Dead Presidents! - India Equity Research: Jul 27, 2007

Friday, July 27, 2007

RBI’s monetary policy review holds key

With most of the frontline companies having already declared their Q1 June 2007 results, the market will closely watch the monetary policy review of RBI due on Tuesday, 31 July 2007. RBI is likely to keep rates steady. However, it remains to be seen whether the central bank will raise cash reserve ratio (CRR) to suck out excess liquidity in the banking system.

The 30-share BSE Sensex lost 330.98 points or 2.13% to 15,234.57 in the week ended 27 July 2007, on profit booking. The S&P CNX Nifty lost 120.85 points or 2.6% to 4,445.20 in the week. Prior to this, the market had been posting weekly gains since the past six weeks.

Latest Data released on Friday, 27 July 2007, showed India's wholesale price index rose 4.41% in the 12 months to 14 July 2007, higher than the previous week's 4.27% due to increase in food prices. The inflation is within the central bank's medium-term target of 4-4.5% and annual target of 5% for this fiscal. The Finance Minister, P Chidambaram, hinted recently that high crude oil and food prices did not necessary mean that money policy would be tightened further.

Among the frontline companies - Bharat Heavy Electricals, Bharat Electronics, Mahindra & Mahindra, Cairn India and i-flex Solutions, will declare their June 2007 quarter results in the coming week

Gujarat Mineral Development Corporation, India Cements, Balkrishna Industries, Bharati Shipyard, Dredging Corporation of India, Gitanjali Gems, India Infoline, Indiabulls Real Estate, Nagarjuna Construction Company, Wanbury, Asian Electronics, Development Credit Bank, Ashapura Minechem, Parsvnath Developers, Birla Corporation, Financial Technologies (India), Provogue (India), Madhucon Projects, Sterling Biotech and United Phosphorous, will also declare their result

Oil prices have held firm above $75 a barrel on fears of tight summer supplies would offset a fresh wave of risk aversion that struck US equities and dragged oil down a day ago. Any sharp rise from these levels, may dampen the sentiment

Sensex sheds 331 points

The market edged lower, last week, due to a sharp fall in a single trading session on Friday, 27 July 2007, that was caused by setback in Asian and US stocks. Earlier, the market remained firm for a better part of the week as renewed buying was witnessed due to good Q1 June 2007 results. FII inflows remained robust.

The 30-share BSE Sensex lost 330.98 points or 2.13% to 15,234.57 in the week ended 27 July 2007. The S&P CNX Nifty lost 120.85 points or 2.6% to 4,445.20 in the week.

Profit taking was witnessed in small-cap and mid-cap shares after their recent solid surge. BSE Small-Cap index shed 261.67 points or 3.2% to 7,926.45 in the week. BSE Mid-Cap index lost 237.75 points or 3.48% to 6,598.32 in the week.

A good rollover was witnessed to the August 2007 series from the July 2007 series when the July 2007 contracts expired on Thursday, 26 July 2007. According to one brokerage report, overall 83% positions have got rolled to August 2007 from July 2007. A good rollover of 73% was witnessed in index futures as well. Institutional investors rolled over short positions in Nifty following the hedging of their positions in the cash market

FIIs inflow in three trading sessions from Monday, 23 July 2007, to Wednesday, 25 July 2007, totaled Rs 2322.40 crore. Mutual funds sold shares worth a net Rs 468.70 crore in four trading session from Monday, 23 July 2007 to Thursday, 26 July 2007.

Trading for the week began on an upbeat note. Sensex surged 166.65 points or 1.07% to 15,732.20, an all time closing high on Monday, 23 July 2007. Shares from the auto, real estate, and capital goods sectors were at the forefront of the rally.

Shares rose in China as well on that day. Shanghai Composite jumped 3.81% to 4,213.36, even as the central bank raised borrowing costs, effective Saturday, 21 July 2007, in the latest of a series of moves aimed at capping inflation and preventing the world's fourth-largest economy from overheating.

The market extended its winning steak to firth straight session on Tuesday, 24 July 2007, helped by steady buying interest for capital goods, power and IT stocks. Sensex rose 62.72 points to 15,794.92, an all time closing high.

The market remained weak throughout the day on Wednesday, 25 July 2007, as correction set in after five straight days of rally. Sensex lost 95.59 points to 15,699.33. Weakness in global markets triggered profit taking.

Short covering ahead of expiry of July 2007 derivatives contracts aided 77-point surge in Sensex on Thursday, 26 July 2007. Two index heavyweights Reliance Industries and Infosys led rally on that day.

Weak Asian and US markets spooked domestic bourses on Friday, 27 July 2007, as Sensex plunged 541.74-point, or 3.4%, to 15,234.57, registering its biggest rout in a single trading session in nearly four months. Stocks across Asia fell after the US market dropped 2.3% on Thursday, 26 July 2007, on signs of further weakness in the US housing market and deteriorating conditions for corporate buyouts. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down between 2.4% to 4%

Reliance Energy surged extending its solid rise witnessed since mid-June 2007 on hopes that the company may win the 4,000- megawatt Sasan power project in Madhya Pradesh as it was the second best bidder after Lanco. The empowered group of ministers (E-GoM) headed by power minister Sushil Kumar Shinde, on Tuesday, 24 July 2007, decided to scrap the allotment of the 4,000- megawatt Sasan power project in Madhya Pradesh to the lowest bidder, the Lanco-Globeleq consortium. E-GoM declared Lanco’s bid as void ab-initio (invalid from the outset). However, E-GoM did not take any decision on awarding the Rs 20,000-crore project to REL or invite fresh bids.

India’s largest cigarette manufacturer ITC surged nearly 9% in a single trading session on Wednesday, 25 July 2007, on market talks it may announce demerger of its agri business. The stock extended gains on Friday, 27 July 2007, when it reported a forecast beating 20% growth in net profit in Q1 June 2007. The company unveiled its results during trading hours on Friday, 27 July 2007.

Car major Maruti Udyog rose nearly 4% on Thursday, 26 July 2007, when it beat forecast by reporting a 35.1% growth in net profit in Q1 June 2007 over Q1 June 2007 during trading hours.

Ranbaxy Laboratories, India's largest pharma firm by sales, jumped nearly 10% on Thursday, 26 July 2007, after it reached an agreement with GlaxoSmithKline (GSK) to end their litigation in the US on Valtrex (valacyclovir hydrochloride tablets) used in the treatment of herpes.

NTPC, India’s largest power generation company, firmed up after it signed an MoU with Asian Development Bank for setting up a joint venture company to undertake renewable power generation. The company made this announcement after trading hours on Monday, 23 July 2007.

Hindustan Unilever (HUL) surged on Monday, 23 July 2007, after its parent announced after market hours on 20 July 2007 it is considering a plan to buy its own shares on 29 July 2007. HUL will also declare financial accounts for the second quarter and half year ended 30 June 2007 on that day.

Index heavyweight Reliance Industries (RIL) edged higher on reports it may seek foreign partner for its deep-water exploration blocks off the country's east coast. The stock hit record high of Rs 1948 on Thursday, 26 July 2007. Reports indicate that global oil firms, including Chevron, have shown interest in partnering RIL for its Cauvery oil & gas assets

Oil exploration major ONGC extended gains after reported an 11.9% growth in net profit to Rs 4610 crore in Q1 June 2007 over Q1 June 2006, due to fall in subsidy sharing burden. The company unveiled results on 25 July 2007.

Cement stocks plunged after their recent rally following reports on Tuesday, 24 July 2007, that Monopolies & Restrictive Trade Practices Commission (MRTCP) had ordered a probe into the business practices of 14 leading cement manufacturers.

ICICI Bank drifted lower despite posting a 25% rise in net profit in Q1 June 2007 to Rs 775.08 crore over Q1 June 2006, riding on increased fee-based income and retail lending. Total operating income rose 46.9% to Rs 9,281.42 crore in Q1 June 2007 over Q1 June 006. The results were announced on 21 July 2007.

UTI Bank lost ground after it priced its GDR issue at a discount to the ruling market price. It announced before market on 23 July 2007 that it had priced its offering of 14.13 million GDRs, aggregating $ 218.07 million. Each GDR, representing one underlying share, was priced at $15.43 and will be listed on the London Stock Exchange. This represents a discount of 1.7% to the closing price of the Bank's GDR on 20 July 2007.

Real-state developer Housing Development and Infrastructure settled at Rs 558.60 on BSE on Tuesday, 24 July 2007, a modest premium of 11.72% over the price of Rs 500 per share. The stock debuted at Rs 567.50. The stock also debuted in NSE's F&O segment with a lot size of 400. The HDIL IPO was subscribed 6.6 times

Debutante Suryachakra Power Corporation settled at Rs 22.82, on Monday 23 July 2007, a premium of 14.1% over the IPO price of Rs 20. The stock debuted at Rs 30. The Suryachakra IPO had closed on 29 June 2007 with 2.18 times subscription.

BSE, on Monday, 23 July 2007, announced that it is shifting 45 scrips to trade-to-trade segment with effect from Friday, 27 July 2007. The stocks transferred to trade-to-trade segment include B.A.G. Films, BSL, Dharamsi Morarji Chemical, Isibars, Pearl Engineering Polymers, V.I.P. Industries and Southern Ispat among others.

Meanwhile, a development that could increase domestic liquidity is the approval given by the Cabinet Committee on Economic Affairs on Thursday, 26 July 2007, to public sector companies enjoying Navratna and Miniratna status to invest up 30% of their surplus funds in equity mutual funds. The total surplus of central PSUs in 2005-06 was estimated at about Rs 2,39,500 crore, according to public enterprises survey. This means that about Rs 70,000 crore may flow to equity mutual funds. However, investments would be allowed only in public sector mutual funds.

Emerging markets-dedicated funds saw their second best inflows ever in the week ending 18 July 2007, after setting their all-time high just the previous week. Inflows to emerging markets equity funds exceeded outflows by $3.3 billion in the week ended 18 July 2007. More than half of this net inflow - a record high of $1.8 billion went to funds dedicated to Asia ex-Japan.

Global index provider FTSE Group (FTSE) and Indian infrastructure specialist, Infrastructure Development Finance Company (IDFC) on Tuesday, 24 July 2007, the FTSE IDFC India Infrastructure Index Series which will represent the performance of Indian companies listed on NSE or BSE, generating the majority of their revenue from infrastructure.

Bowing to pressure from Left-backed trade unions, the Employees Provident Fund (EPF) board on Monday, 23 July 2007 agreed to continue paying 8.5% interest rate to its nearly four crore subscribers for fiscal 2006-07 as well. The EPF has a corpus of Rs 94,000 crore including pension fund.

Data released on Friday, 27 July 2007, showed India's wholesale price index rose 4.41% in the 12 months to 14 July 2007, higher than the previous week's 4.27% due to increase in food prices

Federal Bank Q1FY08 Result Update (Hold)

Maruti Udyog Q1FY08 Result Update (Accumulate)

Media weekly ratings (week ending 21 July 2007): Zee surges ahead

Global fall triggers correction

The market was gripped with intense selling pressure throughout the day's trading session, following sharp fall in US and Asian stocks. There was bloodbath on the street with all most sectoral indices on BSE posting sharp losses. Despite the sharp fall, the turnover was very high today, 27 July 2007.

All the Asian markets settled with sharp losses while most European markets were trading weak.

The BSE 30-share Sensex plunged 541.74-point, or 3.4%, to 15,234.57, its biggest rout in a single trading session in nearly four months. The Sensex had tumbled 617 points on 2 April 2007 following the Reserve Bank of India (RBI)'s surprise hike in interest rates announced after trading hours on 30 March 2007.

Sensex opened lower today, 27 July 2007 at 15,487.76 and recovered some ground to hit a high of 15,495.51. But the index was not able to sustain the recovery and succumbed to intense selling pressure. It slumped to a low of 15,159.68 at 12:24 IST. At day's low, the index suffered a sharp fall of 616.63 points

The S&P CNX Nifty plunged 174.20 points or 3.78% at 4,445.20. The Nifty August 2007 futures was at 4,392.85, a sharp discount of 52.35 points as compared to spot closing

All the Asian indices settled with sharp losses. Japanese stocks led Asian markets lower in a broad-based retreat today, 27 July 2007, as export stocks such as Canon Inc. and Honda Motor Corp. were hit hard on concerns over the outlook for the US economy. Nikkei tumbled 2.36% at 17,283.81.

Hang Seng (down 2.76% at 22,572.95), Taiwan Weighted (down 4.22% at 9,162.28), Singapore's Straits Times (down 2.43% at 3,492.70) and South Korea's Seoul Composite (down 4.09% at 1,883.22) declined sharply.

Shanghai Composite was down 0.03% to 4,345.35

Wall Street suffered one of its worst losses in this year so far on Thursday, 26 July 2007, as investors succumbed to months of worry about the mortgage and corporate lending markets. The Dow Jones plunged 311.50 points, or 2.26%, to 13,473.57. Broader market indicators also slid. The Nasdaq Composite index declined 48.83 points, or 1.84%, to 2,599.34, while the Standard & Poor's 500 slipped 35.43 points, or 2.33%, to 1,482.66.

The fall on the domestic bourses materialised after a recent solid surge as FIIs stepped up buying on strong Q1 June 2007 results and in anticipation of good results from companies which were yet to unveil their numbers. The Sensex has gained 5.5% in the past one month and nearly 42% in the past one year.

Small-cap and mid-cap shares lost ground. The BSE Mid-Cap index lost 192 points or 2.8% 6,598.32 to while the BSE Small-Cap index slipped 219 points or 2.7% to 7,926.45. The market breadth was weak on BSE with 630 shares advancing as compared to 1,991 that fell, while 62 remained unchanged.

Even as the markets declined, the turnover vaulted. The total turnover on BSE amounted to Rs 6,593 crore as against Rs 5,758 crore on Thursday, 26 July 2007.

The NSE F&O turnover was Rs 65,777.96 crore. The NSE F&O turnover was a record Rs 79,995.85 crore on Thursday, 26 July 2007, on the day of expiry of July 2007 derivative contracts.

Among the Sensex pack, 27 slumped, while three stood tall in the bloodbath.

India's largest cigarette manufacturer ITC jumped 2.67% to Rs 171 after its net profit rose 20% to Rs 782.87 crore in Q1 June 2007 over Q1 June 2006, exceeding market expectation. ITC raised cigarette prices by about 20% in the first quarter due to tax increases. Sales were up 16.6% to Rs 3,325.23 crore in Q1 June 2007 over Q1 June 2006. Sales growth was within market expectations. It was the top gainer from the Sensex pack.

The BSE FMCG Index outperformed the market. It shed just 0.12% to 1,927.86, led by ITC. Tata Tea rose 0.64% to Rs 759.60, after it on Thursday, 26 July 2007, said it has become the number one domestic packet tea company in terms of volume. For the first time ever, Tata Tea outperformed its nearest competitor Hindustan Unilever (HUL) in June 2007 by garnering a volume share of 19.2%, compared to HUL's 18.6%.

Ranbaxy Laboratories, India's largest pharma firm by sales, was up marginally by 0.16% to Rs 374. The stock rose for the second straight day after Ranbaxy yesterday, 26 July 2007, reached an agreement with GlaxoSmithKline (GSK) to end the litigation in the US on Valtrex (valacyclovir hydrochloride tablets) used in the treatment of herpes. The stock had jumped 9.95% to Rs 375 on Thursday, 26 July 2007, boosted by the announcement.

North India's largest-selling cement company Ambuja Cements rose 0.76% to Rs 125.35. Other cement stocks also recovered from their lows, still ending the day lower. UltraTech Cement Company (down 6.93% to Rs 865), India Cements (down 5.38% to Rs 195), and ACC (down 3.10% to Rs 990) slipped.

Metal stocks tumbled on intense selling pressure, with BSE Metal Index plunging 5.3% to 11,501.52. It was the biggest loser among the sectoral indices on BSE. India's largest private sector steel producer Tata Steel slumped 7.92% to Rs 647.75 on 11.53 lakh shares. It was the top loser from the Sensex pack.

JSW Steel (down 2.82% to Rs 727), Hindustan Zinc (down 5.52% to Rs 704), Sterlite Industries (down 4.54% to Rs 628), Hindalco Industries (down 5.68% to Rs 172.55), and Sail (down 5.10% to Rs 147.70) were the other losers from metal pack.

The BSE Bankex lost 3.2% at 7,920.19. Canara Bank (down 6.34% to Rs 263), Bank of Baroda (down 3.74% to Rs 292), HDFC Bank (down 3.54% to Rs 1175.90), State Bank of India (down 3% to Rs 1504.10), and ICICI Bank (down 3.18% to Rs 915), all edged lower.

Capital goods duo, the recent favourites of the market, suffered steep losses. India's largest power equipment maker Bhel lost 5.14% to Rs 1665 while L&T plunged 4.61% to Rs 2424.90. The BSE Capital Goods index was down 3.8% at 12,748.77.

India's largest power generation firm National Thermal Power Corporation slipped 4% to Rs 161.10 after it signed a joint venture agreement with Rashtriya Ispat Nigam to set up a 150-MW power plant at Vishakapatnam, Andra Pradesh.

The BSE IT Index lost 2.5% at 4,876.34. Infosys (down 1.25% to Rs 2009.50), Satyam Computers (down 4.67% to Rs 471.50), Wipro (down 4.18% to Rs 490.25), and TCS (down 2.56% to Rs 1155), slipped.

Telecom stocks declined on fresh selling. Reliance Communications, the country's second largest listed telecom company, plunged 5.40% to Rs 537 while Bharti Airtel, the country's largest telecom company based on subscribers, slumped 3.61% to Rs 892.

The country's second largest motorcycle maker Bajaj Auto declined 3.77% to Rs 2,310. French car maker Renault today confirmed that it is in talks with Bajaj Auto for producing a car for around Rs 1.20 lakh ($ 3000).

India's largest truck maker Tata Motors slumped 4.06% to Rs 701, after it announced that its small car would hit the market in the first half of 2008.

India's largest private sector company Reliance Industries (RIL) was down 4.12% to Rs 1861, on 21.90 lakh shares. RIL unveils its Q1 June 2007 results tomorrow, 28 July 2007.

The top losers from small-cap and mid-cap space were Sterling Biotech (down 11.8% to Rs 173.60), Tele Data Informatics (down 10.8% to Rs 61.45), NIIT Technologies (down 9.7% to Rs 491.10), Wire & Wireless India (down 8.2% to Rs 57.50), Bombay Rayon (down 8% to Rs 202.70), Emkay Share & Stock Brokers (down 9.5% to Rs 99), KS Oils (down 8.9% to Rs 52.70), Energy Development Corporation (down 7.9% to Rs 58.20) and Nectar Lifesciences (down 7.9% to Rs 227.65).

Select stocks, however, rose in an otherwise weak market: Timex Watches (up 10% to Rs 29.70), Triveni Engineering (up 9.7% to Rs 57.15), Assam Company (up 6.5% to Rs 17.80) and JK Tyres (up 5% to Rs 147.95), surged.

Shares from the real estate pack were hammered brutally, with the BSE Realty index declining 5.25% to 7,823.91. DLF (down 4.78% to Rs 602.55), Unitech (down 6.06% to Rs 557.60), Mahindra Gesco Developers (down 3.70% to Rs 572.95) and Sobha Developers (down 2.13% to Rs 893) declined from the real estate sector.

Venky's (India) jumped 14.31% to Rs 172.10 after its net profit jumped 197% to Rs 9.06 crore in Q1 June 2007 over Q1 June 2006. Sales moved up 37.88% to Rs 124.07 crore in Q1 June 2007 over Q1 June 2006.

GlaxoSmithkline Consumer Healthcare rose 3.63% to Rs 595 after its net profit moved up 36.80% to Rs 42.30 crore in Q2 June 2007 over Q2 June 2006. Sales were up 17.41% to Rs 315.60 crore.

Tata Chemicals lost 2.76% to Rs 250. It posted a 60.79% rise in net profit to Rs 121.16 crore in Q1 June 2007 over Q1 June 2006. Total income decreased 10.4% to Rs 681 crore in Q1 June 2007 over Q1 June 2006.

Moser Baer India rose 1.97% to Rs 311 after the company said its photo voltaic unit has entered into a agreement with Norway's REC Group for sourcing silicon wafers over an eight-year period beginning from 2008.

Ballarpur Industries jumped 7.29% to Rs 131.65. With an aim to create a large asset base company overseas, the company will transfer ownership of its three units at Bhigwan, Ballarpur and Kamalapuram to an overseas subsidiary for Rs 1,950 crore.

Alok Industries gained 5.54% to Rs 67.60 as buying continued after the scrip's 10.81% rally yesterday, 26 July 2007. The company will declare its Q1 results on 31 July 2007.

Lanco Infratech rose 0.81% to Rs 211 after its consolidated net profit spurted 1,103% to Rs 51.28 crore over Q1 June 2006. Total income rose 136.89% to Rs 603.27 crore. The results were announced after market hours on Thursday, 26 July 2007.

Crompton Greaves rose 2.45% to Rs 285 after its net profit rose 89.1% to Rs 68.76 crore in Q1 June 2007 over Q1 June 2006. Sales moved up 21% to Rs 896.07 crore. The diversified engineering company made the announcement after market hours yesterday, 26 July 2007.

India's third largest power generator and distributor in terms of revenue Tata Power Company dropped 0.86% to Rs 700 even as it reported a 56.09% rise in net profit in Q1 June 2007 to Rs 190.20 crore over Q1 June 2006. Sales rose 9.80% to Rs 1,511.48 crore.

Wholesale price-based inflation rate increased to 4.41% in the week ended 14 July 2007 from 4.27% in the previous week mainly on higher prices of fruits and vegetables, ragi, wheat, jowar, condiments and spices. The inflation numbers are still within the 5% annual target of the Reserve Bank of India, which is set to review the monetary policy on 31 July 2007. The annual rate of inflation was 4.62% in the corresponding week last year.

Meanwhile, a development that could increase domestic liquidity is the approval given by the Cabinet Committee on Economic Affairs on Thursday, 26 July 2007, to public sector companies enjoying Navratna and Miniratna status to invest up 30% of their surplus funds in equity mutual funds. The total surplus of central PSUs in 2005-06 was estimated at about Rs 2,39,500 crore, according to public enterprises survey. This means that about Rs 70,000 crore may flow to equity mutual funds. However, investments would be allowed only in public sector mutual funds.

A good rollover was witnessed to the August 2007 series from the July 2007 series when the July 2007 contracts expired on Thursday, 26 July 2007. According to one brokerage report, overall 83% positions have got rolled to August 2007 from July 2007. A good rollover of 73% was witnessed in index futures as well. Institutional investors rolled over short positions in Nifty following the hedging of their positions in the cash market.

Oil rose on Friday, 27 July 2007 holding firm above $75 a barrel as traders bet that fears of tight summer supplies would offset a fresh wave of risk aversion that struck US equities and dragged oil down a day ago. London Brent crude gained 41 cents to $75.59 a barrel. US crude rose 43 cents to $75.38

Biggest scare since 2 April 2007

The BSE 30-share Sensex's 541.74-point, or 3.4%, decline to 15,234.57 is its biggest rout in a single trading session in nearly four months.

The previous biggest point fall in Sensex had occurred in early April 2007. The Sensex had tumbled 617 points on 2 April 2007 following the Reserve Bank of India (RBI)'s surprise hike in interest rates announced after trading hours on 30 March 2007. RBI had raised its short-term lending rate, the repo rate, by 25 basis points (bps) to 7.75%. It had also raised its cash reserve ratio (CRR) by half a percentage point.

On 27 April 2007, the Sensex had witnessed a big fall of 320 points when feeble Asian markets weighed on domestic bourses.

Today's fall was triggered by a setback in Asian markets. Stocks across Asia fell today, 27 July 2007, after the US market dropped 2.3% on Thursday, 26 July 2007, on signs of further weakness in the US housing market and deteriorating conditions for corporate buyouts. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down between 2.4% to 4%

The fall was broad based. All the sectoral and niche indices on BSE ended in the red. The market breadth was weak: 1,951 shares declined on BSE as compared to 570 that rose, while 55 were unchanged. Losers outpaced gainers by a ratio of 3.4:1.

The fall materialised after a recent solid surge as FIIs stepped up buying on strong Q1 results and in anticipation of good results from companies which were yet to unveil their numbers. Ths Sensex had gained 5.5% in the past one month and nearly 42% in the past one year.

Select stocks, however, rose in an otherwise weak market: Venky's (India) (up 16% to Rs 175.25), Timex Watches (up 10% to Rs 29.70), Triveni Engineering (up 9.7% to Rs 57.15), Assam Company (up 6.5% to Rs 17.80), JK Tyres (up 5% to Rs 147.95), Ballarpur Industries (up 7% to Rs 131.65), and Alok Industries (up 5.5% to Rs 67.65)

Turnover surged on BSE to Rs 6,593 crore compared to Thursday's Rs 5,758 crore

The key event next week is the review of the monetary policy by RBI on Tuesday, 31 July 2007. RBI is likely to keep rates steady. However, it remains to be seen whether the central bank will raise CRR to suck out excess liquidity in the banking system.

Data released today, 27 July 2007, showed India's wholesale price index rose 4.41% in the 12 months to 14 July 2007, higher than the previous week's 4.27% due to increase in food prices

Global meltdown leads to market crash

The market witnessed the biggest carnage today, as widespread selling caused the index slip below the 15,500 mark shortly after the opening bell. A sharp slump across the international markets saw the Sensex resume 288 points lower at 15,488 and shed 616 points to touch the day's low of 15,160. The market soon moved above the 15,250 level but traded below 15,500 through the session as intense selling continued in metal, realty, capital goods, oil and other counters. The Sensex finally ended the session with a loss of 542 points at 15235. The Nifty, too, came under selling pressure and lost 175 points to close at 4445.

The market breadth was extremely weak, with losers outnumbering gainers by 3.44:1 on the BSE. Of the 2,576 stocks traded on the BSE 1,951 stocks declined, 570 stocks advanced and 55 stocks ended unchanged. All the BSE sectoral indices continued to trade weak and dropped around 2-5% each. The BSE Metal Index was the major loser and lost 5.53% while the BSE Realty Index shed 5.11%.

Majority of the 30 stocks of the Sensex ended in the red. Among the major losers Tata Steel shed 7.83% at Rs648, Reliance Communication plunged 6.30% at Rs534, Hindalco crumbled 5.47% at Rs173, HDFC crashed 5.21% at Rs1,946, BHEL slipped by 5.14% at Rs1,665, Reliance Energy tumbled 4.99% at Rs760, Tata Motors lost 4.60% at Rs697, L&T dropped nearly 4.48% at Rs2,428, ONGC slumped 4.38% at Rs905 and Satyam Computer crashed 4.37% at Rs473. Select front-line counters ended in the green. ITC rose 3.12% at Rs172 while Ranbaxy and Ambuja Cement closed with moderate gains.

Metal stocks witnessed a steep fall. Shree Precoated Steel plummeted 7.23% at Rs358, while Hindustan Zinc crashed 5.55% at Rs704. SAIL at Rs148, Jindal Saw at Rs655, Welspun Gujrat at Rs246, Sterlite Industries at Rs628, Jindal Stainless at Rs166 and Nalco at Rs280 tumbled over 4% each. Among the realty stocks Parsvanath Developers plunged 7.21% at Rs359, Peninsula land fell by 6.14% at Rs455, Unitech lost 5.75% at Rs559, Ansal Infrstructure shed 5.64% at Rs265 and Indiabulls Real Estate declined 5.47% at Rs564.

Over 2.41 crore IFCI shares changed hands on the BSE followed by Bellary Steel (2.31 crore shares), Suryachakra Power Corporation (1.70 crore shares), Mangalore Chemical & Fertilizers (1.29 crore shares) and Harig Crankshafts (1.08 crore shares).

Valuewise, Reliance Industries registered a turnover of Rs414 crore followed by Housing Development & Infrastructure (Rs296 crore), Reliance Energy (Rs239 crore), DLF (Rs235 crore) and L&T (Rs172 crore).

Technicals, Snippets, Strategist

Sharp fall in global indices indicate negative open

Weakness across the global markets and rising global crude oil prices may drag down the local indices. Nervousness in the market is likely to continue following a slump in the overnight US market, escalating global crude oil prices and weak Asian indices in the morning trades. All the leading Asian indices like the Nikkie, the Hang Seng, the Straits Times, the Kopsi index and the Jakarta index are down over 2% each. Although the domestic indices moved up sharply in the last couple of sessions, intra-day volatility remains the major concern. Among the local indices, the Nifty may slip to 4550 while on the upside it could test the 4650 level. The Sensex has a likely support at 15480 and could test higher levels at 15850.

On the results front BPCL, Colgate, Deccan Cronical, Gail, GMR Infrastructure, Hindustan Construction, ITC, Madras Cement, Moser Baer, NIIT Technology, Punj Lloyds, Ramco Systems, Spice Tele, Tata Elexsi, Tata Chemicals, Television Eighteen, Titan, TVS Motors are scheduled to announce their numbers.

US indices tumbled on credit market and housing worries, as the Dow Jones slumped 312 points to close at 13475 while the Nasdaq ended 49 points lower at 2599 on Thursday.

All the Indian ADRs fell in tune with the broader market. Rediff led the slump and tumbled 13.4% followed by Patni Computers down by 5.46%, ICICI Bank and HDFC Bank slipped over 4% each. Wipro, Tata Motors, Satyam, Infosys, Dr Reddy's Lab and MTNL dropped over 1-3% each.

The Nymex light crude oil for September delivery slipped by 73 cents and closed at $75.88 per barrel. In the commodity space, the Comex gold for December series tumbled $11.40 to settle at $686.50 an ounce.

EXCLUSIVE - Equibrain Report - July 27 2007

Morning Call

Market Grape Wine :

In House :

Mkt. Outlook: Markets expected to open with a gap down taking cues from the foreign mkts.

Nifty at a Supp of 4585 and 4550 with resis at 4640 and 4660

Base supp on sensex exits at 14800.

Intra Day calls: Sell adlabs below 518.50 with a TGT of 500 and a SL of 522

Sell Bank Baroda below 301.50 with a TGT of 288 and SL of 305.50

F&O: Sell bharatforge below 288

Buy IDFC above 139

Scrips to buy on dips: Kotak bank, REL, Reliance, Relcapital, Indiainfoline,Pantaloon Retail

Out House :

Markets at a support of 15616 & 15515 levels with resistance at 15797 & 15885 levels .

Markets to be very choppy and volatile maintain strict stop loss .

Buy : SBIN at dips

Buy : RIL & REL at dips

Buy : Hdfc at dips

Buy : Bhel at dips

Buy : Bilt & HDIL at dips

Buy : Aban & Asian at dips

Buy : Unitech & UBulls at dips

Buy : RelCap at dips

Dark Horse : REL , Unitech , Educomp , Skumar , HDFC , HLL & ITC

TGIF : Thank God Its Friday : Book profits at all higher levels and relax awaiting correction .

Trade ... with caution

The indices are expected to open with a gap. Trading, especially during the initial minutes is highly risky.

Any wrong decisions could wipe out a major part of your recent gains. So stay light. Watch the situation for the initial minutes and then take a call on the market. Else start your weekend early and stay away.

Long term investors can pick their fundamentally sound favorite counters, especially large caps at lower levels.

One fine day for bears...

Red sky at night, sailors delight; red sky at morning, sailors warning

After bouncing back in style and creating a record turnover on Thursday, the bulls are set to drown at opening thanks to the global weakness. With a lot of money waiting on the sidelines, expect a cushion to be provided later in the day or early next week. The Cabinet Committee on Economic Affairs has given its nod for removing the prohibition on investment of surplus funds of navratnas and miniratnas in equity mutual funds. FII investments in Indian equities this calendar year has reached over $10bn as against $8bn invested in calendar 2006. But all these and any other positives will be ignored at start.

Wall Street came crumbling down after long. US stocks fell on signs of further weakness in the housing sector. The Dow Jones industrial average shed 312 points to close at 13,473. The Nasdaq dropped 49 points to end at 2599. Indian ADRs too were deep in the red. Patni Computers fell 5.5% to $23.90. Infosys, Satyam, Wipro, ICICI Bank, HDFC Bank, MTNL, VSNL and Tata Motors lost in a range of 2-5% each.

Asian stocks recorded one of its worst fall in four months on speculation that a worsening U.S. housing slump will slow growth in the world's biggest economy and prompt investors to shun riskier assets.

Inflation numbers will also be closely watched as RBI will announce its outlook and next course of action. Among the results being announced today include - Adani Ent, Avaya Global, BPCL, Bata, CEAT, IOB, J&K Bank, Madras Cements, MTNL, Moser Baer, Nagarjuna Fertilizers, NIIT Tech, Peninsula Land, STAR, Titan and Tata Chemicals.

French car maker Renault today said it was in talks with Bajaj Auto, the two-wheeler maker, for producing a car worth around Rs 1.20 lakh.

Nestle India today entered the probiotic milk market by launching its new low-fat product, Nestle Nesvita Dahi. Yakult Danone India, an equal joint venture between Yakult Honsha of
Japan and Group Danone of France, and Mother Dairy too announced their entry into the probiotic market with a probiotic health drink and yoghurt.

It was yet another historic session, however not for touching new peaks but for record turnover in F&O segment and market. A late bounce enabled the bulls to recover yesterday’s losses as smooth rollover aided the key indices to record smart gains. Heavyweights like Reliance Industries, Infosys, ONGC and TCS led the rally, even the Mid-Cap and the Small Cap stocks joined the upsurge. Finally, BSE 30-share Sensex added 76 points to close at 15776. NSE-50 Nifty gained 29 points to close at 4618.

NSE F&O and market wide turnover hit record high for third straight trading session. NSE F&O turnover hit a new high of Rs79,996cr and total market turnover hit 1.01 Lakh crore for the first time ever.

Maruti surged by over 3% to Rs835 after the company’s result beat market estimates it declared its Q1 net profit at Rs4.99bn ( up 34%) and sales at Rs3914bn ( up 26%). The scrip touched an intra-day high of Rs857 and a low of Rs810 and recorded volumes of over 31,00,000 shares on NSE.

Suzlon Energy plunged over 8% to Rs1289 after the company’s profit dropped 48% below estimates. Its Q1 profit dropped 54% to Rs894mn and net sales declined 10% to Rs8.39bn. The scrip touched an intra-day high of Rs1379 and a low of Rs1285 and recorded volumes of over 20,00,000 shares on NSE.

Bharti Airtel lost 2.5% to Rs923 after the company’s profit missed estimates. The company announced its Q1 result with profit at Rs14.13bn (up 73.5%) and net sales at Rs56.12bn (up 52.4%). The scrip touched an intra-day high of Rs959 and a low of Rs913 and recorded volumes of over 22,00,000 shares on NSE.

Cummins India edged higher by 0.5% to Rs385 after the company declared its Q1 result with net profit at Rs640.2mn (up 26%) and sales at Rs5.42bn (up 38.6%). The scrip touched an intra-day high of Rs402 and a low of Rs382 and recorded volumes of over 2,00,000 shares on NSE.

GT Offshore marginally gained by 0.3% to Rs811 after the Board of Directors of the company planned to raise FII limit to 49% from 24%. The scrip touched an intra-day high of Rs832 and a low of Rs802 and recorded volumes of over 1,00,000 shares on NSE.

Tata Motors pared its intra-day gains as the scrip marginally slipped 0.2% to Rs725. Reports stated that the company has won bidding for Land Rover, Jaguar. The scrip touched an intra-day high of Rs762 and a low of Rs725 and recorded volumes of over 31,00,000 shares on NSE.

Sugar stocks were back in action as reports stated that government is likely to lift restriction on Sugar exports. Bajaj Hindusthan surged by over 3% to Rs159, Balrampur Chini advanced 5% to Rs70, Renuka Sugar was up by 4.5% to Rs631 and Sakhti Sugar added 7% to Rs86.

Public sector Oil Marketing Companies ended with smart gains. Media reports stated that pressure is mounting on the Government to raise local retail prices of petrol and diesel following the spike in crude oil prices. HPCL gained 2.4%to Rs262, BPCL was up by 1.3%to Rs318. However, IOC slipped 2.3% to Rs410.

Banking stocks were on the receiving end led by fall in heavyweight HDFC Bank slipped by 1.5% to Rs1221, SBI was down by 1.7%to Rs1542, ICICI Bank slipped 1.2% to Rs946. PNB, Corp Bank and Syndicate Bank were the major losers among the Mid-Cap stocks.

Pharma stocks were in good health led by Ranbaxy Cipla rose over 4.5% to Rs194 after the company settled patent dispute with GSK, Dr Reddy’s Lab was up by 0.5% to Rs663, Wockhardt pharma gained by over 3.5% to Rs396 and Glenmark added 0.2% to Rs690.

IT stocks also gained momentum led by IT bellwether Infosys as the scrip advanced 1.6% to Rs2020 after the company announced that it won a seven-year, US$250mn contract from Royal Philips Electronics, Wipro surged by over 3.5% to Rs518 and Satyam Computer added 1.3% to Rs494.

With F&O settlement behind us, bulls will look forward towards the RBI meet later next week as major good news from the corporate earnings are being factored in the price of the stocks. Though, on the whole outlook remains positive given the strong FII inflow. Having said that our bourses are not isolated and cues from the international markets would once again play vital role in keeping the sentiment of the traders intact. Inflation numbers would also be the key factor to watch out for.

Results Today:

Adani Ent, Avaya Global, BPCL, Bata, CEAT, IOB, J&K Bank, Madras Cements, MTNL, Moser Baer, Nagarjuna
Fertilizers, NIIT Tech, Peninsula Land, STAR, Titan and Tata Chemicals.

Fund Activity:

FIIs were net buyers of Rs2.78bn (provisional) in the cash segment on Thursday. On the other hand, local institutions were net sellers at Rs1.44bn. In the F&O segment, FIIs were net sellers at Rs11.74bn.

On Wednesday, FIIs sold worth Rs0.59bn in the cash segment. Mutual Funds were net buyers at Rs0.52bn.

Major bulk Deals:

Fidelity bought BILT. Reliance MF bought Bombay Dyeing while Morgan Stanley was the seller. Goldman Sachs bought CESC. Morgan bought IDFC while UBS Securities was the seller. Citigroup bought Karutiri Networks while BSMA was the seller. Bulk deals were seen on counters like Sadbhav Engineering and newly listed Surya Chakra.

Insider Trades:

Polaris Software Lab Limited: Manju Jain, W/o Mr. Arjun Jain, Chairman & Managing Director has purchased from open
market 75000 equity shares of the company on 20th July, 2007

NELCO Limited: Portfolio Management Schemes of Kotak Securities Ltd has purchased from open market 77207 equity
shares of the company on 20th July, 2007.

Lower Circuit:

IID Forgings and Prism Cement.

Upper Circuit:

Hindustan Oil, Goldstone Technologies, Ganesh Forgings, Bag Film, Evinix, Jai Corp, Raj Tele, Ramco Systems, Ruby Mills and Bank of Rajasthan

Delivery Delight (Rising Price & Rising Delivery):

Balrampur Chini, CESC, HCL Tech, HPCL, IDFC, Satyam.
Abnormal Delivery:

Voltas, Bombay Dyeing, Sesa Goa, IndusInd Bank, Neyveli Lignite, Ballarpur Industries

Major News & Announcements:
Government likely to lift restriction on Sugar exports – Reports

Bharti Airtel Q1 profit at Rs14.13bn (up 73.5%), net sales at Rs56.12bn (up 52.4%)

Alfa Laval Q2 profit at Rs200.98mn (up 7%), revenue at Rs1.55bn (up 7.6%)

Subex Azure to hive off Service biz
Jai Corp Board to consider stock split on July 31

Tata wins bidding for Land Rover, Jaguar – Reports

Glaxo Q1 profit at Rs964.3mn (up 5.9%), net sales at Rs3.96 (down 2.7%)

Dabur Pharma Q1 profit at Rs1.33bn (up 101%), net sales at Rs740mn (down 8.7%)

Maruti Q1 profit at Rs4.99bn (up 34%), sales at Rs3914bn (up 26%)

GT Offshore plans to raise FII limit to 49% from 24%

Cummins India Q1 net profit at Rs640.2mn (up 26%) and sales at Rs5.42bn (up 38.6%)

Government to ease cement import norms to lower prices – Reports

Ranbaxy, GSK agree to settle US patent dispute

Suzlon plans to list in Europe at Appropriate Time

Market Close: Volatile FNO closing as expected !

Markets closed with modest gains after a volatile session all day. Not much support was seen from the global cues as the Asian markets closed mixed after starting in green. As a result of FNO expiry Indian indices had a rough session. Indices started on a firm note. The market saw healthy rollover of derivative positions from the July 2007 series to the August 2007 series. Selling pressure kept the indices in negative in the the mid session. Indices surged in the late session with buying in select index heavy weights. The market turnover hit a record high for the third day at Rs 1 lak cr. Except Banking, Capital Goods and Metals most sectors closed in green. IT, Realty, Auto and Health Care stocks outperformed the day. Mid caps ended inline with the front line indices but the small caps had something to cheer for the day. Ranbaxy was the star performer for the day as a result of settlement of a patent issue.

Sensex closed up 77 points at 15776.31 helped up by gains in Ranbaxy (373.4,+9 percent), Cipla (193.55,+4 percent), Maruti (841,+4 percent), TCS (1185.3,+3 percent) and HDFC (2021.35,+3 percent). Restricting the gains are ACC (1021.65,-5 percent), Guj Ambuja (124.7,-3 percent), Bharti Tele (925.25,-2 percent), BHEL (1755.2,-2 percent) and HDFC Bk (1219.05,-2 percent).
ABG is one of the largest private sector ship building manufacturering capability of marine ships including Bulk carriers, Deck barges, Interceptor boats, Anchor handling supply ships, Diving support ships, Tugs and Offshore vessels. ABG reported a good numbers. Revenues grew by 23% to Rs 203 cr on yoy basis led by the capacity expansion undertaken at the Surat facility. Ebidta margins for the quarter remained flat at 27% Bottomline was up 24% to Rs 33 cr yoy/. At the current market price Rs 537 the stock trades at 22 times of trailing earnings. The outstanding order book stood at Rs 5560 cr. Expect an updated research note. on this one.

Maruti Udyog reported good numbers with Income up 27% to Rs 4154 cr. The net profit was up 35% at Rs 499 cr vs Rs 370 cr. Despite the slowdown in Auto sector the company has reported good results. Competition continues to threaten. All companies are now launching new models and offering discounts too which could pressure margins. Auto stocks closed strong for the day, Maruti closed up by 3.75%, M&M ended up by 2.55% and Tata Motors closed marginally down.

Technically Speaking: Market saw volatile sessions throught out the day but finally closed in the green territory. Sensex touched intraday high of 15812 and low of 15654. Market turnover was good as it churned out Rs 5719 cr. Overall breadth was in favor of Advances, where the Advances to Declines ratio stood at 1.5:1. Sensex has closed the third consecutive day without any direction. The Open and the Close has almost been the same. Such indecision will be resolved when the Sensex moves either above 15860 or breaks below 15575. Trade in the direction of the breakout.

Dead Presidents! - India Equity Research

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