Market Close : Bad cues from Europe... eats up gain

Markets opened in green and continued to trade higher 200 points the first half of the day with supportive global cues from US & Asian markets but could not maintain the momentum in late trade and slipped sharply on the back weak cues from the European markets. Value buying was seen in sectors like capital goods, metal, power, banking and Pharma space. While IT and FMCG stocks remained subdued for most part of the day. Airlines counter ended mixed ahead of Crude prices hit a record high of $102.08/bbl. Midcaps and smallcap indices also performed well in line with frontline counters. Market witnessed some sort of cautions approach as FnO expiry tomorrow. In Mid session markets sliped from the day's high on nervousness in European market on account of uncertain economic statements from U.K.'s biggest mortgage lender, HBOS which followed Indian Indices to lose the major gains to end flat with only 20 points in green. Asian indices ended in green but Europe started subdued and trading in red.

Sensex closed up by 20 points at 17825.99. It was helped up by gains in HDFC (2684.3999,+4 percent), Ranbaxy (436.35,+4 percent), BHEL (2262.8999,+4 percent), L & T (3630.95,+3 percent) and Maruti (832.1,+2 percent). Restricting the gains were Grasim (2888.6499,-5 percent), Rel Energy (1631.35,-4 percent), Satyam (437.1,-3 percent), Infosys (1617.4,-3 percent) and TCS (877.7,-2 percent).

Sugar companies based out of UP were under pressure. Supreme courts asked UP sugar mills to pay SAP at Rs 123/quintal for 2006-2007 against an appeal for Rs 110/quintal. This is negative for UP based sugar mills as they have to pay higher price for sugarcane. Against SAP of Rs 125/ qnt , UP mills had requested for cane price of Rs 110/ qnt. Bajaj Hindustan will be affected more, since it has taken less cane prices in accounting. This will reflect in next results. At current prices of sugar and the price to be paid, these mills make only marginal profits. But, global sugar prices are high and this provides some relief for sugar companies . Sugar mills outside UP follow SMP and this gives them an advantage over UP mills. We were negative on Bajaj Hindustan and Balrampur Chini the two major UP based sugar comanies and we also commented to look for a downside trade.

Paramount Communication was on 5% circuit today. the cable industry which is very much in focus has povided paramount to lead the game . Paramount is one of the leading manufacturers of Power Cables, Railway Cables and Telecom Cables. Paramount has two manufacturing units located at Dharuhera, Haryana and Khushkhera, Rajasthan. Paramount drives 85% of revenues from Power and Railway cable, 10% from Jelly Filled Telephone cables and rest 5% from Optical Fibre cable. Paramount is expanding the capacity in three phases with an investment of Rs 120 cr. Paramount acquired, AEI cables in UK one of the oldest cable manufacturing companies with a strong reputation. Paramount enjoys the acquisition synergy in terms of marketing network and good distribution in UK and helps to enter other countries also. At the current market price of Rs 34 valuations are attractive compared to its peers. We are positive on the business with long term view. Do read our note to know more.

Technically Speaking: Markets ended flat with profit booking seen in the later final hour trades. Sensex made an intra day high of 18137 and low of 17771. The breadth was in favor of Advances, as there were 1420 against 1308 Declines. Market turnover was fine at Rs 4848 Cr. Another lower top made today by Sensex. If now it goes below 17000, we can expect a target of 16300 and immediate support seen at 17650 while resistance at 18200-18500.