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Thursday, November 15, 2007
Edelweiss IPO
Networth Stock Broking has recommended subscribing to the initial public offering of Edelweiss Capital.
“We remain positive on the long term business potential of the broking industry and expect Edelweiss' growth momentum to continue in the coming years. At the upper band, the NBFC is priced at a PE of 35x its FY08 estimated earnings of Rs 23.2 and a price to book value of 3.9x,” says the brokerage report .
Edelweiss Capital is a diversified financial services company in India, providing investment banking, institutional equities, private client broking, asset management and investment advisory services, wealth management, insurance broking and wholesale financing services to corporate, institutional and high net-worth clients.
Issue proceeds will be used for enhancing margins with exchanges and expanding operations and network in addition to general corporate functions.
The price band of the issue is fixed at Rs 725-825 and it closes November 20.
India Number Portability wont affect margins
ndia`s top mobile operator Bharti Airtel on Wednesday said introduction of mobile number portability is unlikely to affect the company`s margins as it expects a major churn out of subscribers in favour of GSM operators.
"It (mobile number portability) will not affect our margins... We are hopeful that the margins will increase as Bharti`s network would attract high value customers from CDMA network," Bharti Airtel Chairman and Managing Director Sunil Bharti Mittal told reporters on the sidelines of CII knowledge summit.
On November 12, the government announced the introduction of mobile number portability in four metros by next year. It would allow users to change their service providers while retaining their numbers.
Welcoming the move, Mittal said, "it should be introduced in all the circles simultaneously not only in four metros... Fixed line services should also be included in it."
The initial cost of operationalising the number portability would be borne by operators, however, rest of the expenses should be passed on to the customers, he added.
There is less competition in circles other than metros, which calls for a greater need for introduction of number portability, Mittal said, adding Bharti is ready to introduce number portability across the country.
On the issue of auctioning of 3G spectrum, Mittal said, "we are in favour of auctioning of 3G spectrum but there should not be any artificial scarcity of spectrum."
Richest Indians
Essar Group's Shashi and Ravi Ruia are the only new entrants in the list of the 10 richest Indians compiled by Forbes, while banker Uday Kotak jumped the most number of places among the top 40 billionaires.
The Ruias jumped five places to the 7th position with a net worth of USD 12 billion, while Kotak with USD 4.6 billion hopped 11 positions to the 16th rank.
Savitri Jindal with a net worth of USD 8.5 billion has leapfrogged 10 ranks to stand at 11th position and Jaiprakash Gaur advanced nine places in the list with USD 3.8 billion. The three saw their wealth soaring thanks to the surge in their companies listed on the country's booming stock market.
The scrip of Kotak Mahindra bank has nearly tripled in the past one year from a low of Rs 364 on Nov 23, 2006 to Rs 1,059 on Thursday on the Bombay Stock Exchange. Similarly, the share price of Jindal Steel and Power Ltd jumped more than six times from a low of Rs 1,889 on December 12 last year to a record high of Rs 13,580 on Nov 1 this year.
There are 10 new entrants in the top 40 - Gautam Adani at 13th, Anand Jain (19), Cyrus Poonawalla (22), Rakesh Wadhawan (26), Niranjan Hiranandani (31), l Madhusudhan Rao (33), Gautam Thapar (34), Vikas Oberoi (36), Anu Aga (38) and Gracias Saldanha (39).
Billionaires Lakshmi Mittal, Mukesh Ambani, Anil Ambani and Sunil Mittal held their ground while Unitech's Ramesh Chandra and DLF's K P Singh rose one position each. Kumar Birla and Tulsi Tanti slipped two places each, while Azim Premji dropped one spot to the fifth position this year.
"Twenty-nine people who returned to the list are richer than last year. The only exception is Rahul Bajaj, who is battling his younger sibling over dividing their empire and whose fortune was flat at 2.3 billion dollar," Forbes said.
Grey Market - Edelweiss, Mundra, Jyothi Lab, Kolte Patil, Kaushalya Infra
Reliance Power -- 70 to 72
Mundra Port & Sez 400 to 440 520 to 525
Empee Distilleries 350 to 400 30 to 35
Edelweiss 725 to 825 820 to 850
Varun Ind. 60 45 to 50
Religare Enterprises 185 300 to 310
Barak Valley Cement 37 to 42 16 to 17
Rathi Bars 35 1.50 to 2
Allied Computers 12 12 to 15
SVPCL 40 to 45 - 2 to 3
Renaissance Jewellery 125 to 150 --
Kolte Patil 125 to 145 55 to 60
Kaushalya Infra 50 to 60 --
Jyothi Labo 620 to 690 300 to 320
CLSA - India not overvalued
CLSA, the Asia-brokerage arm of French lender Credit Agricole, said Indian stocks were not overvalued due to strong economic fundamentals and relatively low political risk, especially compared with its neighbours. But slow-paced infrastructure development and possible unstable coalition politics were risks ahead for India, Rob Morrison, chairman and chief executive officer of CLSA, told media in an interview on Thursday.
"India does not look over-valued. It looks very attractive as against the Chinese companies ... When we look at Indian stocks, the prices are much more attractive," he said.
Helped by foreign inflows India's main 30-share BSE index has risen 43.5 per cent this year to Thursday's close, sparking fears stocks were now overvalued.
Foreigners have so far poured in $16.8 billion in 2007, already higher than a record $10.7 billion in 2005. India has a stock price ratio of around 19 times earnings, compared with a ratio of 50-60 times earnings in China.
Morrison said Indian earnings growth in the second quarter was still high at 25-27 percent, and returns on assets were at 25 percent. He said CLSA saw investment opportunities in many sectors in India, including property, power companies and consumer banking.
In October, India's stock market regulator tightened investment rules for unregistered foreigners, clamping down on issuance of indirect investment notes - so-called participatory notes (P-notes) - to stem inflows of anonymous money.
Morrison said he expected the curbs to lower liquidity levels in the short term, but he saw the move as positive in the medium term by making investment in stocks more transparent. CLSA expected to increase private equity investment in Asia to $3 billion in 2008 from $1.8 billion this year.
India currently accounts from some $100 million in CLSA's private equity investments but the company wants that to rise. CLSA plans to renew a two-year contract with the merchant banking arm of leading lender State Bank of India, he said.
Morrison said he feared an asset bubble in Asia and a knock-on effect from a likely US economic downturn, but added India was better placed than many Asian nations to survive these problems because it relied more on domestic demand than exports.
POLITICAL WORRIES?
Indian stocks were briefly hit this year by political uncertainty over a nuclear deal with the United States that was opposed by the government's communist party allies.
The crisis threatened snap elections. Violent protests by poor farmers over industrial development plans, the closure of large retail stores in north India after demonstrations and go slow on the nuclear deal did not mean there was a wider backlash against reforms, he said.
But unstable coalition politics were a risk, especially as India needs infrastructure and education reforms if bottlenecks are not to shackle the booming economy. "I think it (coalition politics) does slow reforms," he said.
But he said India was still stable relative to its neighbours like Thailand and Pakistan. "When a government is elected in India it stays," he said. N Krishnan, head of research for CLSA India said that political uncertainity this year had weakened the government's ability to implement reforms.
"We don't see a dramatic reverse of economic reform but don't want an extended period of political uncertainty," he said. "With infrastructure, there isn't too much room for a delay."
Sensex sheds 144 points as US credit troubles resurface
The Sensex which had registered a record breaking 894 point surge on Wednesday, 14 November 2007, cooled off today on sustained selling throughout the trading session. Profit booking pulled the market lower. Weakness in banking, IT and power stocks pulled the Sensex down 205.86 points for the day at one point of time in afternoon trade to a low of 19,723.20. Realty and oil refinery stocks soared. Market breadth was strong.
The market sentiment was cautious due to persistent worry that more fallout from the US housing downturn and US credit crunch lies ahead, as stocks dropped across Asia. European markets, which opened after Indian markets were trading lower.
The market has been volatile in recent sessions, caught between jitters about the US housing problems and optimism about India’s economic outlook.
The 30-share BSE Sensex lost 144.17 points or 0.72% to 19,784.89. The broader CNX S&P Nifty ended lower 25.80 points or 0.43% to 5912.10.
The market breadth was strong. On BSE, 1808 advanced, while 988 stocks declined and 46 stocked were unchanged. 23 out of 30 stocks from the Sensex pack were in red.
BSE clocked a turnover of Rs 9233 crore compared to Wednesday (14 November 2007)'s Rs 8796 crore.
The NSE futures & options (F&O) turnover was at Rs 65894.61 crore compared to Wednesday (14 November 2007)'s Rs 68270.99 crore.
The Nifty November 2007 futures were at 5913, a premium of 0.9 points over spot closing of 5937.90.
The BSE Mid-Cap index rose 1.55% to 8,414.09, while the BSE Small-Cap index rose 1.88% to 10,227.66. Both these indices outperformed the Sensex.
India’s largest private sector firm by market capitalization and oil refiner Reliance Industries fell 0.55% to Rs 2871.70, off session’s low of Rs 2850.05.
India’s largest cellular service provider by market share Bharti Airtel jumped 4.71% to Rs 900.10 after the company said on Wednesday, margins would not be squeezed by the introduction of number portability and it favours extending the facility nationwide. The telecom minister said on Monday number portability would begin in four cities -- New Delhi, Mumbai, Chennai and Kolkata -- by the first quarter of 2008, allowing mobile phone customers to retain their phone numbers when they switch operators.
The BSE Bankex lost 1.54% to 11,053.02. It underperformed the Sensex. Index heavyweight and India’s largest private sector bank by assets ICICI Bank slipped 2.29% to Rs 1248.60. HDFC Bank fell 2.85% to Rs 1699.20, Axis Bank dropped 2.68% to Rs 962.60, Punjab National Bank fell 1.37% to Rs 593.10.
India’s largest commercial lender State Bank of India declined 1.62% to Rs 2308.10. The stocks rose in early trades to a high of Rs 2400 on hopes the government would soon approve its right issue. SBI, 59.73% owned by the government, said last month it was planning to raise Rs 10000 crore by selling new equity around the end of 2007. On Wednesday, Finance Minister P Chidambaram said there was a strong case for the rights issue.
Software stocks declined sharply after Wednesday’s rally that was triggered by easing of worries over US credit crisis. The BSE IT index fell 1.96% to 4,196.49. It underperformed the Sensex. Infosys Technologies fell 3.12% to Rs 1653.05, Wipro shed 3.13% to Rs 456.45, Satyam Computers 0.44% to Rs 428.85. Indian IT firms earn more than 50% of their revenue from US.
India’s biggest software exporter TCS edged lower 0.40% to Rs 978.90. The company today said it won a four-year outsourcing deal from Social Security Institute of Mexico worth more than $200 million.
Tata Steel gained 0.31% to Rs 860.60. The company is raising Rs 9135 crore from a rights issue of equity shares and convertible preference shares. The rights issue of equity shares is in the ratio of 1:5, priced at Rs 300 per share. The issue opens on 22 November 2007 and closes on 21 December 2007.
The BSE Realty index moved up 2.01% to 10,523.42. It outperformed the Sensex. Index heavyweight DLF rose 2.08% to Rs 945.95. Unitech moved up 2.35% to Rs 387.10 and Omaxe rose 5.91% to Rs 343.85.
The BSE Oil & Gas index moved up 1.46% to 12,315.88. It outperformed the Sensex. The stocks of the oil marketing companies soared on hopes that the government may give some tax benefits or increase oil bonds, which will bring down under recovery on sale of petrol and diesel. BPCL soared 18.02% to Rs 427, HPCL jumped 14.89% to Rs 299.85 and Indian Oil Corporation moved up 10.23% to Rs 596.
Among stand alone refiners, Mangalore Refinery & Petrochemicals soared 22.09% to Rs 127.95 on huge volumes of 1.85 crore shares and Bongaigaon Refinery surged 30.13% to Rs 104.95 on huge volumes of 1.70 crore shares.
Essar Oil surged 30.50% to Rs 157.65 after it said it would consider preferential issue of securities to promoter group at its board meet on 16 November 2007. The stock rose 34% to Rs 120 on Wednesday, 14 September 2007.
The BSE Power index fell 1.20% to 4,613.94. It underperformed the Sensex. Reliance Energy fell 3.45% to Rs 1854.15, Tata Power dropped 4.92% to Rs 1245.55, Torrent Power fell 3.59% to Rs 193.10, NTPC fell 2.85% to Rs 269.40. However, CESC surged 6.39% to Rs 658.25, Areva T&D moved up 1.06% to Rs 3117.25, Neyveli Lignite rose 0.79% to Rs 215.85 and Power Grid Corporation moved up 1.52% to Rs 156.80.
Fertiliser stocks rose for the second day in a row on reports that the government will issue bonds worth Rs 7500 crore to fertiliser firms by end-November 2007 to compensate them for selling the commodity at discounted prices. Rashtriya Chemicals and Fertilisers (RCF) soared 8.88% to Rs 78.50, Fertilisers and Chemicals Travancore (FACT) spurted 10% to Rs 39.40, Mangalore Chemicals & Fertilisers jumped 20% to Rs 48.90 and National Fertilizers soared 10% to Rs 83.70.
Packaging firm Shetron moved up 6.09% to Rs 71.45 after its board approved acquiring unlisted Belgian firm, Shetron Sobemi Europe NV, and merging paper packaging products maker Fibre Foils with itself.
Anil Dhirubhai Ambani led financial services firm Reliance Capital soared 5.24% to Rs 2259.20 on volumes of 9.79 lakh shares.
Godrej Consumer Products soared 5.61% to Rs 128.95 after it said the board would meet on 23 November 2007 to consider a rights share issue.
Reliance Petroleum clocked the highest turnover of Rs 423.75 crore on BSE. Reliance Energy (Rs 375.22 crore), Housing Development & Finance Corporation (Rs 304.79 crore), GMR Infrastructure (Rs 265.93 crore) and Essar Oil (Rs 258.63 crore), were the other turnover toppers in that order.
Ispat Industries registered highest volumes of 3.78 crore shares on BSE. IFCI (2.12 crore shares), Reliance Petroleum (1.96 crore shares), Manglore Refinery & Petrochemicals (1.85 crore shares) and Essar Oil (1.72 crore shares), were the other volume toppers in that order.
European market edged lower mirroring overnight fall in US stocks. UK’s FTSE 100 was down 0.80%, France’s CAC 40 was down 1.15% and Germany’s DAX was down 1.03%.
Asian markets drifted lower due to overnight fall in US stocks. Key benchmark indices in Japan, Hong Kong, South Korea, Singapore and Taiwan were down by between 0.42% to 1.42%.
US stocks fell on Wednesday, 14 November 2007, amid concerns about a wider fallout from the housing downturn and credit crunch. Dow Jones Industrial Average lost 76.08 points or 0.57% to 13,231.01. The tech laden Nasdaq Composite Index shed 29.33 points or 1.10% to 2,644.32
Crude oil, which fell more than $4 a barrel on 13 November 2007, has rebounded on forecasts that a US Energy Department report today will show US supplies declined.
Mid Caps rally in subdued market
Weak global cues and rise in crude oil prices kept the domestic indices lower today. The Sensex resumed with a positive gap of 19 points at 19,948 but slipped immediately in the red. The persistent selling in heavyweights, banking, and IT stocks dragged the Sensex to its day's low of 19,723 by afternoon. Refinery and fertiliser shares however posted huge gains. The market witnessed some buying interest in late trades, however, the Sensex finally closed the session by shedding 144 points at 19,785. The broad based Nifty ended the session at 5,912, down 26 points.
Surprisingly, the breadth of the market was extremely positive. Of the 2,848 stocks traded on the Bombay Stock Exchange (BSE), 1,801 stocks advanced, 992 stocks declined and 55 stocks ended unchanged. The sectoral indices had a mixed outing. The BSE IT index dropped 1.96% followed by the Bankex index (down 1.54%) and the BSE CD index (down 1.43%). However, the BSE Realty index rallied sharply and gained 2.01% followed by the BSE FMCG index (up 1.83%) and the BSE Oil & Gas index (up 1.46%).
Among the major losers, Reliance Energy shed 3.45% at Rs1,854, Wipro declined 3.13% at Rs456, Infosys fell 3.12% at Rs1,653, HDFC Bank slipped 3.04% at Rs1,696, NTPC dipped 2.85% at Rs269, ICICI Bank lost 2.29% at Rs1,249 and BHEL slumped 1.76% at Rs2,823. Bharti Airtel, however, gained 4.71% at Rs900, followed by ITC up 3.52% at Rs190 while, M&M, ONGC, Tata Steel, Ambuja Cement, L&T ended the day in the positive territory.
Over 3.78 crore Ispat Industries shares changed hands on the BSE followed by IFCI (2.12 crore shares), Reliance Petroleum (1.96 crore shares), Manglore Refinery (1.84 crore shares) and Essar Oil (1.72 crore shares).
Valuewise, Reliance Petroleum registered a turnover of Rs422 crore on the BSE followed by Reliance Energy (Rs374 crore), HDFC (Rs304 crore), GMR Infrastructure (Rs265 crore) and Essar Oil (Rs258 crore).
Post Market Commentary
The market closed the session on a negative note due to the selling pressure across the sectoral indices scrips. A lot of volatility is seen in todays trading session as both the Sensex and Nifty keeps on moving ups and down. The investors showed more calculated approach in booking their positions. More buying activity is seen in oil & gas and reality indices scrips while Bankex index remains out of favor. Finally, BSE Sensex closed lower by 144.17 points at 19,784.89 and NSE Nifty fell by 25.8 points to closed at 5,912.10. But the BSE Mid cap and Small cap closed higher by 128.46 points and 188.28 points at 8,414.09 and 10,227.66 respectively. Overall, the market breadth was strong as 1,808 stocks advanced whereas 988 stocks declined.
BSE Reality index surged by 207.06 points to close at 10,523.42. Pushing it up are Mahindra Ges by (9.55%), Omaxe (5.91%), Akruti city (5.45%), HDIL (3.12%) and Unitech (2.35%).
BSE oil & gas index improved by 177.01 points to close at 12,315.88 as Essar Oil (30.50%), BPCL (18.02%), HPCL (14.89%), Indian Oil (10.23%) and Cairn (4.02%) closed higher.
BSE Capital goods index closed higher by 39.02 points at 20,905.87 as Thermax limited (6.18%), Siemens (4.37%), Praj industries (3.80%), BEML (2.81%), Carbo Universal (2%) closed higher.
BSE Metal index dropped by 16.14 points to close at 17,739.89 as Jindal Steel (4.79%), Hindalco Industries (0.90%) and Sterlite Industries (0.41%) are closed in red .
BSE bankex index slipped by 172.80 points to close at 11,053.02 as HDFC Bank (2.85%), AXIX Bank (2.68%), ICICI Bank (2.29%), SBI (1.62%) and PNB (1.37%) closed lower.
BSE IT index fell by 83.83 points to close at 4,196.49. Pulling it down are Wipro (3.13%), Infosys (3.12%), Moser baer (2.96%), I-Flex (2.28%), HCL tech (1.53%), Satyam (0.44%) closed in red.
BSE Power index slipped by 56.25 points to close at 4,613.94. Pilling it down are tata power by 4.92%, reliance energy by 3.45%, NTPC 2.85%, ABB by 1.84%, BHEL by 1.76% and GVK power by 1.66%.
Enjoy the moment-um
The secret of health for both mind and body is not to mourn for the past, worry about the future, or anticipate troubles, but to live in the present moment wisely and earnestly. – Buddha
Call it short-covering or what you may. But the bulls enjoyed every moment on Wednesday. After the inexplicable spurt, the bulls would hope to consolidate their position today. Signals from the global markets are pretty much mixed this morning. US shares closed down overnight. European and Latin American stocks advanced. Asian markets are mixed. The provisional FII figure for yesterday's session raises doubts about yesterday's big bang rally and as always makes the near term future market direction uncertain.
Unless net inflows from foreign funds turns significantly higher, the main indices may struggle to attain greater heights. They will largely remain in a range and the intra-day volatility will continue. Action will continue to be stock specific and at times sector specific. The lack of any big event in the near term will make it tough for the bulls to continue pushing the indices higher and higher. Some consolidation is a given following the sharp rise from late August to 20,000 level on the Sensex.
The upside appears to be capped at the moment, and a meaningful, healthy correction cannot be ruled out completely. Despite this, we hear Nifty levels of close to 7000 by December. (We’ll wait to see whether December 2007 or December 2008). The trend will be decided by global markets, local political happenings and liquidity. Today, we expect a cautious to slightly higher opening and a choppy day.
Among stock-specific action, Om Metals is likely to continue its spurt on expectations of a placement at a significant premium to the current price.
Marg Constructions has announced the arrival of a Cutter Suction Dredger. MARG CAUVERY with a dredging capacity of 2000 cubm/hour arrived on November 9, and would be immediately deployed in the dredging works of Karaikal Port which is currently being developed by the company.
Broking counters could be in action as the IPO of Edelweiss Capital begins today. The price band for the same has been fixed at Rs725 to Rs825. Going by the grey market premium, Edelweiss is likely to double on listing.
Amtek India has signed a technical collaboration agreement with Teksid SpA. The Italian company is a world leader in the production of iron castings for the automotive industry with operations spread out in Europe, North and South America and Asia.
Essar Oil's Board of Directors will meet on November 16 to consider further issue of securities including issue of securities and warrants on a preferential offer basis to the Promoters / Promoter Group.
US stocks ended lower on Wednesday owing to selling pressure in the last half hour of trade, as investors chose to lock in gains in technology, financials and some of the other leaders of the previous day's rally.
Retailers and PC makers led the fall after Macy's cut its sales forecast and the government said consumer spending slowed last month. Dell, IBM and Apple led technology shares to a fifth drop in six days.
The Dow Jones Industrial Average lost 76 points, or 0.6%, to 13,231.01. The Nasdaq Composite Index fell 29 points, or 1.1%, to 2,644.32. The Standard & Poor's 500 Index dropped 10 points, or 0.7%, to 1,470.58.
Market breadth was negative. More than two stocks declined for every one that rose on the New York Stock Exchange.
On Tuesday, the Dow rallied nearly 320 points, registering its second biggest one-day point gain of the year following encouraging comments from Goldman Sachs and other Wall Street banks on their exposure to the sub-prime mortgage mess.
But the ghost of the housing sector slump returned to haunt investors on news of large writedowns from HSBC and Bear Stearns. Also, Tuesday's rally was largely due to short-covering, which didn't extend into Wednesday's session.
Going ahead, US stocks are likely to be volatile through the rest of the year.
After the close, Merrill Lynch confirmed market rumors that NYSE-Euronext CEO John Thain will take over the top spot at the bank, following Stanley O'Neal's exit.
Airline stocks rose in the afternoon on reports that United Airlines' parent UAL and Delta Air Lines are considering a possible merger. E*Trade Financial rallied for a second session after plunging roughly 60% on Monday on rumors that it would need to file for bankruptcy.
Fed Chairman Ben Bernanke says the central bank will begin providing its economic forecast four times a year, instead of the current two. He also says that when the Fed gives its forecast, it will look out three years into the future, as opposed to the current two years.
Treasury prices inched higher by the end of the session, lowering the yield on the 10-year note to 4.25% from 4.26% late on Tuesday. In currency trading, the dollar continued to slump against the euro. The greenback also inched higher against the yen.
US light crude oil for December delivery rose $2.92 to settle at $94.09 a barrel on the New York Mercantile Exchange, bouncing back after several down sessions. COMEX gold for December delivery rose $15.70 to $814.70 an ounce.
European shares closed higher. The pan-European Dow Jones Stoxx 600 index rose 0.5% to 370.28. The French CAC-40 gained 1.4% to 5,613.60, while the UK's FTSE 100 closed up 1.1% at 6,432.10 and the German DAX 30 inched 0.1% higher at 7,783.11.
Stock markets also rose in Brazil and Mexico. Brazil's Bovespa stocks index ended up 2.7% at 64,630. Mexico's IPC index of 35 most-traded stocks closed up 0.6% at 29,655.68.
Asian stocks are mixed this morning. The Morgan Stanley Capital International Asia Pacific Index added 0.4% to 162.96 as of 10:19 a.m. in Tokyo, after yesterday posting its largest advance since Sept. 19.
Japan's Nikkei climbed 52 points to 15,552, while the Hang Seng in Hong Kong was flat at 29,168.
Rally likely to continue
After opening with a positive gap up in the early trades markets constantly gained momentum as the day progressed. Overnight gains in the
Unabated buying across the board boosted the benchmark Sensex to close over 19,900 rallying 893 points recording it’s biggest-ever single-day gain in absolute terms.
The index added to its yesterday’s 300 points gain almost recouping the 1,200 points it had lost in previous six trading sessions till Monday.
Wipro surged 7% to Rs472 as
Infosys Technologies gained 5% to Rs1707 after the company yesterday declared that they have planned to acquire smaller competitors in
ITC advanced 2% to Rs181 after reports stated that
SBI has gained 1% to Rs2316 following reports that the nation's biggest lender by assets and some other state-run lenders may get Rs200bn as fresh capital from the government. The scrip has touched an intra-day high of Rs2450 and a low of Rs2315 and has recorded volumes of over 2,00,000 shares on NSE.
Pratibha Industries advanced 8.5% to Rs303 after the company announced that they won Rs410mn order for the expansion of the domestic arrival terminal at the Indira Gandhi International airport. The scrip touched an intra-day high of Rs304 and a low of Rs285 and recorded volumes of over 10,000 shares on NSE.
Mcnally Bharat was locked at 5% upper circuit to Rs259.5 after the company yesterday declared that they have received Rs340mn order from Maharashtra State Power Generation Company. The scrip touched an intra-day high of Rs259.5 and a low of Rs251 and recorded volumes of over 1,00,000 shares on NSE.
Stocks in News:
ICICI Financial bidders seek greater disclosure on the underlying subsidiaries of the bank.
Bharti Airtel to go in for major network expansion drive and add over 1,000 locations by March in north Maharashtra.
Malaysia’s Columbia Asia Group of Hospitals to construct 100-bed multi-spatiality hospitals in DLF townships.
Gail is in talks with Qatar Petrochemical and Russia’s Lukoil to build a large petrochemical plant overseas.
Oil companies sell bonds at a discount to LIC and other financial institutions.
Apollo Group to buy 300-bed hospital in the UK.
Essar group run Aegis BPO buys TeleTech Services, a 50:50 JV between TeleTech Europe and Bharti Ventures.
MindTree has bought Purple Vision, Indian subsidiary of French company TES Electronic Solutions SA for US$6.6mn.
The Finance Ministry is to investigate the identity of the promoters of ByCell.
Warburg Pincus sells 8.9% stake in Nicholas Piramal for Rs7.7bn.
RIL to purchase two helicopters for its offshore oil exploration work on the east coast.
Banglore Metropolitan Transpot Corporation (BMTC) is expected to raise Rs7.5bn via IPO.
SISCO, a JSW group company plans to increase production of specialty steel to 3mn tons per annum over the next 3-4 years.
Tech Mahindra to invest Rs10bn for setting up software development centres in Chandigarh, Noida and Jaipur in the next few years.
Nicholas Piramal is set to cut about 70 jobs at its manufacturing plant in Morpeth, UK.
ACC has decided to transfer the ready mix concrete business to its wholly owned subsidiary ACC Concrete for ~Rs1bn.
Sebi has announced new derivative instruments to deepen the market.
The Finance Ministry has finalized modalities to issue bonds worth Rs75bn to the fertiliser companies by the end of this month.
India added 5.7mn subscribers under the GSM segment in October.
The Government’s indirect tax collections grew 18.6% in October.
Members of COAI are willing to go for open auction of spectrum for 2G services beyond 10MHz.
Sugarcane crisis in UP escalates as private sugar mills are unwilling to start crushing.
According to a joint study by the CII and McKinsey, the earth-moving and construction equipment industry’s revenue is likely to grow five-fold to US$13bn by 2015.
FII Investment Trend:
FIIs were net buyers of just Rs1.63bn (provisional) in the cash segment on Wednesday while the local institutions pumped in Rs5.67bn.
In the F&O segment, FIIs were net buyers of Rs20.66bn.
Foreign funds were net buyers of Rs1.22bn in the cash segment on Tuesday.
Mutual Funds pulled out Rs128mn from the cash segment on the same day.
Upper Circuit:
HFCL, KEC Infra, Lloyd Steel, Uttam Galva, Surya Chakra Power, Vikash Metal, Shah Alloys, Kamdhenu, Indus Fila, Bombay Burmah, Zandu Pharma, Tourism Finance, GTC Industries, SREI Infra, Nesco, Ispat Industries and Shree Precoated.
Lower Circuit:
RIIL, MMTC, Engineers India, ITD Cementation, Temptation Foods.
Trading Calls
ICICI Bank
Our short-term outlook for the stock is bullish. We retain our buy recommendation.
Infosys
Negating our view, Infosys surged in the last session. The daily RSI has bounced up from oversold region. We change our recommendation to buy.
L&T
The stock opened with an upward gap and has formed a doji star. Moreover, it is facing key resistance at Rs 4,670. Fresh buy can be initiated when the stock moves above this resistance level.
ONGC
ONGC moved up contrary to our opinion on Wednesday. Buy the stock in dips with tight stop loss at Rs 1,208.
Reliance Capital
The stock is trading near the upper boundary of the sideways range of Rs 1,800 and Rs 2,200. Buy the stock when it moves above Rs 2,200 with tight stop loss.
Reliance Communications
We notice below average volumes in the last session and the stock is facing resistance at Rs 750. Sell the stock if it fails to move above Rs 750.
Reliance Industries
On Wednesday, RIL conclusively penetrated the strong resistance level of Rs 2,850. The trend is bullish as long as the stock trades above this level. We maintain our buy recommendation.
Satyam Computer
As anticipated, the stock gained in the previous session and the daily RSI has recovered from the oversold region. We reiterate our buy.
SBI
The stock has formed a doji star candlestick pattern, with low volumes. Desist trading for the day.
TCS
Buy the stock in dips with stop loss at Rs 974.
Via Businessline
Indian Markets Expensive?
Are Indian stocks too expensive after the breathless rally of the past few months? If you take the Sensex as a proxy for the Indian markets, yes. Its price earnings multiple, at 26.9 based on past year’s earnings, definitely looks stiff both in relation to long-term trends and in comparison to its peers in other emerging markets. The Sensex’s PE multiple now is several levels above its five-year average of 18. Over the past five years, the bellwether’s PE multiple has swung between 10 and 27 times its historic earnings. It has averaged 15 for a 10-year period. The Sensex also appears dear compared to many other emerging market indices that figure on the radar screens of institutional investors.
The Sensex is much more expensive than Brazil’s Bovespa, which trades at about 15 times, Taiwan’s Taiex (21 times), Thailand’s SET (21 times) or Korea’s KOSPI (16 times). The only exception is the Shanghai Composite index of China, which trades at a whopping 68 times.
Higher growth rates
Indian companies will have to deliver much higher growth rates in earnings than most other emerging market peers to justify the current Sensex valuation. The PE of 27 assumes that earnings of the constituent companies would sustain a 25-30 per cent annualised growth at least over the next five years. Is it time to raise the flag of caution? Especially after the slowdown in earnings growth reported by India Inc in the September quarter.
However, investors can probably take heart from the fact that not all of the Indian stock market is as expensive as the Sensex.
With the recent market rally bypassing large swathes of mid- and small-cap stocks, the PE multiples of these stocks are far below those of the Sensex constituents. The PE multiple of the BSE Midcap index is, for instance, at just 22. What is more, a good 60 per cent of the stocks listed on the NSE are still trading at a PE multiple of less than 20, based on their past year’s earnings.
Via Businessline
Edelweiss IPO Analysis
| Edelweiss Capital's IPO may appear slightly expensive but it has high margins to boot. |
| It’s raining IPOs from Indian broking firms. After IPOs of Motilal Oswal and Religare Enterprises in August and October respectively, there is yet another player Edelweiss Capital tapping the primary market. |
| And it’s a bonanza time for investors as they can rake in profits not only by following the broking firms’ investment advice but also investing in their companies, whose stock prices are soaring on the bourses. |
| For example, stock price of Motilal Oswal has appreciated by more than 50 per cent in less than three months and Religare too is expected to be a big gainer on listing. |
| Edelweiss Capital, a holding company of nine subsidiaries, plans to raise about Rs 609-693 crore from the primary market by issuing 8.4 million equity shares (including employee reservation of 0.2 million) in the price band of Rs 725-825. |
| The company plans to spend about Rs 435 crore over the next two years, most of which will be spent by March 2008. |
| The IPO proceeds will mainly be invested in its 100 per cent subsidiary, Edelweiss Securities (ESL)—which is into institutional equities, private client broking and wealth management for maintaining higher margin balances with the stock exchanges, prepaying loans, expanding office network and infrastructure, and enhancing existing technological capacity. |
| Same products… Like its peers, Edelweiss also wants to offer more than just equity broking and expand its product basket to position itself as a diversified financial services player. |
| The company, which started as an investment bank in 1996, has grown its businesses rapidly in last four to five years to include various high growth businesses like institutional equities, private client broking (for high net worth individuals), asset management, wealth management, insurance broking, treasury and wholesale financing. |
| The company has classified the last two businesses (treasury and wholesale financing) as capital businesses, and they form about 38 per cent of total revenues. It groups the remaining segments as agency businesses, which contribute about 58 per cent. |
| The company has indicated that it will achieve a balance between these two businesses. |
| ...but a different strategy There are certain factors, which merit attention before investing in Edelweiss’ IPO. First, the company is a dominant player in the institutional and high net worth individuals (HNI) segments with almost negligible presence in retail. |
| This is in contrast with other major players which are expanding their footprint in retail. |
| This could however be a blessing in disguise in the sense that it has helped the company enjoy higher margins – operating profit margin and net profit margin of about 48 per cent and 29 per cent respectively - than its comparable peers. |
| Says Arun Kejriwal, director, Kejriwal Research and Investment Services, “The company’s forte in institutional and HNI segment has helped as retail business means low brokerages and small volumes.” However, the company has not closed doors for retail customers and will evaluate the opportunity. |
| Second, financial services, being a high growth industry, companies have to grapple with retaining good talent and rein in attrition. |
| Edelweiss Capital has tackled this problem by issuing shares and ESOPs to employees, which will account for just under 20 per cent of the company’s post-issue capital. Moreover, most of the senior management has been with the company for over five years. |
| Third, global financial players like Greater Pacific, Galleon Group, Sequoia Capital, Shuaa Capital and Lehman Brothers will be holding 37 per cent in the post-IPO capital, which instills confidence about the company’s reputation and skills. |
| Some of these investors are also represented on the board, half of which is made of independent directors. |
| The only thing, retail investors need to keep in mind is the fact that the industry, in which the company operates, is highly working capital intensive as margin requirements increase if business increases. |
| So, constant capital infusion (equity or debt) is required from time to time which could lead to dilution (in case of equity). |
| High margins… The issue has been assigned IPO Grade 4/5 by Crisil indicating that the fundamentals of the company are above industry average. This follows strong growth reported in the past few years without much contribution of low margin high volumes retail business unlike its peers. |
| The company’s consolidated net sales zoomed at 119 per cent a year between FY05 and FY07, thanks to the introduction of new high growth businesses mentioned above. |
| Despite substantial jump in employee and other operating expenses, the company managed to clock a higher operating profit growth of 123 per cent CAGR in the same period due to high margin institutional and HNI business. Net profit growth was capped at 120 per cent (still robust) due to jump in interest costs. |
| Going forward, the growth is expected to be higher as many of its subsidiaries covering various businesses like wealth management, asset management and advisory services have been formed in FY06, which are yet to achieve scale. |
| Further, increasing foreign money, rising market turnover and growing HNI population provides immense potential to the company. |
| Despite short term hiccups, the long term trend of the Indian market is upwards thus providing long term visibility. Moreover margins are likely to be maintained. |
| “Our focus is on profitable growth with risk managed return on equity,” says Rashesh Shah, chairman and managing director of the company. |
| …bring premium valuation At Rs 725-825, the issue is priced at about 27 times and 30 times for FY08 estimated earnings respectively. This is much higher than its closest peers Motilal Oswal and Religare which trade at 21 times and 15 times for estimated FY08 earnings respectively. |
| The company commands high valuations because it enjoys superior margins than others and has reported strong financial performance without too much presence into the retail business. |
| Also, the growth in FY09 is going to be robust. For estimated FY09 earnings, the company’s is valued at 13 - 15 times (assuming 100 per cent growth in earnings ) and 17-20 times (assuming 50 per cent). |
| Short term investors would get decent returns depending on market conditions post listing. Long term investors can select from a wide range of listed broking firms depending on factors like the extent of diversification, broader network and choice between HNI or retail growth. Issue opens: November 15 |
Nifty November futures at premium
Turnover in F&O segment increases
Nifty November 2007 futures were at Rs 5952.05, at a premium of 14.15 points as compared to spot closing of Rs 5937.90.
NSE’s futures & options (F&O) segment turnover was Rs 68,270.99 crore, which was higher than Rs 67,336.02 crore on Tuesday, 13 November 2007.
Reliance Industries November 2007 futures were at premium, at Rs 2905, compared to the spot closing of Rs 2888.45.
Neyveli Lignite Corporation November 2007 futures were at premium, at Rs 215.90, compared to the spot closing of Rs 214.05.
Mangalore Refinery & Petrochemicals November 2007 futures were at premium, at Rs 107.80, compared to the spot closing of Rs 104.75.
In the cash market, the S&P CNX Nifty gained 242.50 points or 4.26% at 5937.90
FIIs in buying mode
Inflow of Rs 122.20 crore on 13 November 2007
Foreign institutional investors (FIIs) bought shares worth net Rs 122.20 crore on Tuesday, 13 November 2007, compared to their selling of Rs 820 crore on Monday, 12 November 2007.
FIIs inflow of Rs 122.20 crore on 13 November 2007 was a result of gross purchases of Rs 5186.80 crore and gross sales Rs 5064.60 crore. The 30-shares BSE Sensex rose 298.21 points or 1.59% to 19,035.48 on that day.
FII inflow in calendar year 2007 totaled Rs 69,805.60 crore (till 13 November 2007).
There are a total of 1,155 FIIs registered with the Securities & Exchange Board of India (Sebi).
Crude takes a huge leap
Crude prices close almost $3 higher as OPEC speaks otherwise and dollar slides
Crude oil prices rose today, Wednesday, 14 November, 2007 on forecasts that the weekly inventory report by Energy Department tomorrow will show U.S. supplies declined. Price climbed up by almost $3 today. Price also rose once it was reported that an OPEC official has stated that increase in production is not necessary immediately.
For the day ending Wednesday, 14 November, 2007, crude-oil futures for light sweet crude for December delivery closed at $94.09/barrel (higher by $2.92/barrel or 3.2%) on the New York Mercantile Exchange. Price rose to $90.3 during intra day trading. Since the last two days, oil price had slipped almost $5.
Last week, prices rose to $98.62/barrel during intra day trading on 7 November, 2007. Oil prices had rose 16% in October, 2007, the biggest one-month gain since September 2004.
Brent crude oil for December settlement rose $2.53 (2.9%) to $91.36 on the London-based ICE Futures Europe exchange.
Crude oil also rose because the dollar fell against the euro for the second day on speculation that economic growth in Europe will outpace U.S. The dolar index was down by 0.8% today.
Yesterday, prices had slipped almost $2 after Organization of Petroleum Exporting Countries (OPEC) spoke out and hinted about increasing production in near term. Prices fell after OPEC said that it might consider increasing output in its forthcoming meeting, either this month or the one in December. Prices also fell after The International Energy Agency cut its forecast for global demand through 2008 as record prices could curb fuel use.
Natural gas wipes away earlier gains
Natural gas in New York declined, erasing an earlier gain, on an outlook for above-average winter temperatures and ample inventories. Gas for December delivery fell 11.4 cents (1.4%) to settle at $7.835 per million British thermal units.
Against this backdrop, December reformulated gasoline rose 5.37 cents at $2.3704 a gallon and December heating oil gained 7.13 cents at $2.5734 a gallon.
At the MCX, crude oil for November delivery closed at Rs 3673/barrel, higher by Rs 83 (2.3%) against previous day’s close. Natural gas closed at Rs 311.3/mmtbu as against previous close of Rs 314.2/mmtbu, lower by Rs 2.9/ mmtbu.
The Paris-based IEA cut its estimate for fourth-quarter demand by 500,000 barrels a day as record prices reduced energy consumption. The IEA also said next year's demand is forecast at 87.69 million barrels a day, or 300,000 barrels a day less than a previous estimate. It was due to higher prices and weaker-than-expected economic data from the U.S. and the former Soviet Union.
Attacks on oil facilities in Middle East 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.
The Energy Department will come out with the weekly inventory report on crude oil and fuel products for week ended Friday, 9 November tomorrow morning at Washington at 10.30 E.T. It is a day later than normal due to Veterans Day Holiday.
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