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Friday, January 04, 2008

Stream-line your portfolio


In the confrontation between the stream and the rock, the stream always wins, not through strength but by perseverance.

A number of otherwise rock solid stocks seem to be lackluster even as the market is touching new highs. So are the bulls running out of steam? For the day we expect the main indices to kick of the proceedings on a cautious note given the mixed global cues and uncertainty surrounding the US economy. But, things might just get better as the day wears on.

Keep an eye on what's happening in Asian and European markets for further direction. Side counters - many of them with dodgy background - may continue to dominate the large caps. Be highly alert at this stage, as this speculative buying binge cannot go on forever.

With Reliance Power IPO coming soon and market cap ‘war’ between the Ambani brothers is likely to intensify over the next few weeks. So, expect some heightened activities and possible news flow on the Reliance counters.

The Sensex was down 0.6% while the Nifty closed flat. Gains in Cairn, BPCL, Tata Power, Suzlon and RPL - which are not there in the Sensex - enabled the Nifty to avoid bigger losses. On the other hand, weakness in IT shares - owing to a weak dollar - hurt the Sensex. With the indices near all-time high levels, this kind of churning is only to be expected.

Auto, IT, Textiles and Cement sectors may lag behind due to sector-specific headwinds while Power, Oil & Gas, Infrastructure and Capital Goods shares will remain in the limelight.

Next week select auto stocks could gain as some announcements may be made at the Auto Expo. Select Banking, Pharma, Real Estate and Metal stocks could be looked at for investment purpose. This is for the medium to long term horizon.

NOCIL, which has been hitting upper circuits for the past several days, could see some softening. The company has clarified that NOCIL is not a part of Mukesh Ambani led Reliance Industries and NOCIL Petrochemicals is not a subsidiary of it. Therefore, the question of shareholders of NOCIL getting new shares of NOCIL Petrochemicals does not arise at all. The company further clarified that NOCIL does not own large tract of land in the Thane Belapur Industrial belt in Navi Mumbai as wrongly stated in a newspaper article, dated Dec. 24.

Vishal Retail's Board will meet on January 11, to consider and discuss raising of further capital through various available mechanisms in India. Adani Enterprise will consider fund-raising options in a Board meeting today. Ashapura Minechem will consider a preferential allotment. Dewan Housing Finance will mull fund-raising and enhancing FII investment limit.

Vishal Exports' Board has approved the proposal to demerge the 'Wind Farm Project' in Rajasthan and Tamilnadu, on a going concern basis, to Vishal Wind Project Ltd., Ahmedabad. Post the merger with Rain Calcining with itself, Rain Commodities has allotted 3,48,61,286 shares to the shareholders of Rain Calcining in the ratio of 2:7.

Alps Industries has set up a wholly owned subsidiary called Alps Energy to make investments in various energy projects. This will be the vehicle for the company’s investments in the energy sector. The company is currently negotiating with several parties for acquisition of allotted hydel power projects in Uttarakhand and Himachal Pradesh. In addition, the company is also making direct bids for projects yet to be allotted.

US shares closed virtually unchanged on Thursday as investors absorbed a positive report on factory orders, near record oil and gold prices and a stronger-than-expected reading on private sector employment ahead of Friday's government jobs report.

Retailers and carmakers declined on the back of the weak private job report and disappointing auto sales heightened concerns about consumer spending in the world's biggest economy.

Walgreen dropped after the largest US drugstore chain reported lower December sales than some analysts estimated. GM and Ford fell after sales slipped. Monster Worldwide, the largest provider of job listings, decreased after reporting a decline in its employment index for last month.

Market breadth was mixed. About two stocks fell for every one that rose on the New York Stock Exchange. On the Nasdaq, decliners topped advancers by over three to two on volume of 1.94 billion shares.

The S&P 500 was unchanged at 1,447.16. The Dow Jones Industrial Average added 13 points to 13,056.72. The Nasdaq Composite Index dropped 7 points or 0.3%, to 2,602.68.

Treasury prices rose, lowering the corresponding yields. The dollar fell versus the yen and euro. Oil prices briefly hit a record trading high above $100 a barrel before retreating. Gold prices closed at a new high.

Investors will also be reacting to the results from Thursday's Iowa caucuses, which kick off the 2008 presidential election. However, Wall Street's reaction is expected to be muted until the White House race intensifies further.

Stocks in Europe declined with cautious outlooks from British retailers Next and DSG International underscoring investor worries about economic growth amid record crude oil prices and continuing weakness in the housing sector. The pan-European Dow Jones Stoxx 600 index fell 0.3% to 358.94. The UK's FTSE 100 closed up 1% at 6,479.40, the German DAX 30 index shed 0.5% to 7,908.41 and the French CAC 40 index declined 0.1% to 5,546.08.

In the emerging markets, the Bovespa in Brazil was up 0.1% at 62,891 while the IPC index in Mexico rose 0.6% at 28,860. The ISE National-30 index in Turkey was down 2.4% at 67,546.

Asian markets were trading mixed this morning. The Nikkei in Tokyo was down 616 points at 14,691 and the Hang Seng in Hong Kong was up 256 points at 27,143. The Kospi in Seoul was down 12 points at 1840 and the Straits Times in Singapore added 7 points at 3403.

Bulls likely to bounce back

Weak global cues coupled with selling pressure in the index heavyweights dragged the benchmark Sensex lower in the opening trades. Though, bulls staged a come back led by the Oil & Gas majors, Power and PSU stocks, key indices were unable to hold on to their gains as further selling in even the Mid-Cap and the Small-Cap stocks and negative cues from the European markets dragged markets to end in red. Finally, 30-share Sensex closed at 20,345 slipping 120 points and Nifty ended flat at 6,178.

Asian Electronics gained 0.3% to Rs548 after the board of directors of the company approved raising Rs3bn. The scrip touched an intra-day high of Rs585 and a low of Rs541 and recorded volumes of over 1,00,000 shares on NSE.

Supreme Infrastructure slipped 0.5% to Rs181. The company announced that they secured Rs719.9mn order. The scrip touched an intra-day high of Rs194 and a low of Rs179 and has recorded volumes of over 2,00,000 shares on NSE.

ACC, India's biggest cement maker by capacity has slipped by 1.6% to Rs1005 after the company announced that its December sales declined 6% to 1.57mn tons from 1.67 million tons a year earlier. The scrip touched an intra-day high of Rs1028 and a low of Rs1001 and recorded volumes of over 1,00,000 shares on NSE.

Ambuja Cements was down 2% to Rs145. The company declared its sales rose 7% to 1.49mn tons from 1.39mn tons in the corresponding period a year earlier. The scrip touched an intra-day high of Rs148 and a low of Rs144 and recorded volumes of over 19,00,000 shares on NSE.

Jindal Steel gained 2% to Rs16,211 after the company announced that it secured Bolivia approval for TPA steel plant and would invest $2.1bn in mine, Steel plant. The scrip touched an intra-day high of Rs16,360 and a low of Rs15,660 and recorded volumes of over 1,00,000 shares on NSE.

Hero Honda raced ahead by 1.6% to Rs710. The company announced that sales in December fell 5% to 2,40,532 motorcycles and scooters compared with 2,52,462 units a year earlier. The scrip touched an intra-day high of Rs721 and a low of Rs688 and recorded volumes of over 7,00,000 shares on NSE.

MTNL was up 0.2% to Rs211 after reports stated that the company would get a nationwide license from the government to provide mobile services. The scrip touched an intra-day high of Rs217 and a low of Rs209 and recorded volumes of over 71,00,000 shares on NSE.

Burnpur Ltd., one of the large integrated private sector cement companies in the eastern region, started trading at Rs19 on the BSE against the issue price of Rs12. The scrip rallied by over 285% to close at Rs46. The scrip has touched an intra-day high of Rs49 and a low of Rs17 and recorded volumes of over 11,00,00,000 shares on BSE. The scrip topped second on the BSE turnover toppers’ list for the day.

The company came out with a Public Issue of 3,18,25,100 equity Shares of Rs10/- each. The price band was been fixed at Rs10 - 12 per share.

The company’s IPO was over subscribed by more than 15 times. The funds generated from the IPO would be used by the company for funding its expansion program. The company worked out Rs500crore expansion cum backward integration plan to be executed over a period of 2/3 years.

BGR Energy, supplier of systems and equipment for the power, oil & gas, refinery, petrochemical and process industries got listed at Rs801 on the BSE against the issue price of Rs480.

The scrip ended at Rs901 translating in to a premium of 87%. The scrip touched an intra-day high of Rs940 and a low of Rs801 and recorded volumes of over 43,00,000 shares on NSE.

The company entered the capital market with a public issue of 91.36 lakh shares of Rs10 each. It fixed the price band at Rs425 - 480 per share. The issue was subscribed 119.54 times.

What the FIIs are doing

FIIs were net sellers of Rs2.4bn (provisional) in the cash segment on Thursday while the local institutions pumped in Rs5.27bn.

In the F&O segment, foreign funds were net sellers of Rs9.08bn.

On Wednesday, FIIs were net sellers of Rs2.4bn in the cash segment.