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Recommendations
Tuesday, December 04, 2007
eClerx, BGR Energy, Transformers, Brigade Enterprises, Jyothy Lab
eClerx Services 270 to 315 95 to 100
BGR Energy 425 to 480 380 to 400
Transformers & Rectifiers 425 to 465 180 to 200
Brigade Enterprises 351 to 390 110 to 120
Jyothy Lab. 690 230 to 240
Burnpur Cement Ltd. 12 2 to 3
Edelweiss 825 780 to 800
Renaissance Jewellery 150 20 to 25
Kolte Patil 145 75 to 80
Kaushalya Infra 60 13 to 14
SVPCL 42 - 3 to -4
JK Cement, Saregama India
JK Cement
Cluster: Cannonball
Recommendation: Buy
Price target: Rs330
Current market price: Rs246
Price target revised to Rs330
Key points
- JK Cement is expanding its capacity by 3.5 million metric tonne (MMT) through a greenfield plant at Karnataka, which will be accompanied by a 50-megawatt (MW) power plant at the site. The capital expenditure (capex) programme is in progress and the plant is expected to be commissioned by FY2009 end. This will augment the capacity of the company by 70% in FY2010 and will drive the volumes of the company going ahead.
- Refurbishment of Nihon facility is expected to be complete by the end of Q4FY2008 and would increase cement volumes by 350,000 tonne in FY2009.
- JK Cement's capex on captive power plants (CPPs) is progressing well. The company has already commissioned a 20MW pet coke based power plant and has replaced its 10MW turbine. It has partially implemented the 13MW waste heat recovery plant and expects the plant to get fully operational by FY2008 end.
- With all CPPs in place, the company will be able to save Rs150-200 per tonne on power consumption from FY2009.
- JK Cement's Q2 results were much above our expectations. The topline grew by a healthy 33% year on year (yoy) to Rs356 crore on the back of a blended volume growth of 12% yoy and a realisation growth of 17% yoy to Rs3,597 per tonne.
- Strict control on variable costs led the operating profit grow by 58% yoy and the operating profit margin (OPM) expand by 450 basis points to 28.2%. The earnings before interest, tax, depreciation and amortisation (EBITDA) per tonne jumped by 40% yoy to Rs1,030 per tonne.
- Lower tax provision of 13% during the quarter made the profit after tax (PAT) grow by a whopping 142% yoy to Rs72.7 crore. The PAT growth was much ahead of our expectations.
- We have been bullish on the business prospects of JK Cement on account of its cost-cutting measures and capex programme. Savings in power costs from the CPPs coupled with higher volumes from its greenfield facility will be the major business drivers for the stock. The stock is trading at 10x its earnings and 6.6x its enterprise value (EV)/EBITDA on FY2009 earnings estimate. Even after a significant run-up in the last couple of months, it commands an EV per tonne of USD 84, which is lower than the benchmark asset valuation of USD 100-115 per tonne. Considering the cheap asset valuations, we maintain our Buy recommendation on the stock with an upgraded price target of Rs330, leaving an upside of 30%.
Saregama India
Cluster: Ugly Duckling
Recommendation: Book Profit
Current market price: Rs296
Book profit
Key points
Saregama India Ltd (SIL) reported disappointing results for Q2FY2008. While the operating revenues fell by 2.7% year on year (yoy) to Rs33.8 crore, the operating profit declined by 57.9% to Rs2.7 crore. Consequently the net profit before extraordinary items decreased by 44.7% yoy to Rs2.6 crore.
Operating profit margin (OPM) fell sharply to 7.9% in Q2FY2008 against 18.4% in Q2FY2007. The OPM declined primarily due to a sharp jump in royalty expenses that as a percent of sales increased by 860 basis points yoy to 28.6%. Royalty payments went up as royalty model has shifted from revenue sharing model to a fixed minimum guarantee model.
SIL's audio sales declined sharply by 34% yoy in the last four quarters. Sale of cassettes and CDs is continually falling as consumers shift to non-physical formats of music such as radio and TV.
SIL's share in acquiring new music rights declined to 9-10% from about 30% in the past. With competition setting in, the cost of acquiring these rights has gone up substantially. We believe that the current scenario wherein music rights are awarded on minimum guarantee as against revenue sharing in the past has increased the risk for music companies.
Increasing competition, lack of aggression on the part of the management and sharper decline in physical sales raise concerns. We believe, the current market price of Rs295.5 fully factors the risks and rewards associated with SIL's business and thereby advice investors to book profit.
Midcaps, Small caps run
Frontline equities ended a lackluster session lower on Tuesday as traders booked profits towards the close tracking credit worries in Europe.
Local traders turned cautious after Morgan Stanley said earnings for the UK banking industry might have peaked as access to funding is getting more difficult.
The 50-stock Nifty ended marginally lower at 5861.55, down 0.11 per cent or 5 points. Intra-day, the index touched a high of 5897.25 and low of 5840.30.
The 30-share Sensex settled at 19,529.50, down 0.38 per cent or 74 points after rising to a high of 19,707.86. The low was 19,482.34.
“The Sensex is trading broadly within the 18,000-20,000-22,000 range, which narrowed today, and is expected to narrow further over the next few sessions. The overall trend is positive, but activity will be muted in frontline shares in the first half of December,” said Birendrakumar Singh, technical, analyst at Religare Securities.
Singh expects the rally in mid-caps to continue as the frontliners consolidate. He recommends buying momentum scrips in the fertilizer, cement and textile space.
The BSE Mid-cap Index ended 1.6 per cent higher and the CNX Mid-cap Index was up 1.23 per cent.
Chambal Fertilisers and Chemicals (up 18.58%), MICO (16.92%), Godrej Consumer Products (14.29%) and Maharashtra Seamless (12.37%) topped the list of mid-cap gainers.
Among the large-caps, Tata Steel (up 4.08%), Mahindra & Mahindra (2.79%), BHEL (1.96%), Ambuja Cements (1.22%), Larsen & Toubro (1.21%) and Hindalco Industries (1.15%) were the biggest gainers.
But heavyweights like Reliance Industries (down 2.33%), Tata Consultancy Services (2.22%), ICICI Bank (2.13%) and ONGC (1.28%) proved a disappointment.
SBI, Cement
State Bank of India
Cluster: Apple Green
Recommendation: Buy
Price target: Rs2,680
Current market price: Rs2,300
SBI receives approval for its mega rights issue
Key points
- State Bank of India (SBI) has received the government's approval for its Rs16,740 crore rights issue to be concluded this fiscal. The government is likely to invest Rs10,000 crore to maintain its 59.7% holding in SBI.
- The actual number of shares to be subscribed, the tenure of the securities and other modalities will be worked out by the government in consultation with the bank in due course of time. The government is expected to issue bonds (paying a coupon of 7.9% per annum) to fund its investment in the SBI rights issue.
- The public sector behemoth SBI remains one of our top picks in the banking space. We state below four reasons (for detailed discussion on these reasons please refer to our Investor Eye dated November 6, 2007) why we feel SBI should be a Buy at the current levels:
1. Upcoming rights issue—at a price far higher than envisaged earlier
2. New business initiatives—general insurance, private equity
3. Launch of PSU Bank Benchmark Exchange Traded Scheme (Bank BEES)
4. Other positive news flows and developments that are expected going forward
SECTOR UPDATE
Cement
Cement prices to rise in Andhra Pradesh, Maharashtra
Cement majors in Andhra Pradesh (AP) and Maharashtra have announced a price hike of Rs5 per bag effective 1st December. From the feedback we had got from the dealers, we did not expect cement prices to rise before January 2008. Therefore the earlier-than-expected price hike is a positive surprise and will drive our earnings higher than expectations. Post price hike, wholesale cement prices in Maharashtra will stand at Rs245-250 per bag and at Rs230 per bag in AP. This will augur well for companies like ACC, Ultratech, Ambuja Cements, Orient Paper, India Cements, Madras Cements et al who have a significant exposure in Maharashtra and AP.
Trading Calls
Buy IFCI with a stop loss of Rs 93 for a target of Rs 140.
Buy Reliance Capital with a stop loss of Rs 2300 for target of Rs 2760.
Buy Easun Reyrolle on dips with a stop loss of Rs 320 for a short-term target of Rs 390.
eClerx Services IPO Analysis
Promoted by P D Mundhra and Anjan Malik, both with master’s degree in business administration from Wharton School, University of Pennsylvania, in 2002, eClerx Services provides data analytics and customised process solutions to global enterprise clients from its offshore delivery centers in India. Data analytics, operations management, data audits, metrics management and reporting services are offered to clients in the financial services, retail and manufacturing industries. This process is also termed as knowledge process outsourcing (KPO).
Employing about 1,300 people with operations in India, the UK, the US and Ireland, eClerx Services has three delivery centers in Mumbai: one at Sewri and two at Ghatkopar. The three have an aggregate capacity of about 1,035 workstations. Clients include more than 15 `Fortune 500’ companies including leading personal-computer (PC) component manufacturers, one of America’s largest cable companies, a number of global investment banks and some of the world’s largest commercial banks.
The present public issue of Rs 101 crore in the price band of Rs 270 to Rs 315 per share comprises 8.90 lakh equity shares of Rs 10 each offered for sale and fresh issue of 23 lakh (at the higher price band) to 28.5 lakh shares (at the lower price band), depending on price discovery. Expansion and acquisitions will require Rs 50 crore and the balance will be used for the general expenditure.
Strengths
- Has been enjoying multi-year partnership with the some of its largest clients including leading global corporations. Gets a high percentage of new work through reverse enquiry from existing clients. Has shown strong growth in its revenue and net profit over the last few years. Over the period beginning from financial year ending March 2004 (FY 2004) to FY 2007, revenue grew at CAGR of 58% and profit after tax (PAT) at CAGR of 113%. The Indian business process outsourcing (BPO) / KPO industry has also shown an annual growth of more than 50% over the last five years.
- Has three delivery centers in Mumbai with aggregate capacity of about 1,035 workstations. Entered into a memorandum of understanding with DLF Akruti Info Parks (Pune) for 75,000 square feet and a seating facility of 900 workstations as part of expansion. The first phase is expected to be operational in the March 2008 quarter (Q4) of FY 2008, with the remaining capacity to be made available in FY 2009. Intends to set up additional facilities in Chennai, National Captial Region (NCR), Pune and Mumbai. Explores options for acquisitions and strategic investment opportunities in companies with specific domain expertise operating in the US and Western Europe to expand the scope of existing services and add new clients/ geographic markets.
Weaknesses
- A substantial portion of the revenue comes from a small number of clients. The five largest clients accounted for more than 86% of the total income in the six months ended September 2007.
- Operates in an industry with very high attrition rate. The attrition rate was 37% in FY 2007. As a customised solution provider with high complexity of programs, has to incur high cost on specialised and critical training of employees.
Valuation
The rupee appreciation has impacted performance in recent past. Financial performance was good in FY 2007: revenue was up Rs 86.12 crore over FY 2006, with operating profit margin (OPM) 400 basis points (bps) down to 50.2% over FY 2006) and profit after tax (PAT) 69% higher to Rs 40.52 crore . However, the top line increased 16% on an annualised basis to Rs 50.15 crore, OPM dipped 1,100 bps to 39.2% and PAT down about 19% to Rs 16.47 crore in the six months ended September 2007 (H1) over the same period in 2006. The main reasons for such adverse performance was the significant appreciation of the rupee against the US dollar and increase in employee and personnel cost to 34.4% of revenue in H1 of FY 2008 from 28.50% of revenue in FY 2007.
At the lower band of Rs 270 per share, P/E works out to 15.9 times the annualised EPS of Rs 17.0 for the six months ended September 2007 on post-issue equity of Rs 19.40 crore. At the upper band of Rs 315 per share, P/E would be 18 times the annualised EPS of Rs 17.5 on post-issue equity of Rs 18.87 crore for the six months ended September 2007. There is no listed comparable peer KPO company. However, Firstsource Solutions, a major player (almost 10 times the size of eClerx Services and growing at a face pace) in the BPO industry, is trading at P/E of 15 times its annualised consolidated EPS.BGR Energy Systems IPO Analysis
BGR Energy Systems (BGR) was formerly known as GEA Energy Systems India. The company, promoted by B G Raghupathy and his family, is one of the leading engineering companies supplying balance of plant (BoP) equipment and systems to the power sector. It also caters to process industries such as oil and gas, refinery petrochemicals and the process industries.
Starting off with production and sale of on-line condenser tube leaning systems, debris filters and rubber cleaning balls used in thermal and nuclear power plants in joint venture (JV) with GEA Energietechnik GmbH of Germany, BGR set up its first manufacturing facility for energy products at Pannamgadu, Andhra Pradesh, in February 1987 and supplied these products in India and overseas between 1987 and 1993. In 1993, the promoter and members of his family became the sole shareholders of the company with the JV partner exiting the business of energy products globally. BGR then entered into a series of technical collaborations and sourcing arrangements with foreign licensors to expand its portfolio of products. These included GEA BTT (France) for design and manufacture of air-cooled heat exchangers, Crane Environmental Inc. (US) for design and manufacture of deareators; and Ariel Corporation (US) for selling of packaged gas compressors.
In 1997, BGR established its power projects business and, subsequently, pioneered the concept of BOP contracts for power projects. It won its first BOP contract in 2001 as a subcontractor to Bharat Heavy Electricals (Bhel) for a project offered by the Tamil Nadu Electricity Board. The company executed its first engineering, procurement, construction (EPC) contract for the 120-mega watt (MW) power plant (excluding one gas turbine) of Aban Power Company, a private independent power producer (IPP), in the year ending March 2006 (FY 2006). Since then, BGR has been able to secure BOP contracts of large value directly from state power-generating companies of Andhra Pradesh, Rajasthan and Maharahstra. Besides, it has started focusing on EPC contracts for captive power plants with a capacity up to 100 MW since 2006.
BGR is primarily into two business segments: turnkey EPC contracts for either BOP or entire power plants; and industrial products comprising supply of systems and equipment such as heat exchangers, pressure vessels, condensers, high frequency resistance welded finned tubes, deaerators, and pipeline equipment used in the power, oil and gas, refinery, petrochemicals, and process industries. The industrial products and turnkey contracts division accounted for 29.5% and 70.3% of revenue in FY 2007. The company has a manufacturing facility at Panjetty near Chennai for air-fin coolers; and production of heat exchangers, pressure vessels, reactors, columns, surface condensers and finned tubes manufactured by its subsidiary Progen Systems and Technologies (Progen).
End June 2007, BGR sold its energy products division as a business undertaking to GEA BGR Energy System India for Rs 25 crore. The energy product business sells on-line condenser tube cleaning systems, debris filters and sponge (rubber) cleaning balls to a range of EPCs, original equipment manufacturers and power plant companies. This business contributed about 8% to the standalone revenue of the company in FY 2007.
The air-fin cooler division sells finned tubes to GEA Cooling Tower Technologies (India) (GEAT) and procures cooling towers from the latter for its power and captive power contracts. Incidentally, the BGR owns only 1% stake in GEAT, while GEA, Germany, has a 51% stake and BGR’s promoters 48%.
BGR also owns 41% shares in Cuddalore Power Company. But the majority stake in this power company is with BGR’s promoter Raghupathy. It is an IPP developing a 2 x 660 coal-based power project, still in the development stage. The company signed a power purchase agreement with Tamil Nadu Electricity Board (TNEB) on 28 September 200, to sell all of its power on a take-or-pay basis.
To strengthen its position among competitors, BGR has entered into alliances for its different business segments. For instance, it has formed global marketing agreements with Samsung (air-fin coolers); Termomeccanica Ecologia, Italy, for environmental engineering; SK Engineering & Construction, Korea, to jointly explore opportunities in the domestic market for infrastructure projects; and Ariel Corporation for oil and gas equipment.
The objects of the issue are to augment long-term working capital requirement, expand the production capacity by establishing additional manufacturing facilities in the Mundra special economic zone in Gujarat, China and Bahrain in the Middle East, and to fund corporate expenditure. The plants to manufacture finned tubes in China and Bahrain will offer proximity to customers in that region.
Strengths
In the Indian power equipment space, BOP is the weakest link as there are limited players. Proven track record in project management backed by design and engineering capabilities augur well. Typically, the BOP package accounts for 40% of the power plant cost and power producer manufactures about 40% of the BOP equipment inhouse, giving BOP suppliers an edge. The extension of service to include EPC for the entire power plant and captive power plants has widened the canvas.
Has diverse complimentary products, services and project management capability. The only business group (including subsidiary Progen) in India capable of producing all three variation of finned tubes (extruded finned, embedded finned and welded finned tubes) for different applications. The welded finned tubes, however, are manufactured by Progen.
Consolidated order backlog was Rs. 3321.2 crore with about Rs 2507 crore of orders in the power sector and Rs 427 crore of orders in the oil & gas industry end September 2007. This offers revenue visibility.
Weaknesses
Alleging cartelisation to obtain a higher price, Bhel has banned business dealings for three years, as per its letter dated 1 March 2006.
Has relatively limited track record in the EPC segment for complete power plant, its thrust area going forward. Not backwardly integrated to manufacture critical boiler, turbine and generator (BTG) equipment. Hence, complex projects could pose a challenge.
Most of the products and services, largely catering to the power sector, are sold at a fixed price. There is no cushion of price variation available to insulate margin from the vagaries of fluctuation in metal and other input prices. About 89.80%, 79.10% and 94.05% of the total income in FY 2007 (18 months) and FY ended September 2005 and 2004 are fixed-price contracts.
Owns only 1% stake in technology-oriented GEAT, while promoter own a sizeable 48%. Both a vendor for and buyer from GEAT. Conflict of interest with promoters is, therefore, not ruled out. Though the Cuddalore Power Company has a lucrative take-or-pay clause with TNEB for power supply, there is just a minority stake in this company.
Valuation
BGR clocked consolidated net revenue of Rs 786.80 crore in FY 2007 (18 months), translating into an annualised growth of 77%. Net profit posted an annualised growth of 102% to Rs 40.81 crore. On post- issue equity of Rs 72 crore, EPS works out to Rs 3.70.
At the offer price band of Rs 425 – Rs 480 and on FY 2007 earning, P/E works out to 114.86 (on the lower band) and 129.73 (on the upper band). Sunil Hitech and Techno Electric are trading at P/E of around 36 times. However, BGR is relatively larger and has a more diversified profile. On the first quarter (ended June 2007) annualised EPS of Rs 9.7, BGR’s P/E stands at 43.8 and 49.5 times.
Market Close: Midcaps Steal the show!
Subdued trade after a good green opening but indices succumbed to selling pressure. Sessions continued to trade choppy in narrow range with indices juggling on both sides of the teritorry. Front line stocks had nothing big to surprise, however, SAIL, Tisco, BHEL rallied for the day. Small and Mid cap took away the charms from large caps they kept investors busy which saw huge volumes. Consumer Durables, Metals, PSU and Fertilizers counters were in action for the day while reality, IT and Banking counters slipped for the day. Crude below $ 90 per barrel has eased the oil marketing companies like HPCL, IOC and BPCL which had great day of rally. European indices continued to trade in red after a weak start.
Sensex closed lower by 74 points at 19529.5. Weighing on the Sensex were the losses in RIL (2863.8501,-2 percent), TCS (1029.55,-2 percent), ICICI Bk (1140.4,-2 percent), Satyam (440.9,-2 percent) and ONGC (1156.7,-1 percent). Losses were restricted by gains in TISCO (872.95,+4 percent), BHEL (2815.3999,+2 percent), Dr Reddys (657.75,+2 percent), Guj Ambuja (153.9,+1 percent) and L & T (4229.4502,+1 percent).
Freshtrop Fruits Ltd, a company into food processing industry was also a beneficiary of the boom witnessed today on the mid cap counter and got freezed in the uppar circuit. Freshtrop Fruits is a 100% export company. The major segment of revenue comes from export of grapes which is 65% of revenues, pomegranates accounting for 20% of revenues. The balance revenues are from mangoes and vegetables like bitter gourd, chilies, etc. It has 3 post harvest air-conditioned facilities in Satara, Nasik and Sangli with a total capacity of 75 metric tonnes per day. Valuations seem to be on the higher side as of now and are not justified considering the business model of the company. We have a note here too just have a look at it. Stock was up with decent volumes..
Maharashtra Seamless Ltd. (MSL) is one of the flagship companies of Jindal group. MSL has three divisions: Seamless Division, ERW Division and Power Division. MSL is one of the largest manufacturers of the seamless steel pipes and tubes with a production capacity 350,000MT. The company has in the process of expanding its seamless capacity by 43% to 500,000 MT by FY09. The current domestic demand for seamless pipes is around 500,000MT per year and is growing at a CAGR 10%. The estimated potential demand in India would be around 2.5 mn MT of seamless pipes which is almost Rs12500 cr in the next five years taking into account the realization at Rs 50000 per MT. MSL trades 12 times its FY09 earnings and we believe that the earnings are justified. One could accumulate this one from the long term period of view. Our note should convince you. Do read the note.. Stocks had great volumes and traded over 10% up.
TTK Prestige seem to be the pick of bargain hunters for the day as well as the stock was trading at higher levels. TTK prestige is known for its Pressure Cookers is one of the two large players in the pressure cooker market. TTK Prestige uses the umbrella branding of Prestige to cover several products in the kitchen like Non-stick cookware, Stoves, Kitchen Electrical Appliances such as hobs chimneys and now Modular Kitchens. The company now operates in a market size of over Rs 3000 Crores. In its Kitchen Electrical appliances the products include Mixer Grinder, Juicer, Rice Cooker, Hand Blender, Atta Kneader, Drink Maker and even Wet Grinder. The Company has freehold land of about 2.85 lakh sq.ft in Bangalore. This land became available as the Company's Plant was shifted from Bangalore to Coimbatore. The land is estimated at Rs.75-80 cr. Company looking at various options for the development of the land. Developments here are probable triggers. Company trades 9 times its earnings and is ideally suited for an investor with medium risk appetite and with long term capacity. Do read our note on the company to know why. We had a wow cal here which delivered more than 30% gains.
Technically Speaking: Ranged session for the day. Sensex made an intra day high of 19,704 and intra day low of 19,482. Advances out numbered declines in the ratio of 2:1. Volume for the day stood good at Rs 9,111 cr. Sensex has taken resistance at the expected level of 19700. We might see a correction upto 19230. Midcaps and small cap stocks are likely to rally further, but caution as we could be near the end of their rally as many laggards have started moving up.
Post Market Commentary
The market fell to close lower on the back of selling across the sectoral heavyweights. The benchmark indices slipped due to he profit booking across the counters while the BSE Mid Cap and Small Cap outperformed the benchmark indices to close with hand some gains. Though the market opened on a firm note but failed to retain the initial gains.The Metal, Capital Goods and Consumer durables indices remain the centre of attraction as most buying is seen from these stocks. The BSE Sensex fell 73.91 points to close at 19,529.50 and NSE Nifty closed lower by 6.65 points at 5,858.35. Overall, the market breadth was strong as 1,934 stocks are closed higher while 878 are closed lower. The BSE Mid cap and Small Cap surged 140.28 points and 170.31 points to close at 8,904.54 and 10,956.51 respectively.
BSE Metal Surged 588.04 points to close at 18,869.28. Pushed up by Maharas Seamless (12.37%), Jindal Steel and Power (9.27%), SAIL (8.53%), Jindal Stainless (5.44%), Tata Steel (4.08%) and JSW Steel (2.46%).
BSE Capital goods grew by 213.45 points to close at 20,175.93. Jumped by Lakshmi machines (6.74%), Alstom projects (5.83%), BHEL (1.96%), L&T (1.21%) and Siemens (1.37%).
BSE oil & gas index fell 135.09 points to closed at 12,651.10. Scrips that fell are Cairn India (2.37%), Reliance industries (2.33%), RPL (1.86%) and ONGC (1.28%) while IOCL (8.47%), HPCL (4.02%) and BPCL (4%) closed higher.
BSE Auto index closed up by 92.50 points at 5,639.08 as Ashok Leyland (7.86%), Exide Industries (3.38%), M&M (2.79%), TVS Motor (1.13%) and Tata Motors (0.77%).
BSE Power index closed higher by 24.27 points at 4,508.37. Scrips that grew are Tata power (3.48%), BHEL (1.96%), GVK Power (0.85%), Areva (0.74%) and Suzlon Energy (0.05%).
BSE IT index fell marginally by 6.45 points to close at 4,247.60 as TCS (2.22%), NIIT Techno (2%), Mphasis (0.92%) and HCL Tech.(0.34%).
Key indices slip, but mid-caps strong
Today, the market resumed on a positive note despite pale Asian and US markets. Action was mostly stock-specific. Lack of positive cues and inaction by investors kept the Sensex subdued throughout the day. The market exhibited range-bound moves till the afternoon, but a strong bout of selling towards the close saw the index touch the day's low of 19,482, down 121 points. However, buying at lower levels helped the Sensex to pare some of its losses and end the session with a loss of 74 points at 19,530. The Nifty closed the session at 5,858, down seven points.
The market breadth was very positive. Of the 2,864 stocks traded on the Bombay Stock Exchange (BSE), 1,934 stocks advanced, 878 stocks declined and 52 stocks ended unchanged. Except few, most of the sectoral indices ended in the green. The BSE CD index rallied sharply and gained 6.12% followed by the BSE Metal index (up 3.22%), the BSE Auto index (up 1.67%) and the BSE CG index (up 1.07%). However, the BSE Oil & Gas index slipped and dropped 1.06% followed by the BSE Bankex index (down 0.63%), the BSE IT index (down 0.15%) and the BSE Realty index (down 0.10%).
Among the major losers, Reliance slumped by 2.33% at Rs2,864, TCS plummeted by 2.22% at Rs1,030, ICICI Bank tumbled by 2.13% at Rs1,140, Satyam Computer shed 1.58% at Rs441, ONGC crashed by 1.28% at Rs1,157 and Ranbaxy dropped 1.13% at Rs388. However, Tata Steel surged 4.08% at Rs873, Mahindra & Mahindra jumped 2.79% at Rs772, BHEL zoomed 1.96% at Rs2,815, Ambuja Cement added 1.22% at Rs154 and L&T gained 1.21% at Rs4,229.
Over 2.48 crore shares of Ispat Industries changed hands on the BSE followed by Ashok Leyland (1.99 crore shares), IFCI (1.88 crore shares), Chambal Fertilisers (1.70 crore shares) and Tata Teleservices (1.69 crore shares).
Valuewise, Jindal Steel registered a turnover of Rs471 crore on the BSE followed by Essar Oil (Rs453 crore), Mundra Port (Rs331 crore), ONGC (Rs242 crore) and IFCI (Rs200 crore).
Small-cap, mid-cap indices shine
The market edged lower led by fall in index heavyweights Reliance Industries and ICICI Bank. Select IT stocks weakened. Tata Steel soared. Metal, consumer goods and auto stocks were in demand. The market breadth was strong. 19 out of 30 stocks from the Sensex pack were in red. Key Asian markets, except Singapore, were in green. European markets drifted lower as nervousness over the US economy and the credit crisis kept investors on the sidelines.
Investors were also cautious ahead of the discussion on the Indo-US nuclear deal, which will take place in the Rajya Sabha today (4 December 2007) where the Left is expected to sharpen its attack on the issue.
The 30-share BSE Sensex lost 73.91 points or 0.38% to 19,529.50. The Sensex hit a high of 19,707.86 in early trade. At day's high, the Sensex gained 104.45 points.
The broader based S&P CNX Nifty shed 6.65 points or 0.11% to 5858.35.
The BSE Mid-Cap index rose 1.60% to 8,904.54. The BSE Small-Cap index rose 1.58% to 10,956.51. Both these indices outperformed the Sensex.
Market breadth was strong. On BSE, 1934 stocks advanced, 878 stocks declined and 52 stocks remained unchanged.
BSE clocked a turnover of Rs 9111 crore compared to yesterday (3 December 2007)’s turnover of Rs 9,319.88 crore.
Nifty December 2007 futures were at 5889, a premium of 30.65 points as compared to spot closing of 5858.35.
NSE’s futures & options (F&O) segment turnover was Rs 56330.05 crore, which was higher than Rs 54816.50 crore on Monday, 3 December 2007
India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries fell 2.33% to Rs 2863.85. The stock came off session's high of Rs 2960.
The BSE Bankex fell 0.63% to 10,797.09. It underperformed the Sensex. India’s largest private sector bank by assets ICICI Bank fell 2.13% to Rs 1140.40.
Federal Bank declined 1.46% to Rs 330.20, Bank of India fell 1.30% to Rs 350.25, Karnataka Bank fell 0.63% to Rs 211.70, and State Bank of India declined 0.32% to Rs 2317.40.
Among gainers from the backing sector, Yes Bank spurted 7.37% to Rs 249.90, Punjab National Bank jumped 2.57% to Rs 643.55, Andhra Bank gained 1.90% to Rs 104.45 and Indian Overseas Bank rose 1.66% to Rs 175.
The BSE Metal index gained 3.22% to 18,869.28. It outperformed the Sensex. The world's sixth-largest steel maker Tata Steel soared 4.08% to Rs 872.95 after the chief of its Corus unit said the firm was planning to lift prices next year.
Vedanta group firm Sterlite Industries fell 1.45% to Rs 1066.65 on reports that Sterlite Energy (SEL), a subsidiary of the company, is in talks with private equity firms and financial investors to sell around 15% in the largest pre-IPO placement in the country. Citigroup Global Markets and DSP Merrill Lynch are advising Sterlite Energy on the transaction, which is expected to raise more than $1 billion from a clutch of investors.
Maharastra Seamless surged 12.37% to Rs 574.10, Steel Authority of India (Sail) gained 8.53% to Rs 284.90, Jindal Stainless gained 5.44% to Rs 238.30, and Hindalco Industries gained 1.15% to Rs 193.75.
The BSE Consumer Durables index jumped 6.12% to 6,083.04. It outperformed the Sensex. Videocon Industries surged 20% to Rs 590, Asian Star Company jumped 4.71% to Rs 1380, Rajesh Exports moved up 1.75% to Rs 921.05 and Titan Industries gained 1.16% to Rs 1568.90.
The BSE Auto index rose 1.67% to 5,639.08. It outperformed the Sensex. MICO surged 16.92% to Rs 5438.55, Ashok Leyland spurted 7.86% to Rs 50.75, and Hindustan Motors gained 4.26% to Rs 42.85.
India's top tractor maker by sales Mahindra & Mahindra rose 2.79% to Rs 771.85. The stock rose for the second day in a row after it reported on Monday, 3 December 2007, a 37% rise in vehicle sales in November 2007 over November 2006.
However, Maruti Suzuki fell 0.39% to Rs 1028.15 and Bajaj Auto declined 0.26% to Rs 2768.70.
Cement shares pared gains after the government today warned that it will crack down on the cement industry if it detects any cartelisation in the sector. ACC, India's largest cement maker in terms of capacity, fell 0.35% to Rs 1087.85, off day’s high of Rs 1117. The company said on Monday, 3 December 2007, its November 2007 cement shipments rose 3% to 1.58 million tonnes from 1.53 million tonnes a year earlier.
North India's largest cement maker Ambuja Cements rose 1.22% to Rs 153.90, off day’s high of Rs 160.90. The company said on Monday its November 2007 cement shipments rose 3.8% to 1.36 million tonnes from 1.31 million a year earlier.
JK Cements fell 1.19% to Rs 245.70, and Grasim Industries fell 0.68% to Rs 3813.50. Ultratech Cements declined 0.48% to Rs 994.
The BSE IT index fell 0.15% to 4,240.13. It outperformed the Sensex. TCS fell 2.22% to Rs 1054, Satyam Computers fell 1.58% to Rs 440.90, and I-Flex Solutions fell 1.78% to Rs 1508.85. India’s third largest software exporter by sales Wipro gained 0.68% to Rs 496.75. India’s second largest software exporter Infosys Technologies rose 0.86% to Rs 1614.50.
State run term lending institution Power Finance Corporation fell 0.40% to Rs 249.75 after its board approved to fix current exposure limit for lending purposes for government sector companies at 100% of its networth.
Media and entertainment firm Zee Entertainment rose 0.05% to Rs 306.95, off day's high of Rs 312.45. Zee group reportedly sold the international broadcast rights for its Indian Cricket League (ICL) matches to three global distributors for an estimated $10 million. The three distributors are Astro PPV -– a leading direct-to-home distributor for the South-East Asia region, the Sri Lanka-based Derana and Gateway, which reaches countries in Europe and the US, among others, the report added.
Media firm UTV Software Communications fell 2.77% to Rs 796.55 after the company decided to call off its association with Malaysian media company Astro Multimedia International. UTV Software and Astro had entered into a co-operation arrangement earlier this year via a company - GenX Entertainment - to to set up kids channels in Malaysia and Indonesia.
Textiles firm Pearl Global was locked at upper limits of 20% to Rs 100.55 after the firm struck a deal to jointly develop its Gurgaon property with a unit of DLF. The firm cancelled a similar earlier pact with Ansal Properties & Infrastructure.
Construction firm Hindustan Construction Company rose 3.36% to Rs 209.30 after its chairman and managing director said the firm is in talk with foreign players for airport development and float an infrastructure firm to invest in public private partnership.
Software firm Logix Microsystems fell 0.69% to Rs 310.25, off day's high of Rs 340 after it acquired a majority stake in Add-on-Auto LLC of the US for an undisclosed amount.
Media firm Dish TV India rose 0.81% to Rs 92.80, off day's high of Rs 97.25 after the direct-to-home satellite operator said its board will meet on Wednesday (5 December 2007) to consider equity capital infusion.
Engineering firm Dynamatic Technologies rose 0.56% to Rs 1710, off day's high of Rs 1,850 after the company said it had signed a deal with Spirit Aerosystems (Europe) to set up metallic precision assembly for Airbus aircraft, in Bangalore.
Jindal Steel & Power clocked the highest turnover of Rs 471.08 crore on BSE. Essar Oil (Rs 453.79 crore), Mundra Port & Special Economic Zone (Rs 331.86 crore), ONGC (Rs 242.72 crore) and IFCI (Rs 200.10 crore), were the other turnover toppers on BSE in that order.
Ispat Industries registered highest volumes of 2.48 crore shares on BSE. Ashok Leyland (1.99 crore shares), IFCI (1.88 crore shares), Chanbal Fertiliser & Petrochemicals (1.70 crore shares) and Tata Teleservices (1.69 crore shares), were the other volume toppers on BSE in that order.
European markets were weak in early trade. Key indices in France, Germany and UK were down by between 0.23% to 1.15%.
Most of the Asian markets were in green. Key indices in China, Hong Kong, Singapore, South Korea and Taiwan were up by between 0.18% to 0.97%. However, Japan's Nikkei 225 was down 0.95%.
US markets ended lower on profit booking on Monday, 3 December 2007. The Dow Jones industrial average slipped 57.15 points to 13,314.57. Broader stock indicators also settled lower. The S&P 500 index declined 8.72 points or 0.59% to 1,472.42, and the Nasdaq Composite index dropped 23.83 points or 0.90% to 2,637.13.
Oil rose on Tuesday, 4 December 2007 following signs that Organization of the Petroleum Exporting Countries (OPEC) will probably resist consumer nations' calls to pump more oil. US crude rose 34 cents a barrel to $89.65. London Brent crude was up 24 cents at $90.04.
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