Wednesday, June 20, 2007
India shares up 0.8 pct, head towards record high
Indian shares rose 0.81 percent to a two-week closing high on Wednesday, with gains led by top lender State Bank of India Ltd. as a strong response to ICICI Bank's record share sale lifted market sentiment.
ICICI Bank, the country's largest private bank, gained 0.4 percent to 947.85, its strongest close since May 18, and has risen 4.4 percent this week. It is selling shares in India and the United States this week to raise up to $4.9 billion.
It took less than an hour on Tuesday to cover the $2.1 billion order book for the local leg. The sale, which closes on Friday, follows last week's $2.4 billion initial public offering by property developer DLF Ltd.
"Although global markets were strong in the last few sessions, Indian markets were largely rangebound because of technical barriers. There is some catching up happening now," said K.K. Mittal, vice-president at Escorts Mutual Fund.
"The confidence in the market is very high after the hugely positive response to ICICI Bank's issue. The overhang of large issues is slowly going away."
The benchmark 30-issue BSE index rose 116.45 points to 14,411.95, with 23 components gaining. The index is 2.1 percent off its all-time high of 14,723.88 hit on Feb. 9.
"The immediate resistance is at 14,500, but it will be crossed because the momentum is very strong. We expect the market to make a new peak by the end of this month," said Subash Gangadharan, technical analyst at HDFC Securities.
For a technical analysis by Reuters, please see: www.reutersindia.net.
State Bank of India rose 3.85 percent to 1,425.20 rupees, its strongest close in two weeks, and Bank of India ended up 4.3 percent at 212.85 rupees, also a two-week closing high. Banks have been riding robust demand for loans, which is growing at more than 26 percent annually, in a fast-expanding economy.
Mortgage firm Housing Development Finance Corp. gained nearly 2 percent to 1,810.35 rupees after CLSA said the firm would gain market share and maintain spreads as banks reduce focus on the mortgage lending to meet demand from other sectors.
The 50-issue Nifty ended 0.82 percent higher at 4,248.65 points. It hit an all-time high of 4,362.95 on June 4.
In the broader market, 1,455 gainers beat 1,126 losers on a volume of 233 million shares.
Elsewhere in the region, Karachi's 100-share index ended 0.46 percent higher at 13,556.73, while Colombo's All-Share index rose 0.55 percent to 2,620.43 points.
STOCKS THAT MOVED
* Sterlite Industries Ltd. rose 8 percent to 604.60 rupees after its American depositary shares made a strong debut on the New York Stock Exchange, ending 9.4 percent higher than the offer price of $13.44.
* Blue Dart Express Ltd. rose 11.4 percent to 778.70 rupees on market talk of a share buyback, traders said. A Blue Dart spokesman said the company would not comment on market speculation.
TOP 3 BY VOLUME
* Voltas Ltd. on 7.6 million shares.
* G.V. Films Ltd. on 7.6 million shares.
* Reliance Natural Resources Ltd. on 7.3 million shares.
Market Close: Ranged sessions but ends strong.
Markets ended the day on a strong note with firm global cues supporting in early sessions and buying momentum was seen across major index heavyweights. Indian indices started the day on a firm note but witnessed some volatility in the last sessions as investors started booking profits at higher levels. All the sectors closed in green with Auto, Banking, Cement and Metal leading the rally with some value buying. Mid caps outperformed the day while the small caps closed inline with front line indices. Educomp rallied for second consecutive day after RBI permitted FII to raise their stake up to 100% in the company. Investors sentiments were also high following the good response to FPO of ICICI Bank which has been subscribed 3.10 times. Major Asian markets closed in green while the Chinese Market closed in red.
Sensex closed up by 116 points at 14411.95. It was helped up by gains in Guj Ambuja (118.2,+5 percent), SBI (1425.2,+4 percent), Tata Motors (686.9,+4 percent), Grasim (2512.8999,+3 percent) and Maruti (768.6,+2 percent). Restricting the gains are Ranbaxy (351.85,-2 percent), TCS (1145.8,-1 percent), NTPC (150.3,0 percent), HLL (188.5,0 percent) and Infosys (1954.1,0 percent).
Elecon Engineering Ltd (Elecon) is one of the India?s leading manufacturers of Material Handling Equipment and Gear boxes. Elecon has delivered fantastic results for Q4 and FY2006-07. For Q4 the Revenues grew by 52% to Rs 285 cr on yoy basis, the Net profit surged up by 54% to Rs 19 cr on yoy basis. The Ebidta stood at 14% which enhanced by 150 bps. Ebidta improved by 68% to Rs 39 cr on yoy basis. For FY2006-07 Revenues grew by 58% to Rs 723 cr and the bottom line grew by 82% to Rs 55 cr on yoy basis. For the year Ebidta stood at 15% to Rs 112 cr enhanced by 85% on yoy basis. At the current market price of Rs 497 the stock trades at 28 times of FY06-07 earnings. We dislike this PE. The management has announced capex plan of Rs 120 -150 cr. Rs 80 cr in Wind mill gear box, capacity of 1mw to 2 mw. Presently, gearboxes for 1MW to 2MW are being imported. Initial turnover of Rs. 100 - 150 cr is expected in first full year of operations that may happen in 2008-09. The balance is in Material handling division. The company has given the guidance of Rs 1000 cr for FY 2007-08. This seems to be a good story for long term investment one can accumulate at dips. The stock closed up by 1.6%.
Auto stocks closed in strong note for the day. Tata Motors launched a mass transport passenger vehicle - Magic, developed on the platform of its popular mini truck Ace, while also unveiling a higher capacity van - Winger. Magic has a sitting capacity of 5-8 people, and priced at Rs 2.6 lakh (ex-showroom Pune) while Winger, an eleven seter sitting arrangements, is competitively pegged at a starting price of Rs 4.7 lakh. We are not too enthused by Magic as Its just a replacement for the Maruti Van, which really did not do well. The Winger could be a threat to the bread and butter UVs of Mahindra. Tata Motors closed up by 3.70% while its peer Maruti and M&M closed up by 2.84% and 1.52% respectively.
ABG Shipyard closed 4% higher for the day on back of good set of numbers reported by the company for the full year ended March 2007. For the fiscal, the company achieved sales growth of 30% yoy. The operating margins of the company expanded by 1.7% to 27.7% led by lower raw material costs (as percentage of sales). The benefits of margin expansion were visible in the company's profitability, with net profits for the fiscal recording a 39% yoy growth. The current order book stands at about Rs 4000 cr which looks good for the company. The Board has recommended a dividend of Rs 1.5 per share (dividend yield of 0.4%). As regards its peers, both G.E. Shipping and SCI (up 1% each) also closed in green.
Technically Speaking: It was a ranged session for whole day before closing on a firm note. Sensex touched intraday high of 14449 levels and low of 14347 levels. Sensex has made an upward breakout and clearly headed uptrend with a gap support of 14300 level. The next resistance can be seen at 14570 levels targeting to 14700 levels. Market turnover was pretty good at Rs 5049 cr. Overall breadth was in favor of Advances, where the Advances to Declines ratio stood 1.5:1.
Food, inflation & recession
There is no economic issue that gets the Indian electorate as worked up as inflation does. Elections have been won and lost because of fluctuations in the price of onions. It is tempting for us to ask the government to do something about the problem and it is equally tempting for the government to pretend that knee-jerk bans of futures trading will bring prices down in the street-side markets. But the uncomfortable fact is that rising prices of food are a global problem.
Look at China. Its government is a past master at rigging the price of its currency to keep its export engine humming. But it has been able to do precious little to rig the price of a more basic commodity—pork. China’s consumer price inflation in May was at its highest in more than two years, partly because of a 26.5% rise in meat prices, which in China essentially means pork. One reason why the price of China’s staple food is shooting up is the rise in the price of corn, which is fed to pigs.
A few months ago, there was a similar problem in another part of the world. In Mexico, the prices of corn tortillas, that country’s culinary staple, quadrupled in a year. This tortilla crisis led to a political backlash and the Mexican government eventually pressurized food companies to hold the price of tortillas. Food prices in the UK are up 5%, which is twice the official inflation rate. In the first four months of this year, food inflation in the US was running at 6.7%.
Why are food prices suddenly jumping around like popcorn on a fire? The most immediate reason why corn prices have risen sharply is the world’s new-found love for green fuels. The US has offered subsidies for the use of corn-based ethanol, which ensures that corn is perversely diverted away from kitchens and into car fuel tanks. Hiroyoki Konuma, deputy regional chief for Asia and the Pacific at the Food and Agriculture Organization (FAO), said earlier this month that the upsurge in interest in biofuels is “the gold rush of the 21st century”. He estimates that 1% of the world’s arable land is already being used for biofuels; this could rise to 3.5% in the coming years.
The supply of quality land is shrinking for other reasons as well. Expanding cities, especially in China and India, are already eating up farmland. Meanwhile, rising prosperity in these two countries means that people are eating more and eating better. It takes more land to provide one unit of energy from meat than it does to provide the same amount of energy from corn or wheat. And, to this cocktail of factors, add the uncertainties to food production that can come from climate change. It’s not hard to see that volatile food prices are not an accident.
There are two core economic issues here. One, a sharp rise in food prices is always going to be a political hot potato. People are less upset about inflation in concentrated items that are bought infrequently—cars and television sets, for example. But if you walk to the market every day, and see that the price of tomatoes has gone up further, the sense of anguish is deeper. In other words, inflationary expectations tend to shoot up when items of daily or weekly purchase escalate in price. This could lead to demands for higher wages, and an inflationary spiral.
The other issue is a bit more long-term. What if there is persistent food inflation, perhaps running over many years? Chris Dillow, one of my favourite economist bloggers, has raised a pertinent question in a recent post. “Was Ricardo right after all?” he asks. David Ricardo, the 19th century English economist, famously predicted that as demand for food rose, so would prices. “This was simply because less fertile land would be brought under cultivation so the costs of production would rise; this is diminishing returns. Because wages couldn’t fall—they were set by subsistence needs—this, he forecast, would lead to a squeeze on profits generally,” writes Dillow.
Ricardo spoke of the inevitability of the stationary state, when higher food prices would squeeze profits to a level where economic growth is strangled. This never happened because of two factors: first, new land came into the market with the colonization of the Americas and then productivity improvements in agriculture kept a lid on the relative price of food.
Today, the supply of arable land is shrinking and there are no new Americas to be discovered. In fact, the land available for food is shrinking because of the growth of cities and the spread of biofuels.
A new green revolution is the only real way to keep a lid on food prices in the long term, but revolutions do not take place according to someone’s calendar. Till then, it will be worth watching what impact food prices have on inflation and profits.
So, don’t scoff at the lady next to you in the neighbourhood market when she launches into a harangue on the price of onions.
Stock markets continue to remain a key route for corporates' to raise funds for expansion, with the worldwide IPOs space posting a record net proceeds
The Sensex opened with a positive gap of 65 points at 14,360. Steady buying in auto, banking and capital goods stocks saw the index trade with a positive bias today. The index rallied to a high of 14,449, and finally settled with a gain of 116 points at 14,412.
The BSE Auto and Bankex rallied 1.4% each to 4762 and 7790, respectively. The Metal index gained 1% at 10,725.
The market breadth was positive - out of 2,635 stocks traded, 1,447 advanced, 1,100 declined and 88 unchanged.
INDEX MOVERS & SHAKERS
SBI zoomed nearly 4% to Rs 1,425. HDFC gained 2% to Rs 1,812.
Gujarat Ambuja soared 4.6% to Rs 118. Grasim surged 3% to Rs 2,513.
Tata Motors rallied 3.5% to Rs 686. Maruti advanced nearly 3% to Rs 773, and Bajaj Auto added 2% to Rs 2,162.
BHEL and Larsen & Toubro moved up around 1.7% each to Rs 1,430 and Rs 2,028, respectively.
Bharti Airtel gained 1.5% at Rs 825. Cipla and ITC added 1.3% each to Rs 210 and Rs 155, respectively. Dr.Reddy's was up 1% at Rs 642.
Ranbaxy tumbled 2% to Rs 352, and TCS dropped 1.3% to Rs 1,146.
VALUE & VOLUME TOPPERS
Divi's Lab topped the value chart with a turnover of Rs 165 crore followed by Reliance Capital (Rs 155 crore), Educomp Solutions (Rs 136.30 crore), India Infoline (Rs 120.70 crore) and SBI (Rs 107 crore).
Voltas led the volume chart with trades of around 76.20 lakh shares followed by G V Films (75.20 lakh), Reliance Natural (73 lakh), IKF Technologies (63 lakh) and IFCI (57.25 lakh)
Global IPOs raise record $246 bn in '06
Stock markets continue to remain a key route for corporates' to raise funds for expansion, with the worldwide IPOs space posting a record net proceeds of $ 246 billion in 2006, a new study shows.
India's IPO market emerged as the eighth largest with $ 7.23 billion (Rs 30,000 crore) in net proceeds through 78 public issues, global research and consultancy firm Ernst & Young said in its Global IPO report released on Wednesday.
Across the world, the companies raised $ 246 billion, up from $167 billion in 2005, through a total of 1,729 IPOs, led by Chinese companies at the top with net proceeds of $56.6 billion.
However, the biggest number of IPOs came from the US with 187 offerings, followed by Japan with 185 and China with 175 IPOs.
Mukesh Ambani group's Reliance Petroleum, which raised $1.8 billion, featured in the global Top 20 IPOs, which together raised $84 billion, representing 35 per cent of the total capital raised by all IPOs, the report said.
"India's IPO market has been fairly broad-based in terms of transaction, although energy companies dominated with more than 50 per cent share of funds raised," it added.
According to the study, India's increasing number of larger deals has been driven by the growth of Indian corporations and their need for additional capital for potential acquisitions.
"In 2007 Indian IPOs continue to surge in numbers. Continued strength is expected in the real estate and energy sector," it said.
"The rapid growth in emerging market economies has resulted in a migration of capital from the developed economies into the emerging markets," E&Y India's IPO Leader R Balachander said.
Stock markets continue to remain a key route for corporates' to raise funds for expansion, with the worldwide IPOs space posting a record net proceeds of $ 246 billion in 2006, a new study shows.
India's IPO market emerged as the eighth largest with $ 7.23 billion (Rs 30,000 crore) in net proceeds through 78 public issues, global research and consultancy firm Ernst & Young said in its Global IPO report released on Wednesday.
Across the world, the companies raised $ 246 billion, up from $167 billion in 2005, through a total of 1,729 IPOs, led by Chinese companies at the top with net proceeds of $56.6 billion.
However, the biggest number of IPOs came from the US with 187 offerings, followed by Japan with 185 and China with 175 IPOs.
Mukesh Ambani group's Reliance Petroleum, which raised $1.8 billion, featured in the global Top 20 IPOs, which together raised $84 billion, representing 35 per cent of the total capital raised by all IPOs, the report said.
"India's IPO market has been fairly broad-based in terms of transaction, although energy companies dominated with more than 50 per cent share of funds raised," it added.
According to the study, India's increasing number of larger deals has been driven by the growth of Indian corporations and their need for additional capital for potential acquisitions.
"In 2007 Indian IPOs continue to surge in numbers. Continued strength is expected in the real estate and energy sector," it said.
"The rapid growth in emerging market economies has resulted in a migration of capital from the developed economies into the emerging markets," E&Y India's IPO Leader R Balachander said.
Spice Communications IPO opens on 25 June 2007
Price band Rs 41 - 46 per share
Spice Communications intends to garner around Rs 520 crore through its initial public offering, which opens on 25 June 2007.
The issue, having a price band between Rs 41 - 46 a share, will close on 27 June 2007. The company is taking a 100% book-building route for the IPO.
The company will issue 11.31 crore equity shares of Rs 10 each and the issue will comprise 16.39% Spice Communications’ fully diluted post-issue share capital.
The company had earlier raised Rs 112 crore through a pre-IPO placement of 2.48 crore shares at Rs 45 each.
Malaysia’s official service provider Telekom Malaysia (TM) holds 49%, while industrialist and Modi group Chairman B K Modi owns the remaining 51% stake in Spice Communications.
Spice Communications will use around 50% of the total proceeds to retire part of its Rs 1,000 crore debt, while the remaining would be used for expansion plans.
The company’s expansion plans included foraying into national long distance (NLD) and international long distance (ILD) services in the country.
Post IPO, TM’s stake in the company will fall to 39% and the promoter’s holding to 41%, while retail public holding will increase to around 20%.
Spice Communications' net loss of Rs 68.58 crore in the full year ended June 2006 from Rs 6.97 crore in FY 2005. Sales advanced 9.1% to Rs 661.49 crore in FY 2006 (Rs 606.57 crore).
The company's shares would be listed on the BSE. Spice Communications could not list its shares on the National Stock Exchange (NSE), where listing of companies with negative networth is not permitted.
Rally steers Sensex past 14400
After registering smart gains in yesterday's session, the market rallied sharply and gained 156 points during the intra-day trades. The firm Asian markets made the undertone bullish, with the Sensex crossing the 14400 mark in early trades and maintaining the upward bias thereafter. While the mood remained upbeat on strong buying in consumer durables, capital goods, auto and banking stocks, the rally gathered more steam in the afternoon and the Sensex touched the day's high of 14449. The Sensex finally ended the session with gains of 116 points at 14412 and the Nifty rose 35 points to close at 4249.
The breadth of the market was extremely positive, with gainers outnumbering losers in the ratio of 1.31:1. Of the 2,636 stocks traded on the BSE 1,446 stocks advanced, 1,103 stocks declined and 87 stocks ended unchanged. Among the sectoral indices, the BSE CD Index flared up by 1.48%, the BSE Bankex Index rose 1.42%, the BSE Auto Index moved up by 1.37% and the BSE CG Index was up 1.25%, while the other indices ended with moderate gains.
Barring a few, most of the Sensex stocks ended at higher levels. Cement major Gujarat Ambuja Cement flared up 4.60% at Rs118, SBI bounced back sharply and shot up by 3.85% at Rs1,425, Tata Motors zoomed 3.53% at Rs687, Grasim moved up by 3.11% at Rs2,513, Maruti Udyog scaled up 2.84% at Rs773, Bajaj Auto surged by 2.04% at Rs2,161, HDFC jumped by 1.94% at Rs1,810 and BHEL gained 1.73% at Rs1,430.
Consumer durable stocks were in demand and attracted strong buying support. Titan Industries spurted by 5.38% at Rs1,200, Gitanjali Gems shot up by 4.17% at Rs207, Bajaj Electricals flared up 3.47% at Rs550 and Hitachi Home & Life Science jumped by 2.89% at Rs103. Banking stocks, too, logged significant gains. Canara Bank soared 9.91% at Rs275, BOI added 4.31% at Rs213, Federal Bank jumped by 3.17% at Rs294 and Kotak Bank climbed 2.38% at Rs603.
Over 76.15 lakh Voltas shares changed hands on the BSE followed by GV Films (75.64 lakh shares), Reliance Natural Resources (73.14 lakh shares), IKF Technologies (64.41 lakh shares) and IFCI (57.30 lakh shares).
Value-wise Divi's Lab clocked a turnover of Rs164 crore followed by Reliance Capital (Rs154 crore), Educomp (Rs136 crore), India Infoline (Rs120 crore) and SBI (Rs107 crore).
Sensex settles above 14,400 level
The market was on a winning streak for the second straight day today, as buying momentum continued in index pivotals. It was firm in the first half of the day, but witnessed volatile movement in the second half, as some profit booking emerged at higher level.
All the sectoral indices on BSE logged gains. Shares from auto, banking, cement and metal lead the rally. There was plenty of action outside the index stocks, on strong buying momentum. Also the notable fact was the high daily turnover which crossed Rs 5,000 mark today on BSE indicating fresh buying. Earlier, market players were worried that liquidity might get sucked out from the secondary market, as huge Rs 8750 crore follow on public offer (FPO) of ICICI Bank opened on 19 June 2007.
The 30-share BSE Sensex rose 116.45 points to 14,411.95. It opened higher at 14,359.96 and surged to strike a high of 14,449.38 at 12:37 IST. At 14,449.38, Sensex had risen 153.88 points for the day. The strong opening was on the back of firm global markets. Sensex slipped to a low of 14,347.58 at 14:22 IST. It later recovered sharply from this level.
The S&P CNX Nifty rose 34.35 points to 4248.65. The Nifty June 2007 futures settled at 4242, a discount of 6.65 as compared to spot closing
The market sentiment was firm following good response to the follow-on public offer (FPO) of ICICI Bank. The FPO was subscribed 3.10 times by 16:00 IST today, 20 June 2007. The issue opened for subscription on Tuesday, 19 June 2007 and closes on Friday, 22 June 2007.
Turnover was very healthy today, crossing the Rs 5,000 crore mark. The total turnover on BSE amounted to Rs 5049 crore and the NSE F&O turnover was at Rs 41733.11 crore. The total turnover on 19 June 2007 was on BSE was Rs 4607 crore.
The market breadth was positive on BSE with close to 1.25 gainers for every loser: 1,457 shares advanced as compared to 1139 that declined, while 99 remained unchanged
The BSE Mid-Cap index rose 1.54% to 6,340.22, while the BSE Small-Cap index rose 0.85% to 7,420.44.
Among the Sensex pack, 23 advanced, while only 7 were trading in the negative territory.
Cement major Gujarat Ambuja Cements advanced 4.73% to Rs 118.35, on 18.35 lakh shares, and it was the top gainer from the Sensex pack. Other cement stocks ACC (up 0.78% to Rs 850) and Grasim (up 2.91% to Rs 2508) also gained. As per market talks, cement shortage may last till June 2009 and incremental output from new capacities won’t match demand till then.
The BSE Bankex was up 1.42% at 7,790.27, led by banking heavyweights ICICI Bank and State Bank of India.
ICICI Bank pared gains after striking a high of Rs 961.90. It rose 0.10% to Rs 945.30. Retail bidders would be allotted shares at a discount of Rs 50 per share to the issue price determined by the book-building process, in the ICICI Bank FPO. The issue size is Rs 8,750 crore. In addition, there is a green-shoe option under which the bank may allocate additional equity shares up to Rs 1,312.5 crore. The issue including the green-shoe option aggregates Rs 10,062.5 crore.
State Bank of India (SBI) surged 4.06% to Rs 1428, advanced for the second straight day. SBI is set to raise $225 million from the overseas market this year by issuing perpetual bonds. The overseas issue opened on Monday, 18 June 2007, and the bank is expected to price the bonds this week. It plans to raise a total of Rs 15,000 crore this year in the form of equity (tier-I) and debt (tier-II).
Other shares from the banking pack, Canara Bank (up 9.87% to Rs 275), Bank of India (up 5.86% to Rs 216), Bank of Baroda (up 1.43% to Rs 270), Federal Bank (up 3.13% to Rs 294.10), Kotak Mahindra Bank (up 2.87% to Rs 606), and Union Bank (up 2.73% to Rs 133.70), also gained.
Auto stocks extended early gains, rising for the second straight day. The BSE Auto index advanced 1.42% to 4,762.06.
Tata Motors (up 3.97% to Rs 689.80), Hero Honda Motors (up 0.20% to Rs 667.10), Bajaj Auto (up 2.05% to Rs 2161.65) and Maruti Udyog (up 2.84% to Rs 772.50) edged higher. The minister for petroleum and natural gas Murli Deora had said on Monday, 18 June 2007, that the government has no plan to hike the price of petrol or petroleum products. Recently, a senior oil ministry official had said the government was likely to review retail prices of petrol and diesel in mid-July 2007 to bring them in line with the recent rise in global oil prices.
Index heavyweight Reliance Industries (RIL) was up 0.28% to Rs 1732, on 5.50 lakh shares. As per reports, global oil giants including Shell, Exxon and Chevron are eyeing a stake in Reliance Industries’ overseas oil & gas assets. RIL recently hived off these assets into a separate company, Reliance Exploration and Production DMCC.
State run engineering major Bhel gained 2.11% to Rs 1435. As a result, the BSE capital goods index rose 1.30% to 11,505.59.
Engineering & construction major L&T was up 1.57% to Rs 2027. The company’s joint venture won an order worth Rs 610 crore for a residential building project in Dubai. The company made the announcement during market hours on Tuesday, 19 June 2007. The project is to be completed in 660 days from the date of commencement. As a result, the BSE capital goods index was up 1.25% at 11,499.91
Pharma major Ranbaxy Laboratories lost 1.81% to Rs 352.20, on 4.84 lakh shares, and was the top loser from Sensex pack.
IT pivotals were trading on mixed note. The BSE IT Index gained 0.08% at 4,887.29. TCS (down 1.17% to Rs 1147), Infosys (down 0.15% to Rs 1953.90), declined while Wipro (up 0.51% to Rs 524) and Satyam Computers (up 0.54% to Rs 471), advanced.
The rupee was trading at 40.815/825 per dollar, easing from Tuesday's (19 June 2007) 40.79/80. It is up about 8.5% this year on robust capital inflows. The stronger rupee has been impacting profit margins of software services companies that derive more than 60% of their revenue from overseas markets.
Hindustan Unilever (down 0.50% to Rs 188.05), (down 0.50% to Rs 188.05), Tata Steel (down 0.39% to Rs 606.50), and NTPC (down 0.36% to Rs 150.50), edged lower
Some star performers from small-cap and mid-cap pack included, Voltas (up 14% to Rs 110.10), South India Bank (up 11.73% to Rs 116.20), India Infoline (up 10.50% to Rs 737.80), Ess Dee Aluminum (up 10% to Rs 493.65), Vakrangee Software (up 10% to Rs 147.25), Gateway Distriparks (up 9.63% to Rs 199.70), Divi’s Labs (up 8.37% to Rs 6359.95), Shasun Chemicals (up 8.02% to Rs 144.15), Hindustan Construction (up 7.88% to Rs 105.40), Gati (up 7.51% to Rs 88). All of them surged on high volume.
Divi's Labs was the top traded counter on BSE with total turnover of Rs 164.80 crore followed by Reliance Capital (Rs 154.25 crore), Educomp Solutions (Rs 136.20 crore), India Infoline (Rs 120.70 crore) and State Bank of India (Rs 107.08 crore).
Metal stocks gained on renewed buying, with the BSE Metal Index gaining 1.07% to 10,724.96. Sterlite Industries India jumped 7.50% to Rs 601.90 after its American depositary shares made a strong debut on the New York Stock Exchange on Tuesday, 19 June 2007, ending 9.4% higher than the offer price of $13.44.
Hindustan Zinc galloped 7.51% Rs 722 on reports that government will offload residual 29.5% stake in the zinc major to reap Rs 8,381 crore from stake sale.
Blue Dart Express soared 10.20% to Rs 770.25 on market talks that DHL has agreed to an offer price of Rs 950 per share to acquire the remaining stake in the company. DHL currently holds a little over 81% in Blue Dart through DHL Express Singapore, while institutional investors collectively hold 10.34%. Individual investors have a stake of less than 5%. In a clarification issued in this ragard, Blue Dart said it was unaware of any such move by the parent.
Indian Hotels Company lost 1% to Rs 144.70. It reported a 70.6% spurt in net profit to Rs 134.52 crore in Q4 March 2007 as against Rs 78.85 crore in Q4 March 2007. Revenue rose 41.9% to Rs 505.16 crore in Q4 March 2007 as compared to Rs 355.93 crore in Q4 March 2007. Net profit jumped 75.4% to Rs 322.39 crore in the year ended March 2007( as against Rs 183.78 crore in the year ended March 2006. Revenue was up 42.4% to Rs 1544.51 crore in FY 2007 (Rs 1084.26 crore).
Indiabulls Real Estate jumped 4.52% to Rs 405 after it announced that its wholly owned subsidiaries had acquired two housing projects in Chennai.
HCL Technologies rose 0.12% to Rs 336.20 on media reports that the company is close to signing a multi-million dollar contract in the aerospace services space. Reports suggest that the deal in the aerospace services space will be worth $100 million. The stock touched high of Rs 346.95 in early trade
Bharat Earth Movers (BEML) rose 0.20% to Rs 1139.85 on reports that the company plans to raise Rs 400-Rs 450 crore through its forthcoming follow on public offer. BEML’s follow-on public offer (FPO) of 49 lakh equity shares of Rs 10 each opens for subscription on 27 June 2007. The issue will close on 3 July 2007. The company is yet to announce the price band for the FPO. Reports suggest that Bharat Earth Movers (BEML) had set a revenue target of Rs 5000 crore by 2013/14, but could reach there by 2011/12.
Suraj Stainless rose 5% to Rs 337.50 after the company announced on Tuesday, 19 June 2007, after market hours that it would consider issue of bonus shares in a board meeting on 26 June 2007.
After trading hours on Tuesday, 19 June 2007, market regulator Sebi directed 15 brokers and some market participants not to indulge in distortion of the derivatives market. A Sebi investigation of derivatives transactions on NSE for the period from January-March 2007 found that these entities were involved in manipulation in the futures & options segment.
Most the Asian markets were trading higher today, 20 June 2007, with Nikkei 225 index gaining on automakers Toyota Motor Corp. and Nissan Motor Co. Nikkei rose 0.26% at 18,211.68. All the European markets opened higher.
Hong Kong's Hang Seng (up 0.47% to 21,684.67), Taiwan's Taiwan Weighted (up 2.13% to 8,755.88), Malaysia’s KLSE Composite (up 0.69% to 1,386.27), edged higher. But China's Shanghai Composite lost 2.07% to 4,181.32.
South Korea's Kospi index dropped after hitting a fresh high intraday. It lost 1.33% at 1,783.79.
Wall Street posted small gains on Tuesday 19 June 2007, as investors found solace in declining Treasury yields. The Dow Jones Industrial Average (DJIA) rose 22.44 points, or 0.16%, to 13,635.42. The blue-chip index was buoyed largely by GE, which rose $1.22, or 3.2%, to $39.29.
Broader stock indicators also edged higher. The Standard & Poor's 500 index rose 2.65 points, or 0.17%, to 1,533.70, and the Nasdaq Composite index rose 0.16 point, or 0.01%, to 2,626.76.
As per the provisional data, FIIs were net buyers of Rs 171.71-crore equities, while domestic institutional investors (DIIs) sold shares worth a net Rs 32.98 crore on Tuesday, 19 June 2007.
Oil prices steadied on Wednesday, 20 June 2007, as traders waited to see if a threatened strike in Nigeria would cut its crude exports and whether gasoline inventories in the United States have built as forecast. London benchmark Brent crude edged 3 cents lower to $71.81 a barrel today.
Investsmart - Morning Call
Market Grape Wine :
In House :
Nifty at a support of 4181 and 4145 levels with resistance at 4240 and 4265 levels .
Gap above opening with positive Bias and Expiry to take place above 4300 levels .
Buy : ONGC intraday target 929 s/l 908
Buy : Nicolas piramal above 306.1 target 315 s/l 302
Buy : in F&O OBC above 217 target 225 s/l of 213
Buy : ParsvNath above 336 target 348 s/l of 330
Out House :
Markets at a support of 14191 & 14056 levels with resistance at 14414 & 14324 levels .
Buy : RIL & RelCap
Buy : Century & GMR
Buy : Praj & UTV & EssdEe Aluminium
Buy : IBulls & Unitech & IbullsReal
Buy : GujNre at dips
Buy : LUPIN & Tatatea
Buy : Educomp , AIAengg & Divis
Buy : AsianElec & SKumar Bullet
Dark Horse : 3I , SBIN , Prajind , CenTextile , RIL , IBullsReal , Unitech & BHEL
Bullet : Educomp & Divis & Aban with strict stop loss .
Market may open firm
The market sentiment is likely to remain bullish following firm Asian markets in current trades and overnight gains in US markets. The renewed buying interest in heavyweights and banking stocks may keep the bias positive for the day. Among the negative factors FIIs remained the net sellers in equities is likely to exert pressure on the investor sentiment. Among the key domestic indices, the Nifty could test higher levels in the 4245-4270 range and has a support at 4100. The Sensex has a likely support at 14100 and may face resistance at 14400.
US indices finished slightly higher on Tuesday on easing Treasury yields, with the Dow Jones closing 0.2 percent higher at 13635, up 22 points, while the Nasdaq changed a little to close at 2627.
The upsurge in both the domestic and US markets spurred the Indian ADRs trading on the US bourses. ICICI Bank led the pack with gains of 5.39% followed by VSNL gaining 3.87% while Wipro, Tata Motors, HDFC Bank, MTNL, Patni Computers and Rediff surged over 1-2% each. However, Infosys, Satyam and Dr Reddy's slipped around 1% each.
Crude oil prices in the international market moved up, with the Nymex light crude oil for July delivery rising by a cent to close at $69.10 per barrel. In the commodity space, the Comex gold for August series surged by $4.80 to settle at $664.70 a troy ounce.
Sensex to continue its rally
The Sensex is expected to continue its rally, after surging 215.36 point or 1.53% to 14,295.50, on 19 June 2007 on short covering and strong response to the follow-on public offer (FPO) of ICICI Bank. Cues from global markets will also help the sentiment.
Asian markets were trading higher today, 20 June 2007, with Nikkei 225 index gaining on automakers Toyota Motor Corp. and Nissan Motor Co., while South Korea's Kospi index dropped after hitting a fresh intraday high. Japan's Nikkei gained 81.68 points or 0.45% at 18,245.29.
Hong Kong's Hang Seng (up 0.50% at 21,691.73), Taiwan's Taiwan Weighted (up 1.15% at 8,671.86), Singapore's Straits Times (up 0.27% or 9.72 points at ,639.27), also edged higher. However, South Korea's Seoul Composite lost 0.40% at 1,800.56.
Wall Street posted small gains on 19 June 2007, as investors found solace in declining Treasury yields but remained subdued after Best Buy Co.'s lackluster profit forecast and a drop in new home construction. The Dow Jones Industrial Average (DJIA) rose 22.44 points, or 0.16%, to 13,635.42. The blue-chip index was buoyed largely by GE, which rose $1.22, or 3.2%, to $39.29.
Broader stock indicators also edged higher. The Standard & Poor's 500 index rose 2.65 points, or 0.17%, to 1,533.70, and the Nasdaq Composite index rose 0.16 point, or 0.01%, to 2,626.76.
As per the provisional data, FIIs were net buyers of Rs 171.71-crore equities, while domestic institutional investors (DIIs) sold shares worth a net Rs 32.98 crore on Tuesday, 19 June 2007.
Oil prices steadied on Wednesday, 20 June 2007, as traders waited to see if a threatened strike in Nigeria would cut its crude exports and whether gasoline inventories in the United States have built as forecast. London benchmark Brent crude edged 3 cents lower to $71.81 a barrel today.
Daily Technical Note
Nifty and Sensex have exhibited a bullish candlestick.
Technically, one may use the level of 4155 (Nifty) and 14140 (Sensex) as the stop loss level.
Nifty faces resistance at 4280 and Sensex at 14500.
Nifty Range 4170 to 4280.
BSE Smallcap and BSE Midcap also exhibited bullish candlesticks.
CNX IT has closed flat.
In the Punter's zone we have a Buy in Cairns & India cement and Sell in Tata Steel.
In the Technical call section, we have a Buy in M&M, IVRCL & InfosysTCH.
Anand Rathi - Daily Technicals - Jun 20 2007
Indiainfoline - Intraday Stock Ideas
NIFTY (4214) SUP 4179 RES 4257
BUY LICHSGFIN (174.65)
SL 170 T 182 ,185
SL 170 T 182 ,185
BUY HEXAWARE (167.75)
SL 163 T 175,177
SL 163 T 175,177
BUY UNIONBANK (130.10)
SL 126 T 138,140
SL 126 T 138,140
SELL GLENMARK (652.6) @ 655
SL 659 T 643,640
SL 659 T 643,640
SELL INFOSYSTCH (1956) @ 1960
SL 1970 T 1940,1920
SL 1970 T 1940,1920
Bulls bank on another issue
The fish only knows that it lives in the water, after it is already on the river bank. Without our awareness of another world out there, it would never occur to us to change
Suddenly worries evaporated even as dark clouds seem to be looming. Concerns voiced so far seemed to have taken a back seat. With reports of robust advance tax figures, heightened activity in banking counters and bargain hunting in oil and gas stocks the bulls went on a buying spree. Heavyweights like ONGC, RIL and SBI led the gains. Short covering added to the bulls' delight. We continue to advice caution.
We expect a flat open followed by some choppiness. The bulls would hope to retain their position and scale to a new peak. Small-cap and mid-cap shares may remain in focus. Without any fresh triggers available, global markets will guide the indices at least in the early trade.
On the brighter side, ICICI Bank follow on issue was fully subscribed within minutes of the opening. State Bank of India, is expected to raise $400mn from the market. HDFC is expected to raise $420mn. Central Bank of India and UTI Bank also have similar plans. Capital Goods was another sector in the limelight.
SEBI, has passed an order directing that erring brokers cease and desist from indulging in futures & options contracts till further orders.
Asian stocks climbed for a fifth day as declining U.S. bond yields eased concern borrowing costs will rise in the world's largest economy. Japan's Nikkei 225 Stock Average climbed 0.5 percent to 18,245.29. The Taiex index jumped 1.1 percent in Taiwan, where the market was closed for the past two days. BHP Billiton Ltd. and Rio Tinto Group declined with the price of metals and on speculation they may bid for Canada's Alcan Inc.
Among the Indian ADRs, ICICI Bank gained over 5% to $49.69. VSNL added 4% to $22.80. Wipro, HDFC Bank, MTNL and Tata Motors were the other major gainers. Satyam, however, fell 1% to $25.44.
GTL, a network services provider, has entered into a Rs2.50-2.75bn infrastructure leasing agreement with private banking major ICICI Bank and IT company Spanco TeleSystems. The deal permits ICICI Bank to use GTL’s business process outsourcing (BPO) and call centre facilities at Mhape in Navi Mumbai for 25 years.
Petron Engineering and Construction gained 20% hitting a 52-week high after the promoters announced that they entered into an agreement to sell their controlling stake to KazStroy Services plc, UK. The stock has added 54% in a week.
Blue Dart Express is in limelight following reports of an open offer at price which could be substantially high compared with its current market price. Company has denied any such move.
ICRA surged nearly 5% after the company and Vijaya Bank signed a Memorandum of Understanding under which the company will assign ratings to Small Scale Industries (SSIs) and Small and Medium Enterprises (SMEs) that are borrowers of the above bank.
Tripex Overseas was locked at the 5% lower circuit. The company announced that they would set up Pharma SEZ Unit.
The Income-Tax Department on Tuesday conducted search and seizure operations on the Multi Commodity Exchange (MCX) and the offices of its promoters, branches and associates across the country.
Indoco's wholly owned subsidiary La Nova Chem (India) Pvt Ltd will merge with the company, after shareholders recently approved its composite merger and demerger scheme.
Surana Industries is in limelight. The company is reportedly in the final stages of negotiations to secure a long-term lease for a coal mine in Indonesia. The company announced that had raised $25 million through a FCCB issue for the Rs4.73bn Raichur project. These bonds, listed on the Luxembourg stock exchange, will be converted into equity shares at a price of Rs 140 per share. The stock closed a little below Rs120 on Tuesday.
Markets ended on a strong note as bulls came back with vengeance. After opening on a weak note the key indices gradually gained momentum as the session progressed. The Banking and Oil & Gas stocks led the rally, with Auto and Capital God followed suit. The index heavy weight like SBI, Tata Steel, ONGC, ICICI Bank and Reliance Industries lifted the NSE Nifty 4200 level.
Finally, the 30-share Sensex surged 210 points to close at 14290 hitting an intra-day high of 14315.18 and a low of 14058.79. NSE-50 Nifty advanced 67 points to close at 4214 touching an in intra-day high of 4222.40 and a low of 4136.15.
ICRA surged nearly by 5% to Rs903 after the Company and Vijaya Bank signed a Memorandum of Understanding under which the company will assign ratings to Small Scale Industries (SSIs) and Small and Medium Enterprises (SMEs) that are borrowers of the above bank. The scrip touched intra-day high of Rs915 and a low of Rs851 and recorded volumes of over 15,00,000 shares on NSE.
Tripex Overseas locked at 5% lower circuit to Rs27.50. The company announced that they would set up Pharma SEZ Unit. The scrip touched intra-day high of Rs27.50 and a low of Rs25.70 and recorded volumes of over 11,0,000 shares on NSE.
Banking stocks were in the limelight led by gains in the index heavy weight ICICI Bank as the scrip gained by 2.6% to Rs942, SBI was up 4% to Rs1371 and HDFC Bank added 1% to Rs1099. However, Andhra Bank was the major losers among the Mid-Cap stocks.
Auto stocks gained momentum led by fresh buying interest. Tata Motors gained by 2.8% to Rs663, Bajaj Auto advanced by 2% to Rs2121 and M&M added 1% to Rs700.
Securities in ban period:
The derivative contracts in the underlying BRFL, Parsvnath and Nagarjuna Fertilizers have crossed 95% of the market-wide position limit and are currently in the ban period.
Results Today:
ABG Shipyard, Indo Tech Transformers, INOX, Kinetic Motor, Rajesh Exports, Tantia Constructions, Visa Steel and Zicom.
Insider Trades:
Housing Development Finance Corporation Ltd: N M Munjee, Director of the company on 11th & 12th June 2007 has
sold 1000 equity shares of the company.
Ganesh Housing Corporation Ltd: Bhavin Mehta, Head-Business Development of the company on 13th June 2007 from
market has purchased 4000 equity shares of Ganesh Housing Corporation.
Shringar Cinemas Limited: Balkrishna Shroff, Director of the Company from market has purchased 7216 equity shares on 14th June 2007 of Shringar Cinemas.
Lower Circuit:
United Breweries, Country Club, BF Utilities, Dynamic Industries, Rama Pulp and Tripex Overseas.
Upper Circuit:
Deep Inds, Geodesic Info, Prime Focus, UTV Software, Development Credit Bank, Pratibha Industries, Jai Corp, Petron
Engineering, Swan Mills, Surana Industries, Vyapar Industries and Shaw Wallace.
IDelivery Delight (Rising Price & Rising Delivery):
ABB, Ballarpur Industries, Bank of Baroda, Bank of India, Cadila Healthcare, Century Textiles, Colgate, Corporation Bank,
Escorts, Grasim Industries, HDFC Bank, HDFC, ICICI Bank, Indian Hotels, Kotak Bank, McDowell and PNB.
Major Bulk Deals:
Bulk deals were seen in Bihar Tubes, Euro Ceramic, Indo Asian Fuse Gear, JBM Auto, Rana Sugars (Edelweiss sold 0.43mn), RPG Transmission (Goldman Sachs bought 62K )
Abnormal Delivery:
BEL, Indian Overseas Bank, Satyam Computer, Gujarat Alkalies, Sterling Biotech, Andhra Bank, Bharat Earth Movers Ltd, Wipro, Siemens and BILT.
Major News & Announcement:
Gayatri Projects denies reports of getting Rs9bn order from AP Government
Jet Airways to consider rights issue on 26th June
Petron Enginnering promoters to sell stake
Kanoi Paper to mull Rights Issue on 27th June
L&T Eastern Venture gets order worth Rs6.1bn
Lupin Settles litigation with Abbot Labs & Astellas
PSL starts new pipeline Manufacturing facility in Sharjah
Tripex Overseas to set up Pharma SEZ Unit
Ipca Laboratories gets US FDA approval for Hydroxychloroquine sulfate tablets
Tata group forms Financial Service Company
Indian Hotels Q4 profit at Rs1.34bn (up 70%) and revenue (up 45%) at Rs5.39bn
US Market registers small gain
Housing report and higher crude prices try to put a brake on stocks
US stocks registered small gains today after yield on the 10-year note continued to drop and crude prices remained above $69/bbl. It was mainly because of GE and IBM that Dow posted a modest gain.
Nineteen of the 30 Dow stocks closed higher for the day. The Dow Jones Industrial Average closed higher by 22.44 points at 13635.42. Nasdaq closed marginally up by 0.16 points to close at 2626.76. S&P 500 ended the day up by 2.65 points to close at 1533.7.
GE, IBM and Verizon were the major Dow winners today. GE shares soared a 5 year high to $39.29 (3.2% gain). GE accounted for 11 point gain of Dow while IBM’s 1.1% rise accounted for another 9 point gain of Dow.
Before market opened today, the Commerce Dept reported that starts of new U.S. homes fell by 2.1% to a seasonally adjusted annual pace of 1.47 million in May, as building permits for new construction rose 3% to 1.50 million on a jump in multifamily dwellings. The figures were slightly stronger than market expectations.
Best Buy misses Wall Street Expectations, shares slip 5.8%
When market opened in the morning, it was a sluggish start for the major indices which edged lower at the start of trading. After lingering around the flat line for most part of the day, Dow went up by almost 20 points in the final hour of trading, mainly led by GE.
The bond market, where prices have come under pressure and yields have spiked over the past couple of weeks, failed to react much to the latest housing news. The yield on 10 year Treasury notes finished at 5.08%.
Led by GE and the airline stocks, the industrials sector was the best-performing sector today. Conversely, consumer staples were the worst-performing.
Home-Depot shares today rose almost 1% after reports that it has agreed to sell its building supply unit for $10 billion.
Best Buy was a notable laggard today after coming up shy of second quarter earnings estimates and issuing full-year EPS guidance that fell below the consensus estimate. Best Buy shares slipped by almost 6%.
Eyes will be on retailers as Circuit City announces earnings report
Crude oil futures were steady today ahead of tomorrow’s weekly inventory report by Energy Department but still remained above the $69/bbl mark. But concerns still persisted about Nigerian unions planning a strike this week, threatening supplies from Africa's biggest oil producer. As per latest reports, the strike is going ahead tomorrow.
Crude-oil futures for light sweet crude for July delivery closed at $69.10/barrel (higher by $0.01/barrel or 0.01%) on the New York Mercantile Exchange. The contract touched $69.56 during intra day trading. Prices are down just 1% from a year ago.
Trading volumes showed 1.4 billion shares exchanging hands on the New York Stock Exchange and 1.9 billion trading on the Nasdaq stock market. Gaining issues topped decliners by 19 to 13 on the NYSE and by 15 to 13 on the Nasdaq.
Companies that are expected to report their earnings on tomorrow include Circuit City, Morgan Stanley and FedEx. The Energy Department's weekly oil report will hit the wires at 10:30 ET.
Man Financial - ICICI Bank FPO
Man Financial in their report on ICICI Bank FPO
We recommend a Subscribe to the issue at the lower end of the price band. Our fair valuation works out to Rs 968 on a SOTP basis. Key upside risks to our target price remain in the form of the difference between market-implied valuation and our valuation of ICICI Financial services (Rs 53/share incorporating a holding company discount of 20%) and in case of a higher P/BV multiple being ascribed to ICICI Bank by the market on account of its impressive track record.
Sharekhan Investor's Eye dated June 19, 2007
Cadila Healthcare
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs425
Current market price: Rs369
Plans to raise $100 million for financing acquisitions
Key points
- The board of directors of Cadila Healthcare has decided to issue foreign currency convertible bonds (FCCBs)/American depository receipts (ADRs)/global depository receipts (GDRs) or such other foreign currency instrument of up to USD100 million.
- The funds are being raised to finance the company's forthcoming inorganic activities. Cadilla Healthcare is looking to make an acquisition in Brazil to make a foray into the high-margin branded formulation market and to participate in Brazil's growth story. Further, it is also looking to exploit the opportunities in the generic markets of Spain and Italy through the acquisition of some small to mid-sized companies.
- Cadila Healthcare has a vision of becoming a $1-billion company by December 2010 (ie FY2011). Of the billion, $800 million will come through organic growth whereas the balance $200 million will come from inorganic initiatives. Hence, in line with its strategy to hit the $1-billion revenue mark, the company is moving ahead with its acquisition plan.
- At the current market price of Rs369, Cadila Healthcare is trading at 13.8x its estimated FY2009E earnings. We maintain our Buy recommendation on the stock with a price target of Rs425.
VIEWPOINT
Greenply Industries
PAT up 60% in FY2007
Greenply Industries is an integrated interior infrastructure company with leadership in the branded plywood and laminate industry in India. The company has a market share of 25% in the plywood segment and a 15% share in the laminate segment. It is a one-stop manufacturer of all products related to interior infrastructure, from plywood and boards, decorative veneers to laminates and particleboard.
The company has a pan-India network with 24 marketing offices and 7,100 authorised dealers/distributors. It is developing the Greenlam brand internationally and has recently formed an exclusive marketing and distribution alliance with Dekodur, a high-end German metal laminate brand, to cater to premium consumers. Its clients include Godrej, Blowplast and Featherlite.
ABG Shipyard
Sitting on strong order book
We attended the conference call of ABG Shipyard to discuss the company's Q4FY2007 and FY2007 results. We present the key takeaways from the call.
India adds 6.5 mln new mobile users in May
Indian mobile telephone service providers added 6.5 million new customers in May, the government said on Tuesday.
However the number of fixed-line users fell by 200,000. The total number of telephone users stood at 218.06 million.
The government has projected 500 million telephone subscribers by 2010, 440 million of them using mobiles.
GSM mobile firms logged 5 million new customers during the month, while the CDMA segment registered an increase of 1.5 million, led by Reliance Communications.
India has been adding about six million new mobile phone users each month, lured by call rates as low as one U.S. cent a minute.
Monsoon Update - Low Pressure Area
A low-pressure area formed over east-central Bay of Bengal on Tuesday a day ahead of projections and at a location farther out into the sea than was originally thought.
The emerging scenario has crucial implications in that it affords the system extended "ocean residency" and longer distances to travel over warm seawaters, which could combine to alter its growth dynamics overnight.
Calibrated progression to cyclonic strength is not being entirely ruled out now.
The India Meteorological Department (IMD) has said the system could deepen into a depression by Wednesday itself.
Dr Akhilesh Gupta, Advisor to the Department of Science and Technology, said he would not be surprised to see it spinning further as a deep depression, even a cyclone.
ALERT FOR MUMBAI
Significantly, after crossing the Andhra Pradesh coast, the system will be able to traverse the north-northwest track over land without much weakening and cap it all in a blow-up of rainfall over North Konkan (including Mumbai) and south Gujarat.
A rare combination of atmospheric features may actually help the heavy to exceptionally heavy precipitation in the region to last for some time.
The Andhra Pradesh, Maharashtra and Gujarat administrations are being separately notified to take rearguard action.
RARE CONVERGENCE
Dr Gupta said the system would witness a convergence of monsoon flows from both the Arabian Sea and the Bay of Bengal for four days from Saturday.
Predicted circulation features and convergence are quite favourable to trigger exceptionally heavy rains over North Konkan and South Gujarat. There is, of course, no comparison to the cloudburst that caused the Mumbai deluge of July 2005.
But the heavy rains could sustain for a much longer period in this case, spread over a much larger geography.
In this manner, monsoon focus will shift to the peninsula, while it would remain stagnant towards the east of the country. The system will help strength the monsoon flow over the Arabian Sea.
This clearly indicates that monsoon is likely to enter into an active phase beginning Wednesday.
TORRENTIAL RAIN
The system has not only got the potential to intensify into a depression by Wednesday and move west-northwestwards but also the power to sustain over land for at least five days.
North Andhra Pradesh, south Maharashtra, north Konkan and south Gujarat will bear the brunt of the torrential rains.
Kerala and Tamil Nadu will also experience heavy downpour.Rainfall activity is likely to increase over Andhra Pradesh, Orissa and south Chhattisgarh on Thursday and Friday.
The enhanced rainfall belt would shift to Maharashtra, Goa, Karnataka, south Madhya Pradesh and Gujarat for four days from Saturday.
During this period, the monsoon is likely to advance further into remaining parts of Orissa, Chhattisgarh and Maharashtra and some parts of Madhya Pradesh and Gujarat.
The active offshore trough will bring widespread rainfall with heavy to very heavy falls along the west coast during the next five days.
FRESH `LOW'
High-resolution global model predictions further indicate that subsequent to the system moving over to north Konkan/south Gujarat on June 26, another `low' could spring up in the Head Bay by Wednesday next.
Since the predicted event is more than a week from now, the accuracy of prediction may be low.
But what is more important is that the monsoon flow is expected to remain intact even after the present system moves westward and weakens.
This opens up the prospect of monsoon rains reaching other parts (northwest India, for instance) on time, Dr Gupta said.
Auto stocks losing favour
The latest signs of weakness in automobile stocks have not gone down well with fund managers, a section of whom is willing to stay away from the auto sector, at least for the time being.
However, some managers are hoping that a further weakening in valuations will give investors a chance to invest in good stocks at more reasonable levels.
Auto stocks have lately been on the backfoot, especially after the last quarterly results, which, according to investment circles, have not quite been in line with expectations for a number of companies. In fact, not all players have managed to return to the market's radar after the last crash in May 2006, they added.
The sector was perceptibly depressed last year, it is pointed out, a trend evident from the performance of the BSE's auto index for that period. The auto index, which was at 4,576.52 on June 19, 2006 has crawled to only 4,633.97 on June 18, 2007. On the other hand, the BSE Sensex posted a sharp return of 43 per cent during this period.
The current situation, sources said, is quite different from what was witnessed in 2005, when auto stocks added considerably to investors' wealth.
Pare exposures
The top-performing funds of the day now have only a low-to-medium exposure to auto.
Most have scaled down exposure in recent times.
These include ICICI Prudential Services (73 per cent returns for the one-year period ended June 18), Standard Chartered Premier Equity (70 per cent) and DBS Cholamandalam Opportunities (67 per cent). Auto accounted for only 4.55 per cent, 1.74 per cent and 6.04 per cent of their net assets respectively as on May 31, 2007.
The way forward, according to some quarters, may well lie in well-chosen mid-cap stocks, as opposed to strictly large-cap names such as Maruti, Bajaj Auto and Tata Motors, which are key components of the Nifty. "A host of mid-cap names are available in the auto/auto component segment," said a fund industry source.
"Clearly, not all are worth investing in. However, fund managers may consider building diversified portfolios with a bias towards mid-caps." He also said investors must see whether they can enter good stocks when prices soften further. According to him, the following should drive further allocations: global outsourcing opportunities for auto ancillary companies, demand witnessed in specific sub-sectors such as tractors and two-wheelers and recent reduction in Customs duties on polymers.
How auto funds stack up
There seems to be a major difference in the performance of the two auto sector funds, one managed by UTI and the other by JM.
While the JM fund has provided 27.76 per cent for the one-year period ended June 18, the UTI product has in comparison given a disappointing 1.16 per cent, according to data released by Value Research.
These render the one-year average at 14.46 per cent. Both, incidentally, were launched in 2004.
The funds in question seem to follow different styles. JM has, in recent times, relied heavily on such mid-cap names as Ramkrishna Forgings, Amtek and Ashok Leyland. UTI, on the other hand, has invested heavily in M&M, Tata Motors, Maruti and Bajaj Auto. Auto sector funds (in terms of one-year returns) are positioned well below other sectoral products such as bank (70 per cent), IT (69 per cent), pharma (35 per cent) and FMCG (15 per cent).
EXCLUSIVE - Equibrain Report - June 20 2007
Equibrain Report - June 20 2007
Want to customize for your own stocks? Contact Aditya (details inside the PDF)
IPO makes DLF's KP Singh richest realtor
DLF promoter K P Singh has emerged as the richest real estate baron after his company’s initial public offering closed on June 14.
Promoters of the dozen top listed real estate developers in the country, including DLF Ltd, which will be listed next month, are worth a massive Rs 125,845 crore (or over $30 billion).
However, the lion’s share of this net worth (derived on the basis of the latest m-cap) lies with DLF’s K P Singh and his family — Rs 77,915 crore (around $19 billion) based on the allotment price of Rs 525 per share and their shareholding of around 87.3 per cent in the company.
According to BS research, this makes K P Singh the fourth richest Indian by today’s market capitalisation, after Mukesh Ambani, Anil Ambani and Sunil Mittal. He overtakes Wipro’s Azim Premji, who ranks immediately after him. In effect, the DLF promoter family accounts for around 60 per cent of the realty wealth as denoted by market cap.
Promoter | Net worth |
| KP Singh & Associates (DLF Ltd) | 77,915 |
| Ramesh Chandra & Associates (Unitech) | 30,544 |
| Sobha Menon & Associates (Sobha Developers) | 5,277 |
| Pradeep Jain & Associates (Parsvnath Developers) | 4,768 |
| Shah family & Associates (Akruti Nirman) | 2,075 |
| Pranav, Sushil Ansal & Associates (Ansal Properties & Infrastructure) | 1,965 |
| Piramal Family & Associates (Peninsula Land) | 1,291 |
| Mahindra Gesco Developers | 1,076 |
Second, and by a distant margin, is the Unitech Ltd promoter family —which includes Ramesh Chandra and his sons Sanjay and Ajay. Their net worth is about half of DLF’s — at Rs 30,544 crore (around $7.4 billion).
The Unitech promoters hold a 74.33 per cent stake in the listed entity. Last August, Business Standard had valued Ramesh Chandra’s net worth at Rs 12,670 crore.
In March, Forbes ranked Chandra as the world’s 114th richest billionaire.
The substantial difference between the net worth of DLF and Unitech promoters is significant because the two companies are considered comparable in terms of their land assets, among other things.
The Bangalore-based Menon family and associates own just under 87 per cent of Sobha Developers. At Rs 5,277 crore ($1.28 billion), the Menons’ net worth is nearly a fifth of the Unitech family’s.
Parsvnath Developers’ Pradeep Jain and family are ranked fourth — with Rs 4,768 crore ($1.16 billion) of net worth on the basis of their 80.33 per cent stake in the company.
The list also includes Mumbai-based Akruti Nirman, promoted by the Shah family, whose net worth stands at Rs 2,075 crore.
Portals are taking over from real estate agents
A real estate ‘consultant’ with more than two decades of experience, K. Premsundar is a worried man. His business, a letting agency for low-end properties, has seen a big drop in the last two years. He says his clients have left him, choosing to place advertisements directly on the many real estate Internet portals and in neighbourhood dailies. Such advertising costs a fraction of the fee that agents charge.
Indiaproperties.com, an online real estate portal, allows owners to post their properties for Rs500 per listing, whereas if the deal is done through a broker, it would mean a month’s rent as commission, from either the owner or the tenant. Others sites such as magicbricks.com and Sulekha.com also offer similar services. The portals allow for direct interaction between the property’s owner or seller and a prospective tenant or buyer.
“Online portals have impacted agents’ business especially in the lower range. Their traditional clients have moved away,”said J. Sohail Sarooshi, vice-president of the Chennai Real Estate Agents Association. The association, which has 60 members, was formed as an attempt to bring standardized and fair conduct norms into the industry, which is largely unregulated. For a sale, agents get a 3-4% commission on the value of the sale, and for a rental deal, they get 15 -30 days’ rent as commission.
“Real estate agents have so far thrived on information,” said Naresh Malkani, chief executive officer of indiaproperties.com. “Now, the Internet provides the information.”
However, he said unlike booking travel tickets online, the “Internet is not going to replace agents, as the transaction has to be done physically”. Agents now need to focus on services such as valuation, documentation, registration and field visits, he said.
“We definitely have seen the advanced Internet user take advantage of the free online classifieds platform as an additional option. By interacting directly with other individuals, they have able to reduce lead time and costs”, said Satya Prabhakar, chief executive officer of Sulekha.com, a portal that also lists properties. “It still may be a good idea to supplement this with the professional advice of local real estate agents”.
According to an estimate by indiaproperties.com, in cities covered by online portals, 40% of the total market, in terms of property inventory, is listed on Internet sites. In the last six months alone, Malkani said, there has been a 120% increase in listings. And, property for a monthly rent of between Rs5,000 and Rs20,000, the traditional bread and butter for letting agents, constitutes one-third of total listings on his website.
On Sulekha.com, Prabhakar said 80% of rentals are at Rs20,000 per month or below. Both individuals and real estate agents access the site.
Over the next few years, this percentage will increase, as new and young property buyers of the last five years would be in the market to sell or rent. Traditionally, it takes about 7-8 years for change in ownership or usage.
Though the Internet is posing a challenge to agents, Sarooshi and Malkani agreed that both could co-exist. Agents, who pay an annual fee of Rs10,000 to enrol as members, can list 100 properties every year, and provide one-fourth of all listings on indiaproperties.com.
Local real estate agents, especially smaller ones, Prabhakar said, are using online classifieds as a “platform to reach out to individuals who are looking for rental solutions in the niche areas that they operate in. The lower entry barriers and flexible advertising options have helped those who have been quick to adopt this.”
However, Premsundar, in his late fifties, has never used the computer nor browsed the Internet. He says he is too old to start now.
Citigroup - Daily Technicals
Citigroup in their daily technical report,
Nifty — The index opened on a flat note and witnessed a rally for the entire trading session. It ended the day up 67 points.
Resistance — The index faces resistance around 4241 (low of 30 May 07) and 4263 (approx.) - 62% retracement level of the decline from high of 4363 (4 June 07) to the low of 4100 (12 June 07). Intra-day index can rise towards the 4241 level.
Support — The support levels for the days trading are around 4174 (high of 14 June 07) and 10dma at 4164. Intra-day dips should find support around these levels.
Conclusion — Expect intra-day rise towards 4243. Intra-day dips should find support around 4170 levels.
Roman Tarmat IPO Subscription Details
Qualified Institutional Buyers (QIBs) - 27.4921 times
Non Institutional Investors - 62.1384 times
Retail Individual Investors (RIIs) - 21.8190 times
Employee Reservation - 0.7500 times
OVERALL - 29.67 times
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