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Tuesday, January 01, 2008

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.

US stocks finished the final trading day of 2007 in the red, as lingering concerns over the economic slowdown sent shares of energy companies and miners lower.

Exxon Mobil and Freeport-McMoRan Copper & Gold led declines in energy and commodity producers, the year's best- performing industries. Amazon.com and EBay slipped after holiday Internet sales rose at the slowest pace on record.

The S&P 500 dropped 10 points, or 0.7%, to 1,468.36. The Dow Jones Industrial Average lost 101 points, or 0.8%, to 13,264.82. The Nasdaq Composite Index declined 22 points, or 0.8%, to 2,652.28.

Market breadth was negative. Some 1.15bn shares changed hands on the New York Stock Exchange (NYSE), the most ever on the last day of the year, according to Bloomberg. Trading was 19% less than the three-month average.

On the housing front, the number of existing homes sold in November inched moderately higher, according to the National Association of Realtors. The increase was expected by economists but still helped give some companies in the housing sector a lift.

On the corporate side, British newspaper The Observer said that Merrill Lynch could receive another infusion of capital from sovereign wealth funds. Billionaire investor Kirk Kerkorian's Tracinda Corp. is paying $684mn for a 35% stake in Delta Petroleum, an independent energy exploration company.

But, for the year all the three main US indices finished higher despite the housing sector meltdown and the subsequent credit market turmoil. Year-to-date, the Dow is up 6.4%, the S&P 500 is up 3.5% and the Nasdaq is up 9.8%, its biggest rally since 2003.

The S&P 500 has posted gains every year since 2002, advancing 67% over the past five years.

Concern about the credit crunch and a possible recession sent the S&P 500 down 3.8% in the fourth quarter, leaving it 6.2% below its record close on Oct. 9. The declined was the first for any fourth quarter in seven years.

The Dow reached a record high on Oct. 9, then fell more than 10% off its highs by November. Though the Nasdaq was the strongest of the three indexes, it never came close to the record it set in March of 2000.

US light crude oil for January delivery fell 2 cents to $95.89 a barrel on the New York Mercantile Exchange. Crude oil soared $34.93 a barrel in 2007 - a gain of 57% - and came close to the $100 a barrel mark in November.

Treasury prices rose, with the yield on the 10-year note falling to 4.03%, down from 4.07% on Friday. The dollar gained slightly against the euro and lost ground versus the yen. COMEX gold for February delivery fell $4.70 to $838.00 an ounce.

European stocks ended a half-session of trading slightly down, but finished the year with the first losses since 2002 on the back of nagging worries about the credit crunch and rising energy prices.

The FTSE 100 in London dropped 0.3% to 6,456.90 while the French CAC 40 shed 0.2% to 5,614.08 while the Dutch AEX finished flat 515.77. Many markets were closed, including those in Germany, Switzerland and Italy.

For the year, the pan-European Dow Jones Stoxx 600 index closed with a loss of 0.1%. Though Germany's DAX 30 rose 22%, most other major European stock markets finished with tepid growth, or no growth at all.

Markets across Asia are shut today on account of the new year holiday. But, Asian stocks trading in the US fell for a third day, on weak metal and energy prices. BHP Billiton and Posco paced the decline. The Bank of New York's Asia ADR Index lost 0.1% to 166.70.

Hong Kong stocks rallied yesterday in a curtailed session on China-related issues such as Air China. The Hang Seng Index rose 1.6% to 27,812.65, rising 39.3% for the full year.

The Nikkei in Tokyo dropped 11% in 2007 to close at 15,307.78. It was shut yesterday. Pakistani shares plummeted as trading resumed in Karachi following a three-day mourning period for former Prime Minister Benazir Bhutto, who was assassinated on Dec. 27.

Rangebound market expected

It was a day of modest gains as bulls signed off the year 2007 on a firm note. The benchmark Sensex opened with a positive gap touching an intra-day high of 20,484 missing the all time peak by just 14 points. However, after the trading steady for most part of the session 30-share Sensex closed at 20,286 adding 80 points and Nifty gained 58 points to close at 6,138.

The IT index was the only loser among the sectoral indices. The Consumer Durable index was the top gainer (up 5.2%), BSE FMCG index (up 2%) and BSE PSU index (up 2%). Even the Mid-Cap and the Small-Cap indices were in limelight both the indices were up over2% each.

Refinery stocks were in the limelight and closed with smart gains on expectations of petrol price hike in the near future. Oil marketing companies like HPCL, IOC and BPCL ended recording healthy gains.

Shares of Brigade Enterprise posted a flat listing at Rs395 versus an issue price of Rs390. However, the scrip lost momentum and finally ended 3% lower to Rs378. The company offered 16,624,720 equity shares of Rs10 each. The price band was fixed at Rs351 to Rs390 per equity share.

Brigade Enterprise is one of the leading real estate development companies based in Bangalore, primarily focused on the development of residential, commercial and hospitality properties in South India. Residential properties include integrated lifestyle enclaves and apartment buildings targeted towards middle income and high income customers. According to the company the funds raised are to be used for land acquisition and construction at ongoing projects, JP Morgan India, Enam Securities and ICICI Securities are the book running lead managers to the issue.

The scrip touched an intra-day high of Rs409 and a low of Rs365 and recorded volumes of over 47,00,000 shares on NSE.

eClerx started trading at Rs320 on BSE versus an issue price of Rs315. However, unlike Brigade Enterprises the scrip gained momentum as the day progressed and finally ended the day with gains of 42% to Rs448.

The company is a provider of data analytics and customized process solutions to global enterprise clients from offshore delivery centers in India. Portfolio of services comprises data analytics, operations management, data audits, metrics management and reporting services.

The issue was subscribed 26.30 times. JM Financial Consultants and Edelweiss Capital provided assistance to the company to raise Rs1,010mn via this public issue. The scrip has touched an intra-day high of Rs390 and a low of Rs320 and has recorded volumes of over 6,00,000 shares on NSE.

NTPC gained 4% to Rs250 after reports stated that t he company is in negotiations with Bharat Forge to set up a joint venture to produce components for power plants. The scrip touched an intra-day high of Rs252 and a low of Rs241 and recorded volumes of over 66,00,000 shares on NSE.

ONGC advanced 1% to Rs1235 according to reports the company would put a slew of conditions, including land free of cost from AP Government and fiscal incentives, for setting up the Rs256bn export-oriented refinery-cum-petrochemical project at Kakinada. The scrip touched an intra-day high of Rs1245 and a low of Rs1229 and recorded volumes of over 11,00,000 shares on NSE.

Bharti Airtel surged by over 5.5% to Rs996 as reports stated Bharti Infratel, a wholly owned subsidiary of Bharti Airtel agreed to divest ~7.5-9% to a clutch of international investors for Rs40bn. The company also signed US$150mn deal with China Huawei Technologies to set up mobile phone network in Sri Lanka according to reports. The scrip touched an intra-day high of Rs1023 and a low of Rs960 and recorded volumes of over 44,00,000 shares on NSE.

Bilcare rallied by over 12% to Rs1700 after reports stated that the company’s Singapore, subsidiary of Bilcare raised US$90mn through issue of 4% convertible bonds, due for maturity in 2012. The scrip touched an intra-day high of Rs1797 and a low of Rs1525 and recorded volumes of over 49,000 shares on NSE.

What the FIIs are doing

FIIs were net buyers of Rs5.16bn (provisional) in the cash segment on Monday while the local institutions sold shares worth Rs4.43bn. In the F&O segment, foreign funds were net sellers of Rs11.2bn.

On Friday, FIIs were net buyers of Rs11.41bn in the cash segment. Mutual Funds were net buyers of Rs7.16bn on the same day.

Stocks in News:

HDFC has agreed to sell 7.15 per cent stake in its life insurance joint venture - HDFC Standard Life Insurance Company - to its foreign partner, Standard Life (Mauritius Holdings), at a pre-agreed price.

Videocon Industries, Jindal Photo Ltd., Indo Rama Synthetics and National Buildings Construction Company (NBCC), are in the fray for entering the thermal power generation business.

Pfizer has got the approval of its board to transfer four of its consumer health brands - mouth-wash Listerine, cough-syrup Benadryl, skin-cream Caladryl and cough-suppressant Benylin - to Johnson & Johnson for a consideration of Rs214.85 crore.

There are reports state IOC has maintained $2-3 higher refining margin during the first nine months.

Shreyas Intermediates has received an order worth Rs30 crore. The company manufactures CPC crude and other pigments used in dye and dye intermediates and has tied up with German Luvomax to add value to the latter’s rubber master batches by injecting blue colour into them.

Ranbaxy is being accumulated reportedly on the assumption that the company may formalise its plan for hiving off its drug discovery research operation soon.