Market Close: Smart recovery; regains 18k level!

It was one more calamity start for the global indices. Hang Seng ended down by 4.25% points while Nikkei down by 3.97%. Shanghai hit lower circuit for the day and ended down by 7.19%. India too had weak start. Sensex opened with a gap down of 600 points. Till the mid session Indian indices traded ranged in negative region. Value buying post mid sessions in index heavy weights like Bajaj Auto, Maruti, HDFC and M&M pulled indices from days low and managed to recover around 600 points smartly. Short covering ahead of FNO expiry also helped. RBI will meet tomorrow to decide on credit policy. Lot of expectations are build up on rate cut tomorrow. This may be one of the reason for optimism. It was relatively better day for the Midcaps and Small caps than the frontline counters. Sensex regained 18k levels however closed down by 208 points. Asian markets ended in deep red; while European markets trading in red.

Markets are expecting rate in the RBI's monitory policy which is scheduled tomorrow. Banking and Auto are the two counters which are sensitive to interest rate. Major action was seen here. Realty, IT and Capital Goods hit badly. Overall day for the markets was weak and disappointing proceeds following the global weakness.

Sensex closed down by 209 points at 18152.779. Weighing on the Sensex are losses in Dr Reddys (565.05,-7 percent), Wipro (406.25,-5 percent), Bharti Tele (869.7,-5 percent), Infosys (1446.5,-5 percent) and Ranbaxy (350.4,-5 percent). Losses are restricted by gains in Bajaj Auto (2459.3501,+9 percent), Maruti (862.6,+4 percent), Rel Energy (2097.7,+3 percent), HDFC (2781.75,+3 percent) and ACC (798.65,+1 percent).

KEI Industries Ltd (KEI) reported good results for the quarter ended 31st December 2007. The top line grew by 48% to Rs 233 cr while the bottom line grew by 22% to Rs 14 cr on yoy basis. EBIDTA enhanced by 23% to Rs 30 cr on annualized basis. Ebidta margins stood at 13% down by 200 bps due to increase in cost of raw material. KEI commenced the new plant at Chopanki near Bhiwadi, Rajasthan for manufacturing of HT and LT Power Cables. This new unit is registered as 100% EOU. It has production capacity of 10,000 Kms and expected to generate revenue of approximately Rs 300 cr annually, at its full productivity. This is the best time as the capacities have come. Even the EOU unit gets tax benefit this certainly helps to enhance the margins. Valuation seems to be eye catching at the current price of Rs 86, the stock trades at 10 times of trailing earnings. For more details do read our analysis on this.

Bharat Heavy Electricals has secured orders worth over Rs 15,000 cr for supplying power plant equipments. BHEL has recently signed an MoU with Tamil Nadu Electricity Board for supplying super critical boilers for the 2X800 MW thermal power station near Chennai. The boilers would be manufactured with the technology from Alstom, US. The PSU was also augmenting well with its capacity expansion plans and has increased its manufacturing capacity to 10,000 MW in the phase I. The ongoing phase II expansion at an investment of Rs 732 cr was the single largest quantum of investment in the history of BHEL, Tiruchirapalli. BHEL reported a steady jump in net profit for the quarter ended December 2007. During the quarter, BHEL experienced a 15.61% rise in profit to Rs 772 cr from Rs 668 cr in the quarter ended December 2006. Net sales for the quarter rose 14.38% to Rs 4964 cr compared with Rs 4340 cr in the corresponding quarter, a year ago. Total income rose 15.55% to Rs 5229 cr for the quarter ended December 2007 from Rs 4525 cr for the same period, last year.

Technically Speaking: It was smart pull back after a gap down start. Sensex traded in negative region throughout the day. Sensex touched intraday high of 18,213 and low of 17,443. Overall breadth was in favor of Decliners with Advancers at 881 while Decliners at 1844. The turnover was pretty less at Rs 3901 cr. On the higher side Sensex Resistance lies at 18,300 and lower side support lies at 17,750. Sensex is on a pullback rally. We expect this rally to get exhausted near 19200--19300. Traders are advised to reduce their exposure to midcaps on rise.