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Tuesday, October 23, 2007
No fresh telecom license norms for new applicants
The Department of Telecom is understood to have dropped the initial idea of framing fresh guidelines for the 575 new licence applications but will verify ownership, shareholding pattern and source of funding of these aspirants.
There would not be fresh guidelines for these hopefuls on any criteria including lock-in period, raising net worth and the like, official sources said, adding the existing norms in these aspects would be applicable to them.
If the policy is changed for new players, then existing players would have to be asked to apply again so that nobody feels that there is a non-level playing field. But this does not mean that company details, shareholding pattern, hidden information and funding sources would not be verified, the sources said.
However, sources said this cannot be music to new applicants as DoT was in no hurry to issue Letters of Intent as there is hardly an spectrum to give it to new, existing or cross-over players who are planning to offer both GSM/CDMA technology based mobile services.
Allocation of spectrum is subject to availability and this is written well in the current guidelines, sources said.
Telecom Minister A Raja had earlier said DoT would work out fresh guidelines for new applicants as considering the huge number of applications, there was a need to form new norms. However, after receiving applications, he had later said that norms could not be changed as it would put them to disadvantageous position.
The new applicants include a host of real estate players such as DLF, Unitech and Parsvnath Developers, besides foreign firms such as AT&T.
Reliance Power IPO awaiting Sebi nod: ADAG
Reliance ADA Group today said it is awaiting Securities and Exchange Board of India (Sebi) nod for the initial public offering (IPO) of group company Reliance Power even as some "vested interests" were trying to stall the stake sale plan.
"A vicious campaign of disinformation (is) underway by vested industrial interests to stall the Reliance Power IPO," a Reliance ADAG spokesperson said in a statement.
The official said attempts were being made to engineer motivated litigation and the "campaign was motivated by frustration at the continuing success and rising valuation of the ADA Group".
Reliance Power's IPO was awaiting Sebi approval in normal course, he added.
The spokesperson said forged letters by Members of Parliament based on false and baseless allegations were also part of the vicious campaign.
The reaction came after REL Investors Forum, an association of investors in Anil Ambani-led Reliance Energy, today alleged that the planned IPO of Reliance Power will erode the value for REL shareholders.
Reliance Power plans to come out with an IPO of 160 crore shares to part-finance 12 proposed power projects envisaging an estimated investment of nearly Rs 1,00,000 crore. The IPO is being pegged as the biggest-ever in India with total proceeds of about Rs 12,000 crore.
Govt notifies FBT norms on ESOPs
The Central Board of Direct Taxes (CBDT) today notified the long awaited norms for valuation of employee stock options (ESOPs) for the purpose of calculating fringe benefit tax (FBT).
Accordingly, the value of the ESOPs for the purpose of levy of the tax shall be the fair market value (FMV) of the option on the date of vesting, minus the amount actually paid (or recovered from) the employee.
The new rule will take effect from April 1, 2008 and will apply in relation to the assessment year 2008-2009 and subsequent years.
The Finance Act, 2007 had amended the provisions of the Income Tax Act to provide that employers will be liable to pay fringe benefit tax on the value of ESOPs granted to employees as and when the options were allotted or transferred to the employees.
Explanation (i) to clause (ba) of sub-section (1) of section 115WC of the Income-Tax Act defines fair market value to mean the value determined in accordance with the method as may be prescribed by the board. Accordingly, a new Rule 40C has been added to the Income Tax Rules for this purpose
Post Market Commentary
After a strong opening for the day, the market kept on climbing new peaks during the session as heavy buying was happening across all the index pivotals. Capital goods, power, energy, realty and metal stocks surged heavily during the day. The market breadth was also very good as out of 2798 shares, 2089 advanced, 658 declined and 51 remained unchanged. The surge also came on the back of market regulator SEBI allaying concerns of overseas investors, assuring them the process of registration, as FIIs will be expedited. The benchmark index Sensex has registered its biggest intraday gain of 878.85 points to close at 18492.84, whereas Nifty has also made a remarkable recovery of 289.70 points to close at 5473.70. Further, BSE Midcap and BSE Smallcap also closed with higher gains of 292.83 points and 284.25 points at 7556.24 & 9135.72 respectively.
BSE Capital goods closed with the highest gain of 1208.42 points at 16,777.18. Fueling it up are Punj Lloyd, with the highest gain of (13.08%), BHEL (11.54%), Crompton Greaves (10.29%), Suzlon Energy (9.84%), AIA Engineering (8.50%).
BSE Metal also followed the gaining rally to closed higher by 959.57 points at 15.392.29. Pushing it up are Jindal Steel (12.81%), Sesa Goa (10.93%), SAIL (10.90%), Welspun Gujarat (10.06%) and Maharashtra Sea by (9.11%).
The Oil and Gas index ended with good gain of 660.55 points to close at 10,740.5 as Reliance (7.83%), RPL (6.55%), Gail (5.86%), ONGC (4.23%).
The Reality index also surged by 573.81 points to close at 9568.03. Taking it up are Unitech Ltd (9.94%), Penland Ltd (9.52%), DLF (8.30%), Parsvnath (6.25%).
Along with these, BSE Bankex also closed with higher gain of 534.02 points at 9563.11. Scrips surged are Bank of India (22.28%), Kotak Bank (13.21%), Canara Bank (11.32%), Yes Bank (10.00%), Union Bank (9.74%).
BSE IT remained under pressure with the marginal gain of 15.71 points to close at 4,634.88. Scrips moved up are Financial Tech (4.49%), Moser Baer (3.34%) and Satyam (2.97%).
Market Close: Phenomenal rally?But can this hold on?
Great day for the market which started with a gap up of 300 points and moved further into the green zone with every hour of trade as value buying activity intensified in almost all sectors. The 800+ points rally was seen on speculative reports hich said that SEBI has cleared proposals allowing foreign individual investors to invest on Indian bourses. The minimum net worth a Criterion for a foreign individual investor who intends to invest directly is set at $50 million. But still the confirmation was not there from SEBI. The rise was incredible which gradually took it higher making it the biggest ever gain for the Sensex. Capital goods, Power, Realty and Metal stocks were on limelight for the day. Phenomenal bounce back seen in mid caps and Small caps performed well with the heavyweights and closed up by 3% each. Indian market makes over the global cues and had a different story to show. Asian markets ended in green while European markets are trading in mix.
Sensex ended up by 879 points at 18492.84. It was helped up by gains in BHEL (2294.3,+12 percent), Rel Energy (1523.15,+11 percent), NTPC (217.35,+9 percent), Bharti Tele (1005.35,+8 percent) and RIL (2601.55,+8 percent). Restricting the gains were TCS (1064.2,-1 percent), Guj Ambuja (144.55,-1 percent), Wipro (492.2,0 percent), HDFC (2565.8,0 percent) and Infosys (1883.55,0 percent).
Leading media house Zee Entertainment Enterprises reported a phenomenal growth of 4.61 times in consolidated net profit for the quarter ended September 2007. During the quarter the company experienced a rise in consolidated net profit to Rs 97 Cr from Rs 210 Cr in the quarter of the previous year. Consolidated total income during the quarter jumped 15.43% to Rs 421 Cr compared with the same quarter a year earlier. While on standalone basis Zee reported phenomenal growth of 6.33 times in net profit to Rs 69.63 Cr in the quarter compared with Rs 11 Cr a year earlier. Earnings per share for the quarter jumped 6.19 times to Rs 1.61 compared with the same quarter a year ago. Substantial rise in operating margins pushed earnings of the company higher. Operating margin during the quarter jumped of 3,835 basis points to 41.11% compared with 2.75% in the same quarter a year earlier. The net sales for the quarter fell 20.30% to Rs 229 Cr while the total income for the quarter declined 17.98% to Rs 248.72 Cr when compared with the corresponding quarter, a year ago. The results were really good on back of its Advt. earnings as the TRP ratings has been increasing significantly. But the company would be facing the resistance from the advertisers as it intends to hike Ad rates by 25%. However we think that the company would do good in long term. The stock performed well on the results which were in line with the market expectations. The stock ended up by 8%. Do read our note which would update you.
Good numbers were reported by Greenply. Topline grew by 27% to Rs.136crs. EBITDA surged by 120% to Rs.22crs on yoy basis. Margins at EBITDA level improved by 670 bps backed by lower selling and advertising spend. PAT grew by 113% to Rs.11crs as company to same period last year. At the current market price the stock trades 10 times its annualized EPS. Numbers are good and the company will continue to perform well. For now valuations seems fair. Greenply even unveiled plans to acquire two privately held companies Galaxy Decor and Platinum Veneers engaged in manufacturing plywood and allied products. Reacting to the positive development, Greenply stock was in limelight for the day but ended marginally down. We will update you more on this soon.
Jain Irrigation reported healthy second quarter numbers. Net profit of Rs 30 Cr for the quarter ended September 2007 as against Rs 16.2 Cr in same quarter of last year. Net sales stood at Rs 329 Cr versus Rs 226 Cr. Top line was around 45% growth on YoY basis. About 71% growth was from domestic business and 14% came in on the export business. Piping division which is the PVC pipes business grew 27%, while the orders for the same grew by 57%. The only division that did not do that well was the PVC sheets because it had exposure to US homebuilding market. Agriculture remains a key driver. The business is doing well as it has grown about 72%, and this is the most profitable division. It has moved from about Rs 58 Cr to about Rs 100 Cr this quarter. With the good number stock performed well and ended up by 5%
Technically Speaking: Markets traded well on the back of strong positive breadth. Sensex touched intraday high of 18542 and low of 17910. Overall market turnover was healthy for the day at Rs 7390 Cr. Market breadth was in favor of Advances, where the Decliners stood at done 659 against Advances of 2057. Sensex has made a huge gap up opening today. If this momentum fails to gather more upside then we might see a pull back to close in the huge gap left by markets at today's open between 17700 and 17910.
Bulls strike back; Sensex up 879 points
After a subdued trend in last few sessions, the market staged a solid comeback today. The market rallied sharply, making up for the lost ground, after the Securities and Exchange Board of India (SEBI) clarified its position to foreign fund investors on participatory notes. The bulls were back in action after closing flat yesterday. The Sensex took cues from buoyant international markets and resumed 296 points above its previous close at 17,910 on the back of strong buying in heavyweights, capital goods, oil, and banking stocks. The buoyancy propelled the Sensex to the day's high of 18,542 by the afternoon. The Sensex finally closed with a gain of 879 points at 18,493. Nifty advanced 290 points to close at 5,474.
The market breadth was highly positive, with the gainers outpacing the losers in the ratio of 3.17:1 on the Bombay Stock Exchange (BSE). Of the 2,798 stocks traded on the BSE, 2,089 stocks advanced, 658 stocks declined and 51 stocks ended unchanged. All the sectoral indices notched up significant gains. The BSE CG index was the biggest gainer and soared by 7.76% followed by the BSE PSU index (up 7.01%), the BSE Metal index (up 6.65%), the BSE Oil & Gas index (up 6.55%), the BSE Realty index (up 6.38%), the BSE Bankex index (up 5.91%) and the BSE FMCG index (up 4.08%).
Barring few, all the stocks in the Sensex basket ended at higher levels. BHEL led the upsurge and flared by 11.54% at Rs2,294. Among the other major gainers Reliance Energy surged 11.18% at Rs1,523, NTPC moved up by 8.84% at Rs217 and Bharti Airtel advanced 8.38% at Rs1,005. Reliance Industries vaulted 7.83% at Rs2,601, L&T shot up by 7.53% at Rs3,331, HDFC Bank added 7.42% at Rs1,474 and Cipla rose 7.24% at Rs193. However, TCS, Ambuja Cement, Wipro, HDFC and Infosys slipped marginally.
Capital good stocks were the star attraction during the day and rallied sharply. Punj Lloyd soared 13.08% at Rs387, Crompton Greaves jumped 10.29% at Rs365, Suzlon Energy added 9.84% at Rs1,741 and AIA Engineering gained 8.50% at Rs1,262.
Over 1.80 crore Reliance Natural Resources shares changed hands on the BSE followed by Power Grid Corporation (1.63 crore shares), Unitech (1.38 crore shares), Tata Teleservices (1.26 crore shares) and IKF Technologies (1.16 crore shares).
Unitech was the most actively traded counter on the BSE and registered a turnover of Rs447 crore followed by Reliance Energy (Rs396 crore), United Breweries (Rs366 crore), Reliance Industries (Rs297 crore) and Reliance Capital (Rs235 crore).
Sensex jumps over 900 pts
Stock market barometer Sensex on Tuesday surged by more than 900 points in intra-day trading to cross 18,500 points on heavy buying by foreign and domestic funds in blue-chips led by Reliance Group and capital goods stocks.
The 30-share index, Sensex, which suffered steep falls last week, turned bullish a day after market regulator SEBI said it will expedite the registration process for foreign institutional investors and allow proprietary sub-accounts of FIIs to register for investing in India.
The BSE barometer soared 915.87 points to 18,529.86 at around 1500 hrs. The National Stock Exchange index Nifty also rose by 292.75 points at 5,476.75.
Reliance Industries, the nation's largest company by market value, led gains. Larsen & Toubro Ltd, the biggest engineering company, and its nearest rival state-run BHEL also made heavy gains on the bourses. The BSE Capital Goods index was the key driver in the rally and recorded a massive rise of nearly 1,300 points.
Sensex vaults 856 points in biggest ever singe day surge
The market spurted today after the market regulator Securities Exchange Board of India, after trading hours on Monday, 22 October 2007, provided partial breather with respect to proposed restrictions on use of participatory notes and said it would speed up regulatory clearance for foreigners keen to invest transparently.
Television media reports in mid-afternoon trade that the market regulator Securities & Exchange Board of India (Sebi) has cleared proposals allowing foreign individual investors to invest on Indian bourses aided the surge in the second half of the trading session. The minimum networth criteria for a foreign individual investor who intends to invest directly is set at $50 million, television reports suggest.
Index pivotals especially Reliance Industries were in strong demand on value buying after the recent fall. Short covering may also have propelled blue chips. Asian and European markets were trading firm today, 23 October 2007
The BSE 30-share Sensex posted its biggest ever-single day point gains, vaulting 855.51 points, or 4.86%, to 18,469.50, as per provisional close. It opened 296.31 points higher at 17,910.30 and kept on cruising ahead of buying intensified. It struck an intra-day high of 18,542.41 in late trade. The Sensex’s previous biggest single day point gain was on 9 October 2007, when it surged 788.85 points or 4.51% at 18,280.24.
The broader based S&P CNX Nifty was up 288.30 points, or 5.56%, to 5,472.30, as per provisional close.
After market hours on Monday, 22 October 2007, Securities & Exchange board of India (Sebi) Chairman, M Damodaran said that proprietary sub-accounts (through which FIIs handle participatory notes) wishing to apply for FII status must send Sebi their letter of intent within 24 hours indicating their intent. The application itself must be submitted within a week’s time. Although Sebi will go ahead with its proposed restrictions on FII investments through participatory notes, p-notes as instrument are here to stay, provided the anonymity behind them is lifted.
Damodaran further added that currently there is no limit to the number of sub-accounts that may register for FII status. As of now, Sebi is comfortable with the numbers, at present 3000-plus. The Sebi board meets on 25 October 2007 to finalise the proposals. The Sebi chief said an expert panel is working on PNs based on derivatives and that its recommendations along with FII registration norms, would be announced after Sebi's 25 October 2007 board meeting.
After trading hours on Tuesday, 16 October 2007, Sebi issued draft proposals wherein the market regulator proposed restriction on use of the popular participatory notes (PNs) route of FII inflow and it also recommended unwinding of some PNs within 18 months. PNs are financial instruments used by foreign investors that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.
The Sebi chairman will meet domestic brokerage houses at 16:00 IST today, 23 October 2007 to clarify the regulator's position on participatory notes and discuss developments in the equity markets.
Among the 30-member Sensex pack, 26 advanced while only 4 of them slipped. The market breadth was strong on BSE: 2057 scrips advanced as compared to 657 that declined while 54 remained unchanged.
The total turnover on BSE amounted to Rs 7390 crore as compared to Rs 5564 crore by 14:30 IST.
India's largest private sector entity by market capitalisation and oil refiner Reliance Industries (RIL) galloped 7.52% to Rs 2595 on 11.59 lakh shares. As a part of a restructuring exercise, RIL has reportedly decided to hive off Reliance Fresh into a separate company, Ranger Farm, for single point accountability. Reliance Fresh sells food, fruits and vegetables and consumer products.
Battered Reliance Energy and Bharti Airtel made a strong comeback. Reliance Energy, the country’s second largest power utility company in terms of sales surged 12.28% to Rs 1538.25 on 26.78 lakh shares. The stock gained on value buying after it had plunged 28.06% to Rs 1370 in past one week to 22 October 2007. It was the top gainer from Sensex pack.
India’s largest listed cellular services provider by sales, Bharti Airtel gained 7.08% to Rs 993. The stock had slipped 16.41% to Rs 927.65 in the past one week to 22 October 2007, hit by on concerns that the launch of nationwide GSM services by rival Reliance Communications would eat into its market share.
Meanwhile Reliance Communications rose 4.80% to Rs 755. On Friday, 19 October 2007, it got nod to launch nationwide GSM-based cellular services from Department of Telecom (DoT).
Capital Goods shares dominated gainers on fresh buying, in anticipation of strong set of Q2 September 2007 results from them. India’s largest engineering company by sales, Bharat Heavy Electricals (Bhel) jumped 11.82% to Rs 2300. Bhel said on Monday, 22 October 2007, that due to some unavoidable circumstances, the meeting of its board of directors to consider Q2 September 2007 results, scheduled to be held on 25 October 2007 has been postponed to 29 October 2007.
Larsen & Toubro (L&T), the nation's largest engineering and construction company by sales, surged 7.69% to Rs 3336. On 18 October 2007, L&T said it won four orders worth Rs 452 crore for projects in Andhra Pradesh
NTPC (up 9.36% to Rs 218.40), Hindustan unilever (up 4.15% to Rs 215), Cipla (up 7.30% to Rs 193.40), and Tata Steel (up 6.97% to Rs 895.70), were the other gainers from Sensex pack.
Banking heavyweights ICICI Bank (up 3.36% to Rs 1098), HDFC Bank (up 6.75% to Rs 1465), and State Bank of India (up 5.27% to Rs 1803), also rallied
IT pivotals underperformed the market. India’s top software services exporter TCS lost 0.98% to Rs 1063.90 on 4.49 lakh shares. It was the top loser from Sensex pack.
Infosys (down 0.38% to Rs 1879.55), and Wipro (down 0.56% to Rs 492) underperformed the market. The Indian rupee firmed against the dollar. It was hovering at 39.64, as compared to yesterday’s (22 October 2007) close of 39.88.
India’s fourth largest software services exporter Satyam Computer Services gained 3.49% to Rs 464.10 after hitting day’s high of Rs 469. Its net profit rose 7.19% to Rs 417.15 crore on 10.75% rise in sales to Rs 1948.24 crore in Q2 September 2007 over Q1 June 2006. The company declared the results before market hours today, 23 October 2007. The company revised upwards earnings as well revenue guidance for FY 2008 (year ending 31 March 2008), both in rupee terms and dollar terms.
Satyam Computer Services signed an agreement with Fujitsu Services to provide IT services to Reuters as part of a 10-year, $1 billion internal information systems transformation programme. It also announced that entering into a definitive agreement to acquire 100% stake in Nitor Global Solutions ("NITOR") of the UK, a niche consulting firm providing Infrastructure Management Services (IMS), for up to British pound (GBP) 2.76 million ($ 5.5 million) in cash.
Among side counters, LIC Housing Finance (up 20.50% to Rs 272.50), Bank of India (up 23.79% to Rs 318.70), Hercules Hoists (up 20% to Rs 4318.85), Reliance Capital (up 15.84% to Rs 1768.15), and Mercator Lines (up 15.83% to Rs 98.40), surged
Meanwhile, under pressure from the Left parties to make clear whether the Indo-US nuclear deal is on or off, government on Monday, 22 October 2007, after market hours said the operationalisation of the deal will take place in accordance with the UPA-Left committee's findings. External Affairs Minister Pranab Mukherjee made this clear after a meeting between leaders of the Left parties and the UPA coalition formed to go into the concerns of the allies on the nuclear deal. The committee would meet again on 16 November 2007.
European markets were trading higher today, 22 October 2007. Key benchmark indices in United Kingdom (up 1.05% to 6,527), France (up 0.64% to 5,697.75) and Germany (up 0.43% to 7,828.74) moved up.
Asian markets were higher today, 23 October 2007. Hang Seng (up 3.54% at 29,376.86), Taiwan's Taiwan Weighted (up 1.51% at 9,501.89), Nikkei (up 0.07% at 16,450.58), South Korea's Seoul Composite (up 2.32% at 1,947.98) and Singapore's Straits Times (up 1.45% at 3,695.98) edged higher.
US markets ended higher yesterday, 22 October 2007, as investors overcame some of their nervousness about the credit markets and uneven earnings and found solace in the technology sector. The Dow Jones Industrial Average gained 44.95 points, or 0.33%, to 13,566.97. The S&P 500 index rose 5.70 points, or 0.38%, to 1,506.33, while the technology-dominated Nasdaq Composite Index rose 28.77 points, or 1.06%, to 2,753.93.
Volatility is expected to remain high in the coming few days ahead of expiry of October 2007 derivatives contracts on Thursday, 25 October 2007. As per reports, marketwide rollover of derivatives positions from October 2007 series to November 2007 series stood at 24% while that of Nifty was 35%.
Crude oil prices fell on Tuesday, 23 October 2007, extending a sell-off from record highs on concerns about the state of the US economy. US light crude for December 2007 delivery fell 26 cents to $85.76 a barrel. Oil has retraced over $4 since hitting a record-high of $90.07 on Friday, 19 October 2007. London Brent crude fell 36 cents to $82.91 a barrel.
As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 1290.86 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 15.33 crore on Monday, 22 October 2007.
On Monday, 22 October 2007, the BSE 30-share Sensex rose 54.01 points or 0.31% at 17,613.99. However, the broader based S&P CNX Nifty lost 31.30 points or 0.60% at 5,184
Nitin Fire Protection gets approval
Nitin Fire Protection Industries Ltd has informed BSE that the Company's subsidiary Nitin Cylinders ltd at Vishakpatnam has received the NZS 5454 type approval required for exports of CNG Cylinders in countries like Pakistan, Bangladesh, Egypt etc.
This will help Company accept orders and export goods to above countries.
Grey Market - Religare, SVPC, Rathi Bars
Reliance Power 41 to 42
Mudra Port & Sez 400 to 440 225 to 230
MAYTAS Infra 370 120 to 130
Circuit Systems (India) Ltd. 35 6 to 8
Rathi Bars 35 4 to 4.50
Allied Computers 12 6 to 8
Varun Ind. 60 15 to 17
SVPCL 40 to 45 8 to 10
Religare Enterprises 170 to 190 140 to 150
Global cues see market remain positive
After registering smart pullback in yesterday's trades the market is likely to advance further. The fall in crude oil prices for third day may also help sentiment remain positive. However, lack of clarity in the market and volatility may drag down the market. Among the local indices, the Nifty could test 5260 on the upside and may slip to 5100 on the downside. The Sensex has a likely support at 17300 and may face resistance at 18494.
US indices bounced back moderately and finished higher. While the Dow Jones moved up by 45 points at 13,567, the Nasdaq managed to add 29 points at 2,754.
All the Indian floats had a field day on the US bourses. MTNL flared up by 10.21% ,VSNL jumped 5.73% and ICICI Bank surged by 5.06% , while Dr Reddy's, Tata Motors, HDFC Bank, Infosys, Satyam, Patni Computer and Wipro gained around 1-3% each.
Crude oil prices eased a little , with the Nymex light crude oil for December delivery falling by $1.04 to close at $87.56 a barrel.
Market may head higher amid volatility
The market may post gains, amid volatility, tracking positive global cues. Also crude oil prices have cooled off from record highs above $90 reached last week.
After market hours on Monday, 22 October 2007, Securities & Exchange board of India (Sebi) Chairman, M Damodaran said that proprietary sub-accounts (through which FIIs handle participatory notes) wishing to apply for FII status must send Sebi their letter of intent within 24 hours indicating their intent. The application itself must be submitted within a week’s time. Although Sebi will go ahead with its proposed restrictions on FII investments through participatory notes, p-notes as instrument are here to stay, provided the anonymity behind them is lifted.
Damodaran further added that currently there is no limit to the number of sub-accounts that may register for FII status. As of now, Sebi is comfortable with the numbers, at present 3000-plus. The Sebi board meets on 25 October 2007 to finalise the proposals.
Meanwhile, under pressure from the Left parties to make clear whether the Indo-US nuclear deal is on or off, government on Monday, 22 October 2007, after market hours said the operationalisation of the deal will take place in accordance with the UPA-Left committee's findings. External Affairs Minister Pranab Mukherjee made this clear after a meeting between leaders of the Left parties and the UPA coalition formed to go into the concerns of the allies on the nuclear deal. The committee would meet again on 16 November 2007.
Asian markets were higher today, 23 October 2007. Hang Seng (up 2.01% at 28,944.39), Taiwan's Taiwan Weighted (up 1.14% at 9,467.45), Nikkei (up 0.34% at 16,494.91), South Korea's Seoul Composite (up 1.22% at 1,927.07) and Singapore's Straits Times (up 0.47% at 3,659.66) edged higher.
US markets ended higher yesterday, 22 October 2007, as investors overcame some of their nervousness about the credit markets and uneven earnings and found solace in the technology sector. The Dow Jones Industrial Average gained 44.95 points, or 0.33%, to 13,566.97. The S&P 500 index rose 5.70 points, or 0.38%, to 1,506.33, while the technology-dominated Nasdaq Composite Index rose 28.77 points, or 1.06%, to 2,753.93.
Volatility is expected to remain high in the coming few days ahead of expiry of October 2007 derivatives contracts on Thursday, 25 October 2007. As per reports, marketwide rollover of derivatives positions from October 2007 series to November 2007 series stood at 24% while that of Nifty was 35%.
Crude oil prices fell on Tuesday, 23 October 2007, extending a sell-off from record highs on concerns about the state of the US economy. US light crude for December 2007 delivery fell 26 cents to $85.76 a barrel. Oil has retraced over $4 since hitting a record-high of $90.07 on Friday, 19 October 2007. London Brent crude fell 36 cents to $82.91 a barrel.
As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 1290.86 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 15.33 crore on Monday, 22 October 2007.
On Monday, 22 October 2007, the BSE 30-share Sensex rose 54.01 points or 0.31% at 17,613.99. However, the broader based S&P CNX Nifty lost 31.30 points or 0.60% at 5,184.
Crude witnesses major drop
Crude prices drop on profit taking as November contract expires
After going up by 6% last week, crude oil prices slipped today and settled below $88/barrel. Prices eased as dollar strengthened against most of its rival currencies. Prices also eased on reports of a cease fire in Turkey. Profit-taking was another reason for the rise in price, especially given that the November front-month crude contract expired at the end of today’s session.
For the day ending Monday, 22 October, 2007, crude-oil futures for light sweet crude for November delivery closed at $87.56/barrel (lower by $1.04/barrel or 1.2%) on the New York Mercantile Exchange. Last Friday price had peaked to $90.02/barrel after dropping later in the day.
Natural gas declined in New York on unseasonably warm weather, ample inventories and concern U.S. economic growth may slow. Gas for November delivery fell 15 cents (2.1%) to settle at $6.891 per million British thermal units.
November heating oil slipped 1.97 cents to end at $2.3109 a gallon and November reformulated gasoline dropped 3.53 cents to $2.1334 a gallon.
Last week, prices continued to climb up on concern that Turkey's military may attack Kurdish bases in Iraq, which has the world's third-largest oil reserves. Since 2003, due to US invasion of Iraq, shipments of oil from northern Iraq to Turkey have been cut for most of the time because of attacks on pipelines. The problems gave birth to concerns that this might lead to slowing down of shipments as peak season is commencing and would call for more demand for meeting the peak heating demand.
At the MCX, crude oil for October delivery closed at Rs 3432/barrel, higher by Rs 3 (0.08%) against previous day’s close. Natural gas closed at Rs 301.7/mmtbu as against previous close of Rs 305.9/mmtbu, lower by Rs 4.2/ mmtbu.
OPEC planned to boost daily oil production by 500,000 barrels. OPEC's production target is 27.2 million barrels a day, beginning 1 Nov. OPEC, has decided to raise their daily output by 500,000 barrels per day, starting 1 November.
Attacks on oil facilities in Nigeria have curtailed shipments and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.
Trading Calls
Nifty (5184) Sup 5146 Res 5295
Buy Punj Lloyd (343) SL 338 Tgt 351, 354
Buy LITL (392) SL 387 Tgt 402, 404
Buy Moser Baer (290) SL 285 Tgt 299, 302
Sell Aptech (326) SL 331 Tgt 318, 315
Sell SRF (128) SL 132 Tgt 120, 118
Bounce at start, choppiness later
Life is not about how fast you run, or how high you climb, but how well you bounce.
The runaway bulls will return and drag in many others with them. SEBI's clarifications, global cues et al, will ensure a healthy start. Expect high volatility thereafter. With the market regulator SEBI going out of its way to convince investors that the proposed move to restrict foreign capital inflows through P-Notes is positive in the long run, the market may bounce back further. In a video conference with leading FIIs yesterday, SEBI said that proprietary sub-accounts of FIIs can issue P-Notes till they are officially registered with it. These sub-accounts should inform SEBI about their intention to register today and send applications within a week. The market regulator said it cleared 16 FII applications yesterday. Corporate sub-accounts will not be entertained though. SEBI chief M. Damodaran also said that he may allow more than one entity of a single FII to register with it. These are the key takeaways from yesterday's conference call and should cheer up the market this morning.
What's more, a newspaper report suggest that SEBI will take a full review of rules and regulations with regard to FII investments at its Board meeting on Thursday. SEBI is likely to consider permitting more category of overseas investors to register, including unregulated but key entities like pension funds. It could also review the definition of sub-accounts as part of the exercise aimed at allowing all category of foreign investors to come into the Indian market. As a result, we expect the undertone to improve and the bulls to regain control of the market. In addition, global markets rebounded overnight, led by US shares. Most Asian markets are trading firm this morning. And, oil prices have cooled off little, though they still remain quite high around $87 per barrel. The market should open higher, but the anxiety over the SEBI meet and F&O expiry on Thursday will lead to increased volatility.
There is now also talk that the RBI may soften its stance on the monetary policy on Oct. 30 and could leave key short-term rates unchanged. Still, there is a chance that it may go for another CRR hike to absorb excess liquidity. Plus, the market will have to watch out for the Fed meet on Oct 31.
Adhunik Metaliks' Board will meet on October 30, to consider issue of equity shares and Fully Convertible Debentures on a preferential basis to FII / FI and other selected investors. It will also consider issue of warrants to promoters, besides increasing the FII investment limit.
SpiceJet has signed an agreement with Air India for the wet lease of two Boeing 737-800 aircraft, for operating daily flights between Lucknow, Varanasi, Jaipur and Nagpur and Jeddah. The company will operate around 120 flights and will carry around 20,000 Haj pilgrims.
Rajesh Exports has announced 2 for 1 bonus issue and stock split from Rs2 to Re1.
US technology shares rallied on Monday, lifting the broader market at the end of a choppy session, as worries about the state of the economy continued to overshadow some upbeat corporate earnings and lower oil prices.
US stocks rose for the first time in three days after Bear Stearns got a $1bn investment from China and investors speculated technology companies will report better-than-forecast earnings.
Apple climbed to a record before reporting earnings that exceeded analysts' estimates. Merck advanced the most in three months after the No.3 US drug maker reported profit that topped projections.
About nine stocks gained for every five that fell on the New York Stock Exchange as US markets overcame a 115-point decline in the Dow Jones Industrial Average and losses in Europe and Asia.
The S&P 500 Index added 6 points, or 0.4%, to 1,506.33. The benchmark was down 3.9% last week, the most since August. The Dow climbed 45 points, or 0.3%, to 13,566.97. The Nasdaq rose 29 points, or 1.1%, to 2,753.93.
After the close, Apple reported sales and earnings that rose from a year ago and beat estimates. American Express also reported sales and earnings that topped estimates. Netflix reported higher quarterly earnings after the close, as did Texas Instruments.
Treasury prices fell, raising the yield on the benchmark 10-year note to 4.40% from 4.39% late on Friday. In currency trading, the dollar gained versus the euro and fell against the yen. COMEX gold for December delivery fell $8.40 to settle at $760 an ounce.
Oil prices retreated $1.04 to settle at $87.56 a barrel on the New York Mercantile Exchange. On Friday, oil briefly hit an all-time high of $90.07 a barrel in electronic trading.
European shares posted broad losses. The pan-European Dow Jones Stoxx 600 index dropped 1.3% to 375.82, its biggest one-day fall since Sept. 7, with miners down 4.2% and industrials down close to 2%. The UK's FTSE 100 closed down 1.1% at 6,459.30, the German DAX 30 fell 1.1% to 7,794.94 and the French CAC-40 shed 1.4% to 5,661.27.
Brazilian and Mexican stock markets closed higher. Brazil's Bovespa rose 0.5% to 61,215.13 and Mexico's IPC rose .05% to $31,969.48. Chile's IPSA rose 0.5% to 3,429.68 and Chile's IPSA rose 0.5% to 3,429.68. In other emerging markets, the RTS index in Russia slid 2% to 2098 and the ISE National-30 index in Turkey dived 2.8% to 68,172.
Asian stocks rose this morning, with the regional benchmark rebounding from its biggest drop in two months. Japan's Mitsubishi UFJ Financial and National Australia Bank led gains by banks on speculation that the deal between Bear Stearns and China's Citic Securities will bolster confidence in financial companies affected by the credit-market crisis.
The Morgan Stanley Capital International Asia-Pacific Index gained 0.8% to 163.38 as of 10:38 a.m. in Tokyo, after yesterday falling by the most since Aug. 17. An index of financial stocks rose 1%, the biggest gain among the 10 industry groups. It slid 5% in the two weeks to yesterday's close.
Japan's Nikkei 225 Stock Average added 0.4% to 16,510.10, while South Korea's Kospi index gained 0.8%. Singapore's Straits Times Index was the region's best performer, adding 1.1%. All Asian markets open for trading advanced, except in New Zealand.
A highly volatile session ended mixed as benchmark Sensex ended in green as NSE Nifty closed in negative territory Markets opened with a huge negative gap hitting a low of 17,171 in early trades however buying momentum in the index heavyweights like HDFC, ICICI Bank, L&T and SBI lifted the benchmark Sensex to close in positive terrain.
Among the BSE sectoral indices, BSE Bank Oil & Gas index was down 1.5%, BSE IT index down 1.4% and BSE Metal index dropped 0.3%. However, on the other hand, BSE Bank index was the top gainer up 2.1%.
Finally, 30-share Sensex gained 54 points to close at 17,613. NSE Nifty lost 31 points to close at 5,184.
Reliance Industries slipped 2% to Rs2420. Reports stated that the company decided to hive off Reliance Fresh into a separate company, Ranger Farm, for single point accountability. The scrip touched an intra-day high of Rs2483 and a low of Rs2371 and recorded volumes of over 50,00,000 shares on NSE.
ONGC slipped 1.2% to Rs1093. The company’s Mittal Joint Venture has bought 30% stake in
India Cement surged by over 3.5% to Rs277 after the company’s Q2 profit rose 90.5% to Rs2.23bn and net sales at Rs8.9bn (up 50.8%). The scrip touched an intra-day high of Rs291 and a low of Rs260 and recorded volumes of over 21,00,000 shares on NSE.
ITD Cementation jumped by over 4% to Rs648 after the company announced that they would sell 5.76mn shares at Rs415 per share. The scrip touched an intra-day high of Rs709 and a low of Rs613 and recorded volumes of over 3,00,000 shares on NSE.
Triveni Engineering slipped by 1% to Rs113. General Electric along with the company signed pact on compressors. The scrip touched an intra-day high of Rs121 and a low of Rs110 and recorded volumes of over 36,00,000 shares on NSE.
PTC advanced by 2% to Rs94 after the company announced that it plans to sell a 40% stake in its unit PTC India Financial Services Ltd. to select investors. The scrip touched an intra-day high of Rs96 and a low of Rs90 and recorded volumes of over 7,00,000 shares on NSE.
Hindustan Zinc edged higher 0.3% to Rs841.
Bharti Airtel dropped by over 3% to Rs945. Reports stated that the company would venture into IPTV and DTH services. The scrip touched an intra-day high of Rs961 and a low of Rs908 and recorded volumes of over 68,00,000 shares on NSE.
TTML gained by 1% to Rs40 following reports that the company may apply for GSM spectrum. The scrip touched an intra-day high of Rs40 and a low of Rs38 and recorded volumes of over 51,00,000 shares on NSE.
Parsvnath Developers is planning to build two luxury hotels at its 110 acre township in Jodhpur.
Ranbaxy has received an approval from the Canadian regulatory authority to market its hypertension drug Lisinopril.
France Tele is close to signing a 74:26 JV with Moser Baer for NLD and ILD operations.
Tata Teleservices has applied for GSM license in 20 circles.
ONGC Mittal has picked up 30% stake in an offshore exploratory block in Turkmenistan.
Triveni Engineering has struck a strategic alliance with GE to make high speed compressors used in the oil and gas industry.
Union Bank is planning to revalue its property with a view to boost its capital adequacy ratio.
Union Bank is planning to enter MF business and will announce a partner by year end.
Rajesh Exports has decided to issue bonus shares in the ratio of 2:1 post stock split from a face value of Rs2 to Re1.
UTV has announced the launch of World Movies, an international movie channel.
Finolex Industries is close to signing a deal for sale of its Chinchwad land.
Holcim has increased its stake in Ambuja Cement by 3.15% to 39.35%.
Videocon plans to enter airport development business through a newly formed group company.
Reliance Industries is in talks with Peru for picking up stake in two oil blocks.
Tata Power may buy coal mines in Australia and Africa to boost its existing supply of fuel.
Kotak Bank plans to enter the credit card business by February-March.
Nalco plans to build a 500,000 tons aluminum smelter, complete with a power plant in South Africa to save power cost.
Ballarpur Industries has raised uncoated paper prices by Rs500 per ton in October and Star Paper, West Coast Paper and JK Paper mills are also expected to follow suit.
IDFC has purchased 48.4% stake in one of its special purpose vehicles, called SMS Shivnath Infrastructure.
Ennore Foundries plans to increase its castings capacity to 230,000 tpa from ~10,000 tpa at an outlay of Rs3bn.
LIC Housing Finance plans to raise Rs5bn by selling shares to fund more loans to homebuyers.
Tata Chemicals’ bio-fuel plant in Nanded is expected to commence operations in 12-18 months.
Government has decided to allow SEZ units to import used plant or machinery without any quantitative restrictions, provided the machinery was not used by the assessee or previously used in India.
Ahead of the credit policy announcement, banks have sought a status quo for categorization of investments in their portfolio.
Government is planning sector specific sops for exporters affected by appreciating rupee.
India has crossed the milestone of 250mn phone connections, both fixed line and mobile, two months ahead of target.
Heavy rainfall is likely to affect soda ash production in the Saurashtra region of Gujarat, which accounts for 90% of soda ash production.
The demand for cement in the country is expected to grow by 10% in FY08.
The Maharashtra Government may reduce the special duty imposed on imported liquor.
In Q2 FY08, advance tax payments by telecom companies have declined by 17.3% to Rs5.4bn, while auto companies have paid an advance tax of Rs7.7bn, a drop of 14%.
Fund Activity:
FIIs were net sellers of Rs12.92bn (provisional) in the cash segment on Monday and the local institutions pulled out Rs153.3mn. In the F&O segment, foreign funds were net buyers of Rs3.65bn.
FIIs were net sellers to the tune of Rs32.16bn on Friday. Mutual Funds were net sellers of Rs2.32bn on the same day.
Major Bulk Deals:
The Master Trust Bank of Japan sold Ambuja Cements to Holcim; CLSA has sold Champagne Indage; Morgan Stanley has sold Himatsingka Seide; SBI MF and Principal MF have sold Man Aluminium; CLSA has sold McDowell Holding; CLSA has purchased Panyam Cement while Merrill Lynch has sold it; CLSA has sold Radico Khaitan; UBS has sold Sical Logistics; CLSA has sold United Breweries.
Upper Circuit:
RIIL, HFCL, Rei Agro, Prakash Industries, Megasoft, IID Forgings, TCI Industries and BF Utilities.
Lower Circuit:
Marathon Nextgen, Jai Corp, Assam Company, Ferro Alloys.
Nifty October 2007 futures at premium
urnover drops
Nifty October 2007 futures were at 5,189, at a premium of 5 points as compared to spot closing of 5,184.
The NSE futures & options (F&O) segment turnover was Rs 71,454.20 crore, which was lower than Rs 83,102.28 crore on Friday, 19 October 2007.
Reliance Energy October 2007 futures were at premium, at 1,368.70, compared to the spot closing of Rs 1,367.50.
Power Grid Corporation of India October 2007 futures were at premium, at 130, compared to the spot closing of Rs 129.80.
State Bank of India October 2007 futures were at discount, at 1709, compared to the spot closing of Rs 1715.50.
In the cash market, the S&P CNX Nifty lost 31.30 points or 0.60% at 5184.
FIIs get a breather on P-Notes
| Sebi to fast-track registration; proprietary sub-accounts have to register. |
| Securities and Exchange Board of India Chairman M Damodaran stood his ground on restricting the use of participatory notes (P-notes) by foreign institutional investors, but made two important announcements. |
| The first is to allow proprietary sub-accounts of foreign institutional investors (FIIs) — i.e. sub-accounts that are formed to invest their own money — to issue P-notes provided they apply to register themselves with Sebi in the next 24 hours. |
| The second is to put registration of FIIs on the fast track. Addressing FII representatives from all over the world through a video conference, Damodaran, however, said the issue of offshore derivative instruments by other sub-accounts of FIIs will not be possible after the changes it proposed last week come into force. |
| The Sebi board is scheduled to meet on October 25 to take a final decision. |
| “We will allow the sub-accounts of FIIs to apply for a full licence if they are used for their own trading, and will process the applications in about a week,” Damodaran said. |
| Other unregistered investors using derivatives to invest in stocks will have to unwind in 18 months, he added. |
| The Sebi chairman also said more than one entity from an FII can also be eligible for registration. |
| Unregistered investors, including hedge funds, have invested a cumulative $88 billion in Indian stocks. The government does not permit hedge funds to directly buy equities, so they use derivatives to invest. |
| Proprietary sub-accounts are different from other sub-accounts, which are largely corporate structures or special purpose vehicles formed in tax havens by unregistered investors, with FIIs investing the money on their behalf. |
| FIIs were of the view that they are already registered and hence there should not be any ban on P-notes issued by their own sub-accounts. |
| On the issue of speeding up the procedure for registering FIIs, Damodaran said Sebi had cleared 16 applications today, setting to rest the perception that the regulator delays registration of FIIs. |
| One of the proposals cleared was of Citibank’s application for a proprietary sub-account. |
| He also said that the Sebi board will review the registration procedures in its next board meeting and will consider broadening the list of various categories of investors that can come in as FIIs and invest here. |
| The regulator may also review the one-year track record period needed for getting FII registration. |
| Damodaran made it clear that P-notes are here to stay for long, but with limits. “We believe that the responses we have on board at this point of time are adequate for us to take the process forward,” Damodaran said. |
| In its proposal, Sebi had proposed limiting the issuance of additional P-notes, and capping the amount that can be issued by each broker. |
| The regulator proposes to set a limit of 40 per cent of assets under custody for issuing new notes. Brokers who exceed the limit will need to pare their outstanding notes. Brokers who have issued less than the limit may do so at an incremental rate of 5 per cent of their assets under custody. |
| The Sebi chairman, however, did not agree that the FII registration norms are slow and said clearance is pending in many cases as the applications are either incomplete or because the Sebi board has yet to take a decision on allowing that category of investors to register as an FII. |
| In many cases, it has been found that the custodians have not forwarded the applications to Sebi. |
| FIIs have bought a record $19 billion of Indian securities this year, more than double last year's $8.9 billion. More than half has been invested in the month since the US Federal Reserve cut interest rates. |
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