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Thursday, December 06, 2007

Madras Cements , Ashok Leyland

Madras Cements
Cluster: Cannonball
Recommendation: Buy
Price target: Rs4,800
Current market price: Rs4,474

Price target revised to Rs4,800

Key points

  • Madras Cements’ topline grew by 23% year on year (yoy) to Rs500.12 crore. The topline rose on the back of a healthy 29% year-on-year (y-o-y) growth in realisations, which compensated for 5% y-o-y decline in volumes.
  • Variable costs per tonne jumped by 22.3% yoy on the back of a 27% y-o-y rise in power costs and 38% y-o-y rise in freight costs. Employee costs shot up by 38% yoy. Overall costs increased by 15% yoy translating into a per tonne rise of 21% yoy.
  • Higher realisations led the operating profits grow by 36% yoy to Rs214.5 crore and the operating profit margin (OPM) expand by 400 basis points to 42.9%. The earnings before interest, tax, depreciation and amortisation (EBITDA) per tonne zoomed to Rs1,548, the highest in the industry and the highest in the company’s history as well.
  • Interest cost and depreciation provision on a sequential basis remained more or less constant at Rs8.1 crore and Rs25.7 crore respectively.
  • Other income doubled to Rs2.8 crore as the company deployed the surplus cash. Consequently, profit after tax (PAT) rose by 34% yoy to Rs120 crore.
  • The company is expanding its capacity by 4 million metric tonne (MMT) to 10MMT by FY2009, as already mentioned in previous updates. The clinker unit at Jayanthipuram was commissioned in October 2007 as per schedule, whereas the 1MMT grinding unit at West Bengal has been delayed and will come up only in FY2009. The other 2MMT capacity expansion at Ariyalur is expected to come up at the end of Q2FY2009.
  • Taking cognisance of the realisation growth in the current quarter, we are upgrading our FY2008 earnings per share (EPS) estimate by 5.8% to Rs390 and FY2009 EPS estimate by 12.1% to Rs497.
  • 4MMT capacity expansion will drive the company’s volume growth going ahead. Healthy realisations in the South coupled with the company’s efforts on cost control will aid it in maintaining its EBITDA at an above-industry average, which in turn will drive the profitability. The company will also be able to avail tax benefits for setting up wind mills. The robust cash flow position of the company will make it well placed to withstand the downturn in the cement cycle. At the current market price, the company is trading at 9.1x its FY2009 EPS and 5.4x its enterprise value (EV)/EBITDA. With the rise in benchmark valuations, we are upgrading the price target to Rs4,800 per share.

Ashok Leyland
Cluster: Ugly Duckling
Recommendation: Hold
Price target: Under review
Current market price: Rs51

Disappointing sales

Key points

  • Ashok Leyland's total vehicle sales during November 2007 declined by 16.2% to 5,800 units as against 6,923 units in the same month a year ago. Sales in domestic market declined by 16.4%, whereas exports sales were also down by 13.7% for the month. Total sales declined by 15% month on month taking the year-till-date sales volume down by 3%.
  • Passenger or bus sales were flat year on year (yoy) at 1,465 vehicles. Orders from various State Transport Corporations, which drove the sales growth of this segment in the first half of FY2008 have slowed down in the second half.
  • Truck sales declined by 21% to 4,283 vehicles. Domestic sales declined by 20% yoy to 4,226 vehicles, while exports declined by 64% to 57 vehicles.
  • Truck sales were affected due to constrains on the availability of driver cabins and the price increase of 2-2.5% undertaken in October 2007. A new 49 tonne vehicle has been launched in the high growth tractor trailer segment with 'H' series engine.
  • The management has revised its guidance downwards for FY2008E to 91,000 vehicles from 100,000 vehicles. We estimate the volumes for FY2008 to be flat over FY2007 at 83,199. We also estimate a 14.4% growth for FY2009E to 95,138 vehicles.
  • The outlook for the commercial vehicle (CV) industry still appears to be weak. However, the company is trying to diversify itself by entering into joint ventures with Siemens VDO for infotronics and is tying-up with Nissan for the Light commercial vehicles. We maintain Hold on the stock.

UBS - Sensex - target 22,600 in 2008

Foreign brokerage UBS has raised its end-2008 target for the BSE Sensex from 19,000 to 22,600 saying economic growth, which is insulated from the global slowdown, will help companies report strong numbers.

In its India - Outlook 2008 report released here today, UBS said it has factored in higher valuations in an environment it believes will be characterised by both sustainable lower cost of capital and lower domestic political risk.

Putting aside investor concerns on excessive valuations due to the strong performance of the Indian markets in 2007, Manishi Raychaudhury of UBS's India Equity Research team said: "While a global economic slowdown and credit market dislocation could adversely affect Asian markets, the domestically-driven Indian market is relatively insulated."

The Sensex has surged nearly 42% from 13,942.2 to 19,795.87 today during this calendar year making several market watchers advice caution.
Says Raamdeo Agrawal, managing director, Motilal Oswal Securities: "There is all-round optimism across sectors, but this is built into the stock prices. Finding value at current prices is a difficult task."

Raychaudhuri sees a continuation of a strong investment cycle in infrastructure and industrial capex, the peaking of banks' lending and deposit rates - although he concedes that the central bank may not signal a peak in the cycle in the near term, and continued positive surprises in earnings and stable earnings growth as the key themes driving the market in 2008.

"Despite a mean reversion in earnings growth to between 20-22%, from between 30-35% in the last three years, price/earnings ratios of around 20 times are likely to be supported by earnings surprises from domestically-driven and interest rate-sensitive sectors as well as by a continuation of benign liquidity in the stock market," he added.

The UBS report noted that the market movement in 2007 has been narrow - driven by a small number of large stocks causing the valuation of frontline stocks in several sectors to appear steep. "We expect investors to rotate into less expensive sectors such as autos and metals as well as into cheaper stocks in those sectors that have outperformed," said Raychaudhuri.

On the downside, the report warns of the potential for an unexpected rise in inflation (possibly from global prices rising to a level that forces an upward adjustment in the cost of fuel domestically), and growth deceleration. In addition, increasing differences of opinion between the United Progressive Alliance and the Left parties has the potential to increase political uncertainty domestically and lead to an early general election though such concerns have receded recently.

Best Brokers, Research India Polls 2007

Best Brokers, Research India Polls 2007

Nicholas Piramal

Nicholas Piramal



Maharashtra Seamless - Acquisition of a seamless plant in Romania

Maharashtra Seamless - Acquisition of a seamless plant in Romania

Gateway Distriparks - (Company Update): Accumulate

Gateway Distriparks - (Company Update): Accumulate

Ispat Industries

Ispat Industries

India@Risk 2007

1) Economic impact of demographics — India is facing a demographic dividend. What must be done to ensure it does not turn into a demographic liability? Can the 'inequality trap' be overcome and inclusive growth achieved?

2) Loss of fresh water (quantity and quality) — How best can India cope with increasing freshwater insecurity?

3) Economic shocks and oil peaks — How vulnerable is India to external economic turbulence? What exogenous crises would risk derailing India's growth prospects (for instance, an oil price shock)?

4) Geopolitical risks: Globalisation versus protectionism — What happens if there is a backlash or retrenchment from globalisation? With the explosion of expectations, can India keep up with its own aspirations?

5) Climate change: The environment and challenges to India's growth — Can India balance the complex trade-offs between the environment and growth? What are the risks and opportunities for India?

6) Societal risks: Infectious diseases — What must be done to combat the spread of high-mortality disease and pandemics? What if India fails?

Tata Motors, Oil drilling, Cement

Tata Motors
Cluster: Apple Green
Recommendation: Hold
Price target: Rs792
Current market price: Rs772

Recovery still away

Key points

  • Tata Motors' sales for November 2007 stood at 46,947 vehicles. Total sales declined by 4.3% year on year (yoy) and 5% month on month (mom).
  • Commercial vehicle (CV) sales in the domestic market for the month grew by 4% to 26,895 vehicles. The sales growth of CV segment continues to be driven by the sales of light commercial vehicles (LCVs), which grew by 10% yoy. Medium and heavy commercial vehicle (M&HCV) sales were flat at 14,426 vehicles and continue to be affected by high interest rates and high base of last year.
  • Freight rates have started to pick up with the commencement of the festive season after remaining stagnant for last two months. Freight rates increased by 2% for the month and a further recovery is possible.
  • Passenger vehicle segment performed badly in November with domestic sales declining by 16% to 16,322 vehicles. Passenger car sales for the month declined by 21%. Indica sales declined by 19.6% yoy to 10,488 units, while Indigo sales fell by 29.5% yoy to 2,014 vehicles. The substantial decline in passenger car sales in November 2007 was due to the high base month of November 2006. Passenger car sales were higher in November 2006 due to full supply after the restoration of the company's paint shop, which had got damaged in a fire in late September 2006. Sales of Sumo and Safari grew by 7% yoy to 3,820 units mainly driven by the sales of the recently launched Safari Dicor VTT, which recorded a 55% sales growth with 1,775 units.
  • Export sales for the month declined by 1.7% yoy and 12% mom to 3,730 vehicles. Export sales as a percentage of total sales volume was down to 7.9%, the lowest in the year as compared with the highest of 12.4% in June 2007.
  • We continue to take a very cautious outlook of CV industry considering the high base of last year, the lower availability of finance and the delinquencies in the sector. Some momentum has been witnessed in the segment with the beginning of the festive season, but high inventory in the system would restrict the growth in the current year. In the passenger vehicle segment the company will continue to lose market share due to lack of new product launches.
  • The company's plans to acquire Jaguar and Land Rover is also a cause for concern, as these acquisitions would not be value accretive. The estimated acquisition price of $1.5 billion could strain the company's balance sheet in addition to its huge capital expenditure plan.
  • At the current market price of Rs772, the stock discounts its FY2009E consolidated earnings by 12.2x and is available at an enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA) of 6.1x. We maintain our Hold recommendation on the stock with a price target of Rs792.


Oil drilling

Adding fuel to fire
It couldn’t have been better for oil drilling companies. The charter rates for drilling rigs are already at a record high level due to a favourable supply-demand scenario. In fact, the day rates have increased by as much as 200% to 300% (depending on the asset specification) over the past three years. For instance, an offshore rig (350-feet-jack-up rig) has been contracted at day rates of over $2,00,000, up from around $75,000-80,000 couple of years back.


ACC, Ambuja Cements sales up during November
The outlook for the cement sector is buoyant. Going forward we will witness rise in volumes as construction activity catches full steam in December and continues its momentum in the fourth quarter as well. Rising cement demand will push up the prices gradually. We have already seen the first such price hike, after the resumption of construction activity post monsoon, in Maharashtra and Andhra Pradesh. We see this trend to continue across other regions going forward. Price hike and higher volumes in the coming months will be a major trigger for the cement stocks.

Eveninger - Dec 6 2007

Eveninger - Dec 6 2007

Gulshan Sugars, Ahluwalia Contracts

Gulshan Sugars, Ahluwalia Contracts

Post Session Market Commentary

After rising to previous peaks at the start of the session, key indices ended with marginal gains on Thursday as investors sold for profits at higher levels.

“Frontline stocks have been in consolidation mode over the past week, so investors used today’s rise to book some profits. Technical indicators also showed the market was in an over bought zone in the morning, so the momentum eased in the latter half of the day. But the undertone remains strong; there are no signs of weakness,” said Suresh Kumar Iyer, technical analyst at Asit C Mehta Investment Interrmediates.

The National Stock Exchange’s Nifty soared to an all-time high of 6027.05 before settling at 5954.7, up 15 points or 0.25 per cent from the previous close.

The Bombay Stock Exchange’s Sensex ended up 58 points or 0.29 per cent at 19,795.87. From an intra-day high of 20,064.31, the index dipped to 19,716.57 before the close.

Hindalco Industries (down 3.11%), Grasim Industries (3.07%), Bajaj Auto (2.57%), HDFC Bank (2.41%) and Tata Steel (2.1%) were the biggest laggards.

However, heavyweights like ICICI Bank (up 3.24%), Reliance Energy (3.13%), HDFC (2.63%), Bharti Airtel (2.3%) and Infosys Technologies (1.97%) supported indices.

Real estate shares marched ahead despite a reversed trend in the rest of the market, adding3.58 per cent to the BSE Realty Index. Omaxe climbed 12.2 per cent, Unitech advanced 9.82 per cent Peninsula Land rose 6.62 per cent and Sobha Developers gained 2.12 per cent.

Stocks in the mid-cap space also ended weaker, snapping up a week-long rally. Jindal Saw shed 5.25 per cent, Godrej Consumer Products lost 4.96 per cent, Exide Indus slipped 3.96 per cent, Escorts dropped 3.88 per cent, Neyveli Lignite slipped 3.49 per cent and Arvind Mills fell 3.46 per cent.

The BSE Mid-cap Index ended down 0.21 per cent while the CNX Mid-cap Index finished flat.

The market breadth showed 1805 gainers and 1043 losers on BSE, while on NSE, 676 shares rose and 524 fell.

Key indices Asia ended with significant gains. The Nikkei was up 1.7 per cent, the Hang Seng up 1.1 per cent and the Straits Times up 1.08 per cent.

Stocks in Europe also posted gains with the FTSE, CAC and DAX trading about a per cent higher.



Post Market Commentary

The market closed marginally higher after paring most of its initial gains. The market opened on a strong note but failed to sustain all its gains and fell to close with little gains on the back of heavy selling across the sectoral indices scrips. The market lost most of its grounds towards the end of the session as selling intensified. Most buying is seen from the Realty baskets. The BSE Sensex touched an intraday high of 20,064.31 and low of 19,716.57 during the trading session. The BSE Sensex closed higher by 53.27 points at 19,791.34 and NSE Nifty closed up by 14.7 points at 5,954.70. Overall, the market breadth was strong as 1805 stocks are closed higher while 1043 are closed lower. The BSE Small Cap grew by 71.89 points 11,343.85 while BSE Mid cap slipped by 24.17 points to close at 9,028.66.

BSE Realty index surged 318.08 points to close at 11,271.88. Scrips that jumped are Omaxe (12.20%), Unitech (9.82%), Penland (6.62%), Anantraj (2.33%), Sobha developers (2.12%).

BSE Bankex index grew by 87.68 points to close at 11,108.28 as Canara Bank (3.25%), ICICI Bank (3.24%), Oriental Bank (0.99%), SBI (0.55%) and Kotak Bank (0.18%) closed higher

BSE Capital goods dropped by 26.02 points to close at 20,377.24. Pushed it down by Kalpataru power (1.93%), AIA Engineering (1.58%), Areva (1.95%), BHEL (1.30%) and BEML (1.26%).

BSE Oil & Gas index closed down by 104.16 points at 12,835.83. Scrips that fell are Indian Oil (2.66%), BPCL (1.71%), ONGC (1.15%), HPCL (1.13%) and Essar Oil (0.98%).

BSE Metal closed lower by 123.01 points to close at 18,921.21. Scrips that dropped are Jindal Saw (5.25%), Hindalco Industries (3.11%), SAIL (2.85%), Tata Steel (2.10%), Bhusan Steel (1.89%) and Jindal Stain (1.51%).

BSE IT index closed up by 34.87 points at 4,266.90 as Tech Mahindra (4.24%), Rolta India (3.25%), Moser Baer (2.12%), Infosys (1.97%), Patni computers (1%) and I-Flex (0.69%) closed in green

Sensex gains 58 points

The market showed a solid performance in today's trades. The Nifty crossed the 6,000 mark again after November 1 in the morning trades and touched the all-time high of 6,027. The Sensex also opened firm at 20,018, up 222 points, tracking global markets which were up around 1% in early trades and touched the day's high of 20,064 quickly. The market remained firm thereafter on sustained buying in realty and pharma stocks. However, the heavy bout of selling towards the close dragged the market into the red and the Sensex touched the day's low of 19,717. But, buying at lower levels helped the Sensex to recover most of its losses and enter into positive territory again. The Sensex finally closed at 19,796, up 58 points, while the Nifty ended the session at 5,955, up 15 points.

The broader market continued to remain in the green. Of the 2,887 stocks traded on the Bombay Stock Exchange (BSE), 1,805 stocks advanced, 1,043 stocks declined and 39 stocks ended unchanged. Most of the sectoral indices ended in the green. The BSE Realty index was the biggest gainer and moved up by 3.59% at 11,347 followed by the BSE HC index (up 1% at 11,950). However, the BSE CD index dropped 2.95% at 6,043 and the BSE PSU index was down 1.34% at 9,961.

Select heavyweights attracted buying support. Cipla surged 4.89% at Rs199, ICICI Bank rose 3.24% at Rs1,199, Reliance Energy jumped 3.13% at Rs1,947, HDFC added 2.63% at Rs2,813 and Bharti Airtel moved up by 2.30% at Rs940. Among the laggards Hindalco was down 3.11% at Rs193, Grasim declined by 3.07% at Rs3,680, Bajaj Auto shed 2.57% at Rs2,728 and HDFC Bank dropped 2.41% at Rs1,686.

Over 5.98 crore Ispat Industries shares changed hands on the BSE followed by Reliance Petroleum (2.29 crore shares), Tata Teleservices (2.25 crore shares), Chambal Fertilisers (1.84 crore shares) and IKF Technologies (1.82 crore shares).

Reliance Petroleum topped the value list with a turnover of Rs529 crore on the BSE followed by Ispat Industries (Rs438 crore), Reliance Energy (Rs322 crore), Reliance Natural Resources (Rs273 crore) and Unitech (Rs207 crore).

Sensex adds 58 points in volatile trade

Though the market ended in the green, it came off higher level as index heavyweight Reliance Industries slipped. Volatility on the bourses was high today. ICICI Bank edged higher. Cipla surged. Consumer durables stocks dwindled. Realty stocks were the star performers in today’s trade. Market breadth was strong. 18 out of 30 stocks from the Sensex pack were in green. European markets, which opened after Indian markets, were trading firm. Key Asian indices, except China, were in green.

The 30-share BSE Sensex rose 57.80 points or 0.29% to 19,795.87. Sensex hit a low of 19,716.57 in late trade. At day's low, Sensex had shed 21.50 points for the day. Sensex had hit a high of 20,064.31 in early trade. At day's high, Sensex had gained 326.24 points.

Sensex had hit all-time high of 20,238.16 on 30 October 2007 but was not able to sustain at higher levels and it is yet to close above the physcological 20,000 level. The Sensex’s all time closing high is 19,977.67 on 29 October 2007.

The broader S&P CNX Nifty rose 14.70 points or 0.25% to 5954.70.

The BSE Mid-Cap index fell 0.21% to 9,033.76. It underperformed the Sensex. The BSE Small-Cap index was up 0.79% to 11,360.73. It outperformed the Sensex.

Market breadth was strong. On BSE, 1805 stocks advanced, 1043 stocks declined and 39 stocks remained unchanged.

BSE clocked a turnover of Rs 9712 crore compared to yesterday (5 December 2007)’s turnover of Rs 9,410.33.

Nifty December 2007 futures were at 5984, a premium of 29.30 points as compared to spot closing of 5954.70.

NSE’s futures & options (F&O) segment turnover was Rs 66472.74 crore, which was higher than Rs 57522.12 crore on Wednesday, 5 December 2007

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries fell 0.97% to Rs 2874.55, off day’s high of Rs 2955. The company and Kuwait Petroleum (KPC), the national oil major of Kuwait, have reportedly begun the first round of discussions for scripting a mega joint collaboration across the oil and gas vertical. KPC is keen to rope in RIL as a partner in its upcoming projects in Kuwait in both refining and petrochemicals.

The BSE Realty index was up 3.59% to 11,347.36. It outperformed the Sensex. Sobha Developers gained 2.12% to Rs 909.15, DLF rose 1.71% to Rs 971.25 and Indiabulls Real Estate jumped 0.93% to Rs 666.25

Real estate developer Omaxe soared 12.20% to Rs 482.05. Omaxe today said a consortium comprising the company, GVK Power & Infrastructure and Nagarjuna Construction Company has put in a bid for development of 8-lane access controlled expressway project in Uttar Pradesh (UP). The Rs 30,000 crore project named Ganga Expressway Project would be constructed on the banks of river Ganga to connect eastern and western UP.

India’s second largest realty firm by market capitalization Unitech soared 9.82% to Rs 431.15 on reports it may hive off its retail business i.e. the mall development business as a separate company.

The BSE Bankex rose 0.80% to 11,108.28. It outperformed the Sensex. India’s largest private sector bank by assets ICICI Bank rose 3.24% to Rs 1199.30.

Centurion Bank of Punjab jumped 7.73% to Rs 48.80, Canara Bank soared 3.25% to Rs 300, Oriental Bank of Commerce gained 0.99% to Rs 270.55 and State Bank of India rose 0.55% to Rs 2396.60.

Consumer durables stocks fell sharply. The BSE Consumer Durables index fell 2.95% to 6,042.74. It underperformed the Sensex. Videocon Industries slumped 6.73% to Rs 572, Gitanjali Gems fell 2.15% to Rs 446.10, Titan Industries declined 1.55% to Rs 1565.40, and Blue Star shed 1.16% to Rs 469.05.

The BSE IT index rose 0.83% to 4,267.15. It outperformed the Sensex. India’s second largest software exporter Infosys Technologies gained 1.97% to Rs 1634.90.

Patni Computers gained 1% to Rs 328.95, and TCS rose 0.25% to Rs 1034.20. However, Wipro fell 1.12% to Rs 493.40 and Satyam Computers declined 0.44% to Rs 436.80.

The BSE Power index was up 0.41% to 4,560.10. It outperformed the Sensex. Reliance Energy jumped 3.13% to Rs 1946.60, Gujarat Industries Power gained 1.67% to Rs 112.30, and NTPC rose 0.35% to Rs 245. Tata Power was steady at Rs 1311.05.

Power generation and supply firm GVK Power & Infrastructure surged 6.17% to Rs 840.90 after its board approved a 10-for-1 stock split.

Direct-to-home broadcast service provider Dish TV declined 0.32% to Rs 93.95, off day’s high of Rs 102.10 after the company said after market hours on Wednesday (5 December 2007) that Kishore Biyani’s Indivision Capital, the private equity arm of Future Capital, would buy 4.9% in in the company for Rs 250 crore.

Maharashtra Seamless (MSL), the flagship company of DP Jindal Group, rose 0.31% to Rs 581.70 after the company said it is acquiring a seamless pipes plant in Romania having a capacity of 2 lakh tonnes per annum.

Drug maker Glenmark Pharmaceuticals jumped 3.98% to Rs 503.80. The company reportedly plans to acquire a distribution and marketing company in Indonesia, in a bid to increase its foothold in Asia’s emerging markets.

Steel maker JSW Steel rose 3.31% to Rs 1166.85 after the company said on Wednesday, 5 December 2007, its crude steel production rose 16% in November 2007 over November 2006.

Apparel firm House of Pearl soared 5.60% to Rs 276.30 after it acquired UK fashion retailer FX Imports.

Essar Steel, part of the Essar Group, was locked at upper limit of 20% at Rs 71.10 following an order passed by Securities Appellate Tribunal prohibiting the firm from delisting.

Pharmaceutical packaging material maker Essar Steel fell 2.76% to Rs 1282, off day’s high of Rs 1398 after the company signed a deal to set up a Rs 88.40 crore clinical supplies unit in Wales.

Reliance Petroleum clocked highest turnover of Rs 529.63 crore on BSE. Ispat Industries (Rs 438.36 crore), Reliance Energy (Rs 322.51 crore), Reliance Natural Resources (Rs 273.25 crore) and Unitech (Rs 207.29 crore), were the others turnover toppers on BSE in that order.

Ispat Industries registered the highest volumes of 5.98 crore shares on BSE. Reliance Petroleum (2.29 crore shares), Tata Teleservices (2.25 crore shares), Chambal Fertilisers and Petrochemicals (1.84 crore shares) and IKF Technologies (1.82 crore shares), were the others volume toppers on BSE in that order.

In Europe, key indices in UK, France and Germany were up between 0.37% to 1.01%.

Asian markets climbed today, 6 December 2007. Key indices in Hong Kong, Singapore Ssouth Korea, Taiwan and Japan were up by between 0.20% to 1.70%. However, China’s Shanghai Composite fell 0.15%.

US markets surged on Wednesday, 5 December 2007, led by rally in large-cap tech and financial stocks. Data that showed that US companies added staff in November 2007 at the fastest pace in a year, and worker productivity rose at the strongest rate in four years in the third quarter, helped ease recession fears, which boosted the bourses. The Dow Jones industrial average jumped 196.23 points, or 1.48%, to 13,444.96. The S&P 500 index gained 22.22 points, or 1.52%, to 1,485.01, while the Nasdaq Composite index advanced 46.53 points, or 1.78%, to 2,666.36.

Oil prices fell for a third straight day in New York, hitting a six-week low, boosted by an unexpected surge in US stockpiles. Crude oil for January 2008 delivery dropped as much as 96 cents, or 1.1%, to $86.53 a barrel in after-hours electronic trading on the New York Mercantile Exchange.

European Central Bank and Bank of England meet today, 6 December 2007, seperately to consider interest rate. The US Federal Reserve will meet on 11 December 2007 to consider interest rates. Fed is likely to reduce Fed funds rate by 25 basis points to 4.25% as the country's economy is slowing down and money markets are strained. It has already cut the Fed funds rate two times in the last three months.

Trading Calls

Buy Gail with a stop loss of Rs 446 for a target of Rs 550.

Buy IndusInd Bank with a stop loss of Rs 116 for a target of Rs 150.

Buy IDBI only on declines with a stop loss of Rs 163 for a short-term target of Rs 190-200.

Morning Report - Dec 6 2007

Morning Report - Dec 6 2007

Morning Call

Market Grape Wine :

In House :

Nifty at a resis of 5977 and 6015. Mkt to open gap up.

Intra Day: Buy Divis Lab above 1812 with a TGT of 1890 and a SL of 1784

Buy Axis Bank above 958 with a TGT of 980 and a SL of 949

F&O: Buy NTPC above 248 with a TGT of 260 and a SL of 242

Buy Dena bank above 90 with a TGT of 100 and a SL of 86

Out House :

Markets at a support of 18595 & 18881 levels with resistance at 19191 & 19291 levels .

Buy : LT & RIL

Buy : RelCap & RNRL

Buy : JpAsso bullet

Buy : Godrej & Akruti

Buy : SKumar & ABAN

Buy : IBUllsreal bullet

Buy : MRPL & EssarOIL

Buy : Kotak & SBIN bullet

Buy : JPHYDRO & IOlBroad

Dark Horse : JpAsso , IBullReal , GeShipping , RNRL , Akruti , SBIN & JpHydro

Bullet for the Day : Jphydro , AshokLeyland & VideoInd

Market Mantra and Future-O-Scope - Dec 6 2007

Market Mantra and Future-O-Scope - Dec 6 2007

Daily Call - Dec 6 2007

Daily Call - Dec 6 2007

Sensex may retest 20,000 mark

The Sensex may retest 20,000 mark today, on the back of strong global cues. It hit an all time high of 20,238.16 on 30 October 2007 but was not able to sustain at higher levels and is yet to close above the physcological 20,000 level. The Sensex’s all time closing high is 19,977.67 on 29 October 2007.

The 30-share BSE Sensex surged 208.57 points or 1.07% to 19,738.07, on Wednesday 5 December 2007. On the same day, the broader based S&P CNX Nifty gained 81.65 points or 1.39% to 5940, a record closing high. It had struck all-time high of 6011.95 on 1 November 2007.

The European Central Bank’s and Bank of England meet today, 6 December 2007 to consider interest rate. While the US Federal Reserve will meet on 11 December 2007. It is likely to reduce Fed funds rate by 25 basis points to 4.25% as the country's economy is slowing down and money markets are strained. It has already cut the Fed funds rate two times in the last three months.

Asian markets climbed today, 6 December 2007. Hang Seng (up 1.66% at 29,833.93), Japan's Nikkei (up 1.50% at 15,842.92), Taiwan's Taiwan Weighted (up 0.92% at 8,757.13), Singapore's Straits Times (up 1.05% at 3,597.60) and South Korea's Seoul Composite (up 1.09% at 1,959.23) all edged higher.

US markets surged on Wednesday, 5 December 2007, as large-cap tech stocks led the gains on analyst reports that demand for computers and software will increase. The Dow Jones industrial average jumped 196.23 points, or 1.48%, to 13,444.96. The S&P 500 index gained 22.22 points, or 1.52%, to 1,485.01, while the Nasdaq Composite index advanced 46.53 points, or 1.78%, to 2,666.36.

As per provisional data, foreign institutional investors (FIIs) purchased shares worth a net Rs 480.18 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 159.71 crore on Wednesday, 5 December 2007, in cash market.

FIIs were net buyers of index futures to the tune of Rs 202.73 crore while they were net buyers of index options worth Rs 65.82 crore. They were sellers of stock futures to the tune of Rs 1051.89 crore and sold stock options worth Rs 16.43 crore.

Oil prices fell for a third straight day in New York, hitting a six-week low, boosted by an unexpected surge in U.S. stockpiles. Crude oil for January delivery dropped as much as 96 cents, or 1.1%, to $86.53 a barrel in after-hours electronic trading on the New York Mercantile Exchange.

Transformers and Rectifiers, Brigade Enterprises, eClerx

eClerx Services 270 to 315 60 to 65

BGR Energy 425 to 480 375 to 380

Transformers & Rectifiers 425 to 465 280 to 290

Brigade Enterprises 351 to 390 100 to 110

Jyothy Lab. 690 215 to 220

Burnpur Cement Ltd. 12 5 to 6

Edelweiss 825 675 to 700

Renaissance Jewellery 150 18 to 20

Kolte Patil 145 75 to 80

Kaushalya Infra 60 10 to 12

Pre Market Watch

The Market is likely to have positive opening on the back of strong global cues. The market yesterday closed on a strong note as a result of selective buying across the sectoral indices scrips. However, the BSE Small cap outperformed the benchmark indices as most buying is seen from these baskets. On Wednesday, the BSE Sensex surged 208.57 points to close at 19,738.07 and NSE Nifty closed higher by 81.65 points at 5,940. We expect that the market to gain some grounds during the trading session.

On Wednesday, the US market closed in positive territory. The DJIA closed up by 196.23 points at 13,444.96. The S&P 500 index grew by 22.22 points to close at 1,485.01 and NASDAQ advanced by 46.53 points to close at 2,666.36.

Indian ADRs ended in positive territory. In technology sector, Infosys gained 2.80% along with Satyam by 2.69% , Patni computers by 2.40% and Wipro by 0.48%. In banking sector, HDFC bank and ICICI bank advanced by (4.46%) and (2.51%) respectively. In telecommunication sector, MTNL and VSNL grew by (6.15%) and (4.76%).

The major stock markets in Asia are trading firm. Hang Seng is trading up by 488.48 points at 29,833.93. Japan''s Nikkei is trading higher by 234.04 points at 15,842.92. Taiwan Weighted advanced by 80.18 points to trade at 8,757.13. Seoul Composite is trading at 1,959.23 up by 21.03 points. Singapore Strait Times inched up by 37.55 points to trade at 3,597.60.

The FIIs stood as the net buyer on Wednesday both in equity and Debt. The gross equity purchased was Rs3,974.10 Crore and the gross debt purchased was Rs369.50 Crore while the gross equity sold stood at Rs3,954.60 Crore and gross debt sold stood at Rs107.60 Crore. Therefore, the net investment of equity was Rs19.50 Crore and net debt was Rs262 Crore.

Today, Nifty has support at 5,892 and resistance at 6,028 and BSE Sensex has support at 19,586 and resistance at 20,019.

Market may add gains

Most of the leading Asian indices are currently trading with a gain of over 1% each. The surge in the US markets on the back of strong economic news and hoping that the Fed may cut interest rates again in its next policy meeting may help the market log gains. FIIs turning net buyers in equities and fall in the oil prices may boost the market sentiment. Among the key local indices, the Nifty has a strong support at 5750, while on the upside the index could test higher level around 6200. The Sensex has a likely support at 19300 and may face resistance at 21000.

The Dow Jones soared about 200 points on Wednesday, on a mix of strong economic news and hopes that the Federal Reserve will cut interest rates again at its policy meeting next week. While the Nasdaq surged by 47 points at 2666.

Indian ADRs witnessed strong buying support on US bourses. MTNL notched up significant gains and soared over 6% . The other Indian floats, Tata Motors, HDFC Bank and VSNL surged over 4% each. while Infosys, Satyam, Patni Computer and Dr Reddy's were up around 1-2% each.

Crude oil prices slipped marginally. The US light crude oil for January series declined by 83 cents at $87.49 a barrel. In the commodity space, the Comex gold for February delivery slipped by $3.90 to settle at $803.70 an ounce.

Trading Calls

Nifty (5940) Sup 5869 Res 6013

Buy ICICI Bank (1164) SL 1152 Target 1186, 1191

Buy Crompton Greaves (425) SL 420 Target 435, 437

Buy Cummins (419) SL 414 Target 427, 430

Buy Canara Bank (290) SL 285 Target 298, 301

Sell Hero Honda (695) SL 702 Target 682, 680

20K…World is our strength!

The world breaks everyone, and afterward, some are strong at the broken places.

After going through a topsy turvy ride for most part of November, stocks have begun the last month of the calendar year on a better note. Despite the nagging worries over the US housing sector and slowing FII inflows, the Sensex seems headed towards the 20k mark yet again. It needs another 260-odd points to reach the milestone. Given the bullish global cues this morning and renewed buying yesterday by the FIIs, it may well make new lifetime high today itself.

Over the past few weeks we have seen that the small- and mid-cap stocks have taken the limelight away from the large caps. Though the same trend may well continue for a while, one should not write off the frontline shares. Fresh buying may emerge in these scrips, especially today when world equity markets are smiling again.

There is a growing feeling that the Fed and the US Government will oblige the markets and will announce measures to bailout the ailing housing sector. If this indeed materialises, there is a strong case for a fresh rebound in equities across the world.

For the day you can ignore concerns of any unforeseen events, particularly in the US. The bulls will largely remain in command today. We see a gap-up opening and possibly a new high for the Sensex today or tomorrow.

US stocks rallied on Wednesday, with the Dow Jones rising by nearly 200 points, spurred by strong economic news and continuing bets that the Federal Reserve will cut interest rates again at its policy meeting next week.

Microsoft, Oracle and Intel led technology shares higher for the first time in four days on analyst reports that demand for computers and software will increase. Freddie Mac gained as the Treasury Department agreed on an agreement with lenders to stem subprime defaults by freezing rates.

AIG jumped after saying its investments linked to the housing market are manageable.

The Standard & Poor's 500 Index added 22 points, or 1.5%, to 1,485.01, the highest in a month. The Dow gained 196 points, or 1.5%, to 13,444.96. The Nasdaq Composite Index rose 47 points, or 1.8%, to 2,666.36.

Market breadth was positive. Four stocks gained for every one that fell on the New York Stock Exchange.

The Labor Department said worker productivity rose the most since 2003 in the third quarter while labor costs posted the biggest drop in four years. A report from ADP Employer Services showed companies last month added 189,000 jobs, more than triple the average forecast

October factory orders rose 0.5% from an upwardly revised 0.3% in the previous month, the government reported. However, the ISM index on the service sector fell to 54.1 in November from 55.8 in October. Economists had been looking for a reading of 55.

Thursday brings the latest interest-rate policy decisions from the Bank of England and the European Central Bank, as well as the US weekly jobless claims report.

Crude oil futures erased earlier gains and closed below $88 per barrel after the Organization of Petroleum Exporting Countries (OPEC) opted to keep production ceilings unchanged and crude inventories in the US fell to near two-year lows.

Treasury prices eased, boosting the yield on the 10-year to 3.94% from 3.89% late on Tuesday. In currency trading, the dollar gained versus the euro and the yen. COMEX gold for February delivery fell $3.70 to settle at $803.70 an ounce.

Across the Atlantic, stock benchmarks in Europe ended a two-session losing streak as shares of commodity firms rebounded and many economists predicted an imminent rate cut for the UK as well as Europe. The pan-European Dow Jones Stoxx 600 index climbed 1.7% to 369.60.

The UK's FTSE 100 posted its biggest one-day gain since August, up 2.8% at 6,493.80, while the German DAX 30 rose 1.7% to 7,944.77 and the French CAC-40 advanced 2% to 5,659.07.

The emerging markets also closed with solid gains. The Bovespa in Brazil jumped 2.3% to 64,927 while the IPC index in Mexico advanced 2.5% to 30,761. The RTS index in Russia gained 2.6% at 2262 and the ISE National-30 in Turkey surged 3.1% to 70,556.

Most Asian markets were trading strong this morning, gaining between 1-2%. The Nikkei was up 234 points to 15,842 while the Hang Seng in Hong Kong jumped 438 points to 29,783. The Kospi in Seoul gained 22 points to 1960 and the Straits Times in Singapore was up 42 points to 3602.

Samsung Electronics led gains among exporters after reports showed that US productivity and jobs rose. Mitsubishi UFJ Financial advanced among banks on expectations that US regulators and lenders have agreed on measures to contain subprime-mortgage losses that threaten global growth.

The MSCI Asia Pacific Index added 1.1% to 164.17 as of 10:15 a.m. in Tokyo, heading for its highest close since Nov. 7. Most other markets open in the region advanced.

Bulls closing in on 20k again

It was a strong session as bulls rebounded and ended the day with healthy gains, shrugging off weak cues from the US markets. After positing a strong start key indices turned range bound till the mid noon session. Although, bulls marched ahead as strong close in the Asian markets and firm cues from the European markets lifted the sentiments.

Mid-Cap steel stocks shined scrips like Uttam Galva, Sunflag Iron and Essar Steel were among the major gainers. Ispat Industries, Apar industries, Hindustan Motors and WWIL were among the stocks in limelight.

Finally, 30-share Sensex ended 208 points higher to close at 19,738 and Nifty closed at 5,943 adding 81 points.

HDFC ended flat at Rs2739 after the Indian mortgage lender partly owned by Citigroup Inc., announced loans grew at 28-29% in the last two months. The scrip touched an intra-day high of Rs2754 and a low of Rs2720 and recorded volumes of over 13,00,000 shares on NSE.

IOC surged by over 3% to Rs617 after the company announced that the crude oil in Cairn India’s Rajasthan block may be waxy, but it has found it to be sweet. The scrip touched an intra-day high of Rs632 and a low of Rs600 and recorded volumes of over 19,00,000 shares on NSE.

Gujarat Ambuja also ended flat at Rs154. Holcim increased its stake in the company to ~46% by buying 5% through an open offer. The scrip touched an intra-day high of Rs155 and a low of Rs152 and has recorded volumes of over 15,00,000 shares on NSE.

Sintex Industries marginally slipped by 0.2% to Rs454. Reports stated that the company is likely to raise over Rs18bn through issue of securities in Domestic as well as International Markets. The scrip touched an intra-day high of Rs463 and a low of Rs440 and recorded volumes of over 1,00,000 shares on NSE.

Bajaj Auto gained 1.5% to Rs2803 after reports stated that the company is considering picking up majority stake in Austria KTM. The scrip touched an intra-day high of Rs2825 and a low of Rs2740 and recorded volumes of over 2,00,000 shares on NSE.

REL marginally slipped 0.5% to Rs1889. Reports stated that the company would raise funds through FCCBs at a premium to current market rates. The scrip touched an intra-day high of Rs1925 and a low of Rs1875 and recorded volumes of over 17,00,000 shares on NSE.

Indian Hotel gained 4.5% to Rs143 after Ginger Hotel a chain of The Indian Hotel Company earmarked an investment of Rs220cr by March 2008. The scrip touched an intra-day high of Rs144 and a low of Rs137 and recorded volumes of over 23,00,000 shares on NSE.

Pharma stocks were back in action amid reports stated that Government plans to cap trade margins on all medicines sold in the country. Divi’s lab surged by over 8.5% to Rs1793, Nicholas Pharma advanced 4% to Rs319, Pfizer rose over4.5% to Rs708 and Glenmark Pharma added 4.6% to Rs484.

What the FIIs are doing

FIIs were net buyers of Rs4.8bn (provisional) in the cash segment on Wednesday while the local institutions pumped in Rs1.6bn. In the F&O segment, foreign funds were net sellers of Rs12.05bn on the same day.

On Tuesday, FIIs were net buyers to the tune of Rs195mn in the cash segment. Mutual Funds were net sellers of Rs341mn on the same day.

Stocks in News:

Activists to boycott Novartis drugs and plan a nationwide campaign. (Mint)

Novartis to start selling four new cancer drugs by 2011. (BL)

Novartis withdraws Exelon patent suit against Sun Pharma. (BL)

Reliance Industries may make an acquisition in the energy sector for up to US$15bn. (Mint)

Reliance Industries plans solar power projects in Bengal, Rajasthan and Maharashtra. (FE)

Danone's stake in Avesthagen violates norms according to the FIPB. (FE)

Air Deccan forms consortium with Mumbai International Airport (MIAL), Rahejas and IDFC for developing four low cost airports in Karnataka. (FE)

Arunachal Pradesh Government scraps two hydel-power projects by NTPC. (FE)

Aegis Logistics to set up 300 auto LPG stations. (FE)

Reliance Retail in talks with the Essel group to set up outlets at Fun Republic mall across India. (FE)

Air Deccan and Kingfisher merger may take another 2-3 months. (BL)

Reliance Industries, Tata Chemicals, Bharti Enterprises’ Fieldfresh and Indian Oil are among several companies that have evinced interest in leasing closed sugar mills in Bihar. (BS)

Indivision Capital, the private equity arm of Future group, will buy 4.9% in Dish TV for Rs2.5bn. (BS)

Securities Appellate Tribunal (SAT) has kept the delisting of Essar Steel from the stock exchanges in abeyance. (ET)

Kuwait Petroleum and Reliance Industries have kicked off discussions for a mega joint venture across the oil and gas vertical. (ET)

ICICI group plans to mobilize US$8bn for private equity investments in India. (ET)

Tata Motors, M&M and private equity player, One Equity submitted their final bids for Jaguar and Land Rover. (ET)

Biocon to launch oral insulin drug by 2010. (ET)

Glenmark Pharma plans to acquire a distribution and marketing company in Indonesia. (ET)

Post Citi Venture Capital picking up 7% stake in Shiv-Vani Oil for Rs1bn Merrill Lynch and GMO also purchase minority stakes. (ET)

Unitech plans to hive off its retail business as a separate company which may be listed at a later date. (ET)

Railways hike freight charges for iron ore exports by increasing the surcharge to 60% per ton. (BL)

The Government will obtain parliament's approval on the Indo-US nuclear deal after the process of implementing the agreement is complete. (BS)

The Government is likely to announce a new fertilizer policy within one month. (BS)

The Government asks airlines to either deposit tax component or refund the same to the customers in case of cancellation. (ET)

RBI allows banks to give ailing sugar companies a second chance to restructure their loans. (ET).

Crude back to sub 80 levels

Crude prices drop further as fuel product supplies show increase

Crude prices rose today earlier in the day but then gave up all its gains and closed lower for the day after the Energy Department was out with the weekly inventory report. Crude rose earlier in the day when the OPEC members decided that they will not increase production for the time being.

For the day ending Wednesday, 05 December, 2007, crude-oil futures for light sweet crude for January delivery closed at $87.49/barrel (lower by $0.83/barrel or 0.9%) on the New York Mercantile Exchange. Prices reached a high of $99.2 on 21 November. Prices are up 40% from a year ago.

Earlier, crude rose to above $90 after the Organization of Petroleum Exporting Countries opted to keep production unchanged at a Wednesday meeting in Abu Dhabi. OPEC will meet again on 1Feb, 2008 in Vienna to review today's decision. Iran, Venezuela, Qatar and other members opposed a proposal for a 500,000 barrel a day increase.

As per today’s weekly inventory report by the Energy Department, U.S. crude inventories fell by 8 million barrels to 305.2 million barrels in the week ending 30 November. EIA also reported U.S. gasoline supplies rose by 4 million to 200.6 million barrels in the latest week, the highest in more than three months, and distillate stocks, which include heating oil and diesel, grew by 1.4 million barrels to 132.3 million barrels. This increase in fuel supplies helped crude give up its earlier gains for the day.

Brent crude oil for December settlement fell $1.04 (1.2%) to $88.49 on the London-based ICE Futures Europe exchange.

Natural gas remains almost unchanged

Natural gas in New York was little changed, erasing an earlier gain, on inventories considered ample for a winter forecasters say will be milder than normal. Natural gas for January rose 3 cents (0.4%) to settle at $7.185 per million British thermal units.

Against this backdrop, January reformulated gasoline fell 3.47 cents to $2.217 a gallon and January heating oil dropped 2.25 cents at $2.4893 a gallon.

Attacks on oil facilities in Middle East and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.

At the MCX, crude oil for December delivery closed lower at Rs 3498/barrel, higher by Rs 31 (0.9%) against previous day’s close. Natural gas closed at Rs 285.1/mmtbu as against previous close of Rs 281.9/mmtbu, higher by Rs 3.2/ mmtbu.

Today's Pick - JB Chemicals

We recommend a buy in JB Chemicals & Pharmaceuticals at current market price. It is evident from the weekly chart of JB Chemicals that it has been on a long-term downtrend since its life high of Rs 139, recorded in early 2006.

However, the stock found support at Rs 62 levels in August 2007 and has been consolidating sideways in the range of Rs 60 and Rs 70 since then. JB Chemicals has made a sharp move on December 5, recording a gain of 6 per cent accompanied by heavy volumes. The stock has recently penetrated the 21- and 50-day moving average lines too.

The weekly momentum indicator has recovered from the bearish zone. The daily momentum indicator has entered the bullish region. The immediate support for the stock is at Rs 62 and the subsequent support is at Rs 50. We expect the stock to rally to Rs 85 level in the short-term. Short-term investors can buy the stock at current market price while keeping their stop loss at Rs 65.

Via Businessline

Daily Technicals, Futures - Dec 6 2007

Daily Technicals, Futures - Dec 6 2007



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Markets look optimistic

The markets spiked higher, on good volumes, as the resistance of 5897 was overcome on huge volumes. The market breadth was positive as the combined exchange figures were 3099:931.

The capitalisation of breadth was also positive as the commensurate figures were Rs 25899 crore: Rs 4633 crore. The F&O data indicated a 3.62 per cent increase in net long positions with a rise in the PCR.

With the indices closing at the upper end, accompanied with positive market internals and improved volumes, the upmove imbibes confidence in the near term.

The coming session is likely to witness a wide intraday range of 6005 on advances and 5877 on declines due to the larger base effect of Wednesdays range.

The Nifty closed at it’s highest, indicating bullishness. Watch the quality of the upmove hereon as a consistent trade above the intraday high of 6012 with forceful volumes and increased open interest will trigger off a fresh round of buying.

The outlook for the markets on Thursday is that of continued optimism, barring negatives or unforeseen circumstances. The indices may be headed for blue sky territory in the next few sessions. Avoid shorting on rallies.

Vijay L. Bhambwani



Gold declines as dollar gains

Gold prices drop marginally while silver remains almost unchanged

A few upbeat economic reports helped dollar gain some strength against its rival currencies today, Wednesday, 05 December, 2007 and this put some pressure on precious metals. Dollar gained against its major rival currencies on anticipation that the Federal Reserve might not cut interest rates in its upcoming policy meeting on 11 December, 2007 as chances of economy heading towards recession is far less. Gold generally moves in the opposite direction of the U.S. currency.

Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Rising crude increases inflationary pressures and vice versa. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.

Comex Gold for February delivery fell $3.9 (0.5%) to close at $803.7 an ounce on the New York Mercantile Exchange today. Last week, prices had slipped by more than 4.5%. On, 7 November, prices had touched $848/ounce. It was the highest price after a record $873 on 21 January, 1980.

Comex Silver futures for March delivery was almost unchanged at $14.465 an ounce. Prices touched 26 year high on 7 November, after reaching $16.275. The metal has climbed 12% this year.

In the currency market today, the dollar rose against major counterparts, after upbeat U.S. economic data calmed fears of a looming recession and led many investors to believe the U.S. Federal Reserve won't decide on the 50-basis point interest rate cut next week that some had begun expecting. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, rose 0.7% at 76.220.

In the energy market, oil prices fell by 83 cents to close at $87.49/barrel after Energy Department report showed that U.S. fuel stockpiles rose last week.

Gold had climbed 27% this year till date as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Dollar is still 12% down against the euro this year.

In 2006, silver had jumped 46% while gold gained 23%.

Nifty December 2007 futures at premium

Turnover in F&O segment rises

Nifty December 2007 futures were at 5980, at a premium of 40 points as compared to the spot closing of 5940.

The NSE futures & options (F&O) segment turnover was Rs 57,522.12 crore, which was higher than Rs 56,330.05 crore on Tuesday, 4 December 2007.

GMR Infrastructure December 2007 futures were at premium, at Rs 266.50, compared to the spot closing of Rs 263.10.

Jindal Steel & Power December 2007 futures were at premium, at Rs 15,400, compared to the spot closing of Rs 15,332.65.

Mangalore Refinery & Petrochemicals December 2007 futures were at premium, at Rs 141.10, compared to the spot closing of Rs 140.60.

In the cash market, the S&P CNX Nifty gained 81.65 points or 1.39% at 5,940.

US Market soars

Major US stock indexes rose more than 1 percent on Wednesday, after strong economic data calmed recession fears and helped halt a two-day sell-off.

The data, including a report that showed unexpected vigor in the job market, stoked expectations for corporate spending and sparked a robust recovery in technology shares. Bellwethers Microsoft Corp and Apple Inc drove the Nasdaq higher.

Shares of financial services companies headed higher after insurer American International Group Inc said its exposure to the housing and credit crisis was manageable. AIG shares jumped 4.9 percent.

"There's enough good things happening out there, things that are counter recessionary that people are digesting," said Ryan Crane, senior portfolio manager at Stephens Capital in Houston.

"The mind-set that we're not going to enter into any kind of a recession and that you've got some meaningful rate cuts in the near future, explain what's behind the move today," he said about expectations the Federal Reserve will cut interest rates next week.

The Dow Jones industrial average finished up 196.23 points, or 1.48 percent, at 13,444.96. The Standard & Poor's 500 Index closed up 22.22 points, or 1.52 percent, at 1,485.01. The Nasdaq Composite Index added 46.53 points, or 1.78 percent, to 2,666.36.

Optimism about the economy's health also buoyed shares of manufacturers and energy producers, as well as other stocks sensitive to the economic cycle.

Home builders, one of the market's most beaten-down sectors, were also a standout, with the Dow Jones Home construction index ending up 3.5 percent.

On the Nasdaq, shares of Apple, the maker of the iPhone, led advancers, with a gain of 3.2 percent to $185.50, while software maker Microsoft ended at $34.15, up 4.2 percent, the biggest one-day advance in more than a month.

Shares of chip maker Intel Corp gained 3.5 percent to $27.22. Analysts said prospects for big-cap technology were also underpinned by hopes of continued growth abroad.

AIG led financial shares on both the Dow and the S&P 500, with its shares rising $2.70 to $58.15 on the New York Stock Exchange. Shares of Citigroup Inc, the No. 1 US bank, advanced 3.5 percent to $33.69 on the NYSE.

The Dow's standouts included diversified manufacturer United Technology Corp, whose stock climbed 2.8 percent to $76.85. Shares of 3M Co, whose products include Post-it Notes and Scotch tape, rose 2.0 percent to $83.76.

On the energy front, shares of oil company Exxon Mobil Corp rose 2.0 percent to $89.92.

Among the home builders, shares of Beazer Homes USA Inc, the No. 7 US home builder, surged 6.6 percent to $8.38, while shares of Hovnanian Enterprises Inc, an upscale home builder, ended up 5.8 percent at $7.66.

Even so, jitters about the credit crisis lingered. Indexes cut gains briefly after ratings agency Moody's Investors Service said mortgage insurer MBIA Inc was at greater risk of capital shortfall than previously communicated.

Shares of MBIA finished down 16.0 percent at $27.42. Shares of PMI Group Inc, another mortgage insurer, declined 4.8 percent to $12.45.