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Tuesday, August 07, 2007
Market Close: Nose dives ahead of Fed meet !
As expected Indian market bounced with global market and rally was seen across the board. Investor participation helped the market to maintain the momentum for a while after start. But as the day advanced market found it difficult to sustain the rally. Some stock specific action was seen in small and mid caps. Auto, and Technology stocks bounced back smartly as this both counters seems to be oversold. Aviation counter also took off on lower crude prices. ICICI and ITC actually dragged the market. ICICI announced deposit rate revision. However some recover was seen in bank counter?but credit off take seems to be lower than deposit growth rate which is weighing on banks. Unconfirmed reports indicating slow down in cigarette sales for the month of July hammered ITC.
Now all Eyes ogle on Fed meet in US for interest rate decision. Interest rates are expected to remain unchanged. Lets keep watch here.
Sensex closed higher by 30 points at 14932.77. It was helped up by gains in Rel Energy (764.7,+3 percent), NTPC (166.7,+2 percent), Bharti Tele (876,+2 percent), HDFC (1973.6,+2 percent) and Cipla (187.05,+1 percent). Restricting the gains were ITC (167,-3 percent), ICICI Bk (870.75,-2 percent), Bajaj Auto (2275.2,-1 percent), TISCO (642.6,-1 percent) and BHEL (1671.8,-1 percent).
Nitin Fire Protection closed high after the company signed a MOU for the supply CNG Gas Cylinders to IRAN worth Rs.65crs. The execution of the order shall be done within this current financial year. The company also received Letter of Intent form Bangladesh, U.A.E. and Domestic market for the supply of CNG Gas Cylinder worth approx Rs.25crs. It has also received the purchase order from Reliance Petro for supply of fire extinguishing systems for there refinery for Rs.7 cr. The plant at Himachal Pradesh has started operation for manufacturing of Fire Protection equipments. The demand for CNG cylinder is really big and that is what all the cylinder companies are banking on. But there are some reports which suggest that some new capacities are coming in Iran (biggest market for CNG cylinder). EKC (Everest Kanto Cylinders) is largest player here and has enjoyed huge profit on high realisation. But with additional capacity coming in market the business may not remain as lucrative as it is. We are not excited here. Do read our note on both Nitin Fire and EKC to know more.
Everonn Systems (Everonn) is in the field of education and training. The company offers a fully integrated range of services like creating knowledge resources, designing and delivering the learning and training programs through the medium of computers and other resources. The company also sets up infrastructure and delivery platform for enabling the same. The company gets its revenue from two sources i.e. Education and training which contributes almost 95% of the total revenue while the rest is from sale of hardware which is very small. Governments of various states are its key clients as almost 70% comes from them while the rest 30% are from private schools and colleges. Content is the area where the company lags behind Educomp, its arch rival in the business. We are not really convinced with the business model. Do read our note to know more.
Technically Speaking : Sensex key support seen at 14880 and 14735. If both these levels are broken, the medium term trend could also turn negative and the Sensex might slide upto 14100 and 13600. On the higher side 15240 and 15400 are key resistance.
Investor's Eye
KSB Pumps
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs625
Current market price: Rs520
Low-key performance
Result highlights
- KSB Pumps’ Q2CY2007 results were below expectations, both on the top line and the profitability front. The net sales for the quarter rose by just 1% to Rs112.4 crore. We believe that a lower contribution from the project business to the overall sales led to this slower growth. Also, the last years’ base was high considering that Q2CY2006 was one of the best quarters in the company’s history.
- The profitability took a substantial beating during this quarter as the overall margin declined by 1,090 basis points to 12%. On a segmental basis, the profit before interest and tax (PBIT) margin of the pump division fell to 9.5% (from 23.3% last year) while that of the valve division dropped to 15.9% (from 21.8% last year).
- We believe that the profitability of the company was affected in the quarter mainly because of the higher sales through dealers during the quarter and lesser contribution of the project business. We understand that the order book of the company in the project business is growing at about 40% year on year (yoy). Considering this, we expect higher revenue booking on account of the project business (which carries higher margins) in the subsequent quarters.
- The company continues to spend towards its capacity expansions. It spent about Rs50 crore in CY2006 towards capacity expansion and modernisation. It is expected to spend a similar amount this year.
- In view of the slower growth in the first half, we are downgrading our earnings estimates for CY2007 and CY2008 by 18.9% and 5% to Rs28.2 and Rs39.7 respectively. However, considering the buoyancy in its user segments (eg refineries and the power sector), we maintain our positive outlook on the company.
- At the current market price of Rs520, the stock is trading at 13.2x its CY2008E earnings and is available at an enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA) of 7.5x. We maintain our Buy recommendation on the stock with a price target of Rs625.
WS Industries India
Cluster: Vulture’s Pick
Recommendation: Buy
Price target: Rs108
Current market price: Rs75
Price target revised to Rs108
Result highlights
- In Q1FY2008 WS Industries' (WSI) top line grew by 21% to Rs.47.7 crore, which was slightly above our expectation.
- The operating profit increased by 52.5% to Rs7.1 crore, resulting in an expansion in the operating profit margin (OPM) by 310 basis points to 14.9% as against 11.8% in Q1FY2007. The margin improved mainly due to a change in the product mix and a reduction in the power and fuel cost on account of a higher utilisation rate and improved efficiency.
- The profit after tax (PAT) increased by 142.4% to Rs3.95 crore; the PAT growth was higher mainly due to a decrease in both the interest cost, which dropped by 9% year on year (yoy) to Rs1.72 crore, and the depreciation cost, which fell by 4.6% to Rs9 crore yoy.
- The order book of the company stood at Rs190 crore at the end of the quarter.
- A healthy order book of Rs190 crore, which is about 1.15x its FY2007 revenues, and increased production capacity indicate the high earnings capability of the company. Thus WSI is sure to benefit from the large investments lined up in the power sector, especially the transmission and distribution segments, during 2007-2012. We have valued WSI using the sum-of-the-parts (SOTP) method wherein we have valued its core insulator business at 9x its FY2009E earnings per share (EPS). This gives the fair value of Rs78.7 per share. Further, we have valued WSI's realty subsidiary at the current realisable value of Rs3,500 per square feet. Taking WSI's current 59% stake in the realty venture, we arrive at a value of Rs29 per share, which gives us a fair value of Rs108 per share of WSI. We remain positive on the stock and maintain our Buy recommendation with a revised price target of Rs108.
Wipro
Cluster: Apple Green
Recommendation: Buy
Price target: Rs648
Current market price: Rs462
Infocrossing acquisition earnings dilutive
Key points
- Wipro's acquisition of US-based Infocrossing in an all-cash deal of $600 million is important strategically as it would considerably boost the company's capabilities in the infrastructure management service business. The acquisition would enhance Wipro's positioning in terms of bagging large-sized total outsourcing deals.
- On the flip side, the deal appears to be expensive and would also dilute the earnings per share (EPS) over the next couple of years. Infocrossing has been valued at over 70x CY2006 reported net income and 52.2-55.6x CY2007 guided net income. Moreover, the incremental contribution to the consolidated earnings would be much lower than the yield on cash ($600 million outgo) and consequently result in a net negative impact of Rs22 crore and Rs81.5 crore in FY2008 and FY2009 respectively.
- To factor in the impact of the acquisition of Infocrossing, we have revised downward the earnings estimates for FY2008 and FY2009 by 0.6% and 2.1% respectively. At the current market price the stock trades at 20.1x and 16.7x FY2008 and FY2009 earnings estimates. We maintain our Buy recommendation on the stock with a price target of Rs648.
Trading Calls
Buy Prism Cement with stop loss of Rs 50 for target of Rs 75.
Buy IFCI with stop loss of Rs 58 for target of Rs 80.
Buy Shriram Transport Finance with stop loss of Rs 162 for short-term target of Rs 192.
Sensex closes marginally above 14,900
Domestic indices rose today taking cues from the Monday's bounce back in US markets. The US indices rose on speculation that the Federal Reserve will offer some comfort to jittery investors at its policy meeting on Tuesday in light of the recent woes in the subprime, credit and housing markets. The Sensex opened higher at 15,038 tracking positive Asian indices, which mirrored the gains in US markets. The market rallied sharply thereafter to touch the day's high at 15,142 on sustained buying in energy, cement and pharma stocks. However, weakness in Asian markets in the afternoon dampened the sentiment, triggering the selling in the Sensex heavyweights and the index touched the day's low of 14,902 towards the close. The Sensex finally settled at 14,933, up 30 points. The NSE-50 index of the National Stock Exchange gained 17 points, or 0.39%, to 4,356.
The broader market, however, continued to remain in the green. Of the 2,704 stocks traded on the BSE, 1,696 stocks advanced, 950 declined and 58 ended unchanged. Most of the sectoral indices ended in the green. The BSE Bankex was the biggest gainer and moved up by 1.10% at 7,805 followed by the BSE HC index (up 0.79% at 3,627) and the BSE Teck index (up 0.65% at 3,636). However, the BSE FMCG index fell sharply and dropped 1.38% at 1,937 followed by the BSE Metal index (down 0.88% at 11,042) and the BSE Bankex index (down 0.42% at 7,929).
Among the laggards ITC was down 3.10% at Rs167, ICICI Bank declined by 1.90% at Rs871, Bajaj Auto shed 1.39% at Rs2,275, Tata Steel dropped 1.13% at Rs643, while BHEL, Hindalco, ONGC, Ranbaxy, M&M and Maruti closed with marginal losses. However, select heavyweights attracted decent buying support. Reliance Energy surged 2.98% at Rs765, NTPC rose 1.93% at Rs167, Bharti Airtel jumped 1.72% at Rs876, HDFC added 1.59% at Rs1,974, Cipla moved up by 1.49% at Rs187 and Dr Reddy's Lab gained 1.44% at Rs635.
Select FMCG stocks witnessed considerable selling pressure. Colgate dropped 1.87% at Rs401, United Breweries lost 1.34% at Rs319, while, Britania, Dabur India, Tata Tea and Hindustan Unilever ended with moderate losses.
Over 2.30 crore IFCI shares changed hands on the BSE followed by RNRL (2.26 crore shares), Dolat Investments (1.19 crore shares), Suryachakra Power Corporation (1.16 crore shares) and IKF Technologies (81.15 lakh shares).
Everonn Systems topped the value list with a turnover of Rs311 crore on the BSE followed by IFCI (Rs153 crore), Housing Development and Infrastructure (Rs130 crore), SBI (Rs128 crore) and Reliance Industries (Rs115 crore).
Market takes cautious stance ahead of Fed meet
The market which opened on optimistic note tracking strong US and Asian markets, pared gains as the day progressed, on profit booking. Volatility also emerged since mid-afternoon trade. Asian markets were trading mixed, after the initial firmness. Most European markets were trading firm.
The BSE 30-share Sensex rose 29.74 points or 0.20% at 14,932.77. The benchmark index opened with a 135-point upward gap at 15,038.03 and rose further to hit a high of 15,142.04. It hit a low of 14,901.83 at 15:27 IST, at the fag end of the trading session.
The S&P CNX Nifty was up 16.85 points or 0.39% at 4,356.35. The Nifty August 2007 futures settled at 4309, a sharp 47.35 point discount as compared to spot closing.
Profit taking emerged at higher level in late trading as investors turned cautious ahead of the crucial Federal Open Market Committee, or FOMC meeting later in the day today, 7 August 2007. Fed is widely expected to keep interest rates on hold at 5.25% at a policy meeting late on Tuesday, 7 August 2007, but investors are eager to see central bank statements on economic growth and the US credit market turmoil. US stocks had got a boost on Monday, 6 August 2007, from speculation that the US Federal Reserve may take steps to reassure investors that troubles in the subprime mortgage market won't slow economic growth.
The market breadth was strong on BSE with over 1.5 gainers for every loser: 1,660 shares advanced as compared to 1,026 that declined, while 61 remained unchanged.
The BSE Mid-Cap index rose 0.34% to 6,574.90 while the BSE Small-Cap index gained 0.92% to 7,914.37.
The total turnover on BSE amounted to Rs 4626 crore as against Rs 4328 crore on Monday, 6 August 2007
The NSE F&O turnover was Rs 32668.01 crore as compared to Rs 37564.99 crore on Monday, 6 August 2007
Among the 30-member Sensex pack, 17 settled higher while the rest of them slipped.
Reliance Energy (REL), the country’s second largest power generation and distribution company in revenue, advanced 3.02% to Rs 765 on 9.89 lakh shares. It was the top gainer from the Sensex pack. The Supreme Court on Wednesday, 1 August 2007 admitted a petition from REL challenging its disqualification from the Rs 2,600-crore sea-link expressway project connecting Mumbai and Navi Mumbai.
India’s largest power generation company NTPC (formerly known as National Thermal Power Corporation) advanced 1.80% to Rs 166.50. As per reports that company is focusing all its attention in realising its goal of having 50,000 megawatt (MW) capacity by 2012. As on date, the installed capacity of NTPC is 27,904 MW.
Cement stocks advanced on fresh buying in the wake of infrastructure boom. Ambuja Cements (up 0.83% to Rs 127.40), ACC (up 0.35% to Rs 982.50), and Grasim (up 0.45% to Rs 2910) gained.
Recent reports suggest that Maharashtra has been witnessing an acute shortage of cement in the last two to three months resulting in prices shooting up to Rs 280-300 from Rs 240-250 in June 2007, an increase of Rs 40 to Rs 50 during this period. This shortage of cement has been attributed to heavy consumption by infrastructure projects.
Bharti Airtel, the country’s largest listed cellular services provider rose 1.86% to Rs 877.20 after its parent, Bharti Enterprises, and Wal-Mart signed a much delayed joint venture for wholesale operations.
India’s second largest listed cellular services provider Reliance Communications slipped 0.16% to Rs 530.70. As per reports, it is in advanced talks with American Tower Corp. to sell a strategic stake of up to 21% in its telecom towers unit.
Banking shares advanced on steady buying interest. Kotak Mahindra Bank (up 2.23% to Rs 781), Bank of India (up 1.59% to Rs 245.70), Bank of Baroda (up 2.23% to Rs 301.95), Canara Bank (up 3.97% to Rs 267.40) and Union Bank of India (up 2.21% to Rs 148.20) gained.
India’s largest commercial bank State Bank of India eased sharply from its high of Rs 1726 to settle 0.40% lower at Rs 1675.30. Reports that it may announce a stock-split and follow-on public offer simultaneously in the next few months, kept the stock in action. The bank aims to generate liquidity for its share whose value has gone up considerably. Post-split, face value is likely to be Rs 1 or Rs 2 per share.
ICICI Bank slipped 1.98% to Rs 870. The BSE Bankex was down 0.42% at 8,371.91
Tata Motors rose 1.12% to Rs 657.95 on high volumes of 13.41 lakh shares after 10 lakh shares traded were traded at Rs 660 per share on BSE at 11:28 IST in a block deal.
ITC, the country’s largest cigarette manufacturer slumped 3% to Rs 167.20 on high volumes of 17.68 lakh shares. It was the top loser from the Sensex pack.
The BSE FMCG Index lost 1.38% at 1,937.07, and was the top loser among the sectoral indices on BSE. Colgate (down 2.26% to Rs 399.35) and Britannia (down 1.15% to Rs 1600), ended in red.
Bajaj Auto (down 1.96% to Rs 2262) and Bhel (down 0.80% to Rs 1670) were the other losers from Sensex pack.
IT pivotals were in demand today. Tata Consultancy Services (TCS), the country’s largest IT services exporter, rose 0.42% to Rs 1107. It has reportedly inked a multi-year deal with Geneva-based International Organisation for Migration (IOM). Under the deal, TCS will build and implement an integrated financial management solution to meet the resource management challenges of IOM.
Wipro, the country’s third largest software exporter, eased from high of Rs 479.80 to end flat at Rs 457.80, after it announced after market hours on Monday, 6 August 2007, the acquisition of US-based, Nasdaq-listed outsourcing firm Infocrossing for approximately $600 million (around Rs 2430 crore) in an all-cash deal.
Infosys (up 1.24% to Rs 1890), and Satyam Computers (up 0.31% o Rs 463), logged gains
India’s largest private sector entity Reliance Industries (RIL) gained 1.05% to Rs 1800.80 on 6.38 lakh shares. Prime Minister Manmohan Singh on Monday, 6 August 2007, constituted an Empowered Group of Ministers to go into the issue of pricing of natural gas to be produced by RIL from its eastern offshore Krishna Godavari basin block.
Led by RIL and state run oil refining and marketing companies, the BSE Oil and Gas Index advanced 1.10% to 7,804.55. It was the top gainer among the sectoral indices on BSE
State-run oil marketing firms edged higher after crude oil prices declined sharply on Monday, 6 August 2007. Indian Oil Corporation (up 1.75% to Rs 407), HPCL (up 2.42% to Rs 256) and BPCL (up 1.67% to Rs 316) gained.
India’s largest private sector steel maker Tata Steel slipped 1.38% to Rs 641 after pricing an issue of foreign currency convertible alternative reference securities at Rs 876.6225 per share, a 35% premium over yesterday's 6 August 2007, closing price on NSE. Tata Steel's overseas issue was oversubscribed by more than two times and has a greenshoe option of $150 million, which has not been exercised, Tata Steel said late on Monday, 6 August 2007.
Top aluminium maker Hindalco Industries declined 0.76% to Rs 156.25 after its unit Novelis Inc. said it had signed a multi-year supply deal worth $1 billion with drinks cans maker Rexam Plc.
Top gainers from small-cap and mid-cap space were Jagatjit Industries (up 11% to Rs 99), Avanti Feeds (up 19.94% to Rs 57.45), Grabal Alok Impex (up 11.74% to Rs 136.10), Selan Exploration (up 10.27% to Rs 121.85), GM Breweries (up 10% to Rs 96.40), TV Today (up 5.80% to Rs 165.30), Emami (up 5.30% to Rs 257.10), TTK Prestige (up 9.63% to Rs 148), Pratibha Industries (up 9.36% to Rs 235.55), and REI Agro (up 7.24% to Rs 214.60).
Top losers from small-cap and mid-cap space were KSL & Industries (down 8.75% to Rs 169), UB Holdings (down 7.17% to Rs 802.95), Tudor India (down 5.25% to Rs 50.50), and ABG Shipyard (down 6% to Rs 574).
Real-estate stocks hogged limelight on renewed buying on hopes interest rates may remain steady. BSE Realty index was up 0.44% to 7,409.44. DLF (up 1.30% to Rs 588), Housing Development and Infrastructure (HDIL) (up 4.14% to Rs 520.40) and Mahindra Gesco Developers (up 0.70% to Rs 546) edged higher.
Orbit Corporation slipped from high of Rs 413.90 to settle 0.65% lower to Rs 390.50. The inital momentum was on back of reports yesterday, 6 August 2007, that Reliance Retail, an unlisted arm of Reliance Industries, and JSW Steel were in race to buy its land and building in Mumbai for about Rs 800 crore. It had surged 8.26% yesterday.
Kale Consultants jumped 3.66% to Rs 95 on reports it had acquired UK-based Zero Octa, a specialist provider of revenue management, integrity and audit software for airlines. Zero Octa, with revenue of $6 million in 2006, employs about 600 people and has a large part of its operations located in India. The acquisition was made for about 1.5 times Zero Octa’s sales and the consideration will be paid as earn-outs spread over 30 months.
Punj Lloyd, a global engineering, procurement and construction (EPC) services provider in energy and infrastructure domains, jumped 3.60% to Rs 287.70 after it bagged a Rs 590-crore contract for building a sulphur block at Bina Refinery of Bharat Oman Refineries, on Monday, 6 August 2007. The project is scheduled to be completed within 25 months. With this, the order backlog as on June 2007 for the group stands at Rs 16,480 crore.
Public sector diversified listed company Andrew Yule & Co jumped 5% to Rs 27.10 on reports that it has finally initiated the demerger processes for its various divisions.
ETC Networks was locked at the upper limit of 20% to Rs 70.85 on reports that its board approved the merger of Zee Interactive Systems with itself from 1 April 2007. The share-swap ratio has been fixed at two shares in ETC for each held in Zee Interactive.
Nitin Fire Protection Industries rose 1.70% to Rs 433.50 after Nitin Cylinders, a wholly owned subsidiary of the company, signed a memorandum of understanding (MOU) for the supply CNG gas cylinders to Iran. The value of the order is Rs 65 crore.
Prakash Industries spurted 5% to Rs 83 after its board approved issuing 12.1 million convertible warrants to Barclays Capital Mauritius at a conversion price of Rs 67.96 a share.
Binani Cement (BCL) rose 1.22% to Rs 70.50 on reports that it has submitted expression of interest (EoI) for a joint venture with National Aluminium Company (Nalco). Nalco is scouting for a joint venture partner to set up a cement plant that uses fly ash generated at its captive power plant.
Mumbai-based digital post-production and VFX specialist Prime Focus rose 1.86% to Rs 840 on reports that it is gearing up for another acquisition. The buzz is that it is targeting a facility in the United States of America.
Public sector Hindustan Copper (HCL) jumped 5% for the second straight day to Rs 109.10 on reports that it may be revived without any cash support from the government. A financial restructuring package worth Rs 637 crore is proposed by the ministry of mines that includes waiver of loan, interest, preference share capital, guarantee fee and reduction of capital. The combined measures are expected to substantially reduce HCL’s accumulated losses.
GMR Infrastructure slipped from high of Rs 876, and settled 0.35% higher at Rs 831. The company yesterday, 6 August 2007, announced that it had entered into a memorandum of understanding with Tamil Nadu Industrial Development Corporation for the development of a multi-product special economic zone in Krishnagiri District, Tamil Nadu
Era Constructions India surged 5% to Rs 552 on bagging a order in consortium with Karam Chand Thapar & Bros (C.S.) from National Highways Authority of India (NHAI) on build, operate and transfer (BOT) basis.
MphasiS, the global IT and business process outsourcing company, slipped 2% to Rs 282.70 after it posted 57.37% rise in consolidated net profit to Rs 51.30 on a 33.95% growth in sales to Rs 513.9 crore in Q1 June 2007 over Q1 June 2006.
Industrial Finance Corporation of India (IFCI) jumped 3.69% to Rs 66.10 after gaining 5% yesterday, 6 August 2007. Its board of directors in a meeting on Saturday, 4 August 2007 set a deadline of 14 September 2007 to receive expressions of interest (EOI) for offloading a 26% equity stake in the form of new shares to a strategic partner.
Jammu and Kashmir Bank jumped 2.54% to Rs 701 after Fitch Ratings assigned the bank's Rs 600-crore lower Tier 2 subordinated debt programme a national long-term 'AA(ind)' rating with stable outlook.
Meanwhile, India Index Services and Products (IISL) today launched a new sectoral index based on the infrastructure sector. The 25-stock CNX Infrastructure Index will include companies belonging to the telecom, power, port, air, roads, railways and shipping and other utility services providers. CNX Infrastructure Index constituents represented about 21.01% of the total market capitalisation as on 31 July 2007. The index is a market-capitalisation-weighted index with base date of 1 January 2004, indexed to a base value of 1000. The index values will be available on end of the day (EOD) basis.
Asian markets were mixed. Singapore's Straits Times (down 0.21% to 3,302.01), Hong Kong's Hang Seng (down 0.13% to 21,907.99), and Taiwan Weighted (down 0.89% to 8,862.31) slipped
South Korea's Seoul Composite (up 0.26% to 1,859.82), Shanghai Composite (up 0.50% to 4,651.23) and Nikkei 225 (up 0.04% to 16,921.77) gained
Wall Street surged higher in a volatile session yesterday, 6 August 2007. as investors tried to balance their concerns about the availability of credit with hopes that Tuesday's Federal Reserve meeting will be a calming influence after two weeks of frenetic trading on Wall Street.
The Dow jumped 286.87 points, or 2.18%, to 13,468.78. Broader stock indicators also rebounded. The S&P 500 index rose 34.61 points, or 2.42%, to 1,467.67. The Nasdaq Composite index was up 36.08 points, or 1.44%, to 2,547.33.
Crude oil prices continued to decline in Asia on Tuesday, 7 August 2007, on concerns about the US economy and as investors sold to lock in profit from last week's record-setting rally. Light, sweet crude oil for September delivery fell 23 cents to $71.83 a barrel in Asian electronic trading on the New York Mercantile Exchange. Oil prices had slumped more than 5% on Monday, 6 August 2007, the biggest slide since December 2004, to near $71 per barrel.
Grey Market Premiums
Closed IPOs
Omaxe - Rs 80.
Omnitech Info - Rs 90.
Zylog - Rs 280.
IVR Prime Urban - Rs 8.
Central Bank - Rs 36.
SEL - Rs 2.
Asian Granito India - Rs 10.
Refex - Rs 14.
Current IPOs
Puravankara - Rs 10.
Take Solutions - Rs 320.
KPR Mills - Rs 9.
US Market gains back all of last Friday’s loss
Financial stocks provide major boost to the indices
Financial stocks, which were hit hard since past few weeks, brought bargain hunting back in Wall Street today, Monday, 6 August, 2007. After a full day of volatile trading but staying in positive territory for major part of the day, the Dow Jones Industrial Average (DJIx) rose by more than two hundred points in the final couple of hours of trading.
At the day’s close, Dow turned in its biggest point gain since October 2002. The Dow Jones Industrials Average today rose by 287 points at the end to close at 13468. Tech-heavy Nasdaq gained 36 points to close at 2547. S&P 500 added 34 points to close at 1467.
Twenty-nine out of the thirty Dow stocks closed in green after Boeing also inched up in the green territory in the final few minutes of trading. AIG, Citigroup, American Express, Altria and P&G were the main Dow winners. Alcoa was the sole Dow loser after metal prices fell today.
Bear Stearns spiked into positive territory about an hour before the close, following upbeat analyst commentary helped exacerbate the rebound in brokerage stocks.
Wal-Mart surges on joint venture news in India
When market opened in the morning, last week’s sizable downturn gave investors an early buying opportunity. Renewed enthusiasm in the battered financial sector provided the bulk of early support. An analyst upgrade on Merrill Lynch was the driving catalyst.
During mid-day, of the eight sectors trading higher, Consumer Staples paced the way, but the noteworthy surge in Financials continued to provide the bulk of intraday support.
The indices continue to climb going into the close as buying remained widespread across most areas. The Financial sector recouped all of the 4% it had surrendered last Friday.
Merck shares today gained 2.1% after an upgrade on the stock. Wal-Mart Stores rose 3.3% after saying it is setting up a joint business-to-business venture in India.
Energy sector fails to participate in today’s rally
But the Energy sector continued to be the market's only big blemish today and failed to participate in today’s rally. Slipping crude prices was the main reason for this.
Crude oil futures had a major fall today after traders started to worry about a slowdown of US economic growth. Traders continued to panic from last Friday’s weaker than expected job numbers. Dissipating hurricane fears in the Atlantic also softened crude prices today. Crude-oil futures for light sweet crude for September delivery closed at $72.06/barrel (lower by $3.42/barrel or 4.53%) on the New York Mercantile Exchange.
Trading volumes showed 2.2 billion shares exchanging hands on the New York Stocks Exchange and 2.8 billion shares trading on the Nasdaq stock market. Gaining issues topped decliners by 17 to 15 on the NYSE, while decliners topped gainers by 8 to 7 on Nasdaq.
Tomorrow’s key event is the Federal Reserve meeting which will conclude at 14:15 ET. The Fed is widely expected to leave the fed funds rate unchanged at 5.25% again but some section of the market is hopeful for a cut, given the recent crash in the market. Cisco Systems will lead the list of earnings reports out after the close.
Market may witness a pull-back
The market is likely to witness a pull-back on the back of firm Asian markets in ongoing trades and overnight gains in the US markets may help the market to remain firm. However, presence of sharp intra-day volatility and lack of clarity may drag the market down. Among the indices, the Nifty could test higher levels at 4385 - 4420 and has a supports at 4315 and 4280. The Sensex has a likely support at 14,700 and may face resistance at 15,100.
US indices bounced back sharply after Friday's fall on speculation that the Federal Reserve will offer some comfort to jittery investors at its policy meeting on Tuesday in light of the recent woes in the subprime, credit and housing markets. While the Dow Jones flared up by 287 points at 13,469, the Nasdaq climbed 36 points at 2,547.
Barring few, rest of the Indian floats had a good day on the US bourses. MTNL jumped 5.19% and HDFC Bank surged by 4.3%, while Dr Reddy's, Tata Motors, ICICI Bank, Satyam and Rediff gained over 1-2% each. However, Wipro and Patni Computer slipped around 1% each.
Crude oil prices in the US market edged lower, with the Nymex light crude oil for September delivery down by $3.42 to close at $72.06 per barrel. In the commodity segment, the Comex gold for December series dropped by $1.10 to settle at $683.30 an ounce.
Morning Call
Market Grape Wine :
In House :
Nifty at a supp of 4305 and 4266 lavel and resistence at 4382 and 4430
Buy : Intraday Rel Capital above 1132 Target 1159 with SL 1121
Buy : Intraday Tisco above 655 Target 675 with SL 647
Buy : Intraday IFCI
F&O
Buy : Crompgreaves above 296
Buy : Gujrat Alkali above 140
Out House :
Markets at a support of 14848 & 14788 levels with resistance at 15138 & 15233 levels .
Buy : SBIN
Buy : RIL & Rel
Buy : GUjambCem
Buy : Tisco and Sail
Buy : Aban & Skumar
Buy : DishTV & HanunToys
Buy : JP & JpHydro
Buy : DLF , Unitech & IBulls
Dark Horse : RIL , SBIN , Indiainfo , YesBank , Apar , Hanun , JpHydro & Skumar
Buller for the Day : Punjlloyd,Kotak Bank ,JpAsso , Century , Hanun & Aban with strict stop loss .
Indiainfoline Intraday Stock Ideas
Nifty (4340) Supp 4294 Res 4385
Buy ITC (172)
SL 168 Target 178, 180
Buy Tata Motors (650)
SL 644 Target 662, 665
Buy BPCL (311)
SL 306 Target 320, 322
Buy Punj Lloyd (278)
SL 274 Target 286, 289
Sell CESC (461)
SL 466 Target 451, 448
Predictions and contradiction
Those who have knowledge, don't predict. Those who predict, don't have knowledge – Lao Tzu
It’s tough to accurately predict the daily movement in any stock market. Down one day and up the next day, a perfect yo-yo pattern seems to appear on the bourses. The best way to tackle the current bouts of gyrations is to stick to your existing portfolio (we assume by now it is fundamentally sound) and focus on stocks that you wish to add. The dip from the lifetime high of 15,868.85 (struck on July 24) is a good opportunity for long-term investors to pick up quality scrips. For those with less patience, we are afraid its going to be a bumpy ride in the near term. Short-term traders should trade with strict stop losses, as there could be further selling at higher levels.
Though India is a domestic-centric economy, it cannot be immune to the global happenings. In any case, there is nothing new in the offing as far as the local economy is concerned. If anything, earnings growth seems to have peaked out, and there may be a slowdown in the GDP growth as well. There are no fresh triggers in the pipeline that could lift the indices higher. The only factor which could add a boost is FII inflows, which have turned volatile off late. Today, we expect a gap-up opening on the back of the overnight rally on Wall Street and firm opening in Asian markets. But, just as the market recovered towards the close of trade yesterday, the reverse cannot be ruled out today.
Wipro could be in the focus as it has announced the acquisition of US-based IT infrastructure outsourcing firm Infocrossing for $600mn in an all cash deal. TCS is also likely to attract buyers. The company's financial solutions division is bidding for over 150 financial product deals.
Solar Explosives will in the limelight as its Board will consider merger of Solar Industries with the company. Mphasis has announced its results for the first quarter. The IT firm has posted a 57% year-on-year growth in its consolidated net profit while revenues are up 34%.
US stocks rallied the most in four years, led by financial companies, on speculation that the government could come to the rescue amid the ongoing turbulence in the housing and credit markets.
Citigroup, American International Group and Bank of America helped the Standard & Poor's 500 Index and Dow Jones Industrial Average rebound from three weeks of declines. Wells Fargo rose the most in five years after saying it will buy back $1.7bn in shares.
Fannie Mae had its biggest gain in 20 years and Freddie Mac advanced the most since 2000 on expectations that regulators will relax restrictions on how much they can spend on home loans. P&G led an index of consumer shares to its biggest increase in five years on falling oil prices.
The S&P 500 rose 34.61 points, or 2.4%, to 1467.67. The Dow rallied 286.87 points, or 2.2%, to 13,468.78. The Nasdaq Composite Index added 36.08 points, or 1.4%, to 2547.33.
The yield on 10-year Treasury notes climbed more than 0.06% to 4.74%. The dollar rose versus the yen.
The Federal Open Market Committee will release its decision on interest rates today. Policy makers are widely expected to keep rates steady. Some investors and experts believe the Fed may indicate that risks to the US economy have escalated due to the current turmoil in credit market.
Crude oil prices fell the most in seven months in New York on concern that the world's largest economy will slow. Crude for September delivery declined $3.42 to $72.06 a barrel. The front-month contract was trading 35 cents down at $71.71 a barrel in extended trading in Asia.
Treasury prices retreated, raising the benchmark yield on the 10-year note rising to 4.73% from 4.69% late on Friday. The dollar gained against the euro and the yen. COMEX gold for December fell $1.10 to $683.30 an ounce.
American Home Mortgage, which shut shop on Aug. 3, filed for Chapter 11 bankruptcy protection, sending shares of the battered mortgage lender 36% lower after last week's steep decline.
Private equity firm Cerberus Capital Management named ex-Home Depot chief Robert Nardelli as Chrysler's chairman and chief executive officer.
European shares closed mostly lower. The German DAX 30 index closed up 0.1% at 7444.45. The UK's FTSE 100 lost 0.6% at 6,189.10. Elsewhere the French CAC-40 closed down 1.2% at 5,532.99 and the pan-European Dow Jones Stoxx 600 index dropped 0.9% to 368.72.
Brazilian and Mexican stocks erased losses to end slightly higher. In Sao Paulo, the Bovespa rose 0.5% to 53,091. In Mexico City, the IPC index rose 38 points, or 0.13%, to 29,709.32. In Santiago, the IPSA fell 1.8% to 3,254.90. The ISE National 30 index in Turkey was down 0.5% at 63,025 and the RTS index in Russia shed 1.3% to 1944.
Most Asian markets are up this morning. The Nikkei in Tokyo was up 20 points at 18,935 while the Hang Seng in Hong Kong jumped 164 points to 22,101. The Kospi in Seoul gained 11 points at 1865 while the Straits Times in Singapore advanced 33 points to 3342 and the Shanghai Composite in China rose 22 points to 4650.
An index of financial shares on the Morgan Stanley Capital International Asia-Pacific Index climbed 0.4%, the biggest gain among 10 industry groups. The MSCI regional index added 0.1% to 151.33 at 10:48 a.m. in Tokyo, after dropping 1% yesterday to touch the lowest since June 27. It is down 6.2% since closing at a record on July 24.
Markets ended on a weak note however managed to recoup partial losses towards the end led by gains in the heavyweights like SBI, ITC, TCS and Ranbaxy. However, ICICI Bank, Infosys, L&T and Reliance Industries were the major lagging movers in the Sensex index. European markets also recovered as DAX index was up 0.26% and FTSE 100 index recovered by 0.30% boosting the sentiments of the traders at home aiding the benchmark Sensex to recover 198points from its days low. Finally, BSE 30-share Sensex slipped 235 points to close at 14903. NSE-50 lost 62 points to close at 4339.
Punj Lloyd gained by 1% to Rs277 following reports that the company secured order worth Rs5.90bn from Bharat Oman Refinery. The scrip touched an intra-day high of Rs279 and a low of Rs263 and recorded volumes of over 16,00,000 shares on NSE.
Apollo Hospitals marginally gained by 0.3% to Rs512 as reports stated that India's biggest health-care company is planning an acquisition in the U.S. The scrip touched an intra-day high of Rs524 and a low of Rs489 and recorded volumes of over 30,000 shares on NSE.
Hindustan Zinc advanced by 1.2%to Rs725 after India's largest producer of zinc raised lead prices by 3.4% to Rs137,200 per metric ton. The scrip touched an intra-day high of Rs732 and a low of Rs694 and recorded volumes of over 1,00,000 shares on NSE.
IFCI surged over 5% to Rs63 after the company announced that it would invite bids from strategic investors. The scrip touched an intra-day high of Rs64 and a low of Rs58 and recorded volumes of over 11,00,00,000 shares on NSE.
SBI gained 2.8% to Rs1681. Reports sated that the Government is expected to fund the banking major's growth plans. The scrip touched an intra-day high of Rs1699 and a low of Rs1580 and recorded volumes of over 26,00,000 shares on NSE.
Metal stocks lost their shine on back of selling pressure. Hindalco slipped by 3% to Rs157, JSW Steel was down by 5% to Rs646, Sterlite Industries declined by 3% to Rs611. However, Nalco surged 3.1% to Rs259.
Auto stocks were in reverse gear led by fall in frontline stocks. Maruti was down by 3% to Rs824, Bajaj Auto slipped by 1.3% to Rs2299, TVS Motors edged lower by 0.8% to Rs56. However, M&M marginally gained 0.3% to Rs679.
Telecom stocks also ended lower. Reliance Communication plunged by over 3% to Rs531, Bharti Airterl was down by 1% to Rs866 and IDEA slipped by 2% to Rs123.
BSE Realty stocks were badly beaten up led by fall in the heavyweights. Unitech declined by over 3.2%to Rs520, DLF was down by 3.5% to Rs580, Sobha dropped by 3.5% to Rs835 and Akruti lost 5.8% to Rs518.
IT stocks continue the southwards journey led by fall in heavyweight Wipro was down by 2.7% to Rs457; Satyam Computer dropped by 2.3% to Rs461and Infosys declined 2.6% to Rs1865. Polaris, NIIT Ltd and Mphasis BFL were the major losers among the Mid-Cap stocks.
Fund Activity:
FIIs were net sellers of Rs1.43bn (provisional) in the cash segment on Friday. At the same time, local institutions were net buyers of Rs591mn. In the F&O segment, FIIs were net buyers at Rs17.73bn.
On Thursday, FIIs offloaded Rs4.19bn from the cash segment.
Major bulk Deals:
Capital Research and Management has picked up J&K Bank while Vontobel Funds Inc sold the stock; DSP Merrill Lynch Capital has sold India Infoline; Fin Brains Securities (India) has sold Simplex Projects.
Insider Trades:
Shringar Cinemas Limited: Balkrishna Shroff, Director bought from market has bought 10000 equity shares of Shringar Cinemas on 1st August 2007.
Lower Circuit:
Rama Pulp Paper and Balasore Alloy
Upper Circuit:
Goldstone Tech, Ganesh Forgings, Easun Reyrolle, Zuari Industries, Prism Cements, Era Constructions, Accentia Technologies, Maxwell Inds and Sulzer India.
Delivery Delight (Rising Price & Rising Delivery):
ABB, Alstom Projects, Ballarpur Industries, Dishman Pharma, ITC, Jaiprakash Associates, Mphasis BFL, Praj Industries, Punj Lloyd and Reliance Petroleum.
Abnormal Delivery:
Reliance Capital, Ultratech Cement, Unitech, Chennai Petro, SBI, Rolta, Reliance Industries, Hindalco, Tata Tea, Kesoram, GSK Pharma, Aurobindo Pharma and HDFC.
Major News & Announcements:
Inflation rate was 4.36% in week ended July 21 vs expectations of 4.37%
Govt approves FDI proposals worth Rs5.75bn
Apar Industries gets export order of Rs1.11bn
Govt allows TV 18 group to buy stake in MTV India for $50.5mn
Punj Lloyd form JV for Real Estate development
Infosys in multi-year services accord with Canadian Pacific
Parsvnath gets nod for Indore IT SEZ
Goldstone Technologies to foray into business intelligence
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