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Wednesday, August 29, 2007
Top BPO Companies
1 Genpact
2 Transworks
3 IBM Daksh
4 TCS BPO
5 Cambridge Solutions
6 WNS Global Solutions
7 Wipro BPO
8 Convergys India
9 Firstsource Solutions
10 HCL BPO
11 Aegis BPO
12 Infosys BPO
13 EXL Services
14 Sutherland Global Services
15 vCustomer
16 HTMT Global
17 24/7 Customer
18 Aptara
19 e4e
20 MphasiS BPO
Top IT Companies
1 TCS
2 Wipro
3 Infosys Technologies
4 HP India
5 IBM India
6 Ingram Micro
7 Satyam Computer Services
8 Redington India
9 HCL Technologies
10 Oracle India
11 Cognizant Technology Solutions
12 Cisco Systems
13 Teledata Informatics
14 Intel India
15 HCL Infosystems
16 Tech Mahindra
17 Patni Computer Systems
18 Microsoft India
19 Lenovo India
20 Moser Baer
Seal of Freedom - Jay Dubashi
I was perhaps the last Indian to use the Great Seal of the Secretary of State for India in Whitehall. In fact, I am certain I was the last since I operated the seal at 5 pm on Thursday, August 14, 1947, a day before Independence day, after which there was no secretary of state for India.
I was a student in London at the time and also doubled as a journalist, writing occasionally for an Indian paper back home. Some of us were invited to tea by Lord Listowell, who was deputy to the secretary of state for India on August 14, that is, independence day eve, and the tea was to be held in India Office.
India Office, the place from which Britain governed its empire in India for years, was a gloomy old building - like most buildings in London - a stone's throw from the prime minister's office in 10 Downing Street. In fact, we were escorted to India Office through a portal right in front of 10 Downing Street, along some alleyways possibly designed by Charles Dickens. We were first taken to a large hall called Durbar Court, shielded from the English rain by a large glass roof, with a ceramic blue frieze running along its four walls, and riches on which marble busts of previous secretaries of state and viceroys were perched including Curzon, Chelmsford, Irwin (of Gandhi - Irwin pact) and, of course, Willingdon, whose wife had carted away tons of precious stones from Gwalior and Jaipur.
There were also some oil paintings including a huge one of that rogue, Robert Clive, the real founder of the British empire in India, and surprisingly Ranjit Singh, the last ruler of Punjab. There was also a small museum, housing, among other things, a sword of Tipu Sultan and the bejeweled headgear of the last Peshwa whom the British had defeated in 1818.
We were served tea in dainty pottery, totally out of sync with the burly Robert Clive and Lawrence Brothers staring at us from the walls. There were, of course, biscuits and cucumber sandwiches which, for some reason, even the queen serves its guests in Buckingham Palace. There was nothing very Indian about India Office whose very design was intimidating, just like the British rule in India.
Among the men who served us tea and biscuits was an old liveried gentleman, who said that he had served Irwin in Delhi in the thirties and had served tea to Mahatma Gandhi. He was also in charge of the Great Seal of the Secretary of State which appeared in all important documents and was the ultimate rubric of the empire. Would he care to operate the seal for us, possibly for the last time? Of course, he would. Just then, Lord Listowell appeared beside us and said he would show how it worked. He took out a piece of paper from his table and pressed the seal on it.
Nothing happened. So I pressed it again with some force, and lo and behold, it worked. That was the last time the seal was put to use, for a couple of hours later in Delhi, while the world slept, as Nehru said, India would awake to freedom, and the Seals of the Secretary of State for India, in fact, the secretary himself, would pass into limbo, and the Durbar Court would go back to pigeons and sparrows, who, as we sipped tea, were gathering on the glass roof.
The tea party over, we emerged into Whitehall, now gloomier than ever, and proceeded towards Trafalgar Square, yet another imperial landmark. But India would no more be a part of it from tomorrow, and we would walk down Whitehall free men, cocking a snook at Robert Clive in Durbar Hall, just a few feet away.
Rollover Analysis
1. Market wide rollovers picked up good momentum today with the same rising to 47% from 33% yesterday. This continues to be higher than the average D-2 rollovers of 44% over the last few expiries.
2. Simultaneously the average roll cost has also picked up marginally to keep the pace with the increase in rollovers activity with the same rising to 74 bps.
3. The total futures OI increased further by 2.3% today to 2,186,765 contracts indicating demand for fresh long positions in the market.
4. Over all open interest has fallen by over 8% over the past month in terms of contracts and 14.4% in terms of value.
5. Rollovers momentum in Nifty too remained very strong with 47% of total outstanding positions having rolled to September series rising from 34% yesterday. This is much above average D-2 rollovers of 41%.
6. With the rise in rollover activity, the downward pressure on Nifty roll cost increased further to -63 bps from -50 bps yesterday.
7. 85,940 Nifty contracts got rolled today along with a fresh build up of another 30,088 contracts. Over the last 5 days 247,697 Nifty contracts have got rolled, at an average rollover cost of -50 bps, and 4,744 fresh contracts have been added to the September series.
8. The total Nifty OI rose by 4.6% today to 793,153 contracts, which is 11% lower than D-2 of previous expiry.
9. Power stocks saw a sharp rise in long side rollovers with the same rising to 49% from 30% yesterday. Major spurt in long rolls was witnessed in REL (23% to 52%), CESC (35% to 53%) and NTPC (31% to 45%).
10. IT stocks on the other hand continued to witness short rolls with 55% rolls compared to 42% yesterday. Satyam (70%), Infosys (63%) and Wipro (49%) saw further short positions getting rolled to September series.
11. Construction, FMCG, Oil & Gas and Sugar rollovers continue to remain weak at 23%, 29%, 29% and 30% respectively. Major laggards include Colgate (25%), HDIL (26%), Chennai Petro (26%), Tata Tea (27%), Ansal Infra (31%), Cairn (31%) and Renuka (35%).
Rollover Analysis
Sensex ends up 74pts, Tata Steel zooms 9%
Taking cues from the overseas markets, the Sensex opened with a huge negative gap of 268 points at 14,651 and dropped to a low of 14,592. However, fresh buying (mainly in Tata Steel) at lower levels saw the index recoup losses in early trades.
Buying spread to other counters as the day progressed, and the index rebounded by mid-noon trades. The index touched a high of 15,030 - up 438 points from the day's low. The Sensex finally ended with a gain of 74 points at 14,993.
The BSE Metal index surged over 4% to 11,204. The Oil & Gas index was up over 1% at 7937.
The market breadth was positive - out of 2,693 stocks traded, 1,533 advanced, 1,093 declined and 67 were unchanged today.
INDEX MOVERS...
Tata Steel soared 9% to Rs 660. ONGC surged 3% to Rs 834, and BHEL added 2.5% to Rs 1,851.
Hindalco and Reliance Energy rallied 2% each to Rs 157 and Rs 782, respectively. Tata Motors advanced 1.8% to Rs 675.
SBI and ACC gained 1.7% each at Rs 1,575 and Rs 1,044, respectively.
Larsen & Toubro, Ranbaxy and Grasim moved up around 1.5% each to Rs 2,588, Rs 372 and Rs 2,910, respectively. Bajaj Auto was up 1% at Rs 2,319.
Metal stocks witnessed huge buying today. SAIL surged 5% to Rs 161. Jindal Saw Pipes, Jindal Stainless, Jindal Steel, JSW Steel, National Aluminium, Sesa Goa, Sterlite and Shree Precoated were up 2-3% each.
...AND THE SHAKERS
Infosys shed 2.5% to Rs 1,834. NTPC dropped 1.3% to Rs 165.
HDFC and Satyam slipped around 1% each to Rs 1,957 and Rs 445, respectively.
MOST ACTIVE COUNTERS
Tata Steel topped the value chart with a turnover of Rs 212 crore followed by Reliance (Rs 175.70 crore), Everonn Systems (Rs 168 crore), ICICI Bank (Rs 134 crore) and Axis Bank (Rs 131.50 crore).
Ispat Industries led the volume chart with trades of around 3.64 crore shares followed by Tata Steel (3.25 crore), Nagarjuna Fertilisers (1.48 crore), UCO Bank (87.75 lakh) and IFCI (85.50 lakh).
Trai moots no cap on number of telcos in circle
Telecom Regulatory Authority of India has suggested that there should be no cap on the number of operators in any service area and asked the Department of Telecom to form a multi-disciplinary committee to frame a spectrum allocation criteria.
The committee should have members from DoT, Trai, Wireless Planning and Coordination wing of Communications Ministry and operator associations, the regulator said in its recommendations on reforms in the licensing policy released today.
GSM operators wanted a cap on the number of telcos in a circle saying unlimited players are putting strain on the scarce spectrum, leading to poor services.
The regulator has suggested a one-time fee from operators for allocation of spectrum beyond 10 Mhz. At present, a company pays 1% of its revenue to the government for additional spectrum, being allocated based on the subscriber base.
The suggested charge for allocation of 2x5 Mhz of spectrum in category A circles and Mumbai and Delhi is Rs80 crore, while for category B circles and Chennai and Kolkata, it is Rs40 crore. For category C circles, the one-time fee is Rs15 crore.
For allotment of 1 Mhz spectrum, Trai has suggested a one-time fee of Rs16 crore should be charged.
In the recommendations, which are subject to DoT’s approval, the regulator has also sought auction for future allocation of spectrum except in case of allotment to mobile operator on 800, 900 and 1800 Mhz band.
Trai chairman Nripendra Misra said the one-time fee for additional spectrum is the most neutral criteria to create a level playing field.
On mergers and acquisitions, Trai says the combined market share of merged entities should not exceed 40% in terms of both subscribers and revenue. The current cap is 67%.
Misra said Trai has proposed to use adjusted gross revenue as the basis for
computing revenue-based market share of the merged entities. Besides, other checks and balances have also been put in place to ensure that such M&As do not create a monopoly in the market, he added.
The regulator said the merged entities should be charged spectrum fee based on the total radio wave acquired by them.
Trai also proposed that an operator should be allowed to acquire up to 20% equity in a telco in the same circle. At present, the cap is 10%.
On allowing use of GSM and CDMA technology by the same operator, Trai said an existing licensee may be permitted to use alternate technology to provide wireless access services in a particular area after payment of an upfront fee. This fee should be equal to the entry fee for the unified access license in that area.
The operator wanting to use both the technologies will have to pay fee for both spectrums.
Once approved, this proposal will help CDMA operator Reliance Communications in providing GSM services. The company has applied for GSM license and is awaiting guidelines on the use of both technologies.
Trai said the dual license shall be allotted based on combined adjusted gross revenue to ensure it does not attain an advantageous position against others.
Misra said: “These proposals are far reaching. We are guided by the fact that Indian telecom sector has reached a stage where artificial barrier to competition should be removed to achieve the target of 500 million subscriber base.”
Market bounces back
The benchmark Sensex made good its initial loss and ended with a gain of 74 points on the BSE on Wednesday following revival of buying by funds in select bluechip stocks.
The Sensex, which commenced the day with a loss of 327 points on global cues, rebounded to close at 14,993.04, up 73.86 points. It touched the day's high of 15,029.53 and a low of 14,592.11 points.
Similarly, the S&P CNX Nifty on the NSE gained 38.60 points at 4,359.30, after touching a high of 4,368.60 and a low of 4,226.35 points.
Maximum support to the market came in from metal sector with a gain of 455.50 points at 11,203.77, followed by capital goods index by 129.49 points at 13,246.71. PSU index rose by 105.10 points at 6,929.88, oil and gas index by 97.34 points at 7,936.51, consumer durable index by 36.69 points at 4,232.58 and auto index by 35.38 points at 4,711.69
Subprime problems spread
The subprime mortgage crisis is spreading to a somewhat unexpected place: homes costing more than $500,000.
As lending has rapidly gotten more restrictive for borrowers taking out large loans, sales of expensive homes have fallen sharply around the country during what should be one of the busiest seasons for buyers and sellers, mortgage bankers and real estate agents say.
To some degree the change is due to difficulty getting financing, as borrowers are finding fewer lenders willing or able to fund "jumbo" mortgages, loans for amounts greater than $417,000. Such loans are too big to be guaranteed by government-sponsored housing finance agencies Fannie Mae, Freddie Mac or Ginnie Mae.
Given the troubles in the subprime sector, investor appetite for all types of mortgage loans not guaranteed by housing finance agencies has nose-dived.
Banks until recently were able to offload the risk of many jumbo mortgages by selling the loans to investors. But now, as investors burned by the subprime debacle have become extremely picky about what they will buy, banks are having to keep more of these loans on their own books and as a result are charging higher rates.
Some lenders -- such as Countrywide Financial Corp. -- have made a point of saying they're now most focused on making loans that can be guaranteed by Fannie and Freddie.
Other lenders have simply tightened up their lending standards, for example by no longer making jumbo loans to lenders who can't fully document their income, even if they make large down payments and have stellar credit histories.
The banks that are still making jumbo loans are charging substantially higher rates to compensate for the lack of investor demand. Borrowers who could have gotten rates as low as 6.5 percent in June are now having to pay as much as 9 percent.
But aside from the financial impact of higher rates, in certain high-priced real estate markets, the effect of the suddenly tighter lending environment is more psychological, mortgage bankers and real estate agents say, as buyers and sellers alike don't want to plunge into an uncertain future.
"Showings are down, contracts written are down, and sellers are just as backed away as buyers are," said Lou Barnes, a partner in mortgage bank and brokerage Boulder West Financial Services in Boulder, Colo. The company arranges for financing on many higher-priced condominiums and houses in the state.
"I think the psychological damage is worse than the financial damage" which is already bad enough, he said. Even for buyers who have plenty of cash or can easily afford higher mortgage rates, the sudden change in the financing environment reduces "the ardor to buy a house unless you have to," he adds.
With numerous buyers and sellers sidelined, the higher cost of big mortgages is bound to put downward pressure on home prices should the lending environment stay tight for a long period of time, said Ellen Bitton, president of Park Avenue Mortgage, a mortgage bank and brokerage that does business in several states, including New York, Florida and Utah.
In New York, the most pronounced effect so far has been at the very top end of the market, for properties priced $25 million and above, said Dolly Lenz, vice chairman with Prudential Douglas Elliman.
"Every single person I have at the highest end is on hold. They're going to wait and see what happens," she said. "It has nothing to do with them being able to afford" properties or not, Lenz added. "It's a confidence thing. They somehow feel poorer, whether they are or not."
In California, where the median home price is well above $500,000, jumbo mortgages are as much as 44 percent of all mortgages issued in certain metro areas, according to data from First American LoanPerformance.
In and around San Francisco, where the median home price is about $1.1 million, the tougher financing environment has created a "hesitancy" and has led to some canceled escrows for buyers around the $1 million range, said Rick Turley, president of the San Francisco and Peninsula Region for Coldwell Banker Residential Brokerage
Via AP
Trading Calls
Sell Everest Kanto with a stop loss Rs 225 for target of Rs 180
Sell Bombay Rayon Fashion with stop loss of Rs 226 for target of Rs 165
Infosys to lower dependence on US deals
Indian software services exporter Infosys Technologies Ltd is lowering its dependence on US customers through faster growth in other markets, but is not yet seeing a slowdown in US deals, its chief executive said on Wednesday.
S Gopalakrishnan also told reporters that while the business environment is more positive in Europe than the United States, US clients were saying they would increase their offshoring budgets if the US economy slowed down. And India's second-largest software services exporter could raise billing rates by 3 to 4 per cent for new contracts and 2 to 3 per cent for existing contracts, he said.
"From a geography perspective, Europe seems to be positive, Australia is also positive," Gopalakrishnan said. This was was partly because Infosys was investing in those markets and also because these regions were catching up with the United States in outsourcing work.
"They have suddenly woken up to the fact they need to become more aggressive in leveraging this globalisation phenomena." Gopalakrishnan said Nasdaq-listed Infosys would like to see 50 percent of its revenues coming from the United States, 30 per cent from Europe and 20 per cent from the rest of the world, although this was not a time-bound target. "We are close to that, but not there yet. There are no target dates," he said.
About 60 per cent of the company's revenues come from the United States, while Europe's contribution is 26 per cent and growing rapidly. Gopalakrishnan said Infosys had not seen any slowdown in US deals for now. The troubles in the US subprime market have raised concerns that Indian outsourcing firms could lose customers and revenues.
"We're not seeing any slowdown in terms of deals from the US yet, but we have to wait and see," he said. Infosys beat forecasts with a 35 percent jump in June quarter profit, but said at the time a rising rupee was squeezing margins. Operating margins in the June quarter were 24.9 per cent, down from 27.8 per cent in the March quarter.
At 0840 GMT, Infosys shares were down 1.5 per cent at Rs 1,854.80 in a Mumbai market that was up 0.2 per cent. Shares of Infosys, whose clients include ABN AMRO, Goldman Sachs and Airbus have fallen more than 17 per cent so far this year, underperforming the sector index which has declined more than 14 per cent.
Via ET
FII: + Rs 366 cr; MF + Rs 46 cr
FII Gross purchases Rs 2562 Cr, Gross sales Rs 2196 Cr, Net Buyers Rs 366 Cr.
MF Gross Purchases Rs 481 Cr, Gross Sales Rs 435 Cr, Net Buyers Rs 46 Cr
Buying activity in such a choppy environment by the investors can be taken as a good sign. Especially after the big withdrawals witnessed in some previous trading sessions.
Post Market Commentary
Phe market finally ended the day on a positive note after it opens in a deep negative territory. All the BSE indices ended in green while the IT and Health Care indices ended in red. Finally, BSE Sensex closed at 14,993.04 with a gain of 73.85 points. The NSE Nifty advanced by 38.60 points to close at 4,359.30.
Overall, the market breadth was positive as 1530 stocks were closed in green whereas 1094 were ended up in red zone while 69 stocks remained unchanged in BSE. BSE Mid cap and BSE Small cap indices grew by 40.75 points at 6,450.39 and by 65.78 points to 7,874.22 respectively.
BSE Metal index closed 455.50 points up at 11,203.77 as Tata Steel (8.99%), SAIL (5.15%), Sterlite Industries (2.70%) and Hindalco (2.12%) ended higher.
BSE Capital goods index increased by 129.49 points at 13,246.71 as BHEL (2.45%) and L&T (1.53%) are ended in green while Seimens (1.32%) and ABB (0.15%) are ended in red.
BSE oil & gas index closed at 7,936.51 higher by 97.34 points as GAIL (4.65%), ONGC (3.05%), BPCL (2.99%), HPCL (2.86%) and IPCL (1.44%) closed in green.
BSE Auto Index improved by 35.38 points at 4,711.69 as Tata Motors (1.80%), Bajaj Auto (1.03%), Hero Honda (1.08%) and Maruti (0.17%) ended higher whereas M&M (0.14%) ended lower.
BSE bank index grew 16.57 points at 7,652.78 as AXIS Bank (2.42%), SBI (1.69%) and HDFC Bank (0.40%) are ended in positive while PNB (1.32%), ICICI Bank (0.61%) and IDBI Bank (0.38%) ended in negative.
BSE FMCG index closed at 1,936.32 up by 5.39 points as Dabur (1.75%) and ITC (0.78%) are ended in positive while HUL (0.10%) is ended in negative.
BSE IT index closed 54.36 points down at 4,504.40 as Infosys (2.55%), Satyam (0.98%) and HCL Tech. (0.34%) are ended in red while Wipro (0.59%) and TCS (0.354%) are ended in green.
BSE Health Care Index closed at 3,486.31 lower by 7.12 points as GSK (1.62%), Sun Pharma (0.88%), Dr. Reddy (0.60%) and Cipla (0.56%) ended in red where as Ranbaxy (1.44%) closed in green.
Sensex ends buoyant shrugging off weak global trend
Today the market saw a smart rally despite weakness in the global markets on worries about the health of the US economy. Despite slipping over 300 points in early trades the Sensex witnessed a relief rally led by across-the-board buying. The Sensex recovered quickly from its lows and remained upbeat through the session as value buying emerged at lower levels. The Sensex received major support from metal, energy and capital goods stocks. The market gathered steam towards the close and the Sensex crossed the psychological mark of 15,000 and touched the day's high of 15,030 before closing at 14,993, up 74 points. The Nifty, too, bounced back sharply and advanced 39 points to close at 4,359.
The breadth of the market was positive, with the gainers outpacing the losers in the ratio of 1.40:1. Of the 2,693 stocks traded on the BSE, 1,530 stocks advanced, 1,094 stocks declined and 69 stocks ended unchanged. Most of the sectoral indices closed with significant gains. The BSE Metal index was the major gainer and soared 4.24% followed by the BSE PSU index (up 1.54%) and the BSE Oil & Gas index (up 1.24%) etc. However, the BSE IT Index slipped 1.19% while, the BSE Teck Index and the BSE HC Index closed with the marginal losses.
Attracting strong buying support Tata Steel surged by 8.99% at Rs660, ONGC shot up by 3.05% at Rs834, BHEL jumped by 2.45% at Rs1,851, Hindalco advanced by 2.12% at Rs157, Reliance Energy scaled up by 2.04% at Rs782, Tata Motors zoomed 1.80% at Rs675, ACC added 1.69% at Rs1,044, SBI vaulted by 1.69% at Rs1,575, Grasim firmed up by 1.55% at Rs2910 and L&T climbed 1.53% at Rs2,588. Among the laggards, Infosys slipped 2.55% at Rs1,834, NTPC shed 1.29% at Rs165, HDFC declined by 1.19% at Rs1,957, while Satyam Computer, ICICI Bank, Dr Reddy's Lab, Cipla and Ambuja Cement fell marginally.
Metal stocks witnessed sustained buying support. SAIL soared 5.15% at Rs161, Shree Precoated added 3.90% at Rs305, Sesa Goa scaled up by 2.86% at Rs1,927 and Sterlite Industries gained 2.70% at Rs615.
Over 3.63 crore Ispat Industries shares changed hands on the BSE followed by Tata Teleservices (3.25 crore shares), Nagarjuna Fertilisers (1.47 crore shares), UCO Bank (87.75 lakh shares) and IFCI (85.45 lakh shares).
Tata Steel was the most actively traded counter on the BSE and registered a turnover of Rs219 crore followed by Reliance Industries (Rs175 crore), Everonn Systems (Rs167 crore), ICICI Bank (Rs133 crore) and Axis Bank (Rs131 crore).
Sensex settles a tad below 15,000
The market staged solid rebound from day’s low touched in early trade, on value buying coupled with short covering in derivatives market. With today's gains, the market have now posted gains for fourth conseutive session.
The market had tumbled in early trade today following drop in US stocks overnight driven by credit concerns, US housing data and doubts about the sustainability of global economic growth. A recovery in European markets from an early slide, aided rebound on the domestic bourses.
The BSE 30-share Sensex advanced 73.85 points or 0.50% at 14,993.04. It had opened lower at 14,651.49 and slipped further to hit a low of 14,592.11. At the day's low of 14,592.11, Sensex had declined 327.08 points for the day.
Sensex rebounded sharply from lower levels to hit a high of 15,029.53 at 14:58 IST. At 15,029.53, Sensex had gained 110.34 points for the day. Sensex oscillated 437.42 points between the high and low.
From the recent low of 13,989.11 on 21 August 2007, the Sensex has recovered 1004 points to current 14,993.04.
The S&P CNX Nifty rose 38.60 points or 0.89% at 4,359.30. The Nifty August 2007 futures settled at 4363, a premium of 3.70 points as compared to spot closing.
The market breadth was strong as buying resumed for small-cap and mid-cap stocks. On BSE, with 1568 shares advanced as compared to 1102 that declined, while 66 remained unchanged. This is in contrast to 943 shares declining and 378 advancing, in opening session.
The BSE Mid-Cap index was up 0.64% to 6,450.39, while the BSE Small-Cap index rose 0.84% to 7,874.22. Both these indices, outperformed the Sensex. They recovered from their low of 6,321.33 and 7,730.18 respectively
The total turnover on BSE amounted to Rs 4797 crore as against Rs 4,206.97 crore on Tuesday, 28 August 2007. The NSE’s F&O turnover was Rs 76,510.22 crore as compared to Rs 57340.78 crore on Tuesday, 28 August 2007.
Volatility is expected to remain high in the tomorrow derivatives contracts for August 2007 series expire on Thursday, 30 August 2007.
Among the 30-member Sensex pack, 19 advanced while the rest slipped. In the opening session, all the 30-members of Sensex pack were in red.
India’s largest private sector steel maker, Tata Steel galloped 9.33% to Rs 661.90 on high volumes 34.33 lakh shares. It was the top gainer from Sensex pack. The stock advanced from its low of Rs 591, hit in early trade.
Tata Steel recorded a consolidated net turnover of Rs 31,155 crore for Q1 June 2007, an increase of 442% over the same period last year, on the back of Corus acquisition. Its consolidated operating profit surged 186% to Rs 4,904 crore. The results also include an extraordinary item of Rs 4,121 crore primarily representing actuarial gains due to increase in yield rates on bonds held by various pension funds of Corus.
The BSE Metal Index surged 4.24% to 11,203.77, and was the top gainer among the sectoral indices on BSE. Sterlite Industries (up 3.30% to Rs 619), Jindal Steel & power (up 1.97% to Rs 3770.05), Sesa Goa (up 2.61% to Rs 1922), and Hindustan Zinc (up 0.56% to Rs 700), advanced.
Oil & Natural Gas Corporation, India’s largest oil explorer in terms of revenue, soared 2.56% to Rs 830, on reports that oil ministry has sought scrapping of service tax on exploration activities due to spike in global rates for hiring rigs and other services.
State Bank of India (SBI), the country’s largest bank in terms of net profit advanced 2.21% to Rs 1583, after slipping to a low of Rs 1510.55. A block deal was executed on the counter in the FII segment on BSE on Tuesday, 28 August 2007 at Rs 1,867.95, a 20.61% premium over ruling market price.
India’s biggest power equipment maker in terms revenue, Bhel rose 2.53% to Rs 1853. Recently it won contracts worth over Rs 6,500 crore for setting up two power projects of 500 MW each at Koderma Thermal Power Station in Jharkand and Durgapur Steel Thermal Power Station in West Bengal on a turnkey basis.
Other gainers from the Sensex pack were Hindalco Industries (up 2.12% to Rs 156.55), Reliance Energy (up 2.28% to Rs 784), and ACC (up 1.69% to Rs 1043.90).
India’s top truck maker Tata Motors gained 1.80% to Rs 675 on high volumes of 14.04 lakh shares. A block deal of 5 lakh shares was struck on the counter on BSE at Rs 662.90 per share at 13:28 IST. Earlier, a block deal of 5 lakh shares was struck on the counter on BSE at Rs 667.50 per share at 10:38 IST
India’s second largest software services exporter Infosys Technologies lost 2.86% to Rs 1828.15 on 2.15 lakh shares. It was the top loser from Sensex pack. It slipped sharply from day’s high of Rs 1866.85. As per reports, Infosys BPO has lost a prime client Green-Point Mortgage. Green Point Mortgage, a mortgage arm of Capital One (a financial services company) declared its bankruptcy on 20 August 2007 in the US.
The BSE IT Index lost 1.19% at 4,504.40, and was the top loser among the sectoral indices on BSE. Among other IT pivotals, Satyam Computers declined down 1.30% to Rs 443.90. However Wipro (up 0.76% to Rs 471), and TCS (up 0.66% to Rs 1035) gained.
NTPC (down 1.46% to Rs 164.85), and HDFC (down 1.10% to Rs 1958.90), were the other losers from Sensex pack.
India’s largest private sector entity by market capitalistaion and oil refiner Reliance Industries recovered from early low of Rs 1848.25, to hit a high of Rs 1900. It ended 0.85% higher at Rs 1896 on 9.32 lakh shares. As per reports, the stalemate over the pricing of gas from its KG basin may come to an end soon. Reports say that pricing formula put forward by RIL is likely to be broadly approved by the empowered group of ministers (EGoM) within the next couple of days.
Among side counters, Lakshmi Mills (up 20% to Rs 1607.15), Ispat Industries (up 17.83% to Rs 18.37), Triveni Engineering (up 16.07% to Rs 73.30), Kesar Enterprises (up 15.51% to Rs 60.70), and Uttam Menon Pistons (up 14.40% to Rs 82.60), surged
Ankit Metals (down 7.18% to Rs 48.50), RT exports (down 7% to Rs 26), Gitanjali Gems (down 4.70% to Rs 269.75), Nucleus Software Exports (down 4.31% to Rs 343.90), and Indiabulls Financial Services (down 4% to Rs 488.10), declined.
Sugar shares surged on reports that a group of ministers had recommended mandatory blending of 10% ethanol with petrol to deal with the massive oversupply of sugar. Upper Ganges Sugar & Industries (up 13.80% to Rs 72.55), Oudh Sugar Mills (up 10% to Rs 51.45), Balrampur Chini Mills (up 9.85% to Rs 60.80), Shree Renuka Sugars (up 10.31% to Rs 537.75), Dhampur Sugar Mills (up 7.71% to Rs 52.40) and Bajaj Hindustan (up 6.89% to Rs 136.50) surged.
Ashok Leyland was up 4.15% to Rs 37.65 after it said it would jointly make light commercial vehicles in India along with Nissan Motor Co, Japan. Ashok Leyland will own a majority stake in the vehicle manufacturing venture.
Escorts soared 5.75% to Rs 86.50, despite National Stock Exchange banning fresh positions in the company’s derivatives contracts as the open interest crossed 95% of the position limit.
Abbott India jumped 8.31% to Rs 570 after it announced that the board will consider a proposal for buyback of shares in a meeting to be held on 5 September 2007. The buyback price to be determined by the board will not exceed Rs 650 per equity share.
DLF gained 1.57% to Rs 596. As per reports, it plans to ramp up the current annual delivery volume of about 20 million square feet (sq ft) to an annual delivery volume of 50 million sq ft in its office, retail, and residential businesses, over the next three to five years.
Esab India was up 0.65% to Rs 494 after its parent revised its open offer. It will now acquire 58.01 lakh shares (37.7%) from 30.78 lakh shares (20%) from the earlier open offer. Its also raised the price to Rs 505 per share from Rs 406 per share earlier.
Lanco Infratech spurted 5.42% to Rs 299.40. Earlier on 21 August 2007, Lanco Infratech secured an Rs 82.39 crore order from airports authority of India to construct a new terminal building at Varanasi Air Port.
Steel Authority of India (SAIL) jumped 5.15% to Rs 161.20. As per recent reports, the company has earmarked Rs 2,500 crore to raise its iron ore capacity to 29.5 million tonne (mt) by 2011-12 from 17 mt currently. This is in line with its ambitious plans to boost hot metal capacity to 23 mt.
Pritish Nandy Communications jumped 5% to Rs 83.85 on reports it had bagged $100 million franchisee to remake blockbuster hindi movie 'Sholay' from Sholay Media and Entertainment. PNC will not only remake Sholay, but also do an animated version of the original film, and then a prequel and a sequel.
India Foils surged 5% to Rs 10.60 on reports that Ess Dee Aluminium was in the final stages of negotiations to acquire it. Ess Dee would use the Rs 81.08 crore that it raised by selling a 5% stake to Morgan Stanley for the acquisition.
Firstsource Solutions vaulted 9.62% to Rs 79.20 after it acquired US based MedAssist Holding Inc, a leading provider of revenue cycle management in the healthcare industry in the US. The acquisition is valued at $330 million. MedAssist had revenue of $99 million for year ended December 2006
Elder Pharmaceuticals rose 0.35% to Rs 386.10 on reports it had acquired 51% stake in Bulgaria's Biomeda group for euro 5 million in an all-cash deal. Biomeda Group is a leading pharma group in Bulgaria with a turnover of about 10-12 million euros.
Nagarjuna Construction Company was up 0.86% to Rs 199.25, after hitting a high of Rs 205.95. The stock surged on reports that Blackstone Group, the global private equity firm will buy 14.5% stake in Hyderabad-based Nagarjuna Construction Company (NCCL) for $150 million (about Rs 615 crore).
Jet Airways gained 0.89% to Rs 756. As per reports, Jet would increase the fare of domestic tickets within a month in the domestic segment. The increase in the ticket prices would be in the range of Rs 200 to Rs 500 per seat, reports suggest.
Rei Agro surged 13.03% to Rs 307 after company’s board approved spinning off its retail business.
Essar Oil was up 2.35% to Rs 52.20 on reports that the firm may delist without an open offer.
The Communist Party of India (CPI) on Tuesday, 28 August 2007, said it had no intention of destabilising the government and force an immediate election on the contentious Indo-US nuclear deal issue. The party, however, wanted its concerns on the deal to be addressed by the ruling coalition by a mechanism, like a committee at the political level, to clarify all doubts on 123 agreement and allied matters like the Hyde Act.
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.
Most of the European markets were trading higher today, 29 August 2007. United Kingdom's FTSE 100 rose 0.31% to 6,121.10 and France’s CAC 40 gained 0.19% to 5,484.73. Germany’s DAX was down 0.18% to 7,416.91
In Asia, Hang Seng (down 1.47% at 23,020.60), Japan's Nikkei (down 1.69% at 16,012.83), Taiwan Weighted (down 0.97% at 8,643.22), Singapore's Straits Times (down 0.25% at 3,334.36), Shanghai Composite (down 1.64% to 5,109.27), and South Korea's Seoul Composite (down 0.17% at 1,826.19), all slipped.
US shares slumped yesterday, 28 August 2007 as investors grew more uneasy about the economy and whether the Federal Reserve will take the steps needed to prevent credit market problems from spreading further. The Dow Jones Industrial Average fell 280.28 points, or 2.10%, to 13,041.85. Broader stock indicators were also lower. The Standard & Poor's 500 index was down 34.43 points, or 2.35%, at 1,432.36, and the Nasdaq Composite index shed 60.61 points, or 2.37%, to 2,500.64.
Crude oil prices were steady on Wednesday, 29 August 2007 as mounting concerns over the health of the US economy overshadowed worries that US refinery outages could drag down fuel inventories in the world's top consumer. US crude eased 7 cents to $71.66 a barrel while London Brent crude was unchanged at $70.55
FCI OEN Connectors Limited
It is hereby notified that FCI OEN Connectors Limited (OENCONNECT) will be suspended from trading w.e.f September 10, 2007 (i.e. w.e.f. closing hours of trading on September 7, 2007). Further, the admission to dealings in the following security shall be withdrawn (delisted) w.e.f. September 17, 2007.
Grey Market - Indowind, Motilal Oswal, Power Grid
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 Discount
Puravankara Projects 400 Discount
The Primary Market is a little wobbly, We recommend that you apply in Good issues only!
Market to see correction on weak global cues
Local market is expected to see correction on weak global cues. The BSE 30-share Sensex gained 76.81 points or 0.52% at 14,919.19, on Tuesday, 28 August 2007. 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, Tuesday, 28 August 2007.
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.
Asian markets fell sharply today, 29 August 2007 following a sell-off on Wall Street overnight.
Hang Seng (down 2.29% at 22,829.82), Japan's Nikkei (down 2.59% at 15,864.87), Taiwan Weighted (down 1.81% at 8,569.67), Singapore's Straits Times (down 2.57% at 3,257.23) and South Korea's Seoul Composite (down 1.81% at 1,796.15), all slipped.
US shares slumped yesterday, 28 August 2007 as investors grew more uneasy about the economy and whether the Federal Reserve will take the steps needed to prevent credit market problems from spreading further. The Dow Jones Industrial Average fell 280.28 points, or 2.10%, to 13,041.85. Broader stock indicators were also lower. The Standard & Poor's 500 index was down 34.43 points, or 2.35%, at 1,432.36, and the Nasdaq Composite index shed 60.61 points, or 2.37%, to 2,500.64.
As per provisional data, foreign institutional investors (FIIs) purchased shares worth a net Rs 390.20 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 79.32 crore on Tuesday, 28 August 2007.
Crude oil prices were steady on Wednesday, 29 August 2007 as mounting concerns over the health of the US economy overshadowed worries that US refinery outages could drag down fuel inventories in the world's top consumer. US crude eased 7 cents to $71.66 a barrel while London Brent crude was unchanged at $70.55
Asian markets open negative
Asian markets opened negative on Wednesday (August 29) after confidence of U.S consumers fell the most in two years. Investors further panicked on concerns that the world`s largest economy (U.S) may be heading for a slump which would subsequently have adverse affects on the global markets.
Toyota Motor and Samsung Electronics fell after sales in U.S markets dropped on low consumer confidence. Macquarie Bank and Mitsubishi UFJ Financial declined on speculation that the tight credit markets caused by losses on U.S. home loans, will hurt its earnings. Canon dropped after the Yen strengthened against the Dollar.
The Japanese benchmark index Nikkei, declined 422.62 points, or 2.59%, to trade at 15,864.87.
Hong Kong`s index Hang Seng declined 499.95 points, or 2.14%, to trade at 22,863.81.
China`s Shanghai Composite declined 25.31 points, or 0.49%, to trade at 5,169.38.
Taiwan`s index Taiex declined 164.79 points, or 1.89%, to trade at 8,562.76.
South Korea`s KOSPI declined 24.76 points, or 1.35 %, to trade at 1,804.55.
Singapore`s Straits Times declined 74.41 points, or 2.23%, to trade at 3,268.59. ( 8.10 a.m, IST)
Pre Open Market Commentary
Indian market is likely to have a negative opening on the back of negative global cues. On Tuesday, the Indian markets ended on a positive note, as BSE Sensex closed higher by 76.81 points at 14,919.19 while Nifty grew by 18.1 points to close at 4,320.70. We expect the market to trade lower during the trading session.
Tuesday, the US markets closed in deep red The Dow Jones Industrial Average (DJIA) slipped by 280.28 points to close at 13,041.85. The S&P 500 (SPX) index dropped by 34.43 points to close at 1,432.36 and the NASDAQ Composite (RIXF) decreased by 60.61 points to close at 2,500.64.
Indian ADRs ended in negative territory. In technology sector, Wipro declined by (3.57%) along with Satyam by (3.30%), Infosys by (3.24%) and Patni computers by (0.75%). In banking sector, ICICI bank and HDFC bank slipped by (4.73%) and (3.15%) respectively. VSNL and MTNL closed lower by (4.45%) and (3.75%) respectively. Tata Motors slipped by (2.51%).
The major stock markets in Asia are trading weak. Japan''s Nikkei trading lower by 422.62 points at 15,864.87.Hang Seng fell by 533.94 points to trade at 22,829.82. Taiwan weighted decreased by 157.88 points to trade at 8,569.67. Seoul Composite slipped by 33.16 points to trade at 1,796.15.
Today, Nifty has support at 4,150 and resistance at 4,321 and BSE Sensex has support at 14,270 and resistance at 14,920.
Morning Call - Aug 29 2007
Market Grape Wine :
In House :
Nifty at a supp of 4250 and 4215 levels with resistance at 4349 and 4395 levels .
Gap down opening .
Sell : Intraday : SBIN below 1550 target 1528 s/l of 1560
Buy : Intraday : Indiacement : above 234 target 248 s/l of 229
Sell : Intraday : in F&O : VSNL below 371 target 360
Sell : Intraday : GESCO below 488 target 475
Out House :
Markets at a support of 14523 & 14654 levels with resistance at 14994 & 15051 levels .
Markets to remain choppy and volatile maintain strict stop loss .
Buy : JpAsso & Centextile at dips
Buy : REL at dips
Buy : Titan at dips
Buy : TTML at dips
Buy : JPHydro & GKW at dips
Buy : IndiaInfoline at dips
Buy : Kotak & Union Bank at dips
Dark Horse : Jpasso , TTML , Kotak , Titan , IOlBroad , SKumar , Aban , REL & Centextile
Weak global indices indicate negative open
Overnight fall in US and European indices coupled with steep fall in Asian markets in morning trades may weigh on the local indices in early trades and thereafter could exhibit volatility during intra-day trades. However, the prevailing north-bound journey and strong fund inflows in the past few sessions may add to the market advantage and help the sentiment turn positive. Among the domestic indices, the Nifty could test 4280 on down side, while on the upside it could edge higher to 4350. The Sensex has a likely support at 14570 and may face resistance at 15040.
US indices tumbled on Tuesday after the minutes from the Federal Reserve policy meeting didn't assure any measure to tackle the problem of weak housing, consumer confidence reports and ongoing credit and mortgage market worries. While the Dow Jones dropped by 280 points to close at 13042, the Nasdaq ended 61 points lower at 2501.
Crude oil prices slipped marginally. The Nymex light crude oil for October series was down by 24 cents to close at $71.73. In the commodity space, the Comex gold for December series declined $2.70 to settle at $676.20 a troy ounce.
Mindtree Consulting
MindTree Consulting Ltd, a mid-size Indian software services company, aims to broaden its portfolio of services by setting up new practices to serve customers in manufacturing, banking and financial services industries, as also enter high-end back-office services as the firm seeks to grow faster.
Bangalore-based MindTree, which counts Pfizer Inc. and Sony Corp. among its key customers, has forecast revenues of up to $180 million (Rs739 crore) for the year to March 2008, a growth of around 36%, driven primarily by these new initiatives. In a bid to fuel its growth for the next five years, “MindTree has established these new practices by hiring veterans from companies such as Tata Consultancy Services and Wipro,” said Subroto Bagchi, chief operating officer of MindTree who has recently relocated to the US to help the firm win and manage larger customer deals.
While MindTree will stay away from establishing any presence in providing back-office human resource or accounting services to its customers, “the hunt is on for somebody to establish and spearhead a knowledge process outsourcing business involving high-end analytics,” Bagchi added. The company will also be open to acquiring a niche outfit specializing in analytics, an emerging business focused on statistical analysis of large volumes of data to throw up trends that companies can use to, for instance, increase sales or reduce costs.
In the past four months, MindTree has hired Ashok Hegde, who headed the securities practice at Wipro, “to build capital market services right from scratch, apart from picking up a TCS veteran who will build the company’s business for manufacturing customers,” said Bagchi.
The company plans to establish centres in Europe and China for serving customers in those and neighbouring markets. “Clients want us to de-risk and are valuing proximity,” Bagchi said.
However, analysts tracking the company and industry said it might not be that easy for MindTree to establish new practices. “...the tier I players are entrenched, and you cannot focus on generic skills even within a vertical,” said an equity analyst with a Mumbai-based brokerage firm who did not wish to be quoted. “If they are talking about capital market, they should further specialize in areas such as derivatives to differentiate.”
Shares of MindTree were listed on the Bombay Stock Exchange in March. They closed at Rs548, down 0.38% on the Bombay Stock Exchange on a day when the exchange’s benchmark Sensex index rose 0.52%.
Stock Ideas
Gap down opening
Average your investment picks at lower levels. There is no need to panic and liquidate your positions during a fall. Do not leverage at all. Only buy what you can afford after keeping aside a little cash for better possible opportunities. F&O expiry could cause short-covering later. So don't get caught on the wrong side.
Confidence crumbles...hold on though
All you need in this life is ignorance and confidence; then success is sure
Despite confidence in the India story investors can't afford to ignore the global cues. Consumer sentiment recorded its sharpest fall in nearly two years during August while home prices dropped in the second quarter. The Conference Board's index of confidence dropped nearly 7 points to 105.0, its lowest reading in a year. The worst fears regarding the housing crisis appear to be coming true.
Add to the woes, the Federal Reserve commentary failed to please the market reeling in bouts of negative news. The Dow Jones and Nasdaq fell over 2% each. Asian markets are all down. In fact, the minutes from the last Fed meeting had nothing new. However, fears are the Fed did not appear to be closer to cutting rates added to the sell off. Fed chairman Ben Bernanke's comments on Friday at the annual economic symposium will be the next market mover after which Wall Street takes an extended weekend.
Indian ADRs fell. ICICI Bank and VSNL dropped over 4.5%. Genpact, Sterlite, Infosys, Satyam, Wipro, HDFC Bank, MTNL, Tata Motors and Dr.Reddy's slipped 2-4% each.
Standard & Poor's report showed that home prices fell 3.2 percent in the second quarter versus a year ago. U.S. light crude oil for October delivery fell 27 cents to settle at $71.70 a barrel on the New York Mercantile Exchange.
We've rattled all we could about the US markets because the opening hinges on just these factors today. Expect a gap down open at start. Hopefully, buying will set in at lower levels. Bid for your favorite stocks at lower prices. If it comes your way fine. Else wait for another day.
Ess Dee Aluminium may buy India Foils Ltd. from Vedanta Resources Plc for as much as Rs3bn
Buzz is that UTV Software may take stake in Radaan Media. No confirmation on the same. However, what Radaan did confirm in reports is it is considering allotment of shares to private equity funds, for which there are many offers.
Blackstone Group will buy 14.5% stake in Nagarjuna Construction Company for $150mn.
Watch out for sugar stocks as UP government has requested Centre to grant Rs.20bn interest free loan for state sugar companies.
Essar Group said on Tuesday that it would be setting up a 1,200-MW plant at Jamnagar in Gujarat at an estimated cost of Rs48bn.
Tata Steel and Corus Group Plc's consolidated operations for the June quarter almost tripled. Operating profit climbed to Rs49.04 billion. Revenue surged more than five-fold to Rs311.55bn .
Sical Logistics is to enter into freight forwarding business in order to offer end- to-end logistics service.
Mauritius-based fund Helix Investments has put in $12 million to buy nearly 30 per cent equity stake in MT Educare Pvt Ltd, a holding company of Mumbai-based Mahesh Tutorials.
RIL gas pricing formula is likely to pass muster as members of the EGoM are believed to have broadly agreed to the RIL formula
Reliance Communications have short listed three Japanese submarine cable construction firms for building its $1.5bn next generation network.
The defence ministry floated its biggest ever defence tender for the purchase of 126 multi-role combat aircraft (MRCA), the bill for which could well run up to Rs420bn.
Two years after setting up an ambitious 50:50 joint venture to market farm produce, the Bharti-Rothschild combine is likely to rope in a third partner for FieldFresh Foods (P) Ltd.
Bombay Dyeing said it has got shareholders’ approval to raise about Rs3bn through issue of warrants
Paperboards and Specialty Papers Division of ITC has decided to invest Rs350nmby the year end at its Bolaram facility to increase capacity.
Volatility was back as benchmark Sensex gyrated nearly 200 points and NS Nifty around 40 points. Key indices struggled for direction as mixed cues from the International markets and alternate bout of buying and selling kept the bourses volatile. Volumes however, continued to rise; turnover in NSE cash segment rose 3.3% and in F&O segment rose 8.7%. Finally, the BSE 30-share Sensex closed at 14,919 surging 76 points. NSE Nifty added 18 points to close at 4320.
Dr. Reddy's Lab gained by 1% to Rs636 on reports that it may buy US-based Bradley Pharmaceuticals Inc. for as much as $300mn. The scrip touched an intra-day high of Rs640 and a low of Rs631 and recorded volumes of over 2,00,000 shares on NSE.
Tata Power slipped 1.3% to Rs680. The corporate credit rating of Tata Power and its $300 million senior unsecured bonds have been lowered to BB- from BB+ on Friday by Standard and Poor’s Rating Services. The scrip touched an intra-day high of Rs701 and a low of Rs677 and recorded volumes of over 3,00,000 shares on NSE.
Reliance Energy gained 0.5% to Rs766. The company announced that its 4,000MW Raigad project may get delayed as the Bombay High Court put a stay on the construction activities. The scrip touched an intra-day high of Rs781 and a low of Rs751 and recorded volumes of over 18,00,000 shares on NSE.
TCS edged higher 0.2% to Rs1028. The company yesterday announced that they have signed pact for IT, Infrastructure services. The scrip touched an intra-day high of Rs1039 and a low of Rs1011 and recorded volumes of over 5,00,000 shares on NSE.
Exide Industries surged by over 7% to Rs60 after the company approved right issue to offer 1 share for every 15 held at Rs30 per share. The scrip touched an intra-day high of Rs60 and a low of Rs56 and recorded volumes of over 24,00,00,000 shares on NSE.
Gayatri Project surged by over 1.5% to Rs274 after the company announced that it has increased FII limit to 49%. The scrip touched an intra-day high of Rs281 and a low of Rs271 and recorded volumes of over 27,000 shares on NSE.
Shipping stocks ended higher ahead of the announcement of the news shipping policy. SCI advanced by 2% to Rs178, ABG Ship gained by 2.2% to Rs502, GE Shipping was up by 0.7% to Rs302.
Sugar stocks were in momentum led by fresh buying. Bajaj Hindusthan surged by 3% to Rs128, Renuka Sugar spurred by over 3% to Rs487 and Balrampur Chini advanced by 3.8% to Rs55.
FMCG stocks were back in action led by gains in the index heavyweights like ITC, scrip gained by 1.3% to Rs167, Mc Dowell gained by 2.2% to Rs1390, Hindustan Unilever added 1% to Rs202 and Tata Tea added 1.7% to Rs746.
Banking stocks also ended higher. HDFC Bank gained by 2.7% to Rs1150, OBC was up by 2% to Rs203, Canara Bank gained 1.8% to Rs238 and Union Bank added 1% to Rs133. However, ICICI Bank slipped by 2.2% to Rs862.
Auto stocks were on the receiving end led by fall in the index heavyweight Tata Motor slipped by 2% to Rs663, Hero Honda was down by 1.5% to Rs631 and TVS Motors edged lower by 1% to Rs60 and Maruti edged lower by 0.2% to Rs832.
Though, the market advanced further for a second day in a row, it is not clear if the turnaround has already taken place or will there be fresh massacre going forward. Going by the sudden and sharp correction, nobody wants to take any chance. However, one must add that the long-term outlook still remains upbeat due to the strong economic fundamentals. So, investors with long-term view should buy quality stocks around these levels. The bulls may take a breather, as F&O expiry is likely to keep market choppy. Investors are advised to remain alert at all the time and lock-in some gains after every rally as profit booking could set in the market.Fund Activity:
FIIs were net buyers of Rs3.9bn (provisional) in the cash segment on Friday and the local institutions sold worth Rs0.7bn. In the F&O segment, FIIs were net buyers at Rs22.4bn. On Monday, foreign funds bought worth Rs12bn from the cash segment. Mutual funds were net buyers to the tune of Rs3.4bn.
Major Bulk Deals:
ABN Amro bought Anku Dr Ph, Deutche International bought Asian Granito. Bhagwati Banquets was picked up by Lotus Global. Morgan Stanley bought and sold India Bulls Real Estate. Ipca Labs was sold by ICICI Prudential. KPR Mill was sold by Citigroup. Mastek was sold by Macquire Bank.
Lower Circuit:
IOL Broadband and Bellary Steel.
Upper Circuit: Kothari Products, Hindustan Motors, Jai Corp, ETC Network, XL Telecom, RMCL, Atlanta, Tourism Finance, IID Forgings, Shree Precoated, Swan Mills, Kalindi Rail, Era Construction, Bag Film, Raj Tele and BF Utilities
Delivery Delight (Rising Price & Rising Delivery):
Ashok Leyland, Assam Company, Gokaldas Exports, GHCL and Hotel Leela.
Abnormal Delivery:
Lupin, Satyam, Tata Motors, Alfa-Laval and Mangalam Cement.
Major News & Announcements:
Elder Pharma to acquire 51% stake in Biomedia
Gayatri Projects increases FII limit to 49%
Exide Industries board approves right issue, to offer 1 share for every 15 held at Rs30 per share
Essar Group has sought Sebi permission to delist Essar Oil without having to make an open offer.
As per commerce ministry, India would meet $160bn exports target for 2007-08.
Regional airlines will be allowed to fly abroad, subject to certain aviation norms and regulations.
Essar Group has earmarked Rs12bn for telecom retail expansion in order to increase number of stores from 250 at present to 2500
by 2010.
DLF has acquired 25 acre of land from Andhra Pradesh state government for Rs4.5bn which would be used for IT purposes.
Dr Reddy’s Laboratories will relocate majority of the manufacturing activities carried out by German subsidiary Betapharma to Hyderabad by 2007 year end.
Pantaloon Retail India is likely to raise Rs12.6bn through issue of shares and warrants to investors including Bennett, Coleman and
promoters.
CESC has received shareholders approval for raising over Rs20bn through term loans from various financial institutions.
Power Minister proposes a three-pronged strategy to achieve the target of adding 78,577mw of power generation by 2012.
Bureau of Indian Standards (BIS) certifies two Pakistan-based cement companies to import cement in India.
Heavy inflows by FIIs in equities
Net inflow of robust Rs 1,201.80 crore on 27 August 2007
Foreign institutional investors (FIIs) bought shares worth a net Rs 1,201.80 crore on Monday, 27 August 2007. They had bought shares worth Rs 414.50 crore on Friday, 24 August 2007.
FII inflow of Rs 1,201.80 crore on 27 August 2007 was a result of gross purchases of Rs 2,559.10 crore and gross sales of Rs 1,357.30 crore. The Sensex surged 417.51 points or 2.89% at 14,842.38 on that day.
FIIs sold shares worth Rs 7,279.50 crore in the month of August, till 27 August 2007. FII inflow in the month of July 2007, totaled Rs 23,872.40 crore. FIIs pumped in Rs 1,643 crore in the month of June 2007. FII inflow totaled Rs 3,959.70 crore in May 2007. The inflow was pegged at Rs 6,679.20 crore in April 2007.
FII inflow for the calendar year 2007 stands at Rs 35,524.70 crore, till 27 August 2007. FII inflow for the same period in year 2006 stood at Rs 16,640.20 crore.
There are a total of 1,077 FIIs registered with Securities & Exchange Board of India (Sebi) as of now.
Hind Motors zooms on Mitsubishi move
Hindustan Motors gained 20 per cent from its previous close of Rs 24.80 to settle at Rs 29.75 – its intraday high. The counter witnessed huge volumes of about 5.8 million shares.
The surge followed reports that the company plans of launching premium sports utility vehicles from Mitsubishi stable in the country, in around six months. The price range for these vehicles is expected to be Rs 15-25 lakh.
Lowering investment costs
| A simple idea that is well appreciated worldwide is the importance of fighting fees and expenses in fund management. Good returns in fund management are a possibility, but the fees and expenses paid are a certainty. The international evidence suggests that paying more for fund management generates reduced returns. A remarkable twist to this tale in India lies in the “distributors”, or agents, who sell fund management products. Fund managers have resorted to making very large payments to these agents, to the point where the profits of the agent sometimes exceed the profits of the financial firm. The chief executives of financial firms privately gripe about this state of affairs, but have not been willing to break with the existing system. As a consequence, customers of mutual funds, and particularly those of insurance companies, are getting a poor deal. All too often, customers of insurance companies are blindly placing money in schemes with the intention of saving taxes, and ending up fuelling the profits of the agent who is selling them the scheme. The non-transparency and high charges that are in place with most mutual funds, and particularly with insurance companies, fuel the discomfort of critics of modern finance, who see “professional fund management” as a way to channel the money of ordinary citizens to financial fat cats. |
| Exchange traded funds (ETFs) are a promising way out, because the customer is able to go to a stock broker to get invested, and stock broking is a transparent, competitive and efficient industry with very low charges. The lowest-cost fund management accessible to an individual in India is the ETF. Only one active management vehicle — Quantum Mutual Fund — has broken with the agent system, and has so far experienced limited success. |
| The Securities and Exchange Board of India (Sebi) has now proposed that customers be given a zero-cost alternative whereby they are able to use the Internet and get their money to the mutual fund while bypassing the agent. This is a sound initiative. The insurance regulator, by way of contrast, has offered no positive proposal for addressing the egregious practices of insurance companies. However, the essence of the problem lies not in tweaking the agent system but fundamentally re-shaping the fund management industry. |
| The New Pension System (NPS) represents an effort at using public policy in order to address the market failures of the fund management industry. In the NPS, the selection of fund managers is done on the basis of an auction where the sum total of fees and expenses is stated up front by the fund manager. This ensures that customers get low prices. Centralisation of record-keeping at the “Central Recordkeeping Agency” (CRA) and an unbundling of customer front-ending to Points of Presence (POPs) help to reduce dramatically the costs of bulk fund management. In a recent auction conducted by the Coal Miners Provident Fund, the winning bid was as low as one basis point of assets per annum. |
| Many details remain to be worked out — how the CRA will operate, what the charges of the CRA and the PFMs will be, how POPs will be incentivised in a way that avoids the flaws of mutual funds and insurance companies, and how every detail of operation will be structured so as to constantly put pressure in favour of obtaining low fees and expenses. The onus is upon the ministry of finance and the pension regulator to translate the promise of the NPS into reality. |
Offshore gains
| Investments in creating multimodal hubs and offshore focus could boost the hitherto anaemic numbers of Sical Logistics. |
| Sical Logistics is targeting the offshore business segment to improve its lacklustre performance and margins. |
| The reason for the focus on offshore are the 20 per cent gross margins which are higher than the single digit margins for the business as a whole which includes the bulk and container logistics segments. |
| In line with this goal and to expand into the global offshore logistics market, the company recently acquired a Chinese dredger for Rs 100 crore. |
| Maiden foray The acquisition of the cutter suction dredger is estimated to add Rs 40 crore to the topline annually. |
| The company is planning to acquire more cutter suction dredgers and anchor handling tugs in the next three years to provide dredging solutions. |
| Says Sical Logistics' director R Karthik Menon, “Dredging is a lucrative business and with the market seeing a boom this is a key area of growth for the company.” |
| Why companies such as Sical are keen on buying dredgers is apparent due to the returns that the business generates. On an average, a dredger costs upwards of Rs 50 crore with operating margins of 30 per cent. |
| After the introduction of tonnage tax, the margins at the net level have improved to 20 per cent. The large scale reconstruction of marine and port infrastructure and the reclamation projects in the Gulf, have pushed up the cost of dredging projects by 30 per cent. |
| To take advantage of the high prices the company's offshore strategy is to acquire recently built vessels and deploy them across a global customer base. |
| Due to the two year waiting period of dredgers and manufacturers’ order books at an optimum level, new dredgers are hard to come by. The strategy for Indian players be it Mercator or Sical is to buy recently built dredgers and lease it out outside the country or to the Dredging Corporation of India which has a lion’s share of the country’s dredging projects. |
| The entry into the dredging market combined with Sical's existing offshore activity in North Sea (platform stabilising vehicle for Peterson Oil) and the operations and maintenance services to the ONGC fleet at Bombay High is expected to contribute over 30 per cent of the company's FY2008 revenues. |
| In addition to its offshore impetus, the company is also restructuring its operations to better manage its infrastructure expansions. |
| Managing growth While the services business segments (offshore, bulk and container) have been the sources of revenue for Sical, the company is now looking at capital intensive ventures with the formation of Sical Infra Assets (SIAL). |
| This 100 per cent asset subsidiary is now running seven joint ventures and subsidiaries. |
| Of these only PSA Sical and Sical Distriparks which runs a container freight station in Ennore generate revenues of Rs 75 crore and Rs 48 crore respectively. The company was not able to give revenue projections for the projects under implementation. |
| The setting up of container terminals, logistics hubs and container train operations are part of a strategy to offer multimodal logistics solutions to customers within the country. The new company, believes Menon, will create leverage for Sical's traditional services businesses. |
| SIAL's listing in the near future will not only bring in funds needed to complete the projects but will also unlock value for shareholders. Funding for the projects will also come from internal accruals and proceeds of non-logistics businesses which Sical intends to sell during this fiscal. |
| Non-logistics operations The company has been focussing on its core logistics business and has hived off the cytozyme, palm oil, refractory and auto component business garnering Rs 91 crore in the process. |
| The company sold its automotive business this month (August) to TVS Lucas for Rs 15 crore. The remaining non-logistics businesses are in the process of being hived off and this is expected to be completed by early next year. |
| Says Menon, “We are in the process of demerging the non-logistics business of Sical and hiving them off to another entity, Sicagen.” The company will transfer trading, services and coffee plantation undertakings among other businesses to Sicagen India. |
| Valuations Lack of focus and diversifications in businesses varying from auto components to specialty chemicals to building materials has had a telling effect on its numbers. |
| While revenues have hovered around the Rs 1000 crore mark, losses in various businesses has dented net margins which have varied between one and five per cent. |
| With a focus on logistics and higher margin businesses such as offshore contributing a third of revenues, the net margins which are under 4 per cent in FY07 could see an improvement. The company has an ambitious target of quadrupling its turnover to Rs 4,000 crore by 2012. |
| This means that it has to grow at an annual rate of 32 per cent over the next five years. While the company is on a growth path with its acquisitions and mega expansion plans many of which will start operations in the next fiscal, a target of a billion dollars seems stiff. |
| Going by its projections, the company should register revenues of Rs 1706 crore for FY09. The current price of Rs 220 discounts the annualised FY08 earnings by 14 times. If earnings growth in FY08 is sustained in FY09, the stock will get a discounting of 10 times. |
| This compares well with FY09 multiples of its peers ---Container Corporation (16), Allcargo Global (15), Gateway Distriparks (11) and Balmer Lawrie (7). |
Analysts corner
| Bombay Rayon Fashions Reco price: Rs 210 CMP: Rs 206.15 Target price: Rs 325 Broking firm: Antique Stock Broking |
| Bombay Rayon Fashions Limited (BRFL), the biggest manufacturer of shirts in India has emerged as one of the fastest growing garment companies in the Indian textile industry. |
| The company is increasing its garments capacity by 2.25 times to 45 mn pieces per annum and its fabric capacity by 2.4 times to 120 mn meters p.a by Q3FY09. |
| Post expansion, the contribution of garments would increase to 70 per cent of the total revenues as against 40 per cent in FY07. |
| Further, the company's foray into the export markets (UK and USA) has been remarkable with exports rising from Rs 3.99 crore to Rs 213.4 crore in last three years. The stock trades at 7.7 times its estimated earnings for FY09. |
| Voltas Reco price: Rs 125 CMP: Rs 130.4 Target price: Rs 203 (September 2008) Broking firm: Prime Broking |
| Voltas Limited, the engineering arm of the Tata Group, has grown at a strong pace in the last four years between FY04-FY07, with revenue CAGR of 24 per cent and earnings CAGR of 60 per cent. |
| The company is expected to continue its strong growth trajectory driven by its Electro-mechanical products and services segment (EMPS) (contributing 56 per cent of FY07 revenues) and Engineering products and services segment (EPS) (contributing 18 per cent). |
| While the former is expected to benefit from the infrastructure boom in West Asia and India, the latter's high growth will be driven by substantial capital investments in sectors such as automobiles, engineering, steel and retail. |
| At Rs 130, the stock is valued at 22 times and 16.3 times its estimated earnings for FY08 and FY09 respectively. |
| Deccan Chronicle Reco price: Rs 217 CMP: Rs 225 Target price: Rs 330 Broking firm: Emkay Shares |
| Deccan Chronicle has highly automated printing facilities and operate with very less manpower, resulting in significant operating efficiencies and robust profitability. |
| The company has beaten its competitor THE HINDU in terms of circulation (over 300,000) in just 2 years from the launch of Chennai edition. Further it plans to unlock value from its wholly owned subsidiaries namely ODYSSEY (retailing subsidiary) and Sieger Solutions (engaged in the business of selling advertisement space in Deccan Chronicle and internet advertising). |
| The given target price does not factor in the value of subsidiaries, which leaves further headroom for an upside. The stock trades at 18.3 times and 13.6 times for FY08E and FY09E respectively. |
| Asian Paints Reco price: Rs 928 CMP: Rs 935 Target price: Rs 1200 Broking firm: Khandwala Securities |
| Asian Paints (APL) will be the prime beneficiary of the 13-15 per cent growth in paint industry and its revenues are expected to grow at 17 per cent, while earnings would grow at 22 per cent over the period of next three years. |
| Asian Paints, which has 26 per cent overall market share plans has doubled its capacity at Sriperumbudur plant to 50,000 KL per annum in order to strengthen its hold further. It is also adding a polymer plant at the same location. |
| APL’s international business which contributes 18 per cent of its revenues is expected to grow annually at 20 per cent over the next three years and is expected to be a major growth driver. |
| The stock trades at 26.7 times and 21.25 times respectively for FY08 and FY09 estimated earnings respectively. |
RBI concerned about financial holding companies
Reviews suitability of such conglomerates
The Reserve Bank of India (RBI) posted a discussion paper on its web site on Monday (27 August 2007) to review aspects of bank and financial holding company structures and how suitable they are for India.
The discussion paper comes at a time when State Bank of India (SBI) and ICICI Bank have announced plans to create a holding company to raise capital for their insurance and asset management businesses.
According to RBI, the pace of growth in financial services had led banks to experiment with holding company structures not yet familiar in India.The typical structure for banks in India was the bank subsidiary model, under which non-banking activities are carried out by separate subsidiaries floated by the bank.
Developing bank holding companies in India would require banking laws to be amended, but allowing financial holding companies, which put another level of ownership between the parent bank and its financial subsidiaries, might require a separate act.
Therefore, the central bank wanted to review and assess their legal, regulatory and accounting suitability and highlight the regulatory and supervisory concerns emanating from such structuresCrude slips a bit
Crude prices fall today on weakening consumer confidence
Crude oil future prices fell today on related news in USA’s Gulf region and weak economic data.
For the day ending Tuesday, 28 August, 2007, crude-oil futures for light sweet crude for October delivery closed at $71.73/barrel (lower by $0.24/barrel or 0.33%) on the New York Mercantile Exchange. Prices are up 1.6% from a year ago.
The New York-based Conference Board's index of confidence declined to 105 from 111.9 in July. Confidence averaged 105.9 in 2006. Earlier, another report showed home prices in the U.S. dropped by a record amount in the second quarter.
Brent crude oil for October settlement fell 40 cents (0.6%) to close at $70.55 a barrel on the London-based ICE Futures exchange.
Oil was also pulled lower by gasoline after Chevron said it had started up several process units at its refinery in Pascagoula, Mississippi. On 16 August, a fire forced a partial shutdown of the unit.
Reformulated gasoline slips after a long haul
Natural gas in New York rose as speculators who had sold contracts in a bet that prices would fall, bought them back, pushing prices higher. Gas for September delivery rose 21.3 cents, or 4 percent, to $5.593 per million British thermal units.
Nymex September reformulated gasoline contract fell 1.93 cent (1%) to $2.0209 a gallon, giving up some of its recent gains as the summer driving season draws to a close. Traders also began to focus on refinery maintenance schedules and heating oil stocks. The September heating oil contract shed 1.22 cent (0.6%) to $1.9975 a gallon.
Yesterday, OPEC Secretary General, Abdalla Salem el-Badri said that volatility in U.S. financial markets, caused by trouble in the subprime and credit markets, is clouding the outlook for global oil demand and economic growth next year.
Attacks on oil facilities in Nigeria have curtailed shipments and tight supplies from OPEC have bolstered crude prices this year. Crude oil prices are also higher because of concern that shipments from Iran, Nigeria and Iraq may be disrupted. OPEC is scheduled to meet at Vienna on 11 September, 2007 for their next meeting.
Weak housing data rattles US Market
Inventories of unsold single-family homes highest level in 16 years
US Market once again fell a victim to the housing data that hit the market during morning hours today, Monday, 27 August, 2007. Weak housing data have given investors an excuse to lock in some of last week's sizable gains. The data was in contrast to last Friday's surprisingly strong gain in new home sales.
The Dow Jones Industrial Average closed lower by 56.7 points at 13,322. Tech-heavy Nasdaq dropped 15.4 points to close at 2,561. S&P 500 lost 12.6 points to close at 1,466.8.
Twenty-one out of thirty Dow stocks closed in the red today. JP Morgan Chase, GM, American Express and P&G were the main Dow laggards. Honeywell, Altria, Home-Depot, Alcoa and Boeing were the Dow winners.
The National Association of Realtors reported today that inventories of unsold single-family homes climbed 2.2% to 3.85 million in July, sending the inventory in relation to sales to the highest level in 16 years.
Altria shares today climbed 1.3% amid rising speculation that it might announce a spin-off of its international business after a meeting of the board of directors this week.
Home Depot sells its supply business for $1.8 bln less
When market opened in the morning, the indices opened in the red and lingered in the red for entire day. Biggest news for the day at that point of time was from Home Depot, which finally agreed to sell its supply business but for $1.8 bln less than the original $10.3 bln price tag.
In July, inventory of home grew because sales declined. The Realtors said existing-home sales fell 2.2% in July from June to a seasonally adjusted annual rate of 5.75 million homes. That was down 9% from July 2006 and down 28% from the average for all of 2005, when sales hit 7.08 million units.
The report also showed that the median sales price of a single-family home declined 1% from a year ago to $228,600. The median condo sales price actually rose 2.4% from a year ago to $230,600, mostly due to gains in the Northeast and Midwest.
Of the 10 sectors finishing in negative territory, Utilities paced the way and Financials turned in the next worst performance.
Among the Indian ADRs, Indian ADRs ended mixed today. Sify and ICICI Bank were the topmost gainers. Sify closed higher by 4.9% while ICICI Bank closed higher by 3.6%. Among other technology stocks, Wipro gained 2.3% while Infy lost 0.8%.
Crude soars on falling gasoline inventory
Crude oil future prices registered substantial increased today, mainly boosted by rising gasoline prices. Drop in supplies of motor gasoline for week ended 17 August in last week’s weekly inventory report was perhaps the main reason for this.
Crude-oil futures for light sweet crude for October delivery closed at $71.97/barrel (higher by $0.88/barrel or 1.2%) on the New York Mercantile Exchange.
Volume at the New York Stock Exchange totaled more than 1.1 billion shares, with declining stocks topping advancers 3 to 1. At the Nasdaq, volume came to nearly 1.4 billion shares, and decliners beat advancing stocks 9 to 5.
For tomorrow, investors will look for economic data to help set the tone of trading. The Consumer Confidence Index will hit the wires tomorrow morning at10:00 ET. The report surveys consumer attitudes toward current and developing economic conditions. Tomorrow will also feature the minutes from the 7 August FOMC (Federal Open Market Committee) meeting at 14:00 ET. The report helps provide transparency to the Fed's concerns and decisions regarding its policy.
Daily Technical Analysis
Nifty — The index was range-bound in yesterday’s trading session. It ended the day with a gain of 11 points.
Resistance — The index faces intra-day resistance in the band of 4,328-4,364. The level of 4,328 is a 62% retracement level of the decline from the high of 4,530 to the recent low of 4,002. The 50dma is around 4,364. Intra-day rise will likely face resistance at around 4,328-4,364.
Support — The index has support at around 4,296 (20dma). Break below the 4,296 level could take the index down toward the 4,260 level.
Conclusion — The intra-day index could see range-bound movement, with support at around 4,260.
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