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Recommendations
Tuesday, August 28, 2007
Weekly Stock Recommendations
Bharti Airtel
Research: HSBC Global Research
Rating: Overweight
CMP: Rs 866
HSBC Global Research is bullish on the earnings outlook for Bharti Airtel and forecasts FY07-09E EPS CAGR of 41%. Bharti’s aggressive and sustained capex has led to significant geographic coverage advantage, which is driving higher market share and enabling Bharti to benefit from rural expansion.
HSBC upgraded the tower company valuation by 24%, reflecting a reduced emphasis on informal-bilateral tower sharing in favour of formal-contractual lease contracts with an independent tower company.
The increase in number of tower rental slots in Bharti’s independent tower company is the key driver for its higher valuation. But disclosure on the towers business is limited and HSBC has some reservations about using the recent Reliance Comm tower transactions as reliable competitors for Bharti’s tower assets.
Domestic telecom companies are well-positioned vis-à-vis the macro risks of rising interest rates and strengthening of the rupee. Downside risks are delay in release of additional spectrum, rapid drop in revenue per minute and aggressive global expansion strategy.
Bhel
Research: Merrill Lynch
Rating: Buy
CMP: Rs 1,750
Merrill Lynch is confident that Bhel will achieve the FY08 estimate for new orders worth Rs 37,500 crore ($9.4 billion), despite competition, translating into a backlog of Rs 71,400 crore ($18 billion).
Bhel won two orders worth Rs 6,500 crore from Damodar Valley Corporation for 2,000 mw in an international competitive bidding. This should drive its order backlog to a historic Rs 72,000 crore (3.4x FY08E sales).
Bhel won these two turnkey orders of 1,000 mw each — 2 x 500 mw each for Koderma TPS, Jharkhand and Durgapur Steel TPS, West Bengal. The combined value of these orders was $1.6 billion — 17% of FY08E inflows. Realisations at Rs 32.5 million/mw were healthy, considering the tax breaks and economies of scale.
As per on-ground research, Bhel has had a dream run with regard to the tenders that were opened in the past 16 weeks — it has beaten its Chinese, Czech and European competitors.
Bhel’s plans to expand capacity to 15 gw (+130%) by ’09 is on track and will be carried out at the existing locations with only 20% increase in work force, which should boost its competitiveness. The stock is likely to outperform on improved competitiveness, as the company addresses key concerns regarding Chinese competition and expects super-critical orders in ’07.
SAIL
Research: Morgan Stanley
Rating: Overweight
CMP: Rs 146
Morgan Stanley remains ‘overweight’ on Steel Authority of India (SAIL). The company looks set for strong earnings improvement driven by aggressive brownfield expansion plans, as well as strengthening steel prices.
Morgan Stanley has increased its steel price assumptions, expecting: (a) steel prices in India to come out of the current seasonal lull in the next 2-3 months; (b) curtailed steel exports from China with the recent export-curbing measures initiated by the Chinese government; and (c) steel de-stocking in the US to end by mid Q4 CY07.
Morgan Stanley is projecting a production CAGR of 8.5% (9.6% previously) for the company in FY07-FY09, as the bulk of the enhanced capacity may start flowing in from FY10.
Steel prices exceeding the Street’s expectations, impact of volume growth & cost reduction initiatives on SAIL and strong quarterly results will be the stock catalysts. At a P/E of 6.2x and EV/EBITDA of 3.5x based on FY09 projections, the stock looks attractively priced in light of peer comparable multiples of 11.2x and 6.5x, respectively.
Vishal Retail
Research: Enam Securities
Rating: Outperformer
CMP: Rs 589
Enam Securities has initiated coverage on Vishal Retail with sector ‘outperformer’ rating. The company is a leading value retailer, which operates a chain of low-cost hypermarkets, focused on Tier-II and III towns and cities across the country.
Vishal Retail primarily caters to the bulging middle and lower middle class consumer bracket, which accounts for a bulk of India’s purchasing power. The company has also been successful in establishing a strong ‘customer connect’ with its offering of apparels, non-apparels and a variety of FMCG products.
It has established a pan-India presence with 53 stores, covering a total of 1.3 million sq ft of retail space. It has now embarked on an aggressive roll-out plan to reach a total of 81 stores covering ~2 million sq ft of retail space by FY08. Vishal Retail has differentiated itself with its strong focus on private labels manufactured in-house, and quasi-private labels sourced from low-cost manufacturers.
The company is now focusing on de-risking its business model by strengthening its management team and upgrading its technology and supply chain efficiencies. This will help support scalability and derive efficiency gains. At current market price, the stock trades at 20.8x FY09 earnings and EV/sales multiple of 1.1x.
GMR Infrastructure
Research: ICICI Securities
Rating: Buy
CMP: Rs 721
ICICI Securities has recommended a ‘buy’ on GMR Infrastructure, considering the strong cash flow generation post FY12-13, which will aid the company in its future projects. GMR, as a pure infrastructure developer, is suitably positioned to benefit from the strong growth envisaged in infrastructure spend via the public-private partnership route.
Among its existing projects, airports and the attached real-estate ‘sweetener’ contribute maximum value for the company. With orders exceeding $175 billion slated to flow in from key sectors such as power, roads and airports, the company’s opportunity-scape is expanding rapidly.
GMR has ~1,250 acres of prime real estate surrounding its Delhi and Hyderabad airports projects, where it plans to monetise value in the next few years. The Sabiha Gokcen airport win showcases GMR’s global ambitions. The company has witnessed a mixed trend in the power and roads sectors.
But going forward, it plans to bid for power projects with assured fuel linkages. With 21 projects (power and roads) in the bid/request for quotation (RFQ) stage and two announced wins, ICICI Securities expects potential upside in the stock. Apart from opportunity in domestic airport development, GMR is well-placed to explore airport projects globally, supported by its existing partners such as Malaysia Airports Holdings.
United Spirits
Research: Citigroup
Rating: Buy
CMP: Rs 1,319
United Spirits is one of Citigroup’s top picks in the FMCG sector. The company is best leveraged to capitalise on domestic consumption growth and young population profile. Citigroup expects strong demand for branded liquor and improving margins to drive 41% EPS CAGR over FY07-FY10E.
Historically, United Spirits’ earnings have been surprisingly positive, and there are ample levers for the company to continue to do so. Key positive surprise is likely on earnings of Whyte & Mackay (acquired recently) — the management has stated a guidance of £50 million EBITDA for FY08E, which could be beaten, given that scotch prices have continued to increase, post-acquisition.
The management has indicated that it is likely to pre-pay debt raised for the Whyte & Mackay acquisition. This could happen through a combination of sale of treasury stock and raising funds via a potential listing of Whyte & Mackay. An earlier-than anticipated debt pay-down will boost earnings and the stock price.
Power Grid IPO - At 44-52 Rupees
State-run Power Grid Corp of India said on Tuesday it plans to raise up to 29.84 billion rupees in an initial public offer in September, to fund several transmission projects.
Power Grid operates most of India's inter-state transmission assets, and is the nodal agency for wheeling power across the country.
It also operates a 19,000-kilometre fibre-optic cable network and leases bandwidth to all major telecom operators.
The company has set a price band of 44-52 rupees per share for its offer of 573.9 million shares, set to open on September 10 and close on September 13.
The issue includes a fresh offer of 382.6 million shares and sale of 191.3 million shares by the government. The federal government's holding will fall to 86.36 percent from 100 percent after the issue, it said.
The money raised through the issue will be used to help fund 15 transmission projects worth 127 billion rupees, Finance Director J Shridhar told reporters.
He said Power Grid planned to invest 550 billion rupees in the transmission sector in the 2007-2012 period.
The company had earmarked about 85 billion rupees out of this for setting up the transmission network for the ultra-mega power projects, two of which are already under development.
India's transmission sector is expected to see a total investment of 1.4 trillion rupees during this period.
Kotak Mahindra Capital Co Ltd, Citigroup and Enam Financial Consultants are the lead managers to the issue.
Market rises amid volatility
The bourses continued to gain for the third day, with key indices Sensex and Nifty closing with gains amid increased volatility ahead of the expiry of the Futures and Options (F&O) August series.
The markets shrugged off global co-relation as the expiry of derivatives contract on Thursday induced investors and operators either to roll over or square off their positions, market players said. The BSE Sensex fluctuated within 14,952.04 and 14,751.6 8 before ending the day at 14,919.19, a net rise of 76.81 points or 0.52 per cent over yesterday's close of 14,842.38.
Similarly, the broad-based S&P CNX Nifty on the NSE also moved up further by 18.10 points or 0.42 per cent to 4,320.70 from the previous close of 4,302.60.
News of a slump in the US home sales in July dragged the American indices and had negative impact on Asian markets but activity on Indian bourses were focused on the expiry of the F&O series. Brokers attributed sustained volatility to squaring off activ ity by Foreign Institutional Investors (FIIs) as well as operators, which had heavily shed their holdings in the early part of the month.
Domestic Institutional Investors too, were believed to be active during the day, making purchases at lower levels. The heavyweight counter Reliance Industries was the key driver with a 2.58 per cent jump over previous close. IT majors like Infosys Tech , Satyam Computer and Wipro spurted on a sharp fall in the rupee.
Investor's Eye - Aug 27 2007
NIIT Technologies
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs690
Current market price: Rs442
Stake sale to unlock value
According to media reports, the promoters of NIIT Group are looking to sell the 25% stake in NIIT Technologies (NIIT Tech) that is currently held by NIIT Limited. This much-awaited trigger in the stock is likely to unlock value for the shareholders, as the transaction is expected to be negotiated at a significant premium to the prevailing valuations.
State Bank of India
Cluster: Apple Green
Recommendation: Buy
Price target: Rs1,780
Current market price: Rs1,556
Taking steps in the right direction
Key points
SBI has decided to merge State Bank of Saurashtra: The State Bank of India (SBI), the country's largest commercial bank, has kicked off the consolidation process with its associate banks. It has decided to merge the State Bank of Saurashtra (SBS), an unlisted wholly owned associate bank, with itself. The boards of both the banks have given an in-principle approval to the merger proposal. The SBI will now have to get approvals from the Government (which holds 59.7% stake in SBI) and the Reserve Bank of India. We feel the SBI chose the SBS to begin the consolidation process, as the SBS is the smallest among the SBI's subsidiary banks and due to the ease of getting the regulatory approvals as the SBS is completely owned by the SBI.
First signs that SBI is serious in restructuring its subsidiaries: The SBI-SBS merger has been lingering around for many years without any concrete action on the ground. The merger process was slowed down mainly due to political hindrances and regulatory hurdles. However this time things are really looking bright as the formation of a holding company is in the pipeline and the merger process is already initiated.
Investor's Eye - Aug 27 2007
TCS - the best employer in IT
Tata Consultancy Services retained its top position as the best IT employer in India, while software major Wipro figured nowhere among the ‘Top 20’ list, as per a survey by industry analysts.
While HCL Infosystems, iGate, RMSI and Synechron occupied the next four slots after TCS, Infosys slipped four places to the eight position, according to an annual survey done by Cybermedia's flagship publication Dataquest in collaboration with IDC India.
The seventh annual Dataquest-IDC survey was participated by 2,844 software, hardware and marketing professionals from 33 IT companies, totally employing 3,04,834 people in seven cities.
The rating of employers was done upon the basis of employee satisfaction and HR scores.
IBM was rated the sixth best employer, followed by Capgemini, Infosys, Tavant Technologies and Sun Microsystems.
According to the survey, TCS, with a large workforce based in foreign shores, followed innovative HR practices and maintained ethos across geographies to achieve consistency in workforce.
The employees of HCL Infosystems were found to be satisfied with the growth opportunities, job security and relationship with peers in the company.
According to Pradeep Gupta, publisher of Cybermedia, multinational employers IBM, Capgemini, Sun Microsystems and CSC have mastered the art of managing Indian employees to rank among the Top 20 best IT employers in the country.
"Others, especially many India-based IT employers, need to balance aggressive recruitment with the warmth and personal touch...to retain people as they ramp up headcount".
India protests western style supermarkets
Hundreds of farmers gathered today by an agricultural collection depot run by a top national retailer to call for Uttar Pradesh to reopen Western-style supermarkets closed last week.
Citing law and order problems, UP closed 10 new Reliance supermarkets last week after protests from small traders who say efforts to modernise a $350 billion fragmented retail sector would hurt millions working in “mom and pop” shops.
That closure snowballed, with Reliance Industries Ltd, India’s biggest private company, putting on hold the opening of hundreds of air-conditioned supermarkets across northern and eastern India.
In a rare demonstration in favour of the new supermarkets, the farmers shouted “Reopen Reliance”‘ and “Long live farmers unity”. They also chanted “Down with Mayawati”, the chief minister of UP.
The protests highlighted the fault lines in rapidly globalising India, where millions feel they are being left out of a booming economy that is perceived as only benefiting wealthy consumers.
Others say India’s modernisation is being put on hold by interest groups and politicians wary of losing jobs and votes.
“It seems there is some other politics behind this abrupt decision which is certainly not in the interest of farmers,” said farm leader Ram Chandra Verma.
The Reliance centre buys up farm produce from local farmers. For many farmers it saves them money because they no longer have to go through traditional middlemen to sell their goods.
Farmers´ organisations say they will hold a bigger demonstration in the state capital in the next few days.
Large retail companies account for only 3% of India’s $350 billion retail market, which analysts estimate could double by 2015.
Wal-Mart Stores Inc, the world’s biggest retailer, also faced protests when officials came to India for a deal with Bharti Enterprises.
Post Market Commentary
The markets closed the session on a positive note as BSE Sensex closed higher by 76.81 points at 14,919.19 and the Nifty grew 18.1 points to end at 4,320.70. The BSE mid cap and Small cap closing higher by 48.98 points and 82.92 points at 6,409.64 and 7,808.44 respectively.
BSE Metal index grew by 110.63 points to close at 10,748.27. Pushing it up was SH.Precoated (9.99%), Hindalco 3.30%, Nalco 1.53% and Tata Steel 0.40% closed in green while Sterlite industries (0.47%), JSW Steel (0.39%) and Bhushan Steel (0.34%) closed in red.
BSE oil & gas index added 113.37 points to close at 7,839.17. IPCL (1.72%) led the gainers pack followed by IOCL (1.57%), GAIL India (0.56%) and BPCL (0.22%) while ONGC (1.09%) , Reliance Petroleum (0.27%) and HPCL (0.24%) are the losers.
BSE IT index grew by 85.37 points to 4,558.76 as Finance technology (9.20%), I-Flex (5.13%), Satyam (2.48%), Infosys (1.83%), Wipro (0.62%) and TCS (0.25%) closed in positive.
BSE Capital goods index gained by 37.20 points to close at 13,117.22 with L&T (0.54%) and ABB (0.93%) closed in positive while Siemens (0.56%) and BHEL (0.46%) closed in negative.
BSE Auto Index dropped 6.66 points to close at 4,676.31 as Tata Motors (1.96%), Hero Honda (1.65%) and Mahindra & Mahindra by (0.04%) are trading in red while Bajaj Auto (0.24%) and Maruti Udyog (0.21%) are closed in green.
BSE Bankex index ended lower by 18.77 points at 7,636.21 with SBI (0.50%), ICICI bank (2.43%) and Andhra Bank (0.79%) are closed in red while HDFC Bank (2.73%), PNB (1.15%) and IDBI Bank (0.30%) closed in green.
BSE Health care index closed marginally higher by 6.10 points at 3,493.43 as Nicholas Piramal (4.28%), Sun pharma (0.57%), Dr Reddy Lab (0.48%), Cipla (0.23%), Biocon (0.14%) and Glaxosmithkline (0.07%) closed in green.
BSE FMCG index advanced by 18.73 points at 1,930.93 with Tata Tea (1.78%), United spirit (1.52%), ITC (1.33%) and Britannia (0.30%) closed in green while Colgate palm (0.42%) closed in red.
Sensex ends up 77pts, Reliance gains 2%
After the 417pt rally yesterday, the Sensex opened with a marginal positive gap (16 points) at 14,858 on mixed cues from the global markets.
The index dropped to a low of 14,752 in early morning deals. Sustained buying in heavyweights like Reliance and Infosys saw the index zoom to a high of 14,952 in late noon deals - a gain of 110 points from the Monday close of 14,842 and just 48 points away from the 15,000-mark.
The Sensex finally closed with a gain of 77 points at 14,919.
The market breadth was bullish right through the day - out of 2,699 scrips traded, 1,562 logged gains today.
INDEX GAINERS & LOSERS
Reliance gained over 2.5% (Rs 47) to close at Rs 1,880.
Infosys moved up nearly 2% to Rs 1,882.
Hindalco closed with a gain of over 3% at Rs 153.
HDFC Bank and Satyam moved up over 2% each to Rs 1,152 and Rs 450 , respectively.
ITC and Grasim gained over 1% each at Rs 167 and Rs 2,865, respectively.
ICICI Bank dropped over 2% to Rs 862. Tata Motors was down nearly 2% at Rs 663.
Ranbaxy, ONGC and SBI also declined today.
MOST ACTIVE COUNTERS
Everonn Systems was the most active counter with a turnover of Rs 234 crore followed by Take Solutions (Rs 231 crore), Reliance (Rs 151 crore), Tata Teleservices (Rs 104 crore) and ICICI Bank (Rs 101 crore).
Market Close: Volatility prevails ahead of F&O settlement..
Indices toady witnessed yoyo session with no clear direction through out the day. Lack of support from the global front was partially responsible for the subdued start. Cautious approach by the investors ahead of the derivative settlement added to the chaos on the bourses. However, some index heavyweights were able to attract buyers in the final trading session. The RBI?s caution regarding the foreign investment in the holding companies of Indian banks kept the Banking sector under pressure. Rupee depreciation was unable to ease the pressure on the technology counter as the sub prime continued to haunt them. Selective mid caps were in action. European indices continued to trade in red.
Sensex closed higher by 77 points at 14919.19. It was helped up by gains in Hindalco (152.9,+3 percent), RIL (1884.25,+3 percent), Satyam (449.7,+2 percent), HDFC Bk (1147.5,+2 percent) and Infosys (1880,+2 percent). Restricting the gains were ICICI Bk (859.8,-3 percent), Tata Motors (663.05,-2 percent), Hero Honda (629.8,-2 percent), Ranbaxy (365.25,-2 percent) and ACC (1024,-1 percent).
Financial Technologies (FT) was the star of the day and ended higher by 10% for second consecutive day. Company has honed the technology for straight through processing. (Transaction handling). It is also the promoter of Multi Commodity Exchange in India's MCX which now has about 70% market share in the commodity exchange market. Our note on the company should convince you as buyers despite higher valuations. Do read it.
Himadri Chemical Industries Ltd, the flagship company of the Himadri group is into the manufacturing and marketing of Coal Tar Pitch and its derivatives like Naphthalene, creosote oil, naphthalene, anthracene oil, xylene, benzene and toluene. The Company also produces corrosion protection and manufactures coal tar based pipe coating products at Visakhapatnam. Himcoat Enamel, Himcoat Primer, Himtape and Himwrap are the products. The R&D capability of the company gives it an edge over the unorganized sector. Do read our note on the company to know more investment argument in favor of the company.
Everonn Systems India Limited (Everonn) is in the field of education and training. The company is fully integrated and offers a 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. Content is the area where its arch rival Educomp Solutions out shines Everonn. We have covered both in our research. We find Educomp's business model more convincing but valuations are certainly not. Do read our notes for more insights.
Technically Speaking: Index was volatile as it made an intra day high of 14,952 and low of 14,752. Advances declines ratio was 3:2. Volume was pretty good at Rs.4,096 cr. Sensex has done today our expected target of 14950. We can expect some profit booking here and lower levels of 14670 are possible. Any move above 14950-14970 will take the Sensex to 15200.
But the pain is still not out. Subprime worries and political issue seems to be eased but they are not fully cured. Clarity will come with time till then wait.
Market gains on last minute buying
While majority of the Asian markets closed in the red today, the domestic indices shrugged off the intra-day volatile moves and registered decent gains at close. The Sensex moved marginally up, above its previous close to open at 14,858. But, slipped on sustained selling in frontline stocks and touched the day's low of 14,752 in the early trades. However, the market bucked the trend and recovered on buying in heavyweights, metal and information technology stocks. The market remained subdued thereafter and zigzagged between positive and negative territory in the afternoon. In the last hour of the trading session the Sensex saw hectic activity and moved northwards on selective buying in frontline stocks and finally closed the session in the green by gaining 77 points at 14,919. The Nifty, too, witnessed the choppy trades and wrapped up the session with the gains of 19 points at 4,321.
The breadth of the market was positive. Of the 2,700 stocks traded on the BSE 1,566 stocks advanced, 1,061 stocks advanced and 73 stocks remained unchanged. Among the sectoral indices, the BSE IT index gained 1.91% at 4,559 while the BSE Oil & Gas index, the BSE Metal index, the BSE Teck index also ended with the gains. The BSE Bankex index and the BSE Auto index closed in the red.
Select heavyweights edged higher on decent buying support. Hindalco rose 3.30% at Rs153, HDFC Bank jumped 2.73% at Rs1,152, Reliance Industries advanced 2.58% at Rs1,880, Satyam computer added 2.48% at Rs450, Infosys gained 1.83% at Rs1882 and ITC gained 1.33% at Rs167. However, select front-line stocks came under selling pressure. ICICI Bank was the major loser and dropped 2.43% at Rs862. Other draggers Tata Motors declined 1.96% at Rs663, Ranbaxy dropped 1.09% at Rs367 and ONGC shed 1.09% at Rs809.
Over 3.44 crore Tata Teleservices shares changed hands on the BSE followed by Mascon Global (84.38 lakh shares), IFCI (77.74 lakh shares), Hindustan Motors (59.60 lakh shares) and Nagarjuna Fertilisers (55.45 lakh shares).
Market extends gains
The market settled with decent gains as buying emerged for index pivotals. IT pivotals led the rally along with index heavyweight Reliance Industries (RIL). Yet, weak global markets capped upside. On the flip side, value buying coupled with short covering provided support at lower level.
Asian markets settled on mixed note today, 28 August 2007. Some of these markets recovered from initial weakness. However, all European markets were trading lower. US markets closed lower on Monday, 27 August 2007.
The BSE 30-share Sensex gained 76.81 points or 0.52% at 14,919.19. It had opened slightly lower at 14,841.61 and slipped further to hit a low of 14,751.68, in early trade. However it rebounded from lower levels to hit a high of 14,952.04 at 15:12 IST.
From the recent low of 13,989.11 on 21 August 2007, the Sensex has recovered 930 points or 6.65% at current 14,919.19
The S&P CNX Nifty rose 18.10 points or 0.42% at 4320.70. The Nifty August 2007 futures settled at 4298.80, a discount of 21.90 points as compared to spot closing
The total turnover on BSE amounted to Rs 4096 crore as against Rs 4,017.17 crore on Monday, 27 August 2007. The NSE F&O turnover was Rs 57,340.78 crore as compared to Rs 52749.11 crore on Monday, 27 August 2007.
The market breadth was strong on BSE, with 1593 shares advancing as compared to 1061 that declined, while 75 remained unchanged.
The BSE Mid-Cap index rose 0.77% to 6,409.64 while the BSE Small-Cap index settled with gain of 1.07% to 7,808.44. Both these indices outperformed the Sensex.
Volatility is expected to remain high in the next three days ahead of the expiry of derivatives contracts for August 2007 series on Thursday, 30 August 2007.
Among the 30-member Sensex pack, 19 rose while the rest declined.
India’s largest aluminium manufacturer Hindalco Industries advanced 3.10% to Rs 153 on 12.08 lakh shares. It was the top gainer from the Sensex pack. As per recent reports it plans to make inroads into supplies for the car market which has so far been dominated by steel manufacturers. Hindalco will soon make high-grade aluminium products for the body-in-white segment for cars.
Other metal counters, Tata Steel (up 0.50% to Rs 606), Hindustan Zinc (up 1.68% to Rs 697), and Sail (up 2.61% to Rs 153.35), also edged higher. The BSE Metal Index rose 1.04% to 10,748.27
IT pivotals made a comeback today, as rupee weakened against the dollar. Satyam Computers (up 2.10% to Rs 448) and Infosys (up 1.72% to Rs 1880), gained from IT pack. The BSE IT Index gained 1.91% at 4,558.76, and was the top gainer among the sectoral indices on BSE
TCS, the country’s largest software services exporter rose 0.13% to Rs 1027, on reports it had signed a multi-year contract with Hawaiian Airlines to provide IT, business process outsourcing and infrastructure services. Reports suggest that the deal may be worth about $40 million.
India’s third largest software services exporter Wipro gained 0.11% to Rs 465.05 on reports that it plans to open a software development center in the US city of Atlanta that will employ mostly graduates from colleges and universities in the state of Georgia. The Atlanta facility will hire more than 200 people in the first year, and is expected to employ over 500 by the third year of operations.
Financial Technologies (up 10% to Rs 2300), HCL Technologies (up 2.88% to Rs 293) and Tech Mahindra (up 1.57% to Rs 120.50), gained from mid-cap IT pack.
Rupee was hovering at 41.17 as against yesterday's close of 41.01/41.02.
India’s largest private sector entity in terms of market capitalisation and oil refiner Reliance Industries soared to a high of Rs 1890. It settled 2.80% higher to Rs 1884.25 on 8.15 lakh shares. Reliance Industries (RIL) is reportedly entering into an alliance with Container Corporation of India (Concor), the country’s largest container train operator. Under the partnership, RIL will have access to several infrastructural facilities of Concor, including almost 60 terminals across the country. RIL intends to utilise these facilities as key warehousing points for Reliance Retail.
BSE Oil and Gas Index gained 1.5% at 7,839.17
FMCG stocks were in demand on fresh buying. The BSE FMCG Index gained 0.98% at 1,930.93. ITC (up 1.40% to Rs 167.35), Marico (up 3.11% to Rs 59.70), Britannia (up 0.30% to Rs 1590), and Nirma (up 1.46% to Rs 160), gained from FMCG pack.
Larsen & Toubro (L&T) rose 0.30% to Rs 2543 after L&T Capital Company, its group company invested around Rs 100 crore for a stake in Mysore based Rangsons Electronics, an electronic manufacturing services (EMS) provider.
India’s third largest pharma company in terms of net sales, Cipla was up 0.15% to Rs 170.55 on reports that company will replace all products with chlorofluorocarbons ahead of Montreal Protocol ban deadline.
ICICI Bank, the country’s largest private sector bank in terms of net profit, extended early fall. It lost 2.89% to Rs 858.20 on 11.72 lakh shares. It was the top loser from Sensex pack. The bank got a setback today, after the Reserve Bank of India made a strong case against intermediate holding companies to float holding companies for their insurance and mutual fund business. The regulator said any clearance for foreign investment in such a holding company by other regulators could be subject to “legal review”.
State Bank of India, the country’s largest bank in terms of net profit slipped to a low of Rs 1527 in early trade. However it recovered from lower levels and ended 0.10% lower at Rs 1555.50.
Led by ICICI Bank and SBI, Bankex fell 0.25% to 7,636.21, and was the top loser among the sectoral indices on BSE.
India’s largest listed cellular services provider Bharti Airtel declined 0.34% to Rs 874. As per reports, the Telecom Regulatory and Development Authority (Trai) has alleged that the company had violated the national numbering plan that designates short codes and numbers for value-added services. It has asked the company to immediately discontinue some services.
Ranbaxy laboratories (down 1.51% to Rs 365.25), ACC (down 1.40% to Rs 1022.40), and ONGC (down 1.13% to Rs 808.90) were the other losers from Sensex pack.
Sugar shares advanced in volatile market on renewed buying interest. Shree Renuka Sugars (up 2.82% to Rs 486.20), Bajaj Hindustan (up 2.90% to Rs 127.70), Sakthi Sugar (up 3% to Rs 64.40), and Mawana Sugar (up 5.80% to Rs 26.45), advanced. Bajaj Hindustan got a boost from reports that it will clinch an export deal for 60 lakh litres of rectified spirit from Japan.
K P R Mill settled at Rs 173.50 on the BSE, a discount of 22.89% as compared to IPO price of Rs 225. On BSE, 49.21 lakh shares of the scrip were traded. The stock had debuted at Rs 201.20 on BSE, a discount of 10.57% over the IPO price. It had hit a high of Rs 209.80 and a low of Rs 169.10.
Hindustan Motors surged 20% to Rs 29.75 on reports it plans to launch premium sports utility vehicles from the Mitsubishi stable in the price range of Rs 15-25 lakh within six months. The decision follows a surge in sales of Mitsubishi’s Pajero and Montero models during 2006-07. The SUVs will be manufactured at the company's Chennai plant.
Karnataka Bank was up 1.64% to Rs 179.50. As per reports, the bank has put its asset management joint venture on hold. The bank would need capital to fund its projected business growth of 20-22% and also for the non-life insurance joint venture. Reports also suggest that the bank is planning to enter into online broking in a tie-up with an established broking firm.
Vikas WSP, which was relisted yesterday, 27 August 2007, jumped 5% to Rs 38.03 today. It was suspended from trading on the BSE on 1 October 2001. As per reports, it has lined up Rs 735 crore for capital expenditure.
Federal-Mogul Goetze (India) surged 7.70% to Rs 171.25 after company approved rights issue aggregating Rs 106.33 crore. Its board of directors approved rights issue of 73.33 lakh equity shares of Rs 10 each at an issue price of Rs 145 per equity share (including a premium of Rs 135 per equity share) aggregating Rs 106.33 crore. The rights issue will be in the ratio of 29:100 (29 equity shares for every 100 equity shares held).
Automobile batteries-maker Exide Industries jumped 6.65% to Rs 60.15. The company’s board has approved a rights issue of up to 5 crore equity shares in the ratio of 1:15 (that is, one share for every 15 shares held), priced at Rs at Rs 30 per equity share.
GMR Infrastructure, which develops various infrastructure projects, moved up 6.46% to Rs 797.25. On Monday, 27 August 2007, the company's subsidiary GMR Energy secured a major hydropower project in Himachal Pradesh, after it paid the state government Rs 82 crore as premium upfront money.
IT solutions provider i-flex Solutions spurted 5.13% to Rs 2014.45. Recently, its Dutch unit, i-flex Solutions BV, had raised its stake in Greek unit i-flex Solutions SA to 90%. The Greek unit was incorporated in May 2007 with an investment of 35% by i-flex Solutions BV.
Nicholas Piramal India surged 3.93% to Rs 257.70 after it announced that its board will consider proposal for restructuring the company's research & development division by demerging its new chemical entity (NCE) research unit into a separate entity. The board meeting will be held on 31 August 2007.
Modern Dairies hit 5% upper circuit of Rs 95.05 on BSE after it fixed 1 October 2007 as record date for issue the 1:1 bonus shares.
UTV jumped 4.92% to Rs 485.95 on reports that it is in talks to rope in a strategic investor for its broadcasting business, which entails an investment of Rs 600 crore for nine channels. The broadcasting initiatives are under UTV Global Broadcasting which is privately held. UTV Global Broadcasting has three subsidiary companies which run the different lines of businesses.
Nagarjuna Fertilisers slipped 1.47% to Rs 33.60 after the National Stock Exchange (NSE) barred further F&O positions in the stock as 95% marketwide position limit was crossed on Monday, 27 August 2007.
Centurion Bank of Punjab rose 0.91% to Rs 38.80 after the private sector bank got Reserve Bank of India's approval for the merger of Lord Krishna Bank with it. The merger is effective from 29 August 2007 and Centurion will issue seven shares in itself for every five held in Lord Krishna, the bank said.
Mold-Tek Technologies was locked at upper limit of 5% at Rs 131.90 after its board approved to de-merge plastic business and merge Teck Men Tools with itself.
Auto ancillary maker Perfect Circle India jumped 5% to Rs 26.70 after it said during market hours on Monday, 27 August 2007, that acquirer Asia Investments has accepted delisting price of Rs 35 per share for acquiring balance stake of 15.70% from the public, as discovered in the reverse book building process which closed on 24 August 2007.
All European markets were trading weak today, 28 August 2007. Key benchmark indices in France (down 0.98% to 5,535.51), Germany (down 0.38% to 7,457.54) and United Kingdom (down 0.71% to 6,176) declined.
Asian markets settled on a mixed note today, 28 August 2007. South Korea's Seoul Composite (up 1.46% at 1,829.31), Taiwan Weighted (up 0.11% at 8,727.55) and Shanghai Composite (up 0.87% to 5,194.68) rose.
Hang Seng (down 0.91% at 23,363.76), Singapore's Straits Times (down 1.34% at 3,343) and Japan's Nikkei (down 0.09% at 16,287.49) slipped.
US shares slipped yesterday, 27 August 2007 after news that sales of existing homes slipped in July 2007 for a fifth straight month stirred concerns about the strength of the economy. The Dow Jones industrial Average fell 56.74 points, or 0.42%, to 13,322.13. Broader stock indicators also declined. The Standard & Poor's 500 index fell 12.58 points, or 0.85%, to 1,466.79, and the Nasdaq Composite index fell 15.44 points, or 0.60%, to 2,561.25.
Crude oil prices were steady at above $72 on Tuesday, 28 August 2007, with US refinery shutdowns reviving supply concerns. US crude rose 6 cents to $72.03 a barrel. London Brent gained 7 cents to $71.02 a barrel.
The UPA government and the Left parties, on Monday 27 August 2007, agreed to formalise a joint mechanism to address the latter’s objections on the civil nuclear deal with the US. But the Left’s main demand of not proceeding with International Atomic Energy Agency (IAEA) negotiations remained unresolved, even after a series of high-profile meetings between the two sides, reports suggest. In a meeting of government with the Left party leaders held on Monday, 27 August 2007, Left parties reiterated their that they would agree to participate in the mechanism, but the government shouldn't go ahead with next round of IAEA negotiations.
The proposed mechanism in the form of a committee will also decide how long the government will stall IAEA negotiations. However, the government has refused to give any time frame for the committee to finish its work
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
Grey Market - Power Grid, Magnum Venture
Power Grid Corporation 44 to 52 10 to 11
Motilal Oswal 825 90 to 95
Indowind Energy 55 to 65 Discount
Magnum Venture 27 to 30 1 to 1.50
Puravankara Projects 400 Discount
KPR Mills 225 Discount
Trading Calls
Buy SBI with a stop loss of Rs 1480 for target of Rs 1740
Buy Titan Industries with a stop loss of Rs 1080 for target of Rs 1340
Buy Suzlon Energy on dips with a stop loss of Rs 1230 for short-term targets of Rs 1313 and Rs 1330.
Morning Call
Market Grape Wine :
In House :
Nifty at a supp of 4281 and 4260 with Resis at 4335 and 4372
Range bound movement expected. Nifty expiry expected at 4200~4300
Intra day: Buy JP Associates above 916.50 with a TGT of 938 and a SL of 904
Sell GMRINFRA below 725 with a TGT of 703 and a SL of 734
F&O: Buy REL above 763
Out House :
Markets at a support of 14515 & 14646 levels with resistance at 14897 & 14949 levels .
Buy : JpAsso & Centextile
Buy : RIL & Relcap
Buy : Titan bullet
Buy : Aban
Buy : HanunToys & JPHydro
Buy : IndiaCement
Buy : SBIN & Kotak
Dark Horse : Jpasso , Aban , Kotak , IolBroad , CenTextile , Indiacem & REL
Intraday Stock Ideas
Nifty (4303) Supp 4264
Res 4341
Res 4341
Buy Cummins (369)
SL 364 Target 377, 379
SL 364 Target 377, 379
Buy NTPC (168)
SL 165 Target 174, 176
SL 165 Target 174, 176
Buy CESC (448)
SL 443 Target 458, 460
SL 443 Target 458, 460
Sell Amtek Auto (343)
SL 348 Target 335, 333
SL 348 Target 335, 333
Sell Bank Baroda (263)
SL 267 Target 256, 253
SL 267 Target 256, 253
Tuesday Twist...Some profit booking likely
Our main business is not to see what lies dimly at a distance but to do what lies clearly at hand.
Monday's momentum resurrected the bulls. FII's opened their taps and liquidity flowed into the bourses. The Left leaders are prepared to have a joint mechanism at the political level to address the concerns and evaluate the implications" of the nuclear deal. Latest forecasts by international weather models indicate that the southwest monsoon may get active during the first week of September. But all that was yesterday.
Welcome to a new day which has less promises for the bulls. US indices fell after a disappointing existing home sales report. Dow and Nasdaq shed over half a percent each. But Asian stocks have revived erasing an earlier decline. Profits at China Life Insurance Co. and Foster's Group Ltd. resurrected hopes that regional earnings growth can withstand a US slowdown. The yen rose on speculation banks will report more credit-market losses, prompting traders to pare higher-yielding investments funded by loans in Japan.
Expect a cautious opening. Monday's momentum could bring a spurt at start but be prepared for profit booking. Select counters will continue to excel while a host of them may see some selling.
Dr. Reddy's could gain on reports that it may buy US-based Bradley Pharmaceuticals Inc. for as much as $300mn. Nicholas Piramal India Ltd on Monday said it planned to spin off its novel drug discovery unit as part of a restructure of its research and development. The board would meet on Aug. 31 to consider the proposal. Canara Bank will make an open offer for 51% stake in Can Fin Homes, a housing finance company.
The Nifty (August) future discount decreased to 7.3 points from 12.2 points and shed 13.81 lakh shares in open interest. Oil prices were steady at above $72 on Tuesday, with U.S. refinery shutdowns reviving supply concerns, just as the summer driving season draws to a close.
Vikas WSP was back on the bourses after six years ending the day’s session at Rs 36.22 on the BSE. Transactions in the stock were suspended in 2001 amidst allegations on misreported figures.
Shipping stocks could see some action as the new shipping policy is expected to be announced shortly and is awaiting Cabinet nod.
The proposals of ICICI Bank and State Bank of India to float holding companies for their insurance and asset management business may face regulatory hurdles, going by the Reserve Bank of India’s views expressed in a discussion paper on holding companies released on Monday. The Reserve Bank of India (RBI) expressed concern about aspects of bank and financial holding company structures in a discussion paper published with a view to reviewing how suitable they are for India. The RBI said the pace of growth in financial services had led banks to experiment with holding company structures not yet familiar in India
Reliance has delayed plans to open hundreds of supermarkets in the north and east of India days after Uttar Pradesh shut 10 stores following protests from small traders.
State Bank of India, said its board has given go ahead to the merger of State Bank of Saurashtra with itself.
Virinchi Technologies Ltd has informed BSE that the Board of Directors of the company approved the issue of Foreign Currency Convertible Bonds (FCCBs) up to $20 million and the
issue of preferential shares
The corporate credit rating of Tata Power Co. Ltd and its $300 million senior unsecured bonds have been lowered to BB- from BB+ on Friday by Standard and Poor’s Rating Services.
Reliance Industries is in advance talks with Concor for providing access to several infrastructural facilities, including 60 terminals across the country
Reliance Energy Ltd’s 4,000MW Raigad project may get delayed as the Bombay High Court put a stay on the construction activities
GAIL has sought a price review of gas produced by consortium of Reliance Industries Ltd, BG Group, UK, and ONGC from Panna-Mukta and Tapti fields
NIIT Technologies is scouting for acquisitions in the travel and transport spaces
Jet Airways is in talks with various airlines to offer connectivity from India to Europe and North Africa
Usha Martin has acquired DE Ruiter Staalkabel BV, Netherlands, through its wholly owned subsidiary for €3mn
RBI sanctioned the amalgamation of Lord Krishna Bank with Centurion Bank of Punjab
Hindustan Motors plans to launch premium segment sports utility vehicles in the price range of Rs1.5-2.5mn from the Mitsubishi stable within the next six months
Japan's Kobe Steel is likely to invest Rs6.2bn to build an iron nugger plant in Goa
IPCA labs and Central Drug Research Institute have entered into a collaborative-cum-license agreement for further development of compound 99/411
Venus Remedies signed an agreement with Pharma Match R&D BV, Amsterdam, for jointly preparing, registering and marketing an EUE-CTD dossier for a carbapenem injectible
Punjab Chemicals and Crop Protection Ltd (PCCPL) has acquired the Netherlands-based Pegevo Beheer BV for €39.5mn.
Bulls were back on top after global markets recovered smartly in recent times following Fed decision to cut its discount rates and expectations of a further reduction in September. Key indices continuously gained ground throughout the day led by index heavyweights like RIL, ICICI Bank, L&T and Reliance Communication. Volumes also increased as turnover in NSE Cash segment rose 9.3% and in F&O segment increased by 21.7%.
Among the 30-scrips of Sensex 28 of them ended in green and only 2 finished in negative terrain. Ambuja Cement and Cipla were the two losers. Finally, the BSE 30-share Sensex closed at 14,842 surging 417 points. NSE Nifty added 112 points to close at 4302.
Reliance Industries advanced by 3.2% to Rs1833 on reports that it is entering the construction business. The scrip touched an intra-day high of Rs1840 and a low of Rs1792 and recorded volumes of over 20,00,000 shares on NSE.
Northgate Technologies gained by 3% to Rs1237 after the company announced that they would set up a subsidiary called Social Media India Ltd., to tap the online advertising and other internet transaction services industry. The scrip touched an intra-day high of Rs1250 and a low of Rs1214.
ICICI Bank advanced by over 6% to Rs883 after RBI announced on August 24 that overseas investors can buy more shares in ICICI after the overseas investment in the bank fell below the 74% limit. The scrip touched an intra-day high of Rs887 and a low of Rs852 and recorded volumes of over 62,00,000 shares on NSE.
L&T advanced by 3.3% to Rs2533 the nation's biggest construction and engineering company plans to spend Rs20bn on expansion this year. The scrip touched an intra-day high of Rs2539 and a low of Rs2450 and recorded volumes of over 6,00,000 shares on NSE.
SBI spurred by over 6% to Rs1815 after they announced that it approved the merger of State Bank of Saurashtra with itself. The scrip touched an intra-day high of Rs1835 and a low of Rs1762 and recorded volumes of over 8,00,000 shares on NSE.
Realty stocks were the pick of the day as the index was the top gainer rising over 5%. DLF gained 2.5% to Rs577, Unitech surged by over 7.5% to Rs491, Akruti gained by 2% to Rs517 and Sobha added 2.5% to Rs759.
Power stocks sparked up led by gains in Suzlon as the scrip was up by 3% to Rs1270, Tata Power gained by 1.7% to Rs690, Reliance Energy advanced by 3.7% to Rs762 and NTPC added 2.5% to Rs167.
Banking stocks were among the major gainers as the index surged by 4%. Index heavyweight, ICICI Bank surged by over 6% to Rs88, SBI spurred 6% to Rs1554 and HDFC Bank advanced 2.5% to Rs1119.
Auto stocks also were in top gear. TVS Motors jumped by over 6% to Rs60, Maruti gained by 5.5% to Rs833, Tata Motors surged by over 3% to Rs675 and M&M added 3% to Rs658.
For the near term, the action is likely to be more stock specific based on corporate announcements. However, the mood is still jittery as the bulls, having burnt their fingers badly, are thinking twice before making a fresh investment commitment. One can understand the dilemma the bulls are facing, as FIIs have pulled out heavily in last few trading sessions. On the other hand, the Mutual Funds have grabbed the opportunity and have aggressively picked up stocks This reverse strategy adopted by the two group of institutions could also be keeping many investors guessing on the near-term direction of the market.Fund Activity:
FIIs were net buyers of Rs6.9bn (provisional) in the cash segment on Friday and the local institutions pumped in Rs1.9bn. In the F&O segment, FIIs were net sellers at Rs5.1bn. On Thursday, foreign funds bought Rs4.1bn from the cash segment.
Major Bulk Deals:
HSBC Financial Services sold Futura Poly. Newly-listed Take Solutions was bought by Matrix Equitrade and Reliance Mutual Fund.
Lower Circuit:
IOL Broadband and Empire Industries, Bellary Steel.
Upper Circuit: Atlanta, Bartronics, Asian Electricals, Tourism Finance, Zuari Industries, ETC Networks, Amaraja Batteries, Ganesh Forgings, Kothari Products, Goderej Industries, Prime Focus, Yashraj Industries, Bilcare, Era Construction, Bag Film and Prakash Industries
Delivery Delight (Rising Price & Rising Delivery):
Cummins India, Hero Motors, ICICI Bank, M&M, Punj Lloyd
Abnormal Delivery:
Reliance, IVRCL, Arvind Mills, Hero Honda Motors and Shree Cement.
Major News & Announcements:
TCS signs pact for IT, Infrastructure services with Hawaiian Airlines.
Omax Auto Board to consider Right Issue on September 1
Swaraj Mazda Board approves right issue to raise Rs1.2bn
Parsvnath secures redevelopment project for Mahim Bus terminus
GMR Infra gets 180MW Bajoli Holi Project
McNally Bharat gets Rs898.6mn from Mazagaon Dock
KLG Systel acquires 51% of Atlantis lab
Punjab Chemical unit to acquire Pegevo Beneer Stock
Usha Martin acquires business of DE Ruiter Staalkabel B.V, Netherlands
Venus Remedies starts venture with Pharma Match R&D B.V,
McNally Bharat Engineering Company Ltd, has secured an order from Mazagon Dock for supplying a crane valued at Rs898.6mn
Gati Ltd has entered into an agreement with Kausar India Ltd (KIL) for acquisition of 2mn shares at Rs72.8 per share
Bhushan Steel and Strips Ltd plans a four-fold expansion from present capacity of 1mn tons in the next five years for an
investment of over Rs150bn in 10 years
Fortis Healthcare is investing Rs8bn to set up a seven-star 950-bed medicity in Gurgaon
JSW Steel is planning to expand its capacity to 30mn tons in next ten years
Swaraj Mazda board has approved a Rs1.2bn rights issue
Caution should be maintained
After posting significant gains of over 650 points in the last two sessions, buying interest may continue on the back of a firm trend. However, caution should be maintained as high intra-day volatility and subdued Asian markets in current trades may dampen the investor sentiment. Most of the Asian indices have slipped from their levels and currently are marginally up. Among the key local indices, the Nifty could test higher levels at 4300 while it has a support at 4250. The Sensex has a likely support at 14200 and may face resistance at 15100.
Major US indices slipped Monday after a disappointing existing home sales report revived worries about the mortgage and credit markets. While the Dow Jones slipped by 57 points at 13322, the Nasdaq moved down by 15 points to close at 2561.
Except few, most of the Indian ADRs slipped on US bourses. ICICI Bank led the pack with gains of 3.56% while Satyam, Wipro, Dr Reddy's and Patni Computer gained over 1-2% each. Among the laggards Infosys, Tata Motors, HDFC Bank., VSNL, MTNL and Rediff fell around 0.5-1% each.
Crude oil prices advanced further, with the Nymex light crude oil for October delivery gaining by 88 cents to close at $71.97 a barrel. In the commodity space, the Comex gold for December delivery slipped $1.30 to settle at $676.20 an ounce.
Market may gain further ground
The market is expected to gain further ground on continued buying support. Also local mutual funds are providing support at lower levels. As per the latest data, they pumped Rs 2524.30 crore in the Indian equity market for the month of August 2007 (till 25 August 2007).
Volatility is expected to remain high ahead of the expiry of derivatives contracts for August 2007 series on Thursday, 30 August 2007.
Asian markets were trading mixed today, 28 August 2007, after US stocks reacted to weak housing data overnight.
Japan's Nikkei (up 0.19% at 16,332.06), Taiwan Weighted (up 0.35% at 8,749.24), South Korea's Seoul Composite (up 1.26% at 1,825.72) rose. However, Hang Seng (down 0.25% at 23,519.17) and Singapore's Straits Times (down 0.36% at 3,376.28) slipped.
US shares slipped yesterday, 27 August 2007 after news that sales of existing homes slipped in July 2007 for a fifth straight month stirred concerns about the strength of the economy. The Dow Jones industrial Average fell 56.74 points, or 0.42%, to 13,322.13. Broader stock indicators also declined. The Standard & Poor's 500 index fell 12.58 points, or 0.85%, to 1,466.79, and the Nasdaq Composite index fell 15.44 points, or 0.60%, to 2,561.25.
As per provisional data, foreign institutional investors (FIIs) purchased shares worth a net Rs 695.35 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 193.32 crore on Monday, 27 August 2007.
Crude oil prices were steady at above $72 on Tuesday, 28 August 2007, with US refinery shutdowns reviving supply concerns. US crude rose 6 cents to $72.03 a barrel. London Brent gained 7 cents to $71.02 a barrel.
Sensex had surged 417.51 points or 2.89% at 14,842.38, on Monday, 27 August 2007. The S&P CNX Nifty jumped 112.45 points or 2.68% at 4,302.60, Monday, 27 August 2007.
The BSE Sensex is up 28.26% over the one-year period from its close of to 11,572.20 on 25 August 2006.
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