16 –22 May), took a breather on 23 May 2007 as anxious bulls started liquidating positions in the last hour of trade on the benchmark index's inability to hit a new all-time high. The Sensex had rallied a sharp 525 points, or 3.75%, from 13,929.33 on 15 May 2007 to 14,453.72 on 22 May 2007.

The market is worried about big IPOs lined up June onwards. It is believed to be the highest-ever capital mobilisation. Lot of liquidity will be sucked off from the secondary market. This will make its way to the primary market. Although the exact size and date of the initial public offering (IPO) of DLF and the follow-on issue of ICICI Bank are yet to be announced, marketmen expect these offers will compete head to head for investors’ fund of over Rs 24,000 crore next month.

Real estate major DLF, which took four months to receive market regulator Sebi’s clearance for its public issue, is expected to hit the market by end June with an over-Rs 13,000-crore issue.

The country’s second largest bank, ICICI Bank, has sought approval from Sebi to sell Rs 17,500 crore of shares to local and overseas investors. The bank has set a target of launching the issue in June. The offer may be raised to Rs 20,100 crore depending on demand, the sale document said.

Meanwhile, the total turnover on BSE amounted to Rs 4,461.96 crore, while NSE F&O turnover was at Rs 34762.53 crore. Total market wide turnover was Rs 48755.46 crore

The market breadth, which reflects the overall health of the market, settled weak, with over 1.5 losers for every gainer, as selling continued in small- and mid-cap stocks. On BSE, 1,564 shares declined compared to 1,017 that advanced, while 89 remained unchanged. At 10:30 IST, the breadth was positive, with 878 shares advancing as compared to 734 that declined.

The BSE Mid-cap Index Index settled 8.37 points, or 0.14%, lower at 6,108.84, and the BSE Small-cap Index declined 35.80 points, or 0.49%, at 7,237.55.

Among the Sensex pack, 24 declined while the rest advanced.

Tata Steel was the top loser, down 4.04% to Rs 632.25 on 14.20 lakh shares. It also touched a low of Rs 628 in intra-day trade. The Reserve Bank of India (RBI) today (24 May 2007) stopped the purchase of Tata Steel shares by foreign institutional investors (FII) as the foreign investment in the world's sixth largest steel maker reached the permissible limit of 22%.

Increasing interest of foreign investors in Tata Steel, following the acquisition of Anglo-Dutch steel maker Corus, had pushed up the FII stake in the company by more than 4% in the last one-and-half month. The FII interest has continued to increase in the steel giant, though a large number of retail investors exited the company following the dip in share prices of Tata Steel after the acquisition of Corus. The FII stake in the company was 17.24% end March 2007.

Other shares from the metal pack were not spared either. The BSE Metal Index lost 1.6% to 10,462.28, and was the top loser among the sectoral indices on BSE. Sterlite Industries (down 0.98% to Rs 533), JSW Steel (down 2% to Rs 608.50), Hindalco (down 1.06% to Rs 144), and Sesa Goa (down 0.67% to Rs 1683.25) were among the losers.

Telecom pivotals Reliance Communications (RCom) and Bharti Airtel plunged for the second straight day following massive cut in tariff, which may impact their profitability.

RCom slashed roaming tariffs for outgoing calls by upto 70% to Rs 0.40 per minute on select plans. As a result, the stock suffered a steep loss of 4.01% to Rs 490, with a high 21.27 lakh shares changing hands on the counter.

Bharti Airtel followed, losing 2.14% to Rs 831 on reports that it would also announce price cuts within the next couple of days. On BSE, 3.09 lakh shares were traded in the counter.

Shares from the banking and financial space saw profit booking after seeing a steady rally for the past few sessions. Also there were markets of hike in the CRR going ahead. The BSE Bankex was down 1.5% at 7,479.29. SBI (down 2.15% to Rs 1277.70), HDFC Bank (down 2.79% to Rs 1087) and HDFC (down 2.79% to Rs 1751) declined.

ICICI Bank, which held firm and had hit a high of Rs 931, succumbed to selling pressure in the end. It lost 0.73% to Rs 909.90 on 1.69 lakh shares. Market speculation is the RBI will allow Temasek and Government of Singapore Investment Corporation (GIC) to acquire 10% equity each in the country’s largest private sector lender ICICI Bank as a `one-off case'.

Index heavyweight Reliance Industries (RIL) slumped 2.20% to Rs 1717 on 8.49 lakh shares. It slipped from high of Rs 1761. Even as Singur and Nandigram simmer in West Bengal, signs of serious trouble are evident in Raigad district of Maharashtra where RIL is setting up a 14,000-hectare special economic sone (SEZ), billed to be the biggest in Asia.

The worst did not seem to be over for Bajaj Auto counter, as it declined for the sixth consecutive session, ever since it declared a scheme of demerger along with its poor set of results, during trading hours on 17 May 2007, which triggered a flurry of rating downgrades by brokerage houses. Disappointment about the post-demerger structure and lack of clarity about future business plans were cited as the main reasons for the downgrades.

The stock lost 1.07% today to Rs 2,160. It has eroded 20.60% from Rs 2718.60 on 11 May, till today.

Prior to this, Bajaj Auto was on a losing streak, declining a little under 19% in the previous four trading sessions after the surprise revelation that Allianz — Bajaj’s partner in its two insurance ventures — has a ‘call option’ to buy up to 74% at a nominal price. This was the biggest disappointment in the demerger plan.

The sporadic selling began after the company unleveled its demerger scheme, during trading hours on 17 May 2007, along with its results, which triggered a flurry of rating downgrades by brokerage houses. Disappointment about the post-demerger structure and lack of clarity about future business plans were cited as the main reasons for the downgrades.

Most analysts expected Bajaj Auto to remain the majority partner, while allowing Allianz to raise its stake up to 49%. They see a high possibility of the government raising foreign investment limit in insurance sector to 74% and Allianz exercising the option to hike the stake.

The insurance business of Bajaj Auto was valued at around Rs 800 per share. But going by the new structure, the value has been trimmed to Rs 300 per share. So the fall was more of a realignment to its fair value of Rs 2,250.

State-run power generation major NTPC was the top gainer, up 3.95% to Rs 161.80 on 17.56 lakh shares. It is planning a foray into wind power with an investment of over Rs 12,000 crore, reports said. The company will have wind energy projects with a total capacity of 200-250 MW. Besides this, the state-run company is working on hydroelectric projects and a few biomass plants. It is also said to be working with Asian Development Bank, and is planning to rope in a private partner for the new venture.

FMCG major Hindustan UniLever (HUL) advanced 1.39% to Rs 201.20 on 5.44 lakh shares. Mumbai-based Temptation Foods (TFL), a frozen food marketer, is understood to be inking a deal with HUL to acquire its marine product business division for around Rs 100-120 crore. The deal would also include transfer of the people managing the marine business in HUL to TFL.

HUL’s marine division exports products like crabsticks, shrimps and fish fillets among others. The company had earlier short-listed four bidders for the sale

After staying weak for the past few weeks, IT pivotals bounced back and outperformed the market as the rupee traded in a tight range, just off a nine-year high, on Thursday, 24 May 2007, reined in by dealers wary of provoking the RBI after it was suspected of intervening to block the currency's gains this week.

At 9:45 a.m, the partially convertible rupee was at 40.56/57 per dollar, largely steady with Wednesday's (23 May 2007) closing 40.550/565 and just off Monday's (21 May 2007) peak of 40.50 -- its highest since May 1998. The market is expecting $4 billion to $5 billion of foreign money to flow into Indian IPOs and equities by the end of June, which should add to the rupee's strength.

The RBI bought $2.3 billion in March 2007 in a bid to stem the rupee's rise. While intervention seemed have to have been less aggressive since mid-March, the central bank has been active this week, specially as the rupee approached 40.50.

The rupee was also came under pressure after oil rose above $70 today on worries over Iran's nuclear dispute with the West and thin gasoline stockpiles in the United States ahead of peak summer demand.

The BSE IT Index gained 0.3% to 5,067.73. Infosys (up 0.56% to Rs 1937), Satyam Computers (up 0.82% to Rs 455.95) advanced.

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.

Debutante Hilton Metal Forging settled at a slight discount at Rs 67.60 on huge volumes of 1.32 crore share. It debuted at Rs 75 per share on the BSE today, 24 May 2007, up 7.14% from the IPO price of Rs 70. It hit a high of Rs 80 and Rs 66, respectively. The company specialises in the manufacture of forgings for the oil, petrochemical, pharmaceutical and automobile industries.

Reliance Capital topped the turnover charts with a turnover of Rs 247 crore followed by Reliance (Rs 147.60 crore), Advanta (Rs 133 crore), ICRA (Rs 127.80 crore) and Divi's Lab (Rs 110 crore).

While Reliance Natural Resources (RNRL) led the volumes chart with total volumes of 1.55 crore shares followed by debutante Hilton Metal Forgings (1.32 lakh shares), IFCI (59.50 lakh shares), Idea (57.25 lakh shares) and Nagarjuna Fertlisers (54.70 lakh shares).

Meanwhile as per reports, the India-born billionaire Lakshmi N Mittal's Rs 3,365 crore investment for taking 49% stake in Hindustan Petroleum Corp Ltd's Bhatinda refinery in Punjab will have to wait a little longer for government approval as the Cabinet did not take up the issue on Thursday, 24 May 2007. The Cabinet Committee on Economic Affairs (CCEA) was to take up the issue of raising foreign direct investment (FDI) cap in public sector refineries to 49% from current 26% to facilitate Mittal to pick up stake in the Rs 17,973 crore project. As a result of this the HPCL shares plunged 4.81% to Rs 285.

As per the current policy, in case of private Indian companies 100% FDI is permitted under the automatic route, but in case of public sector units, FDI in petroleum refineries is permitted up to 26%. The current policy also restricts PSU holding to 26% in such projects and makes it mandatory for the balance 48% to be offered to public.

Divi's Laboratories vaulted 17.68% to Rs 4,780 on 2.41 lakh shares, following its surprise announcement of a stock-split of equity shares from Rs 10 each to Rs 2 each, after market hours yesterday, 23 May 2007. The company's net profit jumped 341.2% to Rs 100.98 crore in Q4 March 2007 as compared to Rs 22.89 crore in Q4 March 2006. Sales surged a massive 98.7% to Rs 252.59 crore (Rs 127.09 crore). Net profit spurted 172.1% to Rs 191.74 crore in the year ending March 2007 compared to Rs 70.47 crore in FY 2006. Sales increased 90.1% to Rs 724.42 crore (Rs 381.11 crore).

NIIT Technologies spurted 6.84% to Rs 554.75 after reporting a net profit surge of 64% in the March 2007 quarter and recommending a 1:2 bonus issue after market hours on 23 May 2007. The NIIT Technologies counter clocked a huge volume of 4,47,582 shares on BSE.

NIIT Technologies' net profit rose 64.01% to Rs 36.77 crore in the quarter ended March 2007 as against Rs 22.42 crore in the quarter ended March 2006. Sales jumped 36.74% to Rs 88.13 crore (Rs 64.45 crore).

Sterlite group zinc producer Hindustan Zinc rose 0.25% to Rs 668 after it raised lead prices by 2.1%, or Rs 2,000 to Rs 96,600 ($2,379) per tonne, effective immediately. The company, however, kept zinc prices unchanged at Rs 177,900 a tonne.

Man Industries saw high volatility today. It settled 0.20% to Rs 217.65 on high volumes of 18.88 lakh shares. A a single block deal of 18 lakh shares (6.83%) at Rs 219.40 per share was executed on BSE. The stock had surged to a high of Rs 239.90 in intra-day trade.

Matrix Laboratories galloped 11.02% to Rs 244.80 after the company reported a 77.08% rise in net profit in March quarter, reversing the decline in its profits in the previous two quarters. The company’s net profit rose to Rs 54.38 crore in the quarter ended March 2007 as against Rs 30.71 crore in March 2006. Sales increased to Rs 238.79 crore (Rs 167.71 crore). Net profit declined to Rs 99.61 crore in the year ended March 2007 as against Rs 182.38 crore in March 2006. Sales notched Rs 749.51 crore (Rs 667.14 crore).

Alembic rose 0.46% to Rs 65.40 on reports of possible acquisition of a domestic ophthalmic products maker. The company is now believed to be in talks to take over a domestic ophthalmic company as part of it inorganic growth strategy. Without disclosing the name of the target, Alembic said its deal size for the acquisition would be around Rs 100 crore.

Also, Alembic signed a deal to out-license its novel drug delivery platform to Belgium's UCB for the latter's anti-epileptic drug Keppra XR, on 23 May 2007. Under the deal, Alembic would receive milestone payments of $11 million over three years and would get additional royalty payments on sale of the drug.

Keppra XR is a once-daily, extended release form of UCB's twice-a-day Keppra, whose patent is set to expire in 2009. Keppra, which is chemically levetiracetam, clocked sales of 761 million euros in 2006. Alembic's objective is to file 20 abbreviated new drug applications (ANDAs) every year with the US regulator to sell its drugs in that country. Alembic has already filed three ANDAs so far.

K Sera Sera Productions gained 4.78% to Rs 18.65 after it scheduled a board meet on 30 May 2007 to consider raising up to $50 million for expansion.

Parsvnath Developers declined 1.79% to Rs 312.50 after NSE barred further positions in the F&O segment after market hours yesterday, 23 May 2007, as the marketwide position limit of the underlying had reached 95%.

Sterlite Optical Technologies moved up 1.55% to Rs 210 after it bagged a Rs 169-crore contract from MTNL for deployment of a broadband and metro ethernet network in Delhi and Mumbai. The network, once completed, would be capable of handling about half a million broadband connections in these cities. The project would be completed in FY 2008 and FY 2009.

An important set of data marketmen would be keenly awaiting tomorrow(25 May 2007) is that of inflation. India's wholesale price inflation rate is forecast at 5.24% for the 12 months to 12 May 2007, the lowest since early September 2006l. The data will be released around noon. Annual inflation in the previous week was 5.44%.

The annual rate had hit 6.69% on 27 January 2007, its highest in more than two years, but has since moderated as the central bank tightened policy and the government cut duties on a range of items to rein in prices.

Technically, the Sensex has strong support at 14,000 level and on the upside faces a stiff resistance at 14,600 level. Similarly, the Nifty has support of 4,180 on the downside, while on the upside there is a near term resistance at 4,300.

The annual monsoon is predicted to strike the Kerala coast Sunday, 27 May 2007, four days ahead of its normally scheduled date of arrival on 1 June 2007. From Kerala the monsoon travels upwards to the parched central Indian plans and is expected to bring rains to New Delhi by the end of June.

US indices slipped on Wednesday, 23 May 2007,giving back earlier gains as investors showed some caution after the Dow industrials and S&P 500 index briefly touched record territory. While the Dow Jones shed 14 points at 13,526, the Nasdaq Composite was down 11 points to close at 2,577.

Oil prices inched higher after a U.S. government report showed gasoline stocks rose unexpectedly, but still not enough to dispel supply fears at the kick-off of the summer driving season.

Light, sweet crude for July delivery rose 26 cents to settle at $65.77 a barrel on the New York Mercantile Exchange. Brent crude for July delivery climbed $1.08 to settle at $70.60 a barrel on the ICE Futures exchange in London, while gasoline futures slid 0.41 cent to $2.3104 a gallon.

Gold inched up in thin trade on Thursday, while Tokyo futures hardly moved ahead of the release of US data, which should offer new leads to the dollar and precious metals. Spot gold edged up to $661.70/662.20 an ounce from $660.60/662.10 late in New York on Wednesday.

The key April 2008 gold futures contract on the Tokyo Commodity Exchange was unchanged at 2,611 yen a gram despite gains in New York's Comex market. Silver inched up to $13.05/13.08 an ounce from $12.99/13.03 an ounce on Wednesday.

Emkay - NIIT Technologies

Sensex tumbles 177 points in late sell-off

Bears strike back, Sensex sheds 145 points

Former US Federal Reserve Chairman Alan Greenspan warned about the boom in Chinese equities and the Asian markets declined in the morning trades. Mirroring the fall, the market back home opened on weak note at 14345, down 18 points. The market managed to pick up the momentum in mid-morning trades and touched the intra-day high of 14390. But the profit booking in index heavyweights Tata Steel, SBI and HDFC Bank pulled the Sensex down to touch the day's low of 14174. However, the Information Technology index and Consumer Durables index bucked the trend and closed in the green. While the market remained choppy for most of the trading session, the resumption of buying at lower levels helped the Sensex to pare some losses towards the close. However, the Sensex finally closed the session after shedding 145 points at 14218, while the Nifty lost 41 points at 4205.

The breadth of the market was negative, with the losers outnumbering the gainers in the ratio of 1.48:1. Of the 2,646 stocks traded on the BSE, 1,523 stocks declined, 1,027 stocks advanced and 95 stocks ended unchanged. Among the sectoral indices, the BSE Metal index was the major loser and crumbled by 1.62% followed by the BSE Oil & Gas index (down 1.47%), the BSE Bankex index (down 1.45%).

Out of the 30 Sensex stocks only six gained and the remaining 24 ended in negative territory. Sliding sharply Tata Steel crumbled by 4.14% at Rs632, Reliance Energy plunged 3.38% at Rs551, Reliance Communication dropped 3.28% at Rs494, ACC slumped by 3.26% at Rs858, HDFC declined by 2.57% at Rs1,755, Hero Honda shed 2.41% at Rs677, Ranbaxy fell by 2% at Rs382 and HDFC Bank lost 1.94% at Rs1,090. The other front-line stocks also bore the brunt of the selling pressure and declined around 1-2% each. Among the select gainers NTPC attracted strong buying support and moved up by 4.30% at Rs162, HLL was up nearly 1.41% at Rs201 while Satyam Computers, Tata Motors, Infosys and Gujarat Ambuja Cement gained marginally.

Metal stocks took a sharp beating on the bourses. After Tata Steel, Monnet Ispat plunged by 4.13% at Rs283, Shree Precoated Steel crumbled by 3.94% at Rs311, Essar Steel dropped 3.30% at Rs38 and Ramsarup Industries shed 3.30% at Rs151. Select oil stocks also declined sharply, Dolphin Offshore dropped 4.87% at Rs212, IOC lost 4.09% at Rs482, HPCL slipped by 3.99% at Rs288 and BPCL fell 3.54% at Rs371.

Over 1.56 crore Reliance Natural Resources shares changed hands on the BSE followed by Hilton Metal (1.32 crore shares), IFCI (59.54 lakh shares), Idea Cellular (57.27 lakh shares) and Nagarjuna Fertilizers (54.68 lakh shares).

Value-wise Reliance Capital registered a turnover of Rs247 crore on the BSE followed by Reliance Industries (Rs147 crore), Advanta (Rs133 crore), ICRA (Rs127 crore) and Devi's Lab (Rs110 crore).

Sharekhan Commodities Buzz, Daring Derivatives, Eagle Eye Commodities, High Noon

Sharekhan Commodities Buzz

Daring Derivatives

Eagle Eye Commodities

High Noon

ABN Amro - United Phosphorus - Buy - Trading Call - CMP 287 - TGT 340

Bear Stearns - Reliance Industries, Jefferies & Company - Educomp Solutions

Bear Stearns - Reliance Industries

Jefferies & Company - Educomp Solutions

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Anand Rathi - Daily Fundamental Snippets - May 24 2007

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Market expected to stay weak

After a late sell-off of 92 points yesterday, Wednesday, 23 May 2007, the market is likely to decline further as profit booking is expected to continue at higher levels. Global cues are not very encouraging either.

Since the past few months, it has been observed that local bourses are moving in sync with global markets.

Technically, the BSE 30-share Sensex has strong support at 14,000 level and on the upside faces a stiff resistance at 14,600 level. Similarly, the Nifty has support of 4,180 on the downside, while on the upside there is a near term resistance at 4,300.

The Nikkei slipped 0.11% by the close of morning trade on Thursday, 24 May 2007, on track for its first loss in four sessions as investors sold some recent gainers such as Sony Corp. after Alan Greenspan warned of a sell-off in Chinese stocks. Nikkei finished the morning session 18.77 points lower at 17,686.35. The broad TOPIX index lost 0.14% to 1,737.59.

US indices slipped on Wednesday, 23 May 2007,giving back earlier gains as investors showed some caution after the Dow industrials and S&P 500 index briefly touched record territory. While the Dow Jones shed 14 points at 13526, the Nasdaq Composite was down 11 points to close at 2577.

Among Indian ADRs, except VSNL all had a weak outing on US bourses. Patni Computer tumbled over 4%, while Infosys, MTNL ,Rediff, Satyam, Dr Reddy's, Tata Motors, ICICI Bank, HDFC Bank and Wipro dropped around 1-2% each.

Crude oil prices gained further, with the Nymex light crude oil added 26 cents at $65.77 per barrel.

In the metals segment, the Comex gold for June series gained $2.70 to settle at $662.60 an ounce

Anand Rathi - Daily Strategist - May 24 2007

The NIFTY futures saw a drop in OI to the 0.36% with prices down indicating liquidation of positions and fresh short positions built up in the market suggesting some weakness may be seen in the market..Market if it goes below 4200 levels then we may see further short positions built up in the market and liquidation of weak long positions. Nifty futures premium disappeared due to liquidation of positions during the last hour and nifty futures closed at 5 points discount to spot nifty. The FII were buyers index futures to the tune of 44 crs and buyers in index options to the tune of 100 crs. The PCR has come down from 1.48 to 1.47 indicates some weakness may be seen in the market. The IV is around 20.50 levels indicating some volatile trading sessions ahead.

Among the Big guns, ONGC saw 2.44% rise in OI with prices coming down indicating short positions built up in the counter aggressively thus suggesting weakness in the counter. Whereas RELIANCE saw drop of 2.06% in OI with prices moved down and closed near day's low thus suggesting long positions liquidating in the counter and the built up suggests that their may be some profit booking seen in the counter.

In the TECH counters, INFOSYSTCH saw rise in the OI with prices coming down indicating short positions built up in the counter suggesting some weakness may be seen in the counter. SATYAMCOMP saw drop in OI with prices remaining positive indicating short covering seen in the counter thus suggesting strength in the counter. TCS saw rise in OI with prices remaining positive indicating long positions built up in the counter suggesting strength in the counter.

In the BANKING counters, all the majors saw rise in the positions with prices coming down from highs indicating short positions built up in the counters suggesting some weakness may be seen in the overall BANKING counters.

In the Metal pack, TATASTEEL saw significant rise in OI with prices coming up indicating long positions built up in this counters suggesting strength in the counter .SAIL saw marginal rise in OI with prices down indicating some selling pressure emerging in the counter. HINDALCO, NALCO & STER saw rise in OI with prices coming down indicating fresh short positions built up in these counters suggesting further weakness may be seen in these counters.

We feel that the volume and built up in OI suggests that market may show some profit booking in the coming few days so one should not take aggressive positions in the market. Market may show further weakness and we may see fresh selling emerging in the market if market goes below 4200 levels One should trade with strict stop losses to be adhered too.

Anand Rathi - Daily Strategist - May 24 2007

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Investsmart - Morning Call

Market Grape Wine :

In House :

Nifty at a support of 4215 & 4185 & 4170 levels with resistance at 4292 and 4365 levels .

Buy : IntraDay : JetAir above 735 target of 755 s/l of 727

Sell : IntraDay : NagarConst below 175.5 target of 168 s/l of 179

Buy : HLL in F&O above 200 target 208

Out House :

Markets at a support of 14292 & 14204 levels with resistance at 14456 & 14515 levels .

Buy : RIL & RelCap

Buy : Kotak at dips

Buy : IDEA at dips

Buy : Siemens

Buy : Centextile

Buy : JSW , Tisco & sail

Buy : Praj & Educomp

Dark Horse : Educomp , EKC , Centextile , Praj , TataTea , Grasim & IBulls

Bullet for the day : PNB , IDEA with strict stop loss

Anand Rathi - Daily Technical - May 24 2007

Nifty and Sensex have exhibited a downward bar reversal.

Technically, one may use the level of 4200 (Nifty) and 14300 (Sensex) as the stop loss level.

Nifty faces resistance at 4300 and Sensex at 14500.

BSE Smallcap and BSE Midcap exhibited a bearish candlestick.

CNX IT has lost ground.

In the Punter's zone we have a BUY in IDEA , Reliance Energy & SELL in Tata Steel.

In the Technical call section, we have a BUY in IDFC & Sell in Titan and DCB.

Anand Rathi - Daily Technical - May 24 2007

Emkay - Morning Notes, Unity InfraProjects

Global weakness may weigh on local indices

The market is moving in tune with global markets and the weak Asian indices in current trades coupled with overnight fall in the US markets is likely to weigh on the local indices. Nervousness in the market is likely to continue after the Sensex reporting losses in yesterday's trades. The domestic funds resorting to selling of equities in the last session could make the investors jittery from taking any fresh position. Among the key local indices, the Nifty could decline to 4180 on the downside while on the upside there is a near term resistance at 4300. The Sensex has a likely support at 14000 and may face resistance at 14600.

US indices slipped Wednesday, giving back earlier gains, as investors showed some caution after the Dow industrials and S&P 500 index briefly touched record territory. While the Dow Jones shed 14 points at 13526, the Nasdaq was down 11 points to close at 2577.

Among Indian ADRs except VSNL all had a weak outing on US bourses. Patni Computer tumbled over 4% while Infosys, MTNL ,Rediff, Satyam, Dr Reddy's, Tata Motors, ICICI Bank, HDFC Bank and Wipro dropped around 1-2% each.

Crude oil prices gained further, with the Nymex light crude oil added 26 cents at $65.77 per barrel. In the metals segment, the Comex gold for June series gained $2.70 to settle at $662.60 an ounce.

Indiainfoline - Intraday Stock Ideas

NIFTY (4246) SUP 4216 RES 4261

BUY HTMEDIA (219.7)
SL 214 T 229, 231

BUY HINDLEVER (198.55)
SL 194 T 206, 209

SELL CESC (368.80)
@ 371 SL 375 T 362, 358

SELL BHARATFORG (328.35)
@ 331 SL 335 T 322, 319

SELL HCLTECH (333.60)
@ 336 SL 340 T 323, 320

STRATEGY INPUTS FOR THE DAY

Fear sets in!

FEAR is an acronym in the English language for "False Evidence Appearing Real"

After being bullish so far, is it time for investors to get bull-ied? Besides fear of a CRR hike, (which remains a rumor till it is done) investors at large could get a little perturbed by the latest threat that World Trade Center in Mumbai would be destroyed by the outlawed militant group Lashkar-e- Taiba. But then life goes on and investors and non-investors especially in Mumbai have manage to shrug off all such threats and attacks in the past.

Back to the markets, though the Nifty managed to carve out a new record for itself, the BSE Sensex is struggling to cover the distance of a few hundred points to create a new milestone. If FIIs inflows remain strong the Sensex will also hit a new all-time high sooner or later. Having said that we would like to reiterate that these are only statistical events and they should rather focus on their own investments.

Today, we expect the market to open on a subdued note given the weakness in the US and Asian markets. The usual intra-day swings will continue to keep investors on tenterhooks. The action will continue to be more stock specific and outside the key indexes. As a result, small-cap and mid-cap shares may remain in the limelight.

On Wednesday, the market suddenly tanked late in the afternoon amid grapevine that the RBI may go for another CRR hike to tackle the relentless inflow of foreign capital. This coincided with reports that the monsoon would be delayed. Whether that will indeed be the case only time will tell. If another tightening measure from the central bank does materialise that could prove to be the trigger for some kind of a correction.

Other than a possible negative surprise from the RBI one should also be weary of rising oil prices, an overheated Chinese economy and a downturn in the US. Inflation and its fallout on the local interest rates will also continue to cast a spell on the market.

The derivative contracts in the underlying NAGARFERT, ARVINDMILL, IFCI and PARSVNATH have crossed 95% of the market-wide position limit and are currently in the ban period.

NIIT Tech, Divi's Labs and Universal Cables could gain after announcing strong results. Opto Circuits' Board will meet today to consider issue of warrants to promoters, and issue of securities on a preferential basis to strategic investors. Bharat Seats' Board will today to fix and announce the record date for a 5:1 stock split and 1:1 bonus. Compact Disc India has announced that it will co-produce 90 minutes, 3D Animation, family-oriented feature film 'GoaaaaaL' with Motion Pixel Corporation, a leading Los Angles based Hollywood production company. Shares of Temptation Foods were up yesterday amid market talk that it may acquire HLL's marine products business.

US shares ended lower on Wednesday for the first time in four days after former Federal Reserve Chairman Alan Greenspan said he fears a dramatic contraction for Chinese stocks. Greenspan, speaking by satellite to a conference in Madrid, said a rally that boosted China's benchmark CSI 300 Index by 90% this year is unsustainable.

Shares reversed early gains that sent the S&P 500 above its 2000 record for a third day. McDonald's, Intel and IBM posted the steepest declines in the Dow Jones Industrial Average, while technology shares led the Standard & Poor's 500 Index's retreat.

The Dow dropped 14.3 points, or 0.1%, to 13,525.65 after earlier reaching a record. The S&P 500 lost 1.84 points, or 0.1%, to 1522.28 after rising as high as 1532.43, five points above its March 2000 record close. The Nasdaq Composite Index declined 10.97 points, or 0.4%, to 2577.05.

US light crude oil for July delivery rose 27 cents to settle at $65.78 a barrel on the New York Mercantile Exchange. Prices rose as US naval action in the Middle East overshadowed a US report showing higher refinery activity. The front-month contract was trading 11 cents higher at $65.88 a barrel in extended trading in Asia.

COMEX gold for June delivery rose $2.70 to settle at $662.60 an ounce. Treasury prices inched lower, raising the yield on the 10-year note to 4.85% from 4.83% late on Monday. In currency trading, the dollar fell versus the euro and the yen.

European shares closed higher. The pan-European Dow Jones Stoxx 600 index added 0.8% to stand at 396.53. The index hit a high of 396.61 in the session, a level not seen since September 2000. Around the region, other indexes were making progress, with the U.K.'s FTSE 100 closed up 0.2% at 6,616.40, the German DAX Xetra 30 advanced 1% at 7,735.88 and the French CAC-40 ended 0.5% higher at 6,120.20.

In the emerging markets, the Ibovespa in Brazil shed 0.8% to 51,812 while the IPC index in Mexico rose 0.2% to 30,869 and the RTS index in Russia plunged 2.4% to 1815.

Asian markets are mostly in the red this morning following Greenspan's warning on the Chinese equities. The Shanghai Composite Index, which tracks shares listed on the larger of China's two stock exchanges, is up 56% year to date.

The Morgan Stanley Capital International Asia-Pacific Index dropped after nearing a record. The MSCI index lost 0.2% to 149.57 at 11:01 a.m. in Tokyo, halting a three-day, 1.8% advance.

Benchmarks fell in Singapore and Malaysia and rose elsewhere in the region. Markets in Hong Kong and South Korea are closed for holidays today.

BHP Billiton followed metal prices lower. A measure of six metals traded on the London Metal Exchange (LME), including copper and zinc, fell 1.6% overnight. Copper dropped 0.8%, zinc slid 1.6% and nickel slumped 4.2%. Earlier BHP had risen 2% amid reports that the mining giant was in talks with Alcan.

Bulls snaps five day rally

Markets ended on a weak note as Met department announced that monsoon would delay by 3-4 days further selling pressure in the frontline stocks like Tata Motors, ONGC, Reliance Industries and SBI. BSE Metal index was the major gainer as the index nearly outperformed the key indices by 1% led by gains in Tata Steel. Others like Auto, Oil & Gas, FMCG and Banking stocks dragged the markets lower.

Reliance Capital lost over 5% to Rs965 on profit booking after rallying over last few trading sessions. McDowell also witnessed profit booking as the scrip was down by 6% to Rs1169. However, Raj Telefilm rallied by over 10% to Rs318 and SKF India jumped by over 11% to Rs318. Finally, the 30-share Sensex ended lower by 90 points to close at 14363. NSE-50 Nifty lost 31 points to close at 4246.

Karur Vysya Bank slipped by 0.8% to Rs287. The company announced that they would pay dividend of Rs10 a share. The scrip touched intra- high of Rs280 and a low of Rs289 and has recorded volumes of over 1,0,000 shares on NSE.

Bata India surged nearly 5% to Rs178 on reports that Reliance Retail Ltd, a unit of India's second-most valuable company, may form an alliance with the company to sell products in each other's outlets. The scrip touched intra- high of Rs190 and a low of Rs173 and recorded volumes of over 20,00,000 shares on NSE.

Tata Tea pared its gains towards the end on back of profit booking the scrip was down by 0.5% to Rs908. Reports state the company is considering various options with regard to its 30% stake in Glaceau. The scrip touched intra- high of Rs949 and a low of Rs886 and recorded volumes of over 6,00,000 shares on NSE.

KS Oils edged higher by 0.3% to Rs413 after the company announced that they would split each share into 10 and raise $100mn in overseas securities sale. The scrip touched intra-day of Rs428 and a low of Rs406 and recorded volumes of over 2,00,000 shares on NSE.

Oil refinery stocks also pared its intra-day gains as selling pressure dragged the stocks lower. IOC was flat at Rs502, BPCL fell by 1.5% to Rs384 and HPCL edged lower by 0.4% to Rs299.

Pharma stocks also were on the receiving end. Ranbaxy dropped by over 2.5% to Rs389, Dr Reddy’s Lab was down 1.1% to Rs655, Lupin fell 1% to Rs708 and Sun Pharma edged lower by 0.3% to Rs1087.

Capital Good stocks stood firm in a weak market. BHEL was up 1.3% to Rs2713, Thermax gained by 1.8% to Rs457, SKF India rallied by over 11% to Rs477 and Praj Industries added .7% to Rs503.

Metal stocks also recorded smart gains led by gains in the index heavy weight Tata Steel, the scrip surged nearly 5% to Rs659, JSW Steel was up by 0.3% to Rs621 and Maharashtra Seamless added 0.4% to Rs572

Insider Trades:
Development Credit Bank Limited: 1) Morgan Stanley & Co. International Plc A/C Morgan Stanley Mauritius Co. Ltd. 2) Morgan Stanley & Co. International Plc A/C Morgan Stanley Investment Mauritius Ltd. has purchased from open market 876691 equity shares of Development Credit Bank Limited on 18th May, 2007

Sectoral Movement:
BSE Oil & Gas index was the major loser and lost 1.15%, BSE Auto index (down 1.08%), BSE FMCG index (down 1.19%) and BSE Technology index (down 0.88%) were among the other major losers. However, BSE Metal index gained 1%.

Volume Toppers:
RNRL, Idea, SAIL, RPL, DCB, Pochiraju Industries, BRFL, Unitech, Centurion Bank, Reliance Energy, ITC, HLL, Inox Leisure, Gujarat NRE

Upper Circuit:
PSTL, Sparsh BPO, Raj Tele, Tanla, Global Broadcast, Goderej Industries, Mefcom Agro, Tripex Overseas, MLL and Heritage Food

Delivery Delight:
BEML, BHEL, Bombay Dyeing, Cadila Healthcare, Hero Honda Motors, HLL, HDFC, Jindal Steel & Power, MTNL, M&M, UTI Bank and VSNL.

Abnormal Delivery:
APIL, Balaji Telefilms, Bharat Forge, MPhasis BFL, Reliance Capital, Colgate-Palmolive, Aurobindo Pharma, India Cements, Wipro, CEAT and LIC Housing Finance Ltd.

Stock Futures with largest increases in OI:
BRFL, IOC, Shree Cement, Ansal Property, reliance Energy, Sesa Goa, United Spirits and matrix labs

Stock Futures with Decreases in OI:
Educomp Solutions, Indian Bank, Nagarjuna Construction, Bombay Dyeing, Kotak Bank, Zee Telefilms, Financial Technology and VSNL

Results Today:
Bombay Dyeing, BPCL, Banswara Syntex, Centurion Bank of Punjab, Gokaldas Exports, Majestic Auto, Sangam India, SpiceJet,

Results Corner:
PNB Q4 profit at Rs2.38bn (down 17%) and Q4 revenue at Rs37.13bn (up 26%)

Brokers Recommendations:
Crompton Greaves – Outperformer from Enam with target of Rs280
Tata Steel – Buy from Merrill Lynch with target of Rs800

Long Term investment:
REL

Major News Headlines:

Divi’s Lab recommends stock split from face value of Rs10 to Rs2 each

NIIT Tech declares 1:2 bonus; recommends dividend of Rs6.50 per share

Govt stake may be cut to 51% in PNB

KS Oils announces 10:1 stock split; to raise $100mn overseas

Rel Com cuts call rates to middle east by 36%

Karur Vysya Bank to pay dividend of Rs10 a share

BEML forms JV with Midwest Granite for mining

NDTV to raise Rs4bn by selling securities, may consider acquisitions and partnerships

Anagram - Daily Call - May 24 2007

Anagram - Daily Call - May 24 2007

USE PASSWORD: deadpresident.blogspot.com

Prabhudas Lilladher - Bharat Forge

Religare - Daily Technicals, Futures, Market Outlook - May 24 2007

IngersollRand Presentations

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Good Evening - May 23 2007

Markets traded weak in opening trade despite positive global cues. But rupee appreciation (40.60/$) and upward journey of Crude Oil ($66.2/bbl) raised some concern. Nifty fell marginally after hitting a new lifetime high of 4277.80 in opening trade. Sensex and Nifty have gained 3.5% over the last four sessions. However, concerns over sustainability of the rise and a mixed trend in Asian markets also kept investors wary. At 10:30AM, Sensex was 14371.20, down 47.40 points or 0.3%. Nifty was at 4249.85, down 11.05 points or 0.3%. The CNX Midcap and S&P CNX 500 indices were down marginally. On the BSE, there were nearly as many advances as declines in the morning session. The worst hit frontline stocks were oil retailers BPCL, down 1.8% at Rs 386, and HPCL, down 1.6% at Rs 300. Oil marketing companies are likely to stay weak as crude oil is trading above $66 a barrel on NYMEX and is seen staying firm on worries that a report due later this week will show a fall in US gasoline inventories. Technology shares were among laggards, as the rupee remained strong against the dollar, currently trading at Rs 40.60 to $1. Infosys Technologies was down 1.2% at Rs 1,937, and HCL Technologies, down 1.2% at Rs 344. Sun Pharmaceutical Industries, up 3% at Rs 1,098, was the biggest Nifty gainer, extending Monday gains as the Rs 18.6 bn buy of Israel's Taro Pharmaceutical Industries is seen without equity dilution. Other gainers included Zee Entertainment Enterprises, up 3% at Rs 308, BHEL, up 1.8% at Rs 2,682, Tata Steel, and up 1.3% at Rs 631. In the mid trading session, indices were flat amid choppy trade on profit sales after four sessions of gains. Sensex was at 14410.89, down 7.71 points, or 0.1%. Nifty was at 4262.70, up 1.80 points, or 0.1%. Zee Entertainment, up 3%, was the top Nifty gainer. Sentiment for media shares was up amid positive news flows and as valuations are attractive. Raj TV touched upper circuit of 10% at Rs 26. Bajaj Auto, down 3% at Rs 2,178, was the worst hit on Nifty. Deutsche Bank Securities has downgraded the stock "sell" on lower valuations for its insurance segment. Marico was up 0.2% at Rs 60.50. 47 lakh shares changed hands in a block deal on BSE, NSE at Rs 60/sh. We also saw no of block deals in this counter. Spicejet was up 2.6% at Rs 46.70. The company expects to be breakeven in Apr-June 2007 quarter and plans to fly to 6 new destinations and to operate 150 flights/day by the end of this fiscal. It is also planning to acquire 8 Boeing aircrafts in FY08. Reliance Capital surged 5% to Rs 1,018 on reports it has made a profit of Rs 3.5 bn by selling its entire 5.79% stake in Reliance Energy for Rs 7.25 bn to promoters of Reliance Energy on Monday. Reliance Communications shares were trading 3% up at Rs 522 on a report on CNBC-TV18 that the company has cut its roaming rates by 70%. Bharat Forge was up 1.7% No. of Scrips Value (Crs.) Advances 539 8024 Declines 518 3373 Unchanged 26 7 Total 1083 11404 at Rs 341. In Q4, the company reported standalone net profit of Rs 64.3 cr Vs Rs 53 cr YoY. Whereas net sales stood at Rs 510 cr Vs Rs 438.4 cr. Mukand Ltd declined 5% at Rs 90.50 on bad quarter results. In Q4, the company reported net profit down at Rs 22 Vs Rs 27 cr. Nifty closed at a record high for the second straight session, settling marginally higher than Monday's finish, as investors were cautious due to worries over long-term sustainability of recent gains. Trade today was volatile due to alternate bouts of bottom fishing and profit sales. Firmness in other Asian markets provided support to key indices. After opening at alltime high, the Nifty succumbed to profit sales as some investors opted to stay on the sidelines. Sensex ended at 14453.72, up 35.12 points or 0.2%, after touching a low of 14348.26 and a high of 14483.59 intraday. Nifty ended at 4278.10, up 17.20 points or 0.4%. It moved between a low of 4234.10 and an all-time high of 4281.60 in the session. The combined turnover on the two exchanges was Rs 166 bn. CNX Midcap Index ended up 0.6% and S&P CNX 500 Index up 0.3%. The biggest sectoral gainer was BSE Capital Goods Index, up 0.6%. Media stocks took centre stage in today's trade amid some news-driven, stock specific activity. Zee Entertainment, up 4.5% at Rs 312, was the top Nifty gainer. Sentiment for media shares was up amid positive news flows and as valuations was attractive. Zee Entertainment gained on reports Telecom Regulatory Authority of India will review tariff of non-CAS (conditional access system) areas. Balaji Telefilms, up 2% at Rs 245, extended gains for second straight session. NDTV was up 2.4% at Rs 428. Shares of TV18 group companies hit upper circuit after the parent announced a 50-50 joint venture with Viacom Inc. called Viacom18. TV18 ended up 2.4% at Rs 868, Global Broadcast News up 5% at Rs 780, and Network 18 Fincap up 5% at Rs 601. Other Nifty gainers included Housing Development Finance Corp., up 4.3% at Rs 1,793, Reliance Communications, up 3.1% at Rs 523, and VSNL, up 2.9% at Rs 473. Reliance Communications gained on reports the company will add 20,000 towers in 2007-08 (Apr-Mar) and is also close to selling stake in its tower business. There is talk that the company will announce a 70% cut in its roaming rates. Reliance Capital rose 5.3% to Rs 1,020 on reports it has made a profit of Rs 3.5 bn by selling its entire 5.79% stake in Reliance Energy for Rs 7.25 bn to promoters of Reliance Energy on Monday. ABB ended up 2% at Rs 4,361 after winning a Rs 2.89 bn order from Delhi Metro Rail. Bajaj Auto, down 2.3% at Rs 2,196, was the worst hit in the Nifty, extending losses, as worries persist over the valuation of the company's stake in the insurance joint ventures with Allianz. SBI ended down 1.7% at Rs 1,326. Information technology shares were also weak, as the dollar remained weak against the rupee. Other losers included GACL, down 2% at Rs 116, and HPCL, down 1.7% at Rs 300. Shares of oil retailers fell as crude oil prices are holding above $66 a barrel on New York Mercantile Exchange. Everest Kanto Cylinder, which fell early today on a 50% on year decline in Jan- Mar net profit to Rs 51.2 mn, ended 1% up at Rs 1,155. Tech stocks ended down. Infosys was down at Rs 1946.75 with volumes of Rs 462 crs, TCS was down at Rs 1230.65 with volumes of Rs 189.67 crs, Satyam was down at Rs 450 with volumes of Rs 177.30 crs, and Wipro closed down at Rs 532.20 with volumes of Rs 55.27 crs. Pharma stocks witnessed positive trend with exception. Dr Reddy was down at Rs 662.40 with volumes of Rs 53.03 crs, Sun Pharma closed up at Rs 1090.40 with volumes of Rs 50.23 crs, Glenmark was up at Rs 681.15 with volumes of Rs 30.73 crs, and Ranbaxy closed up at Rs 399.75 with volumes of Rs 19.04 crs. Banking stocks ended mixed trend. In the Public Sector banks SBI closed down at Rs 1326 with volumes Rs 211.42 crs & Bank Of India closed up at Rs 213.10 with volumes Rs 48.06 crs. In the private sector ICICI Bank closed down at Rs 928.55 with volume of Rs 145.80 crs & Kotak Bank closed up at Rs 607.10 with volumes of Rs 93.75 crs. Auto Stocks witnessed mixed trend. Tata Motors closed down at Rs 726.95 with volumes of Rs.129.55 crs & M&M closed up at Rs 734.10 with volumes of Rs 59.39 crs. While in the 2 wheeler segment stocks, Bajaj Auto closed down at Rs 2195.85 with volumes of Rs 244.35 crs & TVS Motor closed up at Rs 65.10 with volumes of Rs 11.24 crs. Cement Stocks ended down with exception. GACL closed down at Rs 116.05 with volumes of Rs 62.23 crs, ACC closed up at Rs 890.55 with volumes of Rs 36.04 crs, India Cement closed down at Rs 190.50 with volumes of Rs 26.75 crs and Birla Jute closed down at Rs 255.35 with volumes of Rs 2.33 crs. Nifty ended at 4278 up by 17 points.

HSBC - Mindtree Consulting

Sharekhan Eagle Eye (equities) & Derivatives Info Kit for May 24, 2007, Sharekhan Commodities Buzz dated May 23, 2007

Sharekhan Eagle Eye (equities) & Derivatives Info Kit for May 24, 2007

Sharekhan Commodities Buzz dated May 23, 2007

Sharekhan Investor's Eye dated May 23, 2007

Tata Motors
Cluster: Apple Green
Recommendation: Buy
Price target: Rs980
Current market price: Rs708

Price target revised to Rs980

Result highlights

Tata Motors' Q4FY2007 results are slightly below are expectations, primarily on the margin front. The Q4FY2007 net sales (excluding a foreign exchange [forex] gain) of the company grew by 20.0% to Rs8,206.8 crore, driven by a volume growth of 16.2% and a realisation growth of 3.3%.
Excluding the effect of the forex gain/loss, the operating profit margin (OPM) has fallen by 160 basis points year on year (yoy) and by 130 basis points sequentially to 11.0%. This was mainly owing to a higher raw material cost and a sequential drop in the realisation due to a change in the product mix. Consequently, the operating profit grew by just 5.1% to Rs906 crore.
The other income was higher at Rs60.4 crore against Rs4.4 crore last year. Further, lower interest cost and taxes, and stable depreciation aided the company to record a 25.9% growth in its profit to Rs576.7 crore.
For the full year, net revenues grew by 33% to Rs27,404.8 crore against Rs20,672 crore last year, while the net profit grew by 25% to Rs1,913.5 crore.
The consolidated sales for the full year grew by 36.4% to Rs32,426.4 crore while net profit grew by 25.4% to Rs2,170 crore.
We are taking a cautious view on the commercial vehicle (CV) industry and expect the slowdown to continue in the first half of FY2008 on the back of tightening liquidity and higher interest rates. However, we expect the situation to correct itself towards the second half of the fiscal with the peaking out of interest rates and better availability of funds.
We are downgrading our FY2008 earnings estimate by 6.2% to Rs53.4 and are also introducing our FY2009 estimate. We expect stand-alone earnings of Rs60.8 and consolidated earnings of Rs70.3 in FY2009. At the current levels, the stock trades at 11.7x its FY2009 stand-alone earnings per share (EPS) and 10.1x its consolidated earnings. We maintain our Buy recommendation on the stock with a revised price target of Rs980.

Punjab National Bank
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs578
Current market price: Rs559

Q4FY2007 results: First-cut analysis

Result highlights

The Q4FY2007 results of Punjab National Bank (PNB) are much below our expectations with the profit after tax (PAT) reporting a decline of 17.7% year on year (yoy) to Rs237 crore compared with our estimate of Rs460 crore. The PAT declined mainly due to higher than expected staff expenses and provisions.
The adjusted staff expenses (adjusted for Rs225 crore of write-back in pension liability expenses during Q4FY2006) grew by 35.2% yoy and 34.4% quarter on quarter (qoq) to Rs781 crore from Rs581 crore in December 2006 and Rs577.6 crore in March 2006. Such a sudden spike could be due to a one-off item, details of which are awaited.
The reported net interest income (NII) was up 20.6% yoy but down by 1.6% qoq to Rs1,423 crore. However, adjusted for a one-time cash reserve ratio (CRR) interest income of around Rs56 crore the NII was up 15.8% yoy to Rs1,367 crore. The net interest margin (NIM) of the bank is likely to have declined on a sequential basis.
The non-interest income was up 23% yoy and higher by 30.2% qoq to Rs518.4 crore.
The adjusted operating expenses shot up by 27.8% yoy and 30.4% qoq mainly due to the jump in the staff expenses, which restricted the operating profit growth to 6.9% yoy. The provisions remained stable yoy but showed an increase of 41.6% qoq; a detailed break-up of the same is awaited.
The asset quality of the bank has shown some deterioration with the net non-performing asset (NPA) in percentage terms at 0.76% in March 2007 compared with 0.42% in December 2006 and 0.29% in March 2006. However, the gross NPA stood at 3.45% compared with 3.65% in December 2006, largely due to a higher advances base because in absolute terms the gross NPA increased to Rs3,391 crore from Rs3,268 crore in December 2006.
The bank management has said that it needs around Rs2,000 crore of additional capital in FY2008 for its overseas subsidiaries and to meet Basel-II compliance. It plans to raise Rs500 crore tier-II capital by June-end and additional equity capital could also be raised which will dilute the government's stake from the existing 57.8% to 51% in CY2008.
At the current market price of Rs559, the stock is quoting at 8.4x its FY2008E earnings and 1.4x FY2008E book value. A detailed result update would follow.

NIIT Technologies
Cluster: Ugly duckling
Recommendation: Buy
Price target: Rs720
Current market price: Rs519

Price target revised to Rs720

Result highlights

NIIT Technologies Ltd (NTL) reported a growth of 5.2% quarter on quarter (qoq) and 46.5% year on year (yoy) in its consolidated revenues to Rs243.5 crore during the fourth quarter. The organic revenues grew at a rate of 5.2% sequentially. The revenues of Room Solutions (acquired in May 2006) also grew by 5.2% qoq to Rs31.3 crore.
The company reported an improvement of 70 basis points in its operating profit margin (OPM) to 21.9% on a sequential basis, despite the adverse impact of the appreciation of the rupee during the quarter. The margin improvement was driven by the cumulative impact of a favourable revenue mix, savings in the overhead cost as a percentage of sales, higher margins in the business process outsourcing (BPO) business and better profitability of Room Solutions.
The increase in the other income (Rs5.6 crore as compared with the third quarters' Rs3.3 crore, which was driven by tax refund in its overseas subsidiary), lower depreciation charges and a steep decline in effective tax rate (down to 2% due to the write-back of the provisions made earlier) aided the earnings growth during the quarter. Consequently, the consolidated earnings grew at an explosive rate of 32.7% qoq and 138.9% yoy to Rs45.9 crore. This is the third consecutive quarter of over 20% sequential growth in the earnings.
In terms of the outlook, the company is expected to maintain the growth momentum on the back of the record order intake of $72 million during the quarter and $209 million over FY2007. The pending order backlog of $103 million (executable over the next one year) is one of the highest ever reported by the company. The management expects the margin to also improve with the improving profitability of the BPO business, the efforts taken to increase the proportion of the high-margin offshore revenues and other cost levers like a lower overhead cost. There is enough scope for further improvement in the overhead cost (at 20% of its sales in FY2007). Consequently, the earnings estimate has been revised upwards by 16.4% for FY2008.
Along with the results, the company has rewarded the shareholders with a bonus issue of one equity share for every two shares held and a dividend of 65% on the existing capital.
At the current market price the stock trades at 12.2x FY2008 and 10.1x FY2009 estimated earnings. We re-iterate our Buy call on the stock with an upgraded price target of Rs720 (14x FY2009 earnings).

SECTOR UPDATE

Automobiles

Dream run interrupted
The commercial vehicle (CV) segment has been on a dream run, with FY2007 being its sixth straight year of positive growth. A strong growth in the economy, easy availability of finance, lower interest rates and high freight rates contributed to this phenomenal performance. We believe that the time has come for taking a slight breather. While the macro factors still appear to be strong, we expect the growth to slacken in the next 6-12 months.

Sharekhan Investor's Eye dated May 23, 2007

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