SAIL, Omax Auto, Jyothi Structures, BHEL, Motherson Sumi, India Technicals

Angel on SAIL

Better-than-expected Q4FY2007 performance: Public sector steel major, SAIL, reported a better-than-expected performance for the quarter ended March 2007 (Q4FY2007). It reported a yoy Topline growth of 15.7% to Rs10,385cr (Rs8,980cr). This was primarily led by higher realisations even as volume sales declined during the quarter. It must be noted that the company is already operating at around 119% capacity utilisation, which leaves little room for volume-led growth until new capacities come onstream.

At the CMP, SAIL trades at 11.8x FY2009E EPS, 6.8x EV/EBITDA and P/BV of 2.3x. Considering current valuation of the stock and the outlook in the medium-term, we maintain our Neutral view on the stock.

Angel on Omax Auto

In line Q4FY2007 results: In Q4FY2007 the company’s Net Sales grew by 27.6% yoy Rs181.2cr. The company sustained its margin improvement achieved in 9MFY2007 on the back of a lowered cost base. Operating Profit grew 59.3% yoy to Rs16.3cr. Net Profit grew 116% yoy to Rs8.1cr mainly on account of an 88.2% jump in Other Income. Omax has lowered its operating cost base over the last two quarters and will further benefit from partial captive sourcing of steel and higher capacity utilisation at its Bangalore and Binola plants.

Valuation: At the CMP, the stock trades at 7.3x FY2008E and 6.5x FY2009E Earnings. It appears very attractive at EV/EBIDTA of 4.7x FY2008E and 3.7x FY2009E. We maintain a Buy on the stock with a Target Price of Rs105.


Angel on Motherson Sumi

Consolidated Performance: Motherson Sumi Systems (MSSL) reported Net Sales of Rs462.7cr for Q4FY2007 as against Rs305.4cr in 4QFY2006. The results are not exactly comparable with the corresponding quarter of last year, as Q4FY2007 results include Motherson Advanced Polymer (MAPL) numbers, a 100% subsidiary amalgamated with MSSL with effect from February 1, 2006. OPM, for the quarter, was flat at 16%. Net Profit was Rs45.7cr (Rs42.2cr).

MSSL is a leader in wire harnessing and controls over 65% of the domestic passenger car market. The company is now focusing on the supply of higher level assemblies and modules where the Margins are comparatively higher. The company is also increasing content per car to diversify its product portfolio. MSSL is laying emphasis on its global product plan (GPP) wherein it would enter into JVs with leading tier-I suppliers to upgrade its technology base and increase clientele. MSSL targets to achieve 60% of consolidated turnover from overseas clients. The company expects to continue exploring opportunities in the non-automotive segments, which contributed 15.8% to FY2007 consolidated Revenue compared to 13.8% in FY2006. Increased
share of non-automotive segment is expected to help the company de-risk its business.

We remain positive on the company. We believe MSSL will grow at a CAGR of around 30% over the next two years. We upgrade our consolidated EPS for FY2008E and FY2009E to Rs6.9 and Rs8.4, respectively. At the CMP, the stock trades at 20.4x FY2008E and 16.6x FY2009E consolidated earnings. We maintain a Hold on the stock with a Target Price of Rs130.


Angel on BHEL

Net Sales surge: For Q4FY2007, Bharat Heavy Electricals (Bhel) reported a strong yoy growth of 25.5% to Rs6,919.7cr (Rs5515.7cr). For FY2007, the company reported growth of 29.7% to Rs17,237.5cr (Rs13,289.28cr). This was expected FY2007 being the last year of the Tenth Plan.

Strong Order Book: Bhel clocked a sharp increase in order inflow of more than 88% (5%) to Rs36,300cr (Rs1,9318cr). In absolute terms, order inflow increased by around Rs17,000cr as against a relatively moderate increase of Rs2,650cr in turnover has resulted in an unexecuted order book of Rs55,000cr, an increase of 47% (18%). Of this, the power segment, which accounts for more than 70% of the company's revenues, contributed Rs27,700cr with orders for nearly 9,900MW of capacity being booked during the year. Apart from this, transmission sector orders doubled to Rs1,170cr. FY2007 has been a significantly better year than FY20, in terms of the order intake and order book position, which had grown at a modest rate of 5% and
18% only in FY2006.

Bhel has grown at a CAGR of more than 25% in terms of sales over the past three years. With significant growth in sales, and fixed cost getting spread over a larger base, profits have risen sharply by around 43%. The growth in sales came on the back of a strong order book and government initiatives in the power sector. Going ahead, we expect a slow down in order book to slowdown as there have been issues regarding delays in execution, capacity limitations of the company and the government requires faster execution of the projects to meet the targets set for the Eleventh Plan. The Central Electricity Authority (CEA) had undertaken assessment of preparedness of Bhel to meet the capacity requirement of the power sector during the Eleventh Five Year Plan. The report stated that while some of the delays in the Tenth Plan were on account of state power utilities, major delays have been attributed to Bhel -- “major delays are attributable to Bhel”. Hence, the Ministry of Power has held Bhel responsible for much of the delays in the Tenth Plan, which led to a shortfall of nearly 15,000MW in the period.
At the CMP, the stock trades at 22.2x and 18.2x FY2008E and FY2009E EPS. With valuation stretched and sustained earnings momentum also factored in, we remain Neutral on the stock.


ABN Amro Technicals

The broader indices namely BSE Midcap and C NX 500 are trading near their weekly resistance levels. However, the BSE Smallcap index seems to have some more steam left on the upside. All the major sectoral indices namely, Auto, Capital Goods, Consumer Durables, Healthcare, Oil & Gas, PSU and Bankex are trading near their medium term resistance levels. However, IT Index is trading near the lower end of its channel which suggests the fall in the sector is likely to get arrested in the short term.
The FMCG Index and the Metal Index are also showing some strength in the near term.
To sum it up, the broader indices and major sectoral indices are near their strong resistance levels, after the recent up move. Therefore caution and some profit booking is advised in the short term.

BSE Midcap Index is trading near its weekly trend line resistance of 6187 and 6314. Sustaining above 6314 on a weekly basis can take the index to 6600. On down side support is at 5752.

BSE Small Cap Index faces resistance at 7510; currently the index is in mid way suggesting that it can still witness some up move. Support comes at 6971 and 6815 thereafter.

CNX IT index is trading near its lower band of long term channel hence the chance of bounce back is not ruled out. It needs to sustain and make a good base around 5060, from where it can rally to levels of 5900. In case support is broken on monthly basis it could be headed towards 4500.


ABN Amro on Jyothi Structures

Strong sector growth outlook: The transmission business has high visibility over the next few years, with a continuous focus on improving the power infrastructure in the country. Projects such as Accelerated Power Development and Reforms Programme (APDRP), Rural electrification under Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) and measures to reduce Aggregate Technical & Commercial (AT&C) losses by upgrading the Transmission & Distribution (T&D) infrastructure would drive demand for the services rendered by the transmission companies. An investment of Rs4270bn is envisaged during the 11th 5 Year Plan on various schemes in the T&D sector.

Valuation: JSL’s revenues and PAT are estimated to grow at a CAGR of 33% and 51% between FY07- FY09. At the CMP of Rs185, JSL trades at 17.3x FY08F EPS of Rs10.7 and 11.8x FY09F EPS of Rs15.7. We reiterate our Buy call on JSL, given the high earnings visibility for the sector, and greater comfort over management

Sharekhan Investor's Eye dated May 29, 2007

ITC
Cluster: Apple Green
Recommendation: Buy
Price target: Rs200
Current market price: Rs165

Strong growth across segments

Result highlights

In Q4FY2007 the net revenues of ITC grew by 24.4% year on year (yoy) as most of its businesses saw a strong growth: cigarettes (revenue up 14.3%), fast moving consumer goods (FMCG; revenue up 63%), hotels (revenue up 15.6%), paperboards (revenue up 12%) and agri-business (revenue up 16%).

The company's earnings before interest, tax, depreciation and amortisation (EBITDA) margin dropped by 220 basis points to 23.9% in Q4FY2007 primarily due to higher other expenditure.

The tax provisioning was on the higher side during the quarter which along with a decline in the operating profit margin (OPM) led to a lower than expected profit after tax (PAT). The Q4FY2007 net profit grew by 14.7% yoy to Rs650 crore.

We believe that the company's cigarette business would see a stable growth despite the slowdown in demand witnessed by the cigarette industry earlier in the year.

The non-cigarette FMCG business is the only business in ITC's portfolio that is not making a profit. However, its losses were stable despite the roll-out of the Bingo brand of products throughout the country which led to higher sales and promotion expenses during the quarter. We expect this business to break even by FY2009.

In the hotel segment, the profitability was lower primarily due to a one-time transition cost incurred on account of upgrading 7 Sheraton Hotel to Starwood Hotels and Resorts' The Luxury Collection brand.

At the current market price of Rs165, the stock is attractively quoting at 20.6x FY2008E earnings per share (EPS) and 13.1x FY2008E enterprise value (EV)/EBIDTA. We maintain our Buy recommendation on ITC with a price target of Rs200.

Saregama India
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs375
Current market price: Rs295

Hitting a musical note

Result highlights

The business mix of Saregama India Ltd (SIL) is undergoing a change. Until now the company used to generate the bulk of its revenues by selling cassettes, CDs and DVDs (physical sales). However with the increasing preference of consumers for non-physical formats like radio and the continuing high rate of piracy, the physical sales business is witnessing a downtrend. At the same time, SIL has found a new high-margin revenue stream in radio stations and telecom companies that pay it royalty for use of its content (non-physical sales). This new revenue stream is going to be the driver of SIL's growth in future as is evident from its results for the fourth quarter and FY2007.

In the fourth quarter, the revenue from operations remained almost flat year on year (yoy) at Rs29.3 crore. As expected physical sales declined by 23.8% yoy to Rs19.1 crore while non-physical sales grew sharply by 117.4% yoy to Rs9.5 crore.

The share of the non-physical sales for the quarter increased to 33.3% from 14.9% in Q4FY2006; the same rose to 30.2% in FY2007 from 14.9% in FY2006. This is a big positive as the revenue mix of the company is shifting towards this high-margin business.

The operating profit margin (OPM) improved manifold yoy, from a meagre 1.7% in Q4FY2006 to 10.1%. The margin improvement was possible because the total cost declined during the quarter despite flat revenues. Also, the contribution of non-physical sales to total revenues was higher yoy. Consequently, the operating profit grew from Rs0.5 crore in Q4FY2006 to Rs3.0 crore.

With flat depreciation and interest charges, a slightly lower other income and a higher tax outgo, the company recorded a pre-exceptional net profit of Rs1.6 crore for Q4FY2007 against a loss of Rs0.4 crore in Q4FY2006.

Several growth triggers are in the offing which make the SIL stock an attractive investment. These triggers include (1) the expected roll-out of many new radio stations by H1FY2008; (2) the increase in the music content rate; (3) a rapid growth in the number of telecom subscribers and the inclination of telecom customers towards value-added services (ring tones, caller tunes etc); (4) the expected commissioning of its portal in Q1FY2008 (containing its large portfolio of musical tracks); and (5) the value creation on listing of Global Wholesale Club.

At the current market price of Rs295, the stock is quoting at 18.4x its FY2008E earnings per share (EPS) of Rs16 and 12.9x its FY2008E enterprise value (EV)/earnings before interest, deprecation, tax and amortisation (EBIDTA). We reiterate our Buy recommendation on the stock with a price target of Rs375.

Mahindra & Mahindra
Cluster: Apple Green
Recommendation: Buy
Price target: Rs1,050
Current market price: Rs765

In investment mode

Result highlights

Mahindra and Mahindra's (M&M) stand-alone net sales grew by 20% year on year (yoy) to Rs2,747 crore in Q4FY2007. The operating profit margin (OPM) for the quarter declined by 48 basis points to 11.4% yoy. Higher other income and interest income resulted in a 59% growth in the pre-exceptional profit after tax (PAT) to Rs247.1 crore. An extraordinary income of Rs166 crore realised from the sale of shares of Mahindra and Mahindra Financial Services Ltd (MMFSL) last year depressed the reported PAT. The reported PAT declined by 21% to Rs233 crore from Rs255 crore in Q4FY2006.

On a stand-alone basis, the net sales for FY2007 grew by 22% to Rs10,050 crore. The operating profit rose by 30% to Rs1,263 crore. In the automotive business, the domestic volumes grew by 17.8% while the exports surged by 45%. The tractor segment however recorded a strong growth of 22%.

On a consolidated basis, the net sales for FY2007 grew by 43% to Rs17,617 crore. The OPM surged to 15.3% from 14.0% in FY2006. Consequently, the operating profit grew by 56% to Rs2,704 crore. The consolidated pre-exceptional PBT for the year stood at Rs2,320 crore, marking a growth of 50.7% yoy.

The company plans to increase its capital expenditure (capex) for the year to Rs2,000 crore, which is going to be utilised for capacity expansions, new product launches and research and development (R&D) activities. Apart from this, the company also needs to carry out the Punjab Tractor Ltd (PTL) and Swaraj Engine acquisitions, and invest in joint ventures. All these projects would be financed through a combination of debt and equity which would lead to nominal equity dilution.

The contribution of the non-automotive business has increased significantly in the recent years. For FY2007, the non-automotive business contributed 39% to the top line and 51% to the bottom line.

We expect FY2008 to be the year of consolidation for the company while all new product launches would take place in FY2009. At the current market price of Rs764, the stock discounts its consolidated FY2009 earnings by 8.7x. We maintain our Buy recommendation on the stock with a sum-of-the-parts (SOTP) price target of Rs1,050.

ITC, Thermax, Gokaldas, IGL, Patni

UBS on ITC

ITC's FY07 cigarette growth, at 7%, was in line with our estimate, and cigarette segmental revenue growth was 13.3%, aided by an estimated 2-2.5% of weighted price increase and 3-3.5% mix improvements. Gross revenue grew 20.2%, and net revenue grew 26.3%. FY07 operating profits rose 19% YoY. PBT was up 20% but a higher tax rate caused PAT to grow by a little less (18.4%).

Our price target of Rs160 is benchmarked against 18x FY08E earnings, which is the mid-point of ITC's long-term trading band. We maintain our Neutral 2 rating.

Prabhudas Lilladher on Gokaldas Exports

Based on the revised earnings estimates of Rs 24.3 and Rs 31.0, the stock is trading at PER of 9.1x and 7.1x FY08E and FY09E respectively. We maintain our BUY rating on the stock given the attractive valuations and set a 12-month price target of Rs 291 (12.0x FY08E EPS) giving an upward return of 32%.

Man Financial on IGL

Indraprastha Gas Ltd.’s (IGL) Q4FY07 results were much ahead of our expectations with positive surprise in sales volume
• Net sales were up by 21.1% at Rs 1,643mn while net profit was up by 35.6% YoY at Rs 401mn.
• Increase in CNG and PNG volumes by 11.6% and 44.4%, respectively, boosted revenue and net profit growth
• We maintain our Buy rating on the stock and a target price of 135

Citigroup on Patni Computers

Significant outperformance — After outperforming the BSE IT index by 50% in the past 2 months, we downgrade Patni to Sell/Medium Risk. High valuations, coupled with execution risks, tilt the risk-reward profile to the downside.

Why we had upgraded the stock? — We had upgraded Patni based on thefollowing: (a) cheap valuations; and (b) it being an M&A candidate with its cheap valuations and decent size.

Target price at Rs565 — The apparent M&A premium in the current valuations,putting the stock on a par with Satyam, is difficult to justify, in our view. An upside risk remains potential M&A announcements. Our new target price is Rs565, based on a 15% discount to Satyam.

Citigroup on Thermax

Strong recurring PAT growth — Thermax reported Q407 consolidated recurring PAT of Rs668mn, up 74% YoY and 35% ahead of our expectations. Higherthan- expected revenues, EBITDA margins, other income and lower-thanexpected taxes helped boost recurring PAT growth.

Order backlog up 66% YoY, guidance positive — Thermax FY07 end order backlog was Rs36.72bn, up 66% YoY. Management has guided for more than 40% revenue growth in FY08. We await further details in the conference call to be held on May 30.

Maintain Buy (1L) — Thermax remains one of our top picks in the Electrical E quipment and Engineering space. TARGET of Rs 562

Kotak Mahindra Bank, BPCL, Construction, Consumer, IOC, IVRCL

Morgan Stanley in their report on Kotak Mahindra Bank

Kotak’s stock is up 40% YTD, buoyed by strong capital markets. Its earnings continue to be largely dependent on capital markets: 78% of F2007 PBT was contributed by businesses linked to capital markets, such as securities, distribution income, investments, etc. With competition intensifying in these segments due to entry of strong players, we expect Kotak’s capital markets-related earnings to come under
pressure. This, coupled with steep valuations, will keep further stock performance in check, in our view.

Increased competition likely to depress brokerage earnings. Kotak’s average daily volume rose 52% in F2007, but its PBT increased by only 12%, implying downward pressure on brokerage rates – which we expect to accelerate with entry of Reliance Money (brokerage rates offered are significantly below the current market rates) in retail broking and distribution business.

Full Valuations – Our New Target Price of Rs450 implies 22% downside from current levels. Kotak is trading at 32x our F2008E earnings – highest in our coverage universe in India. Given its dependence on capital markets, we view these valuations as full. We
maintain our Underweight rating but raise our target price to Rs450 based on sum of parts.


HSBC in their report on BPCL say

BPCL’s FY07 profits almost quadrupled on higher oil bonds and increased subsidy sharing by upstream companies

Subsidy sharing based on oil bonds looks set to continue in high crude price scenario – positive for R&M companies

We revise our target price marginally upwards to INR445 to reflect change in EPS, BVPS and value of investments


B&K on Construction

In line with the NHDP, the government has embarked ambitious programme for the state highways and has urged state government to take a cue from the NHAI in expanding the road network. The government has also advised private sector to prepare for a bigger role in the development of infrastructure sector. The government is ready to provide financial assistance and do handholding for the state government in setting technical and procedure standards.

Although, few state governments have taken initiatives for highway construction. Ability and willingness of most of the state government and PWD departments to implement the projects of such magnitude is yet to be seen. The states needs to raise fair amount of resources on their own by taking the partnership route and even collecting levies from the public to meet the additional burden for highway construction.

Though, order book is not a concern for the construction sector, even if state governmentsare able to convert small portion of proposed investment into actual projects, it would be big opportunity for the construction sector. We remain upbeat on the construction sector.

JP Morgan on Consumer Shelf


Key highlights of our fourth edition of the consumer fortnightly:

Domestic : 1) HLL extends its premium soap brand 'Dove' into hair care segment with the launch of shampoos, conditioners and treatments under this brand to counter rising competition from L'Oreal in premium segment, 2) Godrej Consumer is planning to enter the shampoo segment with the launch of a mass market brand in near future. This is likely to intensify competition in this space which is currently dominated by HLL and Procter & Gamble, and 3) Diageo-Radico JV launches Masterstroke whisky targeting mid-premium segment in Maharashtra.
· Key commodity trends: Palm oil prices continued their uptrend rising almost 5% over the fortnight. Expected tightness in soyabean (closest substitute) supply and increased demand for bio-diesel is leading to new highs for palm oil (now at over M$2500/tonne). On the other hand prices for wheat softened by 2% over the past fortnight on the back of steady crop arrivals.
· International: 1) Luxury brand Christian Dior Couture is planning to set up its subsidiary in India and expand its operations, reflecting confidence of foreign luxury brands in India's fast growing luxury retailing market (35-40% growth p.a.), 2) UK based Cobra beer has announced plans to set up two Greenfield breweries in India.


Merrill Lynch on Indian Oil Corporation

IOC has attained a recurring consolidated EPS of Rs50.2/share in FY07, which implies 31% YoY earnings growth. The rise in earnings has been driven by generous issue of oil bonds in FY07 by the government. IOC received Rs139bn of oil bonds in FY07, which is almost twice the Rs70bn of oil bonds received in FY06. FY08E earnings outlook is uncertain. It is entirely dependent on the
government decision on oil bonds. We remain Neutral on IOC.

We are keeping our FY08E earning forecast unchanged at Rs49/share, which implies 2.5% YoY earnings decline. There could be upside risk to our earnings forecast if the government is generous in the issue of oil bonds to R&M companies even in FY08E. Clarity on earnings outlook for FY08E is possible in the next two months. The government may announce a subsidy sharing plan for FY08E as it did in June 2006 for FY07. The fact that it stuck to its announced subsidy sharing plan in FY07 would lend credibility to any such plan for FY08E

Merrill Lynch on IVRCL

IVRC, our top pick in the mid-cap E&C space, reported solid 4QFY07 on all fronts. Sales were up Rs10bn +67%YoY; EBITDA margin expanded by 140bpsYoY & PAT of Rs732mn, +67%YoY. PAT was ahead of MLe due to better margins & non-prov of full tax (25% v/s MLe 32%) pending appeal in tribunal. Order backlog remains robust at ~3x FY07 sales. Value creation through the listing of IVR Prime, and 42% earnings CAGR in core business are potential triggers ahead. Buy, PO Rs450.

Our PO of Rs450 is based on an SOTP approach. We have valued IVRCL's core construction business at PER 14x FY09E - a 30% discount to E&C majors despite its faster growth. Risk: Unrelated acquisitions (oil & gas), project execution.

Ernst & Young - Infrastructure 2007 - Global Perspective

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BCA Research - Emerging Markets Strategy

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Carlyle Group - Have Emerging Markets Finally Left Behind their Second Class Citizenship for PE Investors

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Market Close: LNT, BHEL..Fuel the rally But..

Subdued start in the Indian indices with little support from the Asian Counters. Markets traded ranged after open in green with profit booking at higher levels. Preceding session continued to be choppy ahead of FNO expiry. Indices continued to gain ground with momentom given by the small caps and mid caps. INdex majors like Cipla, LNT BHEL rallied at the final hours of trading RIL and SBI too helped to push the indices to close high. Selective Buying was witnessed in Cement, Power, Banking and Pharma companies. Volatility in Rupee kept Techies to trade ranged. Adani Exports slipped by 10% after the SEBI banned the promoters for 2 Yrs for their involvement in Ketan Parekh securities scam. Binani cement which got listed yesterday continued to trade at discount and ended lower than its issue price. Cooling Gold prices provided soothing effect in Titan which rallied. Global market trading ranged with most of the European markets trading in red.

Sensex ended up by 110 points at 14508.21. It was helped up by gains in Cipla (218.55,+5 percent), BHEL (2856.2,+5 percent), L & T (1856.5,+4 percent), Ranbaxy (390.45,+2 percent) and RCVL (521.2,+2 percent). Restricting the gains were HDFC (1813.45,-2 percent), Guj Ambuja (114.8,-1 percent), NTPC (160.75,-1 percent), Infosys (1951.6,-1 percent) and ITC (165,-1 percent).

Larsen & Toubro (L&T) ended 3% with its good result news. The net profit for the quarter grew by 50%, while the top line surged by 31%. The Company posted a net profit of Rs.701 cr for the quarter as compared to Rs.467 cr in the same quarter previous year. Total Income increased from Rs.4782 cr in the previous quarter to Rs. 6452 cr in this quarter. The top line on standalone basis grew by 38%.The Company posted a net profit of Rs.1403 cr for the year as compared to Rs.1012 cr in the previous year on standalone basis. Total Income increased from Rs.15199 cr for the year ended March 31, 2006 to Rs 18041 cr for the year ended March 31, 2007, up by 18%. On Consolidated basis Net profits jumped by 70% YoY, from Rs.2240 cr for the year as compared to Rs.1317 cr previous year. The Total Income increased from Rs.17019 cr for the year to Rs. 21342 cr for the year ended March 31, 2007. Order inflow for the year stood at Rs.25,429 cr while the total order book of the company at present is at Rs.35,300 cr. Engineering and Construction segment reported a revenue of Rs.13,400 cr contributing 75% of the top line. LnT with its huge order booked and expertise in its core segments looks good. the stock is trading at new levels Keep a Stoploss of 1725 for Long term if take for delivery from current levels.

Mahindra & Mahindra (M&M) ended 4% higher after its results were announced yesterday. The top line for the quarter improved by 21% at Rs.2,747 cr from Rs.2,288 cr in the same quarter previous year. The bottom line for the quarter stood at Rs.236 cr against Rs.322 cr down by 26% on yearly comparison. The EBIDTA margins for the quarter stood at 8.48%. The sales numbers for the year stood at Rs.10,245 cr against Rs.8,326 cr in the same quarter previous year. The top line for the year improved by 23% YoY. The net profit for the year stood at Rs.1,068 against Rs.857 cr witnessing a growth of 24%. The growth of the company on volume terms improved by 15% in the Automobile segment and 21% in its tractor business. The decline in the bottom line was due to increased input cost which could not be passed on the customer. Company had also launched its new model "Logan" which is being manufactured in partnership with Renault Ltd. The increased advertisement expenses also had an impact in deflating the bottom line. The increased interest rates also had an impact on the company's performance as it acted in halting the sales of its cars. The impact of higher interest rates has had its impact on all the other players in industry.

Greenply has launched 13 laminates categories under their Greenlam range targeting the growing interior infrastructure space. Kenyan raft wood, horizontal hush, horizontal lines, American wall paper, Caravan leather, Quarter cut oak finish, Alluring alligator finish, Techno steel finish, Wacky wicker finish, Fabric (Thai Silk), 3D range, Chic and Teen talk are the new categories that define the shade and texture of the product. Exotic names like Ebony, Samara oak, Candy orange, Divine yellow, Thai fauna silk, Olive chic, Antique oak, Lorriane walnut and many others are available in the price range of Rs 600 to Rs 2,000 a sheet. The products would be marketed through its network of 27 branches and more than 3,700 dealers and stockists across the country. Company is well placed in the industry where 90% of the market is with the unorganized players. Brand name of the company is its key factor for success in the business. Implementation of VAT has been a big positive as it hits the unorganised sector and makes it more competitive. One can accumulate the stock at this level for long term investments. The story is damn good and we are bullish here. We have a note here to and Wowcall ranning here too.

Technically Speaking: Sensex has managd to trade at 14500 levels. As it made an intra day high 14,530 and low of 14,372 levels. The breadth favored Advances as there were 1,352 Advances against 1,240 Declines. The turnover for the day stood at Rs.4,573 cr. Sensex support lies at 14,420-14,250 levels while Resistance lies at 14,530-14,560 levels if managed to open up with a gap above 14530 levels and touches 14560 and sustaince this levels then we could see new Highs..

Market regains as capital goods surge

Despite getting mixed signals from Asian markets the Sensex resumed on a positive note at 14419, up 21 points. But it soon lost momentum as traders took to profit booking and touched the day's low of 14372. The market gained momentum in the mid-morning trades after a hectic upsurge in capital goods, consumer durables and oil stocks that lifted the Sensex to positive territory. The buying remained stock-specific thereafter as investors remained on the sidelines, expecting a further fall. As trading progressed, the mood turned extremely buoyant in the afternoon on hectic buying in select large cap stocks and the Sensex touched the intra-day high of 14530. Buying was also seen in a number of mid-cap and small cap stocks. Buoyancy among heavyweights towards the close ensured that the Sensex moved past the 14500 mark and ended the session with a surge of 110 points at 14508. The Nifty rose 36 points to close at 4293.

The breadth of the market was positive. Out of a total of 2,670 stocks traded on the BSE today, 1,346 stocks posted gains, 1,217 stocks were down in the red and 107 stocks remained unchanged. Among the sectoral indices, the BSE CG index jumped 2.81% at 10,896 followed by the BSE HC index (up 1.70% at 3858), the BSE CD index (up 1.59% at 3943) and the BSE Oil & Gas index (up 1.19% at 7793).

Barring a few select counters, most of the heavyweights ended at higher levels. Among the blue chips, Cipla shot up by 4.95% at Rs219, BHEL soared 4.86% at Rs2,856, L&T surged 4% at Rs1,857, Ranbaxy advanced by 2.17% at Rs390, Reliance communication added 2.05% at Rs521, Reliance Industries moved up 1.85% at Rs1,755, HDFC Bank scaled up 1.78% at Rs1,145 and SBI was up 1.22% at Rs1,322. Among the laggards, HDFC dropped 1.72% at Rs1,813 and Gujarat Ambuja Cement shed 1.03% at Rs115 while NTPC, Infosys, ITC, Maruti Udyog, Bajaj Auto and ICICI Bank closed marginally lower.

Capital goods stocks were in the limelight and closed with strong gains. Reliance Industrial Infrastructure vaulted 5% at Rs499, Crompton Greaves soared 4.54% at Rs251, Carborundum Universal surged 4.14% at Rs173 and Lakshmi Machine Works advanced by 3.93% at Rs2,755.

Over 1.83 crore Reliance Natural Resources shares changed hands on the BSE followed by IFCI (96.70 lakh shares), NOCIL (87.59 lakh shares), Orbit Corporation (84.79 lakh shares) and Sunflag Iron & Steel (74.32 lakh shares).

Orbit Corporation clocked a turnover of Rs208 crore on the BSE followed by Unitech (Rs150 crore), Reliance Industries (Rs149 crore), Advanta (Rs129 crore) and India Infoline (Rs122 crore).

Sensex settles above 14500 after 110-point surge

The benchmark index, BSE Sensex, which stayed lacklusture for most part of the day, surged to cross the 14,500 level, as sudden buying momentum emerged in late-afternoon trade, led by index heavyweight Reliance Industries (RIL). The rise could also be attributed to short covering ahead of expiry of May 2007 derivatives contracts on Thursday, 31 May 2007. All the BSE's sectoral indices settled with gains, except the BSE IT index and FMCG index.

Sensex advanced 110.32 points or 0.77% at 14,508.21. This is Sensex's highest closing in over 3-1/2 months since 9 February 2007. Sensex today opened higher at 14,457.57, and touched an intra-day low of 14,372.07. It advanced to an intra-day high of 14,530.15, by 14:48 IST.

The S&P CNX Nifty, which struck a record high of 4,298.85 points in late trade, settled 36.70 points or 0.86% higher at 4,293.25, an all time closing high.

Volatility was the hallmark of today’s trading session, with the Sensex moving in and out of positive zone. Going forward, volatility is expected to remain high this week in the run-up to expiry of May 2007 derivatives contracts on Thursday, 31 May 2007.

The market breadth, which indicates overall health of the market, stayed positive on BSE, with 1352 shares advancing as compared to 1240 that declined. 96 remained unchanged. It was much stronger by 10:30 IST, with 949 shares advancing and 500 declining.

The BSE Mid-Cap index settled at 6,254.51, rising 48 points or 0.8%, while the BSE Small-Cap index gained 54 points or 0.7% to 7,388.33.

The total turnover on BSE amounted to Rs 4576.77 crore, while the NSE F&O turnover was at Rs 43290.08 crore.

Among the Sensex pack, 21 shares advanced while the rest declined.

Pharma major Cipla surged 5.64% to Rs 220, on high volumes of 11.62 lakh shares. It was the top gainer from the Sensex pack. The stock witnessed strong buying momentum today, after it was hammered in the past few weeks, for posting poor Q4 March 2007 results.

State run engineering major Bhel advanced 4.75% to Rs 2853, on 2.91 lakh shares. It had galloped to an all time high of Rs 2889.90 in intra-day trade. It had reported 32.54% rise in net profit in Q4 March 2007 to Rs 1150.37 crore from Rs 867.95 crore in Q4 March 2006, after trading hours on 25 May 2007. Sales rose to Rs 6919.68 crore, from Rs 5515.69 crore in March 2006. The net profit rose to Rs 2414.70 crore in the year ended FY 2007, from Rs 1679.16 crore in FY 2006. Sales rose to Rs 17237.53 crore in FY 2007, compared with Rs 13228.26 crore in FY 2006. Earlier, Bhel had set 1 June 2007 as record date for a liberal 1:1 bonus issue.

Engineering and construction major Larsen & Toubro advanced 3.30% to Rs 1844, after it reported 50% rise in net profit in Q4 March 2007 to Rs 701 crore from Rs 467 crore in Q4 March 2006. Sales rose 35.01% to Rs 6248.24 crore in the Q4 March 2007 as against Rs 4627.87 crore in previous Q4 March 2006.

The net profit rose 38.62% to Rs 1,403.02 crore in the year ended March 2007 as against Rs 1,012.14 crore in FY 2006. Sales rose 19.31% to Rs 17,578.84 crore (Rs 14,733.85 crore).

Led by Bhel and L&T, the BSE Capital Goods Index surged 2.8% to 10,896.14, and was the top performer among the sectoral indices on BSE.

Pharma major Ranbaxy Laboratories advanced 2.10% to Rs 390.40. Ranbaxy Laboratories Inc., the wholly owned subsidiary of Ranbaxy Laboratories, acquired the US rights to a group of 13 dermatology brands from Bristol-Myers Squibb Co.(BMS) for $26 million on Monday, 28 May 2007. Ranbaxy expects the 13 products, with a US presence of over 10 years, to contribute significantly to its incremental sales volume

Index heavyweight Reliance Industries (RIL) rose 1.67% to Rs 1752 on 8.53 lakh shares. It saw high volatility, as it moved in a range of Rs 1711.95 to Rs 1765.80. As per reports, the Directorate of Revenue Intelligence (DRI) officials on Monday visited Mukesh Ambani promoted Special Economic Zone (SEZ) at Jamnagar to ascertain the area used for setting up the export zone.

Cement major Gujarat Ambuja Cements was the top loser, down 1.47% to Rs 114.30 on 7.43 lakh shares.

HDFC (down 0.98% to Rs 1827), Bajaj Auto (down 0.89% to Rs 2183), NTPC (down 0.85% to Rs 160.90), and ITC (down 0.45% to Rs 165.35) were the other losers.

Reliance Energy (REL) rose 0.54% to Rs 553.50 on reports that t is scouting for coal mines in Indonesia and Australia to feed its proposed projects in Uttar Pradesh and Maharashtra.

IT pivotals showed mixed trends, after the rupee inched towards a nine-year high on Tuesday, 29 May 2007. IT stocks have not participated in the recent rally, due to concerns of stronger rupee.

The BSE IT index was down 0.14% to 4,908.15. Satyam Computers (up 0.53% to Rs 471.50), and TCS (up 0.46% to Rs 1230.35) advanced whereas Infosys (down 0.95% to Rs 1945.90) and Wipro (down 0.37% to Rs 537.20) declined. 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.

Other IT stocks, Tech Mahindra (down 0.92% to Rs 1490.15), and Hexaware Technologies (down 1.61% to Rs 159), also declined.

Recently listed real estate company Orbit Corporation surged 15.13% to Rs 252.60 on huge volumes of 84.38 lakh shares. It was the top traded counter on BSE with total turnover of Rs 207.53 crore. Unitech (Rs 150 crore), Reliance Industries (Rs 149 crore), Advanta (Rs 129 crore) and India Infoline (Rs 122 crore), followed Orbit Corporation in that order in terms of turnover on BSE.

Reliance Natural Resources (RNRL) topped the volumes chart on BSE with 1.83 crore shares followed by IFCI (96.70 lakh shares), NOCIL (87.60 lakh shares), Orbit Corp (84.38 lakh shares) and Sunflag Iron & Steel (74.30 lakh shares).

Tyre stocks rallied on renewed buying interest, on expectations of significant expansion in the profit margins during the current financial year. CEAT (up 2.86% to Rs 176.15), MRF (up 3.07% to Rs 4072), Goodyear India (up 5% to Rs 196.55) and Krypton Industries (up 10% to Rs 58.40) advanced.

The tyre industry has been suffering from high input costs and thin operating margins for the past few years. In the past two quarters, the industry has been able to pass on the rise in input cost to consumers through successive price hikes. This has significantly pushed up the industry’s profit margins in the last quarter. Analysts expect top tyre makers to close the financial year with a net profit margin of around 4% of net sales, against an average net profit margin of 2.5% during last year.

Ashapura Minechem jumped 10% to Rs 292.65 after Reliance Growth Fund purchased 8.94 lakh shares (2.3% stake) at Rs 263.09 per share in a block deal on 28 May 2007. Deutsche Securities Mauritius was the seller to the tune of 5 lakh shares at Rs 265 per share.

Bajaj Electricals jumped 10.39% to Rs 588 after its board recommended a liberal 1:1 bonus issue. Prior to this, the company had issued bonus in ratio of 1:2 (1 bonus share for every 2 held) in 1997. The latest equity share capital of Bajaj Electricals is Rs 8.64 crore. The latest book value per share is Rs 90.59.

Strides Arcolab soared 3.33% to Rs 329 after the company said during trading hours today, 29 May 2007, it would acquire fermentation unit of Italy's Diaspa S.p.a near Milan. The plant has approvals of US Food and Drug Administration and the European Union.

Dishman Pharmaceuticals & Chemicals rose 1.98% to Rs 247.25 after it announced 101.7% surge in net profit in Q4 March 2007 to Rs 14.20 crore as compared to Rs 7.04 crore in Q4 March 2006. Sales rose 23% to Rs 78.89 crore (Rs 64.16 crore). The net profit rose 33.1% to Rs 60.87 crore in the year ended March 2007 (FY 2007) compared to Rs 45.72 crore in the year ended March 2006. Sales rose 23% to Rs 279.95 crore (Rs 216.06 crore). The results were announed after trading hours on Monday, 28 May 2007.

Mahindra & Mahindra (M&M) advanced 3.88% to Rs 769 after it reported a 17.9% increase in consolidated net profit to Rs 1497.15 crore in FY 2007 compared with Rs 1269.72 crore in FY 2006. The company's total income was up 41.6% at Rs 17,912.28 crore in FY 2007 (Rs 12,648.41 crore). The results hit market during trading hours on 28 May 2007.

M&M also said that future outlook for the company remains positive. However, high interest rates, moderation in credit growth and uncertainties on the inflation front were a few worrisome factors.

Indraprastha Gas spurted 6% at Rs 120, after it reported 35.61% rise in net profit to Rs 40.06 crore in Q4 FY 2007 as against Rs 29.54 crore in Q4 FY 2006. Sales increased 21.08% to Rs 164.30 crore (Rs 135.70 crore). Profits jumped 29.98% to Rs 137.96 crore in FY 2007 as against Rs 106.14 crore in FY 2006. Sales scaled up 17.90% to Rs 614.10 crore (Rs 520.88 crore). The results were announced after trading hours on Monday (28 May 2007).

Adani Enterprises plunged 10% to Rs 212.25 after the market regulator on Monday, 28 May 2007, banned promoters of Adani group from dealing in stock markets for two years for their involvement in the Ketan Parekh securities scam. The regulator said that the promoters of Adani Enterprises, formerly Adani Exports, Adani Agro, Adani Impex, Crown International, Shahi Property Developers, Adani Properties and Advance Intercontinental India have been restrained from accessing the securities market either directly or indirectly for two years.

Easun Reyrolle rose 2% to Rs 885 after the company announced after trading hours on Monday, 28 May 2007 that its board will consider stock split on Wednesday, 30 May 2007, along with FY 2007 (year ended 31 March 2007) results.

Product design and system integrator Tata Elxsi surged 10.15% to Rs 360.30. The company was recently in news for its expansion plan in India by adding two more locations.

Power Finance Corporation jumped 9.06% to Rs 163.65 on value buying. It also struck an all time high of Rs 165.50 today.

Gayatri Projects rose 1.13% to Rs 272 after the firm said it had secured five orders aggregating Rs 455 crore.

The Nikkei rose 0.48% on Tuesday, 29 May 2007, as Sanyo Electric Co. surged after posting strong earnings. The Nikkei added 84.97 points to 17,672.56.

FIIs were net buyers to the tune of Rs 324 crore on Monday, 28 May 2007.

Finance Minister P Chidambaram said on Tuesday, 29 May 2007, that he aims to bring down inflation to 4%-4.5%, urging states to maintain adequate supplies of food for ensuring price stability.

The Reserve Bank of India (RBI) on Monday, 28 May 2007, asked Securitisation Companies/Reconstruction Companies (SC/RC) to declare their net asset values (NAVs) to enable investors know the value of their investment in the securities issued by such companies.

RBI has asked the SC/RC companies to use the ratings obtained from SEBI-registered rating agencies like Crisil, Icra etc for the purpose of arriving at NAV. The NAV should be calculated according to the past experience of the company in recoveries.

Commerce Minister Kamal Nath expects foreign direct investment (FDI) equity flows of $30 billion in the fiscal year ending in March 2008, almost doubling from the previous year. FDI equity flows increased almost three times to $15.7 billion in 2006/07, from $5.5 billion in 2005/06.

Crude oil prices bounced back to $70 per barrel in London on Tuesday due to concerns over Nigerian crude production at the beginning of the summer driving season in US. London Brent crude was up 29 cents at $70 per barrel after hitting $70.05 earlier. It had slipped 98 cents on Monday, 28 May 2007, after Nigerian oil unions called off the two-day strike that had threatened to halt oil supplies.

Lacklustre Trading

The market opened on a flat note and witnessed lacklustretrading in the opening session. Last week¿s tug of warbetween bulls and bears seems to be continuing this weekas well, which is dragging the markets into a subduedmode with lack of a clear direction in the short term. AsKST in the hourly chart shows, the market is consolidatingand we should wait for a clear indication on either side.We expect the market to consolidate throughout thetrading session and experience some of buying towardsend of the day. The market breadth is indicating a positivebias with 2,115 advances and 905 declines. The index islikely to have strong support around 14327 level, which is 20-hour simple moving average, and on breaching thislevel it is likely to take support around 14250, which isthe lower end of the triangle in the hour chart shown below.The index is likely to have resistance around 14500 level,which is our short-term resistance, and on breaching thislevel it is likely to touch 14600, which is our short-termtarget. Our short-term as well as medium-term bias remainspositive with targets of 14600 and 14700 respectively.We have a positive bias on Titan Industries as it has strongsupport around Rs1,050 level, which is around 10-day simplemoving average, and resistance around Rs1,090-1,110 levels.We have a negative bias on IDBI, which is having resistancearound Rs97 level and support around Rs94.10-93.50 levels.We have a positive bias on GE Shipping with support aroundRs261 level and resistance around Rs266-270 levels.

Citigroup - ABB

Citigroup in their report on ABB are positive on its prospects

Raise target price to Rs5,516 — We increase our target price to Rs5,516 (from Rs4,400 earlier) on the back of an earnings revision and rolling forward our P/E multiple (30x) to FY09E. We now expect earnings CAGR of 42% over the CY06- 09E with RoEs at the ~35% levels driven by sales CAGR of 40%.

At a ~ 50% premium to BHEL — Our target price of Rs5,516 is based on a P/E of 30x FY09E (~50% premium to BHEL, in line with premium over the last 3 yrs). The premium is justified by: A) EPS CAGR of 42%; B) RoEs of ~ 35%; C)Access to parent technology; and D) ABB India’s importance in the ABB Group.

Earnings revised upwards — Raising our EPS estimates by 2-5% over CY07ECY09E on the back of: 1) Better-than-expected sales, profit & order inflow in 1QCY07; 2) In the next 10 years, India is targetting 151GW of capacity up 86% vis-à-vis the last 10 years; and 3) India is also targetting a transmission capex of Rs550bn in the next five years up 157% vis-à-vis the previous 5 years.

Trading Calls

Buy Gokaldas Exports around Rs 221.15. Stop Loss at Rs 218 (Intra-day Call)

Buy L&T at Rs 1805. Stop Loss at Rs 1775 (Intra-day Call)

Buy Hindustan Oil Exp and remain invested at Rs 103-96. Stop Loss at Rs 84. Target of Rs 129 and Rs 168 (Delivery-based call)

Buy GMR Infrastructure at Rs 514. Stop Loss at Rs 500 (Intra-day Call)

Nestle, Indraprastha Gas, IOC, CBoP, Gokaldas

ENAM recommends OUTPERFORMER on Nestle

We believe Nestlé India has a significant intrinsic value (~Rs 2056 per share) and value unlocking will unfold in stages on successful introduction of brands / products from its parent¿s global portfolio and an improvement in its existing portfolio¿s reach and affordability in the rural markets. At CMP (Rs.1143) Nestlé India is currently trading at P/E of 24x CY08E and EV/EBITDA of 14x CY08E, close to its long-term one-year forward valuations. Given the growth momentum and EBITDA margin (pre provisions) expansion in Q1CY07, we believe the company has the potential to positively surprise consensus growth expectations in the interim term. We maintain sector Outperformer rating on the stock.


ISEC recommends BUY on Indraprastha Gas

IGL reported impressive 35% YoY growth in Q4FY07 recurring net income to Rs401mn, the best ever quarterly performance. Recurring net income was 11% higher than our estimates on the back of higherthan- expected volumes and margins. The company's growth prospects are bright based on accelerated conversion of private vehicles to CNG and incremental demand of 1,000 CNG buses due to Commonwealth Games in '10. Valuations are attractive as the stock has fallen 14.1% YoY and has underperformed the BSE-200 45% in the past one year. Maintain BUY.

ISEC on Indian Oil Corporation

Indian Oil (IOC) reported recurring net income of Rs29bn in Q4FY07 as against Rs8bn in Q4FY06. The impressive 262.5% YoY growth was post pro-rata adjustment of oil bonds worth Rs65.7bn issued to IOC in Q4FY06 for full FY06. However, reported net income at Rs16.1bn was down 60.1% YoY. Overall, fall in crude prices reduced gross underrecoveries, which, along with the surprise increase in subsidy relief through upstream sharing and oil boosted IOC¿s performance. Further, the healthy outlook on refining margins and expected reforms on cooking fuel subsidies is a key positive for IOC. Added drivers include the impact of the company¿s petrochemicals business (paraxylene, PTA) and the upside from oil & gas finds from IOC¿s E&P assets. The stock rose 13.2% QoQ, outperforming the Sensex 7.7% QoQ based on the benign subsidy sharing scheme implemented by the Government. The stock is currently trading at FY07 P/E of 8.3x.

ENAM on Centurion Bank of Punjab

Our FY08 numbers take into account the LKB merger, Bank of Muscat preferential allotment and a part of warrants conversion by Sabre Capital. This will keep the reported ROE low, but the ROA will likely be maintained at 0.8%. Given that valuations at 3.6x FY09E are rich, the stock may underperform in the short term. However, along with the strong growth prospects and high execution capability, the bank is also a strong takeover candidate post 2009. Hence, valuations are
likely to remain high in the coming years. Maintaining our sector Outperformer rating on the stock.

ENAM on Indraprastha Gas

In our view, market is largely ignoring IGL¿s business franchise, itsability to manage the costs and seems to be concerned on the impactregulations. However, at current valuations (9.8x FY08E EPS), theconcerns seem to be overdone, making it one of the mostinexpensive stock in oil & gas universe. We maintain our sectorOutperformer rating on the stock.

Merrill Lynch on Gokaldas Exports

Valuations at 10x FY08E PER, look undemanding, being at the lowest end of thehistoric PE band (12-15x). However, with expectations of an earnings slowdown inFY08, these multiples may just about be right, for now. We note that impendinglabor reforms and the big domestic opportunity remain as key long term growthdrivers for Gokaldas. However, in the absence of any near term triggers and theoverhanging concern on Re appreciation, we maintain our Neutral rating

Kotak - Nagarjuna Constructions, Emkay - NIIT Technologies

Kotak recommends Nagarjuna Constructions, in their report, they say

At the current market price of Rs.175, the stock is trading at 18.5x and 14.5x on P/E multiples and 9.7x and 7.8x on EV/EBITDA multiples on FY08 and FY09 estimates. Adjusted with BOT and land development valuations, it is trading at 15.5x and 12x on P/E multiples on FY08 and FY09 estimates. We have valued the company on the sum-of-the-parts methodology, incorporating the valuation of core business, BOT projects and land development valuation. We recommend BUY with a price target of Rs.210.

Emkay recommends NIIT Technologies

The fiscal gone by, can be termed as a year of strong accomplishments for NIIT
Technologies, with four quarters of double digits sequential growth in net profit,
successful integration of Room Solutions, which further strengthened company’s
BFSI Vertical, especially insurance coupled with JV with global giant Adecco, which
gave NIIT Technologies access to top global Fortune 100 companies.
Going forward, we expect NIIT Technologies to continue its strong business
momentum, with strong revenues visibility from key business verticals and
geographies. We have marginally revised our estimates for FY08E and introduce our new estimates for FY09E. We expect NIIT Technologies revenue and net profit to grow at a CAGR of 32% and 26% respectively over FY07A-09E.

Rollover Analysis

1. Build-up in futures open interest at the market wide level continued to be strong in the month of May resulting in it nearing its all time high levels.

2. The aggregate futures OI, at 1,756,534 contracts, is up by 1.8% from D-3 of previous expiry. However in value terms, open interest has risen by over 9% over the last month and 22% over the last 2 months.

3. Momentum in rollovers picked up very strongly on the very first day of the expiry week with 35% rollovers against 31% on the same day in previous expiry.

4. In fact D-3 rollovers of 35% are at the highest level seen since November 2006 expiry.

5. As there is still huge open interest that needs to be rolled to the June series, we expect the markets to remain volatile till the end of this expiry.

6. Rollovers in Nifty have also picked up quite sharply with 31% positions getting rolled compared to 26% and 25% in March and April expiry respectively.

7. However short covering throughout the month resulted in an 11% fall in Nifty OI from D-3 of previous expiry.

8. Nifty rollover cost continued to hover in the range of -5 bps to -15 bps over the last 5 days simultaneously with rollover of 116,065 contracts.

9. In contrary to the market sentiments, IT stocks have shown very strong rolls along with a good jump in rollover cost. Overall 44% of total positions have got rolled to the June series simultaneously with the average rollover cost rising to 63 bps from 32 bps yesterday. Satyam(71%), Infosys (44%) and TCS (36%) lead the action.

10. In continuation with the trend of previous expiry, Metal stocks showed very strong rollovers. Jindal Steel (63%), Jindal Stainless(57%) and JSW Steel (55%) have seen aggressive rollovers. Rollovers in Construction, FMCG and Sugar stocks remained weak.

Kotak - Ranbaxy, Nagarjuna Constructions, VSNL, Mahindra & Mahindra, Indian Oil Corporation

Kotak Instutional Recommendations

Indian Oil Corporation

IOCL reported 4QFY07 standalone adjusted net income at Rs29.1 bn (reported Rs16.1 bn) versus our estimated Rs30.7 bn. The difference between adjusted and reported net incomereflects decrease in value of investments in IBP (Rs13.2 bn), which has been merged withIOCL. 4QFY07 results include FY2007 financials of IBP and thus are not comparable withresults of 3QFY07 or 4QFY06. FY2007 reported net income is Rs75 bn (Rs56.2 bnadjusted) versus Rs49.2 bn (without IBP). We see little merit in analyzing quarterly resultsgiven (1) merger of IBP with IOCL and (2) quarterly volatility in the amount of oil bondsand payment from upstream companies. We have fine-tuned FY2008, FY2009 andFY2010 consolidated EPS estimates to Rs63.6, Rs62.7 and Rs55.2 versus Rs62.8, Rs62.1and Rs59.7, respectively, previously. We retain our 12-month target price of Rs500, whichis based on a 30% discount to our 5X normalized EBITDA. Key downside risk is higherthan-expected subsidy losses.

Mahindra & Mahindra

M&M reported 4Q recurring net profit at Rs2.3 bn ' a 33% yoy growth in-line with our estimate of Rs2.6 bn. Net sales for the quarter at Rs27.5bn increased 20% yoy. This was on account of a 15% increase in volumes and 5% increase in realisations. 4Q EBITDA margins at 11.4% declined 30 bps yoy and 60 bps qoq. There was an exceptional profit of Rs100mn during the quarter on account of sale of certain long term investments. We maintain our consolidated fully diluted EPS estimates for M&M for FY2008 at Rs67.8 and for FY2009 at Rs85.0. We maintain our OP rating on the stock with a SOTP based target
price of Rs1,000 based on Rs613 for M&M stand-alone at 7.1X FY2009 EV/EBITDA equivalent to 11.4X FY2009 P/E and Rs387 for value in key subsidiaries of the company (valued at 20% discount to market value of holding). We shall be revising our numbers shortly.

VSNL


VSNL's 4QFY07 reported net income (standalone) of Rs1.31 bn was 4% ahead of our estimates of Rs1.26 bn. EBITDA declined 6% qoq to Rs2.4 bn, 6% lower than our estimate of Rs2.6 bn. Year-end seasonality along with one-off items to the tune of Rs600 mn such as provision for doubtful debts, legal and professional charges and R&M costs impacted EBITDA performance. Voice and data business demonstrated robust performance. We have fine-tuned FY2008E and FY2009E EBITDA to Rs10.4 bn and Rs11.7 bn from Rs10.4 bn and Rs11.2 bn, respectively previously. We will wait for FY2007 annual report and full consolidated accounts to convert our earnings model to consolidated basis. Our 12-month SOTP-based target price of Rs560 faces risk from continued delay in unlocking of land value and aggressive pricing competition

Nagarjuna Constructions

Nagarjuna construction has reported revenues of Rs8.7 bn in 4QFY07 versus our expectation of Rs10.5 bn and EBITDA (before other income) of Rs737 mn versus our expectation of Rs901mn respectively. EBITDA margin at 8.4% was about 20 bps lower
than our expectations. Order backlog at the end of FY2007 was Rs73 bn, providing a visibility of 1.8 years based on forward 12 month revenues. We revise our FY2008 EPS estimated downwards based on lower execution versus our earlier expectations. We revise our DCF based target price to Rs204/share from Rs198 earlir based on higher valuation of investment in Land bank/BOT projects. We maintain out perform rating based on strong macro outlook and value unlocking in real estate and infrastructure holding subsidiary.

Ranbaxy

Ranbaxy has acquired from Bristol-Myers Squibb (BMS) the US rights to a group of 13 dermatol/asaogy products. These brands have revenues of US$15 mn and have been acquired for US$26 mn. Clearly, these are small tail-end brands, which were not being promoted by BMS. Ranbaxy hopes to grow these brands by promoting them (through its existing dermatology sales force) and thereby improving profitability. The acquisition will add about 4% to US revenues (1% to total revenues) and is likely to be EPS neutral for the next two years, assuming that deal price will be amortised over ten-years. We have an OP rating on the stock.

Indian Banks

Key highlights of the financial results of Indian banks for 4QFY07 are:
a) Most banks maintain margins, despite fall in CASA for a few
b) Credit growth remained robust and led to increased reliance on bulk deposits for most
banks,
c) Non-interest income remained robust aided by fee income and loan loss recoveries,
d) Higher provisions (NPL, standard asset and investment depreciation losses) impacted
overall PAT growth.
e) Some banks like Indian Bank, PNB and Federal Bank made higher provisions than
mandated by RBI regulations to strengthen their balance sheets.

We continue to maintain preference for banks focusing on moderate asset expansion and funding their loan growth through core deposits. PNB, IOB, Andhra Bank, SBI, Federal Bank and J&K Bank are our favored stocks in this space given their valuations and growth outlook.

Trading Calls

Buy Gokaldas Exports with stop loss of Rs 190 for a target of Rs 242, 284
Buy Crompton Greaves with stop loss of Rs 215 for a target of Rs 295

Buy Unitech with stop loss below Rs 587 for target of Rs 613 & 624. This is a day-trading recommendation.
Buy GAIL with stop loss below Rs 294 for a target of Rs 307 & 311. This is a day-trading recommendation.

Buy Alphageo with stop loss of Rs 275 (On closing basis), for a short-term target of Rs 305.
Buy SMS Pharmaceuticals with stop loss of Rs 337(On closing basis), for a short-term target of Rs 394 and a medium term target of 425.

Citigroup - Unitech, Mahindra & Mahindra, Nagarjuna Construction

Citigroup in their report on Nagarjuna Constructions,

Revenues up 36% YoY, but below expectations — Nagarjuna reported Q407 revenues of Rs8.7bn up 36% YoY, but 16% below our expectations. Full-year revenues of Rs28.7bn were below CIR expectations and their target of Rs30bn.

Positive guidance — Management has guided for FY08 revenues of Rs40bn (~39% growth), EBITDA and net profit margins of 9.5% and 5.5% respectively.

Our sum-of-the-parts-based target price for NJCC of Rs272 per share is based on its four distinct parts: cash contract business, BOT projects, real estate projects, and landbank. We value the core construction business at a P/E of 19x FY08E FD EPS to derive a value of Rs221 per share. We value its BOT projects at Rs19 per share, using the P/BV method to value its share in these projects. We then value its real estate projects at Rs22 per share based on book value. Finally, we value its 130-acre and 248 acres NCC Urban landbank at Rs11 per share, using management's estimates of its current market value.

Citigroup in their report on Unitech,

Results beat expectations — Unitech's consolidated FY07 revenues of Rs33bn and net profit of Rs13bn were ahead of estimates, largely due to higher-thanexpected one-time profit of Rs~6.5bn from 60% stake sale in six IT Parks to Unitech Corporate Parks (UCP), listed on AIM, and increased other income.

Our target price of Rs430 is based on 10% premium to our NAV value of Rs391 (excluding SEZs). The premium is attributed to: 1) Unitech's competitive advantage of large diversified land bank, while peers are still aggregating land; 2) dynamic business model with thrust on recycling capital faster; 3) strong brand positioning and proven track record. Our assumptions are: a) current market price levels to sustain with no price inflation; b) development volume of 471m sq.ft (~19mn recognized as revenue in FY07); c) all projects undertaken will be completed largely as per schedule though given the scale of the roll-out, we expect risk of delays; d) average cost of capital of 14%; e) tax rate of 28%; and f) does not include any value attributed towards SEZs.

Citigroup in their report on Mahindra & Mahindra

4Q results — Adjusted PAT (excluding one-time prior-period adjustment and exceptional items) at Rs2.36 bn (up +35% YoY) was in line with our estimates. Higher other income and lower-than-expected tax rate offset the weak operating performance. EBITDA margins at 11.4% (60 bps below our expectations) declined 60 bps q/q indicating impact of rise in commodity costs and higher other expenses.

Our target price of Rs1,032 is based on a sum-of-parts methodology. We value M&M's core business at Rs543 (11x FY08E core CEPS). We also incorporate value for M&M's listed subsidiaries (Rs402/share), its auto component business (Rs57/share) and M&M's investments in other subsidiaries (including Mahindra Holidays at Rs30/share). Our core multiple of 11x, is supported by an 18% CAGR in core cash earnings (excluding dividends from group companies) for M&M over FY07E-09E. We value the key subsidiaries / associates / auto component initiatives at Rs459/share. At our core target price (of Rs543) the stock would trade at around 13.6x FY08E core EPS (excluding dividends from subsidiaries) and should be supported by 16% CAGR in earnings over FY07E- 09E. We have chosen to use P/CEPS as our primary valuation metric to ensure proper comparison with historical trading bands — the company is undertaking a significant product development and capital expenditure program, and also undertook a restructuring of the balance sheet in FY02. We believe valuations will also be supported by: a) management’s continued
efforts to unleash value from investments in group concerns (we believe that the listing of the group's hotel / resorts venture is next on the anvil); and b) new initiatives announced in the passenger cars, commercial vehicles and auto components segments, which should fructify over the next 2-3 years.

Futures & Options Strategy

The NIFTY futures saw a decline in OI to the 14.71% with prices coming down from high indicating liquidation of long positions, which built up during the day and built up of fresh short positions indicating market participants may see some weakness in the market led by profit booking after a sharp rally in the market. The premium in nifty futures disappeared during the closing of the session indicating lack of confidence among market participants to carry the positions. Market if it goes below 4220 levels then we may see further short positions built up in the market and longs liquidating their positions. The FII were buyers of index futures to the tune of 346 crs and buyers of index options to the tune of 220 crs. The PCR has come down from 1.43 to 1.41 indicates some consolidation may be seen in the market. The IV is around 26.50 levels indicating some volatile trading sessions ahead.

Among the Big guns, ONGC saw 13.341% drop in OI with prices remaining in a dull range suggesting some liquidation might be seen in the counter before taking any sharp direction on either side. Whereas RELIANCE saw drop of 14.25% in OI with prices coming down from high and closing near day's low indicating liquidation of long positions in the counter thus suggesting some caution to be taken while making positions in the counter.

In the TECH counters, TCS, INFOSYSTCH, SATYAMCOMP & WIPRO saw liquidation of positions with prices coming down and closing near low suggesting lack of confidence among market participants in the overall IT pack led by lack of clarity regarding currency rate. One should not take aggressive positions in IT pack unless some clarity comes therein.

In the BANKING counters, SBIN saw significant drop in OI with prices coming down from high indicating liquidation of long positions and built up of fresh short positions suggesting weakness in the counter. ICICIBANK saw drop in OI to the tune of 10.00 % with prices coming down from high indicating liquidation of long positions in the counter. HDFCBANK saw 13.34% drop in OI with prices moving up and closing high indicating fresh long positions built up in the counter suggesting further strength in the counter.

In the Metal pack, TATASTEEL saw significant drop in OI with prices coming down indicating long positions liquidating in the counter-suggesting one should book profits in the counter. SAIL saw drop in OI with prices down indicating profit booking seen in the counter. HINDALCO saw drop in OI with prices coming down indicating long positions liquidated in the counter whereas NALCO saw drop in OI with prices flat indicating built up of aggressive positions in the counter.

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 strength and we may see fresh buying emerging in the market if market goes above 4280 levels One should trade with strict stop losses to be adhered too.

Sharekhan Investor's Eye dated May 29, 2007

Aurobindo Pharma
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs914
Current market price: Rs684

Betting big on formulation growth

Key points

Formulation business grows at 62.2% CAGR: Aurobindo Pharma (Aurobindo) has created a robust product pipeline of 1,172 formulation dossiers for various markets and expects major growth in its speciality generic formulation business. The formulation sales are expected to gallop at a CAGR of 62.2% over FY2006-09.

Robust product pipeline: During FY2007, Aurobindo filed 32 ANDAs and 41 DMFs, taking the cumulative DMF filings to 110 and ANDA filings to 82 in the US market. With the recent USFDA approval for products like Bisoprolol, Simvastatin and Zolpidem tartarate, we estimate incremental revenue of Rs100 crore from the US generic business during FY2008.

European business to expand at over 50%: Aurobindo expects to deliver over 50% growth in Europe on the back of increased product registrations and synergetic benefits flowing from the recent acquisitions of Milpharm in the UK and Pharmacin in the Netherlands. It is also contemplating a couple of mid-sized acquisitions in Europe.

Steady growth in ARV business: With most of the registrations taking place in the recent past, we expect Aurobindo to see steady growth in its ARV formulation revenues. We estimate the ARV formulation business would generate revenues worth $99 million and $128.7 million in FY2008 and FY2009 respectively.

Consolidated PAT to grow at 70% CAGR: Going forward, the increasing traction in formulation exports would help the consolidated revenue to grow at a 24.3% CAGR during FY2006-09E (Rs3,143.1 crore in FY2009E). The adjusted net profit would gallop at a CAGR of 70% during FY2006-09 (Rs348.4 crore in FY2009E), translating into earnings of Rs57.1 per share.

Buy with price target of Rs914: At the current market price of Rs684, Aurobindo is trading at 14.9x its FY2008E and 12.0x its FY2009E earnings. We initiate coverage on Aurobindo with a Buy recommendation and a one-year price target of Rs914 (an upside of 34% from the current levels). The price target discounts the FY2009E earnings by 16x.

---

STOCK UPDATE

Bharat Heavy Electricals
Cluster: Apple Green
Recommendation: Buy
Price target: Rs3,125
Current market price: Rs2,724

Price target revised to Rs3,125

Result highlights

At Rs1,150 crore the Q4FY2007 net profit of Bharat Heavy Electricals Ltd (BHEL) saw a growth of 33%. The same is in line with our estimates. The turnover for the quarter grew by 25% to Rs7,576 crore driven by higher order backlog of Rs46,700 crore at the end of Q3FY2007.

The order backlog during the quarter grew by an impressive 45% to Rs55,000 crore driven by a strong 56% increase in order inflows of Rs16,300 crore on a year-on-year (y-o-y) basis.

The power division registered a 23% growth in revenues whereas the industry division recorded a growth of 30% in revenue.

The operating profit margin (OPM) for the quarter improved by 135 basis points year on year (yoy). Consequently the operating profit for the quarter grew by 33% to Rs1,587 crore.

The other income increased by 34% to Rs286 crore mainly on account of the rising yields on the huge cash reserves of the company.

On a full year basis, the turnover for FY2007 grew by 29% to Rs18,702 crore and the net profit grew by 42% to Rs2,385 crore.

Order inflows during the year grew by a whopping 88% to Rs35,633 crore. In the power segment, BHEL secured orders worth Rs27,722 crore. In the industry business BHEL secured the biggest ever order worth Rs6,008 crore during the year. The order backlog at the end of March 31, 2007 stood at Rs55,000 crore, which is around 3x its FY2007 sales.

In international business, BHEL secured export orders of Rs1,903 crore during the year in comparison with an average yearly order book of Rs1,275 crore in the last five years.

Morning Murmur - May 29 2007

Markets opened with a flourish Monday but lost momentum in the afternoon. The strength in the rupee spooked the IT stocks. Apparent intervention by the banks to shore up the dollar did result in Rupee depreciation but that failed to lift the
IT stocks back to the morning levels. The current settlement seems to have run into a wall of 4300 level in the Nifty. The markets are likely to consolidate in the 4200-4300 region. The Rupee-dollar gyrations will be the key driving factor for the markets. We do not advice rolling over to the existing settlement at this point of time.

HONGKONG AUTHORITIES WORRIED

The Hong Kong Monetary Authority, the Chinese territory's de facto central bank, added its voice to the growing chorus of concern about the risk of an asset bubble in China. "Excess liquidity may help create an asset-price bubble in China. The situation is worrying," the monetary authority said in a document it sent to the Legislative Council ahead of a meeting with legislators next week.
The HKMA said while Hong Kong may be affected by fluctuations in the Chinese economy caused by monetary tightening, it believes Hong Kong can withstand the impact on its economy and consumer prices.

DEAL POSSIBILITIES BUOYA AVAYA
Telecommunications-equipment maker Avaya Inc, in the US, is in talks with private-equity and strategic bidders about selling part or all of the company, according to people familiar with the matter, the latest sign that there could be a new round of mergers and acquisitions in the telecommunicationsequipment industry.
The Indian stock hit the upper circuit of 20% on this news.

After Market Hours

Elder Pharmac has entered into an agreement with Cymbiotics of USA for in-licensing arrangement for marketing of their pharmaceutical formulations for Diabetes, Chronic Pain, Skin Care, etc. Rico Auto and Zhejiang Jinfei Co. of China have signed a joint venture agreement for establishing joint venture company in India to manufacture Aluminium Alloy Wheels for two wheelers.
SEBI banned promoters of Adani Group from dealing in stock markets for two years for their involvement in Ketan Parekh securities scam. TCS announces formation of TCS Financial Solutions, a new strategic business unit to consolidate its
financial products business.

During Market Hours

Bharati Shipyard secured an order worth Rs 418 crore for supply of two platform supply vessels from Germany's Man Ferrostaal AG.
Cambridge Technology board approved the acquisition of US based ComCreation Inc. for US $ 3.5 million. Crompton Greaves to acquire Ireland-based Microsol Holdings for an enterprise value of around 10.50 million euro (over Rs 57 crore).
Era Constructions board approved to Issue 55 lakh warrants convertible into equal number of Equity Shares on preferential basis to the Promoter Group and Non Promoter Group.
Glenmark Pharma Swiss subsidiary Glenmark Pharmaceuticals S.A. (GPSA),has completed Phase I clinical trials for GRC 6211 in Europe. GRC 6211 is its lead Vanniloid Receptor (VR1) antagonist compound for a range of pain indications like naturopathic pain, osteoarthritis and urinary incontinence.
Hindustan Zinc cuts zinc prices by Rs 6,600/t to Rs 171300
ICI India has recommended to buy-back its own shares at a price not exceeding Rs 575 per share from minority shareholders through market operations.
Jain Irrigation has signed definitive agreements through a wholly owned subsidiary in Netherlands to acquire 50.01 % of the share capital of Na'anDan Irrigation Systems, Israel for US $ 21.5 mn.

Modison Metals Board to meet on June 04, 2007 to consider stock split.

Northgate Technologies board approves 1:1 Bonus Issue.

OM Metals Infraprojects Board approved to sell/dispose off the shares held by the Company in JV

Companies to a newly incorporated 100% subsidiary & to Hikes FII limit to 49 %.

Omax Auto board approved selling a part of its stake in subsidiary Omax Steels Ltd.

Caution should be maintained

After the broad-based national stock exchange Nifty hitting the all time high yesterday, buying interest can be seen in today's trades. However, caution should be exercised as the market may move in tandem with global indices. Except Nikkei index almost all the key Asian indices have lost ground in the ongoing trades. Investors should also take into account the prevalence of strong intra-day volatility. Among the key local indices, the Nifty in short term could test higher levels at 4300 while it has a support at 4245. The Sensex has a likely support at 14300 and may face resistance at 14500.

Daily Technical Note

BSE Sensex and Nifty have exhibited a Gravestone Doji candlestick as it has a long upper shadow which implies trend reversal following the weekly Doji. This indicates that there is a cautious approach in markets emerging at higher level. Technically, caution is advised in the market for the time being. Based on the chart pattern developed to date, one may use the level of 4200 (Nifty) and 14,200 in Sensex as the stop loss level for long positions. Breach of these support levels may lead to a deeper correction.

On the resistance front, the Nifty faces resistance at around 4,320-4350 level and the Sensex at around 14,550-14,750 levels.

Strong FII inflow may support share prices

FII inflow has been robust over the past few days. As per provisional data, FIIs were net buyers to the tune of Rs 180.65 crore on Monday, 28 May 2007, the day when Sensex had risen 59 points. Domestic institutions were net buyers to the tune of Rs 74.74 crore on Monday, 28 May 2007.

FII inflow aggregated Rs 4015 crore in 6 trading sessions from 17 May 2007 to 24 May 2007. But they had turned net sellers on Friday 25 May 2007. FIIs sold shares worth a net Rs 147 crore on that day.

Volatility may remain high this week in the run-up to expiry of May 2007 derivatives contracts on Thursday, 31 May 2007.

The Q4 corporate earnings were strong which helped trigger a solid surge in domestic bourses since early last month. The Q1 June 2007 corporate earnings season will kickstart from about a month and a half and, over the next few days, traders are likely to build positions based on Q1 results expectations

South Korean stocks extended their record-breaking run on Tuesday, 29 May 2007, while gains for major miners amid firmer metals prices helped nudge Australian shares higher. But other Asia-Pacific markets were mixed, with few cues from overseas as markets in the United States, Britain and Germany were shut on Monday, 28 May 2007, for public holidays.

Intraday Stock Ideas

NIFTY (4271) SUP 4233 RES 4272

BUY TVTODAY (162.05)
SL 158 T 170, 172

BUY KTKBANK (177.05)
SL 173 T 185, 187

BUY IBREALEST (373.9)
SL 368 T 383, 386

SELL GHCL (127.75)
@ 130 SL 133 T 122, 119

SELL AMTEKINDIA (156.45)
@ 158 SL 162 T 149, 146

STRATEGY INPUTS FOR THE DAY

Subdued opening likely

Open your mouth and purse cautiously, and your stock of wealth and reputation shall, at least in repute, be great.

Profit booking and weakness in IT shares dragged the main indices down from intra-day peaks yesterday. The sudden and sharp pullback in the afternoon session just goes to show the vulnerability of the market at all-time highs. The Sensex has gained some 2,000 points from the lows hit in March. As a result, valuations, especially that of the large cap stocks, appear to be much higher than historical average. The benchmark BSE index still needs around 325-330 points to make a new historic high. It may take a while to reach there as the market will be choppy ahead of Thursday's derivative settlement. Investors and traders should remain cautious at this juncture. Big-time fresh buying should be avoided though select stock picking after proper home work can be done.

Today, we don't have much in the way of global cues as the markets in the US, UK and Europe were shut for holidays. Asian markets are mixed this morning with the Nikkei in Tokyo advancing and the Hang Seng in Hong Kong losing a little bit of ground. Oil prices are hovering above the $64 per barrel mark. We expect the market to open on a cautious note. It will remain rangebound and volatile with lots of stock specific action to go with it. Small-Cap and Mid-Cap shares may continue to attract attention with the frontline counters looking a bit tired. Though there is no big threat to the ongoing secular bull run, returns may not be as high as in the past. The market will continue to witness alternate bouts of buying and selling with a slightly positive bias.

Reliance Industries may come under some pressure amid reports of inspection at its proposed multi-product SEZ at Jamnagar by Directorate of Revenue Intelligence. Hero Honda may be in action as it has launched two new variants of the Splendour. Sobha Developers has forayed into the booming retail segment with the launch of Sobha Lifestyle. With the rupee breaching the 40.50 mark yesterday, IT shares will continue to feel the heat. Cellular mobile service providers like Reliance Communications, Idea and Bharti Airtel may attract some buying amid reports of value unlocking from the infrastructure business.

Adani Enterprises is likely to crash after SEBI banned its promoters for two years due to the alleged price manipulation. Sugar stocks will remain weak as a host of brokerages have come out with negative calls on the sector. ICI India may rise as its Board will consider a higher buyback price of Rs575 per share instead of Rs350 a share earlier. Rico Auto Industries and Zhejiang Jinfei Co. Ltd. of China have signed an agreement for establishing a JV in India to manufacture aluminium alloy wheels for two wheelers. Easun Reyrolle's Board will meet on May 30 to consider results and a stock split.

Markets managed to end in positive terrain as selling pressure set in towards the end of the session. IT stocks were the major laggards led by heavy weights like Infosys, Wipro and Satyam Computer. The Mid-Cap and small cap stocks were in momentum as both the index gained nearly by 1% each. Finally, the 30-share Sensex ended higher by 49 points to close at 14387. NSE-50 Nifty gained 8 points to close at 4256.

Unitech rallied by over 9% to Rs595 after the company declared that hey would give bonus shares in the ratio of 1:1. The scrip touched intra-day of Rs604 and a low of Rs545 and recorded volumes of over 79,00,000 shares on NSE.

Bharti Shipyard gained by over by 3% to Rs437 after the company received order worth Rs4.18bn. The scrip touched intra-day of Rs450 and a low of Rs423 and recorded volumes of over 62,000 shares on NSE.

Ranbaxy edged higher by 0.4% to Rs382 after the company declared that they have purchased 13 Bristol-Myers Squibb Brands. The scrip touched intra-day of Rs390 and a low of Rs381 and recorded volumes of over 8,00,000 shares on NSE.

IOC gained by 1.4% to Rs481 after the company announced its result with net profit at Rs75bn (up 52%) and sales at Rs1994bn (up 20.5%). The scrip touched intra-day of Rs494 and a low of Rs476 and recorded volumes of over 2,00,000 shares on NSE.

Jain Irrigation surged by over 3% to Rs465 after the company announced that they would buy 50% stake in Israel's Naandan for $21.5mn. The scrip has touched intra- of Rs475 and a low of Rs451 and has recorded volumes of over 48,000 shares on NSE.

Banking stocks were among the major gainers. HDFC Bank surged by over 5.5% to Rs1127, SBI was up 0.7% to Rs1308 and ICICI Bank added 1.1% to Rs922. bank of Baroda, Canara bank and Bank of India were the major gainers among the Mid-Cap stocks.

Oil exploration stocks were a mixed bag. Reliance Industries pared its gains on back of profit booking the scrip edged lower 0.4% to Rs1723 and ONGC edged higher 0.5% to Rs911. Oil Refinery stocks gained as HPCL advanced 0.32% to Rs280 and IOC added 1.4% to Rs481.

Pharma stocks were in good health. Glaxo surged by over 3.5% to Rs1270, Cipla was up by 1.7% to Rs208, Dr Reddy’s Lab gained 0.8% to Rs655 and Lupin added 1.5% to Rs700.

Technology stocks were on the receiving end as Indian Rupee is trading at a nine year high at Rs40.50 per dollar. Infosys declined by 1% to Rs1971, Wipro was down by 0.8% to Rs539 and Satyam Computer slipped by 0.5% to Rs469.

Insider Trades:
UFLEX Limited: Anshika Consultants Private Limited (part of the promoters' group) has purchased from open market 44026 equity shares of UFLEX Limited on 25th May, 2007.

The Great Eastern Shipping Co. Limited: Bharat k. Seth, Deputy Chairman & Managing Director has purchased from open market 25000 equity shares of The Great Eastern Shipping Co. Limited on 22nd May, 2007.

Educomp Solutions Limited: Reliance Growth Fund has sold from open market 91476 equity shares of Educomp Solutions Limited on 23rd May, 2007.

Volume Toppers:
RNRL, RPL, Nagarjuna Fertilizers, Idea, Dish TV, SAIL, Unitech, Dena bank, R Com, IVRCL Infrastructure, IDFC, ITC, Satyam Computer, Zee News, Welspun Gujarat, NTPC, Ahishek Mills and Reliance Capital

Upper Circuit:
United Breweries, KEW Industries, Tele Data, Raj Tele, Avaya Global, Unity Infrastructure, Eicher Motors, Karut Network, KEI Industries, Rasoi, Tripex Industries, Sujana Metal, Flawless Diamond, Nirma, ION Exchange and Infomedia

Delivery Delight:
Andhra Bank, Arvind Mills, ACC, Bank of Baroda, BEML, BHEL, Chambal Fertilisers, Cipla, Deepak Fertilizers, Kesoram Industries, National Aluminium, OBC, Ranbaxy Laboratories, SCI, Siemens and TVS Motors.

Abnormal Delivery:
VSNL, ABB, APIL, SCI, ITC, McDowell, Tata Tea, Union Bank of India, SAIL, ICICI Bank, Bombay Dyeing, SBI and Federal Bank.

Results Today:
ACE, Adhunik Metaliks, Bajaj Electricals, Britannia, HPCL, India Hume Pipe, L&T, Pricol, Sanghvi Movers, Savita Chemicals, Shasun Chemicals, Sunil Hitech, Tata Coffee, Thermax and Torrent Power.

Results Corner:
M&M Q4 net profit at Rs10.68bn (up 25%) and total income (net of excise) at Rs102.45bn (up 23%)

Dwarikesh Sugar Q2 loss of Rs2.86mn against profit of Rs85.74mn, net sales at Rs638mn (up 24%)

IOC full year profit is at Rs75bn (up 52%) and sales at Rs1994bn (up 20.5%)

Brokers Recommendations:
ITC - Underperform from CLSA with target of Rs150

Ramkrishna Forgings – Buy from Man Financial with target of Rs197.

Long Term investment:
Gayatri Projects

Major News Headlines:

Monsoon hits Kerala four days earlier than normal, says MET

M&M to combine all engineering services into one unit

IOC, Suntera, Oil India acquire stake in Nigerian field

GMR Infra to acquire 100% stake in GMR Aviation

Jain Irrigation to buy 50% stake in Israel's Naandan for $21.5mn

Ranbaxy buys 13 Bristol-Myers Squibb Brands

Northgate Technologies announces 1:1 bonus issue

Bharti Shipyard receives order worth Rs4.18bn

Crompton Greaves to buy Ireland’s Microsol holdings

Morgan Stanley - ICICI Bank

Morgan Stanley in analyzing ICICI Bank's holdings say,

We also analyze the period for which US$5 bn will fund ICICI Bank’s growth. In the last two capital raisings, almost 50% of capital raised was used for investments in subsidiaries or higher risk weights. Going ahead, we expect the regulatory environment to be relatively benign and also no significant investment will be required in subsidiaries. We expect the current issue to fund ICICI Bank’s loan growth for the next 4-5 years. The key on profitability will be whether the bank increases capital consumption significantly or not – for example the bank’s return on risk-weighted assets has declined from 1.8% to 1.2% in the last two years. We expect average ROE for F2008 – F2011 at 13%

Raising fair value, maintain Equal-weight. We are incorporating the announced capital issuance in our numbers. This results in some increase in value for the banking business. This, coupled with higher value for ICICI Holdings, takes the fair value to Rs900. The stock is trading at 21x F2008e earnings on a core basis.