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Wednesday, January 02, 2008

Small is beautiful but many is scary!


Caution is the eldest child of wisdom

When many small caps hit upper circuit, the situation could turn scary soon. The markets may have ended flat but deep inside, investors enjoyed as the number of stocks hitting the upper circuit filter stood at 1,146. On Monday, it was even higher at 1,223. No prizes for guessing that most of the circuit stocks were from the T-group.

The outlook for today is again a narrow range for the main indices. With US markets closed and Asian markets nothing much to write about, the action will continue more on the side counters. Making gains on the small counters is enjoyable as long as it hits the upper circuit. Those dealing in such stocks will well remember that the reverse could also happen. At lower circuits there is no exit mode. So allocate only a small part of your asset to high risk counters.

Select banking stocks are being accumulated. Action is also picking up in RPL, RNRL. Reliance Energy is a counter which could see action ahead of Reliance Power IPO.

Most auto numbers will be released today and depending on the numbers expect some action. On Tuesday, TVS Motors announced December two-wheeler sales figures which declined 5.4% yoy to 97,576 units.

RBI has permitted SEBI-registered FIIs and sub-accounts of FIIs to short-sell, lend and borrow equity shares of Indian companies. SEBI has proposed that an insider should surrender short-term profits made on insider trades to the company.

Expect action in IDBI Bank, CHD Develop and Dollex Industries today. Satra Properties, Kopran and Vishal Exports are other counters which could see action.

HCL Technologies could gain as it has won a Rs1bn contract from RBI to set-up two large data centres in Maharashtra and for completely overhauling the latter’s IT infrastructure.

UCO Bank is expected to see heightened activity as it plans to raise Rs4.5bn from the proposed FPO. Reports also mention a possible merger with another bank.

BHEL and NPC are to enter inyto a JV for manufacturing nuclear reactors, according to reports.

Reliance Power IPO has goty a four-star rating from Crisil and ICRA.

Parvnath Developers is closey to tying up with JW Marriott, Starwood, Intercontinental and ITC for several hotels it is planning to build, according to a report.

PTC has raised Rs1.56bn by selling 40% in the financial arm, PTC Financial Services (PFS), to financial investors.

Glenmark Pharma is to transfer its API and generic business to new subsidiary, Glenmark Generics Ltd, for a consideration of Rs6.98bn, according to reports.

What the FIIs are doing

FIIs were net sellers of Rs4.61bn (provisional) in the cash segment on Tuesday while the local institutions pumped in Rs3.06bn.

In the F&O segment, foreign funds were net sellers of Rs685mn.

Bulk deals:

Among the major bulk deals on Tuesday, Reliance Capital Partners offloaded over 19 lac shares of Assam Company at an average price of Rs57. Merrill Lynch sold 3 lac shares of Vivimed Labs at an average price of Rs150. While, Citigroup picked up over 2.20 lac shares of Rajesh Exports around Rs894.

News Snippets:

  • FM hints at moderation in tax rates in the 2008-09 Budget. (BS)
  • Steel majors hike prices by up to Rs1,500 per ton. (BL)
  • Consumer Durable companies planning to hike prices of branded ACs and refrigerators by 10-12% in first quarter of 2008. (FE)
  • Exports grow 26.8% in November 2007 to US$12.4bn. (ET)
  • Government is planning corporatisation of cargo operations at non-metro airports. (ET)

Bhushan Steel to expand steel manufacturing capacity to 7mtpa over the next five years.

Godrej Consumer (GCPL) to raise Rs4bn via rights issue for its expansion plans and acquisitions.

Wockhardt has received US FDA approval to sell generic copies of Pfizer’s anti-allergy drug, Zyrtec, in the US.

GMR Infrastructure has set-up a subsidiary in Mauritius for routing equity investments in overseas ventures.

The consortium led by LN Mittal and HPCL is weighing the option of housing its US$6bn greenfield refinery-cum-petrochemical project in a SEZ, says a report.

Brigade Hospitality Services planning to invest Rs10bn over the next three years in six hospitality projects.

ITC to increase focus on health and wellness oriented products.

HPCL and Total JV have commissioned Rs3.33bn underground cavern facility to store 60,000 MT of LPG in Vishakhapatnam.

TVS Motors to roll-out ‘Flame’ across five cities in January, according to a report.

Godrej Industries enters into an agreement to transfer its medical diagnostics division to ICICI Venture-backed RCFL Ltd.

Venus Remedies gets European Good Manufacturing Practice certification for two of its plants.

Ramsarup Industries increases prices of steel wires by Rs1,000-2,500 per ton.

South Asian Petrochem (SAPL) has decided to set-up Rs6bn polyester fibre manufacturing unit in Haldia, West Bengal.

Bhagwati Banquets to raise Rs2bn through issue of shares in domestic or international markets.