Thursday, June 14, 2007
ICICI Bank is offering baits to entice retail investors to invest in its equity share issue aimed at mobilising Rs 10,062.5 crore from the domestic market, including a greenshoe option (or, the option to retain a part of the oversubscription) of Rs 1,312.5 crore.
Apart from a discount of up to 5%, the bank is providing small investors an easy option to pay for the shares on offer through the book-building process (an auction conducted by investment bankers).
Retail bidders also have the option to pay only Rs 250 per share on application, Rs 250 on allotment and the balance on call, which will be issued within six months of allotment. ICICI Bank will also list the partly paid shares for the benefit of retail investors.
ICICI Bank has defined retail investors as individual bidders, including Hindu undivided families and non-resident Indians (NRIs), whose bid amount does not exceed Rs 1,00,000. Up to 5% of the issue, or Rs 437.5 crore, has been reserved for existing retail shareholders of the bank. ICICI Bank officials said NRIs would have to take the Reserve Bank of India’s permission to make part payments in the issue.
The bank is likely to announce the price band for the book-built issue and the discount for retail investors on Sunday. The bank is expected to fix the price band around the market price of its shares. The bank’s shares today closed at Rs 905.75, down 0.78% , on the Bombay Stock Exchange.
The bank will raise an equivalent amount through simultaneous issue of American Depository Receipts (ADRs). The bank will launch roadshows for the ADR issue in Singapore tomorrow. The domestic issue opens on June 19 and closes on June 22. ICICI Bank is raising a total of Rs 20,125 crore through simultaneous domestic and overseas offers making it the largest ever equity raising by an Indian company.
K V Kamath, ICICI Bank’s managing director and CEO, giving reasons for such large equity raising, said “We continue to maintain that the ICICI Bank growth story is linked to the India story. At present, we are seeing balanced economic growth in the country, both in the manufacturing and services sectors. There is a healthy investment pipeline in both the manufacturing and infrastructure sectors of at least $500 million which we would see in the next 30 months or so.”
“The Indian financial sector have to be prepared to meet this growth. As compared to the Chinese banking system, the Indian banking system has a lot to achieve. We see this as an opportunity and we need to create a banking sector commensurate to these opportunities; that’s how we came to this number of $5 billion,” added Kamath.
Kalpana Morparia, chief strategy and communications officer of ICICI Group, said Temasek Holdings Pte and Government of Singapore Investment Corporation (GIC) can raise their holdings up to 10% each, but the bank has not received any communication from them stating that they would be subscribing to shares in the issue. At present, Allamanda Investments (an affiliate of Temasek) holds 7.37%, the Singapore government holds 2.24% and GIC holds 1.05% in ICICI Bank.
Qualified Institutional Buyers (QIBs) - 5.1288 times
Non Institutional Investors - 1.1434 times
Retail Individual Investors (RIIs) - 0.9752 times
( 3347960 out of 50903990 are price bids)
Employee Reservation - 0.7862 times
(726280 of 786150 are price bids )
OVERALL -3.47 times
Price bids essentially mean that if DLF fixes the IPO price at 550, all those price bids will be rejected - so all the others will get more than what they bargained for.
(pun intended ofcourse with the bargain statement) - Most of the retail guys apply for listing gains because they hope the issue is hugely oversubscribed, In this case, the FIIs will get the unallotted retail shares - so they might not even buy from the secondary market.
It was strong bounce back for the Indian markets. Global cues were positive and Indian indices followed. Indices gained momentum in the later half of the day. Sensex ended up with a gain of around 200 points, it was inline with global markets gain. Asian markets ended on a strong note. Buying was across the board, all the sectors closed in strong note. The Mid caps and the Small caps were inline with the frontline indices. Metals and Capital goods witnessed strong buying, ended up by 2.5%. Hero Honda Motors was the one to hit because of Honda Japan's 100% subsidiary Honda Motorcycle & Scooter India has planed to enter 100 cc entry level bikes. As Rupee marginally depreciated, currently trading at 40.92 against US Dollar. This gave some support to IT stocks. Cement stocks saw strength given the view that the capacity expansion is unlikely to have an impact. Power equipment majors also saw upsides. However comfort level is missing. Global markets are trendless and unpredictive and thats what makes Indian markets choppy as well.
Sensex closed up by 207 points at 14209.82. It was helped up by gains in HDFC (1826,+4 percent), ACC (825.75,+3 percent), TISCO (615,+3 percent), L & T (1922.75,+3 percent) and Grasim (2422,+3 percent). Restricting the gains are Hero Honda (683,-2 percent), ICICI Bk (906.9,-1 percent), Tata Motors (642.3,-1 percent), ITC (151.5,0 percent) and HLL (186.6,0 percent).
Hero Honda slumped by 1.75% on news of Honda foray into the 100 cc bike. Honda Japan's 100% subsidiary Honda Motorcycle Scooters India (HMSI) intends to launch a new motorcycle in the 100cc segment for the Indian market in next three years. According to company officials the new 100cc model could be positioned slightly higher than the existing ones in the market and would sport a premium price tag. The bike would be produced from Honda's existing facility at Manesar and would take about two years to develop while another year would be spent for commercial production and marketing. The company has investment plans of Rs 400 crore for increasing Manesar plant capacity to 12 lakh units per annum from the existing 9 lakh units, as well as marketing initiatives and product development. The company is also looking at the possibility of introducing its popular high end bikes in the domestic market that could cost a whopping Rs10 lakh per unit as high end bikes are levied 60% duty. 2 wheeler stocks closed in mixed. The major loser was Hero Honda, Kinetic Motors closed down by 1% and TVS ended up by 6%. We had a negative view on Hero Honda for the day in Hunters pick. It delivered.
Maruti Udyog has substantially increased discounts on models such as the 800, Alto, Zen Estilo and the Esteem. While it has increased discounts on Esteem to Rs 35,000 from Rs 25,000 last month, that on the Zen Estilo has been hiked from Rs 10,000 to Rs 15,000 this month. The discount on the popular Alto, with sales of nearly 20,000 units per month, has been doubled to Rs 10,000. Customer preference for the Alto over the 800 in the entry-level segment and new competition from the Renault Logan and Tata Indigo in the sedan segment could also be possible reasons behind Maruti increasing discounts on its own models. The company will keep all its plants shut for maintenance from June 17-24, but the dealer dispatches are not expected to be affected by the same. Maruti closed positive but it has been under sustained pressure and the stock is down abouy 25% from its peak
Emami Group would invest about Rs 220 crore for expansion in the FMCG segment, which includes acquisitions in personal care and healthcare space and product portfolio enhancement through forays into new categories. The company, which is eyeing over Rs 500 crore of revenue in the next 3-4 years by foraying into new segments such as baby care, hair care and expansion in men's grooming categories, has also renewed its advertising contract with Bollywood superstar Amitabh Bachchan for another three years. Emami would launch 18 new products this year in hair care, baby care and men's grooming segments. The new range of products from Emami would include hair pack, hair dye and shampoo, which are expected to be launched in next five months. This is the sector where every company is facing severe competition to retain their market shares. All FMCG companies are launching new products to increase product portfolio to increase their customer base. Meanwhile increase in advertisement costs could have an impact on margins. FMGC stocks closed mixed, Emami ended marginally down. Its peer HLL and Dabur closed marginally up.
Technically Speaking: It was a strong and bull session for the whole day. Sensex touched intraday high of 14219 and days low of 14087. Resistance lies at 14255, 14302 levels and Support lies at 14123, 14040 levels. Market turnover was pretty good at Rs 4402 cr. Overall breadth was in favor of Advances, where the Advances to Declines ration stood at 2:1. Sensex faces resistance at 14270 and that is where one could see selling pressure.
The market displayed a positive trend on firming global cues. The Sensex went into a major recovery mode and surged by 201 points during the intra-day trades. Recovery in major Asian indices turned the sentiment bullish, with the Sensex crossing the 14100 mark in early trades and maintaining the upward bias thereafter. The mood remained upbeat on strong buying in metal, capital goods, public sector and technology stocks. The market rallied sharply towards the close and the Sensex surged past the 14200 mark to touch the day's high of 14219. The Sensex ended the session by gaining 201 points at 14204, while the Nifty added 57 points at 4170.
The breadth of the market was extremely positive, with gainers outnumbering losers in the ratio of 2.18:1. Of the 2,561 stocks traded on the BSE 1,692 stocks advanced, 781 stocks declined and 88 stocks ended unchanged. Among the sectoral indices the BSE Metal Index flared up by 2.84%, the BSE CG Index rose 2.31%, the BSE PSU Index moved up by 1.71% and the BSE Teck Index was up 1.60%. The other indices also ended with gains.
Barring Hero Honda, ICICI Bank, Tata Motors and ITC all the other Sensex stocks ended at higher levels. HDFC flared up 4.24% at Rs1,825, ACC shot up by 3.36% at Rs825, Tata Steel zoomed 3.18% at Rs614, Grasim moved up by 2.96% at Rs2,432, BHEL scaled up 2.88% at Rs1,349, L&T surged by 2.78% at Rs1,933, Bharti Airtel jumped by 2.63% at Rs818 and Hindalco gained 2.34% at Rs164.
Metal stocks were in demand and attracted strong buying support. JSW Steel spurted by 5.07% at Rs582, Maharashtra Seemless shot up by 4.40% at Rs607, SAIL flared up 4.39% at Rs133 and Sesa Goa jumped by 4.39% at Rs1,762. Jindal Saw, Jindal Steel, Jindal Stainless and Sterlite gained around 1-2% each.
Over 71.02 lakh GV Films shares changed hands on the BSE followed by IFCI (63.09 lakh shares), Reliance Natural Resources (6.06 lakh shares), Time Technologies (50.92 lakh shares) and MIC Electronics (38.15 lakh shares).
Value-wise Time Technologies clocked a turnover of Rs248 crore followed by ICRA (Rs186 crore), Unitech (Rs138 crore), MIC Electronics (Rs137 crore) and Indiabulls Real Estate (Rs102 crore).
The market was in an upbeat mood today, 14 June 2007, on strong buying momentum throughout the day. The benchmark, BSE 30-share Sensex, settled above the 14,200 mark.
Buying resumed in index pivotals after a 128-point fall of the Sensex on Wednesday, 13 June 2007. All the sectoral indices on BSE settled with gains. Firm global markets supported domestic bourses.
The Sensex registered a 200.69-point rally to settle at 14,203.72. It opened higher at 14,087.91 (also its low for the day) and kept on hitting fresh intra-day highs with the last being at 14,219.24, by 14:51 IST, as buying intensified.
The S&P CNX Nifty rose 56.95 points, or 1.38%, to 4,170. The Nifty June 2007 futures settled at 4,155.05, a discount of 14.95 points compared to the spot closing.
The total turnover on BSE amounted to Rs 4402 crore and NSE's futures & options segment clocked a turnover of Rs 28760.54 crore.
The market breadth was strong on BSE, with over 2 gainers for every loser: 1,734 shares advanced as compared with 837 that declined, while 98 remained unchanged
The BSE Mid-Cap Index rose 96 points, or 1.6%, to 6,161.61, while the BSE Small-Cap Index advanced up 97 points, or 1.34%, to 7,320.91.
Among the Sensex pack, 26 advanced while only 4 of them declined.
Housing finance major HDFC advanced 4.46% to Rs 1,829 on 79,920 shares and was the top gainer among Sensex constituents. The stock rose after chairman Deepak Parekh indicated that interest rates, steady at present, may go up marginally after two to three months. He added that possible tightening by the central bank could push up rates further. HDFC had already raised lending rates by 175 basis points during 2007 through three rate hikes in January, March and April 2007.
Meanwhile, as per reports, HDFC's realty fund has purchased 10% equity of Pune-based housing and construction company Paranjape Schemes for a total value of Rs 74 crore.
Cement major ACC gained 3.83% to Rs 829, while Grasim rose 2.56% to Rs 2423. Reports indicated that the current cement shortage in India can last till June 2009. This in turn will ensure that the cement prices remain firm.
IT stocks held on to early gains, after declining on Wednesday, 13 June 2007, as buying resumed. The The BSE IT Index advanced 1.4% at 5,033.76. Satyam Computers (up 0.44% to Rs 488.50), Infosys (up 2% to Rs 2022.60), Wipro (up 0.35% to Rs 532.50), and TCS (up 0.10% to Rs 1204), edged higher.
Other IT stocks, MphasiS (up 1.73% to Rs 316.90), i-flex Solutions (up 5.68% to Rs 2499), i Gate Global Solutions (up 1.10% to Rs 333.55), and HCL Technologies (up 0.65% to Rs 339.15) also ended higher.
The gain in IT stocks was despite the rupee rising today, 14 June 2007, buoyed by positive cues from high-yielding Asian currencies as dealers bet foreign investors would continue pouring in funds into the surging Indian economy. In early trade, the rupee was at 40.89/90 per dollar, moving up from Wednesday's 40.96/97. The rupee hit a nine-year peak of 40.28 in late May 2007.
Engineering & Construction major L&T advanced 3.32% to Rs 1,933 on reports that it is planning to group all its businesses under 15 verticals compared to the present 6 business divisions. The move is aimed focusing on a particular industry segment and improvement the company's effectiveness in that segment.
State-run engineering major Bhel rose 3.31% to Rs 1355. Led by Bhel and L&T, the BSE Capital Goods index gained 2.3% to 10,972.02
Metal stocks were in demand, in anticipation of firm prices after Anglo-Dutch steelmaker Corus, owned by Tata Steel, on 12 June 2007, attributed the decision to raise UK wire rod prices by at least 7% in the third quarter to rising demand. It said the price increase will apply to deliveries from 2 July 2007. Tata Steel had won a bid battle in January 2007 to take over Corus.
The BSE Metal Index surged 2.8% to 10,567.54, and was the top gainer among the sectoral indices on BSE. JSW Steel (up 5.53% to Rs 585), SAIL (up 4.86% to Rs 133.75), Sesa Goa (up 4.92% to Rs 1771) and Maharashtra Seamless (up 4.47% to Rs 607) gained.
Index heavyweight Reliance Industries (RIL) was up 1.11% to Rs 1,692, on 5.79 lakh shares. RIL said on Wednesday, 13 June 2007, its Jamnagar refinery was working normally and output was as planned. The company clarified this after media reports had suggested that a unit at the Jamnagar refinery had been shut down.
Among the other heavyweights, State Bank of India (SBI) was up 1.87% to Rs 1313.55, while ONGC was up 2.50% to Rs 883.
Hero Honda Motors slumped 1.43% to Rs 685 on 1.42 lakh shares, and was the top loser from the Sensex pack. As per reports, Honda Japan's 100% subsidiary Honda Motorcycle & Scooter India (HMSI) has charted out plans to capture a significant part of the Indian two-wheeler industry. HMSI will come up with a new scooter model to further strengthen its presence in the segment. The company also plans to foray into the entry-level 100cc segment and the higher segment bikes including the 500 cc imported compressive build-up units (CBUs).
The Hero Honda Motor stock has been declining steadily ever since reports that it has cut production following reduced demand as interest rates surged to five-year-high.
ICICI Bank lost 0.76% to Rs 906. ICICI Bank said during trading hours today, 14 June 2007, it would launch a share sale next week to fund robust demand for loans in the rapidly expanding economy. It will offer shares worth Rs 8750 crore ($2.1 billion) each in India and in the United States, with a greenshoe option for 15%, taking the total offering to Rs 20125 crore. The private sector bank will fix an indicated price band for the domestic follow-on offer on Monday, 18 June 2007. The issue will open for subscription on 19 June 2007 and close on 22 June 2007.
Banking shares saw renewed buying. Bank of India (up 4.87% to Rs 191.80), Bank of Baroda (up 5.96% to Rs 263.10), Andhra Bank (up 5.30% to Rs 86.35), Federal Bank (up 3.07% to Rs 283.90), and Vijaya Bank (up 6.75% to Rs 48.25) advanced from the banking pack. The BSE Bankex was up 0.7% at 7,417.66.
Tata Motors (down 0.50% to Rs 642.50) and ITC (down 0.10% to Rs 151.85), edged lower.
Shares of real estate developers were in demand after the IPO of DLF received good response. Unitech (up 8.62% to Rs 535.35), Ansal Infrastructures (up 3.50% to Rs 283.85), India Bulls Real Estate (up 2.73% to Rs 359.85), Sobha Developers (up 2.28% to Rs 850), and Parsvnath Developers (up 4.15% to Rs 331.55) gained.
As per latest data from the stock exchanges, property developer DLF's Rs 9,625-crore (at the upper end of Rs 500 to Rs 550 price band) IPO, was subscribed 3.12 times by 16:00 IST today, 14 June 2007. The IPO would constitute 10.27% of the fully diluted post-issue capital of the company. The issue closes today.
Sun Pharma rose 1.63% to Rs 1070 after a block deal of 6.50 lakh shares was executed in the counter in opening trade on BSE at Rs 1045 per share. The counter saw total volume of 7.43 lakh shares on BSE
Sun TV Network vaulted 8.30% to Rs 1477 after the broadcaster said it signed a long-term agreement with Nimbus Communications to broadcast live feed of one day international cricket matches to be held between on 23 June 2007 to 3 July 2007. The matches will be telecast on Sun News with Tamil commentary, on Gemini News with Telugu commentary and Udaya Varthegalu with Kannada commentary and is the first of its kind in Telugu and Kannada Languages.
PVR advanced 3% to Rs 224 on announcing exemption from the payment of entertainment tax for a period of 5 years for its premier multiplex at Juhu, Mumbai. The exemption available to the multiplex is 100% of entertainment tax for the first 3 years and 75% of entertainment tax for the forth and fifth year
Bihar Tubes rose 5% to Rs 89.60 after it announced acquisition of 100% shares of Apollo Metalex. Apollo Metalex manufactures GP sheets. The shares of Apollo Metalex will be acquired at book value and no premium will be paid for a running and profitable business including goodwill, Bihar Tubes said. The acquisition will cost about Rs 1.21 crore. The profitability of the company on a consolidated basis is expected to get a big boost from this transaction.
Advanta India soared 10% to Rs 1007.65 on institutional buying. On Friday, 1 June 2007, Advanta India, a unit of chemicals and pesticides maker United Phosphorus, had agreed to buy the business of Golden Seeds for Rs 60.10 crore to boost its vegetable seeds business. The company expects to pay an additional Rs 17.50 crore for Golden Seeds' inventories and receivables. Recently, the company had raised its FII investment ceiling to 49% of its equity capital.
Nagarjuna Construction Company advanced 1.49% to Rs 163 on securing a Rs 61-crore order from the National Institute of Technology, Warangal, Andhra Pradesh, valued at Rs 61 crore. The project comprises construction of a hall for1,000 students and a kitchen-cum-dining hall. The work is to be completed over a period of 18 months.
Aban Offshore slipped from high of Rs 3036 to settled 0.16% higher at Rs 2991 on receiving a letter of intent from ROC Oil (China) company for deployment of its jack-up rig Murmanskaya Offshore China. The company announced the order win after market hours on Wednesday, 13 June 2007.
The estimated revenues from the contract ranges from $19.5 million for firm wells to $31.2 million (if optional wells are declared) exclusive of revenues for mobilization and demobilization.
Jetking Infotrain rose 5% to Rs 614.25 after its board scheduled a meeting on 20 June 2007 to consider issue of bonus shares. This announcement was made after trading hours on Wednesday, 13 June 2007. The company has a tiny equity share capital of Rs 2 crore and its latest book value per share is Rs 46.25. Its latest reserves are 7.25 crore. Its previous bonus issue was in 2004 in the ratio of 1:1.
Lupin moved up 1.81% to Rs 685 after receiving approval from US regulator for Trandolapril tablets. Lupin's Trandolapril tablets are the AB-rated generic equivalent of Abbott's Mavik(R) tablets, indicated for the treatment of hypertension. The brand had annual sales of approximately $49 million in the twelve months ended December 2006, based on IMS sales data.
IDBI edged up 0.92% to Rs 98.50 on plans to raise $1.5 billion through issue of bonds. The issue of bonds will be fund IDBI's future expansion and acquisition purposes, reports suggest. It would be a medium-term programme and the money would be raised in different tranches, including perpetual Tier I and Tier II capital. The funds would also used for carrying out operations of overseas branches proposed to be opened during FY 2008.
Aurobindo Pharma jumped 3.87% to Rs 755 on reports it is setting up a wholly owned subsidiary for collaborative research in Hyderabad and is planning to hire over 2,000 scientists by 2008. It would focus on basic research & development (R&D) and contract research. Aurobindo currently employs over 6,000, including 700 scientists.
ICRA galloped 13.65% to Rs 907 after the credit rating firm signed a Memorandum of Understanding with Corporation Bank to assign ratings to the small scale borrowers of the bank. Under this MoU, ICRA will assign ratings to small scale industries (SSIs) and small and medium enterprises (SMEs) that are borrowers of the bank.
Global Broadcast News spurted 3.03% to Rs 909.10 on proposal to launch a 24 hour Marathi language news and current affairs channel. The channel is being launched through a 50:50 joint-venture with the Lokmat group, owners of Lokmat, the most widely circulated newspaper in Maharashtra, and having other publications including Lokmat Times and Lokmat Samachar.
Majority of Asian indices moved higher today as exporters such as Sony Corp. and Samsung Electronics advanced on positive US economic news, while Woodside Petroleum took its cues from rebounding energy prices after crude oil moved back above $66 a barrel in the US.
Hong Kong's Hang Seng rose 1.40% while Japan's Nikkei advanced 0.62%. Taiwan's Taiwan Weighted (up 1.25%), Singapore's Straits Times (up 0.63%) and South Korea's Seoul Composite (up 2.74%) also logged gains.
However, China’s Shanghai Composite was down 1.47% to 4,115.29. All the European markets were trading higher.
Wall Street rebounded smartly on Wednesday, 13 June 2007, as bond yields eased and economic data came in stronger than expected. The Dow saw its biggest point gain since 19 July 2006. The Dow Jones Industrial Average (DJIA) jumped 187.34 points, or 1.41%, to 13,482.35. The index is still 193.97 points below its record close of 13,676.32 reached on 4 June 2007. Broader stock indicators also advanced sharply. The Standard & Poor's 500 index rose 22.67 points, or 1.52%, to 1,515.67, and the Nasdaq Composite index rose 32.54 points, or 1.28%, to 2,582.31.
Crude oil rose 91 cents, to $66.26 a barrel, after a government report showed a smaller-than-expected gain in United States supplies of motor fuel last week.
FIIs were net sellers in equities to the tune of Rs 307.80 crore on 13 June 2007
Buy Dabur India at Rs 101.45 with Stop Loss at Rs 99.80. (Intra-day Call)
Buy GTL around Rs 222.95 with stop loss at Rs 216. (Intra-day Call)
Buy DCM Shriram Consolidated around Rs 74, with stop loss at Rs 71.50 (Intra-day Call)
Buy Aban Offshore above Rs 3030. Stop Loss at Rs 2970 (Intra-day Call)
Buy Sesa Goa above Rs 1732 with stop loss at Rs 1685 for a target of Rs 1829 and 1918 (Delivery-based Call)
Buy Titan Industries at Rs 1086. Stop Loss at Rs 1060 (Intra-day Call)
In a Poll conducted on this site 391 (as of now) voted, 153 said they will apply for DLF, a overwhelming 238 said they won't
However, when asked which would give the best returns in the next 5 years, readers felt DLF is the second best after Reliance Industries
They feel Parsvanath is the cheapest real estate stock right now
With all the interest rate hikes, one would have expected the real estate prices to cool down, however, we find that real estate prices have actually gone up (the votes polled are a lot less here - may not be the reflection of the actual situation )
Looking for DLF related information ? We have PLENTY
Market Grape Wine :
In House :
Nifty at a support of 4100 and 4060 levels with resistance at 4168 above that 4205 levels .
Buy : Satyam above 486 target 499 s/l 481
Sell : ACC below 787.5 target 768 s/l 794
Sell : SBIN below 1280 in F&O
Buy : TataSteel in F&O with stop loss
Out House :
Markets at a support of 13978 & 13939 levels with resistance at 14232 & 14325 levels .
Buy : RIL & RCAP
Buy : IFCI & IDBI
Buy : Praj bullet
Buy : IBulls & Unitach
Buy : GujNre bullet
Buy : GlenMark , LUPIN & Auropharma
Buy : GTL & UTV
Buy : AsianElec & SKumar
Dark Horse : Prajind , GTL , GRMInfra ,CenTextile , Auropharma , IDBI , RIL , IBulls & MoserBaer
Nifty and Sensex have exhibited a bearish candlestick.
Technically, one may use the level of 4050 (Nifty) and 13850 (Sensex) as the stop loss level.
Nifty faces resistance at 4170 and Sensex at 14200.
BSE Smallcap and BSE Midcap also exhibited bearish candlesticks.
CNX IT has lost ground.
In the Punter's zone we have a Sell in Tata Steel , VSNL & J.P Associates.
In the Technical call section, we have a Sell in L&T , Bombay Dyeing and Titan Industries.
Anand Rathi - Daily Technicals - Jun 14 2007
Overnight gains in the US markets and a sharp rise in several Asian indices in the ongoing trading session may help the domestic indices rebound from yesterday's losses. However, the market may exhibit caution owing to lack of clarity, higher volatility and the Sensex breaking the psychological level of 14000 towards the close yesterday. Among the indices, the Nifty could test higher levels at 4140 and 4170, and has a supports at 4075. The Sensex has a likely support at 13900 and may face resistance at 14100.
US indices bounced back sharply after the strong readings on retail sales and the Fed's "Beige Book" report on the economy, and some relief on the interest-rate front. While the Dow Jones flared up by 187 points at 13,482, the Nasdaq moved up by 33 points at 2,582.
Barring Patni Computers and ICICI Bank, rest of the Indian floats had a field day on the US bourses. Dr Reddy's Lab jumped 4.13%, while Tata Motors,HDFC Bank, Wipro, Infosys, Satyam, VSNL, MTNL and Rediff gained around 1-2% each.
Crude oil prices edged higher, the US light crude oil for July delivery moved up by 91 cents at $66.26 a barrel. In the commodity segment, the Comex gold for August delivery slipped by 40 cents to settle at $653.10 an ounce.
The market is expected to head higher, tracking strong global markets. Over the past few months, local bourses have been taking cues from global markets in the similar direction.
Asian stocks advanced today as exporters such as Sony Corp. and Samsung Electronics advanced on positive US economic news, while Woodside Petroleum took its cues from rebounding energy prices after crude oil moved back above USD 66 a barrel in the US.
Hong Kong's Hang Seng rose 0.77% at 20,737.57 while Japan's Nikkei advanced 0.66% at 17,849.39. Taiwan's Taiwan Weighted (up 1.02% at 8,431.70), Singapore's Straits Times (up 0.87% at 3,582.12) and South Korea's Seoul Composite (up 1.63% at 1,750.09) also logged gains.
Wall Street rebounded smartly on 13 June 2007, as bond yields eased and economic data came in stronger than expected. The Dow saw its biggest point gain since 19 July 2006. The Dow Jones Industrial Average (DJIA) jumped 187.34 points, or 1.41%, to 13,482.35, after bouncing around earlier in the session as investors weighed the possibility of rising interest rates. The index is still 193.97 points below its record close of 13,676.32 reached on 4 June 2007. Broader stock indicators also advanced sharply. The Standard & Poor's 500 index rose 22.67 points, or 1.52%, to 1,515.67, and the Nasdaq Composite index rose 32.54 points, or 1.28%, to 2,582.31.
Crude oil rose 91 cents, to $66.26 a barrel, after a government report showed a smaller-than-expected gain in United States supplies of motor fuel last week.
As per provisional data, FIIs were net sellers to the tune of Rs 294.16 crore in equities, while Domestic Institutional Investors (DIIs) bought shares worth a net Rs 331.48 crore on 13 June 2007.
NIFTY (4113) SUP 4094 RES 4132
BUY CANBANK (236.05)
SL 232 T 244, 247
BUY EICHERMOTOR (349.90)
SL 344 T 359, 361
SELL HINDLEVER (186.8)
@ 188 SL 192 T 179, 177
SELL GAIL (295.65)
@ 298 SL 302 T 289, 285
SELL VSNL (450.35)
@ 453 SL 458 T 443, 438
It is by going down into the abyss that we recover the treasures of life. Where you stumble, there lies your treasure.
Make no mistake. We very well know that the bears stole the limelight on Wednesday. And, we are not talking of the recovery expected this morning either. Just to flash back, the Sensex had plunged to its 52-week low (below 9000) this day last year. The benchmark BSE index rose to a high of 14,724 points on Feb 9 this year. A new high continues to evade the Sensex though the Nifty has already made a new peak. The bulls have something to cheer about this morning, buoyed by the heartening performance on Wall Street and firm trend across Asia.
Strong reading on retail sales and a positive assessment of the US economy in the Fed's "Beige Book" report brought some hopes that there could be some relief (in thought) on the interest-rate front. However, one needs to temper the euphoria, as China's Premier Wen Jiabao says monetary policy needs a moderate tightening' to prevent the Chinese economy from overheating, suggesting the central bank may raise interest rates. Also, there are concerns that interest rates will go up in key economies of UK, Japan, EU and India over the next few months.
The Bank of Japan begins a two-day policy meeting today. Though it is unlikely to jack up its key rate, most economists do expect a hike sometime later this year, as the world's second largest economy stages a comeback from years of stagnation.
What is encouraging though is that the last reported FII figure from SEBI for Tuesday shows overseas investors as net buyers of Rs5.45bn in the cash segment. But, they were net sellers of Rs2.94bn yesterday, according to the provisional data from the NSE. In the F&O segment, foreign funds were net sellers of Rs11.6bn yesterday.
Considering the multitude of factors, we expect the market to open higher this morning, but things will remain volatile. We expect select large cap stocks to advance while the small- and mid-cap shares may not see a big jump. IT shares will continue to hog the limelight amid a volatile trend in the currency markets. Lots of stock-centric action is expected. ICICI Bank will be in focus as it launches its mega follow-on public offer today.
US stocks rallied on Wednesday, with the Dow Jones Industrial Average clocking its best one-day gain of 2007. The bond market rallied and a government report on retail sales exceeded economists' estimates.
The Federal Reserve, citing its so-called Beige Book report, said that the world's largest economy is growing without stoking inflation. Bond yields fell from a five-year high.
The Dow Jones Industrial Average jumped by 187 points or 1.4% to close at 13,482.35. The S&P 500 added 22.67 points, or 1.5%, to finish at 1515.67, its biggest rally since March. The Nasdaq Composite Index advanced 32.54 points, or 1.3%, to end at 2582.31.
Retail sales in the US rose 1.4% in May, the most in more than a year. Economists expected a gain of 0.6%.
The 10-year Treasury yield fell 9 basis points to 5.21%. The yield on the 10-year note - which impacts mortgage rates and other consumer loans - briefly touched 5.32% in electronic trading yesterday, its highest point since 2002 and above the Fed's current target for its key short-term interest rate, 5.25%.
COMEX gold for August delivery fell $0.40 to settle at $652.70 an ounce. In currency trading, the dollar gained modestly versus the euro and rallied against the yen, following the retail sales report. Crude oil rose 91 cents to $66.26 a barrel following a government report showing a smaller-than-expected gain in US supplies of the motor fuel last week.
The US government said on Wednesday that China's yuan was undervalued and that it continues to push for it to gain. However, it added that China was not manipulating its currency to benefit its trade.
Across the Atlantic, European stocks weakened. The pan-European Dow Jones Stoxx 600 index declined 0.5% to 387.11. The UK's FTSE 100 closed down 0.7% at 6,520.40, while the German DAX Xetra 30 dropped 0.4% to 7,678.26 and the French CAC-40 lost 0.7% at 5,898.16.
In the emerging markets, the Ibovespa in Brazil surged 2.3% to 52,993 while the IPC index in Mexico gained 0.9% to 31,884 and the RTS index in Russia was up 0.5% at 1806.
Asian stocks rebounded from a two-week low after US retail sales rose more than expected and the Federal Reserve said that the world's biggest economy was growing without stoking inflation. Toyota and Samsung led exporters higher. BHP Billiton paced gains among mining companies after metals prices climbed.
The Morgan Stanley Capital International Asia-Pacific Index added 0.7% to 150.51 as of 10:56 a.m. in Tokyo, ending a two-day, 0.9% decline sparked by a gain in bond yields. The stock benchmark yesterday fell to the lowest since May 30.
Japan's Nikkei 225 Stock Average added 0.7% to 17,848.99. Japanese exporters including Sony also rose after the yen weakened to the lowest against the dollar since 2002, increasing the value of their dollar-denominated sales. China's CSI 300 Index opened lower. All other Asian benchmarks gained.
Yet another volatile session ended in deep red, the key indices constantly lost ground as the session progressed led by fall in the Capital Good, Oil & Gas and Banking stocks. The Technology stocks also witnessed selling pressure. However, Select Consumer Durable and Pharma stocks held on to its gains.
The BSE Mid-Cap and the small cap index which managed to hold on to their gains till mid afternoon also pared its gains as both the key indices also ended in red. The index heavy weights like SBI, L&T, ACC and HLL were the major losers dragging the benchmark index below the 14000mark. Finally, the 30-share Sensex slipped 127 points to close at 14003. NSE-50 Nifty was down by 42 points to close at 4113.
HDFC Bank edged higher by 0.2% to Rs1089. The company announced its plans to sell shares overseas in July. The scrip touched intra-day high of Rs1090 and a low of Rs1074 and recorded volumes of over 3,00,000 shares on NSE.
ICICI Bank edged lower by 0.6% to Rs913. The company announced that to raise Rs87.5bn selling shares. The scrip touched intra-day high of Rs936 and a low of Rs910 and recorded volumes of over 12,00,000 shares on NSE.
Reliance Industries slipped 1.4% to Rs1675. The company announced that they would use GAIL pipelines to sell 50% of Gas output. The scrip touched intra-day high of Rs1709 and a low of Rs1670 and recorded volumes of over 22,00,000 shares on NSE.
IMP Power surged by over 4% to Rs127 after the company secured export order worth $1mn. The scrip touched intra-day high of Rs133 and a low of Rs121 and recorded volumes of over 30,000 shares on NSE.
Select Pharma stocks managed to hold on to their gains. Dr Reddy’s lab surged by 2.8% to Rs627, Divi’s Lab gained 1.4% to Rs5285, Cadila advanced 0.8% to Rs341 and Lupin added 0.5% to Rs673.
Oil & Gas stocks also ended lower. Oil exploration major and heavy weight Reliance Industries was down by over 1.4% to Rs1675. Oil Refinery stocks slipped led by BPCL as the scrip was down by 3.4% to Rs334 and HPCL lost 2.8% to Rs269.
Selling pressure also dragged the Banking stocks lower. SBI declined 3.2% to Rs1290, PNB slipped by 1.5% to Rs486 and ICICI Bank edged lower by 0.6% to Rs913 and HDFC Bank slipped 0.5% to Rs1082. Bank of India, OBC Corp Bank were the major loser among the Mid-Cap stocks.
Autoline Industries Ltd: Merrill Lynch Capital Mkts Espana SA SV has purchased from open market 25223 equity shares of Autoline Industries Ltd on 8th June, 2007.
McDowell Holdings Limited: FMR Corp & Fidelity International Ltd has sold in open market 467908 equity shares of McDowell Holdings Limited on 5th June, 2007.
Ruby Mills, Bag Films, Teledata Informatics, Tanla and Raj Tele.
Sical Logistics, Prime Focus, Simplex Infrastructure, IKF Technology, Yashraj Securities, Swan Mills and Garware Offshore.
Delivery Delight (Rising Price & Rising Delivery):
Arvind Mills, BASF, Bhushan Steels, Cipla, Dabur, Dr Reddys Lab, Eicher Motors, Gitanjali Gems, HCL Tech, Indian Hotels, Nestle, ONGC, Satyam Computer, Tamil Nadu Newsprint and Titan.
Wipro, Glenmark, Amtek Auto, GDL, UltraTech Cement, RPL, KPIT Cummins, Hexaware Tech and D S Kulkarni.
Major Bulk Deals:
Lehman-Cayman has sold 3i Infotech, HSBC has sold Ambika Cotton and Nestle, Lotus Global has sold AMD Metplast, Bear Stearns has sold Bombay Rayon, Lehman Bros and Lotus Global have bought Gremac Infra, Deutsche Securities has sold Shree Renuka Sugars, Deutsche India, Prudential ICICI MF and Citigroup have picked up Time Technoplast.
HDFC Bank plans to sell shares overseas in July
Simplex Infrastructures gets two overseas orders worth Rs10.05bn
Commerce Minister Kamal Nath to ask Finance Ministry for relief to exporters
Indian Sugar Exim wins contract to export 2 lakh tons Sugar
Reliance to use GAIL pipelines to sell 50% of Gas output
ICICI Bank to raise Rs87.5bn selling shares and to reserve 5% stock for existing shareholders
IMP Power gets export order worth $1mn
Wipro and EMC announce Global Strategic Infrastructure alliance
Bihar tubes to consider buying Apollo Metalex
Cluster: Emerging Star
Price target: Rs425
Current market price: Rs338
Three product approvals in succession
- Cadila Healthcare (Cadila) has received three product approvals from the US Food and Drug Administration (USFDA) in quick succession. These are the final approvals for Benzonatate tablets, and Naproxen tablets and the tentative approval for Amlodipine Besylate.
- Benzonatate and Naproxen are already off patent products and have market sizes of $143 million and $53 million respectively. On the other hand, Amlodipine is current under exclusivity, which is set to expire in September 2007. The annual market size for amlodipine stands at $2.7 billion.
- Based on our calculations, we believe the three products together would generate combined revenues and profits of $18.5 million and $3.7 million respectively for Cadila in FY2009, translating into incremental earnings of Rs1.2 per share.
- At the current market price of Rs338, the stock discounts its FY2009E earnings by 12.7x. With a strong momentum in the US generic market, a ramp-up in the contract manufacturing business and the turn-around of the French business, we believe Cadila has a bright future and hence maintain our Buy recommendation on the stock, with a price target of Rs425.
Cluster: Ugly Duckling
Price target: Rs914
Current market price: Rs728
Denies any stake sale plan
Reacting to a media report that said Aurobindo Pharma is open to a partial stake sale, the management of the company has clarified that the company has no such plans. On the other hand, the management has indicated that the company is doing well in all its business segments including formulation exports, anti-retroviral (ARV) business and bulk business.
Cluster: Apple Green
Price target: Rs1,173
Current market price: Rs913
Valuation of key subsidiaries above market estimates
- India's largest private sector lender ICICI Bank has announced plans to raise Rs20,000 crore ($5 billion) through a follow-on public offer (FPO). The FPO is likely to be equally distributed in the domestic and foreign markets. It is expected to open in the third week of this month. The price band and other issue details are awaited.
- The bank's management has indicated that the pace of growth in the economy as well as the bank's business in the past few years is unprecedented and the FPO tries to address the increased capital requirements of the bank for the next three years.
- The life insurance sector has been growing at a scorching pace for the past few years and ICICI Prudential Life Insurance is the private sector leader with a 30% market share among the private players and a 10% market share in the overall insurance market. The insurance sector is considered to be a sunrise sector and currently there are no listed insurance companies to play on the boom in the insurance sector. Hence, ICICI Bank, which has a 74% stake in ICICI Prudential Life Insurance, remains our preferred choice to play on the insurance story.
- In the past the bank has had to divert a significant amount of the capital raised through its earlier issues to fund its insurance subsidiaries. However this time we feel the difference is that ICICI Bank has already made arrangements for continuous funding of its insurance businesses. Thus with the funding of the insurance businesses taken care of, we feel, there will be more capital available to the bank to grow its core banking business without frequent dilutions in future. However, the huge FPO would take its toll on the return on equity (RoE), which is expected to come down to 10.3% and 10.5% in FY2008 and FY2009 respectively from 13.3% in FY2007.
- We feel one of the concerns pertaining to the bank remains in the form of the delay in obtaining the regulatory approval for the entire ICICI Financial Services (IFS) deal. The fact that the valuation of IFS is much higher than market estimates is a positive development. However the regulatory approval is very important, as it will set the precedence based on which the market would assign improved valuation to the bank. An uptick in the non-performing assets (NPAs) and related provisions remains the other concern.
- We feel the stock will continue to consolidate around the current levels, as has been the case in the past after the announcement of any equity issuance. This provides a good opportunity to buy the stock. At the current market price of Rs913, the stock is quoting at 20.2x its FY2009E earnings per share (EPS), 9x its pre-provision profits (PPP) and 2.1x FY2009E book value (BV). We maintain our Buy recommendation on the stock with the price target of Rs1,173.
Sharekhan's top equity fund picks
We have identified the best equity-oriented schemes available in the market today based on the following 3 parameter : the past performance as indicated by the one and two year returns, the Sharpe ratio and Fama (net selectivity).
The past performance is measured by the one and two year returns generated by the scheme. Sharpe indicates risk-adjusted returns, giving the returns earned in excess of the risk-free rate for each unit of the risk taken. The Sharpe ratio is also indicative of the consistency of the returns as it takes into account the volatility in the returns as measured by the standard deviation.FAMA measures the returns generated through selectivity, ie the returns generated because of the fund manager's ability to pick the right stocks. A higher value of net selectivity is always preferred as it reflects the stock picking ability of the fund manager.
Sharekhan Investor's Eye dated June 13, 2007
US stocks rallied today, Wednesday, 13 June, 2007 as market got a break from rising bond yields. Falling interest rate and Fed’s Beige Book portraying a moderate growth of the economy gave the stocks a major boost today erasing all of yesterday’s loss.
The yield of the 10-year Treasury note fell to 5.22% after hitting a five-year high yesterday at 5.26%. In addition, the Commerce Department came out with a much better-than-expected report on retail sales for May.
Twenty-nine out of the 30 Dow stocks closed higher for the day. The Dow Jones Industrial Average soared by a huge 187.34 points to close at 13482.35. Nasdaq rose 32.54 points to close at 2582.31 and S&P 500 went up by 22.69 points to close at 1515.67.
Alcoa, Boeing, Intel, GM, Caterpillar and Citigroup were the major Dow winners today. All 10 economic sectors posted hefty gains while only four of the 147 S&P 500 industry groups closed lower.
In the post lunch session, The Beige Book showed that manufacturing activity was up in most districts while the majority of the 12 Fed regions also reported that overall wage pressures do not seem to be rising, even though hiring picked up in late April through May.
Today’s triple digit gain was the best day for Dow since July, 2006. For Nasdaq, it was the best day since March, 2007.
Boeing, Caterpillar and Alcoa - each rise more than 2%
When market opened in the morning, a sense that stocks are oversold gave buyers the green signal right out of the gate. A report showing that retail sales were surprisingly strong in May was an added good piece of news.
The Commerce Department reported that retail sales rose 1.4% in May - a healthy change from the revised 0.1% sales decline in April. It was also more than double what economists had predicted. Retail sales excluding automobiles rose 1.3% for the month. It was the strongest data in 16 months.
A reversal in Health Care sector removed some notable leadership during the afternoon hours. But stocks picked up momentum in the final couple hours of trading, mainly after the Beige Book release.
Among major Dow winners, Boeing surged 2.1% after raising its 20-year forecast for global aircraft deliveries. Caterpillar turned in a similar performance after backing its 2007 outlook. Alcoa was also up almost 3% after Alcan said that it might make a counteroffer for Dow component Alcoa.
Decent PPI and CPI reports expected to boost market
Of the 10 economic sectors trading closing higher today, Utilities led the charge followed by Materials.
Crude oil futures rose today after Energy Department came out with today’s weekly inventory report. The report showed a smaller than expected gain in U.S. supplies of crude for the week ended 8 June. Gasoline futures also rallied on the report after it failed to climb for first time in 6 weeks. Crude-oil futures for light sweet crude for July delivery today closed at $66.26/barrel (higher by $0.91/barrel or 1.34%) on the New York Mercantile Exchange.
Trading volumes showed 1.6 billion shares exchanging hands on the New York Stock Exchange and 2.1 billion trading on Nasdaq. Gaining issues topped decliners by 13 to 3 on the NYSE and by 20 to 9 on the Nasdaq.
Tomorrow PPI report will be closely watched and should help set the tone for the day's trading. Weekly Initial Claims will also be released before market opens. On the earnings front, Goldman Sachs and Bear Stearns are expected before the bell while Adobe Systems will report after the close.