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Friday, December 28, 2007

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Weekly Newsletter

Democracy under siege in Pakistan

Pakistan plunged deeper into the political abyss after former Prime Minister Benazir Bhutto was killed in a suspected suicide attack on Dec. 27 at an election rally in Rawalpindi. The opposition leader, aged 54, had survived a previous attempt on her life in Karachi when she returned from exile two months ago. Police said at least 16 people died and more than 60 were injured in the attack. The Interior Ministry said it suspects Al-Qaeda was involved in the gunfire-cum-bomb attack on Bhutto's political rally, but added it could not confirm reports about the terrorist network having claimed responsibility. The Government has ordered a judicial inquiry into Bhutto's killing. Islamic terrorists, fighting an insurgency in north-western Pakistan, had previously threatened to kill Bhutto.

She returned from a self-imposed exile in October after spending years out of Pakistan where she had faced corruption charges. Her return was the result of a power-sharing arrangement with President Musharraf, but analysts , there were always plenty of doubts about the effectiveness of the agreement. The latest incident of violence threatens to derail the fragile attempts of President Parvez Musharraf to restore democracy in a strife torn nation. It also puts a big question mark over the entire process, which many political analysts term farcical, and casts doubts over the upcoming general elections, scheduled for Jan. 8. But, Interim Prime Minister Mohammedmian Soomro said that the polls will be held as scheduled.

Another Former Prime Minister Nawaz Sharif said his opposition party will boycott national elections next month, and asked Musharraf to step down. "Under the present circumstances and under Musharraf, neither is campaigning possible nor is a free election," Sharif said. Musharraf appealed for calm while US President George W. Bush asked Pakistanis to honor Bhutto's memory by continuing with the democratic process for which she so bravely gave her life. Bush condemned the attack as a cowardly act by murderous extremists. "The manner of her going is a reminder of the common dangers that our region faces from cowardly acts of terrorism and of the need to eradicate this dangerous threat," said India's Prime Minister Dr. Manmohan Singh.

Meanwhile, the stock exchange, central bank and all markets remained closed after President Musharraf announced three days of national mourning. Domestic flights were canceled and some train services were suspended Riots erupted across Pakistan following the Bhutto's death, prompting the government to deploy army on the streets of some cities to restore law and order. Violence broke out in Karachi, Lahore, Peshawar, Rawalpindi and in dozens of towns across the southern province of Sindh, including Bhutto's hometown of Larkana.

Despite the political turmoil and expectations of manipulation by President Musharraf, elections had generated some hopes in Pakistan. Many hoped that even a flawed election was seen to be better than the sham democracy President Musharraf had been running for eight years as a military ruler. These hopes have now been dashed. Bhutto's killing is a setback to Pakistan and could destabilise the political process and the move towards democracy. What's worse, without Bhutto's charismatic and courageous leadership the Pakistan People's Party (PPP) will find it tough to return to power. Sharif is believed to be a weak leader, which means that Pakistan may not have a secular and democratic future for a long time to come.

Impasse over spectrum allocation continues

There is no end to the current stalemate over spectrum allocation. The Department of Telecommunications (DoT) accepted telecom regulator TRAI's recommendations on new subscriber-based criteria for spectrum allocation while the GSM lobby COAI asked the Government not to allocate radio frequency before the Delhi High Court gives it verdict on the thorny issue. The DoT accepted a spectrum review panel's recommendation that existing wireless players (both GSM and CDMA) be allocated additional spectrum only after they increase their subscriber base 2-6 times.

DoT also endorsed the Government appointed spectrum panel's recommendation that GSM operators be given additional spectrum in quantities of 1 MHz, as against the current norm of granting it in tranches of 1.8 MHz to 2.2 MHz. To this effect, an affidavit would be filed in the telecom tribunal TDSAT and the Delhi High Court, where COAI has challenged the new spectrum allocation norms and grant of permission for the use of dual technology.

The Government panel set up to examine the issue of spectrum allocation also suggested setting up of a new committee with technical experts to arrive at a scientific method for allocation of additional spectrum. The new panel will give its report in six months. Till such time, TRAI recommendations on the matter should be implemented, according to the DoT.

Meanwhile, reports suggested that the DoT is unlikely to grant spectrum to Reliance Communications (RCOM) and others before the next Delhi High Court hearing, on January 3. The Letters of Intent (LOIs) will not be issued before January 3, a business news channel said. The channel also reported that Telecom Minister A. Raja will meet Solicitor General in the first week of January on the current logjam over spectrum allocation.

The GSM mobile operators, who had pulled out of the spectrum review committee alleging bias against them, accepted the panel's report. On the other hand, RCOM and fellow CDMA operators assailed the DoT move. RCOM slapped a legal notice on the DoT and urged it to accept the report by the Telecom Engineering Cell (TEC). The ADAG company also said that the DoT must direct GSM companies to return additional spectrum of over 50 MHz.

Separately, COAI - the GSM lobby group - said that all pending application of existing players for extra radio frequency be considered as per the earlier subscriber-linked policy issued in March 2006. Reports also said that Telecom Minister A Raja had asked the Telecom Commission to review the annual spectrum charges that service providers pay as licence fee. TRAI has proposed that operators pay a higher revenue for radio frequencies along with a one-time fee for every additional MHz of spectrum.

Indian energy sector exhibits rich potential for investment in diverse streams: CII - KPMG

Long term vision and adequate policy & regulatory support necessary to achieve sustainable self-sufficiency in the energy sector: CII - KPMG Report

The Indian energy sector is exhibiting a rich potential for investment in diverse streams, driven by the surging economy and the resultant demand supply gap in the short run; and by the need to achieve sustainability and self-sufficiency in the long run. A long term vision, and adequate policy and regulatory support is necessary to realize this potential, according to a report jointly released by CII and KPMG. The report titled ‘India Energy Inc. – Emerging Opportunities & Challenges’ was released recently at the CII - India Energy Conclave 2007.

India’s power and upstream energy sectors need investments to the tune of US$120 – 150 billion over the next five years. The report emphasizes the need for strong private sector participation to complement public sector and to bring in the required capabilities & technologies. Policies have increasingly recognised the need to promote private investment. Private interest in captive coal mining, oil and gas exploration and in power sector has shown significant progress and is also envisaged in nuclear sector.

By world standards, India’s current level of energy consumption is very low. For the year 2004 – 05, the total annual energy consumption for India is estimated at 572 Mtoe (million tons oil equivalent) and the per capita consumption at 531 kgoe (kilograms oil equivalent). With a target GDP growth rate of 8-10% and an estimated energy elasticity of 0.80, energy requirement is expected to grow at 6.4-8.0%. This would mean a five-fold increased in India’s energy requirement over the next 25 years.

Energy transport infrastructure such as ports, railways, pipelines and power transmission networks need significant investment. The policy now allows private participation in all these areas and some private sector activity is already under way. Tariff reform in the energy sector and distribution reform in the power sector are two important steps that need to be successfully carried out. Tariff reform to phase out subsidies or to target them effectively and distribution reforms to bring efficiency in the power sector are vital.

Along with private participation, there is a move to bring in market mechanisms in the energy sector under an independent regulatory oversight. A gradual approach is important till the supply side position improves and more players enter the sector so that markets can work effectively.

The report also highlights the key opportunities in the sectors:

.Coal - India has vast reserves of coal and participation of the private sector in captive mining, across different user industries, is an immediate opportunity for investment. 38 coal fields have been identified and are in the process of being allocated, involving a total capital requirement of around USD 1.5-2 billion. Investment activity is also seen in other parts of the value chain including washeries.

.Oil - A number of private investors have entered this segment attracted by the government’s policies for upstream exploration and production. There is a huge potential in refining due to the strategic advantages of low cost and location; and India is already a net exporter of products. The downstream marketing sector is also now open to private participation.

.Gas - Gas discoveries of around 700 bcm in the last decade point towards a tremendous promise. While in the near term, potential for LNG may be limited due to inability of key sectors such as power to absorb high international prices, in the longer term there would be place for LNG as the share of Natural Gas in India’s energy mix increases. Gas coverage in at least 30 cities, is likely to see active interest from both private and public players in the next few years.

.Nuclear - India has one of the largest reserves of the nuclear fuel - thorium. However, the nuclear energy programme will continue to be uranium based until commercial production based on thorium becomes feasible. If the Indo-US nuclear deal goes through, there will be a boost to nuclear energy and private participation in this sector would be expected.

. Hydro - India is endowed with a hydroelectric potential of about 150,000 MW. However, only 17 percent of the hydroelectric potential has been harnessed so far; with another 5 percent under various stages of development. Private participation in the hydro sector will be important to meet the target of an additional 45,000 MW of hydro capacity within the next ten years.

. Renewable Energy - India has a vast potential for renewable energy sources, especially in areas such as solar power, biomass and wind power. The current installed capacity of renewable energy is around 9220 MW, constituting about 7.3% of India ’s total installed generation capacity. India is already the fourth largest in the world in terms of wind energy potential and we are seeing significant investment activity in this area. There is a huge potential for development of solar power and bio-fuels.

According to the report, to meet its large and growing energy needs, there are certain key imperatives for the Indian energy sector:

.Private sector investment needs to complement public sector - Reliable and economic energy supply will require investment of capital as well as capabilities and efforts from both public and private sectors. The government is taking the right steps to attract private players to this sector which will need investments of around USD 120 to 150 billion over the next five years. Further clarity in areas including pricing of products and stability in policy framework is essential to further encourage private investment.

.Encourage market mechanisms with a credible and independent regulatory oversight - Market mechanisms will bring in efficiencies, and also encourage investments by minimizing regulatory risks. With an improving supply-side situation, market mechanisms have been gradually introduced in the various segments of the energy chain, and this needs to be extended to other left-out sectors like coal block allocation to encourage private sector participation.

·Reduce vulnerability to price and supply shocks - The biggest challenge is to replace coal (exhaustible in 40 years), representing 51% of the energy basket, and oil which is heavily dependent on international supply in the short term towards Natural Gas, Hydro and renewable sources. Apart from diversifying the basket, enhancing domestic production and taking equity positions in energy resources abroad are also necessary steps in reducing the effects of fuel price shocks.

.Bringing in efficiency and enhancing capacity in energy transport infrastructure - To reduce the high inter-regional disparity to match demand and supply centers, significant investments in ports and railway, pipeline and storage network and infrastructure are underway.

.Tariff reform and power sector reform - Heavily distorted power and energy prices have resulted in inefficient end-use and energy choices. Policy measures with sufficient political will are required to address these issues. Distribution reforms to cut down on network losses due to theft and pilferage are also necessary.

.Provide Government Support for Energy Efficiency - Policy framework incentivising energy efficiency is an urgent requirement. The environment should encourage energy efficiency companies to come up and operate profitably.

Oil rises for 5th straight day on Bhutto killing

Crude oil prices in New York gained through the week after the assassination of former Pakistani Prime Minister Benazir Bhutto revived concerns about geopolitical factors affecting global fuel supplies. Prices also rose after a US Energy Department report showed larger than expected drop in fuel inventories. Oil is set for a third week of gains after US stockpiles declined to the lowest since January 2005. Supplies of distillate fuel, including heating oil, dropped the most since February. Light, sweet crude for February delivery last traded at US$96.64 a barrel, up 2 cents, on the New York Mercantile Exchange at 9:07 a.m. London time. Oil was heading for its biggest annual gain in eight years. Oil prices surged to a one-month high of US$97.79 a barrel on Dec. 27 - within US$1.50 of the all-time high of US$99.29 struck on Nov. 21. Prices are up 60% from a year ago level. Brent crude for February settlement rose 13 cents to US$94.91 a barrel at 9:10 a.m. local time on London's ICE Futures Europe exchange.

Rising energy costs fuel inflation in Japan

Japan's inflation rose at the fastest pace in more than nine years in November and industrial production and household spending declined, suggesting that rising energy costs may derail the economy's longest postwar expansion. Core consumer prices, which exclude food prices, gained 0.4% from a year earlier, the statistics bureau said. Factory output slid 1.6% from a month earlier. Households cut spending 0.6%, the first drop since July. Wages fell and employment prospects dimmed as number of job seekers outnumbered vacancies for the first time in two years, the Labor Ministry said. Rising energy costs rather than consumer spending is said to be driving inflation in Japan, according to analysts. As a result, the Bank of Japan (BOJ) will refrain from raising rates amid slowing GDP growth. The yield on Japan's 10-year bond fell 4.5 basis points to 1.5% in Tokyo on Dec. 28. The Topix stock index tumbled 1.6%, capping off a 12% drop for the year, making Japan the worst performer of the world's 10 biggest markets.

Toyota may surpass GM as top auto firm in 2008

Toyota Motor Corp. expects to upstage General Motors (GM) from the position of the world's top automobile company by sales next year after the Japanese major forecast a 5% jump in its global volume from this year. Toyota said on Dec. 25 it planned to sell 9.85mn vehicles worldwide in 2008, up from an estimated 9.36mn sales this year. If Toyota meets the 2008 sales target, it would top the record 9.55mn that GM sold 30 years ago, according to the Wall Street Journal. GM has placed this year's sales estimate at 9.3mn vehicles, and has not given a forecast for the number of vehicles it expects to produce or sell in 2008. During the first nine months of this year, Toyota sold 7.05mn vehicles sold worldwide, just shy of GM's figure of 7.06mn. Toyota's 2007 sales figure would thus for the first time place it as the world's largest auto maker on an annual basis, ending GM's more than 70-year reign.

Warren Buffett to buy 60% in Marmon Holdings

Berkshire Hathaway, the investment company promoted by legendary billionaire investor Warren Buffett, would acquire a 60% stake in Marmon Holdings for US$4.5bn. Marmon is a privately-held conglomerate controlled by the Pritzker family in Chicago. Berkshire Hathaway will take control of 60% of Marmon and acquire the rest of the company within six years at a cost based on future earnings. The Marmon acquisition is set to be completed in the first quarter of 2008. Marmon has group sales of US$7bn in annual sales and has 125 units, including operations that serve the railroad and energy industries. The company's operating income more than tripled from 2002 to 2007, Berkshire said. Marmon employs 21,500 people, mostly in North America, the UK, Europe and China. Its businesses include a dozen companies that manufacture wire and cable products for energy and construction use

GE Capital to acquire Merrill Lynch Capital

GE Capital, the financial unit of General Electric (GE) said that it will acquire the bulk of the Merrill Lynch Capital commercial finance operations, allowing Merrill to redeploy about US$1.3bn into other parts of its business. GE said the acquisition, for an undisclosed sum, will also add US$5bn in commitments to GE Capital Commercial Finance's base of US$260bn. "These strong units fit perfectly with existing and very successful GE Capital businesses," Mike Neal, vice chairman of GE said. GE Capital will buy Merrill Lynch Capital's corporate finance, equipment finance, franchise, energy and health care finance units. Merrill Lynch Capital's commercial real estate finance unit is not part of the transaction. "This transaction reflects Merrill Lynch's continued strategic focus on divesting non-core assets and optimising capital allocation," said John A. Thain, Chairman and CEO of Merrill Lynch. The deal is expected to close in the first quarter of 2008.

Apple, Fox to sign deal to rent films: reports

Apple Twentieth Century Fox are set to announce a deal that will allow consumers to rent Fox movies through Apple's digital iTunes Store, according to media reports. The agreement will allow renting of Fox's latest DVD releases by downloading a copy from the online iTunes store for a limited time, the Financial Times said. The Wall Street Journal also reported the deal in its online edition. Fox's corporate parent, News Corp, and Apple refused to comment. Walt Disney is the only Hollywood studio that currently sells its new DVD releases on iTunes but these are available for outright purchases rather for renting purpose. Paramount, Metro-Goldwyn-Mayer and Lionsgate sell older library titles. The Apple-Fox deal is likely to be announced at the Macworld show on January 14.

OVL to buy 40% in Venezuelan oil block

ONGC Videsh Ltd. (OVL), the overseas arm of Oil & Natural Gas Corp. (ONGC), would reportedly pick up a 40% stake in San Cristobal oilfield in Venezuela. Venezuela's national oil company Petroleos de Venezuela (PDVSA) will hold the remaining 60% stake in the block through a subsidiary, according to reports. OVL will invest US$355.74mn, comprising signature bonus of US$173.1mn for the stake, an OVL official was quoted as saying. It would also be required to sanction a loan of US$355.74mn for the Venezuela project that covers an area of 160.16 square kilometres and is located in the Orinoco Heavy Oil belt. Production from the San Cristobal field started in October 1981. Till date, 44 wells have been drilled, of which 24 are active. The block is currently producing about 24,000 barrels of oil per day (bpd). A joint team of ONGC and PDVSA has estimated ultimate recoverable reserves at 232.38mn barrels that can yield up to 100,000 bpd.

Pakistan, Benazir Bhutto

Pakistan, Benazir Bhutto

Tata Power

Tata Power

Mercator Lines, K P R Mill, Tata Metaliks,Apar Industries, REI Agro

Mercator Lines, K P R Mill, Tata Metaliks,Apar Industries, REI Agro

Post Market Commentary

The market ended the session marginally lower after facing the volatility throughout the trading session. The market opened on a weak note backed by negative cues from the global markets. The market got the direction after the declaration of inflation figures by the government that represented that the India''s wholesale price index grew 3.45% in the 12 months ended 15 December 2007 which was lower than the previous week''s rise of 3.65%. Whereas the annual inflation rate was 5.73% during the corresponding week of the previous year. The Realty, Metal and Consumer Durables indices remained in the limelight as most buying is seen from these baskets. As usual, both the Mid Caps and Small Caps indices once again outperformed the benchmark indices as they closed with handsome gains of 145.71 points and 272.55 points at 9,574.57 and 12,901.29 respectively. The BSE Sensex closed marginal lower by 9.77 points at 20,206.95 and NSE Nifty fell by 1.8 points to close at 6,079.70.

BSE Metal index surged 484.26 points to close at 19,951.37. Scrips that pushed up are Gujarat NRE (6.32%), Jindal Steel (5.38%), Hind Zinc (4.96%), Nalco (3.47%), Tata Steel (2.76%).

BSE Realty index closed higher by 471.80 points at 12,551.96. Scris that grew are Parsvnath (7.86%), HDIL (5.99%), DLF (5.31%), Penland (4.98%), Omaxe (4.22%) .

BSE Oil & Gas index grew by 90.06 points to close at 13,213.09 as RNRL (5.46%), Essar Oil (3.74%), IOCL (3.68%), HPCL (2.22%), Cairn India (1.63%) and RPL (1.30%) closed in green.

BSE Bankex index closed up by 26.61 points to close at 11,396.94. Scrips that gained are BOB (5.96%), Federal bank (4.25%), Kotak bank (4.02%), Canara bank (2.89%) and Union bank (2.24%).

BSE IT index fell 26.08 points to close at 4,543.06. Scrips that fell are Wipro (3.52%), TCS (1.83%), Infosys (0.47%) and Satyam (0.40%).

BSE Health Care index increased by 48.42 points to close at 4,336.30. Pushed up are Orchid chemicals (14.54%), Dishman pharma (6.88%), Divi''s lab (5.35%), Matrix labs (3.16%) .

Weekly Close: bounce back with optimism !

This was a positive week for the markets and surprisingly strong in the face of the FNO expiry for the December series. There were no major negative cues from global as well as domestic front and markets took hold strongly above 20000.

Sessions overall were ranged after a sharp run up seen in thebeginning of the week. Most fund managers and investors in holiday mood were less involved. It was a holiday shortened week. Market terms this as santa rally and had indicated that last week that one could have expected that. We had a major event. Gujarat elections came in favour of BJP - on Modis leadership despite the anti-incumbency factor. Global credit woes continued there cry but US showed some resurgence on good corporate earnings. The F&O settlement also kept session ranged and choppy. December was a ranged month with FIIs outflow and that will keep investors worried.

Sensex closed up over 5% this week. Weekly losers for the were Bajaj Auto -6.36%,Tata Motors -7.07% while gainers ruled the with TISCO 13.24%, REL 10.7%, DLF +10.5%, Bhel +8.49%, Hindalco +7.46%, HDFC+7.34%,WIPRO 7.13%, RIL 7.13%,MNM 6.4% ICICI BNAK 6.31%, HDFC 5.54%, SBI 5.38%, NTPC 5.27%,Satyam 5.2%, Infy 5% LNT 4.29%,ITC 4%, Ambuja Ceme +3.71%,Rcom 3.61%, TCS 3.5%, Bharti +2.56%. BSE Midcaps 4.47%, BSE Small Caps 6.9%

Politics: Elections are nearing. Gujarat election was first step toward this . The BJP is seen in a strong position now in Himachal Pradesh as well. A strong BJP certainly will be an obstacle for the Nuclear deal It is likely to keep the Congress defensive and delay elections as much as possible. The Budget is the next important event and that may be a disappointment. The Congress may make this populist.

Common man is likely to be the nucleus for the budget and that means focus would be on giving more to him. Inflation is another area of action. This has been under control but more because of a base effect. inflation remains a concern and it is a supply side issue. Food articles have seen a major upsurge and this is on the back of poor agriculture growth. Agriculture thus would be an area of focus. Crude is at an all time high and it would be really difficult for Govt. to cope up with this. If the Govt. doesnt hike petrol and diesel pricesit would only postpone the problem. If it does hike then the Govt would face the ire of the Left and certainly it cant afford this when elections stare it in the face. This would be a big issue going ahead and certainly there are no easy answers. The easy way out is not the best one Economically for the country.

Some Geo political issues surfaced with Pakistan's Former Prime Minister Benazir Bhutto was assassinated. This means some risk from this angle as well and increased probable Militancy. However, such issues are unlikely to impact markets in any big way. At least not yet !

Cement counters regained strength post the MTPC probe for forming cartelisation. The Long term view still remains positive but valuations remain highly demanding.

Telecom stocks managed to hold on. The license and spectrum issue continues and things would be though ahead.

IT stocks saw some revival. Results are just ahead and they have risen on hope. On the face of results may appear positive but we believe that headwinds are still high in the form of an appreciating rupee, rising salary costs and poor business conditions nearing for clients. Banking sector remains a big sector exposure for the IT sector and the situation is not good.

Karuturi continued to circuit. The company is the largest manufacturer of flowers post the Kenyan acquisition. The numbers would flow in top line and bottom line from this quarter. Flowers is really localised and fragmented business. But Karuturi has really done great job and is now a global company. Our research note would give you better idea on this.

Adhunik is another success story. The company is into speciality steel back by iron ore mines. The story here is that it seems to be the only other mining play such as Sesa Goa and valuations remain undemanding.

We had our research on WWIL this week. WWIL is a Multi Service Operator (MSO) and one of largest player in Cable and Satellite industry (C&S). However this industry is dominated by Local Cable Operators (LCO?s). The Goon squad background and the political backing of the of cable operators has made it difficult for MSOs to breakdown the LCOs chain. The industry is also highly fragmented and there are no signs of consolidation yet. Digitalisation is the only way of transition. Do read our note so as to know what action needs to be taken here.

Fedder Lloyd is another interesting story. It is a niche player in India and caters to Defense and Railways. It has also forayed into Real Estate which seems to be a worry... but it can be also an opportunity. Our note would tell you more about this.

Realty firm in lacklustre market

The market witnessed a sharp pull-back after witnessing a slump by afternoon. The Sensex had a weak start and lost over 59 points following reports of assassination of former Pakistan Prime Minister Benazir Bhutto. Most of the Asian markets were subdued fearing terrorists attacks in Pakistan might see withdrawal of foreign money from the region. However, the benchmark Sensex index moved up by 42 points to touch the day's high of 20,259 quickly, only to lose further ground in the absence of buying interest in frontline shares on rising geo-political concerns. The Sensex shed all its gains thereafter and touched the day's low of 20,023. But, recovered on some buying interest towards the close. After recovering around 190 points from the day's low the Sensex ended the session by shedding 10 points at 20,207. The Nifty closed the session by slipping two points at 6,080.

Although the market ended on a negative note, the breadth of the market was positive. Of the 2,953 stocks traded on the BSE, 2,270 stocks advanced, 651 stocks declined and 32 stocks ended unchanged. Among the sectoral indices, BSE CD Index surged by 4.15% and BSE Realty index added 3.90%, while other sectoral indices gained around 1% each. However, BSE Teck Index, BSE IT Index and BSE Auto index slipped marginally.

The index heavyweights witnessed some selling. Wipro slumped 3.52% at Rs530, Bharti Airtel lost 2.65% at Rs941, Bajaj Auto shed 2.30% at Rs2,611, TCS plunged 1.83% at Rs1,080, ICICI Bank crumbled by 1.20% at Rs1,227, ONGC declined 1.13% at Rs1,227, Maruti Suzuki dropped 1.05% at Rs984, while Tata Motors, HDFC and Infosys slipped marginally. Few counters, however, managed to buck the downtrend and ended in the green. DLF rose 5.31% at Rs1,064, Tata Steel moved up by 2.76% at Rs931, Ambuja Cement added 2.75% at Rs149 and Grasim gained 1.13% at Rs3,630 and Hindlaco ended higher by 1.11% at Rs213.

Over 2.18 crore Spice Jet shares changed hands on the BSE followed by IKF Technology (1.83 crore shares), Himachal Futuristic (1.70 crore shares), RNRL (1.48 crore shares) and G V Films (1.43 crore shares).

Valuewise, RNRL registered a turnover of Rs261 crore followed by Reliance Energy (Rs218 crore), Transformers & Rectifiers India (Rs193 crore), Spice Jet (Rs179 crore) and Essar Oil (Rs171 crore).

Sensex soars 1,044 points

The market surged ahead of Q3 December 2007 earnings reporting season. Strong global cues also boosted the sentiments. Stronger-than-expected US consumer spending calmed fears the world's top economy was heading into a recession. The market also cheered a comfortable victory for Bharatiya Janata Party (BJP) in the Gujarat state election. The market further got a boost from reports the government has allowed all trusts to invest in securities, including shares and bonds of listed companies. Sensex gained in 3 out of 4 trading sessions in the week.

The BSE Sensex surged 1,044.38 points or 5.45% to 20,206.95 in the week. The S&P CNX Nifty jumped 313.2 points or 5.43% to 6,079.70.

The BSE Mid-Cap index rose 549.03 points or 6.08% to 9,574.57. The BSE Small-Cap index surged 1,087.97 points or 9.2% to 12,901.29. It hit an all time high of 12,909.82 on Friday, 28 December 2007.

Sensex rose 691.55 points or 3.61% to 19,854.12 on Monday, 24 December 2007. Bharti Airtel spurted. Reliance Industries edged higher. Reliance Energy hit all time high. The market breadth was strong.

The 30-share BSE Sensex jumped 338.40 points or 1.70% to 20,192.52 on Wednesday, 26 December 2007. The market surged led by rally in index heavyweight Reliance Industries.

The 30-share BSE Sensex ended up 24.20 points or 0.12% to 20,216.72 on Thursday, 27 December 2007. The market swayed between gains and losses ahead of expiry of December 2007 derivative contracts. The market breadth was strong. Reliance Industries declined. ICICI Bank moved up. Consumer durables, metal and PSU stocks were in demand. Auto and IT stocks declined.

The 30-share BSE Sensex declined 9.77 points or 0.05% to 20,206.95 on Friday 28 December 2007. The market ended flat on that day largely shrugging off geopolitical concerns arising from Pakistan’s opposition party leader Benazir Bhutto's assassination in nuclear-armed Pakistan. Bhutto was killed on Thursday, 27 December 2007, at a rally in Rawalpindi, raising fears of instability in Pakistan.

Mahindra & Mahindra gained 6.23% to Rs 834.40 in the week, Mahindra and Mahindra (M&M) is reportedly planning to enter the highly-competitive UK market with its flagship model Scorpio next year.

Wipro jumped 7.76% to Rs 529.95 on reports that it may bid for France's Capgemini by the end of January 2008 in a deal valuing the latter at around $7 billion. Capgemini is a global leader in consulting, technology and outsourcing services. However Wipro denied these reports.

Larsen & Toubro rose 4.17% to Rs 4,150.30 on reports it has floated a power generation firm Larsen & Toubro Power Development and is planning to generate 5,000 megawatt in the next five years. According to the current estimates, the cost of the proposed power capacity would be Rs 20,000 crore. Meanwhile, L&T said on Wednesday, 26 December 2007, its subsidiary L&T Oman LLC had secured an order worth $110.37 million from Muscat Golf Course Project LLC.

State Bank of India advanced 5.26% to Rs 2,384.45 on reports that its board of directors will meet on 25 January 2008 to consider the merger of its six associate banks with itself. As per reports, the respective boards of State Bank of India (SBI)'s associate banks are expected to give an in-principle nod to the merger. These associates include the listed banks - State Bank of Travancore, State Bank of Mysore, State Bank of Bikaner and Jaipur and unlisted banks State Bank of Hyderabad, State Bank of Indore, and State Bank of Patiala

Oil & Natural Gas Corporation gained 3.01% to Rs 1,226.75, on reports it would raise $20 billion to buy stakes in major oil and gas properties overseas. Oil & Natural Gas Corporation (ONGC) is expected to finalize agreements in Turkmenistan, Iran, Latin America and West Africa, reports suggest.

Tata Steel (up 12.92% to Rs 931.40), Reliance Energy (up 11.11% to Rs 2,155.30), Reliance Industries (up 6.77% to Rs 2,898.35), ICICI Bank (up 6.06% to Rs 1,227.10), Infosys Technologies (up 5.73% to Rs 1,795.75), HDFC Bank (up 5.11% to Rs 1,730.85), Satyam Computer Services (up 5.12% to Rs 449.60), Reliance Communications (up 3.69% to Rs 732.60), Tata Consultancy Services (up 3.33% to Rs 1,080.05) were major gainers from Sensex pack.

India's wholesale price index rose 3.45% in the 12 months to 15 December 2007, lower than the previous week's rise of 3.65%, government data showed on Friday, 28 December 2007. The annual inflation rate was 5.73% during the corresponding week of the previous year. The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is published weekly.

The market regulator Securities & Exchange Board of India (Sebi) on Thursday, 27 December 2007, gave nod to BSE and NSE for launch of mini derivative (futures & options) contract on BSE Sensex and S&P CNX Nifty respectively. The mini derivative contract on Sensex and Nifty will have a minimum contract size of Rs 1 lakh at the time of its introduction in the market.

The infrastructure sector grew 4.5% in October 2007 over 9.9% in October 2006. The six key infrastructure industries comprising cement, crude, refining, coal, electricity and steel rose grew by 6.2% in the April-October 2007 compared with 8.9% in April-October 2006. Infrastructure growth data for September 2007 was revised downwards to 5.5%.

The third, and probably the final, round of negotiations for India-specific safeguards with the International Atomic Energy Agency (IAEA) is expected to take place in Vienna early January 2008.

The Bharatiya Janata Party (BJP) won the Gujarat elections on 23 December 2007 by bagging 117 of the 182 seats. The Congress party bagged 59 seats which could mean a setback to the party's plans to call an early national election.

The market regulator Securtities & Exchange Board of India (Sebi) on Thursday, 27 December 2007, proposed to clear mutual funds products on a fast-track basis. To begin with, fixed maturity plans (FMP) with closed ended income schemes can be offered on a fast track basis, the Securities and Exchange Board of India (SEBI) said. Under the proposal for fast-track clearance, a fund house can file a final offer document with the regulator along with compliance certificates and fees. After the filing, the regulator will confirm the receipt of the documents and the fund house can offer the scheme to investors.

On 26 December 2007, the government approved spectrum review committee's recommendation of allocating additional frequency to existing GSM operators based on the Telecom Regulatory Authority of India's (TRAI) subscriber linked formula and in multiples of 1 MHz. The GSM operators were getting additional spectrum in the multiples of 2.4-2.8 MHz and lowering it to 1 MHz would hit the operators as this would mean additional capital expenditure for them.

According to a report by the Confederation of Indian Industry (CII) and KPMG ‘India Energy Inc. – Emerging Opportunities & Challenges’, released on 26 December 2007, India's power and upstream energy sectors need investments to the tune of $120–150 billion in the next five years.

Geopolitical situation could weigh on bourses

Geopolitical situation in South Asia could weigh down the sentiments on the market in the coming week after former Pakistani Prime Minister Benazir Bhutto's assassination on Thursday, 27 December 2007. Stock markets around the world weakened and oil prices rose after the assassination in nuclear-armed Pakistan increased geopolitical uncertainties, with investors shifting money into safe-haven assets such as gold and bonds. However, the Indian market ended flat on Friday, 28 December 2007, shrugging off geopolitical concerns.

Stock specific activity may rule the roost based on expectations regarding Q3 December 2007 results of the companies. IT bellwether Infosys Technologies will announce results on 11 January 2007.

Rising oil also can play a spoilsport for the markets as it is nearing $100 mark. Oil rose for a fifth day to $97 a barrel on Friday, within sight of its record high after US crude stocks fell more sharply than expected, and geopolitical tensions mounted in Pakistan and northern Iraq. Also US government data showed US crude oil stockpiles fell to their lowest level since January 2005 last week.

FIIs were net buyers of Rs 3,494.20 crore in equities so far in the month of December 2007, till 26 December 2007. FIIs had sold equities worth Rs 5,849.90 crore in the month of November 2007 after heavy purchases in September 2007 and October 2007.

Annual inflation, based on the wholesale price index (WPI), dipped to 3.45% in the week ended 15 December 2007 from 3.65% in the week ended 8 December 2007. The market estimate stood at 3.65%

Small-cap, mid-cap stocks shine

The market ended the choppy session with miniscule losses. The volatility was high on account of weekend profit booking, but value buying supported frontline stocks at lower level. Metal, consumer goods and realty stocks were star performers of the day. Auto and IT stocks edged lower. DLF surged. Wipro slipped. 17 out of 30 stocks from the Sensex pack were in green.

European markets, which opened after Indian markets, were trading in red. Asian markets, which opened before Indian market, were weak after the assassination of Pakistan’s opposition party leader Benazir Bhutto in nuclear-armed Pakistan increased geopolitical uncertainties. Bhutto was killed on Thursday, 27 December 2007, at a rally in Rawalpindi, raising fears of instability in Pakistan.

India's wholesale price index rose 3.45% in the 12 months to 15 December 2007, lower than the previous week's rise of 3.65%, government data showed on Friday, 28 December 2007. The annual inflation rate was 5.73% during the corresponding week of the previous year. The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is published weekly.

The 30-share BSE Sensex fell 9.77 points or 0.05% to 20,206.95. The market witnessed a bout of volatility. Sensex hit a low of 20,022.88 in the mid-afternoon trade. At day's low, Sensex lost 193.84. Sensex hit a high of 20,259.45 in early trade. At day's high, Sensex rose 42.73.

The broader CNX S&P Nifty fell 1.80 points or 0.03% to 6079.70.

The BSE Small-Cap index rose 2.16% to 12,901.29 and the BSE Mid-Cap index rose 1.55% to Rs 9,574.57. Both these indices outperformed the Sensex.

Market breadth was strong. On BSE, 2270 shares advanced and 651 shares declined. 32 shares remained unchanged.

BSE clocked a turnover of Rs 8497 crore compared to Thursday (27 December 2007)'s Rs 8286.79 crore.

The NSE's futures & options (F&O) segment turnover was Rs 50436.85 crore, which was lower than Rs 94658.80 crore on Thursday, 27 December 2007.

Nifty January 2007 futures were at 6119.75, a premium of 40.05 points compared to the spot closing of 6079.70.

India’s largest private sector firm by market capitalization & oil refiner Reliance Industries rose 0.14% to Rs 2898.35.

India’s largest private sector bank by assets ICICI bank fell 1.20% to Rs 1227.10.

India's biggest drug maker by sales Ranbaxy Laboratories jumped 1% to Rs 415.60 after it received tentative approval from the US Food and Drug Administration for galantamine hydrobromide oral solution.

Debutante Transformers and Rectifiers (India) settled at Rs 728 on BSE, a 56.55% premium over IPO price of Rs 465 per share. The stock debuted at Rs 701.10, a 50.77% premium over the IPO price. The stock hit a high of Rs 813.75 and low of Rs 685.20.

India's second largest power utility by revenue Reliance Energy gained 0.97% to Rs 2155.30, off day’s high of Rs 2218. The stock moved up on reports Reliance Power in which it holds 50% stake, has edged closer to its mega initial public issue. As per reports, a two-member panel of the Securities and Exchange Board of India (Sebi) office directed that 20% of the equity held the promoter group be locked in for a period of five years, instead of the mandatory three years as per the guidelines on IPOs.

The BSE Metal index rose 2.47% to 19,948.45. It outperformed the Sensex. Tata Steel rose 2.76% to Rs 931.0, Sterlite Industries 1.35% to Rs 1051.95, National Aluminum Company jumped 3.47% to Rs 497.5 and Steel Authority of India rose 2.31% to Rs 279.50.

The BSE Consumer Durables index rose 4.15% to 6,602. It outperformed the Sensex. Videocon Industries soared 10% to Rs 752.10, Titan Industries spurted 3.66% to Rs 1533, and Blue Star jumped 0.37% to Rs 485.

The BSE Realty index rose 3.90% to 12,551.26. It outperformed the Sensex. India’s largest real estate firm by market capitalization DLF moved up 5.31% to Rs 1063.70 on reports the firm plans to raise $5 billion over the next three years by listing five of its business units, including DLF Homes, DLF Retail, DLF Hotels, DLF Utilities and DLF Infrastructure. There are no plans to further dilute equity in group flagship DLF.

India’s second largest real estate firm by market capitalization Unitech spurted 4.18% to Rs 483.80 on reports the company is making an aggressive entry into the booming realty market in the south. It is on the verge of announcing two joint development deals, involving over 1,400 acres of prime land in Hyderabad and Chennai.

Parsvnath Developers surged 7.86% to Rs 457.45, Peninsula Land jumped 4.98% to Rs 143.40, Omaxe gained 4.22% to Rs 573.30 and Indiabulls Real Estate rose 1.71% to Rs 720.

The BSE Auto index fell 0.20% to 5,595. It underperformed the Sensex. Bajaj Auto slipped 2.30% to Rs 2610.95, Maruti Suzuki fell 1.05% to Rs 984.20, Tata Motors declined 0.81% to Rs 730.75, and Amtek Auto fell 0.76% to Rs 425.25. Mahindra & Mahindra rose 0.79% to Rs 834.40.

The BSE IT index fell 0.37% to 4,552.06. It underperformed the Sensex. India’s third largest software exporter by sales Wipro declined 3.52% to Rs 529.95. The stock fell after some reports suggested that Europe-based computer services firm Capgemini has denied takeover talks with Indian rival Wipro. Earlier some reports had suggested that Wipro was preparing a €7 billion bid for taking over Capgemini.

India’s second largest software exporter by sales Infosys Technologies fell 0.47% to Rs 1795.75. The company said during market hours today, 28 December 2007, it would unveil Q3 December 2007 results on 11 January 2008.

TCS declined 1.83% to Rs 1080.05 and Satyam Computers fell 0.40% to Rs 449.60.

Special steel and strips maker Bhushan Steel jumped 3.26% to Rs 1565.50 on reports Japan's Sumitomo Metal Industries has signed a memorandum of understanding (MoU) with Bhushan Steel, whereby the Japanese company will assist the Indian counterpart in its proposed integrated steel plant in Orissa.

Among the mid-caps, Monsanto India surged 20% to Rs 1942, SpiceJet soared 18.74% to Rs 86.50, Gulf Oil Corporation spurted 15.04% to Rs 335, Orchid Chemicals & Pharmaceuticals moved up 14.54% to Rs 294.70 and Bajaj Auto Finance rose 14.04% to Rs 426.5.

Among the small-caps, Suraj Stainless surged 20% to Rs 235.25, Glodyne Technoserve soared 20% to Rs 394.10, Ramco Systems spurted 20% to Rs 214.10, ORG Informatics climbed 20% to Rs 94.90, and L G Balakrishnan & Bros moved up 20% to Rs 43.55.

Reliance Natural Resources clocked the highest turnover of Rs 261.61 crore on BSE. Reliance Energy (Rs 218.30 crore), Transformers and Rectifiers (India) (Rs 193.97 crore), SpiceJet (Rs 179.46 crore) and Essar Oil (171.23 crore shares), were the other turnover toppers on BSE in that order.

SpiceJet registered the highest volume of 2.18 crore shares on BSE. IKF Technologies (1.83 crore shares), Himachal Futuristic Communications (1.70 crore shares), Reliance Natural Resources (1.48 crore shares) and GV Films (1.43 crore shares), were the other volume toppers on BSE in that order.

The December 2007 derivative contracts expired yesterday, 26 December 2007. As per reports, Nifty rollover from December 2007 series to January 2008 series stood at 81% while total marketwide rollover stood at 85%, as on Thursday, 27 December 2007. This compared to Nifty rollover 76% from November 2007 series to December 2007 and marketwide rollover of 83% from November 2007 series to December 2007 series.

In Europe, key indices in France, Germany and UK were down by between 0.14% to 0.39%.

Asian stocks were trading lower today, 28 December 2007. Key indices in Japan, China, Singapore, South Korea and Hong Kong were down between 0.60% to 1.70%. However, Taiwan’s Taiwan Weighted index was up 1%.

US markets declined on Thursday, 27 December 2007, on news of Benazir Bhutto's assassination. The Dow Jones Industrial Average fell 192.08 points, or 1.42%, to 13,359.61. Broader stock indicators also fell. The Standard & Poor's 500 index declined 21.39 points, or 1.43%, to 1,476.27, and the Nasdaq Composite index fell 47.62, or 1.75%, to 2,676.79.

Crude oil was unchanged today, 28 December 2007 around $97 a barrel as an Energy Department report showed that US inventories fell more than expected. Crude oil for February delivery was at $96.91 a barrel, up 29 cents, on the New York Mercantile Exchange. Brent crude for February settlement was at $95.11 a barrel, up 33 cents in London.

Grey Market - Reliance Power, eClerx, BGR and more

Reliance Power 450 to 500 260 to 270

eClerx Services 315 30 to 40

BGR Energy 480 380 to 400

Transformers & Rectifiers 465 330 to 340

Brigade Enterprises 390 8 to 10

Burnpur Cement Ltd. 12 5 to 7


Aries Agro 130 20 to 25

Manaksia Ltd. 160 10 to 15

Porwal Autocomponents 75 DISCOUNT

Precision Pipes & Profiles 150 20 to 25

Short Term Trading Calls

Buy Everonn System with a stop loss of Rs 780-Rs 800 for a target of Rs 1200-Rs 1400.

Buy Educomp Solutions with a stop loss of Rs 4300 for a target of Rs 4850.

Buy CMC with a stop loss of Rs 1320 for a short-term target of Rs 1680

Short Term Trading Calls

Buy Indian Hotel at Rs 162-Rs 150. Stop Loss at Rs 133, target of Rs 249 and Rs 396.

Buy Hotel Leela Ventures at Rs 71.50-Rs 65. Stop Loss at Rs 60, target of Rs 91 and Rs 120. Add further on close abvoe Rs 73.50

Buy RPG Life Sciences at Rs 108-Rs 98. Stop Loss at Rs 88, target of Rs 159 and Rs 204.

Global weakness may weigh

US indices ended weak in yesterday's trades and tracking the same the Asian markets are also trading weak in morning trades, which may weigh on the local indices and thereafter the market could exhibit volatility during intra-day trades. However, the prevailing north-bound journey and strong fund inflows may add to the market advantage and help the sentiment turn positive. Among the domestic indices, the Nifty could test 6,200 and above this level may surge to 6,400, while on the downside it could slip to 5,840-5,540 levels. The Sensex has a likely support at 19,500 and may face resistance at 21,000.

US indices plummeted on Thursday after Bhutto's assassination stoked geopolitical concerns and economic reports showed weakness in US markets. While the Dow Jones dropped 192 points at 13,360, the Nasdaq fell 48 points to close at 2,677.

All the ADRs on the US bourses tanked on Thursday. Tata Motors led the slump and tanked 6.43% and Satyam, ICICI Bank, HDFC Bank and VSNL fell over 5% each. While, Infosys, Wipro, Dr Reddy's Lab, MTNL and Rediff slipped over 1-4% each.

Crude oil prices rose further after the assassination of Pakistani opposition leader Benazir Bhutto raised concerns about stability in the Middle East. The Nymex light crude oil moved up by 65 cents at $95.97 per barrel. In the metals segment, the Comex gold for February series moved up by $2.30 to settle at $831.80 an ounce.

Market may turn nervous

The market may turn nervous tracking weak global markets following the assassination of former Pakistan Primer Minister Benazir Bhutto. This is despite of healthy rollover of derivatives positions from December 2007 series to January 2007 series. Bhutto's assassination sparked fears of global unrest.

The December 2007 derivative contracts expired yesterday, 26 December 2007. As per reports, Nifty rollover from December 2007 series to January 2008 series stood at 81% while total marketwide rollover stood at 85%, as on Thursday, 27 December 2007. This compared to Nifty rollover 76% from November 2007 series to December 2007 and marketwide rollover of 83% from November 2007 series to December 2007 series.

Asian stocks were trading lower today, 28 December 2007. Japan's Nikkei 225 (down 1.65% to 15,307.78), Shanghai Composite (down 0.41% at 5,287.11), Hang Seng (down 1.08% at 27,543.27), Jakarta Composite (down 0.20 points to 2,739.50), Straits Times (down 0.62% at 3,455.77), Seoul Composite (down 0.31% to 1,902.74), Taiwan Weighted (down 0.26% to 8,292.08) declined.

US markets declined on the news of the Benazir Bhutto's assassination. The Dow Jones fell 192.08 points, or 1.42%, to 13,359.61. Broader stock indicators also fell. The Standard & Poor's 500 index declined 21.39 points, or 1.43%, to 1,476.27, and the Nasdaq Composite index fell 47.62, or 1.75%, to 2,676.79.

Back home, the 30-share BSE Sensex rose 24.20 points or 0.12% to 20,216.72 on Thursday 27 December 2007. The broader CNX S&P Nifty rose 10.75 points or 0.18% to 6081.50 on that day.

As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 702.64 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 787.92 crore on Thursday, 27 December 2007.

FIIs were net sellers to the tune of Rs 3.56 crore in the futures & options segment on Thursday, 27 December 2007. FIIs were net buyers of index futures to the tune of Rs 350.02 crore and bought index options worth Rs 966.32 crore. They were net sellers of stock futures to the tune of Rs 1,318.11 crore and sold stock options worth Rs 1.80 crore.

Crude oil was unchanged today, 28 December 2007 around $97 a barrel as an Energy Department report showed that US inventories fell more than expected. Crude oil for February delivery was at $96.91 a barrel, up 29 cents, on the New York Mercantile Exchange. Brent crude for February settlement was at $95.11 a barrel, up 33 cents in London.

Morning Call

Market Grape Wine :

In House :

Nifty at a supp of 6055 and 6010 with resis at 6111 and 6135

Intra Day: Sell ABB below 1474 with a TGT of 1445 and a SL of 1486

Buy Alokind above 100.20 with a TGT of 108 and a SL of 98

F&O: Buy Suzlon above 1945 with a TGT of 2000 and a SL of 1930

Buy ITC above 207 with a TGT of 218 and a SL of 202

Out House :

Markets at a support of 19786 & 20012 levels with resistance at 20341 & 20432 levels .

Buy : RIL & REL

Buy : JSW & sail

Buy : JpAsso at dips

Buy : EssarOil at dips

Buy : GeShipping atdips

Buy : IBUllsreal & IBullsFin at dips

Buy : HLL & ITC

Buy : IciciBank & SBIN at dips

Buy : IndiaGlycol & Balrampur

Dark Horse : REL , Renuka , JpAsso , IBull , Sail , IciciBank , RIL & SBIN

TGIF : Thank God its Friday : Markets at a high book profits at all higher levels .

Bullet for the Day : Alok & Noida with strict stop loss .

Pre Market Watch

The Indian Market is likely to have a negative opening on the back of weak cue from the global markets. Yesterday the Indian market closed with marginal gains after struggling a lot throughout the trading session. A lot of volatility was seen in yesterday''s trading session. However, both the Mid Cap and Small Cap indices outperformed the benchmark indices as most buying was seen from these baskets. The Nifty December futures closed at 6,007.50, up 218 points while the Nifty January futures closed at 6,001.55 up 226 points. The BSE Sensex closed with marginal gains of 24.20 points at 20,216.72 and NSE Nifty closed up by 10.75 points at 6,081.50. We expect the market to remain cautious during the trading session.

On Thursday the US market closed in red. The Dow Jones Industrial Average (DJIA) closed lower by 192.08 points at 13,359.61. S&P 500 index fell by 21.39 points at 1,476.27 and NASDAQ dropped by 47.62 points to close at 2,676.79.

India ADRs ended in negative territory. In technology sector, Satyam fell by (5.91%) along with Wipro by (4.70%) and Infosys by (2.19%). In banking sector, ICICI bank and HDFC bank fell by (5.79%) and (5.17%) respectively. VSNL and MTNL decreased by (5.12%) and (2.70%) respectively.

The major stock markets in Asia are trading weak. Japan''s Nikkei is trading lower by 257 points at 15,307.78. Hang Seng index is trading down by 300 points at 27,543.27. Taiwan Weighted is down by 22 points to trade at 8,292.08. Sanghai Composite is trading lower by 21.78 points at 5,287.11. Strait Times is down by 21.43 points at 3,455.77.

On Thursday, the FIIs stood as net buyers in equity while no transaction was reported in debt. The gross equity purchased was Rs4,727.30 Crore while the gross equity sold stood at Rs2,306.80 Crore. Therefore, the net investment of equity reported was Rs2,420.50 Crore.

Today, Nifty has support at 5,948 and resistance at 6,136 and BSE Sensex has support at 19,829 and resistance at 20,341.

Market Outlook - Dec 28 2007

Market Outlook - Dec 28 2007

eClerx Services to debut on bourses

On 31 December 2007

eClerx Services will list on exchanges on Monday, 31 December 2007. The stock will be placed in the B1 group on BSE.

The company had fixed the IPO price at the top end of the Rs 270-315 price band. At the IPO price of Rs 315, the PE multiple works out to 14.65, based on the year ended March 2007 EPS of Rs 21.50.

eClerx Services IPO had ended on 7 December 2007 with 26.30 times subscription. The issue received bids for 9.83 crore shares as against 37.40 shares on offer.

The qualified institutional buyers' (QIBs) category was subscribed 31.59 times. The non institutional investors' category, made up of corporates and high net-worth individuals, was subscribed 36.36 times. The retail investors' category was subscribed 12.37 times.

eClerx Services IPO had managed to get a CRISIL IPO Grading of 3 out of a scale of 5. This rating of 3 indicates that the fundamentals of eClerx Services are inline (average) with that of other listed companies in India.

eClerx Services proposes to utilise the net proceeds to fund acquisitions, infrastructure investments and for setting up additional facilities.

eClerx Services’ portfolio of services comprises data analytics, operations management, data audits, metrics management and reporting services. It provides service solutions using a mix of custom designed data processes with the assistance of delivery teams comprising generalists and domain specialists, and in-house software to automate processes.

eClerx Services reported a profit after tax of Rs 40.52 crore on sales of Rs 86.12 crore in the year ended March 2007.

Daily Trading Calls

Nifty (6082) Sup 6022 Res 6107

Buy Bombay Dyeing (735) SL 728 Tgt 746, 750

Buy SUN TV (410) SL 405 Tgt 420, 422

Buy IVRCL Infra (517) SL 512 Tgt 527, 530

Sell Wockhardt (399) SL 404 Tgt 390, 386

Sell Praj Inds (239) SL 244 Tgt 230, 228

Bulls hope for indomitable spirit!

Death comes to all. But great achievements build a monument.

The assassination of former Prime Minister Benazir Bhutto, coupled with a few negative news has hurt global markets. This could well cloud the outlook for the Indian market today, at least at start. Equity benchmarks across key global markets, except Europe, have reacted to the fresh political upheaval in Pakistan. So, we expect a similar knee-jerk reaction in India as well. Given that the market has had a good rally over the past few days and with the main indices close to their previous all-time highs, bears were waiting for an excuse. But as we mentioned yesterday, remember a Santa Claus rally was something we were into. On the birth day of Dhirubhai Ambani, bulls might pray that the indomitable spirit may guide them to stage a comeback. And as Rabindranath Tagore says, taking shelter in the dead is death itself, and only taking all the risk of life to the fullest extent is living.

The near term outlook is positive though one cannot rule out the possibility of a small correction. The settlement in the F&O segment has been pretty good, with about 79% rollover in Nifty December futures. This is one of the highest figures in recent memory. In November the rollover in Nifty futures was around 75%. According to reports, traders and investors have created long positions in the Nifty January futures, which are quoting at a 40-point premium to the spot Nifty. Most signs from the derivative side are bullish, though there may be some choppiness in the next few days ahead of next month's quarterly results, and key events like the Fed meeting and the RBI policy review.

US shares slumped on Thursday amid renewed geo-political concerns after former Pakistani Prime Minister Benazir Bhutto was killed in a suspected suicide attack in Rawalpindi, Pakistan. Wall Street was also hurt by a slew of economic reports that reinforced concerns about the health of the world's biggest economy.

Reports on durable goods and unemployment heightened worries that growth is slowing in the US. Citigroup fell to a five-year low after Goldman Sachs analyst William F. Tanona said it will cut its 54-cent dividend to preserve capital amid the current turmoil in credit markets.

The Standard & Poor's 500 Index lost 21 points, or 1.4%, to 1,476.27. The Dow Jones Industrial Average dived 192 points, or 1.4%, to 13,359.61. The Nasdaq Composite Index dropped 48 points, or 1.8%, to 2,676.79.

Traded volume was once again unusually low since many Wall Street traders are on an extended Christmas vacation this week. This means that the market's reaction to new developments, good or bad, could be exaggerated.

Market breadth was negative. About seven stocks fell for every one that gained on the New York Stock Exchange.

On the economic front, the US Commerce Department said that factory orders for November came in lower than expected. Meanwhile, the US Labor Department said the number of workers applying for unemployment benefits last week was higher than expected.

Consumer confidence in December was slightly higher than expected, despite concerns about economic instability, according to the Conference Board. Separately, the government's weekly oil inventory report showed a larger-than-expected drop in domestic crude supplies last week.

The reports helped lift bond prices, for the first time in four sessions, as the weak economic outlook drove investors to safe haven investments.

US light crude oil for January delivery rose 11 cents to US$96.73 in New York. COMEX gold for February delivery rose US$2.20 to US$830.80 an ounce. The dollar fell versus the euro and the yen. Treasury prices rose, with the yield on the 10-year note falling to 4.19%, down from 4.28% on Wednesday.

European shares managed modest gains as investors bought producers and dumped travel firms on the news of Bhutto's assassination and a sharper-than-forecast drop in US oil inventories. The pan-European Stoxx 600 index ended with a rise of 0.2% to 365.08. Germany's DAX 30 rose by 0.5% to 8,038.60 while the French CAC-40 moved up 0.2% to 5,627.48 and the UK's FTSE 100 gained 0.3% at 6,497.80.

In the emerging markets, the scene was mixed. The Bovespa in Brazil shed 0.8% at 63,774 while the IPC index in Mexico was down 1.2% at 29,642. The RTS index in Russia rose 0.4% at 2291 and the ISE National-30 index in Turkey dropped 0.4% at 70,253.

Asian markets were down in line with the weakness across world markets. Toyota led declines among exporters after US durable goods orders rose less than forecast last month, while jobless claims unexpectedly increased.

Mitsubishi UFJ Financial Group led a drop among lenders after Goldman Sachs said that top US banks may have additional writedowns linked to the collapse of the subprime-mortgage market.

The MSCI Asia Pacific Index lost 0.7% at 155.94 as of 10:11 a.m. in Tokyo, its steepest decline since Dec. 17 and adding to a 3.8% drop this quarter. The regional index is up 11% this year, on course for its worst annual gain in five years.

The Nikkei in Tokyo shed 257 points or 1.65% at 15,307. The benchmark Japanese index has lost 11% in the year 2007, marking its first annual decline in five years. The Hang Seng in Hong Kong was down 339 points or 1.2% at 27,508.

The Kospi in Seoul was down 0.5%, while the Straits Times in Singapore fell 0.65%. The Shanghai Composite in China was flat and the Taiex in Taiwan too was nearly unchanged. All other Asian benchmarks dropped.

Bulls seek direction!

Bulls again managed to end the day with modest gains extending its wining streak to fifth straight trading session. After a positive gap up opening markets were unable to capitalize on to the start as volatility was witnessed on account of F&O expiry.

The frontline stocks like ONGC, REL and ITC remained range bound on the expiry day to end with moderate gains. On the other hand, small-cap stocks outperformed key indices, the small-Cap index was the top gainer adding over 2%.

The IT stocks were on the receiving end as the rupee held at a two-week high against the dollar. Others like Satyam, Rolta and Moser-Baer also lost ground.

Finally, 30-share Sensex closed at 20,216 adding 24 points and Nifty gained 10 points to close at 6,081.

VSNL slipped 2% to Rs735. The company announced Tata Group sold a 10% stake in its Sri Lankan unit for 75mn Sri Lankan rupees. The scrip touched an intra-day high of Rs770 and a low of Rs721 and recorded volumes of over 16,00,000 shares on NSE.

Spice Communications ended marginally loser by 0.5% to Rs62. Reports stated that the company would sell its tower arm to Srei Infrastructure for over Rs5bn. The scrip touched an intra-day high of Rs64 and a low of Rs61 and has recorded volumes of over 40,0,000 shares on NSE.

Gemini Communication rallied by over 9% to Rs252 after reports stated that the company along with Midas Communication Technologies bagged Rs2.6bn order from BSNL. The scrip touched an intra-day high of Rs274 and a low of Rs234 and recorded volumes of over 7,00,000 shares on NSE.

Videocon Industries rallied over 9% to Rs683 as reports stated that the company was planning to generate 5,000MW at an estimated cost of Rs250bn. The scrip touched an intra-day high of Rs689 and a low of Rs632 and recorded volumes of over 12,00,000 shares on NSE.

Ahluwalia Contracts spurred by over 6.5% to Rs351 after the company announced that it received new work orders worth Rs3.41bn. The scrip touched an intra-day high of Rs3560 and a low of Rs331 and recorded volumes of over 1,00,000 shares on NSE.

Shree Cement marginally slipped 1.4% to Rs1340. The company announced that they commissioned its second 1.5 MTPA cement grinding unit at Village Khushkhera, near Gurgaon on December 26, 2007. The scrip touched an intra-day high of Rs1439 and a low of Rs1325 and recorded volumes of over 8,000 shares on NSE.

MindTree declined 2% to Rs498. The company announced that it completed the process of acquiring TES PV Electronic Solutions on December 17. The scrip touched an intra-day high of Rs515 and a low of Rs480 and recorded volumes of over 81,000 shares on NSE.

PTL surged by over 3% to Rs173 after the company announced that the board of Directors of the company approved splitting each stock into five. The scrip touched an intra-day high of Rs174 and a low of Rs164 and recorded volumes of over 9,000 shares on NSE.

SAIL gained 1.1% to Rs273 after reports stated that the company would invest Rs200bn in West Bengal, about two fifth’s of its total planned investments. The scrip touched an intra-day high of Rs275 and a low of Rs270 and recorded volumes of over 1,00,00,000 shares on NSE.

What the FIIs are doing

FIIs were net sellers of Rs7bn (provisional) in the cash segment on Thursday while the local institutions pumped in Rs7.87bn. In the F&O segment, foreign funds were net sellers of Rs35.6mn.

On Wednesday, FIIs were net buyers of Rs24.2bn in the cash segment. Mutual Funds were net buyers of Rs7.4bn on the same day.

Stocks in News:

SEBI clears decks for Reliance Power IPO by disposing complaints against the offer and asking promoters to lock-in entire 20% of their contribution for five years. (BS)

DLF plans to raise US$5bn over the next three years by listing five of its business units. (ET)

NTPC has signed agreements for loan and bond subscription worth Rs20bn LIC. (ET)

L&T plans to invest Rs25bn in building shipyard and expanding its engineering manufacturing unit. (ET)

GMR Infrastructure is considering listing GMR Energy on domestic bourses to fund its upcoming projects. (DNA)

Unitech is close to announcing two joint development deals in Hyderabad and Chennai. (ET)

Reliance Communication slaps legal notice to DoT asking to freeze allocation of additional spectrum to existing GSM players. (FE)

ONGC Videsh strikes crude in Arabian Gulf Block off Qatar. (ET)

BOI gets board approval to raise Rs15bn via QIP. The floor price has been fixed at Rs359 per share. (FE)

GSPL and a subsidiary of Gujarat State Petroleum Corporation plans to invest Rs25bn on new pipelines. (DNA)

Dabur India to foray into milk-based beverage segment. (BS)

Yamaha is likely to team up with Bajaj to create a common engine platform for high-end bikes. (DNA)

L&T to hive-off concrete business into separate entity. (FE)

BoB raises Rs5bn through issue of bonds. (ET)

Bhushan Steel in technical assistance JV with Sumitomo Metal for the Orissa plant. (BL)

GSK Pharma to launch two vaccines in India. (Mint)

Canara Bank ups its open offer price for Can Fin Homes to Rs78 per share from Rs63. (FE)

Wipro Consumer Care to provide lighting solutions for retail industry in India. (FE)

Infosys plans to offer wealth management solution in the domestic market. (ET)

JSW Steel and Essar Steel to set-up retail outlets for showcasing products. (BL)

Combined output growth of six key infrastructure industries was lower at 4.5% in October Vs 9.9% last year. (ET)

The Government is likely to scrap service tax on business and first-class air tickets for international journeys. It is also likely to halve duty on ATF from 10% to 5%. (ET)

The Railway Budget is likely to bring down freight on key commodities including steel, cement and petroleum products by 5%. (ET)

Mobile companies may have to shell out a higher percentage of their annual revenues as spectrum charges. (ET)

Leading tea players have hiked prices and the remaining companies are expected to follow suit. (ET)

Trai has asked I&B ministry to specify the date on which the CAS would become mandatory in 55 of the country’s top cities. (ET)

FIIs step up buying

Inflow of Rs 2420.50 crore on 26 December 2007

Foreign institutional investors (FIIs) bought shares worth net Rs 2420.50 crore on Wednesday, 26 December 2007, compared to their buying of Rs 167.40 crore on Monday, 24 December 2007.

FIIs inflow of Rs 2420.50 crore on 26 December 2007 was a result of gross purchases of Rs 4727.30 crore and gross sales Rs 2306.80 crore. The 30-share BSE Sensex jumped 338.40 points or 1.70% to 20,192.52 on that day.

FII inflow in December 2007 totaled Rs 3494.20 crore (till 26 December 2007). FII inflow in calendar year 2007 totaled Rs 69,401.50 crore (till 26 December 2007).

There are a total of 1,214 FIIs registered with the Securities & Exchange Board of India (Sebi).

Precious metals end mixed

Weak dollar and geo-political tension send gold prices higher

Precious metals ended mixed today, Thursday, 27 December, 2007 after gold gained but silver slipped. The precious yellow metal once again gained after the dollar slipped against almost all its rival currencies and geo political tensions surfaced on the news of assassination of Benazir Bhutto, former Prime Minister of Pakistan. Crude oil price also rose substantially today.

Gold closed above the $830/ounce mark once again. Gold generally moves in the opposite direction of the U.S. currency. Gold, as a dollar-denominated commodity, suffers from dollar strength. US stocks also slumped after the news of tension in Pakistan.

Comex Gold for February delivery rose $3.4 (0.4%) to close at $832.9 an ounce on the New York Mercantile Exchange today. Prices touched $835/ounce during intra day trading. Last week, the yellow metal gained $17.4/ounce (2.2%). 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 fell 5.5 cents (0.4%) to $14.78 an ounce. Prices touched 26 year high on 7 November, after reaching $16.275. The metal has climbed 14.5% this year.

Gold is headed for a seventh straight annual gain. In 2006, silver had jumped 46% while gold gained 23%.

In the currency market today, the dollar index, which tracks the value of the U.S. currency against a basket of other major currencies, fell for a fourth day, down 0.7% at 76.58.

In the energy market, oil prices ended substantially higher after Energy Department report showed that U.S. inventories fell more than expected. Crude oil for February delivery rose 65 cents (0.7%) to settle at $96.62 a barrel.

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.

Gold had climbed 30% this year till date as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Dollar is still 9% down against the euro this year.

The Fed has reduced overnight lending rates by 1% in FY 2007. On 11 December, Federal Reserve lowered the federal funds rate by a quarter-point to 4.25%. The Fed also lowered its discount rate, the interest it charges on direct loans it makes to banks, by a quarter-point to 4.75%.

Before 11 December, Federal Reserve had cut the fed funds rate by a quarter-point to 4.50% on 31 October, 2007. Prior to that, Federal Reserve had cut interest rates by half percentage point on 19 September, 2007. With these interest rate cuts, dollar has been tumbling down. Market anticipates that there will be more rate cut in the coming year.

Nifty January 2008 futures at premium

Turnover in F&O segment declines

The Nifty January 2008 futures were at 6126 at premium of 44.50 points as compared to spot closing of 6081.50. Derivative contracts for December 2007 series expired today, 27 December 2007.

The NSE's futures & options (F&O) segment turnover was Rs 94,658.80 crore, which was lower than Rs 96,144.43 crore on Wednesday, 26 December 2007.

Reliance Energy January 2008 futures were at premium, at 2177, compared to the spot closing of 2134.10.

Reliance Industries January 2008 futures were at premium, at 2945.50, compared to the spot closing of 2893.85.

Essar Oil January 2008 futures were at premium, at 313.50, compared to the spot closing of 307.85.

In the cash market, the S&P CNX Nifty gained 10.75 points or 0.18% at 6081.50.

Crude gains for fourth straight day

Prices are on the verge of kissing $97 again as report shows sharp drawdown in crude inventories

Oil prices marked the straight fourth day rally after Energy Department reported that crude stockpiles fell more than expected for the week ended Friday, 21 December, 2007. Assassination of former Pakistan Prime Minister, Benazir Bhutto, also led to some added tension firming prices up. Prices have been on a roll since last Friday, 21 December and have gained more than $5.5/barrel since then. Prices once again are on the verge of kissing the $97/barrel mark. Price also rose as the greenback slipped against its rival currencies.

For the day ending Thursday, 27 December, 2007, crude-oil futures for light sweet crude for February delivery closed at $96.62/barrel (higher by $0.67/barrel or 0.7%) on the New York Mercantile Exchange. Prices are 60% higher than the year before.

As per the weekly inventory report by the Energy Department, U.S. crude inventories fell by 3.3 million barrels to 293.6 million barrels in the week ending 21 December, the lowest in nearly three years. Market was expecting a drawdown of 1.2 million barrels.

Total crude oil and petroleum products inventories dropped 10.5 million barrels to 981.9 million barrels during the week under review. Refineries operated at 88.1% of their operable capacity last week, up from the previous week's 87.8%.

U.S. gasoline supplies rose by 700,000 barrels in the latest week to 205.9 million barrels, but are in the lower half of the average range. Distillate supplies, which include heating oil and diesel, fell by 2.8 million barrels to 126.6 million barrels and are near the lower limit of the average range for this time of year.

In the currency market today, the dollar index, which tracks the value of the U.S. currency against a basket of other major currencies, fell for a fourth day, down 0.7% at 76.58.

Brent crude oil for February settlement today rose $0.84 (0.9%) to $94.78 on the London-based ICE Futures Europe exchange.

Today, natural gas rose as buyers who had made bets that prices would fall bought the positions back to protect gains or limit losses. Gas for January delivery rose 12.6 cents (1.8%) to $7.172 per million British thermal units.

Against this backdrop, January reformulated gasoline gained 4.36 cents to $2.4962 a gallon and January heating oil rose 3.91 cents at $2.6803 a gallon.

As per EIA, global oil markets will likely remain tight through 2008 and monthly average oil prices are expected to near $85 per barrel over the next year. The IEA, an adviser to 27 nations, said global demand in 2008 will rise 2.5% to 87.8 million barrels a day.