Prediction pains, knowledge gains
Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.
After days of weakness, bulls will hope today is better. Predictions are that Reliance will beat expectations with RIL's bottomline expected to cross the $1bn mark. It may report Rs40bn gains from the sale of 4% stake in RPL. We see a much improved opening today. The markets will remain choppy during the day. US markets shed their gains and ended lower, and Asian markets, which gained around 1-1.5% earlier, are again in the red. We advocated leaving the indices alone for some time. Knowledge is power (we are not talking about Reliance Power) and this correction should give you an opportunity to use knowledge to get into fundamentally strong counters, which are available at better rates.
Global markets have been hit hard by a sudden selling deluge following fresh tremors on Wall Street linked to the ongoing subprime crisis. As if the selling pressure due to the frenzied rush for applying for the record-breaking Reliance Power IPO was not enough, the bulls received another jolt from global cues.
Given the selloff on Wall Street over the past few sessions and mounting concerns over the subprime-related losses, some experts are betting that the Fed could announce rate cuts ahead of its Jan. 29-30 meeting. If that does happen, there could be a relief rally. If not, the markets will remain subdued till the formal rate cuts. Wall Street is looking at a 50-75 bps reduction in key short-term rates. As always the accompanying statement from the FOMC will be crucial. As far as India is concerned, we will also have the RBI announce its quarterly policy review. No rate cuts are expected immediately, but even an indication could fire up the bulls.
Among the other key results include: Biocon, Emco, FT, Godrej Consumer, HCL Tech, HT Media, Hikal, IDBI, Indiabulls Financial, JBF Industries, KPIT Cummins, NDTV, Orchid Chem, Ranbaxy, REL, RNRL, S Kumars Nationwide and Wipro.
Bulls rely on RIL
It was a day of massive losses and significant recovery towards the end. Markets opened with a negative gap in early trades and continued to lose ground on back of global sell-off and all round selling on the bourses. However, markets witnessed a turnaround in the last hour as benchmark Sensex recovered over 400 points and Nifty index recouped almost 100 points from their respective low. Finally, 30-share Sensex closed at 19,868 losing 382 points and Nifty lost 138 points to close at 5,935.
Southern Ispat was locked at 5% upper circuit to Rs36.75 after the company announced that it approved merger of Kerala Sponge. The scrip touched an intra-day high of Rs36.75 and a low of Rs36.70 and has recorded volumes of over 91,000 shares on NSE.
Videocon Industries lost 1% to Rs602. Reports stated that the company was looking to venture into the grocery and retailing space through cash & carry format across the country. The scrip touched an intra-day high of Rs614 and a low of Rs580 and recorded volumes of over 6,00,000 shares on NSE.
Jet Airways dropped 1.8% to Rs887. Kingfisher and low cost carriers have affected the company’s market share. Jet airways share fell to 22.6% in 2007 from 31.2% in 2006 whereas the Kingfisher group together accounted for 29.3% share in 2007 from last years 26.8% reports stated. The scrip touched an intra-day high of Rs903 and a low of Rs879 and recorded volumes of over 37,000 shares on NSE.
ITC was down 3.4% to Rs208. According to reports the company was setting up a new cigarette manufacturing facility in Pune and also the Food Business Division (FBD) of the company would set up its second manufacturing facility in Pune for a total investment of Rs3.50bn. The scrip touched an intra-day high of Rs216 and a low of Rs201 and recorded volumes of over 88,00,000 shares on NSE.
Nicolas Piramal dropped 2.8% to Rs342. Reports stated that the company’s subsidiary wellspring entered into pact with Dr. L.H. Hiranandani Hospital for complete outsourcing of Radiology Dept. The scrip touched an intra-day high of Rs347 and a low of Rs330 and recorded volumes of over 70,000 shares on NSE.
India Cements slipped by over 5% to Rs261. The company announced its Q3 result with net profit at Rs1.27bn Vs Rs797.8mn and revenue at Rs8.58bn Vs Rs5.44bn. The scrip touched an intra-day high of Rs272 and a low of Rs254 and recorded volumes of over 24,00,000 shares on NSE.
Kavveri Telecom was locked at 5% upper circuit to Rs294.74 after the company announced that they purchased Software Wireless. The scrip touched an intra-day high of Rs294 and a low of Rs285 and recorded volumes of over 1,00,000 shares on NSE.
LIC Housing Finance dropped 2% to Rs365. The company declared its Q3 results with net profit at Rs1.06bn (up 37%) and revenue at Rs5.52bn (up 36%). The scrip touched an intra-day high of Rs376 and a low of Rs354 and recorded volumes of over 18,00,000 shares on NSE.
Welspun Gujarat declined by over 2.5% to Rs500. The company announced its Q3 result with net profit at Rs974mn (up 136%) and net sales at Rs10.36bn (up 40%). The scrip touched an intra-day high of Rs520 and a low of Rs480 and recorded volumes of over 13,00,000 shares on NSE.
What the FIIs are doing
FIIs were net sellers of Rs3.65bn (provisional) in the cash segment on Tuesday while the local institutions were net sellers of just Rs897.4bn.
In the F&O segment, they were net sellers to the tune of Rs14.92bn.
On Monday, FIIs were net buyers of just Rs1.74bn in the cash segment. Mutual Funds were net sellers of Rs5.51bn on the same day.
News Snippets:
Vedanta Resources is panning to invest over US$12.5bn in metals, mining and power generation by 2012. (FE)
REL gets nod from ministry of environment and forest for a 4,000MW power project in Maharashtra. (FE)
Infosys BPO expects to close three integrated IT-BPO deals in the range of US$50-150mn each in the next 3-6 months. (ET)
Wipro denies negotiations to takeover or merge with French IT company, Cap Gemini. (FE)
Maruti to roll out its Rs10-lakh luxury passenger car, Kizashi, in 2010. (ET)
NTPC to foray into power equipment manufacturing after getting a clearance from the board for a JV with Bharat Forge. (BS)
PTC raises Rs12bn through QIP. (ET)
JSW Steel gets 8 mining concessions in north of Chile. (BL)
Apollo Tyres is planning to set-up a greenfield passenger car radial tyre facility in Hungary. (FE)
Tata Steel enters in JV with Oman-based Al Bahja group for development of Uyum limestone deposits at Salalah. (FE)
Infosys BPO to set-up a new unit for its foray in the domestic business. (FE)
M&M will invest Rs1bn to make diesel engine for Scorpio, to comply with the US emission norms. (FE)
National Fertilizers, RCF and KRIBHCO to form JV to explore the possibility of investments in nitrogenous, phosphatic and potassic sector. (FE)
Sterlite Energy is planning a pre-IPO placement of US$1bn in next couple of months. (DNA)
MTNL to invest Rs15bn to expand GSM and broadband operations. (BS)
NMDC likely to get Navratna status. (BL)
Simplex Infrastructure to foray into thermal power generation through a JV. (BL)
LIC Housing Finance plans to raise Rs3-4bn by issuing fresh shares to select investors in next 3-4 months. (DNA)
GHCL to expand soda ash capacity in India by 2,50,00 tpa by 2010. (DNA)
Deccan plans to launch international flights from August. (BS)
Gitanjali Gems forms five wholly-owned subsidiaries for developing SEZs. (DNA)
Royal Orchid Hotels to open its first Ramada brand hotel in India by April. (FE)
The Government is likely to confer Navratna Status to CONCOR soon. (FE)
Hindustan Sanitaryware to foray into home interior solutions retail business. (BL)
Mahindra Holiday & Resorts to offer 1% stake to Jacob Ballas India fund through a private placement for around US$10mn. (FE)
The annual export target of US$160bn is likely to be reduced to US$150bn on account of the sharp appreciation in the rupee. (BS)
Apparel exports register a decline of 14% in 2007. (FE)
Finance Ministry is considering cutting import duties on ferro nickel from present 5% to 2%. (ET)