India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Friday, August 24, 2007
India second-largest market for Nokia
India has now become the second-largest market for Nokia in terms of sales, ahead of the US. Over the past three years, India has been gaining significant ground year-on-year, moving from the 4th position in 2005 to third in 2006, and it is today poised right behind China.
Making this announcement, Olli-Pekka Kallasvuo, the president and CEO of Nokia Corporation, who was in New Delhi today, said, “India is playing an increasingly important role in the global economy buoyed by impressive economic growth, skilled manpower and tremendous business opportunity. Today, India hosts a comprehensive Nokia R&D, manufacturing and design presence. Moreover, we are also the country’s leading provider of wireless infrastructure through Nokia Siemens Networks, the newly-merged entity. This not only reiterates our commitment and belief in the market but also underscores India’s emergence as a strategic resource hub for Nokia globally.”
The company also announced that half of the handsets manufactured at its plant in Sriperumbudur, near Chennai, was being exported to 58 countries across Asia, Africa, Australia and New Zealand.
The company currently employs over 9,000 people and has 95,000 outlets with 50,000 exclusive Nokia brand stores. The Sriperumbudur manufacturing plant alone employs 4,700 people, 70 per cent of them women.
Moreover, Nokia Telecom Park, which received an investment of $500 million (Rs 2,043 crore) from the company and seven global component manufacturers, is likely to generate over 30,000 jobs when fully functional.
Buoyed by the growth of the Indian economy and the telecommunications segment, the company sees the country as a focused market.
The prompt ‘product advisory’ issued recently (the company does not call it a recall) for the BL-5C battery manufactured by Matsushita Battery Industrial, indicates how sensitive it is about its reputation. The feedback that the company received post its advisory also reiterates its position in India. On the very first day (August 16) of the opening of its centre for advice on the faulty batteries, Nokia India answered 20,000 calls and received 1.45 lakh SMSes.
Weekly Stock Ideas
Buy REL at Rs735 with SL 727 Target of Rs755, 760
Buy Kotak Bank at Rs649 with SL of Rs638 and Target of Rs670, 675
Buy Arvind Mills at Rs46 with SL of Rs43 and Target of Rs52, 53
Buy JP Associates at Rs841 with SL of Rs833 and Target of Rs870, 875
Buy Maharashtra Seamless at Rs579 with SL of Rs571 and Target of Rs597, 603Weekly Newsletter
The Communist Party of India (Marxist) or CPM reiterated its strong opposition to the Indo-US nuclear deal and called upon the Government not to take any further step to operationalise the landmark pact. "It is incumbent on the Government, which commands a majority in Parliament only with the support of the Left parties, to heed the voices of opposition," CPM General Secretary Prakash Karat said at a news conference in New Delhi, on Aug. 23.
However, Karat added that the CPM or the Left front did not want to destabilise the Government, provided the latter does not proceed with the recently concluded 123 agreement with the US. The Central Committee of CPM has decided to take the issue of the Indo-US strategic relations, of which the nuclear agreement is a part, to the people through a mass campaign alongwith the Left parties, Karat said. The CPM and the Left parties will conduct this joint campaign from 4-8 September all over the country.
Later replying to questions fielded by reporters, Karat said that though the CPM and the Left front doesn't want the Government to fall, the responsibility of the future of the current regime lies fully with the Government. The CPM wants the Government to pause, and heed the voices of opposition to the deal, he said, adding that the Centre should examine the wider fallout of the agreement and allay apprehensions with regard to the Hyde Act.
The communist parties are vehemently opposing the Indo-US nuclear deal, terming it as a 'sellout' to the US. They claim the agreement will hurt India's sovereignty and undermine its independent foreign policy. At the same time, Prime Minister Dr. Manmohan Singh has refused to bow to the pressure from the Left parties. Congress chief Sonia Gandhi and UPA allies have expressed their full support to the PM. However, none of them want mid-term polls now.
The onus is now surely on the Government to make the next move. Given their belligerent stance, the Left parties are unlikely to blink first. So, it will have to be the Government, who will have to take a step back. The spotlight is now on Sonia Gandhi, who is slated to hold talks with CPM. Its a really precarious situation for her, as she is the one who made Dr. Singh the PM. Now to ask him to eat a humble pie will be difficult for her.
What can happen is that the Government may defer any further steps to operationalise the nuke deal and buy some more time with the Left. Another possibility is no change in current position, which will lead surely to mid-term polls some time next year. What is certain though is that the Left will not relent. So, if anybody has to give up it has to be the PM. Having said that, since relations between the Government and the Left are at an all-time low, continuing with the same regime just for the heck of it also doesn't make much sense. So, the net result would most likely be general elections in 2008 instead of 2009.
Global markets bounce back
After several weeks of turbulence, global markets were relatively calm this week, thanks largely to last week's rate cut by the Federal Reserve. Assurance from the American central bank that it was ready to take any step to avoid further turmoil in the financial markets also went down well with the global investors. Traders also bet that the current credit crunch may force the Fed to cut its more widely followed benchmark fed funds rate next month. To increase confidence in the system for discount loans, the Fed encouraged several of America's biggest banks, including Citi and JPMorgan, to tap into them. Moreover, Countrywide Financial, America's biggest private mortgage-lender which has been teetering on the brink of collapse in the current market turmoil, received a boost when Bank of America bought a US$2bn stake in it. The strength in the global equity markets helped investors resume the so-called carry trades with money borrowed in Japanese yen, which fell against the dollar. Though widely expected, the decision by the Japanese Central Bank to hold rates steady also aided the rally.
Still, the bad news on the US subprime mortgages and the credit market kept pouring in. Lehman Brothers said it is shutting its subprime mortgage lending unit, which will result in 1,200 layoffs and a US$25mn charge. HSBC said it is closing its Indiana mortgage unit, which will result in it cutting 600 jobs. Accredited Home Lenders said it won't take any more loan applications and that it will cut 1,600 jobs, due to the problems in the subprime mortgage lending market. Toll Brothers reported slumping earnings and warned about its outlook. However, the luxury homebuilder's earnings were nonetheless stronger than expected. Thornburg Mortgage said it sold over 35% of its assets and reduced its borrowing to lower its risk. Capital One Financial said it was closing its troubled GreenPoint mortgage unit, that it will cut 1900 jobs and shutter 31 offices by the end of the year.
Reports said Countrywide Financial has started laying off employees, in an effort to cut costs amid its ongoing credit. Meanwhile, its CEO Angelo Mozilo said the housing slump may slow consumer spending and lead to an economic contraction. Outstanding US commercial paper fell 4.2% last week, the biggest decline in at least seven years. Commercial paper backed by assets led the fall as buyers fled debt linked to subprime mortgages. Bank of China had its biggest drop since going public last year after the China's second-biggest bank said it holds almost US$9.7bn of securities backed by US subprime loans, the most of any Asian company. But, not all news was bad, as French bank BNP Paribas said it will re-open three suspended investment funds that invest in pools of mortgage debt after developing a new way to price their assets. And, investment guru Warren Buffett was quoted as saying that "worsening credit and housing markets may provide some real investment opportunities."
The outlook is not good though. Not only do subprime delinquencies continue to rise, but defaults on prime and good to middle quality loans have started to climb too. Figures released this week in the US showed foreclosures in July up by 9% compared with June, and by 93% over the year before. Traders see a 56% chance the Fed will cut its target for overnight bank lending by a quarter percentage point to 5% at its next meeting on Sept. 18 compared with 36% a week ago, based on futures contracts. Some think the Fed may act sooner. But the it may still remain a pipe dream. "Financial-market volatility, in and of itself, does not require a change in the target federal funds rate," said a Fed member this week. Even if the Fed succeeds in cooling the markets, the appetite for risky assets is un likely to be the same again. And, even if stability returns, the repricing of risk is likely to continue.
Sudden crashes and swift recoveries were the order of the week. However, the bulls weren't complaining, as they closed the week with some gains, especially after being slaughtered for the past few weeks. Large-caps led the recovery this time around, with BHEL, Bhartil Airtel, Tata Steel and Gujarat Ambuaj Cements among the major gainers. Political uncertainty had the better of bulls on the Indian bourses and for a change the market players seemed to have forgotten about the crisis in the US subprime mortgage market and the turmoil in the global credit markets. Rumours of LEFT pulling out from the Government dominated the headlines on Dalal Street over the week. However, Friday’s rally came on expectations that the Congress Party will reach an agreement with Communist parties over the Indo-US nuclear energy.
After a volatile week, the sentiments turned around on Friday. The CPM clarified that they did not want to destabilise the Government. This was one of the biggest fear on Dalal Street. Auto, Capital Good, Metals, Cement and FMCG stocks were among the major gainers driving the Sensex higher by 283 points or 2% to close the week at 14,425. NSE Nifty added 2% or 82 points to close at 4,190.
ecovery in metal prices on the LME boosted the metal stocks on Dalal Street. The BSE Metal Index gained nearly 5% during the week. Tata Steel led from front as the scrip surged by over 7% to Rs582. Sterlite Industries rallied by over 11.5% to Rs576, SAIL spurred by over 6% to Rs145 and Bhushan Steel advanced 4.5% to Rs656.
Value buying boosted Capital Goods stocks led by BHEL and L&T. Strong order book and good sets of numbers by most players in the industry continues to propel the Capital Goods Index higher after being on the sidelines in last few weeks. L&T surged by 6% to Rs2443 and BHEL advanced by over 12% to Rs1750. Siemens added 1% to Rs1199 as its German parent announced plans to double the size of Indian operations in the next three years.
With a host of issues to contend with the bulls and bears are set for regular confrontation in the coming week. While many players view the current political situation as a ceasefire time, wagging tongues and complicated interpretations could add to the confusion in the minds of investors. Besides, we also have the F&O expiry on Thursday.
If global cues hold well, another firm opening on Monday morning is on the cards. But that's where the predictions end. The flow of liquidity is drying with FIIs selling heavily for the past few weeks. They are unlikely to resume their big buying spree given the standoff between UPA and the Left.
Among the positives, the concerns of interest rates appear to have cooled off in recent days. Speculation is rife regarding a rate cut by the Fed. For that we may have to wait a couple of weeks. Inflation remains under control. India's inflation, based on the Wholesale Price Index (WPI), rose to 4.1% for the week ended August 11, recording a 10th consecutive week in which inflation held below the Reserve Bank of India's (RBI) FY08 target.
Hold on to your fundamentally sound counters. Avoid the temptation of averaging in mid-cap or small cap counters. Keep a close look on the breadth and volumes. A couple of spurts may just be short covering. Avoiding falling into any bear trap.
F&O expiry to keep market volatile
The market is expected to remain volatile ahead of the derivative contracts expiry for the August 2007 series on Thursday, 30 August 2007
Market nudged higher for the week ended Friday, 24 August 2007, tracking recovery in Asian markets on speculation that the US Federal Reserve will cut benchmark rates sooner rather than later. Also the Bank of Japan (BOJ) decision to keep interest rates unchanged at 0.50% boosted the market further
The market ended its four week losing streak to post gains for the week ended Friday, 24 August 2007. The 30-share BSE Sensex rose 283.35 points or 2% to settle at 14,424.87. The S&P CNX Nifty rose 82.10 points or 1.99% to settle at 4,190.15 in the week.
But the domestic bourses underperformed its Asian peers due to fluid political situation in New Delhi, with prospects of mid-term polls looming large. World stock markets had fallen sharply in recent weeks as problems in the risky US subprime mortgage sector spread to other markets.
Also FIIs, who were the key drivers of the recent rally have resorted to selling. As per the latest data they sold shares worth Rs 8,895.80 crore in the month of August, till 23 August 2007. FII inflow in the month of July 2007, totaled Rs 23,872.40 crore.
Inflation has been under control. India's wholesale price index rose 4.10% in the 12 months to 11 August 2007, slightly up from the previous week's 4.05%, due to higher food and manufactured product prices, government data showed on Friday, 24 August 2007.
One in 20 Indians now owns a phone
One in every 20 (corrected!) persons now owns a telephone as the total number of subscribers reached 232.87 million by July, led by an addition of 8 million mobile subscribers.
The tele-density has increased to 20.52 in July 2007 as compared to 19.86 in June 2007, according to sector regulator Trai.
The telecom subscriber base was 225.01 million in June 2007.
In the wireless segment, 8.06 million subscribers were added in July, against the addition of 7.34 million June. The total wireless subscribers (GSM, CDMA & WLL (F)) base is 192.98 million now.
The wireline (landline) segment subscriber base stood at 39.89 million with a decline of 0.20 million in July.
Total broadband connections in the country have reached 2.47 million by the end of July with an addition of 0.05 million links.
In July, the GSM subscriber base grew from 135.9 million in June to 141.74 million, recording an addition of 5.75 million. This translates into an overall growth of 4.23% over the previous month when the addition was was 5.3 million.
Country's top mobile operator Bharti Airtel captured 31.58% share of the market. It added 2 million new users and its subscriber base touched 44.76 million.
Vodafone Essar added 1.68 million new users to take its user base to 32.43 million to retain the second slot, while state-run BSNL which is struggling with capacity expansion added just 0.55 million (5 lakh) new users to remain at the third slot with a user base of 28.97 million.
Sensex up 260 pts, closes at 14,424.87
The benchmark Sensex Friday moved up by 260 points on the Bombay Stock Exchange on expectation the government and the left allies will resolve their differences on the Indo-US nuclear deal.
The Sensex, which remained volatile since morning, shot up by 260.89 points to 14,424.87. Twenty-eight out of the 30 stocks in the index ended with gains.
The CPI(M) last evening said it did not want the "current crisis" over the nuclear deal to affect the Manmohan Singh government and that it had not discussed the possibility of elections in a crucial two-day meeting.
Congress had also expressed hope that some way would be found to ease the stand-off. "We hope keeping in view the national interest, some understanding will be reached and some way will be found out," AICC General Secretary Janardan Dwivedi has said.
The index touched the day`s high of 14,455.49 and a low of 14,163.61.
The wide-base national stock exchange`s nifty also surged by 75.80 points to 4,190.15.
Stock markets had yesterday declined on concern that the opposition from communist parties on the nuclear accord could lead to an election about two years ahead of schedule.
The major support to the market today came from the metal sector by rising 284.20 points at 10,276.60 followed by capital goods index by 285.56 points at 12,622.23.
PSU segment index rose by 148.88 points at 6626.05, auto sector index by 105.80 points at 4569.26, bank index by 91.14 points at 7315.43, it index by 52.20 points at 4408.48, technology index by 50.62 points at 3466.72 and healthcare index by 37.42 points at 3424.02.
Sensex zooms 261pts, Tata Motors gains 6%
The Sensex opened with a positive gap of 73 points at 14,237. After extending gains in early trades, the index dropped a low of 14,164 in late morning trades.
Fresh buying at lower levels saw the index bounce, but the recovery was on low volumes as anxious players opted for a wait-and-watch outlook ahead of the weekend and the current political crisis.
The index rallied to a high of 14,455 in noon deals, and finally settled with a gain of 261 points at 14,425.
The BSE Metal index surged nearly 3% to 10,277. The Auto and the PSU indices rallied over 2% each to 4569 and 6626, respectively.
The market breadth was fairly positive - out of 2,677 stocks traded, 1,563 advanced, 1,067 declined and 47 were unchanged today.
INDEX MOVERS
Tata Motors zoomed nearly 6% to Rs 658. BHEL soared over 5% to Rs 1,750.
Reliance Energy, Tata Steel and ACC surged around 4% each to Rs 736, Rs 582 and Rs 1,010, respectively.
SBI, Ranbaxy and Satyam rallied around 3.5% each to Rs 1,466, Rs 361 and Rs 437, respectively
ONGC and NTPC gained 2.7% each at Rs 805 and Rs 164, respectively.
Mahindra & Mahindra and Reliance Communications advanced 2.5% each to Rs 640 and Rs 499, respectively.
Ambuja Cements, Hindalco and Larsen & Toubro added 2% each to Rs 135, Rs 142 and Rs 2,444, respectively.
Cipla, Reliance, Bharti Airtel, Maruti and Wipro were the other major gainers today.
VALUE & VOLUME TOPPERS
SEL Manufacturing topped the value chart with a turnover of Rs 212.40 crore followed by SBI (Rs 133 crore), Reliance (Rs 99.40 crore), Asian Granito (Rs 97.40 crore) and Omaxe (Rs 91 crore).
Nagarjuna Fertilisers led the volume chart with trades of around 1.29 crore shares followed by Tata Teleservices (1.13 crore), SEL Manufacturing (1.03 crore), IQMS Software (99.90 lakh) and IFCI (99.30 lakh).
Market recovers in choppy trade
Market nudged higher last week tracking recovery in Asian markets on speculation that the US Federal Reserve will cut benchmark rates sooner rather than later. But the domestic bourses underperformed its Asian peers due to fluid political situation in New Delhi, with prospects of mid-term polls looming large. World stock markets had fallen sharply in recent weeks as problems in the risky US subprime mortgage sector spread to other markets.
The 30-share BSE Sensex rose 283.35 points or 2% to settle at 14,424.87 in the week ended Friday, 24 August 2007. The S&P CNX Nifty rose 82.10 points or 1.99% to settle at 4,190.15 in the week.
The market surged on Monday, 20 August 2007, tracking recovery in Asian markets which were boosted by Federal Reserve' 50 basis-point cut in discount rate at which it lends to banks, on Friday 17 August 2007.
However, the Indian market underperformed its Asian peers on that day due to political concerns. Left parties asserted on Monday, 20 August 2007, that a freeze on the forthcoming negotiations on India-specific safeguards at the International Atomic Energy Agency (IAEA) was a prerequisite for accepting the government’s suggestion of setting up a panel to look into Left’s concerns over the Indo-US nuclear deal.
Left parties had warned the government on Saturday, 18 August 2007, of serious consequences if it pursues with a nuclear deal with the United States. The four Communist parties have 60 members of parliament (MPs) in the 545-member lower house of parliament. Prime Minister Manmohan Singh's government could fall or be reduced to a minority if the Left withdraws support.
Political uncertainty spooked the market on Tuesday, 21 August 2007, as Sensex plunged 438 points in a broad-based sell-off. A host of small-cap and mid-cap stocks tumbled.
The market bounced back on Wednesday, 22 August 2007, as mutual funds mopped up battered shares amid market talks that left parties may not withdraw support to the government. Firm global markets also supported domestic bourses.
Volatility gripped the market on Thursday, 23 August 2007. Sensex lost 84.68 points or 0.59% to settle at 14,163.98. The market lost ground despite firm global bourses.
The market bounced back again on Friday, 24 August 2007, as fears of immediate elections eased after India's biggest communist party, Communists Party of India (Marxists), or CPM, said after trading hours on Thursday, 23 August 2007, it does not want to pull down the government over a nuclear deal with the United States.
Though CPM softened its stand on withdrawing support to the ruling coalition government at the Centre, it reiterated the government should not go ahead with negotiations with the International Atomic Energy Agency and Nuclear Suppliers Group over a nuclear deal with the US.
Cement shares edged up on Thursday, 23 August 2007, following Switzerland's Holcim open offer to acquire additional 20% stake in North India’s largest cement maker Ambuja Cements. Holcim said on Thursday it would launch a public takeover offer for another 20% of the share capital of Ambuja Cements in a bid worth around $1.12 billion. The open offer will be made at Rs 154 per share, representing a 20% premium over the average price of the shares for the last two weeks, Holcim said.
Concerns of possible US economic slowdown due to sub-prime defaults weighed on IT shares which derive a lion’s shares of revenue from exports to US.
Bharti Airtel surged on reports it plans to double its telecom towers to 80,000 by end of March 2008.
Reliance Industries (RIL) witnessed alternate bouts of buying and selling. The Empowered Group of Ministers, formed to look into pricing and utilisation of natural gas produced from new fields like the KG-D6 of RIL, is likely to hold its first meeting on 27 August 2007.
Meanwhile, Uttar Pradesh chief minister Mayawati on Thursday, 23 August 2007, ordered the closure of 10 new supermarkets run by RIL following protests by traders and some political activists against the opening of the Reliance Fresh stores. Mayawati said the state government has appointed a high-level committee to review the whole affair. Until the committee gives a green signal, Reliance Fresh stores will remain shut
Bhel came off lower level after the company on Tuesday, 21 August 2007, won orders worth Rs 6500 crore to set up power project units. L&T, too, came off lower level as investors mopped the counter due to its strong order book position.
Refex Refrigerants ended at Rs 62 on BSE on Monday, 20 August 2007, a discount of 4.61% over the IPO price of Rs 65. The scrip debuted at Rs 69.10. Refex Refrigerants refills non-ozone depleting refrigerant gases, or hydro fluorocarbons (HFCs).
Central Bank of India settled at Rs 115.40 on BSE on Tuesday, 21 August 2007, a premium of 13.13% over the IPO price of Rs 102. The stock debuted at Rs 130.10 at a premium of 27.54% over the IPO price of Rs 102. The share price touched a high of Rs 133.25 and a low of Rs 114.
SEL Manufacturing Company ended at Rs 142.80 on BSE on Tuesday, 21 August 2007, a premium of 58.67% over the IPO price of Rs 90. SEL Manufacturing had debuted at Rs 87.90, a discount of 2.33% over the IPO price. SEL Manufacturing Company manufactures and exports knitted garments, fabrics and combed and carded yarn.
Asian Granito India settled at Rs 94.75 on BSE on Thursday, 23 August 2007, a discount of 2.3% over the IPO price of Rs 97. The stock debuted at Rs 100.15, a premium of 3.2% over the IPO price of Rs 97. Asian Granito India manufactures vitrified tiles.
Power Grid Corporation of India, on Wednesday 23 August 2007, filed the draft prospectus for its initial public offer (IPO) with Securities & Exchange Board of India (Sebi). The public offer involves issuing 10% fresh equity while the government will divest 5% stake simultaneously. The company is expected to raise about Rs 580 crore from the IPO.
Securities and Exchange Board of India (Sebi) said on Wednesday, 22 August 2007, it had barred D-Lind (India) from trading in securities for one month citing false and misleading information by the company on shares buybacks.
BSE said on Monday, 20 August 2007, it has decided to shift a total of 143 stocks to trade-to-trade segment with effect from Friday, 24 August 2007. The stocks transferred to trade-to-trade segment include Aurangabad Paper Mills, Bharat Fertilizer Industries, Eltrol, G.P. Electronics, G.R.Cables, Harig Crankshafts, HOV Services, Kilburn Engineering, LML, Nath Pulp & Paper Mills, SIEL, Trishakti Electronics & Industries, Bajaj Hindustan Sugar & Industries, Ion Exchange (India), among others.
Sebi said on Wednesday, 22 August 2007, it is considering a waiver of the entry load for direct applications received by asset management companies. Equity mutual funds charge entry load on one-time investments made directly or through distributors.
The government is committed to developing its nuclear energy capability and other sources of power as the country’s its oil bill will impose an unbearable burden as growth continues, Prime Minister Manmohan Singh's said on Monday, 20 August 2007. Singh urged political parties to appreciate the vital interest of pursuing a sound energy security strategy.
India's wholesale price index rose 4.10% in the 12 months to 11 August 2007, slightly up from the previous week's 4.05%, due to higher food and manufactured product prices, government data showed on Friday, 24 August 2007.
Sensex settles above 14,400
The market surged in the second half of the trading session as fears of immediate elections eased after India's biggest communist party, Communists Party of India (Marxists), or CPM, said after trading hours on Thursday, 23 August 2007, it does not want to pull down the government over a nuclear deal with the United States. The market saw a bout of volatility. Despite the rally today, the turnover was dull.
The highlight of today's trading session was that the domestic market ignored weak global cues. Most of the Asian markets and European markets were trading lower today, 24 August 2007. US markets settled flat on Thursday, 23 August 2007. Over the recent past, local bourses have been closely tracking world markets.
India's wholesale price index rose 4.10% in the 12 months to 11 August 2007, slightly up from the previous week's 4.05%, due to higher food and manufactured product prices, government data showed on Friday, 24 August 2007.
The BSE 30-share Sensex rose 260.89 points or 1.84% to settle at 14,424.87. It had opened higher at 14,237.26 and advanced further to hit 14,455.49 as buying continued. The index slipped to a low of 14,163.61. It had oscillated in a range of 291.88 points for the day.
The S&P CNX Nifty was up 75.20 points or 1.83% at 4190.15. The Nifty August 2007 futures settled at 4169.90, a discount of 20.25 points as compared to the spot closing
The market breadth was positive on BSE with 1581 shares advancing as compared to 1112 that declined, while 62 remained unchanged.
The BSE Mid-Cap Index settled 1.4% higher at 6,190.45, while the BSE Small-Cap Index gained 1.32% to7,522.25. But both the indices underperformed the broad market index.
The total turnover on BSE amounted to Rs 3608 crore as against Rs 4914.46 crore on Thursday, 23 August 2007. The NSE F&O turnover was Rs 43336.32 crore as compared to Rs 56000.15 crore on Thursday, 23 August 2007.
All the sectoral indices on BSE settled higher. The BSE Metal index (up 2.84% to 10,276.60), BSE PSU index (up 2.30% to 6,626.05), BSE Auto index (up 2.37% to 4,569.26) and BSE Capital Goods index (up 2.31% to 12,622.23), were outperformers compared with the broad market index.
BSE Oil & Gas index (up 1.78% to 7,516.68), BSE Realty index (up 0.45% to 6,783.21), BSE Bankex (up 1.36% to 7,315.43), BSE Health Care index (up 1.10% to 3,424.02), BSE Consumer Durables (up 0.64% to 3,987.01), BSE TECk index (up 1.48% to 3,466.72), BSE FMCG Index (up 0.84% to 1,877.97), and BSE IT index (up 1.20% to 4,408.48) were underperformers compared to broad market index.
Among the 30-member Sensex pack, 27 advanced while only 3 of them slipped.
India’s top truck maker Tata motors jumped 6.11% to Rs 660.15 on 4.08 lakh shares. It was the top gainer from the Sensex pack. On Thursday, 23 August 2007 it launched two light commercial vehicles, Magic and Winger in the metropolis. Magic and Winger are being produced in the Pune facility of the company. The stock had lost 14.31% in the past one month to Thursday, 23 August 2007.
Reliance Energy (up 4% to Rs 734), and ACC (up 3.75% to Rs 1008.90) were the other gainers from the Sensex pack.
India’s leading power equipment maker Bharat Heavy Electricals gained 5.32% at Rs 1750. It had bagged contracts worth Rs 6500 crore for setting up power project units on Wednesday, 22 August 2007. The orders were placed by Damodar Valley Corporation (DVC).
India’s biggest engineering & construction firm by sales L&T rose 1.61% to Rs 2435. L&T has sought shareholders' nod for raising up to $700 million through issues that could include global depositary receipts (GDRs), American depositary receipts (ADRs), foreign currency convertible bonds or other equity related instruments.
State Bank of India, the country’s largest bank by net profit, advanced 3.81% to Rs 1469 after the Parliament on Thursday, 23 August 2007, passed a bill to replace an ordinance enabling transfer of the Reserve Bank of India’s stake in State Bank of India to the Union government.
The SBI (Amendment) Bill, 2007 was approved by the Rajya Sabha by a voice vote yesterday, while it got the Lok Sabha’s clearance on Tuesday, 21 August 2007.
A block deal on the SBI counter was executed in the FII segment of NSE on Thursday, 23 August 2007. The strike price was Rs 1750, a premium of 23.70% over the ruling market price.
India’s biggest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 2% to Rs 1778 on 5.62 lakh shares. The Empowered Group of Ministers, formed to look into pricing and utilisation of natural gas produced from new fields like the KG-D6 of RIL, is likely to hold its first meeting on 27 August 2007. RIL had proposed increase in gas price from $4.33 per million British thermal unit to $4.58, which was opposed by key consuming sectors like fertiliser and power.
Cement shares rallied for the second straight day today, 24 August 2007 following Swiss cement major Holcim’s open offer to acquire an additional 20% stake in Ambuja Cement, India’s second largest cement producer by sales, yesterday, 23 August 2007.
ACC (up 3.75% to Rs 1008.90), UltraTech Cement (up 0.55% to Rs 872.60), Birla Corporation (up 5.71% to Rs 277), India Cements (up 5.73% to Rs 229.75), Ambuja Cement (up 2.34% to Rs 135.85), and Grasim Industries (up 0.42% to Rs 2762) ended higher.
Switzerland's Holcim yesterday, 23 August 2007 said it had acquired a 3.9% additional stake in Ambuja Cements from the founding families at Rs 154 share, in a deal worth $220 million. This will be followed by an open offer.
IT shares also participated in the rally today. Satyam Computers (up 3.36% to Rs 436.90), Wipro (up 1.25% to Rs 454), TCS (up 1.02% to Rs 1017.95), and Infosys (up 0.39% to Rs 1815.50), all posted gains. The Indian rupee was hovering at 41.07 against the dollar, almost unchanged from Thursday (23 August 2007)’s close of 41.04/41.06
HDFC Bank (down 0.25% to Rs 1097), Dr Reddy’s (down 0.29% to Rs 629) and Bajaj Auto (down 0.50% to Rs 2217), were the losers from the Sensex pack.
SEL Manufacturing Company galloped 16% to Rs 215.30 on huge volumes of 1.02 crore shares after it received an export order for exporting readymade garments to the extent of $18 million (approximately Rs 73.80 crore). It was the top traded counter on BSE with turnover of Rs 212.20 crore
Among the side counters, Patel Airtemp (up 20% to Rs 41.75), Vadilal Industries (up 20% to Rs 56.20), Stewarts & Lloyds (up 13.33% to Rs 170), Steelcast (up 12.58% to Rs 200), and Asian Granito (up 12.45% to Rs 106.55), advanced
Alfred Herbert (down 11.95% to Rs 147), Jindal Worldwide (down 9.09% to Rs 123), Sutlej Industries (down 5.31% to Rs 65.10), Wpil (down 5.12% to Rs 40.80), and Era Construction (down 5% to Rs 468.05) slipped.
Western India Shipyard jumped 4.86% to Rs 17.25 on reports ABG Shipyard plans to buy the company for Rs 200 crore. ABG Shipyard slumped 6.46% to Rs 474.50. Reportedly, ABG Shipyard will get management control and a 40% stake in the company held by financial institutions led by ICICI Bank. The deal will not be followed by an open offer as it is a court-initiated sale.
Gujarat State Petronet spurted 3.55% to Rs 55.55 after it approved issuing up to 22 million preference equity shares to International Finance Corporation. The approximate equity investment by IFC would not exceed $30 million.
ICSA (India) soared 10% to Rs 1561.15 after it announced its board would meet on 30 August 2007 to consider a stock-split.
Panoramic Universal vaulted 4.85% to Rs 107 after announcing a board meet on 30 August 2007 to consider raising Rs 65 crore through a rights issue. The board will also consider issuing non-convertible preference shares to promoter group on private placement basis to raise Rs 50 crore.
Cairn India slipped 0.86% to Rs 143.90 despite reports of the government approving the company's proposal to lay the 582-kilo metre pipeline from Barmer district of Rajasthan to Gujarat coast for transporting crude oil it had discovered in Rajasthan
Turnkey construction firm Madhucon Projects galloped 8.80% to Rs 243.80 after a large block deal of 11 lakh shares changed hands at Rs 229 per share on the BSE. The block deal constituted nearly 3% of its equity capital of the company.
Jaiprakash Hydro-Power rose 3.89% to Rs 45.40, after NSE lifted the ban on its trading in the F&O segment on the stock from today, 24 August 2007.
Financial Technologies (India) (FTIL) was up 0.49% to Rs 2040 after it bought 4.50 lakh shares of NSE from ICICI Bank at an outlay of Rs 125 crore, yesterday 23 August 2007. The average share price of NSE works out to be Rs 2778.
Chennai Petroleum slumped 6.82% to Rs 245.10 after it turned ex-dividend of Rs 12 per share today. It has face value of Rs 10 each.
Mercator Lines (MLL), the Mumbai-based shipping company rose 3.20% to Rs 53.60 on reports that it is raising around $250 million in the largest-ever Indian offering in Singapore. It will offload 30% stake in its wholly-owned subsidiary Mercator Lines (Singapore) through the proposed IPO.
Chennai-based Aban Offshore gained 3.20% to Rs 2634.90 on reports it is planning to list its wholly-owned subsidiary, Aban Singapore, in Singapore. The subsidiary was the vehicle used to acquire the Norwegian company Sinvest in 2006.
Areva T&D India rose 4.84% to Rs 1480 after securing turnkey sub station contract from Essar Steel worth Rs 63 crore. Also, Maharashtra State Electricity Transmission Company (MSETCL) awarded a turnkey solutions order worth Rs 33.90 crore to the company.
Chambal Fertilisers & Chemicals jumped 4.33% to Rs 46.65 on reports that its subsidiary is likely to sign an MoU with the Orissa government for setting up a 2,000-mega watt thermal power project with an investment of Rs 8,000 crore in the state. The project will come up at Saria in Dhenkanal district.
Shree Renuka Sugars declined 0.37% to Rs 460.80. It announced before market hours today, 25 August 2007, that it has completed the acquisition of the ethanol plant of Dhanuka Petro-Chem, a division of Dhanuka Cold Storage located at Khopoli, Maharashtra for a total consideration of approximately Rs 6 crore. The company has plans to increase the ethanol capacity of this unit from 100 klpd to 250 klpd, in the near future.
It also set up a wholly owned subsidiary viz. Shree Renuka Biofuels Holdings FZE in Sharjah International Free Zone (SAIF Zone) for its overseas investments.
Reliance Capital (RCL) gained 3.16% to Rs 1089 after it reportedly picked up 26% stake in Victory Transformer & Switchgear (VTSL), a fully-integrated transformer manufacturing company, for Rs 75 crore. VTSL’s revenue has grown at a CAGR of 89% over the last two years, and it has an order book of over Rs 200 crore.
HCL Infosystems edged higher by 6% to Rs 174.35 on reports that it has bagged a contract from BSNL includes convergent billing and customer relationship management for BSNL and would be implemented in 18 months, worth Rs 500 crore
Though CPM softened its stand on withdrawing support to the ruling coalition government at the Centre, it reiterated the government should not go ahead with negotiations with the International Atomic Energy Agency and Nuclear Suppliers Group over a nuclear deal with the US.
The Left Front’s opposition to the nuclear deal with US had stoked concerns over the past few days that if the Communist allies of the ruling coalition government at the Centre decide to pull their support, the government will be reduced to a minority, triggering fresh elections.
Most of the Asian markets settled lower today, 24 August 2007. Hang Seng (down 0.20% at 22,921.89), Japan's Nikkei (down 0.41% at 16,248.97), Taiwan's Taiwan Weighted (down 0.49% at 8,690.09), Singapore's Straits Times (down 0.04% at 3,369.45) and South Korea's Seoul Composite (down 0.47% at 1,791.33) edged lower.
However, Shanghai Composite was up 1.49% to 5,107.66. It also struck an all time high of 5,125.35
Most of the European indices were trading lower today, 24 August 2007. UK's FTSE 100 (up 0.10% to 6,203.90) and CAC 40 (up 0.15% to 5,531.81) rose while DAX lost 0.39% to 7,482.86.
The US market ended on flat note yesterday, 23 August 2007. The Dow Jones Industrial Average closed almost unchanged at 13,235.88, marginally down by 0.25 points. Tech-heavy Nasdaq dropped 11.1 points to close at 2,541.7. S&P 500 lost 1.57 points to end at 1,462.5.
Oil prices steadied at below $70 a barrel on Friday, 24 August 2007, after Mexico's state oil firm said Gulf oil rigs suffered only minor damage from powerful Hurricane Dea. US light crude for October delivery dipped 5 cents at $69.78 a barrel.
Buoyancy lifts Sensex past 14,400
The markets stabilised today after witnessing wild intra-day swings yesterday. The market regained strength after the Left Front indicated softening its stand on the Indo-US nuclear deal. The Sensex opened on a positive note at 14,237 despite weakness in global indices. As trading progressed, the market gained strength on strong buying in metal, auto, oil and capital goods stocks. A smart rally thereafter and buoyancy in heavyweight towards the close saw the index surge to an intra-day high of 14,455. The Sensex finally ended the session with a gain of 261 points at 14,425, while the Nifty added 75 points to close at 4,190.
The market breadth was positive. Of the 2,677 stocks traded on the BSE 1,563 stocks advanced, 1,067 stocks declined and 47 stocks ended unchanged. Among the sectoral indices the BSE Metal index notched up a gain of 2.84% at 10,276 followed by the BSE Auto index (up 2.37% at 4,569), the BSE PSU index (up 2.30% at 6,626) and the BSE CG index (up 2.31% at 12,622).
The heavyweights witnessed a strong buying interest. Tata Motors soared 5.93% at Rs659, BHEL rose 4.72% at Rs1,740, Reliance Energy shot up by 4.22% at Rs736, ACC jumped 3.90% at Rs1,010, Tata Steel added 3.80% at Rs582, SBI gained 3.60% at Rs1,466, Ranbaxy moved up by 3.48% at Rs361 and Satyam Computer was up 3.36% at Rs434. However, Dr Reddy's Lab at Rs626 and HDFC at Rs1,905 inched marginally lower.
Metal stocks notched up significant gains during the day. JSW Steel surged 10.13% at Rs572, Welspun Gujrat scaled up 5.77% at Rs228, Bhushan Steel rose 4.98% at Rs655, Maharashatra Seamless Steel jumped 4.33% at Rs578, Jindal Stainless added 3.52% at Rs145 and SAIL gained 3.22% at Rs145.
Over 1.29 crore Nagarjuna Fertiliser shares changed hands on the BSE followed by Tata Teleservices (1.13 crore shares), SEL Manufacturing (1.02 crore shares), IFCI (99.30 lakh shares) and Asian Granite (94.82 lakh shares).
Value wise, SEL Manufacturing registered a turnover of Rs212 crore on the BSE followed by SBI (Rs133 crore), Reliance Industries (Rs99 crore), Asian Granite (Rs97 crore) and Omaxe (Rs90 crore).
Grey Market - Magnum Venture, Purvankara, KPR Mills
Motilal Oswal 725 to 825 50 to 60
Indowind Energy 55 to 65 3 to 4
Magnum Venture 27 to 30 4 to 3 (Against Rs. 1,00,000 Form Price Rs. 1600 to 1700)
Puravankara Projects 400 Discount
Take Solutions 730 90 to 100
KPR Mills 225 Discount
Premiums have been consistently coming down, be careful when you apply for IPOs
Outlook not so rosy
Outlook for the Indian market does not look promising on Friday with US stocks falling for the first time in six days and Asian equities snapping a five-day rally.
Thursday, Standard & Poor's 500 Index lost 1.57, or 0.1 per cent, to 1,462.5, Dow Jones Industrial Average decreased 0.25 to 13,235.88 and Nasdaq Composite Index slipped 11.1, or 0.4 percent, to 2,541.70 after US’s largest mortgage lender Countrywide Financial said the economy is heading for a recession.
Asian stocks followed suit today on fears of a recession in its largest export market and as BHP Billiton and Posco led declines on concern demand for raw materials will cool.
Japan's Nikkei 225 Stock Average dropped 0.3 percent to 16,271.08, while the Kospi index declined 1.1 percent in South Korea.
Back home, the clash between Left parties and Congress has reached a flashpoint with CPM’s general secretary Prakash Karat saying the future of the Manmohan Singh regime is contingent upon the government’s willingness to put the Indo-US nuclear deal on hold.
Thursday too equities opened firm on global cues but closed in the negative given the political rumblings. Bombay Stock Exchange's Sensex closed 85 points or 0.59% lower at 14,163.98, after a high of 14,554.93.
The biggest index losers were Cipla (down 4.41%), ONGC (3.07%), State Bank of India (2.94%), Reliance Energy (2.63%) and ICICI Bank (2.47%). Banking stocks were worst hit, followed by realty. Cement and FMCG shares, however, managed to hold gains.
Nifty lost 38 points or 0.92% ending at 4114.95. The National Stock Exchange's index had touched a high of 4249.85 intra day.
STOCKS TO WATCH
Ambuja Cements is expected to advance as Holcim plans to buy a further 20% in the cement major at Rs 154 per share, taking its stake to about 56%. The Holcim group purchased 3.9% in Ambuja Cements for $220 million triggering the open offer. The price is at 20% premium to the average of Ambuja's share price over the past two weeks.
Cairn India is likely to surge since the government has approved the company's proposal to lay a pipeline from Barmer in Rajasthan to Gujarat coast. The project is estimated to cost $700 million and will take a minimum of 18 months to complete the project.
Market to remain under pressure
The market is expected to stay under pressure due to subdued trend in Asian equities. Most of the Asian markets were trading lower today. Volatility is expected to remain high.
The Central Committee of the CPI (M) yesterday, 23 August 2007, endorsed the party Politburo's opposition to the Indo-US nuclear deal and authorised it to do whatever it can to block the deal. The Politburo had warned the government of serious consequences if it went ahead with negotiations with the International Atomic Energy Agency and Nuclear Suppliers Group.
But the party appeared to have softened its stand regarding withdrawing support to the government as a post meeting statement of the party mentioned that the Central Committee does not want the current crisis to affect the government.
The market's concerns over the past few days have been that it the communist allies of the ruling coalition government at the centre decide to pull their support, the government will be reduced to a minority and that could trigger fresh elections.
As per provisional data, foreign institutional investors (FIIs) purchased shares worth a net Rs 274.64 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 530.72 crore on Thursday, 23 August 2007.
In Asia, Hang Seng (down 1.34% at 22,659.55), Japan's Nikkei (down 0.33% at 16,262.81), Taiwan's Taiwan Weighted (down 0.43% at 8,695.14), Singapore's Straits Times (down 0.90% at 3,340.60) and South Korea's Seoul Composite (down 1.09% at 1,780.14), edged lower.
However Shanghai Composite surged 1.56% to 5,110.93.
US market ended on flat note yesterday, 23 August 2007. The Dow Jones Industrial Average closed almost unchanged today at 13,235.88 marginally down by 0.25 points. Tech-heavy Nasdaq dropped 11.1 points to close at 2,541.7. S&P 500 lost 1.57 points to close at 1,462.5.
Oil prices steadied at below $70 a barrel on Friday, 24 August 2007 after Mexico's state oil firm said Gulf oil rigs suffered only minor damage from powerful Hurricane Dean and worries over the subprime mortgage woes in the US weighed. US light crude for October delivery dipped 5 cents at $69.78 a barrel
The BSE 30-share Sensex lost 84.68 points or 0.59% at 14,163.98, on Thursday 23 August 2007. From an all time high of 15,868.85 on 24 July 2007, the BSE Sensex is down 1704.87 points.
Morning Call -Aug 24 2007
Market Grape Wine :
In House :
Nifty at a supp of 4100 with resistance at 4155 and 4200 levels .
Sell : Intraday : BombayDye below 492 target 480 s/l of 498
Buy : Intraday : IDEA above 114 target 122 s/l of 111
Out House :
Markets at a support of 14014 & 13786 levels with resistance at 14253 & 14414 levels .
Markets to remain choppy and volatile maintain strict stop loss .
Buy : SBIN & Kotak at dips
Buy : RIL & REL at dips
Buy : Bhel and Siemens at dips
Buy : Titan at dips
Buy : HanunToys at dips
Buy : ITC at dips
Buy : ONGC at dips
Dark Horse : HLL , ITC , SBIN , ONGC ,Kotak , Gacl & INFY & RIL
TGIF : Thank God its Friday : Book profits at all higher levels as political scenario not stable .
Motilal Oswal Financial Services IPO subscribed 27 times
The IPO of Motilal Oswal Financial Services was subscribed 27.33 times by 17:00 IST, as per data availed on NSE website. The issue closed today, 23 August 2007. The IPO received bids for 8.15 crore shares compared to 29.82 lakh shares that were on offer.
The price band for the IPO was Rs 725 to Rs 825 per share. At the offer price band of Rs 725-Rs 825, PE works to 27.9 (on lower band) to 31.7 (on upper price band).
Motilal Oswal Financial Services (MOFSL) is the Motilal Oswal group’s holding company with stake in four group companies: Motilal Oswal Securities (MOSL – the stock broking arm), Motilal Oswal Commodities Brokers (MOCB - the commodity business arm), Motilal Oswal Venture Capital Advisors Pvt Ltd (MOVC - the venture capital advisory arm) and the Motilal Oswal Investment Advisors Pvt Ltd (MOIAPL - the investment banking arm).
The object of the issue was to raise funds to enable the group to improve its competitive position and support growth plans through deployment of long-term working capital, enhanced financing facility for broking customers, and additional office space and technology advancement.
MOFSL’s consolidated net profit rose 15% to Rs 69.58 crore, on 39% growth in income from operations to Rs 358.75 crore in FY 2007 over FY 2006.
Slide may continue
Market may slide further on account of weak Asian markets in morning trades and overnight fall in the US markets. Political uncertainties and continued selling pressure may also drag the domestic indices further down. The FIIs remained net sellers in equities for last couple of sessions may also weigh on the investors' sentiment. Key indices, the Nifty may get support at 4100 level and on the upside it could test higher levels at 4260. The Sensex has a likely support at 14,100 and may face resistance at 14,500.
US indices declined on Thursday as investors worried about the economic outlook after the head of the biggest U.S. mortgage company said the housing downturn could create a recession. While the Dow Jones slipped marginally at 13236, while the Nasdaq lost 11 points to close at 2542.
Indian ADRs had a mixed outing on the US bourses. Among the major losers VSNL, Rediff, HDFC Bank, Satyam, Wipro, MTNL, Patni Computers and Tata Motors shed over 1-3% each. While, Infosys, Dr Reddy's, Satyam gained marginally.
Crude oil prices gained marginally, with the Nymex light crude oil for October delivery moved up by 57 cents to close at $69.83 a barrel. In the commodity space, the Comex gold for December series lost 30 cents to settle at $668.40 a troy ounce.
Intraday Stock Ideas
Nifty (4115) Supp 4076 Res 4154
Buy Bharti Airtel (850) SL 844 Target 860, 864
Buy Cairn (145) SL 142 Target 151, 152
Buy JP Associates (823) SL 817 Target 834, 838
Sell Rolta (423) SL 428 Target 415, 412
Sell Tata Motors (622) SL 629 Target 612, 609
No-clear issue...Markets Left to chance
Where observation is concerned, chance favors only the prepared mind - Louis Pasteur.
Be prepared for wild swings yet again and chances are you could get what you want at your price. With politics likely to dominate the headlines and the market movements coupled with anxiety over the contagion in the US subprime mortgages, the bulls and traders are in for a tough time. The Left parties have lobbed the ball in the Government's (read Congress') court over the Indo-US nuclear deal. It is now for the Government to announce its next move. Just like the mess in the US housing market, nobody has a clue what lies ahead. The moot question is who will blink first?
The Left parties have made it clear they will not budge. So, it obviously has to be the Government who has to take a step back. The uncertainty will continue to haunt the market for a while, which is not good for the bulls. As a result, we may see lot of fluctuations in the market over the next few days till the political storm subsides.
At the same time, we have to continue to keep one eye on the global markets and the developments in the US economy. The crisis there is still not over and going ahead we could get some more bad news from that front. So, it will be prudent for one to remain guarded and be selective in buying shares, which should be done at lower levels and that too in quality scrips only. Today, we expect another day of wild swings after a cautious to lower opening.
ABG Shipyard could gain as a financial daily reports that it is set to buy Western India Shipyard for Rs2bn. Mercator Lines is also likely to be in action as it considers an IPO of its Singapore subsidiary. Tata Steel and Essar Steel might attract some attention as Egypt has shortlisted the two Indian steel makers for building a $3bn plant in the north African country. Gillette India, P&G, Paradyne Infotech and Kalindee Rail Nirman will declare their results today.
Cairn India is likely to advance as it has reportedly received government approval for transporting its Rajasthan crude to Gujarat coast through a pipeline. Bajaj Auto plans to halt production of two wheelers at its four decade old Akurdi plant in Pune, in September. The plant made 350,000 vehicles in 2006 and 50,000 in 2007. Production could be shifted to the company's Waluj facility.
Shree Renuka Sugars could rise as it has completed the acquisition of the Ethanol plant of Dhanuka Petro-Chem located at Khopoli, Maharashtra. The company has also set up a wholly owned subsidiary in Sharjah International Free Zone for its overseas investments. ORG Informatics has signed an agreement with Belgacom NV/SA to acquire Belgacom's satellite based business. The acquisition will involve all the customer contacts and assets.
The Nasdaq slipped and the broader market struggled after remarks by CEO of troubled mortgage lender Countrywide Financial stoked worries about the ongoing turmoil in the credit and mortgage markets.
Countrywide Financial CEO Angelo Mozilo said the housing slump may slow consumer spending and lead to an economic contraction.
The Standard & Poor's 500 Index lost 1.57 points, or 0.1%, to 1,462.5. The Dow Jones Industrial Average ended unchanged at 13,235.88. The Nasdaq Composite Index slipped 11 points, or 0.4%, to 2,541.70.
Financial shares contributed the most to the drop after the Federal Reserve said outstanding US commercial paper fell 4.2% last week, the biggest decline in at least seven years. Commercial paper backed by assets led the fall as buyers fled debt linked to subprime mortgages.
US stocks had risen in the morning after Bank of America said it was making a $2bn investment in Countrywide Financial. But the advance was short-lived, and stocks turned lower in the afternoon.
Also adding to worries was news that the Fed injected $17.5bn in temporary reserves into the banking system.
But, losses were limited as energy producers rallied after the price of crude oil rose for a second day. About five stocks fell for every three that gained on the New York Stock Exchange.
In the Treasury market, the 10-year note ended little changed to yield about 4.64%. In currency trading, the dollar slipped versus the euro and rose versus the yen. COMEX gold for December delivery fell 30 cents to settle at $668.40 an ounce.
US light crude oil for October delivery rose 57 cents to settle at $69.83 a barrel on the New York Mercantile Exchange.
European shares closed slightly higher marking their fifth winning session in a row. The pan-European Dow Jones Stoxx 600 index rose 0.2% to 369.33. The German DAX 30 closed up 0.2% at 7,511.96 and the French CAC-40 added 0.1% to 5,523.33. The UK's FTSE 100 closed up 0.01% at 6,196.90.
Major Latin American markets closed higher. Brazil's Bovespa index erased losses after Moody's lifted the ratings on the government's foreign-and local-currency bond ratings to Ba1 from Ba2.
Mexico's IPC ended up 0.7% at 29,459.82 and Argentina's Merval rose 1.5% to 2,038.29. Chilean stocks, however, shed 0.1% at 3,206.79. In other emerging markets, the RTS index in Russia gained 0.6% at 1864 while the ISE National 30 index in Turkey rose 1.17% to 59,320.
Most Asian markets were down this morning between 0.3% to 1%. The Nikkei was down 53 points at 16,262 while the Hang Seng in Hong Kong fell 230 points at 22,736. The Kospi in Seoul dropped 20 points to 1778 and the Straits Times in Singapore slipped 36 points to 3334.
Political uncertainty had the better of the bulls on the Indian bourses today, and for a change the market players forgot about the crisis in the US subprime mortgage market and the turmoil in the global credit markets. The bulls ran for cover even as the CPI (M) asserted their pre-eminent position as the key allies of the Congress-led coalition Government. After a highly choppy day of trade, the key indices ended in the red despite a firm trend across global markets. The benchmark BSE Sensex closed at 14,163, down 85 points or 0.6% from the last close after touching a high of 14,554 and a low as 14,128.
Ambuja Cement gained by 2% to Rs132 after Holcim announced that it further purchased 3.9% of the company for $220mn at Rs154 per share and to further bid for 20% of Ambuja Cement. The scrip touched an intra-day high of Rs154 and a low of Rs131 and recorded volumes of over 1,00,00,000 shares on NSE.
L&T pared its gains however managed to end with marginal gains 0.3% to Rs2396 after the company announced that they have secured order worth $70mn. The scrip touched an intra-day high of Rs2468 and a low of Rs2360 and recorded volumes of over 13,00,000 shares on NSE.
Satyam Computer advanced by 1.3% to Rs422 after India's fourth- largest computer-services provider won a three year contract from KPN, a European telecommunications provider. The scrip touched an intra-day high of Rs429 and a low of Rs419 and recorded volumes of over 29,00,000 shares on NSE.
VSNL declined by 1% to Rs378. Reports stated that India's largest provider of overseas calls lost a tax appeal of as much as Rs10bn. The scrip touched an intra-day high of Rs395 and a low of Rs364 and recorded volumes of over 3,00,000 shares on NSE.
Hindustan Zinc slipped 2.7% to Rs676.The company announced that they have cut Zinc prices by Rs6,000. The scrip touched an intra-day high of Rs719 and a low of Rs670 and recorded volumes of 56,000 over shares on NSE.
After being on the receiving end in the previous trading session, select Realty stocks bounced back. Sobha gained 1.4% to Rs745, Ansal infrastructure advanced 2.2% to Rs252. However, DLF slipped 0.5% to Rs555, Akruti was up by 1.2% to Rs475 and Parsvnath lost 2.5% to Rs269.
FMCG stocks ended with smart gains as the index gained 1.1%. ITC gained 1.3% to Rs160, Tata Tea advanced 1% to Rs676, HLL was up by 0.6% to Rs197 and McDowell added 3% to Rs1302.
IT stocks also ended higher led by gains in the index heavy weights like Infosys, the scrip gained 1.2% to Rs1811, Satyam Computer rose 1.3% to Rs422, Financial Technology added 0.8% to Rs2032.
Cement stocks recorded smart gains after Holcim announced that it further purchased 3.9% of Ambuja Cement at a premium price of Rs154 compared to yesterday’s close of Rs130.2, the scrip rose 2.04% to Rs132, ACC surged by 2.1% to Rs972, Kesoram Industries was up by 2% to Rs429 and Grasim added 0.8% to Rs2751.
Banking stocks witnessed selling pressure. SBI lost by over 3% to Rs1414, ICICI Bank was down by 2.5% to Rs824 and HDFC Bank slipped 1.6% to Rs1100. OBC, Corp Bank and Canara Bank were the major losers among the Mid-cap stocks.
Select Metal stocks also pared their gains. Tata Steel lost 1.7% to Rs559, SAIL was down by 0.5% to Rs141, Hindalco ended flat at Rs139. However, National Aluminum added 1.4% to Rs255.Fund Activity:
FIIs were net buyers of Rs2.75bn (provisional) in the cash segment on Thursday and the local institutions pumped in Rs5.31bn. In the F&O segment, FIIs were net buyers at Rs9.49bn. On Wednesday, foreign funds pulled out Rs6.68bn from the cash segment. Mutual Funds were net buyers at Rs228mn on the same day.
Major Bulk Deals:
Sundram BNP Paribas has picked up Emkay Shares; CLSA Mauritius has sold Mahindra
Gesco; Sundaram MF has sold Royal Orchid Hotels; Prabhudas Lilladhar has purchased
SEL Manufacturing; Morgan Stanley has bought Shree Ram while UBS Securities has
sold the stock; Deutsche Securities has picked up Standard Industries while Bear
Stearns has sold it.
Lower Circuit:
LML, Atlanta, EC Network, Jaybharat Textile, Balasore Alloys, IOL Broadband, Anant
Raj Industries, Era Construction and Bag Films.
Upper Circuit:
Prism Cement, Kothari Products and Prakash Industries.
Delivery Delight (Rising Price & Rising Delivery):
Andhra Bank, Bank of Maharashtra, Birla Corp, ITC and Mahindra Gesco.
Abnormal Delivery:
GNFC, Hero Honda, ICICI Bank, Bajaj Auto and IDBI.
Major News & Announcements:
Govt to review fuel prices on Sept. 1: Oil Minister
Reliance Capital buys 26% of Victory transformer for Rs750mn
Accentia Technologies buys Thunga Software in all cash deal
Cairn gets right to buy land for pipeline – Reports
Grindwell Norton to sell stake in Lincoln Helios for Rs1bn
ICSA secures order worth Rs186mn
Standard Chartered to buy 49% stake in UTI Securities
L&T secures order worth $70mn
ITD Cementation secures Rs8.93bn order
Myanmar awards 3 deep water blocks to ONGC – Reports
Holcim buys 3.9% in Ambuja Cement for $220mn at Rs154 per share
Holcim announces open offer to buy another 20% in Ambuja Cements at Rs154/share
US Market ends flat
Comments from Countrywide’s Chairman leave a nervous feeling among investors
Clear sense of nervousness ruled over US Market today, Thursday, 23 August, 2007 as the recession debate once again heated up and credit worries rekindled. Comments from the Chief Executive of USA’s largest mortgage lender, Countrywide Financial, led to this nervousness.
The Dow Jones Industrial Average closed almost unchanged today at 13,235.88 marginally down by 0.25 points. Tech-heavy Nasdaq dropped 11.1 points to close at 2,541.7. S&P 500 lost 1.57 points to close at 1,462.5.
Sixteen out of thirty Dow stocks closed in the green today. IBM, H-P, AT&T and Mc Donalds were the main Dow winners. Boeing, Home Depot, General Motors and United Technologies were the Dow laggards.
Home-Depot led the team of the Dow laggards on reports that the company’s $10.3 billion deal to sell Home Depot's wholesale supply division might fall apart.
Countrywide Financial, CEO, Angelo Mozilo telling a television channel that the housing slump will lead to a "recession" and that there is still a tremendous liquidity problem led indices reverse their course of direction.
Market welcomes Bank of America’s equity stake in Countrywide
When market opened in the morning, the indices opened in the green. Indices rallied on news of Bank of America’s $2 billion investment in Countrywide. The news initially helped ease the worst of fears about a possible credit crunch.
But soon after the nation's largest mortgage lender’s CEO spoke about a significant decline in economic activity, it gave sellers an added excuse to take some money off the table.
Of the five sectors closing lower, Materials paced the way followed by Industrials and Financials. Technology sector closed in the green getting support from IBM and H-P. But Nasdaq closed in red as neither of them are listed on Nasdaq.
Among the Indian ADRs, all Indian ADRs ended in red today. ICICI Bank and HDFC Bank led the decliners. HDFC Bank dropped by 3.8% while ICICI Bank dropped by 2.3%. Rediff and Sify followed them dropping 1.7% and 2% respectively.
Crude rises snapping three sessions of fall
Crude oil future prices increased today. Drop in supplies of motor gasoline for week ended 17 August in yesterday’s weekly inventory report was perhaps the main reason for this. Oil market also likely found some additional support today from news that some Mexican oil supplies will be delayed due to Hurricane Dean.
Crude-oil futures for light sweet crude for October delivery closed at $69.83/barrel (higher by $0.57/barrel or 0.82%) on the New York Mercantile Exchange. On a yearly basis, prices are 2.7% lower. .
Nearly 1.4 billion shares exchanged hands at the New York Stock Exchange, with advancing stocks running just ahead of decliners. At the Nasdaq, 1.6 billion shares were traded, with declining stocks outpacing advancers 9 to 5.
For tomorrow, investors will look for economic data to help set the tone of trading. July Durable Orders will be released at 8:30 ET and will be followed by July New Home Sales data at 10:00 ETIT Training and Education market grows at rapid pace
The Indian IT Training and Education market, which is currently dollar 656 million, is growing at a CAGR of 64 percent.
However, the Indian IT e-learning market, which is currently dollar 122 million, is growing at a CAGR (Compound Annual Growth Rate) of 73 percent, said Navug Mohnot, CEO of India QAI, while announcing education ventures in this space under the name — Edista.
QAI, the leading process consulting organisation, has decided to foray into this space in order to meet the growing need for IT training and education in the country.
Quoting interesting trends in IT education, he said 29 percent of all IT training is on demand: e-learning, as it meets just-in-time training requirements, has maximum reach and no geographical boundaries, offers homogeneity and consistency in content which can be easily upgraded.
Forseeing a huge potential in this space, QAI has launched The Edista learning, an on-demand, web enabled curriculum that offers learner centric online curriculum with real time collaboration, Singh said.
The Edista Testing Institute,which is launched in India, is aimed at addressing the fast growing software testing segment, he said. The Indian software testing segment market was two billion dollars and expected to grow at eight billion by 2008 while the size of the testing training market here was dollar 6.6 million and expected to grow at a CAGR of 50 percent.
The worldwide market for testing services is forecasted to grow to USD 13 billion by 2010 with 45-50 percent getting outsourced, Singh said, quoting a Nasscom-Gartner report on the issue.
The Edista Training Institute would soon be rolled out globally, including Asia Pacific region and Africa to meet this growing demand, he said.
QAI, which were market leaders in facilitating operational excellence in it, BPO and knowledge intensive organsations would leverage its capabilities to run the Edista Suite of Education Ventures, including Edista certifications.
QAI has certified over 25,000 professionals in software industry and over 4000 in the ITES space, Singh said adding that Edista would now be the aggregation of QAI's training and education practices with its own brand and identity.
The investment for e-learning would be Rs 4 crore spread over two years. Another Rs 4 to Rs 5 crore would be largely invested for sales, marketing and brand building while another 5 crore would be pumped into the testing institute.
Subprime woes erupt in US, but India, Japan hit most
Though the US market is in the epicentre of sub prime crisis, Japan and India have been the worst affected.
A dipstick study into the movements of select Asian and European markets infers that Japan’s Nikkei and India’s Sensex have shed 12.4% and 10.13% respectively over the past one month; the American Dow Jones Industrial Average Index has only fallen 5.49% over the past one month.
Concerns over a crisis in the US sub prime lending market - where loans are offered to borrowers who do not qualify for market interest rates because of poor credit history - had sent global markets into a tailspin since the mid-week of July.
The current sub prime meltdown in the US is consequential to scores of sub-prime housing loan defaults that began in late 2006 and has continued into 2007. The sharp rise in sub prime credit defaults has caused several major sub-prime mortgage lenders to shut down or file for bankruptcy, leading to a general market downtrend and negative sentiment.
Though most equity analysts maintain that there would be `negligible indirect effect’ of sub prime credit defaults on emerging and distant markets in Asia and Latin America, the cumulative impact has been drastic. For instance, since July 25, FIIs have sold around Rs 9741.40 crore in cash market and about Rs 3132.06 crore in the derivatives segment.
In terms of FII retreat, India, Taiwan, Korea and Thailand have been the worst affected markets in the world. China, even though with huge exposure to the US market, managed to log positive gains at 22% over the past one month.
Lalit Thakkar, director - research, Angel Broking opines that the sub prime fallout is a bigger burden for the US economy but the irony is that emerging markets have corrected more than American markets. “India receives sizeable FII inflows; within FIIs, we also get money from hedge funds.
While it has always been difficult to quantify how much influence hedge funds have on stock markets, the fact remains that time again, hedge funds owing to their over-leveraged positions have lead to liquidity issues,” he adds.
According to analysts, the trouble starts when large-sized funds (with exposure to highly leveraged sub prime markets) start liquidating their holdings in emerging markets to make good their losses in a sinking sub prime market.
In the case of Chinese market, FIIs are not allowed to pull out money at their whims and fancies; there is a lock-in period for staying invested in that market. Japan has fallen more on accounts of yen instabilities while Dow and FTSE have fallen marginally because of timely central bank intervention, say analysts.
“Whenever hedge funds start making losses, they temporarily exit from profit-making destinations. This time round, it was more of an uninformed fear-led sell off from foreign institutions. One cannot blame them (hedge funds) as the risk premium on equity investments has been rising and there could have been tremendous pressures from investors to pull out of emerging markets,” said Amitabh Chakraborty, president - equities, Religare Securities.
“Sub prime fears have clearly been factored in by Indian markets; In fact, politics has overtaken sub prime fears in Indian markets. If what we know is right, most FIIs would adopt a wait and watch approach till the government reaches a firm decision on the nuclear deal,” said a senior official of an Honk Kong-based investment company.
Daily Technical Analysis
Nifty — The index opened on a positive note, but was unable to hold onto the opening session’s gains. It declined throughout the session with high intra-day volatility.
Resistance — The index is facing stiff resistance around the 4263 level (high of 20 August 07). Yesterday’s trading session saw a strong opening and index posted a
high around 4250 in opening trade, it failed to sustain higher levels. This suggests a level of 4263 is a stiff resistance level. Intra-day resistance is around 4166.
Support — The index has support around the 200dma at 4075, breaking below the 200dma could see the index exhibit weakness and decline to lower levels around 3971.The level of 3971 is [62% retracement level from the low of 3555 (5 March 07) to
the recent high of 4648 (24 July 07)].
Conclusion — Intra-day weakness can be expected below 4075, whereas a break above 4166 could see the index test 4250 levels.
MakeMyTrip to cross Rs1,000 cr sales in 2007
MakeMyTrip India, which runs a travel booking portal promoted by a host of US venture capital funds, said on 23 August it expects to touch Rs1000-crore sales in the current year.
“In 2006 sales were Rs500 crore. The growth in travel and leisure remains strong and we will maintain the trend of growth,” co-founder and MakeMyTrip India COO Keyur Joshi said. Online booking is estimated at 10% of the total $20 billion travel and tourism market in the country, he added. The company is in the process of creating facilities for travel booking from mobile phones as an alternate channel for air tickets and hotel booking, Joshi said.
MakeMyTrip has opened physical offices in five locations in India, the first among online travel booking companies, and may expand it footprint in retail hypermakets as well, the company chief said. Talks are also on with Indian Railways to start railway ticket booking through the portal, he added.
ESAB India, Banking, Information Technology, Ambuja Cement
Esab India
Cluster: Vulture’s Pick
Recommendation: Buy
Price target: Rs575
Current market price: Rs484
Results ahead of expectations
Result highlights
- ESAB India's revenues grew by 35% to Rs87.3 crore in the Q2CY2007, which is ahead of our expectation.
- The operating profit grew by 36.8% to Rs21.7 crore in Q2CY2007 as against Rs15.8 crore in Q2CY2006. Consequently, the operating profit margin (OPM) also expanded by 30 basis points year on year (yoy) to 24.8%. The raw materials cost-to-sales increased by 130 basis points, while the staff cost-to-sales ratio increased by 290 basis points.
- The commissioning of a new plant at Chennai and capacity additions in its existing plants lead to an increased top line in Q2CY2007. The equipment division registered a whopping 65.5% growth in its revenues and the revenues from the consumables increased by 25.6%.
- The depreciation cost for the quarter increased by 26.7% as the company has commissioned its new plant.
- Elexvia group India B.V. along with Charter plc and ESAB Holding Ltd have made an open offer to the shareholder of ESAB India to acquire 30.78 lac shares (Fully paid up equity share of Rs10 each) at Rs426 per share. These represent 20% of the total fully paid up capital.
- For the first half of CY2007 the net sales grew by 32.1% to Rs168.5 crore and the bottom line grew by 36.4% to Rs26.4 crore, subsequently generating an earnings per share (EPS) of Rs17.2 per share.
SECTOR UPDATE
Banking
Q1FY2008 earnings review
In this sector update we have analysed the banks under our coverage based on certain parameters that we feel are important for the overall banking sector’s performance going forward. We have also taken cognisance of the risks and positive triggers that the banking sector could face in the near to medium term. Based on our analysis we feel the risk/return ratio for banking stocks appears favourable for investors. We say so because we expect the USA to reduce rates in the near future and if that happens, the Reserve Bank of India (RBI) would not be able to sit on the sidelines for too long. A stable to falling interest rate scenario is generally best suited for the banking sector’s performance. Hence, although we remain cautions in the near term, yet we feel the banking sector provides good investment opportunities after the recent correction. Our top picks in the banking sector remain State Bank of India in the public sector, and ICICI Bank and HDFC Bank in the private sector.
Information Technology
Concerns overdone
The tech sector has grossly underperformed the benchmark indices over the past few months. Going by the historic trend, the tech stocks tend to lag behind the overall markets in Q1. However, the underperformance has been much more pronounced this year, due to the added concerns related to the steep appreciation in the rupee, subprime issue and its possible fallout on the overall demand environment, and the slowdown in the earnings growth momentum (compounded annual growth rate [CAGR] over the next three years) on the back of technical issues such as higher tax rate in FY2010.
These issues are largely related to external environment and consequently, not in the control of the domestic tech companies. However, the concerns appear to be overblown and more than priced in the current valuations.
In fact, the premium commanded by the tech stocks over the Sensex valuations (on one year forward basis excluding tech stocks) have reduced from a high of around 120% in the mid of 2004 to a historic low of 20%. This appears to be an overdoing given the fact that one of the key concerns of rupee appreciation is under control now and the performance of the tech sector is not likely to impacted by the rising political risk in the country.
VIEWPOINT
Ambuja Cement
Holcim picks up 3.94% in Ambuja Cements
Continuing with the creeping acquisition of Ambuja Cements' shares, Holcim Mauritius has announced the acquisition of 6 crore equity shares of the company from its promoter and promoter companies (Narotam Sekhsaria, and Radha Madhav Investments and RKBK Fiscal Services). The acquisition has been carried out at a price of Rs154 per share and amounts to 3.94% of the equity capital of Ambuja Cements.
Subscribe to:
Posts (Atom)