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Monday, December 03, 2007
Market Close: Reliance stocks uproars for the day..
Friday's rally continued in the market as buying was seen across all the sectors. Today markets rallied despite some mixed global cues where Asia ended mixed. Sectors like Auto, Power, metal and capital good stocks were in the limelight for the day while Telecom and Banking stock were under pressure. In the mid session markets traded stable at the higher levels without showing any sign's of weakness. In mid cap space stock like Essar Oil, Videocon Ind, IFCI, Gitanjali Gems and Dish TV were garnering interest in investors. Both mid caps and Small caps ended up by 2.5% higher outperforming the heavyweights. IT pivotals advanced well on value buying seen across the counter. Market during the final hours managed to sustain its accumulated gains and closed at higher level. Auto Stocks come out with their November sales number which were mixed as two wheelers had slight dip in sales while 4 Wheelers managed cheer with the festive Season. Reliance pack were all on fire from Reliance Industries to RNRL but RPL was out of the race.
Sensex ended up by 240 points at 19603.41. It was helped up by gains in Rel Energy (1900.15,+9 percent), Wipro (493.4,+7 percent), RCVL (711.8,+5 percent), TCS (1052.95,+4 percent) and Hindalco (191.55,+3 percent). Restricting the gains were Hero Honda (705.3,-2 percent), ICICI Bk (1165.25,-2 percent), Bharti Tele (924.3,-2 percent), HDFC (2746.25,-1 percent) and HDFC Bk (1701.2,-1 percent).
Auto companies were much in action as they came out with their Numbers. In the two wheelers segment: Bajaj Auto sales for two wheeler in November stood at 2.11 lakh units Vs 2.14 lakh units (YoY). Its total November sales stood at 2.35 lakh units? Vs 2.43 lakh units (YoY) which was down nearly 3%. TVS Motors November motorcycle sales stood at 57,113 Vs 68,874 units which fell by 17%. TVS Motor's two wheeler sales slipped by 5% to 1.12 lakh units on yoy basis. In the four wheelers segment: Maruti Udyog witnessed a good sales growth mainly on the back of performance in Swift & SX4. Total sales stood at 69,699 Vs 55,033 vehicles (YoY) for November. Its November passenger cars sales at 64,885 Vs 52,333 vehicles (YoY). Exports were at 4,483 Vs 2,459 vehicles, YoY. Mahindra & Mahindra also reported its vehicle sales which were up by 37% to 18,585 units on YoY basis. This includes utility vehicles, light commercial vehicles and three-wheelers up by 36 % to 17,846 units. Exports sales were up to 739 units from 443 units. Logan sales were 1,561 units. Sedans numbers were also in line the with expectation in November. Mahindra tractor sales were up by 1% up to 8,066 units on YoY basis. In overall growth two wheelers failed to perform for the festival season as major concern was on interest rates which are still high when compared to what they were about a year ago. Industry is still in hope that it will start growing and hopefully the interest rates will come down. Major auto stocks ended marginally up by 2%.
Lok Housing and Construction Ltd, a prominent player in real estate in and around Mumbai was in limelight for the day. Lok Housing caters to the housing needs of the middle-income group, mainly in the suburbs of Mumbai. It is planning to commence premium projects in Mumbai and at other places like Pune, Vasai, Bangalore, Turbhe.Till date Lok Housing has completed 31 projects over 17,000 units and 9mn sq.ft area. Report says that land bank of group companies will be merged into Lok Housing subject to approval. Lok is managing to cap the real estate bhoom in India with its up coming projects in major Tier 2 cities. One can bet on the value of the land bank it holds which gives more space to have positive out look for the company. We are positive on the company business. Do read our detailed research note to know our view. Stock ended up by 9%.
Technically Speaking: Markets traded strong followed by positive momentum continued with strong positive breadth. Sensex touched intraday high of 19619 and low of 19447. Overall market turnover was good at Rs 9264 Cr. Market breadth was in favor of Advances, where the Decliners stood at 710, Advances were stood at 2057. Sensex has taken resistance on the rising trend line at 19620. This will remain a crucial level to watch tomorrow. If markets fail to hold above this, we might correct upto 19200.
Post Market Commentary
The market after creating a rally over all the sectoral indices scrips closed on a strong note on the back of heavy buying across the counters. The global cues are in favor that gave boost to he domestic market. The market opens with a heavy gap up and keeps on marching forward since the initial bell. Almost all the sectorial indices closed in green except the bankex index that remained out of favor. Most buying is seen from the Metal, Oil & Gas, Consumer durables and Capital Goods baskets. The BSE Sensex grew by 240.22 points to close at 19,603.41 and NSE Nifty closed up by 102.25 points at 5,865. Overall, the market breadth was strong as 2,087 stocks are closed higher while 709 are closed lower. The BSE Mid cap and Small Cap grew by 210.70 points and 260.18 points to close at 8,764.26 and 10,786.20 respectively.
BSE Metal Surged 550.71 points to close at 18,281.24. Scrips that grew are Jindal saw (6.14%), Ispat industries (5.64%), Jindal Steel (4.87%), JSW Steel (4.85%) and Sterlite industries (4.60%).
BSE Capital goods grew by 325.10 points to close at 19,962.48. Jumped by AIA Engineering 4.48%, Alstom Projects 3.96% BHEL 3.02%, ABB 2.91% and L&T 1.21%.
BSE Realty index closed firm at 10,755.75 up by 129.44 points. Pushed up by Mahindra life (7.13%), Unitech (3.14%), Pheonix Mill (2.81%), Akruti City (2.54%)
BSE oil & gas index grew by 426.46 points to closed at 12,786.19. Scrips that jumped are Essar Oil (20.42%), BPCL (4.34%), RNRL (2.97%), Reliance (2.86%) and HPCL (2.58%).
BSE Auto index closed up by 77.08 points at 5,546.58 as Ashok Leyland (5.02%), MRF (3.03%), Bharat Forge (2.72%), M&M (2.61%), Bajaj auto (2.47%) and Mauti Suzuki (1.96%).
BSE IT index grew by 56.43 points to close at 4,254.05 as Wipro (7.19%), Aptech (4.09%), TCS (3.85%), Rolta India (3.92%) and I-Flex (2.07%).
BSE Power index closed higher by 139.88 points at 4,484.10. Scrips that grew are Reliance energy (9.32%), Tata Power (7.72%), GVK Power (5.51%), Torrent Power (2.87%).
Sensex rallies, despite mixed global cues
Despite getting mixed signals from Asian markets, the Sensex resumed on a positive note at 19,547, up 184 points. The undertone remained bullish for the entire trading session, with the Sensex crossing 19,550 mark in early trades and maintaining its upward bias thereafter. While market remained upbeat on strong buying in consumer durables, metal, oil and power stocks, the rally gathered momentum in the afternoon and the Sensex touched the day's high of 19,619. The Sensex finally ended the session with a gain of 240 points or 1.24% at 19,603. The Nifty rose 102 points or 1.77% to close at 5,865.
Among the sectoral indices, the CD index led the upsurge with a gain of 6.83% at 5,732 followed by the BSE Oil & Gas index (up 3.45% at 12,786), the BSE Power index (up 3.22% at 4,484) and the BSE Metal index (up 3.11% at 18,281). The market breadth was extremely positive with gainers outpacing the losers in the ratio of 2.85:1. Of the 2,854 stocks traded on the Bombay Stock Exchange (BSE) 2,087 stocks advanced, 709 stocks declined and 58 stocks ended unchanged.
Out of the 30 Sensex stocks, 24 managed to end with gains while six stocks ended with losses. Reliance Energy was the leading gainer and soared 9.32% at Rs1,900. Wipro jumped 7.19% at Rs493, Reliance Communication shot up by 5.48% at Rs712, TCS advanced 3.85% at Rs1,053, Hindalco moved up by 3.37% at Rs192, BHEL added 3.02% at Rs2,761 and Reliance Industries gained 2.86% at Rs2,932. Among the laggards ICICI Bank dropped 1.64% at Rs1,165, Bharti Airtel shed 1.61% at Rs924, HDFC declined by 1.37% at Rs2,746, HDFC Bank fell 1.04% at Rs1,701, while HLL and Infosys slipped marginally at Rs206 and Rs1,600 respectively.
Over 5.88 crore IDFC shares changed hands on the BSE followed by IFCI (4.38 crore shares), Tata Teleservices (2.42 crore shares), Ispat Industries (2.41 crore shares) and Essar Oil (2.33 crore shares).
IDFC registered a turnover of Rs1,215 crore on the BSE followed by Essar Oil (Rs660 crore), IFCI (Rs459 crore), Reliance Petroleum (Rs371 crore) and Reliance Energy (Rs315 crore).
RIL, REL lead 240-points Sensex surge
Strong buying interest in some index pivotals including Reliance Industries boosted the bourses today. IT pivotals, Wipro, TCS and Satyam Computer edged higher. Reliance Energy spurted. The market breadth was strong. 24 out of 30 stocks from the Sensex pack were in green. Last week's sharp fall in global crude oil prices supported the rally on the bourses.
European markets, which opened after Indian markets, turned negative after a positive start. Asian markets, which opened before Indian market, were mixed.
The 30-share BSE Sensex rose 240.22 points or 1.24% to 19,603.41. The Sensex hit a high of 19,619.32 in mid-afternoon trade trade. At day's high, the Sensex gained 256.13 points.
The broader based S&P CNX Nifty advanced 102.25 points or 1.77% to 5865.
The BSE Mid-Cap index was up 2.46% to 8,764.26. The BSE Small-Cap index was up 2.47% to 10,786.20. Both these indices outperformed the Sensex.
Market breadth was strong on BSE on the back of strong demand for small-cap and mid-cap shares. 2087 stocks advanced, 709 stocks declined and 58 stocks remained unchanged on BSE.
BSE clocked a turnover of Rs 9264 crore compared to Friday (30 November 2007)'s Rs 8,457.32 crore.
Nifty December 2007 futures were at 5876, a premium of 11 points as compared to spot closing of 5865.
NSE’s futures & options (F&O) segment turnover was Rs 54816.5 crore, which was lower than Rs 60313.99 crore on Friday, 30 November 2007
India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries rose 2.86% to Rs 2932.20, off day’s low of Rs 2850.
India’s largest private sector bank by assets ICICI Bank fell 1.64% to Rs 1165.25.
India’s largest private sector bank by net profit HDFC Bank declined 1.04% to Rs 1701.20.
The BSE Consumer Durables index soared 6.83% to 5,732.15. It outperformed the Sensex. Gitanjali Gems sprout 7.02% to Rs 464.70, Rajesh Exports jumped 4.80% to Rs 905.20, and Lloyd Electric & Engineering gained 2.51% to Rs 179.70.
Diversified firm Videocon Industries spurted 20% to Rs 491.70 on reports the company has negotiated directly with land owners in Asansol for 2,000 acres for its proposed steel and power plant. The new company--Videocon Steel and Power--will build the 3 million-tonne steel and 1,200 megawatt thermal power plant on 4,000 acres. The project will start with 2,000 acres.
The BSE Power index rose 3.22% to 4,484.10. It outperformed the Sensex. GVK Power & Infrastructure gained 5.51% to Rs 803, Neyveli Lignite Corporation rose 2.72% to Rs 241.95, and NTPC gained 1.35% to Rs 239.85.
Power producer and distributor Tata Power soared 7.72% to Rs 1262.85. The company is reportedly eyeing a bid for Singapore electricity companies Tuas Power, PowerSeraya and Senoko. The report suggests that Singapore's state investor Temasek Holdings is selling its interests in the three firms and Tata Power was evaluating the opportunity.
Anil Dhirubhai Ambani Group (ADAG) led Reliance Energy (REL) jumped 9.32% to 1900.15. As per reports, ADAG will invest Rs 8,000 crore in REL that would help the company to double its net worth and increase its borrowing limit. The infusion is proposed through a preferential offer of shares to Reliance-Anil Dhirubhai Ambani Group. The preferential offer will be made at Rs 1,812 per share. After the equity infusion, the promoter’s stake will increase to 43-45% from the current 35.89%.
The BSE Oil & Gas index rose 3.45% to 12,786.19. It outperformed the Sensex. Essar Oil spurted 20% to Rs 391.35, BPCL gained 4.34% to Rs 402.95, Reliance Petroleum gained 2.32% to Rs 222.80 and Reliance Natural Resources rose 2.97% to Rs 173.20.
State-run oil refiner Indian Oil Corporation moved up 2.05% to Rs 552.50. The company has received approval of its board for acquiring a 5% stake in Oil India by acquiring 1.07 crore equity shares at a price equivalent to its initial public offer price (IPO). The IPO of OIL is slated for the first quarter of 2008.
India’s biggest car-maker by sales Maruti Suzuki India rose 1.96% to Rs 1032.20. The company's domestic sales rose 24% to 65,216 units in November 2007 over November 2006. This is its highest ever monthly domestic sales.
India's top tractor maker by sales Mahindra & Mahindra rose 2.61% to Rs 750.90. The company's vehicle sales rose 37% to 18,585 units in November from 13,597 units a year earlier. Exports rose to 739 units in November 2007 from 443 units a year earlier.
The BSE IT index rose 1.34% to 4,254.05. It outperformed the Sensex. Wipro jumped 7.19% to Rs 493.40, TCS rose 3.85% to Rs 1052.95, and Satyam Computers gained 1.83% to Rs 448.
India’s second largest software exporter by sales Infosys Technologies fell 0.21% to Rs 1600.70.
India's largest steel producer in terms of sales Steel Authority of India (Sail) rose 1.57% to Rs 262.50. The firm reportedly plans to invest Rs 53,000 crore to increase hot metal capacity to 26 million tonnes. The investment is expected to be funded through a mix of debt and equity in the ratio 1:1.
Infrastructure development firm GMR Infrastructure rose 1.87% to Rs 259.25. The GMR Group reportedly plans to invest over Rs 60,000 crore in next five-six years to enhance its power generation capacity in the country and acquire coal assets abroad. GMR Energy, a subsidiary of GMR Infrastructure, has three operational power plants of 388.5 megawatt (MW), 220 MW, 200 MW capacity in Andhra Pradesh, Karnataka and Tamil Nadu respectively.
Term lending institution IFCI jumped 12.90% to Rs 106.80. The firm has reportedly decided to rope in International Finance Corporation, the investment arm of World Bank, as an investor to hold less than 20% stake.
Heavy equipment maker BEML gained 1.40% to Rs 1695.80. The company has reportedly floated a subsidiary in Brazil for sourcing and assembling of mining and construction equipment to cater to the growing Latin American markets. The quantum of investment for the project is still being worked out, the reports added.
Ceramic tiles maker Euro Ceramics rose 7.02% to Rs 220.95. The company is likely to invest Rs 575 crore to increase vitrified tiles production capacity by 1,00,000 tonnes per annum.
Cooling products maker Fedders Lloyd Corporation spurted 13.44% to Rs 143.50 after the company said it has tied up with Victor Company of Japan to bring the latter's consumer electronics products to India.
IDFC clocked the highest turnover of Rs 1215.73 crore on BSE. Essar Oil (Rs 660.55 crore), IFCI (Rs 459.56 crore), Reliance Petroleum (Rs 371.93 crore) and Reliance Energy (Rs 315.78 crore), were the other turnover toppers on BSE in that order.
IDFC registered highest volume of 5.88 crore shares on BSE. IFCI (4.39 crore shares), Tata Teleservices (2.42 crore shares), Ispat Industries (2.42 crore shares) and Essar Oil (2.33 crore shares), were the other volumes topper on BSE in that order.
European markets declined after a positive start. In Europe, key indices in UK, France and Germany were down between 0.01% to 0.24%.
Asian markets were trading mixed today, 3 December 2007. Key indices in Singapore and Hong Kong were up between 0.01% to 0.05%. Key indices in China, Japan, South Korea and Taiwan were down between 0.03% to 0.33%.
Oil prices fell below $89 on Friday on expectations that OPEC will decide to increase output at its meeting in this week. Crude oil hovered above $89 a barrel on Monday, 3 December 2007, after close to $10 fall last week. US crude for January delivery rose nearly $1 to above $89.50 a barrel, but was still well off a record high near $100 set on 21 November 2007.
US markets ended mixed on Friday, 30 November 2007 on the expectation that Fed will cut interest rates by 25 basis points in its meeting scheduled on 11 December 2007. The Dow Jones Industrial Average rose 59.99 points 0.45% to 13,371.72 and The S&P advanced rose nearly 1% to 1,481. However the Nasdaq Composite slipped 0.3% to 2,661.
FIIs sold equities worth Rs 5,849.90 during the month of November 2007. On cumulative basis, FIIs were net buyers of equities to the tune of Rs 65,907.30 crore in calendar 2007 so far.
Market to open higher
The market is expected to open higher continuing its Friday’s rally. The 30-share BSE Sensex rose 359.93 points or 1.89% to 19,363.19, on Friday 30 November 2007. The broader based S&P CNX Nifty gained 128.15 points or 2.27% to 5762.75 for the day
Asian markets were trading firm today, 3 December 2007. Hang Seng (up 1.02% at 28,934.56), Singapore's Straits Times (up 1.23% at 3,564.55), Taiwan's Taiwan Weighted (up 0.39% at 8,620.19), South Korea's Seoul Composite (up 0.11% at 1,908.01) and Japan's Nikkei (up 0.02% at 15,684.22) edged higher.
US markets ended mixed on Friday, 30 November 2007 on the expectation that Fed will cut interest rates by 25 basis points in its meeting scheduled on 11 December 2007. The Dow Jones Industrial Average rose 59.99 points 0.45% to 13,371.72 and The S&P advanced rose nearly 1% to 1,481. However the Nasdaq Composite slipped 0.3% to 2,661.
Oil bounced back above $89 a barrel on Monday, 3 December 2007, after close to $10 fall last week. U.S. crude for January delivery rose nearly $1 to above $89.50 a barrel, but was still well off a record high near $100 set on 21 November 2007
The BSE Sensex rose 510.32 points or 2.70% to settle at 19,363.19 while the S&P CNX Nifty rose 154.15 points or 2.74% to 5762.75, in the week ended Friday, 30 November 2007.
At current 19,363.19, Sensex trades at a PE multiple of 18.44 to 19.36 based on projected FY 2009 EPS of Rs 1000-to-Rs 1050 for 30 Sensex companies.
Back home, India's gross domestic product (GDP) rose 8.9% in the second quarter ended 30 September 2007, which was below a robust 9.3% growth recorded in the first quarter ended June 2007. The data was released on Friday, 30 November 2007.
As per provisional data, Foreign Institutional Investors (FIIs) purchased shares worth a net Rs 1072.07 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 688.34 crore on Friday, 30 November 2007.
FIIs sold equities worth Rs 5,849.90 during the month of November 2007. On cumulative basis, FIIs were net buyers of equities to the tune of Rs 65,907.30 crore.
Morning Call
Market Grape Wine :
In House :
Mkt likely to stay positive today.
Intra Day: Buy SCI above 271 with a TGT of 284 and a SL of 260
Buy TCS above 1018 with a TGT of 1054 and a SL of 1000
Outlook positive: VSNL, REL and Shyamtele
Out House :
Markets at a support of 19119 & 19019 levels with resistance at 19494 & 19591 levels .
Buy : RIL
Buy : RPL & RNRL
Buy : JpAsso & Centextile
Buy : HDIL& Akruti
Buy : GeShipping
Buy : IBUllsreal & APIL
Buy : JpHydro & EssarOIL
Buy : SBIN & Kotak
Buy : HEG & Ngarafert
Dark Horse : HDIL , JpAsso , Kotak , GeShipping , Akruti , SBIN & JpHydro
Bullet for the Day : REL & RIL with strict stop loss.
Burnpur Cement, eClerx, BGR Energy Grey Market
Jyothy Lab. 690 195 to 200
Burnpur Cement Ltd. 12 4 to 5
eClerx Services 270 to 315 90 to 100
BGR Energy 425 to 480 400 to 425
Edelweiss 825 775 to 800
Renaissance Jewellery 150 25 to 30
Kolte Patil 145 60 to 70
Kaushalya Infra 60 12 to 14
SVPCL 42 - 3 to -5
Pre Market Watch
The market closed on an upbeat note by creating a rally across all the sectorial indices on the back of heavy buying across the index heavy weights. The positive sentiment also boosted as the government gave SBI the nod to raise Rs 10,000 Crore through a rights issue. Also, the cement shares joined the rally on talk that cement companies will increase prices by Rs 5 per 50 kg of cement in the western parts of the country. The BSE Sensex grew by 359.93 points to close at 19,363.19 and NSE Nifty closed up by 128.15 points to close at 5,762.75. We expect that the market may gain some grounds during the trading session.
On Friday, the US market closed in green. The DJIA closed higher by 59.99 points at 13,371.72. The S&P 500 index grew by 11.42 points to closed at 1,481.14 while Nasdaq closed lower by 7.17 points at 2,660.96.
Indian ADRs ended in positive territory. In technology sector, Wipro surged (3.94%) along with Infosys by (2.21%) and Patni computers by (1%). In banking sector, ICICI bank and HDFC bank grew by (1.70%) and (0.89%) respectively. VSNL and MTNL grew by (13.39%) and (7.59%) respectively.
The major stock markets in Asia are trading strong. Hang Seng is trading higher by 290.05 points at 28,934.56. Singapore Strait Times is trading up 43.28 points at 3,564.55. Taiwan Weighted is trading at 8,620.19 up by 33.79 points. Seoul Composite is trading with marginal gains at 1,908.01.
The FIIs performed a mixed activity on Friday. The gross equity purchased was Rs5,311.40 Crore and the net debt purchased was Rs126.90 Crore while the gross equity sold was Rs6,289 Crore and net debt sold wasRs0.00 Crore. The net investment of equity stood at (Rs977.60 Crore) and net debt stood at Rs126.90 Crore.
Today, Nifty has support at 5,709 and resistance at 5,857 and BSE Sensex has support at 19,238 and resistance at 19,712.
Crude gives up 10% for the week
Price end at lowest level in a month as OPEC says it is ready to increase production
Crude-oil future prices for sweet light crude for January delivery which had ended at $98.18/bbl last week (23 November) finished $9.47 (9.6%) lower this week (30 November) at $88.71/bbl. This was the lowest price for crude in a month. For the month of November 2007, prices slipped by $5.82/barrel.
Price decreased during the week after OPEC hinted that the cartel is ready to increase production. Prices were also affected as traders speculated that demand from USA might go down in the coming months. Price did rise a bit during the end of the week on reports that there were explosion in four Canadian oil pipelines that supply oil to USA. But crude gave up all its gains on news that the pipes were re-opening after a short time.
Price also dropped to its lowest level in almost a month after Energy Department reported in the weekly inventory report that crude supplies fell less than expected for the week ended 23 November.
Traders speculated during the week that the 12 members of the OPEC will probably increase output 1.1% to 31.6 million barrels a day in December. Also, as per reports, Saudi Arabia, the biggest producer in the OPEC, is pumping 9 million barrels a day, the most in more than a year.
As per the weekly inventory report by the Energy Department on Wednesday, 28 November, 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.
Outlook remains positive
The positive global cues and firm opening in most of the Asian indices in ongoing trades coupled with strong buying interest in most of sectoral stocks may help the local market advance further. However, bouts of strong intra-day volatile moves and the FIIs remaining net sellers of equities may weigh on the sentiment. But, the fall in oil prices may release some pressure. Among the key indices, the Nifty can see an up- move till 5900-6200 levels and has a key support at 5600 levels in the near-term. The Sensex has a likely support at 18800 and may face resistance at 19500.
Major US indices finished with marginal gains on Friday, as investors welcomed the comments from the Fed chief that more rate cuts are on the way, but gains are limited on the back of weakness in technology stocks. While the Dow Jones gained by 60 points at 13372, the Nasdaq slipped by seven points to close at 2661.
Most of the Indian ADRs posted gains on the US bourses on Friday. VSNL led the pack with the gains of 13.39%, while MTNL surged 7.59%. HDFC Bank, Tata Motors, Infosys, Wipro, Rediff, Patni Computer and Dr Reddy's gained over 1-3% each. However, Satyam fell over 1%.
Oil prices fell below $89 on Friday on expectations that OPEC will decide to increase output at its meeting in this week. The Nymex light crude oil for January delivery slipped by $2.30 to close at $88.71 a barrel. In the commodity space, the Comex gold for February delivery tumbled $13.20 to settle at $789.10 an ounce.
Daily Trading Calls
Nifty (5762) Sup 5702 Res 5830
Buy CESC (627) SL 621
Target Rs638, 642
Buy IDFC (205) SL 201
Target 213, 215
Buy Satyam (440) SL 435
Target 450, 452
Sell NIIT Tech (223) SL 228 Target 215, 213
Sell Strides Arcolab (264) SL 269 Target 256, 253
Energized bulls set to smile!
Our energy is in proportion to the resistance it meets.
The bulls sure look energized (we’re not talking just of Reliance Energy) with FIIs pumping in over Rs10bn on the last day of the month. And all this after being sellers for virtually the whole of November. Is this the sign of things to come or just an aberration only time will tell. Generally, overseas investors tend to reduce their activity around this time of the year, ahead of the Christmas holidays. One has to wait and see whether this trend continues this year as well. But as we mentioned on Friday, historically, this has been a good month and bulls will hope to usher in the new calendar year with gains.
Today, we see a positive opening on the back of Friday's rally and positive FII data. To go with that, global markets are in better shape and oil prices are hovering around the US$89 per barrel mark. Auto stocks will attract some attention due to the release of the monthly sales data. Maruti has reported strong numbers. Hero Honda has managed to beat the negative growth trend in the two-wheelers segment. IFCI will be in action as a financial daily reports that it has decided to sell up to 20% stake to IFC, the World Bank's private arm.
Reliance Energy will remain in the limelight. The promoters have decided to inject Rs80bn in the company to help it fund the two UMPPs at Sasan and KrishnapatnamAshok Leyland could resume its buying spree as a business newspaper reports that the promoters may announce a share buy back at Rs60-65 per share. Tata Motors has reportedly bought Jaguar and Land Rover from Ford. But, there is still no official confirmation of the report that appeared on the web site of The New Zealand Herald. Deccan Chronicle is likely to rise as the RBI has allowed fresh purchases by FIIs.
The FIIs were heavy sellers last month, offloading Indian shares worth nearly US$1.5bn. As a result, the Sensex and the Nifty struggled to make further advances. In short, liquidity will hold the key if the main indices are to cross the previous lifetime highs. Market participants will also have to pay attention to the global factors like the US slowdown and housing sector meltdown there. Fresh bad news on this front could spark renewed sell-off across global markets.
For now though, world markets are stable and there is talk of more rate cuts from the Fed when it meets on Dec. 11. If the American central bank obliges again, there will be a relief rally. The downside would be capped in that case. Besides the Fed meet, there are no major triggers that can move the market either way. So, we expect the market to remain lackluster with alternative bouts of buying and selling. Moreover, in the absence of any great catalysts, there could be more intra-day swings.
Citigroup and Lehman Brothers have both bought Hindustan Oil Exploration; Citigroup has also purchased Indo Asian Fusegear; Prudential ICICI MF has picked up Ion Exchange while UBS has sold the stock; Tata Sons has bought Tata Elxsi while HDFC MF has sold it; HSBC has sold Vyapar Industries and Intense Tech.
US shares closed mixed on Friday with the blue chip Dow Jones Industrial Average and the S&P 500 index managing modest gains on growing optimism of further rate cuts. But, the Nasdaq finished slightly lower on disappointing outlook from PC major Dell.
The advance reduced the worst monthly losses in five years for the S&P 500 and Dow.
The S&P 500 rose 11 points, or 0.8%, to 1,481.14. The Dow gained 60 points, or 0.5%, to 13,371.72. The Nasdaq slipped 7 points, or 0.3%, to 2,660.96, led by Dell's 13% fall after the company's earnings missed analysts' estimates.
Market breadth was positive. About nine stocks gained for every five that fell on the New York Stock Exchange.
Wall Street had a tough November, with the Dow losing around 4%, the S&P 500 dropping just over 4% and the Nasdaq down around 7%.
Treasury prices cut losses by the end of the session, with the yield on the 10-year note at 3.94%, up from 3.93% late on Thursday. In currency trading, the dollar gained versus the euro and the yen.
US light crude oil for January delivery fell US$2.30 to settle at US$88.71 a barrel on the New York Mercantile Exchange. COMEX gold for February delivery tumbled US$13.20 to settle at US$789.10 an ounce, falling along with other dollar-traded commodities.
US Federal Reserve Chairman Ben S. Bernanke sparked another strong day of gains in European shares on Friday. The pan-European Dow Jones Stoxx 600 index rose 1.3% to 370.35. The UK's FTSE 100 gained 1.3% at 6,432.50, while the German DAX 30 index advanced 1.4% to 7,870.52 and the French CAC-40 climbed 1.3% to 5,670.57.
Brazilian shares also closed up and Mexican stocks too rose on continued hopes of US rate cut this month. Brazil's benchmark stock index, the Bovespa, climbed 849 points, or 1.4%, to end at 63,000.06. In Mexico City, the 35-stock IPC index rose 1.3% to 29,770.52. Chile's IPSA rose 0.9% to 3,204.83. Argentina's Merval, however, fell 1.3% to 2,207.16.
Asian stocks rose for a third day this morning, led by Mitsubishi UFJ Financial and National Australia Bank on speculation that US Treasury Secretary Henry Paulson will announce an agreement with banks today to stem credit losses.
Paulson, who is negotiating an agreement with banks to fix interest rates on loans to subprime borrowers, may make the announcement when he addresses a housing conference in the US today.
The MSCI Asia Pacific Index gained 0.2% to 162.28 at 10:46 a.m. in Tokyo. Japan's Nikkei 225 Stock Average was little changed at 15,686.81, while the broader Topix index climbed 0.3% to 1,536.71. All other markets open for trading rose, except China.
The yen advanced against the dollar from the lowest in two weeks after Moody's Investors Service said that it is preparing the biggest credit rating cuts since subprime mortgage defaults rocked financial marketsUpward trend to continue
Markets saw second straight day of gains as players cheered healthy economic growth and better than expected Inflation figures.
The benchmark Sensex which opened with a positive gap immediately retreated from its highs as it faced resistance at higher levels. However, swiftly gained momentum as the day progressed on back of firm cues from Asian markets. Finally, 30-share Sensex ended 359 points higher to close at 19,363 and Nifty closed 128 points lower at 5,762.
Sector wise the BSE Metal index was the top gainer (up 5%). Other indices like BSE realty index (up 3.9%), BSE Bankex index (up 2.5%) and BSE IT index (up 2.7%). Even the BSE Mid-Cap and the BSE Small-Cap index gained over 1.5% each.
The Banking stocks gained momentum after government approved the company’s right issue, also announced that they would invest Rs10,000 cr in the issue. The whole of the banking pack was in demand with Mid-Cap banks like Bank of Baroda, Syndicate Bank and Bank of India surging over 6% each.
Cement stocks also were in the limelight as reports stated that the companies would hike prices in
Jet Airways edged higher by 0.5% to Rs829 after reports stated the nation's biggest domestic carrier won government approval to fly to
SBI gained 1.2% to Rs2302 after government announced that it approved the company’s right issue, also announced that they would invest Rs10,000 cr in the issue a and would also issue bonds for subscribing to SBI rights offer. The scrip has touched an intra-day high of Rs2345 and a low of Rs2282 and has recorded volumes of over 15,00,000 shares on NSE.
BPCL gained 1.1% to Rs386 as
Shares of IOC gained 2.8% to Rs543 as reports stated that the company is trying to fit the expansion of the Haldia refinery within the plants 500-acre property near port town. The scrip touched an intra-day high of Rs556 and a low of Rs530 and recorded volumes of over 7,00,000 shares on NSE.
ONGC advanced 2.6% to Rs1167 after the company yesterday announced that they found more gas in a block in Rajasthan. The scrip touched an intra-day high of Rs1177 and a low of Rs1120 and recorded volumes of over 11,00,000 shares on NSE.
Tata Steel gained 3.5% to Rs825 after the company announced that they have completed an accord with Riversdale Mining Ltd., an Australian coal-mining company to develop two coal projects in
Polaris surged by over 3.5% to Rs109 after the company announced that they have settled
What the FIIs are doing
FIIs were net buyers of Rs10.7bn (provisional) in the cash segment on Friday while the local institutions pumped in Rs6.88bn.
In the F&O segment, foreign funds were net sellers of Rs3.86bn on the same day.
On Thursday, FIIs were net sellers to the tune of Rs9.78bn.
Stocks in News:
Reliance Energy to raise Rs80bn for infrastructure projects; promoters to invest Rs65bn through convertible warrants and preferential shares.
ADAG Group on the lookout to buy coal assets abroad; shows interest to acquire PT Berau of Indonesia.
BHEL to invest Rs3bn to set up two plants to expand manufacturing capacity to 15,000MW annually.
Hindalco plans to raise captive copper supplies to 60%; planning for mines in South America.
GMR Energy, part of the GMR group is looking for global acquisitions in the power sector, especially in Singapore and Turkey.
Reliance Power is likely to tie up with an America company for strategic partnership in coal mining.
Tata Power may bid for three Singapore power generation companies Tuas Power, PowerSeraya and Senoko Power.
SAIL to invest Rs530bn over the next five years to increase hot metal capacity to 26mn tons.
Vedanta Resources, the holding company of the Sterlite group, would invest Rs50bn in Rajasthan.
Rashtriya Ispat Nigam proposes to acquire the entire Bird Group of companies to secure iron ore supplies.
Pfizer has won a US court ruling that prevents Ranbaxy from selling a generic version of blood pressure drug Caduet until 2010.
NMDC to invest Rs180bn to expand capacity to 50mn tons; to conduct fresh explorations within five years.
National Textile Corporation and Pantaloon Retail plan to float a retail JV.
A slowdown in manufacturing to 8.6% saw Q2 GDP growth at 8.9% vs. 10.2% a year ago.
Fiscal deficit stood at 54.5% of the total budget estimate of Rs1.5tn in the April-October period.
Air fares to increase after a 14% rise in ATF prices.
Mobile operators must return excess spectrum, says Telecom Minister.
Inflation rises to 3.21% mainly due to higher vegetable prices for week ended Nov. 17th ; CPI up at 5.5% in October.
The Government projects textile industry growth of 16% to touch US$115bn in the 11th Five-Year Plan.
The Government may divest 10% of its equity in Rashtriya Ispat Nigam in the market.
The Government not in favour to allow international flying rights of one airline to be transferred to another until it is wholly acquired.
The RBI gives in principle concurrence for a framework on stock lending and borrowing.
Kolte Patil - How to Withdraw
In view of the disclosures herein, kindly note that all applicants (including QIBs) who have submitted their bid(s) in response to our Initial Public Offering may, if they so desire, withdraw their applications. The last date of receipt of request for withdrawal shall be 10th day from the date hereof, i.e., on or before 5.30 pm on December 04, 2007.
All applicants (including QIBs) seeking to withdraw their bid(s), should submit their duly signed requests alongwith the details of applications such as, Name of Applicant(s), Address, Application Form No., Number of Shares bid for, Amount paid with the application form, Cheque Number and Bank/Branch on which drawn, to the Registrar to the Issue marked “Kind Attn: Mr. Ashok Shetty, Bigshare Services Private Limited, E-2, Ansa
Industrial Estate, Sakivihar Road, Saki Naka, Andheri East, Mumbai 400 072, India. Tel: +91 22 2847 0652, Fax: +91 22 2847 5207/ 2847 0605.
Stocks you can buy this week
Colgate Palmolive
Research: Merrill Lynch
Rating: Buy
CMP: Rs 282
For the first time in 10 years, Colgate is available 6% cheaper than the market at a P/E of 19x FY09E. The ‘buy’ rating is underpinned by the defensive nature of the business, powerful brand and quality management. Colgate’s toothpaste volumes are growing at a safe, but unexciting rate of 10%, in an era when income levels are rising sharply.
The management highlighted that economic growth has not trickled down to Colgate’s key growth market — rural India. Higher urban incomes are less relevant for Colgate as penetration levels in urban India are over 70%. Moreover, toothpaste is a low-priority item on the shopping list and uptrading trends are typically less common than in other consumer categories. The management stated that, contrary to popular belief, HUL is not lying low in toothpastes and other competitors such as Anchor have sharply upped their marketing budgets.
Colgate is gaining market share gradually, supported by an advertising-to-sales ratio of ~15%. This ratio is unlikely to fall in the near future. Over the next two years, Merrill Lynch forecasts Colgate’s sales to grow at 15%, led by 10-11% volume growth. Input cost increases have slowed down and are offset by retail price increases of ~3-4%. Merrill Lynch believes there is upside risk to its EPS estimates as the tax rate is likely to be increased.
DLF
Research: Citigroup
Rating: Buy
CMP: Rs 944
DLF has formed an equal partnership with the founder of Aman Resorts to acquire the company at an enterprise value (EV) of $400 million (including debt of $150 million). While this appears aggressive, it includes an agreement to acquire a controlling interest in Aman Resorts. The acquisition will be largely financed through debt. Aman Resorts is a luxury hotel chain operating 22 hotels (650 keys), many with villas (172 keys). It owns properties in France, Phuket, Bali, Sri Lanka and India. DLF will work closely with founder Adrian Zecha to drive future growth. Aman Resorts enjoys average room rate (ARR) of $778-1,000 and is likely to generate CY07 revenues of $120 million with EBITDA of $27 million. With six new properties (300 keys, fully funded) in various stages of development likely to become operational by ’08-09, the management expects earnings to grow at 20%. It believes DLF’s land bank and growth capital will complement this growth. The acquisition is in line with DLF’s plans to grow big in the hotel space. While the acquisition at 15x CY07E EV/EBITDA appears aggressive versus 10x EV/EBITDA for most global hotel chains, Aman Resorts has inherent value of real estate assets, which should add significant value in the long term.
Oriental Bank of Commerce
Research: CLSA
Rating: Buy
CMP: Rs 256
CLSA maintains ‘buy’ rating on Oriental Bank of Commerce. OBC has underperformed the Sensex and Bankex by 36% and 43%, respectively, over the past one year. Its gross non-performing loans (NPLs) have declined 50% from their peak and margins have bottomed out. The bank’s fee income is estimated to witness a compound annual growth rate (CAGR) of 24%.
While OBC acquired a large NPL portfolio via the acquisition of GTB in FY05, it has recovered a substantial part of it. Hence, gross NPLs have declined 41% from December ’05. OBC’s net NPLs of 0.6% and coverage ratio of 79% are among the best for Indian banks. Its margins are estimated to have contracted by 20-30 bps due to re-pricing of some of its high-yielding G-Sec portfolio and moderation in credit demand. With credit growth expected to pick up and most of the re-pricing having already been done, CLSA expects margins to rebound by at least 10-20 bps in the next few quarters. CLSA expects earnings to witness a 20% CAGR over FY07-10CL, led by strong credit growth, margin expansion of 10-20 bps and rising fee revenues (24% CAGR).
Low bond yields will also result in lower mark-to-market hits on the bond portfolio (MTM hit was 30% of operating profit in FY07). Further, given the relatively lower proportion of its bond portfolio being in held-to-maturity (HTM), the bank will also have a lower amortisation cost versus its peers. At 0.9x FY09CL adjusted book and 5.5x FY09CL EPS, OBC trades at the lowest end of the valuation range among Indian banks. With a return on equity (RoE) of 18.3% in FY09CL, it can trade up to 1.2x 12-month forward adjusted book, with earnings growth being the key catalyst.
TVS Motor
Research: Morgan Stanley
Rating: Equal-Weight
CMP: Rs 65
MORGAN Stanley retains ‘equal-weight’ rating on TVS Motor, but lowers the price target to Rs 50 from Rs 56. Morgan Stanley believes execution risk has come down significantly, with the showcase of the company’s new products and commencement of operations at Himachal Pradesh and Indonesia. Earnings recovery is likely to lag as these new projects take time to show an improvement in operating performance. Morgan Stanley cuts its FY09 earnings forecasts by 29% to reflect year-to-date performance, delay in launch of new products — three-wheeler, new executive motorcycle and premium motorcycle — and reduction in its volumes forecast from such new launches.
TVS Motor trades at 16.3x FY09 estimates. Key risks to the valuation will be a further delay in the launch of new products and intense price competition between the market leaders — Bajaj Auto and Hero Honda — leading to overall lower profitability. The stock is likely to trade in the range of Rs 50-60 per share in the near term as the market prices in improvement in volumes. Morgan Stanley may turn more positive on the stock once it has obtained visibility on the earnings from the company’s new projects — especially from the Indonesian operations — and volume potential of the three-wheeler segment.
Google Mobile - bidding for US spectrum
Google Inc said on early Saturday that the company would bid on coveted airwaves to launch a US wireless network, pitting it against established telecommunications players AT&T and Verizon.
The Internet leader said in a statement that it was ready to go it alone rather than rely on partners in bidding in the Federal Communications Commission-run auction of 700-megahertz wireless spectrum due to begin on Jan 24.
The Silicon Valley-based company said it would make its filing ahead of the FCC deadline on Monday for companies to declare their interest in joining the airwaves bidding.
"We believe it's important to put our money where our principles are," Chief Executive Eric Schmidt said. "Consumers deserve more competition and innovation than they have in today's wireless world."
Wall Street investors have reacted cautiously to Google's latest move to expand beyond its core Web search and online advertising franchises, worried the potential upfront costs and eventual network build-out could exceed USD 10 billion.
But some analysts have speculated that Google was more interested in ensuring certain requirements for network openness and that it was bidding just to preserve those rules.
"The real question here is whether Google's intent is to bid up to the reserve price and assure that the openness condition stays in place," Stifel Nicolaus analyst Blair Levin wrote to investors. "Or is the real purpose to actually win?"
And despite the excitement surrounding a Google bid, Stifel Nicolaus said in a research note that it suspects Verizon will probably end up winning the auction for the C block spectrum.
Google shares closed down USD 4.00 at USD 693.00 on Nasdaq.
Bidding separately instead of assembling a coalition does not rule out Google later signing up partners if it wins the bidding, said a source familiar with the company's strategy. But the FCC has "anti-collusion" rules that prevent deal-making between potential bidders during the auction period.
The source said Google was eyeing the biggest chunk of spectrum up for auction -- the "C block" -- but also was considering bidding on separate spectrum reserved for public safety agencies but which will allow some commercial uses.
A Google spokesman declined to comment on the company's bidding strategy.
Last chance for new player
The auction is expected to take several weeks, or even months, of daily, back-and-forth bidding, with the identities of the bidders kept secret. Big spectrum bidders typically draw up elaborate strategies, often with input from game-theory experts.
Expected bidders include AT&T Inc and Verizon Wireless, the No. 1 and No 2. US wireless network operators. Verizon Wireless is a joint venture of Verizon Communications Inc and Vodafone Group Plc.
Less certain are the strategies of satellite broadcasters DirectTV and EchoStar Communications and cable networks Comcast Corp and Time Warner Inc as well as other wireless players Sprint, T-Mobile and Clearwire, according to Levin.
AT&T is in merger talks with EchoStar that could lead them to join forces in the bidding, but with the deadline looming the time to strike such a deal is short, the Stifel Nicolaus analyst said.
These radio waves are being returned by broadcasters as they move from analog to digital signals early in 2009. The signals can go long distances and penetrate thick walls. The auction is seen as a last chance for a new wireless player.
Google and other Silicon Valley leaders see the wireless spectrum as a way to create more open competition for mobile services and devices than existing networks -- putting the industry on a footing similar to the free-wheeling Internet.
The company won some changes in rules governing use of the spectrum several months ago, but was denied other requests, including a rule that would have required winning bidders to resell access to their spectrum on an open wholesale basis.
The winning bidder must provide open access to any device consumers choose to use on the network if the reserve price of USD 4.6 billion for the "C Block" is met at auction, Google said.
If the reserve price is not met, the auction would be rerun without the so-called "open-platform" conditions.
On Tuesday, Verizon Wireless announced it had acceded to Google's open-platform demands and would open its network to any phone or software application by the end of 2008.
But Levin said Google may still want to bid high enough to lock in a government-enforced open-platform condition on the 700-megahertz spectrum.
If its bid proves successful, Google could operate a wireless network itself or seek partners to help it build out the network and to potentially resell wireless services.
Google's announcement was greeted as good news at the FCC, said a source at the agency. "It means that they're willing to go a little bit further into the water," the source said. "They're not just dipping their toe anymore."
FCC officials hope the company's participation will mean a possible new player in the wireless business and boost the amount of money the government can bring in from the auction.
"We know we're going to have somebody in the mix who has a lot of money and who is showing signs in being interested in winning," said the source.
$200 million pulled out of India
Soaring oil prices have made global investors to pull out over 200 million dollar from India-focused funds during the last week of November, a latest report says. "Funds geared to China and India, both big oil importers, posted outflows of 688 million dollar and 208 million dollar respectively as oil prices continue to test the 100-dollar a barrel mark," international fund tracking firm EPFR Global said in its latest weekly report.
Besides, funds focused on BRIC (Brazil, Russia, India and China) witnessed an outflow of 81 million dollar in the week ended November 30. But two countries --Russia and Brazil -- which have exportable oil reserves did not fare so badly.
Russia country funds posted modest inflows while it was neutral for Brazil, the report said.
At the country level, investors last week again pulled back from China and reduced their exposure to emerging markets such as Korea and India that have big oil import bills.
However, money market funds continued to find favour as investors parked another 7.62 billion dollar in them. This fund group has absorbed fresh money for the eighth time in the past nine weeks, the report said. Since early August net inflows have totalled over 115 billion dollar.
"Despite the angst over the real scope of the global credit crisis, recent flow data suggests that investors are still as focused on returns as they are on risk," EPFR Global analyst Cameron Brandt said.
Weekly Technical Analysis
Nifty — The index closed positive on the opening session of the week; mid-week it consolidated in a trading band and closed on a strong note toward the closing session of the week. It ended the week with gains of 154 points.
Moving Averages — The 50 dma = 5523, 20 dma = 5733, 10 dma = 5681. The index has closed above the averages, which should be considered positive. Declines during the current week’s trading should find support around the averages.
Consolidation — Last week the index consolidated in a narrow band of 5596-5773; it has closed around the upper end of its consolidation band suggesting strength. Breakout above 5773 should see index test higher levels around 5950 levels.
Momentum Oscillators — On the daily chart, MACD is in sell mode but around the zero line. RSI (14) – Relative Strength Index is exhibiting a reading of 55.14 (reading above 70 signifies overbought and reading below 30 signifies oversold).
Support — The index has support around the lower end of the consolidation band around 5596; intra-week declines should find support around these levels. Lower support is around the 50 dma = 5523 levels.
Resistance — The index faces resistance around the upper end of the consolidation band around 5773; breakout above the 5773 level will see the index rally toward 5950. Higher resistance is around 6012 (high of 1 November 2007).
Conclusion — Breakout above 5773 should see the index test higher levels around 5950 during the week’s trading.
Market may stay range bound
| The settlement went through with the market maintaining an uptrend. The Nifty ended the week up by 2.75 per cent at 5,762.75 points with the Sensex ahead by an equivalent 2.71 per cent. The Junior was up 4.41 per cent and the CNX Midcaps gained 4.83 per cent. Breadth was fairly good and volumes were good though this is always true in settlement week but the high carryover was also a bullish signal. |
| The BSE 500 was up by 3.42 per cent. The overall gains were somewhat surprising since the foreign institutional investors (FIIs) were heavy sellers throughout the week and indeed the month, and mutual funds barely bought although they were net-positive. |
| Outlook: The market stays stuck inside the trading range of Nifty 5,400-5,850 and until there is a breakout from that range, it's difficult to call the future direction. The volume pickup this week and the decent breadth make an uptrend look more likely. But FII attitude is likely to be the key to the immediate future direction. |
| Rationale: There is clearly defined resistance above 5,800 and clear support at 5,400. Any breakout beyond these levels is likely to require volume expansion. That could come about either through unabated FII selling or a shift in attitude and buying. It appears operators are bullish since they absorbed last week's FII sales but they are unlikely to expand their commitments much beyond current levels. |
| Counterview: The volume pickup was largely driven by settlement considerations. If volume tails off, the market is likely to move down. The market's last peak came on November 14 and it's been in a downtrend or range-trading since. |
| The current phase has lasted just two weeks and on the basis of the time-factor, a further consolidation or downtrend seems more likely. But just as it would require much buying to break 5,800, it will require a spurt in supply to break the 5,400 support. Only the FIIs have the capacity to sell or buy sufficiently large quantities against delivery. |
| Bulls & Bears: There were sharp gains across several sectors. Telecom stocks such as VSNL, MTNL, Bharti and TTML all jumped on Friday. Bank stocks did well in the last two sessions with Kotak, Bank of Baroda, HDFC Bank and Indian Overseas being among the best performers. IT stocks made a general recovery with HCL Tech and Satyam among the winners, though market leaders such as Infosys and TCS remained close to annual lows. |
| Apart from these, the Reliance and ADAG stocks continued to generate high volumes. Essar Oil, Sterlite and Neyveli Lignite remained strong. GMR Infra and Hind Oil Exploration were two new counters that attracted bulls. |
| MICRO TECHNICALS |
| GMR Infrastructure Current Price: 255.1 Target Price: 275 |
| The stock has completed a breakout on reasonable volumes. It has a potential target of 275 and it could exceed that, given that the long-term trend has been excellent for the past 6 weeks. Keep a stop at 249 and go long. |
| Hind Oil Exploration Current Price: 142.7 Target Price: 160 |
| The stock broke key resistance at 135 on a big volume expansion. It has a likely target of 160 and some resistance at current levels. Keep a stop at 134 and go long. Book partial profits at 155. The potential long-term target is 180 plus, so it may be worth keeping a delivery position for 3-4 weeks. |
| Kotak Mahindra Bank Current Price: 1,233.5 Target Price: 1,275 |
| KMB has seen what could be an important breakout past resistance at 1,175. It has an immediate target of 1,275 and a long-term target that could be quite a lot more. Keep a stop at 1,215 and go long. Book partial profits above 1,270 and hold a delivery position for 3 weeks with a perspective of 1,400. Satyam Computer Current Price: 440 Target Price: 475 |
| The stock seems to have bottomed and is likely to trade up again until it hits resistance at 475-480. The long-term trend suggests range-trading between 400-500 will continue. Keep a stop at 430 and go long. Book partial profits at 460 and close out above 475. VSNL Current Price: 627.95 Target Price: 660 |
| The stock made a huge jump on Friday on the basis of a big volume expansion. When it crossed resistance at 590 it set up a short-term target of 660. The long-term trend also looks to have undergone an improvement to bullish from range-trading. Keep a stop at 610 and go long. |
via Business Standard
Strong finish to US Markets
Expectations about another interest rate cut help ease concerns in housing and credit markets
US Market started off the week on a weak note on Monday, 26 November but market picked up momentum in all the rest of the four days of the week that ended on Friday, 30 November, 2007. Comments from Federal Reserve Vice-chairman Donald Kahn during the middle of the week and from Ben Bernanke on the last day of the week was the main reason for market to get some encouraging hints about another rate cut and indices soaring upwards.
Crude price tumbling down to lowest level in a month also provided some good support to the market. Oil prices closed almost 10% lower around $88/barrel at the end of the week on talks that OPEC will increase production. An upward revision of third quarter real GDP to a very strong 4.9% annual growth rate from a previously reported 3.9% was welcomed by the market.
The Dow Jones Industrial Average gained 390 points for the week. Tech - heavy Nasdaq gained 64 points. S&P 500 gained 40 points.
Market started off on a shaky note on Monday, 26 November, 2007 after credit market turmoil once again rocked the market. Citigroup weighed on overall market after reports that the company might lay off as many as 45,000 workers because of the subprime-mortgage crisis. Dow and Nasdaq went down by 267 and 55 points respectively.
On Tuesday, 27 November, it was same Citigroup that helped market erase most of prior day’s losses after reports that an Abu Dhabi Investment Authority (ADIA) will invest $7.5 billion to acquire a 4.9% stake in Citigroup. The investment will make ADIA the bank's largest shareholder. Dow and Nasdaq went up by 215 and 40 points respectively.
On Wednesday, 28 November, Fed’s Vice Chairman, Donald Kahn took market up 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. Financial sector was once again centre of everyone’s attention on reports in the Wall Street Journal that Citigroup and Bank of America were contemplating a merger.
On Thursday, 29 November, indices once again closed modestly higher with the Dow gaining 22 points and Nasdaq higher by 5 points with the market digesting mixed bag of economic reports. Disappointing profit reports from some retailers and news of a pipeline explosion in the Midwest also took some steam out of market on that day.
But on Friday, 30 November, a speech by Ben Bernanke, cheered investors after he hinted clearly at another interest rate cut in the coming month. In his speech he acknowledged that the renewed turbulence in the financial markets over the past month has affected the economic outlook, as there could be additional restraint on housing market activity and other credit-sensitive sectors. Market ended mixed with Dow gaining 60 points but Nasdaq slipping by 7 points.
On the earnings front, Sears Holding posted a third quarter profit which was a whopping 99% drop in earnings compared to a year-ago. Dell, the world's second largest maker of personal computers, reported a higher quarterly profit, but provided a cautious outlook due to a less favorable component pricing environment.
Among major economic news hitting the market during the week, 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.
Other than the above, the November Chicago Purchasing Manager’s Index survey on regional manufacturing conditions rose to 52.9 from 49.7 in October, while October construction spending fell 0.8%, with residential spending down 2.0% and non-residential spending up 0.1%.
Executive Summary
For the week, indices registered very good gains. DJIx and S&P 500 closed up by almost 2.9% each. Nasdaq too gained 2.5%. Encouraging comments from Federal Reserve Chairman and Vice-Chairman on two separate days of the week made investors look forward to another interest rate cut in December, 2007.
Crude prices slipping by almost 10% and closing at almost at lowest level in a month also added to positive market sentiment. The economic reports that came out were more or less positive in nature. An upward revision of third quarter real GDP to a very strong 4.9% annual growth rate from a previously reported 3.9% was a strong economic piece of news for the market.
For the year, Dow is up by 7.3%, Nasdaq is up by 10.2% and S&P 500 is up by 4.4%.
Market may rally
Sensex (19,363.19): The month of November was tumultuous for stock markets across the world.
The Indian markets displayed amazing resilience amid global weakness and the sharp rally on Friday has reinforced the bullish view expressed in recent weeks.
The bullish view and the possibility of a rally to 21,500-22,000 would be intact if the index holds above 18,180.
Else, we could see a test of 16,200-16,300 levels. The long- term positive view would, however, not be affected even if the Sensex were to drop to 16,200-16,300 zone.
Such an event would only delay the eventual progress towards the target zone of 21,500-22,000 and would not negate the positive view.
Going by the chart patterns, there is a fair chance of the rally gathering steam and the Sensex could hit this target zone soon.
The price action in the next few weeks would hold the key and would provide clues about what is in store. Till such time 18180 is not breached, a quick and sharp move to the target zone would be the favoured view.
Nifty (5765.5): After a sharp rally on Monday, the index was confined to a narrow trading zone during the best part of the week.
The sharp spurt on Friday is indicative of the start of the next leg of the rally. A quick and decisive overhaul of the earlier high of 6012 would confirm the resumption of the bullish trend.
The market action during the week has not negated the bullish view featured in the recent weeks. The index is on course to move to the target zone of 6400-6500.
A close above 5775 would be an early sign of strength and a close past 6012 would provide further momentum to the rally.
It would be safer to avoid chasing momentum stocks and investors may look to buy fundamentally sound stocks that have corrected recently.
CNX IT Index (4431): This index has taken a drubbing in the recent months. The fall was arrested at the recent low of 4141 which is just a shade below the crucial 61.8 Fibonacci retracement of the rally from 3193 to 5857.
The bounce from this crucial support zone and the price pattern in the recent weeks indicate that a bottom of some consequence has been established at 4141.
The occurrence of a classic positive divergence between the price action and the 14-day RSI is another factor favouring an uptrend.
The immediate resistance is at 4750-4800 range and the major target cum resistance zone is at 5100-5200.
Short-term support is at 4300-4350. Stop loss for long positions may be placed at 4240. Keep an eye on software biggies as they could move up smartly in the short-term.
Key pivotals:
Sterlite Industries (Rs 1032): This is one of the top performing stocks from the metals space. After a brief correction in the past few weeks, the next leg of the uptrend appears underway.
The outlook is bullish and a move to Rs 1250-1300 appears likely. The bullish view would be valid as long as the support at Rs 876 is not breached. Have a stop loss at Rs 870 for long positions.
DLF (Rs 944): The stock price moved in line with expectations and the sharp rally on Friday indicates that the upward move has gathered momentum.
The share price is on course to move to the target zone of Rs 975-980 mentioned last week. Have a stop loss at Rs 870 for long positions. Long term investors would find opportunities to exit at or beyond Rs 1100.
Wipro (Rs 460): The steady downward move over the recent months has been arrested at the recent low Rs 428.
A classic “double bottom” pattern appears to be in place. The stock could bounce to the immediate target zone at Rs 520-525 range.
An overhaul of this target zone could result in a long term trend reversal and could result in a rally to Rs 625-650. The stock has to sustain above Rs 420 for the bullish view to be in force.
Stock of the week:
Voltas (Rs 241.1): The stock is in a long-term uptrend and appears to be headed towards Rs 275-280 range in the near term.
Long term investors may find exit option at Rs 330-350 levels. The stock may be bought at current levels and weakness with a stop loss at Rs 221.
Though a close below Rs 221 would impart short term weaknesss, it would not negate the long term bullish view. The stock has to close below Rs 192 for the long term bullish view to be invalidated.
Via DNA
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