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Tuesday, November 20, 2007
RNRL, REL, IDFC November futures at premium
Turnover in F&O segment rises
Nifty November 2007 futures were at 5797, at a premium of 16.10 points as compared to spot closing of 5780.90.
NSE’s futures & options (F&O) segment turnover was Rs 73,178.98 crore, which was higher than Rs 51,841.62 crore on Monday, 19 November 2007.
Reliance Natural Resources (RNRL) November 2007 futures were at premium, at Rs 168.10, compared to the spot closing of Rs 165.95.
Reliance Energy (REL) November 2007 futures were at premium, at Rs 1824, compared to the spot closing of Rs 1795.10.
Infrastructure Development Finance Company (IDFC) November 2007 futures were at premium, at Rs 204 compared to the spot closing of Rs 200.80.
In the cash market, the S&P CNX Nifty lost 126.75 points or 2.15% at 5780.90.
Edelweiss Capital IPO ends with 109.80 times subscription
Receives bids for 92.08 crore shares
Edelweiss Capital IPO ended with 109.80 times subscription. The IPO received bids for 92.08 crore shares, as against the issue size of 83.86 lakh shares.
The price-band of the issue has been fixed at Rs 725-825 per share.
At the lower end of the price band, Edelweiss will raise over Rs 607 crore and it will raise Rs 691 crore at the upper end of the price band.
Rating agency CRISIL has assigned an IPO grade of 4/5 to the company, indicating that the fundamentals of the issue are above average.
Edelweiss Capital provides investment banking, institutional equities, private client broking, asset management, wealth management, insurance broking and wholesale financing services to corporate, institutional and high net worth individual clients. It operates from 43 other offices in 19 Indian cities.
Edelweiss plans to utilise the proceeds for enhancement of margin maintenance with stock exchanges, establishment of additional offices and acquisition of office infrastructure, enhancement existing technology capacity and prepayment of loans.
The company’s total consolidated income in 2006-07 (April-March) was Rs 371.2 crore and net profit for the year stood at Rs 109 crore. For the five months ended August 2007, its consolidated total income stood at Rs 284.8 crore and net profit Rs 80.9 crore.
Kotak Mahindra Capital, Citigroup and Lehman Brothers were the book running lead managers to the issue.
Goldman Sachs - subprime crisis
For more than three months, as turmoil in the credit market has swept wildly through Wall Street, one mighty investment bank after another has been brought to its knees, levelled by multibillion-dollar blows to their profits.
And then there is Goldman Sachs Group Inc.
Rarely on Wall Street, where money tends to travel in a thundering herd, has one firm gotten it so right when nearly all its peers were getting it so wrong. Three banking chief executives have already been forced to resign because of the debacle and the pay for nearly all the survivors is expected to be deeply cut.
But for Goldman’s chief executive, Lloyd Blankfein, this is turning out to be a very good year. He will surely earn more than the $54.3 million (Rs213 crore) he made last year. If he gets a 20% raise—in line with the growth of Goldman’s compensation pool—he will take home at least $65 million.
Many expect his pay, which is tied directly to the firm’s performance, to reach as high as $75 million. Goldman’s good fortune is not due simply to good luck. Late last year, with the markets roaring along, David Viniar, Goldman’s chief financial officer, called a “mortgage risk” meeting in his meticulous 30th floor office in the firm’s New York headquarters. At that point, Goldman’s mortgage desk was down somewhat but the notoriously nervous Viniar was worried about bigger problems. After reviewing the full portfolio, his message was clear: the bank should reduce its stockpile of mortgages and mortgage-related securities and buy expensive insurance as protection against further losses, a person briefed on the meeting said.
With its mix of swagger and contrary thinking, it was just the kind of bet that has long defined Goldman’s hard-nosed, go-it-alone, risk-taking style. Meanwhile, most of the firm’s competitors, with the exception of the smaller and more specialized Lehman Brothers, appeared to barrel headlong into the mortgage markets. They kept packaging and trading complex securities for high fees and more market share without hedging, or protecting themselves against the positions they were buying.
When the credit markets seized up in late July, Goldman was in the enviable if not quite believable position of having offloaded the toxic products that Merrill Lynch & Co. Inc., Citigroup Inc., UBS, Bear Stearns Cos. Inc. and Morgan Stanley, among others, had kept right on buying until it was too late.
“If you look at their profitability through a period of intense credit and mortgage market turmoil,” said Guy Moszkowski, an analyst at Merrill Lynch who covers the investment banks, “you’d have to give them an A-plus.”
This stark contrast in performance has been a struggle for competitors to swallow. The bank that seems to be in every corner, with a hand in so many deals and products and regions, made more money in the boom and—at least so far— managed to go right on making money in the bust.
via Mint
Sensex sheds 353 points in volatile trade
The market slipped deep into the red in late trade as IT and metal stocks tumbled. Index heavyweights Reliance Industries and ICICI Bank faltered. All the sectoral indices on BSE were in red. Banking, power, realty and capital goods stocks declined. Market breadth though positive, it weakened in late trading compared to strong breadth earlier during the day. European markets, which opened after Indian market, were in green. Asian markets, which opened before Indian market, were mixed.
Worries of impact of credit troubles on the broader US economy heightened after Goldman Sachs on Monday, 19 November 2007, downgraded Citigroup's stock to sell from neutral, forecasting more write-downs by the largest US bank because of mortgage losses.
The 30-share BSE Sensex lost 352.56 points or 1.8% at 19,280.80. Sensex hit a low of 19,196.41 in late trade. At day’s low of 19,196.41 Sensex had lost 436.94 points.
The S&P CNX Nifty ended down 126.75 points or 2.15% to 5,780.90.
The market had bounced back from lower level in early afternoon trade amid volatility as some Asian markets came off lower level. Sensex touched a high of 19,714.22 in early afternoon trade. At day's high, Sensex had risen 80.86 points. The market had opened with a downward gap in early trade tracking weak global markets.
The market breadth was positive. On BSE, 1,548 stocks advanced, while 1,278 stocks declined and 40 stocks were unchanged. 25 out of 30 stocks from the Sensex pack were in red.
BSE clocked a turnover of Rs 8,576 crore compared to Monday (19 November 2007)'s Rs 8,120.51 crore.
Nifty November 2007 futures were at 5797, at a premium of 16.10 points as compared to spot closing of 5780.90.
NSE’s futures & options (F&O) segment turnover was Rs 73,178.98 crore, which was higher than Rs 51,841.62 crore on Monday, 19 November 2007.
The BSE Mid-Cap index declined 1.2% to 8,625.87 whereas BSE Small-Cap index rose 0.17% to 10,691.16. Both these indices outperformed Sensex.
BSE Auto index (down 1.37% to 5,339.29),BSE Bankex (down 1.43% to 10,764.53), BSE FMCG index (down 1.22% to 2,197.79), BSE Health Care index (down 0.09% to 3,946.15) outperformed Sensex.
BSE Capital Goods index (down 2.2% to 20,349.42), BSE IT index (down 2.55% to 4,054.64), BSE Metal index (down 2.03% to 17,310.69), BSE Oil&Gas index (down 2.65% to 12,136.58), BSE Power index (down 3.01% to 4,513.02) and BSE Realty index (down 2.8% to 10,447.35) underperformed Sensex.
IT stocks extended losses in late trade on concerns over the US economy. Infosys (down 3.41% to Rs 1,564.40), Tata Consultancy Services (down 2.79% to Rs 960.55), Wipro (down 1.91% to Rs 448.65) and Satyam Computer Services (down 0.97% to Rs 418.55) edged lower.
State Bank of India (SBI) declined 1.1% to Rs 2,279.60. As per reports it is seeking to expand its foothold beyond immediate associate banks by possibly absorbing UCO Bank and Dena Bank. UCO Bank jumped 7.99% to Rs 61 and Dena Bank soared 5.46% to Rs 92.75.
ICICI Bank (down 1.65% to Rs 1,167.25) and HDFC Bank (down 1.43% to Rs 1,631.60) edged lower.
Index heavyweight and India’s largest private sector firm by market capitalisation Reliance Industries was down 2.3% to Rs 2,786.85, off session's high of Rs 2,857.80.
Metal shares retreated on sharp fall in metal prices on Shanghai. National Aluminium Company (down 8.09% to Rs 372.45),Sterlite Industries (down 5.17% to Rs 958.90), Hindalco Industries (down 5.5% to Rs 194.15) and Tata Steel (down 0.37% to Rs 859.55),edged lower. However Steel Authority of India (up 0.63% to Rs 263.60) edged higher.
Capital goods stocks declined on profit taking after a solid surge over the past few days. Bharat Heavy Electricals (down 4.65% to Rs 2,654.20), Suzlon Energy (down 2.54% to Rs 2,041.05) and Larsen & Toubro (down 0.73% to Rs 4,336.35) edged lower.
Power stocks fell. Tata Power Company (down 4.31% to Rs 1,217.20), NTPC (down 1.96% to Rs 260.40) and Reliance Energy (down 1.8% to Rs 1,79430), edged lower.
Realty stocks declined. DLF declined 4.21% to Rs 907.90. Merrill Lynch (ML) has reportedly acquired 49% equity stake in seven residential projects of DLF for Rs 1,481 crore.
Unitech declined 4.57% to Rs 380.20, on reports the company foraying into Mumbai with a commercial project spread over 80 acre near the Bandra Kurla complex. However, Indiabulls Real Estate rose 0.33% to Rs 661.20.
Tata Motors (up 0.75% to Rs 707.85), ACC (up 0.07% to Rs 1,084.65), Hindustan Unilever (up 0.24% to Rs 205.30), Ambuja Cements (up 0.44% to Rs 148.25) and Bajaj Auto (up 0.14% to Rs 2,429.60) edged higher.
Bharat Heavy Electricals (down 4.65% to Rs 2,654.20), Maruti Suzuki (down 4.11% to Rs 1,010.25) edged lower.
Jindal Stainless was the top gainer from A group and rose 16.08% to Rs 205.40. Century Enka (up 5.51% to Rs 179), Fertilisers and Chemicals Travancore (up 4.95% to Rs 47.70), D- Link (India (up 4.94% to Rs 91.35), and Nirma (up 4.78% to Rs 221.60) were other major gainers from A group.
Tata Teleservices Maharashtra clocked the highest volume of 4.23 crore shares on BSE. It ended flat at Rs 50.70. Himachal Futuristic Communications clocked the second highest volume of 2.85 crore shares on BSE. The scrip rose 3.76% to Rs 31.75. IFCI declined 1.47% to Rs 97.10 and clocked the third highest volume of 2.34 crore shares. Ispat Industries rose 1.98% to Rs 46.30 and clocked fourth highest volume of 2.02 crore shares. Jaiprakash Hydro Power rose 5.53% to Rs 110.65 and clocked fifth highest volume of 1.64 crore shares.
Reliance Petroleum clocked the highest turnover of Rs 307.34 crore on BSE. Reliance Industries (Rs 251.2 crore), Infrastructure Development Finace Company (Rs 240.63 crore), IFCI (Rs239.05 crore) and Tata Teleservices Maharashtra (Rs 222.57 crore) were other major turnover toppers on BSE.
European markets opened on a positive note. France’s CAC 40 (up 0.62% to 5,467.86), Germany’s DAX (up 0.9% to 7,578.73) and UK’s FTSE 100 (up 0.78% to 6,168.70) edged higher.
Most of the Asian markets ended in the green, recovering from an early slide. Hong Kong's Hang Seng (up 1.13% to 27,771.21) Japan's Nikkei rose 1.12% to 15,211.52 and Singapore's Straits Times gained 0.78% at 3,438.27. Taiwan Weighted index was flat at at 8,680.
South Korea's Seoul Composite index (down 1.12% at 1,872.24) was trading in the red.
US markets suffered sharp losses on Monday, 19 November 2007, after a broker downgrade of Citigroup sparked concerns of more mortgage losses and fears of slumping auto sales hammered GM shares. The Dow Jones industrial average plunged 218.35 points, or 1.66%, to 12,958.44. The S&P 500 index fell 25.47 points, or 1.75%, to 1,433.27, and the Nasdaq Composite slipped 43.86 points, or 1.66%, to 2,593.38.
Crude oil prices edged lower in Asian trade on Tuesday, 20 November 2007 with the dip seen as temporary because traders were still worried about tight global supplies. New York's main contract, light sweet crude for January delivery was down 26 cents at $94.38 a barrel. Brent North Sea crude for January delivery eased 33 cents to $91.95
Market Close: Is this the End of Mid cap Mania ?
Small and mid cap contiued its uptrends from the start despite a weak start for Indian Indices. Globally markets slipped as US ended in red on the back of low Home sentiments and Down grading of Citi Bank by Goldman sachs. Indian Indices traded ranged with bouts of profit booking at regular intervals post a weak start. Midcaps and Small caps starred till the mid session but the final hour witnessed intensified profit booking which dragged the indices in the negative territory. Mid caps had good rallied for the day but was also not spared as it too went for profit booking while the small cap counter struggled to remain in the positive territory. The major losers for the day were on the Banking, Consumer Goods, Power and Auto counters. Billion Dollar expansion plans of Unitech failed to attract investors towards the stock. DLF had also announced private equity placement yesterday. However, The reality index ended in red. European indices continued to trade mixed.
Indian atomic official would start talks this week with the International Atomic Energy Agency (IAEA) as part of efforts to clinch a landmark nuclear deal with the US. This brought some strength in the front line stocks. However, the movement in the index heavyweights was limited. More clarification regarding the Indo US nuclear deal can be expected after November 27 when the issue would be on the agenda of the parliamentary discussion.
Sensex closed lower by 353 points at 19280.801. Weighing on the Sensex were the losses in Hindalco (194.15,-6 percent), BHEL (2654.2,-5 percent), Maruti (1010.25,-4 percent), Infosys (1564.4,-3 percent) and ONGC (1221.5,-3 percent). Losses were restricted by gains in Tata Motors (707.85,+1 percent), Guj Ambuja (148.25,+0 percent), HLL (205.3,+0 percent), Bajaj Auto (2429.6001,+0 percent) and Dr Reddys (617.3,+0 percent).
The possibility of increase in the foreign direct investment in the cable TV business was the primary reason for the rally of Dish TV which ended higher by 7% for the day. The present cap of investment in the cable TV business is 26%. Company recently reported its results for the September ended quarter. The bottom line of the company reported a loss, despite the growth in Topline. The Competition intensifing with companies like Tata, Reliance and Bharti is also set to price in the cable Tv business. This could result in delaying the break even period for the company and the losses would continue. We are not buyers of the cable tv business at the moment under the present market scenario. Any fresh position in the company is not recommended on the back of possibility of rise in cap of investment by foreign partner.
Karuturi networks one of the splendid stocks which we started tracking. The Company has become the largest cultivator of roses In the world post the Kenyan acquisition. The company has a total capacity of 650 mn stems. It has 10 hectares in India with 10 mn stems capability inhouse and another 25 mn stems which are managed through contract farming. 100 hectares are operational in Ethiopia with a capacity of over 100 mn stems. Karuturi Networks has been allotted additional 450 hectares of land by the Government of Ethiopia for its expansion and diversification projects. The results of the September ended quarter were impressive as well. The valuations seems to be fair considering the business potential of the company. Do read our note on the company for investment rationales and to know why we like the business.
Hunt of the investors for companies with strong business fundamentals drove Balkrishna Ind higher by 4% for the day. The Company specializes in the manufacturing of the off the road tyres (OTR) which derives 85% of the revenues to the group. The rest are from the paper, fabric and wind power businesses. 75% of the company?s products are exported. Exit by global players from the OTR segment turned situation in favor of the company. The competition from the other players like Apollo and Jk Tyres in the OTR segment seems to be in the nascent stage. Company intends to hike the prices of its products in this quarter to counter the impact of Rupee appreciation and higher input costs. The numbers reported for the September ended quarter were encouraging. Do read the quarterly analysis of the company and why we are positive on the business.
Technically Speaking: Sensex traded in narrow ranged from the start but selling pushed Indices over 450 points before ending at 19280 levels. Sensex made an intraday high of 19,690 and low of 19,240. Advances seem to have edge against the declines despite profit booking witnessed in the later part of session. Support for sensex is at 19,275 while nifty finds support at 5,750. Resistance is at 19,975 levels. Bias remains positive so long as NIFTY does not close below 5725..
Market extends losses in late trade
The market slipped deep into the red in late trade as IT and metal stocks tumbled. Index heavyweights Reliance Industries and ICICI Bank faltered. All the sectoral indices on BSE were in red. Banking, power, realty and capital goods stocks declined. Market breadth though positive, it weakened substantially in late trading compared to strong breadth earlier during the day. European markets, which opened after Indian market, were in green. Asian markets, which opened before Indian market, were mixed.
Worries of impact of credit troubles on the broader US economy heightened after Goldman Sachs on Monday, 19 November 2007, downgraded Citigroup's stock to sell from neutral, forecasting more write-downs by the largest US bank because of mortgage losses.
The 30-share BSE Sensex provisionally ended down 340.05 points or 1.73% at 19,293.31. Sensex hit a low of 19,196.41 in late trade. At day’s low of 19,196.41 Sensex had lost 436.94 points.
The S&P CNX Nifty was down 118.35 points or 2% to 5,789.30, as per provisional close.
The market had bounced back from lower level in early afternoon trade amid volatility as some Asian markets came off lower level. Sensex touched a high of 19,714.22 in early afternoon trade. At day's high, Sensex had risen 80.86 points. The market had opened with a downward gap in early trade tracking weak global markets.
The market breadth was positive. On BSE, 1,593 stocks advanced, while 1,217 stocks declined and 41 stocks were unchanged. 25 out of 30 stocks from the Sensex pack were in red.
The BSE Mid-Cap index declined 0.94% to 8,648.96 and the BSE Small-Cap index rose 0.29% to 10,704.37. Both these indices outperformed Sensex.
IT stocks extended losses in late trade on concerns over the US economy. Infosys (down 3.99% to Rs 1,555), Tata Consultancy Services (down 2.65% to Rs 962), Wipro (down 1.95% to Rs 448.50) and Satyam Computer Services (down 1.57% to Rs 416) edged lower.
State Bank of India (SBI) declined 1.08% to Rs 2,280. As per reports it is seeking to expand its foothold beyond immediate associate banks by possibly absorbing UCO Bank and Dena Bank. UCO Bank jumped 7.99% to Rs 61 and Dena Bank soared 5.46% to Rs 92.75.
ICICI Bank (down 1.33% to Rs 1,171.05) and HDFC Bank (down 1.04% to Rs 1,638) edged lower.
Index heavyweight and India’s largest private sector firm by market capitalisation Reliance Industries was down 1.74% to Rs 2,803, off session's high of Rs 2,857.80.
Capital goods stocks declined. Bharat Heavy Electricals (down 4.65% to Rs 2,654.20), Suzlon Energy (down 2.54% to Rs 2,041.05) and Larsen & Toubro (down 0.73% to Rs 4,336.35) edged lower.
Power stocks fell. Tata Power Company (down 4.09% to Rs 1,220.05), NTPC (down 1.58% to Rs 261.40) and Reliance Energy (down 1.27% to Rs 1,804), edged lower.
Realty stocks declined. DLF declined 3.78% to Rs 912. Merrill Lynch (ML) has reportedly acquired 49% equity stake in seven residential projects of DLF for Rs 1,481 crore.
Unitech declined 4.64% to Rs 379.90, on reports the company foraying into Mumbai with a commercial project spread over 80 acre near the Bandra Kurla complex. However Indiabulls Real Estate rose 0.68% to Rs 663.50.
Tata Motors (up 0.77% to Rs 708), ACC (up 0.38% to Rs 1,088), Hindustan Unilever (up 0.34% to Rs 205.50), Tata Steel (up 0.25% to Rs 864.90) and Bajaj Auto (up 0.16% to Rs 2,430) edged higher.
Hindalco Industries (down 5.5% to Rs 194.15), Bharat Heavy Electricals (down 4.65% to Rs 2,654.20), Maruti Suzuki (down 4.11% to Rs 1,010.25) and Grasim Industries (down 3.48% to Rs 3,735) edged lower.
Jindal Stainless was the top gainer from A group and rose 15.29% to Rs 204. Fertilisers and Chemicals Travancore (up 4.95% to Rs 47.70), D- Link (India (up 4.54% to Rs 91), MIRC Electronics (up 4.36% to Rs 33.50), Nirma (up 4.02% to Rs 220) were other major gainers from A group.
European markets opened on a positive note. France’s CAC 40 (up 0.16% to 5,440.95), Germany’s DAX (up 0.45% to 7,547.96) and UK’s FTSE 100 (up 0.08% to 6,126.60) edged higher.
Most of the Asian markets were in the green. Hong Kong's Hang Seng (up 1.13% to 27,771.21) Japan's Nikkei rose 1.12% to 15,211.52 and Singapore's Straits Times gained 0.78% at 3,438.27. Taiwan Weighted index was flat at at 8,680.
South Korea's Seoul Composite index (down 1.12% at 1,872.24) was trading in the red.
US markets suffered sharp losses on Monday, 19 November 2007, after a broker downgrade of Citigroup sparked concerns of more mortgage losses and fears of slumping auto sales hammered GM shares. The Dow Jones industrial average plunged 218.35 points, or 1.66%, to 12,958.44. The S&P 500 index fell 25.47 points, or 1.75%, to 1,433.27, and the Nasdaq Composite slipped 43.86 points, or 1.66%, to 2,593.38.
Crude oil prices edged lower in Asian trade on Tuesday, 20 November 2007 with the dip seen as temporary because traders were still worried about tight global supplies. New York's main contract, light sweet crude for January delivery was down 26 cents at $94.38 a barrel. Brent North Sea crude for January delivery eased 33 cents to $91.95.
Market posted losses for third straight day on Monday, 19 November 2007. The 30-share BSE Sensex lost 64.53 points or 0.33% at 19,633.36 while the broader CNX S&P Nifty was up 0.8 points or 0.01% at 5,907.65 on that day.
As per provisional data, FIIs sold shares worth a net Rs 371.04 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 63.45 crore on Monday, 19 November 2007.
Market nosedives on late selling
The market witnessed heavy profit bookings towards the close triggering a major sell-off in heavyweights, power, and realty stocks. Asian markets fell sharply in early trades following the major selling on the Wall Street last night on concerns of more mortgage losses. The market however recovered in the afternoon as Asian indices rose, reversing the earlier declines, on the speculation that the US Federal Reserve will provide signs that the US economy is growing faster than estimates. All-round selling in the last hour of the trading sessions shaved off nearly 518 points from the day's high. However, a strong up move in the international markets helped the Sensex to pare some losses and end the session at 19,281, down 353 points. The Nifty shed 127 points to close at 5,781.
The breadth of the market was positive. Of the 2,866 stocks traded on the Bombay Stock Exchange (BSE), 1,555 stocks advanced, 1,270 stocks declined and 41 stocks ended unchanged. All the sectoral indices ended in the red. The BSE Power index tumbled 3.01% at 4,513 followed by the BSE PSU index (Down 2.95% at 10,231), the BSE Realty index (down 2.80% at 10,447) and the BSE Oil & Gas index (down 2.65% at 12,137).
Barring a few select counters, most of the heavyweights suffered heavy losses. Among the blue chips Hindalco tumbled 5.50% at Rs194, BHEL shed 4.65% at Rs2,654, DLF dropped 4.21% at Rs908, Maruti Suzuki lost 4.11% at Rs1,010, Grasim dipped 3.48% at Rs3,735, Infosys slumped up 3.41% at Rs1,564 and ONGC slipped 3.16% at Rs1,222. However, Tata Motors, Ambuja Cement, HLL, Bajaj Auto and ACC closed with marginal profits.
Over 4.23 crore Tata Teleservices shares changed hands on the BSE followed by Hindustan Futuristic Communications (2.85 crore shares), IFCI (2.34 crore shares), Ispat Industries (2.34 crore shares) and JP Hydro Power (1.64 crore shares). Reliance Petroleum clocked a turnover of Rs307 crore on the BSE followed by Reliance Industries (Rs251 crore), IDFC (Rs240 crore), IFCI (Rs239 crore) and Tata Teleservices (Rs222 crore).
Post Market Commentary
The market closed the trading session on a negative note as BSE Sensex declined by 352.56 points to closed at 19,280.80 while Nifty fell by 126.75 points to closed at 5780.90. The market opened on a weak note backed by the unfavoring global cues but manages to pare all its initial losses at the mid session but after that lost the grip and fell to closed in the red zone. Most selling is seen in capital goods, metal. Oil & gas and reality indices scrips. Overall, the market breadth was strong as 1,548 stocks are closed lower while 1278 are closed lower. The BSE Mid cap closed lower by 104.95 points to close at 8,625.87 while Small cap grew by 18.27 points to closed at 10,691.16.
BSE Capital Goods index fell drastically by 457 points to close at 20,349.42. Scrips that fell are BHEL (4.65%), Areva (4.32%), Praj industries (4.25%), Siemens (3.36%) and ABB (2.72%).
BSE Metal index declined by 358.17 points to closed at 17,310.69. Pulling it down are Nalco (8.09%), Hindalco (5.50%), Sterlite (5.17%), Jindal Saw (4.80%), Hind Zinc (2.23%) closed lower.
BSE oil & gas index dropped by 330.92 points to close at 12,136.58. Pushing it down are Essar Oil by (8.34%), Cairn (4.21%), BPCL (4.18%), Indian Oil (4.04%) and RNRL (1.80%).
BSE Realty dropped by 300.68 points to close at 10,447.35 as Ansal infra (5.85%), Mahindra ges (5.61%), Penland (5.06%), Unitech (4.57%) and DLF (4.21%) closed in red.
BSE Power index closed lower by 140.25 points at 4,513.02 as Tata Power (4.31%), Torrent power (3.06%), Suzlon energy (2.54%), NTPC (1.96%) and reliance energy (1.80%) closed in negative.
BSE bankex index fell by 156.14 points to close at 10,764.53. Pulling it down are Allahabad Bank (8.27%), Andhra Bank (5.49%), Federal Bank (3.79%), PNB (3.67%) and BOI (3.42%) closed lower.
BSE IT index closed lower by 106.24 points at 4,054.64 as Aptech (8.74%), I Flex (3.80%), Infosys (3.41%), Tech Mahindra (2.95%), TCS (2.79%) closed lower.
Morning Call
Market Grape Wine :
In House :
Nifty at a supp of 5905 and 5845 with resis at 5975 and 6020
Intra Day: Sell RCOM below 706 with a TGT of 688 and a SL of 713
Buy IDFC above 204.50 with a TGT of 217 and a SL of 199
F&O: Buy Crompton Greaves above 445 with a TGT of 462 with a SL of 437
Out House :
Markets at a support of 19119 & 18876 levels with resistance at 19786 & 19988 levels .
Maintain strict stop loss for your trades as markets to be very choppy and volatile .
Buy : RIL at dips
Buy : RELCAP at dips
Buy : JpAsso & JpHydro at dips
Buy : Centextile & IFCI at dips
Buy : SKumar & IDBI at dips
Buy : IBUllsreal & IBulls at dips
Buy : MRPL , Noida , Neyvelli at dips
Dark Horse : Petronet , Aban , RELCAP , IBulls , RIL , Centextile , JPASSO & SBIN
Pre Market Watch
ndian market is likely to have negative opening as the Asian Market are trading lower and US market closed in red. On Monday, the Indian market failed to hold their initial gains due to the selling pressure across the sectoral indices scrips but the small caps nad mid caps continued to outperform the benchmark indices. Finally, the BSE Sensex fell by 65 points to close at 19,633.36 and NSE Nifty closed marginally up by 0.8 points at 5,907.65. We expect that the profit booking may prevail in the market during the trading session, as the global cues are not in favor.
Monday, the US markets closed in red as the Dow Jones Industrial Average (DJIA) declined by 218.35 points to closed at 12,958.44. NASDAQ Composite and S&P 500 also dropped by 43.86 points and 25.47 points at 2,593.38 and 1,433.27 respectively.
Indian ADRs ended in negative territory. In banking sector, ICICI bank and HDFC bank slipped by (5.46%) and (3.93%) respectively. In technology sector, Wipro fell by 5.41% along with Satyam by 3.99% and Infosys by 2.47% while Patni computers grew by (0.66%) In telecommunication sector, MTNL and VSNL dropped by (4.84%) and (3.76%) respectively.
The major stock markets in Asia are trading weak. Hang Seng declined by 881.19 points at 26,578.98. Japan''s Nikkei is trading lower by 285.89 points at 14,756.67. Taiwan weighted is trading down by 285.93 points at 8,394.78 and Seoul Composite fell by 64.43 points to trade at 1,829.04.
Yesterday, FIIs stood as the net seller. The gross equity purchased was Rs.3,508.90 (in crores), and the gross debt purchased was Rs.10.50 (in crores) as against the gross equity sold was Rs.3,588 (in crores) and the gross debt sold was Rs.14.90 (in crores). The net investment of equity was -Rs79.10. (in crores) and the net debt investment was -Rs.4.40 (in crores).
Today, Nifty has support at 5,803 and resistance at 5,948 and BSE Sensex has support at 19,261 and resistance at 19,859.
Grey Market Premium - Mundra zooms
Reliance Power -- 64 to 65
Edelweiss 725 to 825 825 to 850
Renaissance Jewellery 125 to 150 65 to 70
Kolte Patil 125 to 145 135 to 140
Kaushalya Infra 50 to 60 20 to 22
Jyothi Lab 620 to 690 400 to 410
Mundra Port & Sez 440 610 to 615
Empee Distilleries 400 40 to 45
Varun Ind. 60 70 to 75
Religare Enterprises 185 370 to 375
Barak Valley Cement 42 25 to 27
Market to slide on weak global cues
The market may slide following weak global cues. However, some recovery may emerge in second half of day’s trading session on value buying at lower levels. Over the recent past, it has been observed that local bourses have outperformed their global peers.
Asian markets slumped today, 20 November 2007 following a sell-off on Wall Street yesterday, 19 November 2007. Hong Kong's Hang Seng (down 3.21% at 26,578.98), Japan's Nikkei (down 1.9% at 14,756.67), Taiwan Weighted (down 3.29% at 8,394.78), Straits Times (down 1.99% at 3,343.90) and South Korea's Seoul Composite (down 3.40% at 1,829.04) all edged lower.
US markets suffered sharp losses on Monday, 19 November 2007, after a broker downgrade of Citigroup sparked concerns of more mortgage losses and fears of slumping auto sales hammered GM shares. The Dow Jones industrial average plunged 218.35 points, or 1.66%, to 12,958.44. The S&P 500 index fell 25.47 points, or 1.75%, to 1,433.27, and the Nasdaq Composite slipped 43.86 points, or 1.66%, to 2,593.38.
Crude oil prices edged lower in Asian trade on Tuesday, 20 November 2007 with the dip seen as temporary because traders were still worried about tight global supplies. New York's main contract, light sweet crude for January delivery was down 26 cents at $94.38 a barrel. Brent North Sea crude for January delivery eased 33 cents to $91.95.
Market posted losses for third straight day on Monday, 19 November 2007. The 30-share BSE Sensex lost 64.53 points or 0.33% at 19,633.36 while the broader CNX S&P Nifty was up 0.8 points or 0.01% at 5,907.65 on that day
As per provisional data, FIIs sold shares worth a net Rs 371.04 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 63.45 crore on Monday, 19 November 2007.
Ashis Behera Daily Picks - Nov 20 2007
AIR DECCAN
andhrabank
birlajute
cromp greav
educomp
nicholas pir
tulip
Allocate equal cash to all the picks, buy at previous close price
Weak global markets indicate negative open
The market may open on a weak note following the weak global trend. The Asian markets are currently down on fears that US spending will decline after Citigroup renewing fears about credit and the health of the U.S. economy. Market also witnessed a slump in last couple trades and is likely to remain shaky on weak global markets. The FIIs remained net sellers in equities in last couple of sessions may also add some pressure on investor sentiment. Among the key domestic indices, the Nifty may get support at 5800 and may test higher levels at 6000. The Sensex has a likely support at 19500 and on the upside could test 20500 levels.
US stocks tanked on Monday as Goldman Sachs and Citigroup renewing fears on the financial sector and a weak report on home builder confidence sparked a broad market selloff. While the Dow Jones tumbled 218 points at 12958, the Nasdaq slipped 43 points to close at 2593.
Most of the Indian ADRs barring few ended in the red on the US bourses. ICICI Bank tumbled 5.46% and Wipro slipped 5.41% while Infosys, Satyam, Tata Motors, HDFC Bank and VSNL lost over 2-4% each. However, Dr Reddy's Lab and Patni Computer gained marginally.
Crude oil prices in the global market extended their upward trend on weakness in the U.S. dollar and concerns supplies could tighten as the U.S. and other consumer nations head into winter. The Nymex light crude oil for January series gaining by 80 cents at $94.64 a barrel. In the commodity space, the Comex gold for December delivery moved down by $9 to settle at $787 a troy ounce.
Crude ekes gains amid low volume
Crude prices close higher after OPEC leaves production plan unchanged
Crude oil prices rose today, Monday, 19 November, 2007 after the Organization of Petroleum Exporting Countries (OPEC) left production unchanged at a weekend meeting in Riyadh. Trading was quite choppy in nature ahead of upcoming Thanksgiving Holiday, but light trading also fuelled volatility.
For the day ending Monday, 19 November, 2007, crude-oil futures for light sweet crude for January delivery closed at $94.64/barrel (higher by $0.80/barrel or 0.9%) on the New York Mercantile Exchange. Prices are up 70% from a year ago.
Brent crude oil for December settlement rose $0.66 (0.7%) to $92.28 on the London-based ICE Futures Europe exchange.
As per OPEC, the oil market was well-supplied and recent gains were due to speculation and beyond the group's control. OPEC is scheduled to discuss oil production for the first quarter of 2008 at a meeting in Abu Dhabi on 5 December. OPEC's finance ministers will also discuss the effect of the weak U.S. dollar on oil revenue before the next meeting.
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.
Natural gas, gasoline and heating oil – all end lower
Natural gas fell in New York amid speculation inventories are ample to meet winter heating needs. Gas for December delivery fell 21.4 cents (2.7%) to settle at $7.787 per million British thermal units.
Against this backdrop, December reformulated gasoline finished up 0.62 cent at $2.3816 a gallon and December heating oil gained 1.71 cents at $2.6042 a gallon.
Last week, OPEC reduced its fourth-quarter estimate of global oil demand growth to 1.97%, down from 2.1%, citing warmer winter weather in the Northern Hemisphere and the higher price of gasoline. The cartel also trimmed this year's world oil demand growth to 1.4% from 1.5%, but the cartel kept the first quarter of next year unchanged at 1.8%.
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.
Credit turmoil again slams US stocks
Downgrade of Citigroup by Goldman Sachs send indices lower for the entire day
Financials were back in action today but once again in a negative sense and sent US stocks down for the day, Monday, 19 November, 2007. Together with Citigroup, General Motors too weighed on the stocks. Indices lingered in the red for the entire day, right from the opening. Nine of the ten economic sectors finished in the day in negative territory, Utilities making the sole advance.
The Dow Jones industrial Average ended the day with a loss of 218.3 points at 12,958. The Nasdaq Composite Index, finished lower by 43.86 points at 2,593.38. S&P 500 finished lower by 25.47 points at 1,433.27. Twenty-seven out of thirty Dow stocks ended in red. Altria and Mc Donalds were a couple of Dow winners.
The financial sector came under pressure today after Citigroup was downgraded to sell from neutral by Goldman Sachs. The investment banker further said that it is seeing up to $15 billion in write-downs from collateralized debt obligations during the next two quarters. Citigroup ended the day being down by almost 6%.
But it was General Motors actually which led the team of Dow decliners. GM shed 8.5% today after reports that GMAC Financial Services, the old General Motors Acceptance, is seeing more delinquencies among its auto loans.
H-P delivers blowout report after close
Things started off in a bitter note since early trading hours after home improvement retailer reported disappointing third quarter results before the open. The company also issued an earnings warning for the fourth quarter.
The other economic report of the morning was the National Association of Homebuilders (NAHB) index of builder confidence in November and that was reported at 19. The reading marked the lowest point since 1985. The NAHB cited "mortgage market problems, a substantial inventory overhang and ongoing concerns about the effects of negative media coverage" as the main reasons for the low number.
Indian ADRs ended mixed today, but majority in the red. ICICI Bank and Wipro Technologies were the two topmost losers, each giving up 5.4%. Rediff and MTNL followed them dropping 4.8% and 4.4% respectively.
After the close, H-P came out with its quarterly result beating market expectations. The company’s fiscal-fourth-quarter profit rose 28% from a year ago. The company also raised guidance for the current quarter.
Eyes set on 31 October FOMC minute details
Crude oil prices rose today after the Organization of Petroleum Exporting Countries (OPEC) left production unchanged at a weekend meeting in Riyadh. Trading was quite choppy in nature ahead of upcoming Thanksgiving Holiday, but light trading also fuelled volatility. Crude-oil futures for light sweet crude for January delivery closed at $94.64/barrel (higher by $0.80/barrel or 0.9%) on the New York Mercantile Exchange. Prices are up 70% from a year ago.
Volume on the New York Stock Exchange came to 1.7 billion, and declining stocks topped those advancing about 5 to 1. On the Nasdaq, nearly 2.2 billion shares were traded, and declining stocks outpaced advancers about 4 to 1.
Tomorrow, investors will have the minutes from the Federal Open Market Committee's 31 October meeting once they are released at 2.00PM, E.T. Market has a tendency to scrutinize each and every detail Bernanke and folks use in their statement. Other than that, there is the October's housing starts data which will come out before market opens.
Nifty November futures at premium
Turnover in F&O segment declines
Nifty November 2007 futures were at Rs 5918, at a premium of 10.35 points as compared to spot closing of 5907.65.
NSE’s futures & options (F&O) segment turnover was Rs 51,841.62 crore, which was lower than Rs 61,505.32 crore on Friday, 16 November 2007.
GMR Infrastructure November 2007 futures were at premium, at Rs 254.10, compared to the spot closing of Rs 250.05.
Reliance Capital November 2007 futures were at premium, at Rs 2406.70, compared to the spot closing of Rs 2400.40.
Jaiprakash Associates November 2007 futures were at premium, at Rs 1730 compared to the spot closing of Rs 1714.80.
In the cash market, the S&P CNX Nifty gained 0.80 points or 0.01% at 5907.65.
Trading Calls
Nifty (5908) Sup 5829 Res 5949
Sell IVRCL Infra (508)
SL 513 Target 498, 495
Sell Wipro (457)
SL 462 Target 448, 446
Sell Ranbaxy (416)
SL 421 Target 408, 405
Buy Zee (319)
SL 314 Target 328, 330
Buy Punj Lloyd (517)
SL 512 Target 527, 530
Better to bend
The bamboo that bends is stronger than the oak that resists.
Is it going to be a terrible Tuesday with Indian indices bending in the face of growing worries over the extent of damage in the US housing sector? Or will our markets show resilience and chart its own course?
Ideally Indian indices should also see steep losses. But, remember, last week we saw our market being resilient and absorbing the bad news emanating from the US and other parts of the world. We suspect the same could happen even today. We may see a 1-2% fall in the Sensex and the Nifty at the start, in step with the fall across global equity markets. After that key indices may look to stabilize. But then past performance may not be repeated all the time. A little pressure at lower levels could result in a heavy sell-off. The crucial point to watch is whether indices settle after an initial fall.
Aggressive buying could be avoided for a while, as the undertone has turned a little bearish, with renewed concern on the US economy, high oil prices and slowing FII inflows. But, the trend of investors storming the side counters (small-cap and mid-caps) is likely to continue as has been the case in the past few days. Here too, be highly alert because the stocks have historically been more volatile and less liquid vis-a-vis their large cap peers.
SBI may acquire UCO Bank and Dena Bank to expand its foothold beyond immediate associate banks. Tata Motors is planning to launch six new models in the heavy commercial vehicle segment over the next two months. Baghdad has assured that oil deals of ONGC and Reliance Industries committed in the Saddam regime will not be annulled.
GTC is planning to de-merge its real estate business in Mumbai, Baroda and Hyderabad into a separate company. Marico is setting up a greenfield plant in Egypt, which will commence operations in second half of next year. PFC is planning to float an overseas financial arm for leveraging the country’s foreign exchange reserves to provide financing for purchasing machinery and equipment abroad.
GMR Infrastructure is planning to raise Rs20bn via QIP to part fund its projects. Action Construction Equipment (ACE) says that its Cyprus arm (WOS) Frested has acquired further stake in Romania-based SC Forma SA by way of a public offer.
US stocks started the holiday-shortened week on a poor note, with the Standard & Poor's 500 index falling to a three-month low after Goldman Sachs told investors to sell Citigroup and home improvement retailer Lowe's cut its earnings forecast for the second time in two months.
Citigroup slipped to its lowest level in four years after Goldman Sachs said credit-market losses may cause the biggest US bank to report $15bn in writedowns over the next two quarters. Merrill Lynch and Morgan Stanley also slumped after Goldman Sachs cut its share-price estimate on both companies. E*Trade Financial plunged 13%, the steepest decline in the S&P 500, after Goldman slashed its price estimate.
Lowe's dropped the most since 2003 after the housing slump cut profits. The report from Lowe's added to concern that retail sales growth this holiday season may be the worst in at least five years and signal a contraction in the broader economy.
The S&P 500 lost 26 points, or 1.8%, to 1,433.27, its lowest close since Aug. 28. The Dow Jones Industrial Average dived 218 points, or 1.7%, to 12,958.44, led by an 8.5% drop in General Motors. The Nasdaq Composite Index dropped 44 points, or 1.7%, to 2,593.38.
Some investors say a decline in the Dow below their August lows would signal a bear market for stocks. The Dow closed today about 113 points above the 30-stock gauge's Aug. 16 level of 12,845.78.
The Dow transportation average declined for a fourth day to the lowest level since October 2006. The Dow Jones Transportation Average slid 106 points or 2.3%, to 4,457.97.
Homebuilders fell the most in more than two years, plummeting 6.4% as a group, as confidence among builders held at a record low. The National Association of Home Builders/Wells Fargo index of builder confidence remained at 19 in November for a second month, the lowest since records began in 1985.
Federal Reserve policy makers won't cut their benchmark interest rate on Dec. 11, according to Bear Stearns. Central bankers signaled in their Oct. 31 statement that the Fed is most likely done cutting rates for the time being, Bear Stearns Chief Investment Strategist Jonathan Golub wrote in a note.
Market breadth was negative. Almost eight stocks dropped for every one that rose on the New York Stock Exchange.
US light crude oil for January delivery rose 80 cents to settle at $94.64 a barrel on the New York Mercantile Exchange, after having been on both sides of unchanged through the morning.
Treasury prices rose, lowering the yield on the 10-year note to 4.07% from 4.16% late on Friday. In currency trading, the dollar fell against the euro and the yen. COMEX gold for December delivery fell $9 to settle at $778 an ounce.
After the close, HP reported quarterly sales and revenue that topped expectations. Shares gained 1.4% in extended-hours trading.
Auto giant GM fell the most in more than two years on concerns that 2008 industry sales may slide and the US may adopt tougher fuel-economy standards for light trucks.
European stocks closed sharply lower after Swiss Re said it will take a $1.1bn hit from exposure to the US subprime mortgages. The pan-European Dow Jones Stoxx 600 index fell 2.2% to 354.70, its worst one-day decline in two months. The UK's FTSE 100 closed down 2.7% at 6,120.80, the French CAC 40 declined 1.7% to 5,432.57 and the German DAX 30 shed 1.3% to 7,511.97.
Latin American markets too ended down. Brazil's benchmark equity index, the Bovespa, fell 3.5% to 62,336.02, its lowest close since Oct. 25. Stocks rose 0.4% the previous week. Argentina's Merval fell 1.7% to 2,243.53 and Chile's IPSA lost 2% to 3,172.95. Mexican stocks were closed Monday for a national holiday.
In other emerging markets, the RTS index in Russia was down 1% at 2166 and the ISE National-30 index in Turkey slid 2.1% to 67,376.
Asian stocks fell for a fourth day. Mizuho Financial led banks lower after Goldman Sachs downgraded Citigroup to "sell" from "neutral", renewing concerns that losses tied to US sub-prime mortgages will increase.
Samsung led a decline among regional exporters after Lowe's cut its earnings forecast. Japanese exporters such as Honda also dropped after the yen strengthened against the dollar.
The Morgan Stanley Capital International Asia Pacific Index slid 1.7% to 155 as of 10:20 a.m. in Tokyo, taking its four-day drop to 4.5%. All 10 of its industry groups fell. The Nikkei in Tokyo lost 1.7% to 14,793.07. All markets open for trading in the region declined.
Market to remain sideways!
Despite posting a strong open bulls again failed to hold on to their gains as markets ended in negative terrain for third consecutive trading session. Profit booking in the index heavyweight like ICICI Bank, Reliance Industries, ITC and HDFC Bank mainly dragged the benchmark Sensex to close in red.
However, the Mid-Cap and the Small-Cap stock were in the limelight, both the indices gained over 2% each continuing their streak of outperforming the major indices. Finally, benchmark Sensex lost 65 points to close at 19,633. NSE Nifty closed flat at 5,907.
Pratibha Industries advanced 4.6% to Rs310 after the company declared that they have secured order worth Rs494.9mn. The scrip touched an intra-day high of Rs311 and a low of Rs266 and recorded volumes of over 36,000 shares on NSE.
Mukta Arts was locked at 20% upper circuit to Rs133.5 after the company announced that it secured Rs730mn distribution deal for 3 films. The scrip touched an intra-day high of Rs133.5 and a low of Rs115 and recorded volumes of over 86,000 shares on NSE.
DLF gained 1.5% to Rs948 after the company declared that they sold 49% stake in 7 residential Projects for Rs14.4bn. The scrip touched an intra-day high of Rs969 and a low of Rs940 and recorded volumes of over 18,00,000 shares on NSE.
Nicholas Piramal surged by over 5.5% to Rs309 as the company said it signed an agreement with Merck & Co. The scrip touched an intra-day high of Rs318 and a low of Rs295 and recorded volumes of over 6,00,000 shares on NSE.
Balrampur Chini surged by over 11% to Rs94 after the Board of Directors of the company announced that they would consider fund raising plan on November 27 and would consider selling bonds to founder. The scrip has touched an intra-day high of Rs97 and a low of Rs86 and has recorded volumes of over 1,00,00,000 shares on NSE.
L&T marginally lost 0.3% to Rs4368. The company’s Joint Venture secured Rs2.75bn Tunneling order for Airpot Line of DMRC. The scrip touched an intra-day high of Rs4460 and a low of Rs4345 and recorded volumes of over 8,00,000 shares on NSE.
Gitanjali Gems surged by over 3.5% to Rs386 after the Indian diamond retailer, announced it purchased Rogers Ltd., a jewelry chain with 46 stores in the
Suzlon surged by over 1.5% to Rs2095 after the company’s unit signed 2 new orders in
Stocks in News:
ONGC has sought work holiday for seven deepwater blocks due to non-availability of deepwater rigs.
ADAG is believed to be in talks with New York based Starwood Hotels to launch its upscale St Regis brand in the country.
Richard Branson’s Virgin group has entered into a branding and marketing tie-up with Tata Teleservices.
Gitanjali Gems is planning a 50:50 JV with Italian watch maker Morellato & Sector group.
IOC is planning to reduce its inventory levels from 14-15 days to 10-11 days.
BEML will take 48% stake in a three-way JV that will take over ailing Mining and Allied Machinery Corporation.
Ranbaxy may dilute 60% stake in its new research company, which will be formed by hiving off its R&D unit into a separate company by 2008.
Crompton Greaves is investing Rs2bn in India and US$55mn overseas, 60% of which is already completed.
Titan Industries is planning to launch its watches in Pakistan and jewellery in the US.
BSNL is planning to add 100mn telephone connections in the next three years.
Reliance Industries is likely to ramp up its retail network and petroleum supply chain.
Liaohe Petroleum Exploration Bureau, an arm of China National Petroleum Corporation has accused ONGC of terminating seismic survey contract on untenable and unjustified grounds.
HPCL plans to set up 100MW of wind power capacity in Maharashtra at an investment of Rs5bn.
Japan’s Yamaha Motor will introduce two high-end bikes, the YZF-R1 and MT01 priced at over Rs10lakh in December.
The world’s second largest retailer, Carrefour, may choose an Indian supermarket partner early next year and plans to launch a wholly-owned Indian cash and carry business in 2009.
Direct tax collection for the period April-November 15 has jumped by 42.9% to Rs1.4 trillion.
Power addition target of 16,335 MW for 2007-08, the first year of the 11th plan is likely to be missed by ~26%.
DoT is planning to include broadband consumer base of a service provider as a criterion for spectrum allocation.
The number of CDMA mobile users increased by 1.94mn in October to 52.99mn.
India’s steel production capacity is expected to at least quadruple by 2020.
The Government is planning to allow 74% FDI in Cable TV services and head-end in the sky (HITS) while also permitting 100% FDI in downlinking general and entertainment channels uplinked from abroad.
The Government has ruled out any sops for ethanol manufacturers.
Defence may vacate 45MHz spectrum by early next year.
The Government may revise bidding norms for ultra mega power projects.
FII Investment Trend:
FIIs were net sellers of Rs3.71bn (provisional) in the cash segment on Monday while the local institutions too pulled out Rs634.5mn.
Foreign funds were net sellers of Rs791mn in the cash segment on Friday.
Midcap Stock Ideas
Mid-cap stocks, which are trading at cheaper valuations compared with large-caps, can be rewarding investments.
Year 2007 is likely to be remembered for providing great returns in the stock market. The BSE Sensex has gained 43 per cent so far this year, and the recent rally, where the Sensex made a new milestone crossing 20,000 levels, has added a lot of wealth to those who are invested in large-cap stocks.
However, many analysts describe the current market rally as one driven by momentum, powered by heavy net foreign inflows into equities, most of it in large-cap stocks.
There is an increasing belief among market experts that valuations of many large-cap stocks appear stretched today – the BSE Sensex trades at a twelve-month forward earnings of 20 times as compared with about 17.7 times a month back.
While most of the gains have been captured by the large-cap stocks, many mid-cap companies have remained out of investors’ focus. Though the mid-cap indices have gained more than the Sensex since the beginning of 2007, their valuations are still low at about 15 times forward earnings.
“The recent rally has created a significant divergence between the valuations of large-cap stocks and the mid- and small-cap stocks. The divergence should shrink as many of the mid-cap stocks are trading at attractive levels,” says Ajay Bodke, senior fund manager - equity, Standard Chartered Mutual Fund. Fund managers believe there is significant value left in select mid-cap stocks.
“Over the last few months we have seen a significant rally in the large cap stocks and most of these stocks are expensive in terms of valuations. This is the right time to enter into some select mid cap stocks,” says, Satish Ramanathan, head-equities, Sundaram BNP Paribas Mutual Fund.
What is a mid-cap? There is no clear definition for this, but Sundaram Mutual Fund calls a stock a mid-cap if it is not among the top 50 shares listed on NSE in terms of market capitalisation.
For DSP Merrill Lynch, it begins from the 101st company. On November 17, the 51st company had a market cap of Rs 25,000 crore and the 101st company Rs 9,538 crore.
Here, we have a list of some select small- and mid-cap companies that have a strong business model and operate in an emerging or growing industry. We have looked at companies with a market capitalisation of around Rs 5,000 crore with just one exception (Indian Overseas Bank).
These companies are expected to grow at a faster rate over a longer period due to the inherent advantages. Also, along with the long-term earnings visibility, these companies are trading at attractive valuations.
| 3i Infotech IT stocks are not doing well due to the appreciating rupee against the dollar. But 3i Infotech, which has only 25 per cent exposure to the US and about 5 per cent net dollar earnings, is an exception. 3i Infotech is a mid-sized software company focussing mainly on the BFSI (banking, financial services and insurance) vertical. |
| The company has a mix of 50:50 between products and services. 3i Infotech offers products catering to segments such as core banking, treasury, investment management, risk management, lending, mutual funds and anti-money laundering. |
| The company also focuses on services such as systems integration and e-governance. The company has been growing inorganically to offer different services. |
| “Going forward, we expect the company to grow at over 54 per cent during FY07-09,” says Rajiv Mehta, analyst, India Infoline. At current market price the stock is trading at 9 times its FY09 earnings. |
| Bartronics India Within the small-cap segment, Bartronics could emerge as one of the best investments. |
| The company is a leading automatic identification and data capture solutions player and is now moving up the value chain by diversifying into smart cards. Smart cards are used in mobile Sim-cards, government projects, magnetic banking transaction cards, and so on. |
| The company sold 4 million smart cards in Q2 FY08 and achieved a capacity utilisation of 20 per cent, which is expected to reach 50 per cent by the end of FY08. In FY09, it will be 80 per cent on its enhanced capacity of 80 million units. |
| “Revenues from smart card business is expected to increase from Rs 99 crore (FY08) to Rs 216 crore (FY09) primarily due to increased demand from telecom, banking and other varied business,” says Harendra Kumar, research head, ICICIDirect.com. |
| Besides, the company is also expanding its presence in neighbouring markets like Malaysia. Considering that the company is operating in a high-growth emerging business and has a first-mover advantage, its current P/E of 9.3 times FY09 estimated earnings is attractive. |
| Bharati Shipyard Stocks of shipbuilding companies have outperformed the market helped by hefty order books. Bharati Shipyard has an order book of Rs 4,430 crore, which is 12 times its FY07 revenue. |
| Bharati designs and builds sea-going, coastal, harbour, inland crafts and other support vessels for the offshore industry. The company has more than 12 clients including well-known global companies. |
| Considering the growing order book, Bharati is expanding its present capacity. This will also facilitate in turnaround of more ships for booking higher revenues and operating leverage. |
| The faster execution of the current order book and better industry outlook makes it an attractive stock for the long term. The company is expected to grow at 50 per cent over the next two-three years and trades at 12 times its estimated FY09 earnings. |
| Everest Kanto Record crude oil prices have once again highlighted the importance of alternative fuels. Everest Kanto Cylinder (EKC) is one player that can benefit from higher crude oil prices as it makes high-pressure cylinders for CNG automobile and industrial applications. |
| Over the past few years, the number of CNG-fitted vehicles has grown at 80 per cent a year due to better economics and efficiency, and is expected to grow at 31 per cent a year till 2010. |
| Most of the CNG supply is limited to Mumbai and Delhi, but there is a proposal to extend it to 28 more cities, which will be a big push for EKC. |
| Analysts estimate the company to grow at about 50 per cent annually over the next few years led by its capacity expansion and higher industrial demand. At the current market price, the stock discounts its estimated FY08 and FY09 earnings at 32 times and 21.3 times respectively. |
| Indian Overseas Bank IOB is the only stock with a market cap of Rs 8,500 crore in this set, but in banks, the market cap is not large. IOB has a return on equity of 27 per cent and net interest margin of 3.5 per cent. |
| The Chennai-based bank has nearly 1,800 branches, almost half of them in the south. “We expect IOB’s business to grow at a 21 per cent a year till FY09. On return on assets front, the bank will continue to do well on the back of 19-20 per cent growth in assets coupled with profitability growth of 22-23 per cent,” says ICICIDirect.com’s Kumar. |
| At the current price the stock trades at 1.4 times its FY09 estimated book value. |
| Opto Circuits Medical equipment player Opto Circuits has been growing at a rapid clip through the organic and inorganic route and expanding its products offerings. |
| The company enjoys technical expertise for making optical sensors, critical electronic equipment used in the healthcare industry and security systems. It has acquired a coronary stent manufacturer and a balloon catheter manufacturer. |
| The increasing demand for its products in the domestic and international markets coupled with the acceptance of its products in international markets will drive the future growth for the company. |
| Opto Circuits is expected to grow at about 55 per cent for the next two years. The stock is trading at 33 times and 23 times estimated FY08 and FY09 earnings respectively. |
| Patel Engineering Construction, real estate and power are considered to be the most favoured sectors. Patel Engineering operates in each one of these segments. It is a leading player in hydropower plant construction with a market share of 22 per cent. |
| Also, the company is building its own power generation plants which are expected to come during 2011-12. |
| In the near term, its growth will come from core businesses of construction, irrigation, transportation and micro-tunnelling, which are growing at a fast pace. |
| Given the strong order book position of Rs 5,000 crore (3.8x FY07 revenue), PEL is expected to grow at about 33-35 per cent annually till FY09. Also, the development of its land bank could unlock value. PEL has a land bank of 1,183 acres in Hyderabad, Mumbai, Bangalore, Chennai and Panvel. |
| PVR Cinemas A pioneer of the multiplex culture in India, PVR has a significant market share in northern region. It is an established film distributor and has also ventured into film production recently. Two of its co-productions with Aamir Khan are slated to be released in the current year. |
| In the wake of the company’s strong financial performance in Q2 FY08 in the exhibition business, its venture into movie co-production along with domestic distribution rights could rake in significant profits if the movies fare well at the box-office. |
| “Considering the company’s future expansion plans, it is expected to register a 54 per cent and 95 per cent growth in net sales and net profit over the next two years,” says Lalit Thakkar, director research, Angel Broking. At the current market price, the stock is trading at 11 times its FY09 estimated earnings. |
| Sanghvi Movers Sanghvi Movers is a good play on India’s increasing industrial and infrastructure capex. |
| Sanghvi Movers provides cranes on a hiring basis to various industries like power, refineries, steel and cement. It is the largest organised player in this sector with a fleet of 254 hydraulic and crawler cranes ranging 20-800 tonne of capacity. |
| Considering that most of its fleet is booked for the next 18-24 month, Sanghvi is expanding its fleet size and investing about Rs 200 crore a year in FY08 and FY09. |
| The company will grow faster in the future, driven by expansion, higher demand from user industries and pricing power. The stock is currently trading at 12.9 times estimated FY09 earnings. |
| Sintex Industries Plastics and textiles player Sintex Industries is another stock that should do well. The company has been moving up the value chain in plastic products providing technology intensive products. It has acquired a leadership position in pre-fabricated structures, custom moulding and other businesses with high entry barriers. |
| Also, it acquired the US-based Wausaukee Composites, an established player catering to the high-end industries such as medical imaging, mass transit, wind energy, recreation and corrosion-resistant materials handling. The company also made its second acquisition of Bright Brothers’ automotive products business. |
| Sintex will continue to benefit through its product innovation, higher plastic penetration in the domestic market and increasing capex across industries. The stock is trading at 21 times its FY09 estimated earnings. |
Daily Technical Analysis
Nifty — The index opened on a positive note and reached an intra-day of 5981 in the opening trades after which it drifted down. It ended the day with a gain of 1 point.
10 & 20 day moving average — The index has support around the 10 dma = 5791 and 20 dma = 5774. Declines should find support around these levels. Intra-day support is around 5860, a break below which could see index drift down intra day. On the upside, index faces resistance around 5981-6012 range.
Conclusion — Intra-day support is around 5860, a break of which could see intraday
weakness.
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