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Thursday, November 29, 2007
FIIs net sellers of Rs 1,113cr in cash market
Foreign institutional investors (FIIs) were net sellers of Rs 1,112.96 crore (provisional) today, according to data released by BSE.
While FIIs made gross purchases of Rs 5,155.11 crore, gross sales totalled Rs 6,268.07 crore.
Domestic institutional investors (DIIs) were net buyers of Rs 606.25 crore today. While DIIs made gross purchases of Rs 1,974.70 crore, gross sales totalled Rs 1,368.45 crore.
FIIs were net sellers of Rs 450 crore on Wednesday, November 28, according to data released by Sebi today. While FIIs made gross purchases of Rs 3,268.50 crore, gross sales totalled Rs 3,718.50 crore.
Mutual funds (MFs) were net buyers of Rs 57.10 crore on Wednesday. MFs made purchases of Rs 778.70 crore and sales of Rs 721.60 crore.
Post Market Commentary
The market closed marginally up after a strong rally at the initial stage. The market came off sharply from the higher levels towards the end of the session on the back of heavy profit booking by the investors. The market opened on a firm note tracking the strong global cues but failed to sustain the momentum towards the final hours of the trading as the selling intensified across all the segments. Also, the expiry of the November 2007 derivatives contracts also put some pressure into the market. Selling is seen mostly in the capital goods and Metal scrips while Bankex, Oil & Gas and Realty attracts investors confidence. The BSE Sensex closed higher by 64.39 points at 19,003.26 and NSE Nifty grew by 17.05 points to close at 5,634.60. Overall, the market breadth was little weak as 1,468 stocks are closed in red while 1317 are closed in green. The BSE Mid cap fell by 20.94 points to close at 8,362.55 while Small cap closed up by 14.45 points at 10,389.75.
BSE Bankex surged 212.20 points to close at 10,601.41. Scrips that gained are IOB (7.43%), HDFC bank (4.30%), ICICI bank (3.15%), PNB (1.53%) and SBI (0.79%).
BSE oil & gas index grew by 127.02 points to closed at 12,044.60 as RPL (11.95%), Essar Oil (3.72%) and Reliance industries (1.15%) closed higher.
BSE Auto index closed up by 15.36 points at 5,419.51. Pushing it up are Hero Honda (3.53%), Maruti Suzuki (2.46%), M&M (1.47%), Exide industries (1.50%), Apollo tyres (0.82%) and Tata Motors (0.25%).
BSE Realty index closed up by 154.69 points at 10,223.93. Scrips that gained are Unitech (3.56%), DLF (0.27%), Sobha developers (0.12%) closed higher.
BSE Power index closed lower by 44.39 points at 4,253.53 as Areva (3.46%), Power Grid (2.39%), Reliance energy (2.37%), Torrent Power (1.89%), Suzlon energy (1.03%) closed lower.
BSE IT index closed marginally up by 4.36 points at 4,085.76 as Educomp solu (5.91%) and Rolta India (4.23%) closed higher while Niit techno (4.67%), Tech Mahindra (3.45%) and I-Flex (3.05%) closed lower.
Market Close: Markets settled in green post F&O expiry
Supportive global cues coupled with some short covering were the primary reason for the Indian indices to trade in the positive territory. A rally was seen across the Asian with most of the markets ending up over 3% after US markets run up on the back of expected Fed cut in the next meeting. The follow on rally from global markets pushed Indian indices to start gap up and traded higher for major part of the day but slipped in the last hour of trade. Volatility crept in as F&O expiry ended today. Selling was seen in select Midcaps but overall rollovers positions have been good for the expiry. Market wide rollover was over 70% for November series expiry. Market ended down over 300 points from day's high after some periodic attempts of profit booking seen at the higher levels. The major gainers for the day were on the Auto, Banking, Reality and Consumer durables sector. On the losing side were Power, Technology and Metal counters. Steel companies slipped in the negative territory after the Govt made ISI certification mandatory for all the steel manufacturers. European indices managed to hold on in the positive territory post a stable start while Asian indices closed a mixed bag.
Sensex closed higher by 64 points at 19003.26. It was helped up by gains in HDFC Bank (1677.15,+4 percent), Hero Honda (733.9,+4 percent), ICICI Bank (1162.2,+3 percent), Maruti (990.45,+2 percent) and RIL (2818.3999,+1 percent). Restricting the gains were Ranbaxy (378.95,-3 percent), Rel Energy (1663.7,-2 percent), TISCO (802.15,-2 percent), RCVL (665.05,-2 percent) and Hindalco (180.9,-2 percent).
Educomp Solutions Ltd rallied and closed higher by 5% after the company informed that it would foray into formal school management with launch of The Millennium Schools. Millennium Schools will be powered by the Millennium Learning System (MLS), India's first fully integrated learning delivery system for Schools developed by the Company. Millennium School would be set up across Indian cities by independent trusts and societies, The Millennium Schools will incorporate unique blend of global best practices in education and inherent strengths of Indian education system with the added advantage of MLS, the Company's cutting-edge proprietary learning system for schools. Educomp has plans to open school nearly to 100 by 2009. Content seems to be the key success factor in this business and Educomp is well placed there. Higher Valuations seem to be the only reason why we are not the buyers at the moment. Do read our note on the company to know other investment rationales in favor of the company.
Solar Exploding continues and ended higher by 10% after report on the company was issued by a major broking house with Buy recommendation. We had discovered the story much earlier and we continue to be positive on the company. Core business of the company comprises of providing explosive solutions for mining activities including slurry Explosives. The company undertakes manufacturing of Detonators and Detonator components through its subsidiary. The company is the one of the largest manufacturer of Packaged Explosives in India with a Licensed Capacity of 2 lac tonne Explosives (Bulk and Packaged), 140 Million numbers of Detonators and 20 Million Meters of Detonating Cord. Numbers for the September ended quarter were exceptional as well. Solar can be considered as an investment option for a long term point of view as per our analysis as well. Do read our note on the company to know why.
Technically Speaking: Sensex traded between an intra day high of 19,267 and low of 18,930. Declines outnumbered advances marginally as there were 1,300 advances against 1,451 declines. Support lies at 18870 and 18500 levels. Resistance is at 19360 and 19525 levels. Volume of Rs 7,596 cr was churned through out the trading session.
Sensex up on US interest rate-cut hope
A firming global trend and persistent buying in frontline stocks saw the Sensex surge to the day's high of 19,297. Yesterday, US markets rose for the second day in a row on the hope that US Federal Reserve may cut the interest rate to strengthen the economy. Tracking the same the Asian indices also rose over 2-4% each. After registering a loss of over 180 points yesterday, the market resumed with a positive gap of 352 points at 19,291. The Sensex remained firm thereafter but within a range. But, some profit booking towards the close dragged the Sensex to its day's low of 18,930. However, late buying in index pivotal stocks lifted the Sensex to end the session with a gain of 64 points at 19,003, while the Nifty closed its session by adding 17 points at 5,635.
The market breadth was negative. Of the 2,857 stocks that traded on the Bombay Stock Exchange (BSE), 1,468 stocks declined, 1,317 stocks advanced and 72 stocks ended unchanged. Among the sectoral indices, the BSE Bankex index moved up by 2.04% followed by the BSE CD index (up 1.67%) and the BSE Realty (up 1.54%). However, the BSE Power index, the BSE CG index, the BSE FMCG index, the BSE HC index, the BSE Metal index and the BSE Teck index closed in negative territory.
Among the index heavyweights, banking majors registered solid gains. HDFC Bank flared up by 4.30% at Rs1,677 and ICICI Bank spurted 3.15% at Rs1,162, while Maruti Suzuki scaled up 2.46% at Rs990, M&M soared 1.47% at Rs720, and Reliance Industries advanced 1.15% at Rs2,818. However, Bajaj Auto tumbled 4.68% at Rs2,600, Ranbaxy slipped 2.67% at Rs379, Reliance Energy fell 2.37% at Rs1,664, Tata Steel was down 2.02% at Rs802 and Reliance Communication lost 1.98% at Rs665.
Over 5.56 crore Reliance Petroleum shares changed hands on the BSE followed by Gujrat Petronet LNG (2.42 crore shares), Ispat industries (2.11 crore shares), Reliance Natural Resources (1.31 crore shares) and Tata Teleservices (1.19 crore shares).
IFCI was the most actively traded counter on the BSE and registered a turnover of Rs137 crore followed by Meghmani Organics (Rs132 crore), Reliance Industries (Rs110 crore), SBI (Rs108 crore) and Orbit Organic (Rs131 crore).
Sensex settles a tad above 19,000
The market came sharply off higher level in late trade due to expiry of November 2007 derivatives contracts. Infosys slipped into the red in late trade in contrast to a decent gainers earlier during the day. Bajaj Auto, Ranbaxy, Reliance Energy slipped. ICICI Bank came off higher level. Market breadth turned negative from positive in the last one hour of trade. 16 out of 30 stocks from the Sensex pack were in green.
European markets, which opened after Indian market, were mixed. Asian markets, which opened before Indian market, surged after comments on Wednesday, 28 November 2007, from US Federal Reserve officials raised the chances of another US rate cut in December 2007.
The market has been volatile over the past few days due to alternate bouts of buying and selling amid FII sales caused by redemption pressure in their home countries and fears of a US recession arising from US housing slump and credit crisis.
The 30-share BSE Sensex rose 64.39 points or 0.34% to 19,003.26. Sensex hit a low of 18,930.31 at the fag end of the trading session. At day's low, Sensex shed 8.56 points for the day. The Sensex hit a high of 19,297.01 in early trade. At day's high, the Sensex gained 358.14 points.
The broader based S&P CNX Nifty gained 17.05 points or 0.30% to 5634.60. Nifty hit a high of 5725 in early trade. At day's high, Nifty had risen 107.45 points.
The BSE Mid-Cap index fell 0.25% to 8,362.55. The BSE Small-Cap index was up 0.14% to 10,389.75. Both these indices underperformed the Sensex.
The market breadth was negetive. On BSE, 1317 stocks advanced, 1468 stocks declined and 72 stocks remained unchanged.
BSE clocked a turnover of Rs 7596 crore, higher than yesterday (28 November 2007)'s Rs 7,472.89.
Nifty November 2007 futures were at 5641, a premium of 6.4 points as compared to spot closing of 5634.60.
NSE’s futures & options (F&O) segment turnover was Rs 98225.56 crore, which was higher than Rs 86287.52 crore on Wednesday, 28 November 2007
India’s largest private sector firm by market capitalisation & oil refiner Reliance Industries was up 1.15% to Rs 2818.40.
India's second biggest motorcycle maker in terms of market share Bajaj Auto fell 0.13% to Rs 2724.30. The stock came under selling pressure in late trade when it hit a low of Rs 2600.
India's biggest drug maker in terms of sales, Ranbaxy Laboratories fell 2.67% to Rs 378.95.
The BSE Bankex rose 2.04% to 10,601.41. It outperformed the Sensex. Indian Overseas bank surged 7.43% to Rs 157.65, HDFC Bank soared 4.30% to Rs 1677.15, Punjab National Bank rose 1.53% to Rs 593, and Kotak Mahindra Bank rose 1.52% to Rs 1127.15.
India’s largest private sector bank by assets ICICI Bank rose 3.15% to Rs 1162.20. The stock came sharply off the higher level in late trade. It came off session's high of Rs 1184.
The BSE IT index rose 0.11% to 4,085.76. It underperformed the Sensex. HCL Technologies jumped 3.18% to Rs 313.40, Wipro gained 0.23% to Rs 450.50, Satyam Computers rose 0.15% to Rs 425.60, and TCS rose 0.10% to Rs 976.75.
India’s second largest software exporter by sales Infosys Technologies was steady at Rs 1569.60.
Realty stocks jumped on television reports that Maharashtra State Assembly has passed a resolution repealing the Urban Land Ceiling Act, leading to more area available for real estate development in the state. The BSE Realty index was up 1.54% to 10,223.93. It outperformed the Sensex. DLF rose 0.27% to Rs 881.85, Unitech soared 3.56% to Rs 372.45 and Sobha Developers gained 0.12% to Rs 860.
The BSE Power index fell 1.03% to 4,253.43. It underperformed the Sensex. Areva T&D fell 3.46% to Rs 2604.30, Power Grid Corporation of India fell 2.39% to Rs 142.80, Reliance Energy declined 2.37% to Rs 1663.70. NTPC gained 0.32% to Rs 231.70, Tata Power rose 0.45% to Rs 1119.50 and Neyveli Lignite rose 0.69% to Rs 210.15.
India's largest public sector oil explorer ONGC fell 0.81% to Rs 1141.20. ONGC Videsh (OVL), the overseas arm of state-run Oil and Natural Gas Corp (ONGC), has reportedly bagged two oil and gas exploration blocks in Brazil. Meanwhile, some reports suggest that the company has found more natural gas in a block in the desert state of Rajasthan. This block was awarded to the company before India moved to a regime of auctioning its oil and gas exploration blocks.
Mukesh Ambani-held Reliance Petroleum surged 11.95% to Rs 215.05 on huge volume of 5.56 crore shares on BSE.
The BSE Auto index rose 0.28% to 5,419.51. It underperformed the Sensex. Tata Motors rose 0.25% to Rs 722.30, Hero Honda Motors jumped 3.53% to Rs 733.90 and Maruti Suzuki gained 2.46% to Rs 990.45.
Mahindra & Mahindra rose 1.47% to Rs 720.25. Mahindra Holidays and Resorts, part of Mahindra & Mahindra Group, is reportedly planning to develop holiday homes on ownership basis. It also plans to float an IPO by March 2008.
India's largest cellular service provider by market share Bharti Airtel rose 0.62% to Rs 915.65. India's second largest listed telecom service provider by sales Reliance Communications fell 1.98% to Rs 665.05.
Pharmaceuticals firm Jubilant Organosys fell 0.79% to Rs 302.25 on reports that the firm is evaluating various proposals to acquire companies in the contract research and manufacturing services, drug discovery and clinical research segments in the US and Europe. It has earmarked around $100 million for acquisition.
Electric equipment maker Kirloskar Electric Company rose 0.71% to Rs 370.20. The board of directors of Kirloskar Electric Company on Wednesday, 28 November 2007 approved the merger of the operating business of Kirloskar Power Equipments with itself. The board also approved merger of its subsidiary Kaytee Switchgear with itself.
Ship building firm ABG Shipyard jumped 8.34% to Rs 888.55 after the company said its board had approved raising funds through issue of equity shares to qualified institutional buyers and convertible warrants to the promoters.
Post-production firm Prime Focus gained 0.17% to Rs 1210 after the company said it was in advanced talks to buy US-based firms, Post Logic Studios and Frantic Films for $43 million.
Liquor firm Shaw Wallace & Company rose 1.05% to Rs 409.60, off day's high of Rs 434 after its board approved merging the firm with group firm United Spirits. Shaw Wallace shareholders will get four United Spirits shares for every 17 held. United Spirits, part of the UB Group, fell 0.41% to Rs 1844.30
Offshore logistics firm Sical Logistics jumped 4.97% to Rs 238.50 on foreign investment promotion board's approval for Old Lane Mauritius IV's $26 million investment in Sical's new infrastructure unit, Sical Infra Assets.
Reliance Petroleum clocked highest turnover of Rs 1137.84 crore on BSE. Mundra Port & Special Economic Zone (Rs 371.03 crore), Reliance Natural Resources (Rs 202.57), Reliance Energy (Rs 186.61 crore) and Jaiprakash Associates (Rs 186.22 crore), were the other turnover toppers on BSE in that order.
Reliance Petroleum registered highest volume of 5.56 crore shares on BSE. Gujarat State Petronet (2.42 crore shares), Ispat Industries (2.11 crore shares), Reliance Natural Resources (1.31 crore shares) and Tata Teleservices (1.20 crore shares), were the other volume toppers on BSE in that order.
In Europe, key indices in France and Germany were up by between 0.02% to 0.28%. UK’s FTSE 100 was down 0.24%.
In Asia, key benchmark indices in Hong Kong, Japan, China, South Korea, Singapore and Taiwan were up by between 2.06% to 4.06%. The Fed's next policy-setting meeting is scheduled for 11 December 2007.
US markets rallied overnight on expectations for an interest rate cut by the US Federal Reserve in December 2007. The Dow Jones industrial average jumped 331.01 points, or 2.55%, at 13,289.45 on Wednesday, 28 November 2007. The Standard & Poor's 500 Index was up 40.79 points, or 2.86% at 1,469.02. The Nasdaq Composite Index was up 82.11 points, or 3.18%, at 2,662.91.
Oil surged by more than $4 a barrel towards $95 a barrel today, 29 November 2007, after a pipeline explosion cut crude oil imports to top consumer the United States by nearly a fifth.
SEBI - RPL Probe ?
Kidding ? Does SEBI have any guts to even send a notice to RIL
The buzz is that a well known investment guru has gone short on RPL at various dizzy -was he involved with the promoters ?
Let the operators have a gala time and let informed investors make money!
What are your views, Do you hold RPL ? Why do you think it deserved to go up the way it went up ? Are you planning to hold on ? Leave a comment and let us know.
Disclosure - Don't hold RPL, Reliance Industries
(Comments have to be manually approved and may not appear immediately )
Trading Calls
Buy Development Credit Bank (DCB) with a stop loss of Rs 127 for target of Rs 176.
Buy Ispat Industries with a stop loss of 37 for target of Rs 51.
Buy Gayatri Projects with a stop loss of Rs 320 for a short-term target of Rs 388.
More broking IPOs soon
Buoyed by the enthusiastic response to the IPOs of leading broking and investment banking firms, more and more industry players are eyeing the capital market route to raise funds.
If market sources are to be believed, about half a dozen players, including established names like Enam Securities, Anand Rathi Securities, Angel Broking and Anagram Stock Broking, are going in for an initial public offering to cash in on the soaring valuations in the stock broking space. Some of these firms, particularly those which have roped in private equity investors, may want to get listed to provide an exit route to their PE partners, said market sources.
Though none of these companies have announced any plans so far, market sources believe the timing is right, given the strong investor appetite for such stocks. Not to be missed is the fact that the recent IPOs of Edelweiss Capital and Religare Enterprises met with an overwhelming response from the public, attracting subscription several times higher than the respective offers. Religare debuted smartly on the bourses on November 21, while Edelweiss Capital is expected to list soon.
Enam Securities, one of the biggest investment bankers in the country, is understood to have initiated moves toward becoming a public listed company. Enam Securities chairman Vallabh Bhanshali, however, declined to comment on the subject. Anand Rathi Securities, which has placed a 20% equity stake with Citigroup Venture Capital, is also learnt to be looking at the IPO option. Company officials were not available for comment.
KR Choskey Shares and Securities, another prominent broking firm, intends to rope in an PE investor, though the company has not finalised its plans. “We are looking at the PE option but nothing has been decided as yet,” said KR Choksey Shares and Securities chairman Kisan R Choksey.
Riding high on the back of the historic bull run, broking and investment firms have recorded a significant growth in their activity and financial performance in the past 3-4 years. Their valuations have also soared to unprecedented levels amid accelerating flow of investments from global players. “Stock brokers are one of the biggest beneficiaries of the bull run. Many of them are raising funds to fuel further growth in areas like portfolio management services and wealth management” said Prime Database MD Prithvi Haldea.
Among players, which have successfully tapped the primary market in the past, include India Infoline, Indiabulls Financial Services, Motilal Oswal Financial Services, Religare Enterprises and Edelweiss Capital. All of them, except the yet to be listed Edelweiss Capital, have had a good run on the bourses post-listing. Their current market cap ranges between Rs 4,000 crore to Rs 15,000 crore
via Economic Times
Morning Call
Market Grape Wine :
In House :
Nifty at a supp of 5550 and 5500 with Resis at 5665 and 5720.
Mkt sentiment likely to stay positive for the day.
Intra day: Buy EKC above 329 with a TGT of 345 and a SL of 324
Buy Maruti above 975 with a TGT of 1005 and a SL of 962
Delivery buy: Lykalab around 60~65 with a TGT of 200(medium term)
F&O: Buy SUN TV above 342 with a TGT of 356 and a SL of 335
Buy Cummins above 413 with a TGT of 428 witha SL of 405
Out House :
Markets at a support of 18658 & 18786 levels with resistance at 19291 & 19591 levels .
Buy : RIL & LT
Buy : RELCAP & RNRL
Buy : JpAsso & JpHydro
Buy : Bhel & Titan
Buy : GeShipping & SCI
Buy : IBUllsreal
Buy : Wipro & INFY bullet
Buy : IciciBnak & SBIN
Buy : Petronet , MRPL , Bongaigaon & Chennaipetro
Dark Horse : RIL , JpAsso , HEG , IBullReal , GeShipping , RNRL , BHEL , SBIN & JpHydro
Bullet : JPASSO & RNRL with strcit stop loss
Smart money drives financial markets
Excellent talk by Tom Williams - Author of "Master The Markets".
Market may remain positive
After slipping over 180 points yesterday the market is expected to remain volatile on the back of unwinding of positions in derivative contracts. However, the market may open on a positive note tracking firm Asian markets in current trades which are up on speculation that Federal Reserve may cut the rate further. The market may also see some short-term profit bookings in frontline stocks creating a volatility in the afternoon trades. Among the local indices, the Nifty could test 5900 on the upside and may slip to 5394 on the downside. The Sensex has a likely support at 18800 and may face resistance at 19500.
Major US indices surged on Wednesday, after comments from a Federal Reserve official sparked the hopes that the central bank will cut rates again at its next policy meeting. The Dow Jones industrial average gained by as much as 331 points, the Nasdaq moved up by 82 points to close at 2663.
The Indian ADRs also witnessed a rally on the US bourses. Satyam zoomed 8.37% followed by Wipro gaining 6.26%, while Infosys, Tata Motors, Rediff, VSNL, MTNL and Patni Computer surged around 1-5% each.
Crude oil prices slipped on Wednesday, with the Nymex light crude oil for January delivery losing $3.80 to close at $90.62 a barrel. In the commodity space, the Comex gold for February delivery tumbled $14 to settle at $821.20 an ounce.
Grey Market - Burnpur, BGR Energy, eClerx, Edelweiss, Jyothy Labs
Jyothy Lab. 620 to 690 220 to 225
Burnpur Cement Ltd. 12 8 to 9
eClerx Services 270 to 315 80 to 90
BGR Energy 425 to 480 240 to 250
Edelweiss 725 to 825 750 to 775
Renaissance Jewellery 125 to 150 20 to 25
Kolte Patil 125 to 145 75 to 80
Kaushalya Infra 50 to 60 12 to 15
SVPCL 42 - 3 to -5
Domestic bourses may track firm global equities
The market may is likely to open with an upward gap today tracking firm global markets. However, volatility may rise during the course of the day as November 2007 derivatives contracts expire today, 29 November 2007. A healthy rollover of 68% was witnessed in Nifty futures at the end of Wednesday (28 November 2007)’s trade. The market wide rollover was about 58% to 60%.
Foreign institutional investors (FIIs) were net buyers to the tune of Rs 599.58 crore in the futures & options segment on Wednesday. According to data released by the NSE, FIIs were net buyers of index futures to the tune of Rs 455.92 crore and bought index options worth Rs 340.82 crore. They were net sellers of stock futures to the tune of Rs 195.88 crore and sold stock options worth Rs 1.29 crore.
The market has been volatile over the past few days due to alternate bouts of buying and selling amid FII sales caused by redemption pressure in their home countries and fears of a US recession arising from US housing slump and credit crisis.
FIIs sold shares worth a net Rs 978.96 crore in the cash market on Wednesday, 28 November 2007, as per provisional data. Domestic funds bought shares worth a net Rs 331.82 crore on that day.
FII outflow in November 2007, till 27 November 2007, reached Rs 4422.30 crore. FIIs had made heavy purchases in September 2007 and October 2007. FIIs had bought shares worth a net Rs 16132.60 crore in September 2007 and Rs 20590.90 crore in October 2007.
Asian stocks surged on Thursday, 29 November 2007 after comments on Wednesday, 28 November 2007, from US Federal Reserve officials raised the chances of another US rate cut in December 2007. Key benchmark indices in Hong Kong, Japan, China, South Korea, Singapore and Taiwan were up by between 1.2% to 4.1%. The Fed's next policy-setting meeting is scheduled for 11 December 2007.
The Dow Jones industrial average jumped 331.01 points, or 2.55%, at 13,289.45 on Wednesday, 28 November 2007. The Standard & Poor's 500 Index was up 40.79 points, or 2.86% at 1,469.02. The Nasdaq Composite Index was up 82.11 points, or 3.18%, at 2,662.91.
Crude oil prices declined sharply for a second day in a row on Wednesday, 28 November 2007.
Another interest rate cut hope cheer investors
Indices register largest percentage wise gain in FY 2007
US Market closed sharply higher on Wednesday, 28 November, 2007 after Federal Reserve Vice Chairman Donald Kohn reportedly hinted at a possible rate cut, amid ongoing problems in the housing and credit markets. The indices soared today and it was Dow’s greatest percentage wise gain in FY 2007 till date. The two day rally (including yesterday’s gains) was the biggest gain for indices since November 2002. All ten economic sectors posted gains today, led by a financial shares.
The Dow Jones industrial Average ended the day with a gain of 331 points at 13,289. The Nasdaq Composite Index, finished higher by 82 points at 2,662. S&P 500 finished higher by 41 points at 1,469.
All thirty Dow stocks ended in green. Citigroup and AIG were the main Dow winners today. The two stocks soared by 6.5% and 5.9% respectively.
Fed Vice Chairman Kohn gave futures a nice boost today after he said the Fed must be "flexible and pragmatic" in policy. Market took his comments as if he was hinting at another quarter to half a percentage point interest rate cut at the 11 December policy meeting.
Finance sector, especially Citigroup was once again centre of everyone’s attention today. This was mainly because on reports at rumors in the Wall Street Journal that Citigroup and Bank of America were contemplating a merger. But the report was denied by both companies. Yesterday Citibank was also in focus after an Abu Dhabi investment company made a $7.5 billion investment in the company thereby becoming the largest shareholder of Citigroup.
Wipro Technology leads among the Indian ADRs
On the economic front, October durable goods orders were sluggish. Also, October existing home sales came in at a 4.97 million annual rate. That is close to the expected 5.0 million rate, and down 1.2% from September's 5.03 million rate.
On the negative side of things, it was Wells Fargo’s turn this time. Wells Fargo announced that it will take a $1.4 billion charge in the fourth quarter to increase loan loss provisions related primarily to home equity loans.
In the technology sector – Apple, Qualcomm and Research In Motion provided required leadership.
All Indian ADRs ended in green today registereing good gains. Wipro Technologies was the main winner gaining 6.3%. It was followed by HDFC Bank and Tata Motors, each gaining 5.4%.
Crude oil drops to lowest level in a month
Crude oil price dropped to its lowest level in almost a month after Energy Departments reported in the weekly inventory report that crude supplies fell less than expected for the week ended 23 November. Comments from Organization of Petroleum Exporting Countries (OPEC) that the cartel is ready to increase production any time also led prices erode further.
Crude-oil futures for light sweet crude for January delivery closed at $90.6/barrel (lower by $3.8/barrel or 4%) on the New York Mercantile Exchange. Prices reached a high of $99.2 on 21 November. Prices are up 49% from a year ago.
Volume on the New York Stock Exchange topped 1.3 billion, and advancing stocks topped declining issues 7 to 1. On the Nasdaq, 2.1 billion shares were exchanged, and advancers outran decliners 3 to 2.
Tomorrow, investors will look for new economic data, along with a host of earnings reports, to help set the tone of trading.
Pre Market Watch
Indian market is likely to have positive opening as the US market closed in green and Asian Market is trading firm. On Wednesday, the Indian markets make a turnaround after the mid session by paring all its initial gains to close in a negative territory. Heavy selling pressure led the indices to close lower. The BSE Sensex closed lower by 188.86 points at 18,938.87 and NSE Nifty fell by 80.6 points to close at 5,617.55. We expect that the market to see some during the trading session.
On Wednesday, the US market closed in positive territory. The DJIA surged 331.01 points to close at 13,289.45. The Nasdaq and S&P 500 index closed higher by 82.11 points and 40.79 points at 2,662.91 and 1,469.02 respectively.
Indian ADRs ended in positive. In technology sector, Satyam is trading up by (8.37%) along with Wipro by (6.26%), Infosys by (4.79%) and Patni computers by (2.74%). In banking sector, HDFC bank and ICICI bank grew (5.43%) and (3.38%) respectively. VSNL and MTNL advanced by (4.27%) and (4.26%) respectively.
The major stock markets in Asia are trading strong. Hang Seng is trading higher by 908.71 points at 28,279.95. Japan''s Nikkei is trading up by 361.02 points at 15,514.80. Singapore Strait times is trading at 3,454.34 up by 84.62 points. Taiwan weighted advanced by 165.88 points to trade at 8,8442.14 and Seoul Composite grew by 47.45 points to trade at 1,882.14.
The FIIs stood as the net seller yesterday as the gross equity purchased was Rs.3,467 (in crores) and the gross debt purchased was Rs0.00 (in crores). The gross equity sold was Rs3,730.60 (in crores), and the gross debt sold was Rs225.30 (in crores). The net investment of equity was -Rs263.60 (in crores) and the net debt investment was -Rs225.30 (in crores).
Today, Nifty has support at 5,592 and resistance at 5,759 and BSE Sensex has support at 18,843 and resistance at 19,315.
Trading Calls
Nifty (5618) Sup 5564 Res 5742
Buy Sun TV (344) SL 339
Target 352, 355
Buy Patni (318) SL 313
Target 328, 330
Buy Sintex Ind (452) SL 447 Target 462, 465
Buy LITL (488) SL 483
Target 499, 502
Sell Bharat Forge (327) SL 332 Target 317, 315
Pyramid Saimira - acquisition
Dimples Cine Advertising is a good acquisition for Pyramid Saimira
Dimples Cine controls a major chunk of ad agency market
Winter winds…will bears go into hibernation?
People don't notice whether it's winter or summer when they're happy.”
The winds blowing from Wall Street have brought joy to markets across Asia and when it hits the Indian markets, bears will need to hide, at least for a day or two. After yo-yoing for most part of this month, the bulls will look to end the month (in the F&O segment) on a promising note. Their task today will be made easier by the overnight rally in the US and other global markets. Asian markets are up smartly already. All Indian ADRs finished sharply higher. In addition, crude oil prices tumbled and are now hovering at $91.56 per barrel mark in extended trading in Asia. There is hardly any bad news except for the persistent selling by the FIIs. But, even that may not be able to prevent the bulls from propelling the key indices higher by 2-4%.
An anticipated short-covering could be the icing on the cake. With Federal Reserve Vice Chairman Kohn pointing out the Fed can take action to offset what is happening in the financial markets expectations are high that the Fed may cut rates after all in December. You may lighten some positions which you are uncomfortable with. For taking a fresh plunge, play the waiting game for some time. Wait for more signals from the global markets, especially the US, for clarity on further Fed rate cuts. Bear in mind that FIIs have been net sellers this month and till the time they resume their shopping spree the market may find it difficult to hit new peaks.
The 15 new scripts to be added in the F&O segment did particularly well yesterday. They are: HOEC, KPIT Cummins, DCB, Hindustan Zinc, MICO, Info Edge, NIIT, Great Offshore, Wire and Wireless, Redington, Network 18, Global Broadcast News, Ispat Industries and Gitanjali Gems.
Lehman Brothers has bought Indo Asian Fusegear; Fidelity has picked up Sarda Energy & Minerals while Morgan Stanley has sold the stock; CLSA has purchased more of Vakrangee Software; Deutsche Bank has bought Videocon Industries and Lotus Global has sold it.
Sterlite Industries plans to sell up to 15% stake worth as much as $2bn in its energy unit to build power plants, according to a foreign newswire agency. Jubilant Organosys and S. Kumars Nationwide could see some action amid reports that the companies are planning fresh acquisitions. Tricom India may see some spurt in the next few weeks as the Mumbai-based non-voice BPO firm is scouting for buy outs.
US shares extended their rally on Wednesday, with the Dow Jones Industrial Average registering its largest percentage gain so far this year. Financial stocks led the advance after a Federal Reserve official bolstered hopes for additional interest-rate cuts.
Federal Reserve Vice Chairman Donald Kohn said market turbulence may reduce credit to businesses and consumers, fueling fresh optimism that the American central bank will cut interest rates again next month.
"The degree of deterioration that has happened over the last couple of weeks is not something that I personally anticipated," Kohn said. "We are going to have to take a look at the stress in credit markets when we meet in a couple of weeks," he said.
Traders and investors seemed to interpret Kohn's remarks as an indication that the Fed plans to cut its key short-term interest rate at the Dec. 11 meeting. Investors will be looking to see if Fed Chairman Ben Bernanke reaffirms this viewpoint when he speaks on Thursday.
The S&P 500 Index added 41 points, or 2.9%, to 1,469.02, bringing its two-day gain to 4.4%, the most since October 2002. The Dow surged 331 points, or 2.6%, to 13,289.45, its best daily advance since April 2003. The Nasdaq gained 82 points or 3.2% to 2,662.91.
Market breadth was positive. More than 13 stocks rose for every one that fell on the New York Stock Exchange.
A steep decline in oil prices gave a boost to companies that directly depend on fuel, such as airlines, railroads and truckers. The Dow Jones Transportation average gained 3.6%.
Oil prices fell sharply for the second straight day on a smaller-than-expected dip in crude oil and distillate supplies. Light, sweet crude for January delivery tumbled $3.80 to settle at $90.62 per barrel on the New York Mercantile Exchange.
Treasury prices tumbled as investors pulled money out of bonds for a second straight session. Corresponding yields headed higher, lifting the yield on the 10-year note to 4.03% from 3.94% late on Tuesday.
In currency trading, the dollar gained versus the euro and yen. COMEX gold for February delivery tumbled $14 to settle at $807.20 an ounce, falling along with other dollar-traded commodities.
European shares put in the second-best session of the year. The pan-European Dow Jones Stoxx 600 index rose 2.8% to 364.09 to break a two-session losing run. The UK's FTSE 100 advanced 2.7% to 6,306.20, while the German DAX 30 climbed 2.6% to 7,723.66 and the French CAC-40 jumped 2.3% to 5,561.21.
Latin American stocks also rallied. Mexico's IPC climbed 1,152 points, or 4.1%, to close at 29,276.39. Brazil's Bovespa jumped 2,283 points, or 3.8%, to 61,714.64. Argentina's Merval advanced 2.8% to 2,230.83 and Chile's IPSA gained 3.4% to end at 3,160.23.
Asian stock benchmarks were up sharply this morning. Samsung Electronics paced gains among the regional exporters. Mitsubishi UFJ Financial, Japan's largest bank by market value, rose on speculation that increased fund flows will offset investment losses.
The MSCI Asia Pacific Index climbed 1.7% to 159.36 at 10:05 a.m. in Tokyo, with nine of its 10 industry groups advancing. Japan's Nikkei jumped 2.3% to 15,494.64, while South Korea's Kospi rose 2.4%. All markets open for trading gained except New Zealand.
Short covering may cheer the bulls
It was the second consecutive day of losses for bulls as markets ended in negative terrain. The fall was led by cues from the regional markets and selling pressure which emerged in the second half of the trading session. Finally, 30-share Sensex dropped 188 points to close at 18,938 and Nifty closed 80 points lower at 5,617.
BHEL gained advanced by 2% to Rs2725 after
Parsvnath Developers gained 1.5% to Rs354 after reports stated that the Indian real estate company is in talks with Carrefour SA, the world's second largest retailer, for opening hypermarkets in
RPL further slipped 3% to Rs192 after reports stated that
PSTL was down 2.5% to Rs357. The company declared that they acquired 51% stake in Dimples Cine. The scrip touched an intra-day high of Rs374 and a low of Rs352 and recorded volumes of over 3,00,000 shares on NSE.
Punj Lloyd lost 1.7% to Rs456. Reports that the company and a US-based PE, Global Technology Investments have bought 33% stake each in a domestic aircraft maintenance firm Airwoks
Asian Oilfield locked at 5% upper circuit to Rs224.8 after the company declared that they would consider selling shares/warrants to founders. The scrip touched an intra-day high of Rs224.8 and a low of Rs216 and recorded volumes of over 34,000 shares on NSE.
Steel Stripes was up by over 3% to Rs168 after the company announced that it received Rs80mn order from
GDL gained 1% to Rs146 on reports that promoters may sell stake. The scrip touched an intra-day high of Rs153 and a low of Rs144 and recorded volumes of over 31,00,000 shares on NSE.
What the FIIs are doing
FIIs were net sellers of Rs9.79bn (provisional) in the cash segment on Wednesday while the local institutions pumped in Rs3.32bn.
In the F&O segment, foreign funds were net buyers of Rs6bn yesterday.
On Tuesday, FIIs were net sellers to the tune of Rs2.64bn.
Stocks in News:
ONGC’s foreign arm ONGC Videsh has bagged two exploration blocks in Brazil.
ONGC’s subsidy burden has rose to Rs74.5bn in first half of the current fiscal year.
ONGC is in the midst of hiring Hercules 260 rig on nomination basis.
DLF is in talks with Escorts to acquire its surplus land at Faridabad.
Tata Steel forms a new organization structure to integrate Corus.
Infosys to team up with Wipro and HP for local contracts.
Kingfisher Airlines and Air Deccan to fly abroad from next year.
Indian Oil may raise US$3bn foreign currency loan to meet increased working capital needs.
The first lot of Tata Motors Rs1-lakh car may not be rolled out from Singur plant, which is running late by 3 months.
The Bandra-Worli sea link built by HCC will meet its deadline of Dec’08.
Parsvnath is in talks with Bharti Enterprises to provide real estate space for the latter's retail venture.
TCS plans to sell its minority stake in Jataayu Software.
RIL denies talks of acquiring RNRL.
SICAL Logistics arm gets FIPB nod for Old Lane investment.
Cabinet to take up SBI’s rights issue proposal at today’s meeting.
DS Kulkarni has formed a JV with Netherlands based Kadaran to develop its 250 acre SEZ.
IndiaStar has made an open offer to acquire 20% stake in Garware Offshore.
RCOM has conveyed willingness to surrender the extra 1.8 MHz spectrum in its Bihar circle.
Binani Cement plans Rs18bn capex to increase capacity to 12mtpa by FY11.
The Government is likely to raise sugar loan subsidy.
The Madras High Court has stayed an order to pull out fixed-dose combination drugs from the market.
The Government is likely to allow PE and VC to be part of the consortia bidding for infra projects.
TRAI suggests Rs1bn net worth for ISPs to offer IPTV services.
The Government has earmarked Rs558bn capex to increase the capacity of major ports.
The Centre has decided that all imported defence equipment should have at least 30% local component.
The Government is examining a proposal to relax buy back norms for promoters of large infra projects.
Textile exports fall 14% in April-June due to sharp rise in Rupee against the Dollar.
Stocks added to futures and options
With effect from Friday, 30 November 2007
The National Stock Exchange (NSE) today, 28 November 2007, said it has decided to add 15 stocks to futures & options (F&O) segment with effect from Friday, 30 November 2007.
The 15 new inclusions for trading in F&O segment include Jindal Saw, KPIT Cummins Infosystems, Development Credit Bank, Hindustan Zinc, MICO, Info Edge, NIIT, Great Offshore, Wire & Wireless India, Redington (India), Network18 Fincap, Global Broadcast News, Ispat Industries, Hindustan Oil Exploration and Gitanjali Gems.
The details of market lot and list of contracts being made available for trading in newly added F&O stocks will be announced on 29 November 2007, NSE said.
Crude at lowest level in a month
Prices drop by more than $3 as crude supplies fall less than expected
Crude oil price dropped to its lowest level in almost a month after Energy Departments reported in the weekly inventory report that crude supplies fell less than expected for the week ended 23 November. Comments from Organization of Petroleum Exporting Countries (OPEC) that the cartel is ready to increase production any time also led prices erode further.
For the day ending Wednesday, 28 November, 2007, crude-oil futures for light sweet crude for January delivery closed at $90.6/barrel (lower by $3.8/barrel or 4%) on the New York Mercantile Exchange. Prices reached a high of $99.2 on 21 November. Prices are up 49% from a year ago.
Brent crude oil for December settlement fell $2.71 (2.9%) to $89.81 on the London-based ICE Futures Europe exchange.
As per the weekly inventory report by The Energy Department, U.S. crude inventories fell by 400,000 barrels to 313.2 million barrels in the week ending 23 November. This was much less than expected figure of 500,000 barrels. Though U.S. crude inventories fell for a second week, stocks are still in the upper half of the average range for this time of year.
Also, as per the report, Gasoline supplies rose by 1.4 million barrels to 196.6 million barrels in the latest week, while distillate stocks, which include heating oil and diesel, fell by 100,000 barrels to 130.9 million barrels.
The EIA also reported that U.S. crude imports averaged nearly 10.4 million barrels per day last week, up 534,000 barrels per day from the previous week. U.S. refineries operated at 89.4% of their operable capacity last week, up 2.4% from the previous week's 87%.
Further rate cut hopes in the mind of traders
Natural gas in New York declined on an outlook that above-average supplies are ample for winter. Gas for December delivery fell 35.4 cents (4.7%) to settle at $7.203 per million British thermal units.
Against this backdrop, December reformulated gasoline fell 9.73 cents at $2.2757 a gallon and December heating oil lost 7.96 cents at $2.5738 a gallon.
In the currency market today, the dollar gained against other major currencies but was off earlier session highs after Federal Reserve Vice Chairman, Donald Kohn, hinted that more interest rate cuts could lie ahead. The dollar index, which measures the performance of the greenback against a basket of six major currencies, rose 0.3% at 75.33.
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.
At the MCX, crude oil for December delivery closed lower at Rs 3630/barrel, lower by Rs 128 (3.4%) against previous day’s close. Natural gas closed at Rs 302.2/mmtbu as against previous close of Rs 312.3/mmtbu, lower by Rs 10.1/ mmtbu.
Daily Technical Analysis
Nifty — The index opened on a flat note and drifted down throughout the day’s trading session. It ended the day with a loss of 80 points.
Resistance & Support — The index is facing resistance around the 10 dma = 5725 and 20 dma = 5754; intra-day rise is facing stiff resistance around the 5725-5754 band. On the downside, index has support around 5515 and lower support is around 5485(50dma) [dma= daily simple moving average].
Conclusion — Intra-day pullback will face resistance around 5725-5754 band.
RPL stake sale, volume data don’t match
The numbers in the Reliance Petroleum Ltd (RPL) counter simply don’t add up. Last week, an unusual event took place on the domestic stock exchanges. Between November 14 and 23, Reliance Industries Ltd (RIL) unloaded 18.04 crore shares worth over Rs 4,000 crore.
It was said to be the largest ever unloading of shares by a parent company in its subsidiary in the open market.
But a peek at the trading data and a little bit of number-crunching reveal a different story.
If the traded data of RPL shares provided by the BSE and the NSE are to be believed, the truth is something else. According to an official statement late last Friday, RIL sold 18.04 crore RPL shares for Rs 4,023 crore, at an average price of Rs 223.
The company revealed this much after exchange officials went home on a two-day holiday. The official RIL communiqué appeared on the stock exchange notice board on Monday, as Saturday was an official holiday.
As per the communication to the exchanges, the shares were sold between November 14 and November 23. A BSE notice said it was sold on the two dates.
Market insiders say the probability of the sale of over 18 crore shares in two days is highly doubtful, if one takes the number of trades done in the two days into account.
The RPL scrip is listed only on BSE and NSE. A microscopic look at the trading turnover in the two exchanges on November 14 and 23 reveals that the RPL counter did not transact trades for so many shares on those two days.
On November 14, the shares traded on the NSE were in the region of 6.57 crore shares. And it was lesser on the BSE — 3.07 crore shares.
The deliverable quantity was even less at 1.19 crore on the BSE, against 2.56 crore on the NSE. How then can RIL claim that it sold 11.42 crore shares on November 14?
The same is true for November 23 when RIL is said to have sold 6.64 crore shares. On that day, the NSE recorded a traded turnover in the RPL counter of 3.53 crore shares that ended in deliveries for only 1.05 crore shares.
On the BSE, the traded turnover was 1.75 crore shares, attracting a delivery of a piffling 51.46 lakh shares.
So, is there a gaping hole in RIL’s information to the exchanges? Or is it the exchanges that have got their numbers wrong?
Even if we add the entire traded turnover from November 14 to November 23 in the two exchanges, the numbers don’t add up. The total deliveries of the two exchanges together amounted to only 17.55 crore shares.
Remember, RIL said it sold 18.04 crore shares. Even if RIL was the only seller in the marketplace between November 14 and 23, the shares traded in the cash segment were lesser than what RIL sold as per their press statement and notice to the exchanges.
Since the RPL counter has reasonable depth and there are many traders, this is almost impossible.
Have the premier stock exchanges goofed up? Will the small investor ever know what transpired and whether the exchanges have been providing the correct information on their trading screens?
A clue may lie in the November 1 spike when RPL’s share price touched Rs 295 on the BSE, and the two exchanges’ combined traded turnover was pegged at 20.18 crore shares, well above the 18.04 crore shares that RIL sold.
However, shares delivered at the two exchanges amounted to 4.46 crore only. On November 6, the total traded turnover of shares was 22.66 crore and shares delivered were 8.87 crore.
So, this really begs a billion dollar (Rs 4,000 crore) question: When and where were the RPL shares traded? Is it possible that the shares were sold even before November 14. Not likely, if the RIL statement to the stock exchanges is to be believed.
via DNA News
Bharat Forge
We recommend a buy in Bharat Forge at current price. From the daily chart of Bharat Forge, we see that it had a steep rally from October low of Rs 260 to early November high of Rs 385. During this rally, the stock penetrated the long-term down trend-line, indicating end of the downtrend. However, after finding resistance at Rs 385, the stock has been on a short-term downtrend, which retraced 50 per cent of its prior rally, which is a Fibonacci number. The weekly moving ave rage convergence divergence is rising towards the positive region from negative territory. Immediate key resistance is at Rs 280 and the immediate key support is at Rs 290. We note that Rs 320 level is historically significant support level and 50-day moving average line coincides at this level. The stock is currently trading just above the aforementioned historic support. Short-term investors can buy the stock at current price with stop-loss at Rs 312. We expect the stock to bounce up from the significant support and rally to Rs 380 in the short-term, with minor pause around Rs 356.
Via Businessline
FIIs in selling mode
Outflow of Rs 263.60 crore on 27 November 2007
Foreign institutional investors (FIIs) sold shares worth net Rs 263.60 crore on Tuesday, 27 November 2007, compared to their buying of Rs 470.20 crore on Monday, 26 November 2007.
FIIs outflow of Rs 263.60 crore on 27 November 2007 was a result of gross purchases of Rs 3467 crore and gross sales Rs 3730.60 crore. The 30-share BSE Sensex lost 119.81 points or 0.62% to 19127.73 on that day.
FII outflow in November 2007 totaled Rs 4422.30 crore (till 27 November 2007). FII inflow in calendar year 2007 totaled Rs 67,334.90 crore (till 27 November 2007).
There are a total of 1,170 FIIs registered with the Securities & Exchange Board of India (Sebi).
Nifty November futures at premium
Turnover in F&O segment rises
Nifty November 2007 futures were at 5638.55, at a premium of 21 points as compared to spot closing of 5617.55.
NSE’s futures & options (F&O) segment turnover was Rs 86,287.52 crore, which was higher than Rs 75,192.11 crore on Tuesday, 27 November 2007.
Reliance Natural Resources November 2007 futures were at discount, at Rs 156.15, compared to the spot closing of Rs 156.45.
GMR Infrastructure November 2007 futures were at premium, at Rs 248.40, compared to the spot closing of Rs 247.65.
State Bank of India November 2007 futures were at discount, at Rs 2248.50 compared to the spot closing of Rs 2252.40.
In the cash market, the S&P CNX Nifty lost 80.6 points or 1.41% at 5617.55.
BHEL, Banking, Real Estate
Hexaware Technologies
Cluster: Ugly Duckling
Recommendation: Book Out
Current market price: Rs84
Book out
Hexaware Technologies (Hexaware) has reported that it has come to the management's notice that one of the officials from its treasury department has conducted fraudulent foreign exchange (forex) transactions over the past few months. There are a total of 11 such transactions spread across various currencies such as the US Dollar, euro, pound, yen and Swiss Franc. The board of directors has appointed an internal committee to investigate the matter and has suspended the official in question. Hexaware plans provisions of $20-25 million to cover any potential loss as a result of these transactions.
Though the scrip has corrected substantially in the recent past and is trading at attractive valuations, it is likely to continue with its underperformance due to lack of any positive triggers. Consequently, it is advisable to exit the stock.
Jaiprakash Associates
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs2,000
Current market price: Rs1,795
ICICI Venture picks up stake in Jaypee Infratech
With the company bagging the Taj Expressway project accompanied by a land parcel of 6,250 acres, the stock has received a tremendous re-rating. As we have mentioned in our earlier reports, we expect the stock price to move up as and when clarity emerges on the development of real estate sector. The ICICI deal now only reinforces our bullishness on the stock. We maintain our buy recommendation on the stock with a price target of Rs2,000 per share.
Bharat Heavy Electricals
Cluster: Apple Green
Recommendation: Buy
Price target: Rs3,289
Current market price: Rs2,725
Price target revised to Rs3,289
Results highlights
- Bharat Heavy Electricals Ltd (BHEL) had a spectacular order inflow in the past 18 months. In H1FY2008, the company's order inflow rose by 74% year on year (yoy). At the end of Q2FY2008, BHEL has an order backlog of Rs72,600 crore (4.2x FY2007 revenues), which represented a staggering increase of 59% yoy.
- In a strategic move, BHEL signed a memorandum of understanding (MoU) with the Tamil Nadu Electricity Board (TNEB) for a joint venture (JV) to set the first 2x800 mega-watt (MW) super-critical power project in Tamil Nadu. We believe this tie-up is positive for the company in two ways. First, the equity stake in the JV would ensure BHEL as a supplier for the super-critical project. Second, the deployment of surplus cash-on-book would yield better returns from the investments made in the JV.
- After National Thermal Power Corporation's (NTPC) Barh-II project, BHEL has emerged as the sole bidder for the AP Genco project at Krishnapatnam, which is a 2x800MW project based on super-critical technology. We expect the order flow in the super critical space to remain buoyant for the company going forward.
- The union cabinet has approved BHEL's proposal of taking over Bharat Heavy Plate & Vessels Ltd (BHPV), an engineering company catering to oil and gas sector. The company's current turnover stands at Rs150 crore, and the BHEL’s management believes BHPV's turnover has a potential to grow to Rs1,000 crore plus.
- For Q2FY2008, the nets sales of BHEL grew by 18.7% to Rs3,965.4 crore, which was slightly below expectations. The operating profit margin (OPM) improved by 380 basis points, which came in as a positive surprise. Led by better OPM and higher other income, the net profit (before extra-ordinary items) increased by 57.5% to Rs567 crore. The profit growth was above expectations.
SECTOR UPDATE
Banking
Indian banks have become more resilient
The Reserve Bank of India (RBI) in its annual report on the trend and progress of banking in India 2006-07 has highlighted the improving resilience of Indian banks' operations to changing macro-economic conditions. It has also stated that the incremental credit-deposit ratio is on the decline and credit growth has shown some moderation in the real estate and retail sectors. Since the credit growth has been strong in the past few years, some minor deterioration could be expected in the asset quality of banks going forward. The medium-term risk for the domestic banking sector could emanate mainly from global developments (US subprime mortgage saga) and the fall-out of the same in the other asset classes (equity, real estate). However, the main challenge facing domestic banks at this juncture remains raising resources to maintain their growth momentum.
Real estate
BKC auction sets high benchmark
According to media reports, Reliance Industries Ltd (RIL), Wadhwa Builders and TCG Infrastructure--Hiranandani Construction consortium emerged as the leading bidders for the three Bandra-Kurla Complex (BKC) plots measuring 75,350 square meter (sm). The value of the top three bids was Rs2,790 crore, which amounts to an average price of Rs34,424 per square feet (sf).
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