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Thursday, January 03, 2008

Market Close: Global weakness weighs


Weakness across the global markets with US downfall kept Indian markets in a ranged bound mode. Indian Indices opened in red but later part of the day tried to recovery to trade in green by profit booking pulled it back into negative teritorry. Oil companies trade strong especially ONGC and Cairn India as Crude touched $100 per barrel and while oil marketing companies got a boost from Oil ministry hinted of raising petrol and diesel prices in February. Power stocks played on investors mind to be the gainers. IT, banking, cement were among the major losers. Mid caps and small caps continued to outpace the large caps as they traded strong. Asian Indices traded in red as Hang Seng slipped by over 450 points for the day while Europe trading in red. We have entered into the result season which could drive the market.

There were two new entrants in bourses BGR Energy which came out with an issue price at Rs 480 but got listed in premium of 75% to Rs 840 but finally ended up by 87% up. And Burnpur Cement came out with small issue but investors rejoiced it as the stock listed at Rs 19 against its issue price of Rs 12 and ended up by 286.25% at the closing.

Sensex closed down by 120 points at 20345.19.Weighing on the Sensex were losses in Grasim (3603.6001,-4 percent), Dr Reddys (718.3,-4 percent), Wipro (495.55,-3 percent), ICICI Bk (1228,-3 percent) and ITC (214.5,-3 percent). Losses were restricted by gains in NTPC (276.7,+8 percent), Rel Energy (2517.3999,+6 percent), HLL (222.95,+4 percent), ONGC (1305.9,+3 percent) and Hero Honda (712.45,+2 percent).

Karuturi the largest rose player in the world. It has 2 segments of business, Horticulture and ISP. More than 90% of the revenue comes from the flower business. Karuturi has a total capacity of 650 mn stems. It has 10 hectares in India with 10 mn stems capability inhouse and another 25 mn stems which are managed through contract farming. 100 hectares are operational in Ethiopia with a capacity of over 100 mn stems. Karuturi Networks has been allotted additional 450 hectares of land by the Government of Ethiopia for its expansion and diversification projects. The Kenyan acquisition of Sher brought in about 525 mn stems. Globally 40,000 hectares of land is under rose cultivation. However, the field sizes globally are fragmented and are not over 200 acres. Karuturi is one of the big players here now. Feb is the peak season and we are positive on this business. Do read our research note to know more about the story..

Avaya Global Connect a leader in converged solutions. Avaya Global Connect Ltd' (AGCL). is a subsidiary of Avaya Inc. (revenues $8.2 billion) which holds 59.13% stake in AGCL. Avaya Global?s Australian subsidiary has started generating revenue. This will further add to bottom line. Most of the equipments are imported from parent company. This not only provides company technology advancement but also benefits of appreciating rupee. The core competency of the business is the technology of the parent and marketing strength to convince clients to move up the value chain of its offerings. The sustainable competitive advantage remains its relationships with the companies that it services. With convergence set to rule the market in the coming years, Innovation and Technology will be the key success for any Industry. With expertise in IP Telephony, Unified Communication and lots more, Avaya Global is well placed to take the advantage. The risk appears to be from slower growth in the call centres who are facing tougher times because of the appreciating rupee. However, the growth may slow but more than that the companies would rely on technology even more to have higher productivity and that would be beneficial for Avaya. We remain positive on this with a long term perspective. Do read our research note.

Technically Speaking: Sensex opened with a gap down of over 70 points. It made intraday high of 20,520 and days low of 20,294. Turnover was good at Rs 10,785crs. The breath was in favor of Advances, where Advances stood at 1565 and Declines at 1336. Sensex is very ranged for past 6 trading sessions. Immediate resistance at 20610, which if crossed will take us to 21400. On the downside there is support at 20000 and 19500.