Monthly Technicals

Monthly Technicals

Monthly Investment Picks - Jan 2008

Monthly Investment Picks - Jan 2008

Stock Picks for 2008

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20 Picks for 2008

Adlabs Films With a strong presence across the entertainment industry value chain of content production, distribution, and exhibition, Adlabs becomes the choicest pick.

Domestic consumption and leisure spends will remain buoyant as disposable incomes rise across the country fuelling growth at Adlabs.

Adlabs produces and distributes films, and is a dominant player in the multiplex segment. It has also acquired 51 per cent stake in television content producer Synergy Communications, the maker of Jhalak Dikhhla Jaa and Kaun Banega Crorepati.

In the FM radio business, its subsidiary, which runs Big FM has 44 FM licenses across India. This could also become a value unlocking opportunity going forward.

Over the past three years, Adlabs has impeccably delivered a top line growth of over 100 per cent y-o-y, along with high profitability. In the September 2007 quarter, it raked in a whopping 69 per cent operating profit margin.

But going by the past numbers, operating margins have remained in excess of 50 per cent consistently, with net profit margins at over 22 per cent. The stock has appreciated three-fold since January 2007 and should do well.

Bank of Baroda Bank of Baroda has a strong presence in western India —a key zone for retail and industrial growth—with equally good rural network.

Further, the bank is one of the few banks having a substantial international presence, which contributes 18-20 per cent to total business and 30 per cent to profits. This business is expected to rise further with the bank growing its global presence.

The bank has improved its fundamentals over the past several years on key parameters such as net interest margins (NIMs) and asset quality despite growing at a robust pace (asset growth CAGR of 19 per cent in FY04-07). Going ahead, the bank's focus on NIMs backed by moderate growth augurs well.

Besides, its initiatives such as online trading services, and joint ventures in insurance and asset management, will help it create value for its shareholders.

Additional triggers could be in the form of consolidation within the public sector bank space. All this put together makes this stock, which is reasonably valued at 1.4 times its FY09 estimated book value, an attractive investment opportunity.

Bharat Bijlee Though Bharat Bijlee has risen by a whopping 228.5 per cent in the last one year, even at current levels, it is inexpensive.

Consider this: The company has investment in various companies including Siemens, HDFC and ICICI Bank.

At current rates, their combined value works out to Rs 317 crore, or about Rs 560 per share. Excluding this, the core business is valued at attractive valuations of 20 times FY08 earnings and 15 times FY09 estimated earnings.

The company is capitalising on the emerging opportunities in the power transformer sector, which accounts for 65 per cent of its total revenues with the balance from motors.

In the Eleventh Five Year Plan, a total power generation capacity of 78,000 mw is planned. This augurs well for transformer manufacturers such as Bharat Bijlee.

The company on its part has recently expanded its transformer capacity to 11,000 MVA from 8,000 MVA. The motors business is also witnessing 25 per cent growth and Bharat Bijlee has forayed into higher frame motors of up to 400 kw. All this put together make Bharat Bijlee a good pick.

Bharati Shipyard Stocks of shipbuilding companies have been re-rated on the back of rising order book-to-sales to over seven times. The stock price of ABG Shipyard has gone up 267 per cent, while Bharati Shipyard is up 107 per cent over the last one year.

The gain has been higher in the case of ABG Shipyard, thus stretching its valuation at 33 times its FY08 estimated earnings. Bharati Shipyard is still trading at a comfortable 18 times estimated FY08 EPS and 13 times FY09 EPS.

Also, its current order book of about Rs 4,639 crore (11 times its FY07 revenue) is strong enough for maintaining 50 per cent growth for the next three years.

Bharati is building a greenfield shipyard which will enable it to build six vessels up to 60,000 dwt (dead weight tonne) against 15,000 dwt currently by December 2008. This will enable Bharati to improve its execution speed and bid for more projects.

Besides, it is planning to invest Rs 2,000 crore along with Apeejay Shipping to set up a shipbuilding yard on the eastern coast, which will be commissioned in FY 2011. A relatively lower valuation and strong earnings visibility makes this stock an attractive investment.

Bhel Today, the biggest constraint in the power sector is the supply of equipment, especially the critical power equipment required for the larger projects.

But, for Bhel, which commands about 65 per cent market share in the domestic power equipment industry, this provides long-term earnings visibility.

While competition is rising with new players like L&T and Chinese companies vying for a share, Bhel's order book of Rs 62,400 crore, almost 3.6 times its FY07 revenues, instils confidence. The successful acquisition of orders for super critical boilers and high technology gas turbines required for the bigger projects would only improve its order book further.

Considering the huge order backlog and the orders in pipeline, Bhel is expanding its capacities by 67 per cent to 10,000 mw by January 2008, which will further increase to 15,000 mw by December 2009.

Bhel is also expanding its forging and casting capacities and a new fabrication plant to help reduce its dependence on imports. These should also help lower costs in the years to come. Overall, a better industry outlook, strong order book and expansion of existing capacities will drive the stock from the current levels.

Bharti Airtel With a mobile subscriber base of 51 million, Bharti Airtel is India's largest mobile service provider. While it has added an average of 2 million subscribers a month in Q2, it is expected to crack the 100 million subscriber mark by FY10.

While the company has experienced good growth, its ARPU has fallen by 10 per cent over the last three quarters, much ahead of the 4 per cent decline experienced by Reliance Communications. Even then, operating margins have improved, on the back of higher margin in broadband business and cost reduction.

Going forward, increase in scale of operations will keep costs in check. Capital and operating expenditure is also likely to come down after the formation of Indus, a tower infrastructure company, which will manage the tower infrastructure of Bharti, Vodafone and Idea.

A trigger for the stock could be the listing of Bharti Infratel, the tower division and which holds 42 per cent in Indus. Bharti Infratel already has 20,000 towers and plans to set up more.

RCOM will be the biggest threat for the company if it manages to soon roll out its GSM services across 15 circles. Additionally, any unfavourable outcome over the spectrum issue will have its impact; it could lead to increased investments in upgradation of existing equipment.

To conclude, Bharti's revenues should grow by 35 per cent in the next two years on the back of subscriber expansion, start of Sri Lankan operations by March 2008, and launch of IPTV and DTH. A sum-of-parts valuation puts the per share value of Bharti at Rs 1,200, a 27 per cent upside from the current levels.

Blue Star The central air conditioning major, Blue Star, is a key beneficiary of the economic boom in the country across sectors like IT/ITES, retail and telecom.

This is reflected in the strong CAGR of 32 per cent and 40 per cent in sales and operating profit respectively in the past three years.

Notably, such strong growth traction is expected to continue as the company is sitting on a strong order book position, which is at Rs 1,030 crore as on September 2007. It is likely to get repeat orders from its existing customers as they expand operations.

It is expanding its capacities by investing about Rs 60-70 crore, which will lead to economies of scale and rationalisation of costs leading to margin expansion. Its return on equity and return on capital employed, which were at 34 per cent and 26 per cent respectively in FY07, will only improve.

However, the full benefits will be reflected only from the next financial year. The macro factors too continue to be robust, with huge investments planned in all the above mentioned sectors.

Dishman Pharmaceuticals Dishman, a pharma outsourcing player, is moving up the value chain from being a commoditised chemicals supplier to a research partner for innovator companies.

Its acquisition of Swiss-based Carbogen-Amcis (CA), which offers drug development and commercialisation services, has helped it tap into the client base of CA that includes seven of the top ten US drug companies.

With three projects in phase-III development, and likely to hit commercial production in two years, CA's revenues are expected to grow 15 per cent annually to Rs 400 crore by December 2008.

Dishman caters to 50 per cent of Dutch pharma major Solvay Pharma's requirement of eposartan mesylate, an anti-hypertension medication. Its acquisition of Solvay's Vitamin-D business will boost revenues. Its foray into China to manufacture Quats, a catalyst, is also seen positively.

All these should help reduce Solvay's share of 25 per cent in Dishman's revenues going forward. With earnings expected to grow between 25-30 per cent in the next two years (Rs 12 in FY08, Rs 15 in FY09 and Rs 20 in FY10), the stock can deliver 28-30 per cent returns in one year.

Educomp Solutions Educomp, the market leader in Kindergarten-12 education products, is a successful niche player. It has made some smart acquisitions, entered new areas. and garnered a client base of almost 6,000 schools across India besides, a small presence in Singapore and the US. Its first mover advantage makes it difficult for competition to catch up anytime soon.

Besides, the company has so far acquired and built the abilities to design and create content for schools, learning and school infrastructure management solutions, online teaching solutions, community building solutions and more recently into setting up its own schools.

Financially, Educomp's top line has almost doubled every year and operating margins have been maintained above 50 per cent.

Considering the growth potential in the Indian education industry, Educomp is likely to keep its juggernaut rolling for the coming few years. In FY09, Educomp will double its top line again and grow its earnings by 75 per cent. Although there has been a concern over valuations, the consistent earnings growth justify the same.

HDFC HDFC is an ideal play on the gamut of financial services. Besides market dominance in housing finance, it provides huge potential for value unlocking from its investment in banking, insurance and mutual fund subsidiaries.

The proposed UTI Mutual Fund IPO, stake sale by Reliance Capital in its mutual fund entity and the probability of listing of insurance companies though in the long term, should provide triggers. Moreover, there is a possibility of a merger with HDFC Bank.

Its core business--housing finance will continue to do well. Its loan book is expected to witness a CAGR of 25 per cent over the next two years. Its net interest margins are expected to remain stable at around 3 per cent.

And, HDFC is known for its asset quality. HDFC's stock trades at about 5 times FY09 estimated book value (adjusted for the value of its subsidiaries, which is about 30 per cent of HDFC's market capitalisation), and is a worthy pick.

India Infoline India Infoline is another company representing financial services, except the lending business.

Its stock price has grown more than fourfold in the last one year amid many positive triggers like capital raising for expansions, tie-up with strategic investors for investments in subsidiaries and restructuring of its various businesses.

Besides equity broking, it has expanded its product basket to include institutional equities broking, commodities broking, margin finance, investment banking and, distribution of life insurance, mutual fund and loans products.

It is investing towards building a strong distribution network (596 branches in 345 cities) and customer base (5 lakh clients) for its various services. Accordingly, the share of its traditional broking business of about 56 per cent in FY07 revenues is expected to come down over the years.

The stock trades at 51 times and 44 times estimated earnings for FY08 and FY09 respectively. While it looks cheaper than Edelweiss, in terms of market capitalisation to revenues, it trades at a higher P/E than Indiabulls.

However, it has the most de-risked business model compared to other players. Given India Infoline's aggressive growth strategy, the stock is ideal for long term investors.

Jain Irrigation Jain Irrigation, which is in the businesses of micro irrigation systems, food processing and plastic pipes and sheets, is a direct play on the growing emphasis on agriculture. Irrigation systems account for 30 per cent of its revenue. It’s revenues from micro irrigation have grown at 70 per cent annually.

Growth will be maintained on the back of its plans to launch new irrigation systems, higher replacement demand, focus on geographical diversification.

Jain's five overseas acquisitions, including a 50 per cent stake in NaanDan of Israel, the world's fifth largest micro-irrigation company, will help in terms of access to technology and access to large markets such as South Africa, US, and Europe.

In food processing, which accounts for 14 per cent of total income and grew by 74 per cent in FY07, Jain produces juices and dehydrated vegetables for companies like Coco Cola, Nestle, etc. This business to grow at healthy from hereon.

In plastic pipes and sheets, its products find application in agriculture (30 per cent market share) and telecom (70% share) among others and, should continue to grow at a healthy pace.

To sum up, Jain is operating in high growth areas, while exports too are expected to grow rapidly, which makes it a good investment case.

Jindal Saw Jindal Saw, the most diversified Indian pipe manufacturer, makes submerged arc welded (Saw), seamless and ductile iron spun pipes, which are used in diverse applications like oil & gas and water-based infrastructure.

The company is expanding its capacities in phases which will bring economies of scale– longitudinal Saw pipes (by 25 per cent), helical Saw pipes (233 per cent) and seamless pipes (150 per cent) -- by FY09. These expansions are well-timed due to strong demand for pipes on account of surging demand for oil and gas globally.

Over the next three-four years, global demand (including India), for Saw pipes is estimated at 200,000 km involving an investment of $60 billion.

Jindal Saw is likely to gain due to restructuring of the investment holdings in Jindal Group companies, wherein it has substantial investments in Nalwa Sons, Jindal Stainless, JSW Steel and Jindal Steel & Power, are worth about Rs 2,200 crore. Excluding the value of investments, the stock trades at 9 times its FY09 estimated earnings, which is attractive as compared with 17 times for Welspun Gujarat.

Larsen & Toubro Reinventing itself and successfully developing new businesses are among L&T's key strengths. That, along with the domestic infrastructure and global hydrocarbon investments, is responsible for the rising revenues and order book. It is now targeting a turnover of Rs 30,000 crore by FY10 as compared with Rs 18,363 crore in FY07.

Going forward, there is more business to come, as the government has estimated an infrastructure investment of $500 billion during the Eleventh Five Year Plan. Besides, a lot of money will also be spent by domestic players in the metal, oil and gas, power and other industries.

Little wonder, L&T's order book has been rising. As of September 2007, the engineering and construction division had an order book of Rs 42,000 crore.

Going forward, L&T is also focusing on the overseas markets and has targeted exports to increase to 25 per cent of 2010 sales. It is entering shipbuilding, railway locomotives, power generation and power equipment as well.

While all these investments in different businesses will help sustain future growth, the medium term continues to be robust. Some of it is already rubbing off positively on the share price. Although the stock seems richly valued, it can fetch good returns.

Maruti Suzuki On the back of a sound foundation of existing products (13 models priced between Rs 2 lakh and Rs 15 lakh), strong distribution, efficient service network and new product launches, Maruti Suzuki will maintain its dominant position.

The company has 52 per cent market share by volume of the Indian car market and 62.5 per cent of the small car segment, which is commendable given the stiff competition from global majors.

Maruti grew at a scorching 18 per cent, compared with the 13 per cent recorded by passenger car market in H1 FY08. For eight months ended November 2007, sales volume was up 19.7 per cent to 500,108 vehicles led by 49 per cent growth in exports. Notably, exports are expected to grow 40 per cent annually for the next two years; its share in total sales is likely to move up to 12 per cent in 2010 from 7 per cent in FY07.

Maruti is already augmenting capacities by 3 lakh in a phased manner by FY10 to a million units. Besides, it has lined up Splash (A2 segment) and the concept car A-Star (A1 segment), while a Swift sedan is on the cards. These will help earnings grow by 20 per cent annually in the next two years. Aggressive pricing, enhanced margins on the back of improved product mix, indigenisation and scale benefits, will help Maruti do well.

ONGC Oil exploration companies are set to benefit from the current high oil prices and firm outlook. India's largest oil exploration company, ONGC is the best bet in this space. ONGC with interest in 85 domestic blocks including 52 offshore fields, has made 28 discoveries in the past two years, of which, 14 were made in FY08 itself.

Further, its 100 per cent subsidiary, ONGC Videsh has stakes in 26 blocks across 15 countries and is expected to be the key growth driver with its share in ONGC's consolidated revenues and profits expected to rise to 20 per cent (14 per cent now) and 14 per cent (9 per cent now) respectively.

ONGC's substantial interests in MRPL, Petronet LNG, GAIL and Indian Oil Corporation are the topping. Moreover, the IPO of Oil India in the next few months could provide further triggers.

What also makes ONGC attractive is that it is the cheapest among its Asian peers trading at 10.1 times estimated FY09 earnings and enterprise value per barrel oil equivalent of about 7.5 times for FY09.

Going ahead, exploration successes especially in the KG basin and favourable announcement on various issues like sharing of subsidy burden, cess and deregulation in gas prices will be big positives.

Patel Engineering Patel Engineering, which is having an order book of Rs 5,400 crore almost 4.8 times its FY07 revenues, would be the key beneficiary of the boom in the construction, power and real estate sectors.

Within power sector, the 11th Five Year Plan has an outlay of Rs 70,000 crore, adding another 18,000 mw in hydropower generation. Patel Engineering has 22 per cent market share in the domestic hydropower construction, which accounts for 60 per cent of its current order book.

Also, the company has pre-qualified for new projects worth over Rs 6,000 crore as on September 30, 2007.

Besides, its entry into own power generation setting up of 1,200 mw thermal power plant at an investment of Rs 5,000 crore are positive triggers. Meanwhile, its core businesses including construction of dams, transportation and micro-tunneling are growing at a faster pace thus providing sustainable earnings growth.

The immediate trigger would come from its real estate business. Patel Engineering has transferred a land bank of about 1,000 acres spread across Bangalore, Chennai, Hyderabad and Mumbai to Patel Realty India, a 100 per cent subsidiary.

According to estimates, the real estate business is valued between Rs 500-520 per share. All of these make Patel Engineering an attractive investment.

Reliance Communications Reliance Communications (RCOM) has a mobile telephony market share of 18 per cent and subscriber base of 38 million, which is rising by a million every month. And this should continue to rise as RCOM penetrates into smaller towns.

What's more interesting is that despite concerns over declining, operating margins have improved to 42.2 per cent in Q2 FY08, thanks to the benefits of larger scale.

This is expected to improve further if RCOM gets the go-ahead to operate an additional 15 GSM circles as 65 per cent of passive infrastructure such as telecom towers, is common to both GSM and CDMA technologies and the investments in its existing networks will be incremental.

Additionally, it is the value unlocking in its subsidiaries that are likely to provide further triggers.

In 2008, RCOM is likely to announce a stake sale and subsequently list its tower subsidiary, Reliance Telecom Infrastructure, list its submarine cable subsidiary, FLAG Telecom, hive off of its SEZ and BPO businesses and the launch IPTV and DTH services by the first quarter of 2008.

Analysts estimate that a conservative sum-of-parts valuation based on FY09 numbers for RCOM comes to Rs 850-Rs 900 per share, which indicates an appreciation of 17-24 per cent from current levels.

Reliance Industries In 2008, Reliance Industries' (RIL) exploration and production (E&P) division, which accounts for 50 per cent of its sum-of-parts valuation, will start selling gas from the KG Basin. The only ambiguous aspect here seems to be the pricing of gas and settlement with the ADA group and NTPC.

Within a few months, Reliance Petroleum will also start operations, all of which should lead to a jump in RIL's profits.

Also, the bids for NELP VII will be awarded by July 2008. While further wins will add to reserves, new discoveries at existing reserves should further add to valuations and the possible de-merger of RIL's E&P division would unlock value.

While the company is yet to prove its mettle in its retail and SEZ initiatives, given its track record managing mammoth projects, one can hope to see positive results here as well.

Notably, analysts maintain their bullish outlook on the core businesses. Refining margins for RIL, already the best among global players, should remain firm until FY11, while petrochemical margins are expected to be stable with good growth in volumes. At a P/E of under 12 times FY09 estimated core earnings, RIL is a worthy investment.

State Bank of India SBI’s move to merge State Bank of Saurashtra with itself has the potential to trigger the re-rating of public sector banking stocks by pushing the much needed consolidation process.

To further expedite consolidation, the boards of SBI and its other six associate banks are meeting in January to consider merger. Should that happen, SBI's standalone balance sheet size will grow 1.5 times to Rs 8.20 lakh crore, almost double the size of ICICI Bank's.

Also, its branch network will jump 50 per cent to 14,400 branches. But, the improvement in valuations (re-rating) should get a boost when the merged entity is able to rationalise costs and extract benefits from the merger.

SBI will raise Rs 17,000 crore through a rights issue that should provide fuel for future growth. In a competitive Indian banking business, it is important for banks to achieve size and scale to be globally competitive.

And for investors, it is more important to find such banks at reasonable valuations. SBI meets both these criteria. SBI's stock trades at 2.2 times and 2 times its estimated consolidated book value for FY08 and FY09 respectively.

Further, SBI has investments in mutual fund and life insurance subsidiaries, which make valuations more compelling. Via Business Standard

No entry load on Mutual Funds from Jan 4 2008

As a New Year gift to mutual fund investors, market regulator Sebi on Monday exempted them from payment of entry fee on applications filed directly to the asset management companies (AMC).

"It has now been decided that no entry load shall be charged for direct applications received by the AMCs i.e. applications received through Internet, submitted to AMCs or collection centre/ investor service centres that are not routed through any distributor/agent/broker," Securities and Exchange Board of India said in a circular.

The exemption would apply for investments in existing schemes with affect from January 4, 2008 and in new schemes to be launched thereafter.

The Sebi circular further said, the entry fee exemption would also apply to additional purchases made directly by the investors under the same folio or for switching from one scheme to the other.

These exemptions, the SEBI said, were intended "to protect the interests of investors' securities and to promote the development of, and to regulate the securities market".

"This is good and positive move and will help the mutual fund industry," said managing director of the Delhi-based Taurus Asset Management Company R K Gupta while commenting on the SEBI notification.

Gupta further said that this decision was overdue and "for the past five years we have been pressing for this exemption".

Sebi's move, however, would have adverse implications for the intermediaries who have been involved with the mutual fund industry.

Post Market Commentary

The market closed on a positive territory on the last trading day of the year 2007. The market opened with handsome gains on the back of favoring cues from the global markets. But all of a sudden it lost the momentum to pare most of its initial gains and gathered the momentum after the mid session as the buying intensified across the counters. The Consumer Durables, Realty and Capital goods index remained the centre of attraction as most buying is seen from these baskets. Both the Mid Caps and Small Caps indices once again outperformed the benchmark indices to closed higher by 214.92 points and 447.08 points at 9,789.49 and 13,348.37 respectively. The BSE Sensex closed higher by 80.04 points at 20,286.99 and NSE Nifty grew by 58.9 points to close at 6,138.60.

BSE Consumer Durables index surged 354.79 points to close at 6,956.79. Scrips that grew are Videocon (10%), Blue Star (5.45%), Rajesh Exports (3.60%), Titan (1.91%) and Lloyd Ele (1.63%).

BSE Health Care index closed up by 79.70 points at 4,418.65. Scrips that jumped are Bilcare Ltd (12.66%), Dishman Pharma (7.29%), Matrix Labs (4.57%), Fortis Healthcare (4.35%).

BSE Metal index advanced by 71.77 points to close at 20,020.22. Scrips that pushed up are Jindal Stainless (2.43%), Ispat Industries (2.23%), Jindal Saw (1.89%), SAIL (1.74%)

BSE Realty index closed higher by 176.16 points at 12,727.42. Scris that grew are Purvankara (6.36%), IndiaBull Real (3.60%), Akruti City (3.41%), HDIL (2.79%) .

BSE Oil & Gas index grew by 99.34 points to close at 13,301.60 as BPCL (10.77%), HPCL (7.69%), Indian Oil (7.48%), Cairn India (4.37%), Gail India (2.15%) closed in green.

BSE Bankex index grew by 31.65 points to close at 11,418. Scrips that gained are Canara bank (6.70%), CentBOP (6%), Oriental bank (2.16%), Allahabad bank (1.58%), IOB (0.79%) .

BSE IT index fell 22.47 points to close at 4,529.59. Scrips that fell are Infosys (1.52%), Niit Tech (1.03%), Wipro (0.82%), Tech Mahindra (0.81%) and I-Flex (0.44%).

Mute welcome to the new year

The Sensex opened 116 points above its previous close tracking positive Asian markets. But, the market could not hold on to its gains as trading progressed on lack of buying support. However, the presence of bullish sentiment helped the market to remain in a range with a positive bias in the latter part of the session with buying in consumer durables, PSU and FMCG stocks. However, selling in frontline stocks towards the close saw the Sensex touch its day's low of 20,240. The Sensex finally closed the session with a gain of 80 points at 20,286, while the Nifty added 59 points at 6,139.

Breadth of the market was extremely positive on the Bombay Stock Exchange (BSE) with gainers outpacing losers in the ratio of 7.02:1. Of the 2,930 stocks traded on the BSE 2,551 stocks advanced, 363 stocks declined and 16 stocks ended unchanged. Except the BSE IT index, all sectoral indices ended in positive territory. The BSE CD index ended firm with gains of 5.37% at 6,957, while the BSE PSU index rose 2.18% at 10,468, the BSE HC index added 1.84% at 4,419, the BSE FMCG index added 1.72% at 2,320 and the BSE Teck index moved up by 1.64% at 4,015.

Action in several index heavyweights lifted the market. Bharti Airtel led the pack and shot up by 5.72% at Rs995. NTPC soared 3.58% at Rs250, M&M surged 3.16% at Rs861, Ranbaxy flared up by 2.49% at Rs426, ITC jumped by 2.34% at Rs210, Reliance Communication added 1.90% at Rs747, ACC advanced by 1.59% at Rs1,025, Tata Motors was up 1.55% at Rs742. However, HDFC dropped 1.76% at Rs2,827, Ambuja Cement slipped 1.54% at Rs147, Infosys lost 1.52% at Rs1,768 and Cipla dipped 1.07% at Rs213 while Reliance Energy, HLL, Wipro, Reliance Industries, SBI and HDFC Bank slipped marginally.

Over 3.48 crore IFCI shares changed hands on the BSE followed by GV Films (2.54 crore shares), Ispat Industries (1.67 crore shares), GTL Infrastructure (1.63 crore shares), and Tata Teleservices (1.42 crore shares).

Valuewise, IFCI registered a turnover of Rs314 crore on the BSE followed by Eclerx (Rs275 crore), RNRL (Rs215 crore), Transformers & Rectifiers India (Rs191 crore) and Brigade Enterprises (Rs183 crore).

Sensex gains 47% in 2007

The market posted modest gains on the last day of calendar year 2007, led by gain in telecom stocks and in select heavyweights. Asian markets which opened before Indian market, edged higher. European markets which opened after Indian market, slipped.

The 30-share BSE Sensex rose 80.04 points or 0.40% to 20,286.99. Sensex opened 116 points higher at 20,323.28 and hit a high of 20,484.28 in early trade. At the day’s high Sensex had gained 277.33 points. Sensex hit a low of 20,239.63 in the day. Sensex had struck an all time high of 20,498.11 on 13 December 2007.

The broader CNX S&P Nifty rose 58.90 points or 0.97% to 6,138.60. Nifty hit a high of 6,167.75 during the day. Its all time high is at 6,185.40, struck on 13 December 2007.

In the calendar year 2007, the BSE Sensex surged 6500.08 points or 47.14% to 20,286.99, from its close of 13786.91 on 29 December 2006. The S&P CNX Nifty vaulted 2172.20 or 54.76% in calendar 2007.

BSE clocked a turnover of Rs 8977 crore as compared to Rs 8497 crore on Friday 28 December 2007. The NSE futures & options turnover was Rs 46186.73 crore, lower than Rs 50436.85 crore on Friday 28 December 2007.

Nifty January 2007 futures were at 6156, a premium of 17.40 points compared to the spot closing of 6138.60.

The market breadth was strong on BSE with 2496 shares advancing as compared to just 387 that declined. 17 remained unchanged

The BSE Mid-Cap index rose 2.24% to 9,789.49, while the BSE Small-Cap index gained 3.47% to 13,348.37. The BSE Mid-Cap index struck an all time high of 9,817.28 today. The BSE Small-Cap index hit a record high of 13,376.80 today. Both these indices outperformed the Sensex.

In the calendar year 2007, BSE Mid-Cap index gained 3984.31 points or 68.63% to 9,789.49, from its close of 5805.18 on 29 December 2006. The BSE Small-Cap index gained 6456.05 points or 93.67% to 13,348.37, from its close of 6892.32 on 29 December 2006.

All sectoral indices on BSE settled higher today, except BSE IT index. BSE Oil and Gas index (up 0.75% at 13,301.60), BSE TecK index (up 1.64% to 4,015.03), BSE Capital Goods index (up 0.56% at 19,755.39), BSE Consumer Durables index (up 5.37% to 6,956.79), BSE FMCG Index (up 1.72% at 2,319.92), BSE Health Care index (up 1.84% at 4,418.65), BSE PSU index (up 2.18% to 10,468.14), BSE Power Index (up 1.25% at 4,548.85), BSE Auto index (up 1.29% at 5,667.45), BSE Realty (up 1.40% to 12,727.42), outperformed the Sensex.

BSE IT index (down 0.49% to 4,529.59), BSE Metal index (up 0.36% at 20,020.22), and Bankex (up 0.28% to 11,418.00), underperformed the Sensex.

Among the Sensex pack, 15 advanced while the rest 15 declined.

India’s largest cellular services provider in terms of market capitalisation, Bharti Airtel surged 5.03% to Rs 988. 3.96 lakh shares changed hands on the counter on BSE. The stock rose on reports a clutch of international investors, led by Singapore's Temasek Holdings, are putting in $1 billion in its 100% subsidiary Bharti Infratel.

Other telecom stocks, Reliance Communication (up 1.17% to Rs 741.15) and Idea Cellular (up 6.38% to Rs 140), also logged gains

India's largest private sector firm by market capitalization & oil refiner Reliance Industries was down 0.57% to Rs 2881.70 on 5.29 lakh shares. The stock eased from session's high of Rs 2948.80.

ITC (up 2.43% to Rs 210.50), and Ranbaxy Laboratories (up 1.90% to Rs 423.50) were the other gainers from Sensex pack.

Housing Development Corporation (HDFC), the country’s largest dedicated housing finance company slipped 1.92% to Rs 2868. It was the top loser from the Sensex pack

IT pivotals slliped. Wipro (down 1.67% to Rs 521.10), Satyam Computers (down 0.75% to Rs 446.25) and Infosys Technologies (down 1.82% to Rs 1763), edged lower.

Shares of state-run refining and marketing companies surged on reports that the government is likely to finalise price increase at a meeting of a Group of Ministers around second week of January 2008. Indian Oil Corporation (IOC) surged 6.90% to Rs 790, Bharat Petroleum Corporation (BPCL) gained 10.65% to Rs 523 and Hindustan Petroleum Corporation (HPCL) advanced 6.31% to Rs 364.50.

Brokerage shares surged on fresh buying. India Infoline (up 8.30% to Rs 1921), Edelweiss Capital (up 5.54% to Rs 1607), Motilal Oswal Financial Services (up 5.57% to Rs 1860) and Religare Enterprises (up 10% to Rs 607.50), surged.

Axon Infotec (up 20% to Rs 90.30), GIC Housing Finance (up 20% to Rs 98.10), Jayant Agro Organics (up 20% to Rs 20.34), Gati (up 20% to Rs 184.90), Ucal Fuel (up 20% to Rs 122.70), and Deepak Nitrite (up 20% to Rs 150.65), surged

Era Construction (down 10% to Rs 815.95), Garnet International (down 8.21% to Rs 111.75), and Core Projects (down 6.99% to Rs 423), slipped

Brigade Enterprises settled at Rs 378, a discount of 3.07% over IPO price of Rs 390. The stock debuted at Rs 399.70, a premium of 2.48% over the IPO price. The stock moved in a range of Rs 409.40 and Rs 365.80 for the day.

eClerx Services settled at Rs 447.50 on BSE, a premium of 42.06% over the IPO price of Rs 315. The stock moved in a range of Rs 466.80 and Rs 320 for the day

Industrial Finance Corporation of India soared 12.61% to Rs 92 on hopes of re-bidding for a 26% strategic stake sale in the firm.

Housing Development and Infrastructure gained 4.04% to Rs 1087 on reports the company is planning to set up a 5,547-acre special economic zone in Vasai-Virar region near Mumbai.

Rashtriya Chemicals & Fertilizers surged 4.98% to Rs 117.95, after the company said it has signed a memorandum of understanding with GAIL India for setting up coal gasification project in Talcher, Orissa

Time Technoplast rose 2.91% to Rs 993.90 on reports the company is eyeing 2-3 acquisitions in the solar energy space to boost its presence in the renewable energy space.

Bata India surged 12.78% to Rs 289 after reports that Reliance Industries’ subsidiary Reliance Retail has entered into a strategic alliance with the company to jump-start its footwear vertical.

France's CAC 40 index was down 0.46% to 5,601.28 whereas the FTSE 100 index in UK was down 0.54% to 6,442.20.

Asian markets were trading firm today, 31 December 2007. Hang Seng (up 1.62% at 27,812.65), Straits Times (up 1.06% at 3,482.30) and Taiwan Weighted (up 1.30% to 8,506.28) rose. Stock markets in Japan, China, Indonesia and South Korea were closed today, 31 December 2007.

US markets ended on a mixed note on Friday, 28 December 2007, after new home sales declined 9% in November 2007 to an annualized rate of 6,47,000 units. The Dow Jones industrial average was up marginally by 6 points at 13,366. The Nasdaq Composite index was down 2 points at 2,674.

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.

Comprehensive List - Multibaggers 2007

Comprehensive List - Multibaggers 2007

Bank of India, Bharat Forge, Garden Silk Mills, Murdeshwar Ceramics

Bank of India, Bharat Forge, Garden Silk Mills, Murdeshwar Ceramics

2007 Stocks, stats

BSE Metal Ind up 122%, Cap Goods up 117%, Oil up 116%

BSE IT Index down 13.9%, BSE Auto Index up 3%

REL up 310%, RPL up 255%, SAIL up 220%, L&T up 189%

Tata Power up 162%, RIL up 127%, NALCO up 127%

Infosys down 21%, Tata Mot down 17.7%, Cipla dn 15%

FIIs pump in Rs.70,291cr in cash+F&O in 2007

MFs net buyers of Rs.6622cr in 2007

Jai Corp up 769%, IFCI up 663%, Ispat up 646%

GMDC up 611%, Nag Fert up 538%, India Info up 530%

Hexaware dn 57%, Subex dn 50%, Sundaram Clay dn 38%

Weekly Technical Analysis, Weekly Industry Trends

Weekly Technical Analysis, Weekly Industry Trends

List of Trading Holidays - 2008

1. Mahashivratri 6th March 2008 Thursday


2. Id-E-Milad 20th March 2008 Thursday


3. Good Friday / Holi (1st Day) 21st March 2008 Friday


4. Ambedkar Jayanti 14th April 2008 Monday


5. Mahavir Jayanti 18th April 2008 Friday


6. Maharashtra Day 1st May 2008 Thursday


7. Buddha Purnima 19th May 2008 Monday


8. Independence Day 15th August 2008 Friday


9. Ganesh Chathurthi 3rd September 2008 Wednesday


10. Ramzan Id / Gandhi Jayanti 2nd October 2008 Thursday


11. Dasera 9th October 2008 Thursday


12. Diwali (Laxmi Pujan) 28th October 2008 Tuesday

13. Diwali ( Bhaubeez) 30th October 2008 Thursday

14. Gurunanak Jayanti 13th November 2008 Thursday


15. Bakri-Id 9th December 2008 Tuesday


16. Christmas 25th December 2008 Thursday

Facts about NSE and BSE

Market Cap: At the beginning of this bull run, the Indian stock market, as represented by NSE, was just another stock exchange in developing world. Though it was admired for its online trading platform, its gyrations hardly mattered to the world. Five years hence, NSE now ranks among the world’s 10 biggest stock exchanges and India is inching closer to the status of being a global asset class. Since ’03, NSE’s market capitalisation has recorded a compounded annual growth rate (CAGR) of 55%.

Obviously, no global fund manager will have the courage to ignore such high returns. In contrast, developed markets have witnessed a CAGR of 10-15%. What’s more, with each 10% rise in NSE’s market cap, it is improving its ranking by one notch. Don’t be surprised if India breaks into the top five in next 2-3 years. As the market cap rises, so does the market breadth and its ability to absorb greater amount of capital. Besides, it reduces the probability of wide fluctuations and price aberrations.

Number Of Trades: Critics may describe the rise as a fluke and temporary in nature, without realising the fact that the NSE is already the world’s third busiest stock exchange in terms of the number of shares bought and sold. The bull run has been supported by an over 25% compounded growth in the number of trades. The fact that NSE can handle such a heavy load without a hitch proves the resilience of its system and raises the confidence of the global investment community in the Indian capital market. This will prove positive in attracting capital in Indian over the longer term.

Value Of Shares Traded: In October this year, shares worth $564 billion were traded on the NSE — almost two-and-a-half times more than at the beginning of ’03. Though volume growth in India lags that of other emerging markets, it has now crossed a psychological barrier of half-a-trillion dollars.

Gulf Oil Corp

Gulf Oil Corp

Top Picks

Top Picks

Gremach Infrastructure

Gremach Infrastructure

Market pares gains

The market which opened on a buoyant note, pared early gains on profit taking at higher levels. Auto shares rose on value buying. Small-cap and mid-cap shares surged on momentum buying. Asian markets were trading firm today, 31 December 2007.

At 11:26 IST, the 30-share BSE Sensex was up 104.92 points or 0.52% to 20,311.98. Sensex opened 116 points higher at 20,323.28. Sensex hit a high of 20,484.28 in early trade. At the day’s high of 20,484.28, the Sensex had gained 277.33 points.

Sensex moved in a range of 20,323.28 and 20,484.28 so far during the day. Sensex had struck an all time high of 20,498.11 on 13 December 2007.

The broader CNX S&P Nifty was up 41.20 points or 0.68% to 6,121.20. Nifty hit a high of 6,167.75 so far during the day. Its all time high is at 6,185.40, struck on 13 December 2007.

BSE clocked a turnover of Rs 3034 crore by 11:30 IST as compared to Rs 1444 crore by 10:30 IST.

The market breadth was strong on BSE with 2488 shares advancing as compared to 290 that declined. 14 remained unchanged

The BSE Mid-Cap index rose 1.58% to 9,726.23, while the BSE Small-Cap index gained 2.79% to 13,261.14. Both these indices outperformed the Sensex.

Among the Sensex pack, 21 advanced while the rest declined

India’s largest cellular services provider in terms of market capitalisation, Bharti Airtel surged 5.24% to Rs 990 on reports a clutch of international investors, led by Singapore's Temasek Holdings, are putting in $1 billion in its 100% subsidiary Bharti Infratel.

Hindalco Industries (up 2.10% to Rs 217.60), Reliance Communications (up 2% to Rs 747), and DLF (up 1.81% to Rs 1083), were the other gainers from the Sensex pack.

Auto stocks, Mahindra & Mahindra (up 1.40% to Rs 846), Tata Motors (up 1.20% to Rs 739.50), and Bajaj Auto (up 0.73% to Rs 2630), gained on value buying

India’s largest private sector firm by market capitalization & oil refiner Reliance Industries dipped in the red after a firm opening. It was down 0.30% to Rs 2888.70 on 1.13 lakh shares. It had hit a high of Rs 2948.80 in early trade.

North India’s largest cement manufacturer by sales, Ambuja Cements was the top loser from the Sensex pack. The stock slipped 1.55% to Rs 146.90 on 1.59 lakh shares.

IT pivotals Infosys Technologies (down 0.32% to Rs 1789.95), and Wipro (down 0.42% to Rs 527.75), edged lower.

Rashtriya Chemicals & Fertilizers surged 4.98% to Rs 117.95, after the company said it has signed a memorandum of understanding with GAIL India for setting up coal gasification project in Talcher, Orissa.

Indiabulls Financial Services rose 0.80% to Rs 989, after the company said it has entered into memorandum of understanding with Societe Generale Insurance for its upcoming life insurance joint venture.

Asian markets were trading firm today, 31 December 2007. Hang Seng (up 1.62% at 27,812.65), Straits Times (up 1.06% at 3,482.30) and Taiwan Weighted (up 1.30% to 8,506.28) rose. Stock markets in Japan, China, Indonesia and South Korea were closed today, 31 December 2007.

US markets ended on a mixed note on Friday, 28 December 2007, after new home sales declined 9% in November 2007 to an annualized rate of 6,47,000 units. The Dow Jones industrial average was up marginally by 6 points at 13,366. The Nasdaq Composite index was down 2 points at 2,674.

Back home, the 30-share BSE Sensex fell 9.77 points or 0.05% to 20,206.95, on Friday, 28 December 2007. The broader CNX S&P Nifty fell 1.80 points or 0.03% to 6079.70 on that day.

The BSE Sensex surged 1,044.38 points or 5.45% to 20,206.95, in the week ended 28 December 2007. The S&P CNX Nifty jumped 313.2 points or 5.43% to 6,079.70 in the week.

As per provisional data, foreign institutional investors (FIIs) purchased shares worth a net Rs 653.76 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 166.69 crore on Friday, 28 December 2007.

FIIs were net sellers to the tune of Rs 476.93 crore in the futures & options segment on Friday, 28 December 2007. They were net sellers of index futures to the tune of Rs 241.45 crore and bought index options worth Rs 868.65 crore. They were net sellers of stock futures to the tune of Rs 1,104.76 crore and bought stock options worth Rs 0.63 crore.

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.

India Strategy Outlook 2008

India Strategy Outlook 2008

Trading Calls

Buy Finolex Industries above Rs 121. Stop Loss at Rs 116, target at Rs 132 and Rs 152.

Buy Hindustan Construction above Rs 238. Stop Loss at Rs 185, target at Rs 313-Rs 503.

Bharti Airtel, Economy, Real Estate

Bharti Airtel, Economy, Real Estate

Blue Star, R Systems International

Blue Star, R Systems International

Morning Call

Market Grape Wine :

In House :

Nifty at a supp of 6010and 5950

Intra Day: Buy Hotel leela above 71.55 with a TGT of 79 and a SL of 69

Buy Lanco Infratech above 845 with a TGT of 886 and a SL of 835

F&O: Buy JPHYDRO above 138 with a TGT of 150 and a SL of133

Buy RNRL above 181.50 with a TGT of 193 and a SL of 177



Out House :

Wisk U all in advance a Very Happy New Year .

Markets at a support of 19786 & 20012 levels with resistance at 20352 & 20456 levels .

Buy : RIL & REL

Buy : VSNL & HdfcBank

Buy : JpAsso & Jphydro

Buy : Adhunik , Ispat & JSW steel

Buy : Geshipping

Buy : IBUllsreal & IBullsFin

Buy : Neyvelli & MRPL

Buy : SBIN

Buy : Primesecu

Dark Horse : REL , Aban , PrimeSec , JpAsso , IBullReal , GeShipping , RIL & SBIN

Bullet for the Day : Kohinoor & Adhunik with strict stop loss .

Market to gain

The market is expected to gain ground as foreign institutional investors (FIIs) may resort to buying to shore their net asset values, for the calendar year 2007. Mutual funds, too, may lend support to prop up their net assets value for the quarter ending December 2007.

Asian markets were trading firm today, 31 December 2007. Hang Seng (up 1.05% at 27,657.78), Straits Times (up 0.79% at 3,473.03) and Taiwan Weighted (up 0.58% to 8,446.26) rose. Markets in Japan, China, Indonesia and South Korea were closed.

US markets ended on a mixed note on Friday, 28 December 2007, after new home sales declined 9% in November 2007 to an annualized rate of 6,47,000 units. The Dow Jones industrial average was up marginally by 6 points at 13,366. The Nasdaq Composite index was down 2 points at 2,674.

Back home, the 30-share BSE Sensex fell 9.77 points or 0.05% to 20,206.95, on Friday, 28 December 2007. The broader CNX S&P Nifty fell 1.80 points or 0.03% to 6079.70 on that day.

The BSE Sensex surged 1,044.38 points or 5.45% to 20,206.95, in the week ended 28 December 2007. The S&P CNX Nifty jumped 313.2 points or 5.43% to 6,079.70 in the week.

As per provisional data, foreign institutional investors (FIIs) purchased shares worth a net Rs 653.76 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 166.69 crore on Friday, 28 December 2007.

FIIs were net sellers to the tune of Rs 476.93 crore in the futures & options segment on Friday, 28 December 2007. They were net sellers of index futures to the tune of Rs 241.45 crore and bought index options worth Rs 868.65 crore. They were net sellers of stock futures to the tune of Rs 1,104.76 crore and bought stock options worth Rs 0.63 crore.

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.

Pre Market Watch

Indian market is likely to have a positive opening on the back of favoring cues from the global markets. On Friday, 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%. 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. We expect the market to gain some grounds during the trading session.

On Friday, the US market closed mixed. The Dow Jones Industrial Average (DJIA) closed higher by 6.26 points at 13,365.87. S&P 500 index grew by 2.22 points to close at 1,478.49 and NASDAQ fell by 2.33 points to close at 2,674.46.

Indian ADRs ended in mixed. In technology sector, Satyam grew by (2.29%) along with Wipro by (1.20%) while Patni computers and Infosys fell by (0.24%) and (0.15%) respectively. In banking sector, HDFC bank and ICICI bank increased by (3.34%) and (3.07%) respectively. MTNL and VSNL fell by (1.39%) and (0.03%) respectively.

Today, the major stock markets in Asia are trading higher. Taiwan Weighted is trading up by 34.99 points at 8,431.94. Singapore Strait Times is trading higher by 20.60 points at 3,466.42.

The FIIs on Friday stood as net buyers both in equity as well as in debt. The gross equity purchased was Rs6,774.30 Crore and the gross debt purchased was Rs300.40 Crore while the gross equity sold stood at Rs5,830.30 Crore and gross debt sold stood at Rs12 Crore. Therefore, the net investment of equity reported was Rs944 Crore and net debt was Rs288.40Crore.

Today, Nifty has support at 6,012 and resistance at 6,194 and BSE Sensex has support at 20,029 and resistance at 20,592.

KPIT Cummins Infosystems

KPIT Cummins Infosystems

Daily Technical Futures - Dec 31 2007

Daily Technical Futures - Dec 31 2007

Sunflag Iron, Sujana Towers

Sunflag Iron, Sujana Towers

Morning Glance

Morning Glance

Market may remain steady with upward bias

A positive opening in most of the Asian indices in ongoing trades and prevailing strong bullish sentiment may help the local market advance further. However, market may witness some volatility in later part of the session due to the recent geo-political tension making FIIs jittery to park their funds. Among the local indices, the Nifty could test 6,200 on the upside and may slip to 5,850 on the downside. The Sensex has a likely support at 19,500 and may face resistance at 21,000.

Us indices closed flat on Friday, as economic and housing woes scuttled hopes for a year-end rally. While the Dow Jones gained six points, and the Nasdaq slipped by two points.

Indian floats trading on the US bourses fared better on Friday, the gainers were, HDFC Bank registering the highest gains over 3.34% while ICICI Bank Satyam, Wipro, Dr Reddy's, Tata Motors and Dr Reddy's gained around 1-3% each. Infosys, MTNL, VSNL and Rediff, however, dropped around 1% each.

Crude oil prices slipped marginally, while the Nymex light crude oil for February delivery slipped by 62 cents to close at $96 a barrel. In the commodity segment, the Comex gold for February series flared up $10.90 to settle at $842.70 an ounce.

Grey Market - IPO Premiums

Reliance Power (approx) 450 to 500 280 to 300

eClerx Services 315 30 to 40


BGR Energy 480 360 to 380


Brigade Enterprises 390 10 to 15


Burnpur Cement Ltd. 12 5 to 6


SVPCL 42 DISCOUNT


Aries Agro 130 22 to 25


Manaksia Ltd. 160 12 to 15


Porwal Auto Components 75 DISCOUNT


Precision Pipes & Profiles 150 25 to 30

Man Industries

Man Industries

Morning Notes, Options

Morning Notes, Options

Trading Calls

Nifty (6080) Sup 6022 Res 6162

Buy Canara Bank (311) SL 306 Target 320, 323

Buy Cairn (247) SL 243
Target 255, 258

Buy IDFC (223) SL 219
Target 230, 233

Sell Nicholas Piramal (350) SL 355 Target 340, 338

Sell Air Deccan (281) SL 285 Target 272, 270

Derivatives

Derivatives

Low volumes, enjoy the music

Year's end is neither an end nor a beginning but a going on, with all the wisdom that experience can instill in us.

As we enter the last trading day of the year and get set to welcome 2008, the Indian market can look forward to much greater things. For today, the outlook is just fine, with the bulls in command of the situation, though traded volume might take a hit due to the holiday mood. Many global markets are shut and may not provide great signals. So, expect some choppiness as well during the day. The key indices will extend their gains but could run out of gas later in the day. It’s been a wonderful year so investors will have no regrets on how it ends.

The bulls will continue to dominate in 2008, though things might remain volatile amid a fragile external environment. The biggest threats and dangers will be further slowdown in the US and elsewhere in the world. A lot has been said and written about the "decoupling" theory wherein emerging markets such as India may not be hurt by a recession in the US. This may be partly right and partly misplaced. So, one has to keep oneself abreast with the latest developments in the global arena to take a call on the local market.

A sharper than expected slowdown in the global economy, led by the US, may have some negative implications for India, though eventually we may be able to overcome any temporary blips. For that to happen, India Inc. would need to continuously deliver the goods and so will the Government. With general elections scheduled for next year (unless there is a sudden course correction), expect some populist measures in the budget. No big bang reforms are expected with the Congress firmly on the backfoot. One will also have to keep a tab on interest rates movement, both globally and locally, besides the state of the Indian economy.

All in all, we are all set for an interesting new year ahead of us. The now well articulated long-term growth story will no doubt continue. At the same time, there will be a few challenges and hurdles that we will have to deal with effectively. Traders, investors and all the other participants will continue to benefit, as the current bull run enters a new phase.

Shares of Brigade Enterprises and eClerx will get listed today. Brigade Enterprises is likely to list in the band of Rs340-360, according to the grey market. It can touch Rs400 intraday. eClerx is likely to list in the band of Rs 410-420. It can touch Rs 435 intraday.

The Board of Advanta India will meet on January 2, to consider acquisitions. Cambridge Technology's Board has approved conditionally, the acquisition of Q-Soft Systems & Solutions, a managed services company in Bangalore. NovaGold Petro Resources' Board will meet on January 1, to consider the possibilities of diversification in various other business areas and a preferential / rights issue to meet future capex requirements.

Alok Industries has deferred the decision to consider a Preferential Allotment of Warrants to the Promoter Group and a Foreign Investor in more detail. Country Club has allocated 18,80,322 shares at Rs770 per share under the Qualified Institutional Placement (QIP).

US stock benchmarks closed nearly unchanged on Friday after yet another choppy session, as lingering worries about the ongoing housing sector mess and tight credit conditions dented hopes of a Santa Clause rally.

A bleak report on new home sales reminded Wall Street that the world's biggest economy is still not out of the woods as far as the meltdown in the housing sector is concerned. Financial shares led the fall after an initial spurt.

Citigroup, Bank of America and JPMorgan Chase erased early gains after a report showed that new-home sales fell to a 12-year low in November, indicating that the correction in the housing sector will continue to hurt economic growth in 2008.

The S&P 500 index added just 2 points, or 0.1%, to 1,478.49, extending its fifth consecutive annual advance. The Dow Jones Industrial Average rose 6 points, or 0.1%, to 13,365.87. The Nasdaq Composite Index fell 2 points, or 0.1%, to 2,674.46.

The S&P 500 lost 0.4% for the week, while the Dow slipped 0.6% and the Nasdaq dropped 0.7%.

For the year, the Dow is up 7.4% versus last year's almost 15% gain. In 2005, it had risen by 3.16%. The Nasdaq, on the other hand, is up more than 9% for the year. The S&P is on track for a yearly gain of 4.2%.

Market breadth was mixed on Wall Street. About the same number of stocks rose as fell on the New York Stock Exchange. Traded volume was once again subdued, in line with the trend through the week, as many market participants chose to take a long year-end break.

Stocks rallied at the opening bell on a report that top US banks could sell off some of their non-strategic assets to shore up their balance sheets amid the current crisis in the credit markets. But those gains proved to be short lived following the release of data on new home sales.

Key indices sank to session lows by mid-day but turned mixed by the day's close.

More housing data is expected in the US today. A report on existing home sales for November will be released. US financial markets will be closed on Tuesday for the New Year's Day holiday.

Asian markets were mostly higher this morning amid thin volumes, rising by 0.2% to 1%. Markets in Japan, China, Thailand and Philippines are closed on account of New Year holidays. The Pakistani stock market was expected to re-open in Karachi after a three-day state mourning following the assassination of former Prime Minister Benazir Bhutto, on Dec. 27. The Hang Seng in Hong Kong was up 203 points at 27,573 while the Taiex in Taiwan gained 38 points at 8435 and the Straits Times in Singapore added 22 points at 3467.

European shares ended a three-session winning streak on the last full trading session of 2007, as traders failed to find inspiration after gloomy economic data on both sides of the Atlantic and thin volumes. The pan-European Dow Jones Stoxx 600 index fell 0.2% to 364.39. The UK's FTSE 100 lost 0.3% to close at 6,676.90 and the French CAC-40 finished nearly flat at 5,627.25. The German DAX 30 ended a holiday-shortened trading session - its last of the year - with a gain of 0.4% to 8,067.32. Markets in London, Paris, Amsterdam and Brussels will have a half-session on Monday, while the German and Swiss stock market will be shut.

In the emerging markets, the Bovespa in Brazil rose 0.2% at 63,886 while the IPC index in Mexico gained 0.2% at 29,700. The RTS index in Russia ended almost unchanged at 2290 and the ISE National-30 index in Turkey advanced 0.7% at 70,755.

Bulls struggle in breaking new ground

The bulls wished a good buy to last week of 2007 in style by recording its longest winning streak in 2 months. Although the day was dull and range bound both the key indices ended the week with gains of 5% each.

Markets showed resilience on Friday closing the day flat when most of the indices dropped amid renewed geo-political concerns after former Pakistani Prime Minister Benazir Bhutto was killed in a suspected suicide attack in Rawalpindi, Pakistan.

Coming to sector specific movements on Friday; the realty stocks were back in action, the index was (up 3.9%), BSE Metal index (up 2.4%) and BSE FMCG index (up 1.2%). The Small-Cap and the Mid-Cap stocks also continued to be in momentum both the index gained over 1.5%.

Among the 30-scrips of Sensex, DLF, ITC, HDFC and BHEL were among the major gainers. However, Bharti Airtel, ICICI Bank and ONGC were among the major laggards. Finally, 30-share Sensex closed flat at 20,206 and Nifty ended flat at 6,079.

Electrosteel Casting surged by over 4.5% to Rs86 after the company declared that they would sell 12.2mn warrants at Rs81 per share to Stemor Metals. The scrip touched an intra-day high of Rs86.55 and a low of Rs82 and recorded volumes of over 47, 00,000 shares on NSE.

Reliance Communication edged higher by 0.5% to Rs734. Reports stated that the company has slapped legal notice to DoT asking to freeze allocation of additional spectrum to existing GSM players. The scrip touched an intra-day high of Rs739 and a low of Rs722 and recorded volumes of over 22, 00,000 shares on NSE.

DLF gained 5.5% to Rs1065 following reports that the company plans to raise US$5bn over the next three years by listing five of its business units including DLF Homes, DLF Retail, DLF Hotels, DLF Utilities and DLF Infrastructure. The scrip touched an intra-day high of Rs1072 and a low of Rs1000 and recorded volumes of over 24, 00,000 shares on NSE.

REL advanced 1.2% to Rs2158 after reports stated that SEBI cleared deck for Reliance Power IPO by disposing complaints against the offer and asking promoters to lock-in entire 20% of their contribution for five years. The scrip touched an intra-day high of Rs2219 and a low of Rs2126 and recorded volumes of over 32, 00,000 shares on NSE.

Suven Life Science rallied by over 10% to Rs61 after reports stated that the company secured first US patent for central nervous system (CNS) compounds. The scrip touched an intra-day high of Rs64 and a low of Rs54 and recorded volumes of over 84, 00, 00,000 shares on NSE.

HPCL gained 2.2% to Rs343 after reports stated that the company may raise over Rs700cr via OIL Bonds sale next week. The scrip touched an intra-day high of Rs349 and a low of Rs328 and recorded volumes of over 21, 00,000 shares on NSE.

NTPC edged higher by 0.5% to Rs241 following reports that the company was in talks with Bharat Forge for Power Equipment Joint Venture. The scrip has touched an intra-day high of Rs245 and a low of Rs238 and has recorded volumes of over 47, 00,000 shares on NSE.

Unity Infraproject rallied by over 14% to Rs1039 after the company announced that it secured Letter of Intent for mall contract. The scrip has touched an intra-day high of Rs1080 and a low of Rs899 and has recorded volumes of over 1, 00,000 shares on NSE.

What the FIIs are doing

FIIs were net buyers of Rs6.54bn (provisional) in the cash segment on Friday while the local institutions pumped in Rs1.67bn. In the F&O segment, foreign funds were net sellers of Rs4.77bn.

On Thursday, FIIs were net buyers of Rs9.4bn in the cash segment. Mutual Funds were net buyers of Rs7.16bn on the same day.

Stocks in News:

Bharti Infratel, a wholly owned subsidiary of Bharti Airtel, has agreed to divest ~7.5-9% to a clutch of international investors for Rs40bn. (BS)

The New York State Banking Department has cleared SBI’s application for opening another branch in USA. (BS)

IOC may have to review its capital expenditure plan if fuel prices are not revised quickly. (BS)

Nalco is expected to complete its Rs50bn expansion plan by CY08. (BS)

Reliance Retail has entered into a distribution tie- up with Bata India; to retail its private labels through Bata outlets. (ET)

IOC, along with Oil India, is expected to join hands with Reliance Industries for exploration in the latter’s oil block in East Timor. (BL)

Suzlon Energy has received shareholders' approval for stock-split in the ratio of 1:5. (BL)

RCF has signed a MoU with GAIL for jointly setting up coal gasification project at Talcher in Orissa. (BL)

Fortune Park Hotels, a subsidiary of ITC will be investing ~Rs1.3bn to build 3-4 hotels in Bangalore, Coimbatore and Kolkata. (BL)

Bajaj Auto, Renault-Nissan to wrap up JV talks by the end of January. (ET)

NMDC has decided to raise long-term contract prices of iron ore fines by a steep 47.5%, bringing the price to Rs1,783 per ton. (Mint)

HDIL is planning to set up a 5,547 acre SEZ in the city. (DNA)

Bilcare Singapore, subsidiary of Bilcare has raised US$90mn through issue of 4% convertible bonds, due 2012. (BL)

Tech Mahindra is looking for growth in Scandinavia and Israel through organic and inorganic routes. (Mint)

Kinetic Engineering is setting up a new gear shop exclusively for passenger cars at its Ahmednagar facility with an investment of Rs500mn. (FE)

Sintex Industries plans to invest Rs1.5bn in its textile business and diversify into garmenting and hosiery for export market. (BL)

Starbucks, the world’s leading coffee chain, has entered into a distribution tie-up with PVR for its select products. (ToI)

GHCL has set up a subsidiary for exclusively handling procurement for the group’s textile retail business in India and overseas. (BL)

Lakshmi Mittal is seeking partnership with HPCL for expansion of refineries in Congo and Nigeria. (ET)

Time Technoplast is eyeing 2-3 acquisitions in the solar energy space. (DNA)

Mastek expects 60-70% growth in revenues from the US over the next three years, seeks buyouts. (DNA)

Infosys is trying to finalize a Rs60bn bid with Capgemini. (Mint)

The kitchen appliances unit of TTK Group, TTK Prestige, wants to triple its sales to Rs10bn by FY10. (Mint)

Posco India is hopeful of starting work on its proposed integrated steel plant near Paradip from April 1, 2008. (BS)

The Government may allow FDI in retail in three phases. (ET)

The WPI-based annual rate of inflation declined to 3.45% for the week ended December 15 against 3.65% in the previous week. (BS)

The Government is likely to finalize the price increase for oil products at a GoM meeting sometime in the second week of January. (BS)

The Government is unlikely to extend sops given to sugar mills for exporting the sweetener beyond April 2009. (ET)

The Government may raise the quantum of sugar stocks for which it pays storage costs or extend the time period for which it will pick up the tab to help ailing mills. (BS)

The Government plans to increase FDI limits in select broadcasting activities to 74% in order to align it with the telecom sector. (BL)

During January and October 2007, tea exports fell to 132mn kg from 174mn kg last year. (BL)

The minimum export price for all non-basmati rice has been hiked from US$425 (Rs17,000) a ton FOB to US$500 (Rs20,000) a ton. (BL)

Domestic steel capacity is likely to touch 60mn tons by the end of FY08 from current 84mn tons. (BL)

SEBI has decided to scrap the entry load on open-ended mutual fund schemes. (ET)

Oil explorers and refiners might get substantial tax breaks in the forthcoming budget. (ET)

The Government is planning to put further restrictions on iron export by introducing a system of royalty for minerals. (ET)

Competition Commission of India suspects cartelisation amidst Indian PSU banks. (ToI)

Competition Commission of India says that competitive bidding is the right method of allocating scarce spectrum to telecom service providers. (FE)

The Rs250bn consumer durables sector has registered a growth of 12% in 2007. (FE)

Morning Brief - Dec 31 2007

Morning Brief - Dec 31 2007

Market Outlook - Dec 31 2007

Market Outlook - Dec 31 2007

Crude oil heads for biggest yearly gain in eight years

Prices end 3% higher for the week and are 59% higher on a yearly basis

Crude-oil future prices for sweet light crude for February delivery shot up earlier in the day on Friday, 28 December, 2007. But then prices fell in the last hour of trading due to profit booking. It was crude’s first fall after five sessions of rise. Also, reports hinting that average temperature will be above the normal during January, 2008 pushed down the price as demand for heating oil will decrease.

For the week ending Friday, 28 December, 2007, crude-oil futures for light sweet crude for February delivery closed at $96/barrel (higher by $2.69/barrel or 2.9%) on the New York Mercantile Exchange. Futures rose as high as $97.2 earlier in the day. For the day, prices closed higher by 62 cents. Prices are 59% higher than the year before. With this, crude is headed for largest price gain in eight years.

Prices rose this week after the Turkish military announced that its warplanes hit eight suspected Kurdish rebel hideouts in northern Iraq. It was at least the third air operation in Iraq this month. Iraq has the world's third-largest crude-oil reserves. Assassination of former Pakistan Prime Minister, Benazir Bhutto, also led to some added tension firming prices up.

Price also firmed up after Energy Department reported that crude stockpiles fell more than expected for the week ended Friday, 21 December, 2007.

Also, on Friday, EIA reported that U.S. natural gas inventories fell 165 billion cubic feet to 3,008 billion cubic feet in the week ending 21 December, the lowest level in more than three months. Natural gas inventories have fallen nearly 550 billion cubic feet since the week ending 16 November.

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%.

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.

MCX IPO to be announced soon

The largest commodity futures bourse in the country - Multi Commodity Exchange of India (MCX) - is all set to hit the primary market with an initial public offering (IPO). The commodity exchange is likely to announce its long-awaited IPO within a week. Sources said, MCX would sell 10% stake, through a mix of fresh shares and an offer for sale, to raise around Rs 500-600 crore.

According to sources, fresh shares will contribute the majority of the offering while the offer for sale will account for 2-3%. An offer for sale refers to the sale of promoter's existing equity to the public. The bourse has been valued at around $1.2-1.3 billion. The issue is being managed by DSP Merrill Lynch, Kotak Securities and Enam Financial. MCX has been mulling over listing on local bourses for the past two years.

Sources said, IPO would provide many of its Indian and foreign investors an exit route. Around 24% of MCX is owned by foreign investors. While Fidelity holds 9%, Merrill Lynch and Citi own 5% each. The other investors include US-based Passport Capital (3%) and the UK-based fund GLG (2%).

Few weeks ago, FTIL offloaded around 10% stake in MCX. ICICI, IL&FS and Kotak acquired 3.55%, 5% and 1% stakes respectively at an enterprise value of $1.1 billion (around Rs 4,400 crore). ET had reported two weeks ago that New York Stock Exchange (NYSE) and the New York Mercantile Exchange (NYMEX) are awaiting policy guidelines on foreign direct investment (FDI) in commodity exchanges to pick up minority stake in MCX. The guidelines are expected to be cleared by the cabinet committee on external affairs (CCEA).

According to sources, post IPO, FTIL's stake in MCX would go down to 34-35% from the existing 37.5%. On BSE, FTIL's stock price has gone up about 11% in the past one month. It closed at Rs 2,577, up 7% on Friday, three times the weekly average volume at BSE.

According to market sources, the primary market is expected to hot up once again in the first half of 2008 as other large issues like that of Reliance Power and SBI's rights issue among others are set to raise money from the market. As per some estimates, about 175 companies are expected to enter the capital market and could raise up to Rs 60,000 crore in 2008.

Market Technicals

Markets are likely to head for volatility as the situation in Pakistan will determine investor sentiment.

The last settlement of the year went through peacefully with a recovery driven by short-covering. Even Benazir's death failed to spark bearishness.

The Sensex ended up 5.45 per cent week-on-week and closed at 20,206 points while the Nifty was up 5.43 per cent at 6079 points. The Defty gained 5.86 per cent as the rupee ended the year at 39.44/ USD.

Breadth signals were mixed. Advances far outnumbered declines. But volumes were exceedingly low except on Thursday, when prices oscillated within a very small range.

The Nifty Junior (+6.15 per cent), the BSE 500 (+6.28 per cent) and the Midcaps (+6.63 per cent) all outperformed the two biggest indices. Both FIIs and mutual funds closed out the year on a positive note.

Outlook: The last two sessions have seen prices stuck inside a very narrow range. The best guess is the trading range will widen to about 6,000-6,200.

Closes outside this zone will be significant especially if they occur with volume expansions. It is difficult to predict direction in purely technical terms but there are practical reasons why the market is somewhat more likely to head up.

Rationale: Obviously there is a lot of resistance above 6,050 and equally good support at 5,975. Volumes are likely to expand one way or the other with the new year.

Usually FIIs tend to make positive allocations in January (though they were negative in January 2007). Any fresh demand will drive up such a delicately balanced market.

Counter-view: The market could well have a delayed response to turmoil in Pakistan. If that occurs and if FIIs are conservative or negative in their initial 2008 allocations, the market could easily swing down again.

Bulls & bears: A wide and varied list of stocks went up this week but most moved up on negligible volumes.

Among the more interesting sector plays was the continuing interest in the sugar sector: Bajaj Hindusthan and Balrampur Chini led the pack.

There appeared to be some focused buying in Bharat Forge and Bhel. Cairn India and Essar Oil continued to ride on bullish sentiment that started about a month ago. Educomp and Gateway Distriparks saw steady buying.

MICRO TECHNICALS

BHEL Current Price: 2,584 Target Price: 2,800

The stock has hit a low and then consolidated and started moving back up. It is time to accumulate with a perspective of about 15 to 20 sessions. It is likely that a target of 2,700 will be hit before there is major resistance. In the 15-20 session timeframe, a target of 2,800 should be achieved. Keep a stop at 2,500 and take delivery.

Educomp Current Price: 4,712 Target Price: NA

The stock is moving up strongly with volume expansion. It's impossible to project a target with this formation, which has maintained a 45 degree trendline on weekly charts since around April 2007. Keep a trailing stop at 4,400, and go long. Move stop up 150 points for every 150 point move.

Parsvnath Developers Current Price: 458.5 Target Price: 480

The stock has broken a resistance on good volume action. It has a target somewhere in the 475-485 range. Keep a stop at 440 and go long. There is likely to be a lot of intra-day volatility and it's possible that the stock may hit 490-500 levels intra-day as well as swing down till 435. Book profits above 480.

Shipping Corporation of India Current Price: 306 Target Price: 320

There has been a sudden jump in trading volumes in the past couple of sessions. SCI broke an important resistance at 285. It's difficult to set a target with this sort of sudden rise but the minimum target should be about 320 with the potential for a larger move till about 330. Go long, book a partial profit at 320 and exit at 330. Via Business Standard

Bosch Chassis Systems India

We recommend a buy in Bosch Chassis Systems India. From the charts of the Bosch Chassis Systems we see that it had been on a medium-term downtrend between June and October (from Rs 600 to Rs 350). However, the stock found support at around Rs 350 in October and moved up slowly. During this up move, the stock breached the 21-day and 50-day moving average lines. On December 26, the stock penetrated the medium-term down trendline. This up-move is supported by a bullish divergence in the weekly momentum indicator. The stock is currently testing resistance level Rs 430. The daily momentum indicator is featuring in the bullish region. The daily moving average convergence divergence is progressively rising in the positive region. The immediate support for the stock is at Rs 350 and the next support is at Rs 300. We expect the stock to penetrate the current resistance and move up to Rs 490 level in the short-term. The short-term investors can buy the stock with stop-loss at Rs 390.

Via BL

India Weekly Technicals

Nifty — The index closed on a strong note on the opening session of the week after which it saw a steady rise for the remaining part of the week. It ended the week with a gain of 313 points.

Moving Averages — The 50 dma = 5786, 20 dma = 5928, 10 dma = 5935. The index is trading above the averages; declines during the week should find support around the averages.

Momentum Oscillators — On the daily chart, MACD is in buy mode but showing signs of negative divergence. RSI(14)- Relative Strength Index is exhibiting a reading of 60.92 (reading above 70 signifies overbought and below 30 signifies oversold). Stochastic (5,3) is in buy mode but in overbought zone. Momentum oscillators suggest index can see choppy movement for the current week’s trading.

Support — The index has support around the 10 dma & 20 dma around 5928- 5935 band. Intra-week declines should find support around the 10 & 20 dma levels. Lower support is around 5830.

Resistance — The index faces resistance around 6111-6185 levels. Index is likely to test resistance around 6185. Close above 6185 levels would likely see index exhibit further strength.

Conclusion — Index has support around 5928. On the upside, we believe it can test 6185 levels.