Reliance Power - no cheer despite bonus

Reliance Power, which turned ex-bonus on Friday, closed down at Rs 235.85, reflecting the expanded capital of the company. According to analysts, the ex-bonus price was below the market expectation.

Opening at Rs 308.95, the scrip touched an intra-day low of Rs 231.71 on the BSE, before closing 42 per cent lower from the cum-bonus price of Rs 409.55 on Thursday.

The company had announced bonus issue of three shares for every five shares held, excluding the promoter group. This was done to compensate investors as the shares got listed at a discount to the offer price. On the first day, the shares closed at Rs 372 against the issue price of Rs 430(for retail investors).

Following the bonus issue, the cost of acquisition of Reliance Power stock was expected to come down by 40 per cent for retail shareholders to Rs 269 per share. In the same way, for institutional investors, the acquisition cost will be reduced by 37 per cent to Rs 281, as the issue price was fixed at Rs 450.

The Reliance Power stock managed to close above issue price of Rs 450 only once on February 25.

“We were expecting the shares to quote at around Rs 256; butthe price dipped to Rs 230 today as a lot of short positions were created,” said the head of research at a brokerage.

The company’s project will become operational only after four years and the stock is priced high, even after the bonus issue. So those investors who are not happy with the price seem to be exiting now, said Mr Sanjay Someshwar, a sub-broker with Ventura Securities.

“A lot of High Networth Individuals (HNI) seem to be exiting now. For the HNIs, who had bought the shares at the IPO price of Rs 275-280, even after the ex-date, the price hasn’t gone up. So, today they booked their losses and exited the stock,” added Mr Someshwar.

The shares recorded a total turnover of Rs 92.3 crore on the BSE and NSE together on Friday. The face value of scrip is Rs 10 per share. “The value of the share for the retail investor was set at Rs 270. And today, the stock is available at Rs 235, which means those who buy the stock now can get it cheaper than before. Those who missed the bus on the IPO or who did not get the bonus shares get it much cheaper, which makes the scrip a good buy at the moment,” said the director of research at a stock broking firm.

Eveninger - May 30 2008

Eveninger - May 30 2008

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Weekly Stock Picks - May 30 2008

Buy Nicholas Piramal

Buy STER

Buy GSK Pharma

Buy Bharti Airtel

Buy Educomp

Weekly Newsletter - May 30 2008

While GDP numbers were better than expected, inflation continues to haunt the bulls. For the coming week, there are no firm triggers except domestic handling of the oil prices. While some decisions could be expected over the weekend, a lot will depend on how the political parties react. Given the current political situation, it is unlikely that the government will take a tough call. The markets will continue to swing at start more to the global beats. Over the day domestic issues and stock specific action will dominate. Any voices on monsoon could improve sentiment. Else bulls may have to wait longer before some stability sets in

Mumbai slips in global office rent sweepstakes

London's West End continues to be the world's most expensive location for hiring commercial space while Moscow and Tokyo have risen two places each, pushing Mumbai to the fourth spot, according to the latest survey of global office rents by CB Richard Ellis.

Office space in Moscow costs an average of US $232.37 per square foot per year compared with US $299.54 in the West End of London, CB Richard Ellis said in the survey. The other costliest markets are Inner Central Tokyo, Mumbai and Outer Central Tokyo.

Office rents in the Russian capital jumped by an average of 93% in dollar terms in the 12 months ended March 31, the second-biggest gain among 173 cities tracked by CB Richard Ellis. Moscow overtook Mumbai, where rents gained 41%.

"Office occupancy costs are continuing to defy sluggish economic conditions and the credit crunch as they rise faster than global inflation," Raymond Torto, CB Richard Ellis's chief economist, said in today's report.

The cost of occupancy, which includes service charges and taxes, jumped 94% in Vietnam's Ho Chi Minh City, more than any other location. It was followed by Moscow, Singapore, Nicosia and Oslo.

Inflation spurts as fuel price hike looms

India's inflation, based on the Wholesale Price index (WPI), climbed further in the third week of May even as the Government remained in a soup over high crude oil prices and its adverse impact on public sector oil marketing companies. The annual point-to-point inflation rose to 8.1% in the week ended May 17 from 7.82% in the previous week, the Commerce & Industry Ministry said. Economists had expected a reading of 7.95-8%. Meanwhile, the Government revised the inflation rate for the week ended March 22, to 7.85% from the provisional forecast of 7%. Inflation may accelerate further as the Government may revise preliminary estimate in two months. Also, with the Government almost making up its mind on effecting a small hike in fuel prices, inflation is bound to go up.

The impending fuel price hike was postponed till the weekend. Prime Minister Dr Manmohan Singh finalised details of the package to bail out public sector oil marketing companies (OMCs), who are suffering due to surging crude oil prices. The Prime Minister discussed the issue with External Affairs Minister Pranab Mukherjee, Finance Minister P Chidambaram, Petroleum Minister Murli Deora and Planning Commission Deputy Chairman Montek Singh Ahluwalia. "We discussed the various options... hopefully, by tomorrow or by day after tomorrow, we will have a solution," Deora told reporters on May 29 after two rounds of talks with the Prime Minister.

Though Deora refused to say what transpired in the meetings, reports suggested that a combination of a hike in petrol and diesel prices along with a minor duty rationalisation and according SLR status to oil bonds could form part of the package. It would be a climb down from the proposed increase of Rs10 a litre in petrol, Rs5 per litre in diesel and Rs50 per LPG cylinder sought by the Petroleum Ministry, along with a cut in customs duty on crude oil and lower excise duty.

"International prices touching US$135 a barrel has forced down our throat Rs2.25 trillion revenue loss on the sale of petrol, diesel, LPG and kerosene. Unless we act, companies will not be left with cash to import crude," Deora said. "The Prime Minister and Finance Minister saw papers of projected revenue loss and options thereof. They realise very much that we need to help PSU oil firms on a war footing," he said.

Meanwhile, there was some relief for the bleeding oil PSUs as the Reserve Bank of India (RBI) came to their rescue. The central bank allowed banks to lend more money to them. The central bank told banks they can lend up to 25% of their capital funds to the cash-starved state-run oil marketing companies as against 20% earlier. This limit can be increased to 30% on board approval.

Indian economy grows faster than expected

The Congress-led Government, humbled by the recent electoral setback in Karnataka and reeling under three-and-a-half-year high inflation, got something to cheer about. The Indian economy did much better in the third and fourth quarter than what was widely anticipated. As against expectations of a sharp dip (some even predicted below 8% growth), GDP in the January-March quarter came in ahead of expectations, prompting the Government to revise up its estimate for the entire year. The bigger than expected growth was mainly due to revision in agriculture production.

Fourth-quarter GDP grew by 8.8% in the quarter ended March versus 9.7% in the same quarter last year. The number is much higher than most economists' estimates, who had forecast expansion of anywhere between 8-8.5%. The Government revised GDP growth for the October-December quarter, to 8.8% from 8.4%. The stronger than expected GDP growth in the third and fourth quarter enabled the Government to hike FY08 growth to 9% from the initial estimate of 8.7%. In FY07, the Indian economy had grown by 9.6%.

Sector-wise break up shows that growth in manufacturing, mining and agriculture decelerated in the fourth quarter while construction, electricity and services improved their performance. Manufacturing grew by just 5.8% in Q4 FY08 as against 12.8% in the year-ago period, while farm sector growth fell to 2.9% from 4.9% in the same quarter last year. Construction expanded by 12.6% versus 12.2%; trade, hotels, transport and telecom rose by 12.4% compared to 11.6% and finance, insurance and real estate grew by 10.5% versus 13.4%.

NSE Bulk Deals to Watch - May 31 2008

Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
30-MAY-2008,GOLDINFRA,Goldstone Infratech Ltd.,D K JAIN,BUY,142511,70.65,-
30-MAY-2008,GSSAMERICA,GSS America Infotech Limi,ASTUTE COMMODITIES & DERIVATIVES Pvt Ltd,BUY,86994,371.36,-
30-MAY-2008,GTCIND,GTC Industries Ltd,ROCKLINE CONSTRUCTION CO.(NG) (PROP.NARENDRAPAL GUPTA,BUY,123450,205.22,-
30-MAY-2008,IFCI,IFCI Ltd.,AMBIT SECURITIES BROKING PVT. LTD.,BUY,5410963,63.19,-
30-MAY-2008,IFCI,IFCI Ltd.,CLEAN FINANCE & INVESTMENT LTD,BUY,3930065,62.91,-
30-MAY-2008,KOHINOOR,Kohinoor Foods Limited,SURABHI JAIN,BUY,140000,77.96,-
30-MAY-2008,MAXWELL,Maxwell Industries Ltd.,SUNIL JAYKUMAR PATHARE,BUY,1267250,17.90,-
30-MAY-2008,MLL,Mercator Lines Limited,RAS ASSET MANAGEMENT SGR SPA A/C RAS EMERGING MARKETS EQUITY,BUY,1303053,117.18,-
30-MAY-2008,NAGARFERT,Nagarjuna Fert & Chem,CLEAN FINANCE & INVESTMENT LTD,BUY,2308276,47.87,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,AMBIT SECURITIES BROKING PVT. LTD.,BUY,128973,287.87,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,DINESH MUNJAL,BUY,150752,288.39,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,MANSUKH SECURITIES & FINANCE LTD,BUY,162987,291.57,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,RELIANCE MUTUAL FUND,BUY,200000,303.40,-
30-MAY-2008,PRAENG,Prajay Engineers Syndicat,BSMA LIMITED,BUY,323728,219.00,-
30-MAY-2008,RALLIS,Rallis India Ltd.,FIDELITY TRUSTEE CO PVT LTD,BUY,203511,420.00,-
30-MAY-2008,UNIENTER,Uniphos Enterprises Limit,DEMURIC HOLDING PVT LTD,BUY,1250000,44.00,-
30-MAY-2008,UNIENTER,Uniphos Enterprises Limit,MATTERHORN SINGAPORE,BUY,1175775,44.00,-
30-MAY-2008,GSSAMERICA,GSS America Infotech Limi,ASTUTE COMMODITIES & DERIVATIVES Pvt Ltd,SELL,82410,370.40,-
30-MAY-2008,IFCI,IFCI Ltd.,AMBIT SECURITIES BROKING PVT. LTD.,SELL,5332163,63.21,-
30-MAY-2008,IFCI,IFCI Ltd.,CLEAN FINANCE & INVESTMENT LTD,SELL,3930065,62.94,-
30-MAY-2008,KOHINOOR,Kohinoor Foods Limited,IDBI TRUSTEESHIP SERVICES LTD,SELL,425000,75.99,-
30-MAY-2008,LLOYDELENG,Lloyd Electric & Engg Ltd,MERILL LYNCH CAPITAL MARKETS ESPANA S A SV,SELL,256000,109.34,-
30-MAY-2008,MAXWELL,Maxwell Industries Ltd.,SHOBHA JAIPAL REDDY,SELL,1267250,17.90,-
30-MAY-2008,MTNL,Maha Tel Nigam Ltd.,VANGUARD EMERGING MARKETS STOCK INDEX FUND A SERIES OF VANGU,SELL,1470741,93.87,-
30-MAY-2008,NAGARFERT,Nagarjuna Fert & Chem,CLEAN FINANCE & INVESTMENT LTD,SELL,2309276,47.89,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,ABERDEEN INTL INDIA OPPORTUNITIES FUND (MAURITIUS) LIMITED,SELL,288563,305.24,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,AMBIT SECURITIES BROKING PVT. LTD.,SELL,128973,288.15,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,DINESH MUNJAL,SELL,150752,289.38,-
30-MAY-2008,PIRLIFE,Piramal Life Sciences Lim,MANSUKH SECURITIES & FINANCE LTD,SELL,162987,291.47,-
30-MAY-2008,PRAENG,Prajay Engineers Syndicat,GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD,SELL,324654,219.00,-
30-MAY-2008,RALLIS,Rallis India Ltd.,HDFC M F A/C INDIA TAX SAVER,SELL,152115,420.00,-
30-MAY-2008,UNIENTER,Uniphos Enterprises Limit,MORGAN STANLEY MAURITIUS COMPANY LTD,SELL,382000,44.00,-
30-MAY-2008,UNIENTER,Uniphos Enterprises Limit,SWISS FINANCE CORPORATION (MAURITIUS) LIMITED,SELL,785000,44.00,-
30-MAY-2008,UNIENTER,Uniphos Enterprises Limit,SWISS FINANCE CORPORATION (MAURITIUS) LIMITED,SELL,2035000,44.00,-

BSE Bulk Deals to Watch - May 30 2008

Deal Date Scrip Code Scrip Name Client Name Deal Type * Quantity Price **
30/5/2008 517494 ACCEL TRANS ACCEL LIMITED B 179249 40.50
30/5/2008 517494 ACCEL TRANS SREEKUMARI R PANICKER S 179249 40.50
30/5/2008 532975 AISHWARYA TE N D NISSAR B 93319 96.59
30/5/2008 532975 AISHWARYA TE N D NISSAR S 93319 96.63
30/5/2008 531223 ANJANI SYNTH NARENDRA VALLABHJI BAHUVA B 63152 42.02
30/5/2008 531223 ANJANI SYNTH NARENDRA VALLABHJI BAHUVA S 57508 42.81
30/5/2008 590059 BIHAR TUBES SPJSTOCK B 39418 196.42
30/5/2008 590059 BIHAR TUBES SPJSTOCK S 39418 197.31
30/5/2008 512624 CHANDRIK TRA ANIL SHARMA B 50000 3.57
30/5/2008 530713 CHOKSH INFO BINA ATUL CHAUHAN S 15000 31.20
30/5/2008 532271 CYBERMAT INF NEWGEN INTERNATIONAL PVT. LTD. B 699583 6.01
30/5/2008 532271 CYBERMAT INF S V ENTERPRISES B 373170 6.01
30/5/2008 532271 CYBERMAT INF S V ENTERPRISES S 373107 6.00
30/5/2008 531595 DOVER SECURT GAINFUL MULTITRADE PVT. LTD B 166987 151.16
30/5/2008 531137 GEMSTONE INV MALA HEMANT SHETH B 75000 22.12
30/5/2008 531137 GEMSTONE INV BHAVESH PRAKASH PABARI S 100247 22.09
30/5/2008 532951 GSS AMERICA OPG SECURITIES PVT LTD B 140267 364.60
30/5/2008 532951 GSS AMERICA OPG SECURITIES PVT LTD S 140267 364.84
30/5/2008 500151 GTC INDUSTRI ROCKLINE CONSTRUCTION CO NG B 116550 205.06
30/5/2008 532614 IMPEX FERRO ANGEL INFIN PRIVATE LIMITED B 166670 39.08
30/5/2008 532614 IMPEX FERRO ANGEL INFIN PRIVATE LIMITED S 166670 39.36
30/5/2008 516078 JUMBO BAG LT JITENDRA SHAMJI PAREKH B 38750 44.26
30/5/2008 512559 KOHINORFOODS IDBI TRUSTEESHIP SERVICES LTD S 327682 76.01
30/5/2008 531261 KUSHAGRA SO ROMY REALTY PRIVATE LTD. B 101010 7.45
30/5/2008 531261 KUSHAGRA SO MAKKHAN LAL SHARMA HUF S 100000 7.45
30/5/2008 532979 PIRAM LIFE OPG SECURITIES PVT LTD B 517254 291.24
30/5/2008 532979 PIRAM LIFE OPG SECURITIES PVT LTD S 517254 291.57
30/5/2008 531273 RADHE DEVELO DIPAL DEVENDRA SHAH S 60000 91.85
30/5/2008 531273 RADHE DEVELO JASMINE JAYENDRA THAKKER S 138924 91.85
30/5/2008 532884 REFEX REFRIG HIMAT PARSHOTTAMBHAI JATANIA B 92000 216.05
30/5/2008 504375 SOFTBPO GLOB SHEETAL RAJESH JAIN B 1000 354.40
30/5/2008 512048 SPLASH MEDIA ASHISH JAUHARI S 9186 100.00
30/5/2008 513530 STELCO STRIP HARDIK M MITHANI B 48653 43.00
30/5/2008 513530 STELCO STRIP HARDIK M MITHANI S 48653 43.41
30/5/2008 532887 SUJANATOWER LB INDIA HOLDINGS CAYMAN II LTD B 200000 119.99
30/5/2008 532887 SUJANATOWER MORGAN STANLEY MAURITIUS CO LTD S 300000 119.71

Company Background - BHEL

BHEL, is the largest engineering and manufacturing enterprise of its kind in India and it was incorporated in the year of 1964. It is one of the leading international companies in the field of power equipment manufacture and engaged in power generation, transmission, industry (transportation, renewable energy etc) and Overseas Business. BHEL is a ISO 9000, ISO 9001-2000, ISO 14001 and also OHSAS-18001 certified public sector corporate situated in New Delhi. BHEL has over the years established its references in 68 countries of the world spanning across all the six-inhabited continents. In 1991-92, it has divested a part of its equity shares to public and financial institutions. At present the government of India holds 67.72% in the total equity capital of the company. In India alone BHEL have 14 manufacturing units, four power sector regional offices, eight service centers and 15 business offices for manufactures over 180 products under 30 major product groups and enable to provide high level of quality & reliability of its products at prompt time. The company's major clients are State Electricity Boards, NTPC, World Bank aided projects, the Railways and a host of private companies in domestic, in case of overseas company's products are exported mainly to the middle-east and the far-east countries. BHEL has two joint venture companies, BHEL-GE Gas Turbine services Ltd with GE,USA for repair & servicing of GE designed Gas Turbines and Power Plant Performance Improvement Ltd with Siemens AG, Germany for plant Performance improvement of old fossil fuel power plants.

BHEL received MOU Award for Excellence in Performance for 2004-05. BHEL has won International Asia Pacific Quality Award (IAPQA 2005) from the International Asia Pacific Quality Organisation (APQO) through its Ranipet Unit. It is the first engineering & Manufacturing organization as well as the first PSU in the country to received this award. During the year 2005-06 BHEL got FICCI Award for environmental conservation and pollution control, ICWAI National Award for Excellence in Cost Management-2005. In 2006-07 the company conferred again the same ICWAI National Award for Excellence in Cost Management-2006. BHEL qualified for the Business Standard Star Public Sector Company Award-2006 and also the CII Exim Award, BHEL is the first public sector company received the CII Exim award.

The company opened a new line of business in the form of Gas Insulated Substations (GIS) in April 2007. The Corporate R&D department of BHEL has successfully developed an indigenous GIS. It has also bagged the first letter of intent from the Andhra Pradesh Transmission Corporation (APTransco), for installing the first unit in the State. As on May 2007 BHEL signed a memorandum of understanding with Toshiba of Japan for know-how in higher horsepower locomotives, it may help the company to shift from the production locomotives capacity 6,000 hp to 10,000-hp range. In August of the same year Uttar Pradesh government and BHEL came to an agreement for setting a 1,600 Mw thermal power project at Obra. The project has divided into two units of 800 Mw each. The cost of the project is estimated to be Rs 6,400 crore or Rs 4 crore per Mw. The deal covered 50 per cent equity participation by the BHEL and the rest by state government of UP. DVC has already awarded turnkey contracts for setting up Koderma and Durgapur Steel thermal power stations of 1000 mw each to BHEL worth of Rs 6,500 crore. In 2007 Sept. 10th NTPC Ltd, the country's largest power generator and equipment major BHEL, have signed a memorandum of understanding to form a joint venture company to carry out engineering, procurement and construction (EPC) activities in the power sector on "mutually beneficial terms."

The company completed Phase I of its latest modernisation drive in December 2007, with an investment of Rs 190 crore, to take its manufacturing capacity to 10,000 MW from 6,000 MW a year. Phase II in 2008 would add about 1.25 million sq ft of shop floor and associated office space, spread over about 130 acres in the 3,000-acre of BHEL campus. On-site fabrication work is under way to erect additional shop floors and 75 different types of machines would be install, after this expansion the company's manufacturing capacity would go up to 15,000 MW equivalent of power plant equipment a year and may to be in a position to supply over 75,000 MW equivalent of plant equipment over a five-year period. From April 2008, BHEL's projects can monitored online, the implementation of a new Web-based project monitoring system covered this and it would enable to get a real-time status on project schedules. BHEL firmly establishing itself in target export markets, positioning of BHEL as a regular EPC contractor in the global market and exploring various opportunities foe setting up overseas joint ventures etc. The company was focused on addition of facilities for various products in manufacturing units and for construction of tools and equipment for erection and commissioning services at project sites.

Company Background - BEML

BEML was incorporated under the Government of India administrative control by the Ministry of defence in 1964. In 1992, Government dis-invested 25% of its shareholding over a period of two years. Presently 40% of its equity has been dis-invested to financial institutions and public.It is the largest manufacturer of earth moving equipment in India and the second-largest in Asia. The company commands 70% market shares in domestic earth mover industry.

The company's unit at Kolar Gold Field Mysore and Bangalore incorporate hi-tech manufacturing facilities with soptisticated CNC machines,Arc-welding robots and FMS.

BEML manufactures a wide variety of equipment like heavy earth movers, rail coaches, military tanks, heavy-duty trucks, trailers, and high-powered diesel engines. Its products find application in mining, construction, power, irrigation, fertilisers, steel, defence and the railways.

BEML made its maiden public offer of Rs 117 cr in Dec.'94 for 60 lac 12.50% PCDs of Rs 195 each. The main objective of the issue was to part-finance the backward integration of an engine project by installing a flexible manufacturing system required for the manufacture of engines; and for expanding the capacity for the manufacture of hydraulic cylinders, which are critical components in the manufacture of earthmoving equipment. The estimated cost of the project was Rs 50 cr. Vignyan Industries, a subsidiary of the company, manufactures casting to meet the requirements of BEML.

During 1999-2000, the company has entered into strategic alliances with multinational companies like M/s Steelfields, UK, Kawasaki, Japan, Europactor, Spain, Crossmobil, Germany and Hartl Crushtek, UK , which will improve growth opportunities.

In 2000-2001, BEML tied up with Technology Information Forecasting & Assessment Council (TIFAC) for manufacturing specialised equipment to be used in disaster management and is planning to productionise them for deployment in hazardous situations.

In 2003-2004, the company has entered the metro Railway business with the manufacture and supply of hi-tech stainless steel metro coaches to the Delhi Metro Rail Corporation. BEML has expanding production activities in the Defence and Railway sectors and acquired over 1,100 acres of land and two workshops on lease basis from now-defunct public sector undertaking Bharat Gold Mines Ltd (BGML) in Kolar Gold Fields in 2004. During the same year, the company has opened a new Railway Fabrication Unit at Kolar Gold Field Complex.

The company has undergone organizational restructuring to improve over competitiveness in the global market and boost the revenues and profitability. Consequent to this, the company's operations will now be run as three-business groups viz. Mining & Construction, Defence and Railway & Metro Business. The company has also diversified into new business areas by opening two new divisions, the Technology Division and Trading Division on 12th April 2006.

With effect from 29th August 2006, the company has conferred `Mini-Ratna (Category 1)' status by the ministry of Defence. The status has been given recognizing position in the industry, consistent performance, growing profitability and rapid absorption of changing technologies. With this status, the company has got enhanced powers from the Ministry of Defence.

BHEL

BHEL

Inflation soars to record high

Refusing to be reined in, inflation struck yet another high note reaching 8.1% for the week ending May 17. It was 7.82% for the week ending May 10 in the face of surging international crude oil prices. Wholesale prices rose 8.1% in the week ended on 17 May from a year earlier the government said on Friday.

Announcing the figure on Friday, Finance Minister P Chidambaram expressed confidence that the government would be able to soon rein the inflation in.

"It is worrisome, but we are confident of gaining mastery over inflation," he said.

The Finance Minister added that authorities may take more steps to control inflation if needed.

The rate of rising prices was much higher at over eight percent even as of March 15, a period for which the government now released final inflation figures.

The inflation was 7.82 percent for the week ended May 10 as compared to 7.83 percent for the previous week, said the official figures released today. During the corresponding week a year ago, the inflation stood at 5.62 percent.

Amid speculation of rise in prices of petroleum products, inflation is likely to remain high for the next 3-4 months, while the Reserve Bank and government may have to take additional monetary and fiscal measures, said analysts.

Tata Steel

Tata Steel

Kalpataru Power

Kalpataru Power

Post Market Commentary - May 30 2008

Indian market closed in green due to the strong buying support despite rise in inflation figures. The market got the momentum due to the strong GDP numbers. India’s GDP reported a growth of 8.8% for the fourth quarter ended March 2008 and the GDP growth in FY 2008 was 9%. This strong growth was on the back of strong expansion in the service sector. The Securities and Exchange Board Of India opened the doors for the university funds, soverign wealth funds, endowments and charitable trusts to register as foreign institutional investors. On the other hand, the government also gave relaxation on the restriction given on external commercial borrowings (ECBs) by raising the limit of borrowing amount by way of ECB and repatriate to $50mn as against $20mn earlier. It has also allowed the infrastructure firms to borrow up to $100mn.

The domestic market opened higher tracking the favoring cues from the US Markets and was trading firm due to buying in key stocks and Nifty June futures series which settled at premium. It touched negative territory for a moment during first half of the trading session. Further investors kept the market well positioned in positive territory till the end of session. From the sectoral front capital goods and metal stocks were in limelight as most of the buying was seen from these baskets. The market breadth was negative as 1008 stocks closed in green while 1701stocks closed in red and 58 stocks remained unchanged.

India’s Inflation stood at 8.1 percent for the week ended May 17, compared to 7.82 percent previous week

The BSE Sensex closed higher by 99.31 points at 16,415.57 and NSE Nifty went up by 34.80 points to close at 4,870.10. The BSE Mid Cap ended up by 18.78 points at 6760.54 while Small Cap fell by 48.03 points to close at 8,133.04. The BSE Sensex touched intraday high of 16,540.49 and intraday low of 16,314.99.

Gainers from the BSE are HDFC (5.59%), Ranbaxy Lab Ltd (4.77%), BHEL (3.89%), Infosys Tech (3.64%), TCS Ltd (3.41%), L&T Ltd (2.53%), Bharti Airtel (2.05%), ONGC Ltd (1.24%) and Hindalco (1.24%).

The Capital Goods index was up by 323.61 points to close at 13,150.64. Major gainers are Aia engineer (5.95%), Kalpat Power (5.79%), BHEL (3.89%), Praj Industries (3.71%), Punj Lloyd (3.23%), L&T Ltd (3.19%) and ABB Ltd (2.87%).

The Metal index ended higher by 235.18 points at 16,914.63 as Bhushan Steels was up by (8.67%) followed by Jindal Saw by (5.15%), Sesa Goa (3.83%), Welspan Gujarat by (3.29%), Sterlite Industries (2.83%) and Jindal Steel by (2.17%).

The IT index advanced by 96.03 points to close at 4,643.79. Gainers are NIIT Ltd (4.35%), Infosys Tech (3.64%), TCS Ltd (3.41%), Tech Mahindra (2.98%), Mphasisi Ltd (1.69%), and Moser Baer (1.59%).

The Oil & Gas index decreased by 174.57 points to close at 10,396.85. Losers are Essar Oil Ltd (2.78%), Reliance (2.63%), HPCL (1.94%), Reliance Nat Resources (1.65%), Reliance Pet (1.02%) and Cairn India (0.64%).

Power index closed lower by 112.60 points at 2,936.24, losers are Reliance Power (42.41%), GVK Power Inf (1.85%), Tornt Power (1.45%), Reliance Infra (1.25%), GMR Infrast (0.89%), Seimens Ltd (0.84%), and Tata Power (0.65%).

Market ends steady

The 82-point rally within few minutes of opening trades lifted the Sensex to a new intra-day high of 16,540, but lack of fresh buying support thereafter pushed the market into a range-bound mode with a positive bias. While the index traded off its early highs for most part of the trading session, extended profit-taking towards the fag-end dragged the index to the day's low of 16,315. Buying in select heavyweights, however, saw the Sensex bounce from its lows and end 99 points higher at 16,416. The Nifty, however, ended higher at 4,870.

Repeating yesterday's trend, the broader market once again ended weak. Of the 2,766 stocks traded on the BSE, 1,692 stocks declined, 1,013 stocks advanced and 61 stocks ended unchanged. Sectoral indices displayed a mixed trend on the BSE. The BSE CG and the BSE IT index were the major gainers and rose above 2% each, while the BSE Teck index, the BSE HC index, the BSE Metal index and the BSE FMCG were up a percent each. The BSE Power index, the BSE Oil & Gas index, the BSE Realty index, the BSE Auto index, the BSE PSU index, the BSE CD index and the BSE Bankex index however slipped into the red.

HDFC was the star performer among the index stocks and soared 5.59% at Rs2,569.15. While Ranbaxy Laboratories flared up 4.77% at Rs528.65, BHEL rose 3.89% at Rs1,662.15, Infosys scaled 3.64% at Rs1,957.55, Tata Consultancy Services moved up 3.41% at Rs1,029.25 and Larsen & Toubro moved up by 3.19% at Rs2,981.35. HDFC Bank at Rs1,355.70, Bharti Airtel at Rs876.45, ONGC at Rs1.24, Hindalco at Rs191.95, ACC at Rs660.65 and Tata Steel at Rs902.90 gained around 1-2% each.

Among the laggards, JP Associates dropped 5.39% at Rs213.20, Ambuja Cement shed 2.66% at Rs95.20, Reliance Industries lost 2.63% at Rs2,401.65 and Mahindra & Mahindra was down 2.26% at Rs592.50. State Bank of India, Reliance Infra, ICICI Bank, Tata Motors and Cipla slipped marginally and ended weak.

Dalal Street Investments at Rs2,759.70, Softbpo Global at Rs354.40, Sandur Manganese & Iron Ores at Rs1,347.25, Sterlite Biotec at Rs220.90, Sanket International at Rs15.92, Ckoramaandel Cements at Rs40.20, Aarey Drugs at Rs44.40, KLG Capital Services at Rs89.30 and JPT Securities at Rs63.05 touched new intra-day highs on the BSE.

Over 2.62 crore IFCI shares changed hands on the BSE followed by Reliance Power (1.44 crore shares), Spice Telecom (1.35 crore shares), Ispat Industries (1.20 crore shares) and Reliance Natural Resources (66.22 lakh shares).

Market may take cues from global equities, oil prices

The market is slated to track global equities in the absence of major domestic trigger. However better than expected Q4 gross domestic product figures which were unveiled by the government on Friday, 30 May 2008, would provide some succor to the market. Earnings downgrade amid rising input and interest costs, high inflation, rising crude oil prices and drying up of global liquidity due to credit crisis remain major concern for the Indian stock market. The fourth quarter corporate results were more or less in line with market expectations.

India’s gross domestic product (GDP) grew 8.8% in Q4 March 2008 from a year earlier, led by strong expansion in the services sector, government data showed on 30 May 2008. The annual growth matched an upwardly revised 8.8% growth in Q3 December 2007. The GDP growth was 9% in FY 2008 (year ended March 2008). The government had earlier estimated annual growth of 8.7% in FY 2008.

Q4 March 2008-results season is over. Aggregate results of 2084 companies showed 13.1% rise in net profit on 24.9% rise in net sales in Q4 March 2008 over Q4 March 2007, so far. There was 26.6% rise in net profit on 20.6% rise in net sales in the year ended March 2008 over year ended March 2007.

The market had succumbed to selling pressure recently as weak global equities and soaring crude oil prices worried investors. An imminent hike in domestic retail fuel prices due to soaring crude oil prices also weighed on the market.

Reportedly the government is expected to take a decision on whether to raise fuel prices in the next two to three days, with key political leaders expressing a willingness to tackle mounting losses at state oil firms. Oil prices hovered near $126 per barrel after dropping $4 on Thursday, 29 May 2008, retreating further from a record high above $135 a barrel hit last week.

India's wholesale price index rose 8.1% in the 12 months to 17 May 2008, above the previous week's annual rise of 7.82%, government data showed. Inflation for the week ended 22 March 2008 was revised upwards to 7.85% from 7%. The annual inflation rate was 5.30% during the corresponding week of the previous year.

The spiraling inflation has been a major cause of concern for Indian equities market. Forthcoming inflation data will be closely watched as it remains as a major worry and hindrance for the domestic growth. With parliamentary elections scheduled next year (May 2009), the government may leave no stone unturned in its attempt to tame inflation. This is bad news for commodity shares.

Foreign institutional investors (FIIs) sold shares worth Rs 3,927.60 crore so far in the month of May 2008. They sold shares worth Rs 14,285.70 crore in calendar year 2008 till 28 May 2008. Domestic funds sold shares worth Rs 567 crore in the month of May 2008, till 28 May 2008.

Adhunik Metal, PVR, IFB Agro Industries, Motherson Sumi Systems, Page Industries, Mcleod Russell, Engineers India, GMR Industries, Shasun Chemicals, Orbit Corporation, AIA Engineering, Balmer Lawrie, Peninsula Land, Berger Paints, Sundaram Fasteners are slated to announce March 2008 quarter results next week.

Market slips on fuel price hike concerns

An imminent hike in domestic retail fuel prices due to soaring crude oil prices weighed on the market last week. Foreign institutional investors sold close to Rs 2204 crore in the first three trading sessions of the week which accentuated the downfall. However better than expected Q4 gross domestic product figures provided some relief to the bourses on Friday. IT stocks gained on slipping rupee. BSE Sensex rose in two out of five trading sessions.

The BSE Sensex declined 234.07 points or 1.41% to 16,415.57 in the week ended Friday, 30 May 2008. S&P CNX Nifty lost 76.45 points or 1.54% to 4,870.10 in the week.

The BSE Mid-Cap index declined 176.57 points or 2.55% to 6,760.54. The BSE Small-Cap index slumped 384.39 points or 4.51% to 8,133.04.

Foreign institutional investors (FII)’s sold shares worth Rs 3,927.60 crore so far in the month of May 2008. They sold shares worth Rs 14,285.70 crore in calendar year 2008 till 28 May 2008. Domestic funds sold shares worth Rs 567 crore in the month of May 2008, till 28 May 2008.

The 30-share BSE Sensex plunged 301.14 points or 1.81% at 16,348.50 on Monday, 26 May 2008, extending previous week’s steep losses on weak cues from Asian markets. Banking, and capital goods stocks suffered the most in the slide. Information technology stocks were star performers.

The 30-share BSE Sensex fell 72.91 points or 0.45% at 16,275.59 on Tuesday, 27 May 2008. Weakness in the second half of the trading session dragged the market lower. The market sentiment was hit by reports which trickled in the market in afternoon trade that one of the options that the government may consider to bail out oil firms which are bleeding due to a surge in crude oil prices, was levying of a cess or surcharge on income tax and corporate tax.

The 30-share BSE Sensex rose 249.78 points or 1.53% at 16,525.37 on Wednesday, 28 May 2008. The market, which moved between positive and negative zone in early trade, surged in the second half of the trading session led by rally in information technology and cement stocks. A sharp fall in crude oil prices and firm European markets also added to positive sentiments. The rally on the bourses gathered steam after the Finance Ministry said in afternoon trade, some media reports about new tax proposals to help ease mounting losses at state oil firms due to soaring crude prices, were totally baseless.

The 30-share BSE Sensex lost 209.11 points or 1.27% to 16,316.26 on Thursday, 29 May 2008. The market, which swayed between positive and negative territory earlier in the day, slumped in the last hour of trade. Major selling pressure was seen in auto and banking shares. Tata Motors plunged even as Larsen & Toubro bucked the weak market trend. Petroleum minister, Murli Deora said the government would take a decision on raising fuel prices in two to three days.

The 30-share BSE Sensex rose 99.31 points or 0.61% to 16,415.57 on Friday, 30 May 2008. Falling global crude oil prices and strong Q4 GDP growth data kept market up throughout the day. Power and oil & gas stocks tumbled. Capital goods and information technology stocks were in demand.

India’s largest telecom services provider by sales Bharti Airtel advanced 4.74% to Rs 876.45. The company decided to disengage from the ongoing talks with the South African telecom major, MTN, to explore the possibility of a merger between the two emerging markets telecom giants. According to a statement issued by the Bharti group, the decision to pull out of the talks was prompted by its consideration that the new structure proposed by the MTN board would not have been in the interest of Bharti Airtel's minority shareholders and in its plans for grow as an Indian telecom multinational. The new structure had envisaged Bharti Airtel becoming a subsidiary of MTN and exchange of majority shares of Bharti Airtel held by the Bharti family and Singtel, in exchange for a controlling stake in MTN.

India’s second largest telecom services provider by sales Reliance Communication edged up 0.85% to Rs 577.15. The company entered into exclusive negotiations with South Africa's MTN Group after the latter’s merger deal with Bharti Airtel collapsed. In an announcement made on 26 May 2008, Reliance Communication (RCom) said that there is no certainty of either the completion or the timing of the proposal. The deal is for discussing a potential combination of business of RCom and MTN Group.

India's largest electrical equipment maker by sales Bharat Heavy Electricals declined 4.87% to Rs 1662.15. The company's net profit declined 3.4% to Rs 1,110.87 crore on 4.1% rise in sales to Rs 7,202.04 crore in Q4 Mrrch 2008 over Q4 March 2007. It announced the result on 23 May 2008. The company had recently secured an order worth Rs 1150 crore to set up a power plant in Punjab.

India’s largest commercial bank State Bank of India declined 8.26% to Rs 1443.35. There are concerns that bank’s surprise hike of 25-50 basis points in deposit rates could put pressure on its operating profit margin in the short term. In an announcement made on 26 May 2008, State Bank of India said that two to three year term deposit rate will be raised to 8.75% from 8.5%, and five to ten year deposits would fetch 9% from 8.5%, effective from 1 June 2008. The hike in deposit rates is aimed at attracting more funds to meet aggressive growth targets.

India’s largest tractor maker by sales Mahindra & Mahindra was down 9.11% to Rs 592.50. The company’s net profit declined 6.3% to Rs 221.10 crore on 14.6% rise in sales to Rs 3148.16 crore in Q4 March 2008 over Q4 March 2007. It announced the results on 28 May 2008.

India’s largest commercial vehicle maker by sales Tata Motors declined 9.56% to Rs 576.90. The company’s net profit declined 7%t o Rs 536.27 crore on 5.8% rise in sales to Rs 8749.52 crore in Q4 March 2008 over Q4 March 2007. Tata Motors also announced plan to raise about Rs 7,200 crore through three simultaneous but unlinked rights issues to be used for financing the Jaguar-Land Rover acquisition.

The world’s sixth largest thermal power producer National Thermal Power Corporation declined 2.66% to Rs 172.25. The company posted 22.78% fall in net profit to Rs 1339.50 crore on 20.33% rise in total income to Rs 11487.50 crore in Q4 March 2008 over Q4 March 2007. It announced result on 29 May 2008.

India’s largest engineering and construction firm by sales Larsen & Toubro rose 4.8% to Rs 2981.30. It recommended a liberal 1:1 bonus and posted 37.95% surge in net profit to Rs 966.76 crore on 34.79% rise in total income to Rs 8715.92 crore in Q4 March 2008 over Q4 March 2007. The company declared a dividend of Rs 17 per share in the year March 2008 as compared to Rs 13 in the year March 2007.

India’s largest private sector bank by net profit ICICI Bank declined 8.74% to Rs 788.30.

Infosys (up 7.18% to Rs 1957.55), Satyam Computer Services (up 8.68% to Rs 523.75), Wipro (up 5.68% to Rs 508) edged higher.

S. Sundareshan, additional secretary in the oil ministry, 27 May 2008, said he hopes that a decision regarding an oil ministry proposal to raise petrol and fuel prices, will be taken soon. He said the government was also considering changes in duties, and whether to issue more oil bonds to compensate state oil firms that are forced to sell petrol and diesel below cost.

The Union government eased the ban on cement exports from the ports in Gujarat, which accounts for almost 90% of the country’s cement exports. The Director-General of Foreign Trade has issued a notification to give effect to the government decision. It may be recalled that on 11 April 2008, the government had banned cement export in its bid to rein in rising inflation.

The Finance Ministry said on 28 May 2008 that media reports about new tax proposals to help ease mounting losses at state oil firms due to soaring crude prices were totally baseless. Media reports on Tuesday, 27 May 2008, had suggested that the government may levy a cess or surcharge on income tax and corporate tax to compensate it for losses due to any duty reduction on crude oil and motor fuels.

The market regulator Securities & Exchange Board of India (Sebi) on Thursday, 29 May 2009, allowed sovereign wealth funds, university funds, endowments and charitable trusts to register as foreign institutional investors (FIIs). Sebi also said an asset management company, investment manager or advisor or an institutional portfolio manager set up and/or owned by non-resident Indians (NRIs) would be eligible to be registered as an FII subject to the condition that they would not invest their proprietary funds. In other words, such entities can act only as asset managers.

The government on 29 May 2008, announced relaxation on restriction imposed last year on external commercial borrowings (ECBs). The limit on the amount that a company can borrow by way of ECB and repatriate, has been raised to $50 million from $20 million.

The gross domestic product (GDP) grew 8.8% in Q4 March 2008 from a year earlier, led by strong expansion in the services sector. The annual growth matched an upwardly revised 8.8% growth in Q3 December 2007. The GDP was 9.% in FY 2008 (year ended March 2008). The government had earlier estimated annual growth of 8.7% in FY 2008.

Inflation based on the wholesale price index rose 8.1% in 12 months to 17 May 2008, above the previous week's annual rise of 7.82%, government data released on 30 May 2008, afternoon showed. Inflation for the week ended 22 March 2008 was revised upwards to 7.85% from 7%.

Strong Q4 GDP lifts bourses

Falling global crude oil prices and strong Q4 GDP data kept market up throughout the day. Power and oil & gas stocks tumbled. Information technology stocks were in demand.

Crude oil was trading around $125 a barrel, nearly $5 lower than its level on Thursday, 29 May 2008. It hit a record $135 last week.

European markets, which opened at Indian markets, were trading firm. Key indices in UK, France and Germany were up by 0.21% to 0.49%. Asian markets were mostly in the green. Key indices in Hong Kong, China, Japan, Singapore and South Korea were up by 0.59% to 1.52%. However, the key index in Taiwan was down 0.76%.

India's GDP grew a strong 8.8% in Q4 March 2008 from a year earlier, led by strong expansion in the services sector, data released by the government earlier in the day showed. The Q4 annual GDP growth matched an upwardly revised 8.8% growth in Q3 December 2007. The GDP growth was 9% in FY 2008 (year ended March 2008). The government had earlier estimated annual growth of 8.7% in FY 2008.

India's inflation based on the wholesale price index rose 8.1% in 12 months to 17 May 2008, the highest reading in more than 3-½ years and above the previous week's annual rise of 7.82%, government data released today, 30 May 2008, afternoon showed. Inflation for the week ended 22 March 2008 was revised upwards to 7.85% from 7%.

The 30-share BSE Sensex rose 99.31 points or 0.61% to 16,415.57. The index climbed 224.23 points at day’s high of 16,540.49, hit at the onset of trading session. Sensex lost 1.27 points at the day's low of 16,314.99, hit in afternoon trade.

The broader based S&P CNX Nifty rose 34.8 points or 0.72% at 4870.10. Nifty June 2008 futures were at 4848, a discount of 22.10 points against the spot closing.

The NSE's futures & options (F&O) segment turnover was at Rs 35,883.79 crore, lower than Rs 64758.96 crore on Thursday, 29 May 2008. BSE clocked a turnover of Rs 5478 crore in the cash segment as against Rs 6,230.43 on Thursday, 29 May 2008.

The Securities & Exchange Board of India (Sebi) on Thursday, 29 May 2008, allowed sovereign wealth funds, university funds, endowments and charitable trusts to register as foreign institutional investors. (FIIs).

The government on Thursday, 29 May 2008, announced relaxation on restriction imposed last year on external commercial borrowings (ECBs). The limit on the amount that a company can borrow by way of ECB and repatriate, has been raised to $50 million from $20 million. The government has allowed infrastructure firms to borrow up to $100 million from abroad.

Derivative contracts for May 2008 series expired yesterday. As per reports, rollover of Nifty positions from May 2008 series to June 2008 series stood at 66% as compared to 71% in the previous expiry. Marketwide rollovers were 82% as compared 81% in the previous series.

US markets advanced for a third straight day yesterday, 29 May 2008. The rally was led by strength in the financial sector and a big decline in oil prices.The Dow Jones industrial average advanced 52.19 points, or 0.41%, to 12,646.22. The Standard & Poor's 500 index rose 7.42 points, or 0.53%, to 1,398.26, and the Nasdaq composite index gained 21.62 points, or 0.87%, to 2,508.32.

The market breadth was weak on BSE with 1008 shares advancing as compared to 1701 stocks that declined. 58 stocks remained unchanged.

The BSE Mid-Cap index rose 0.28% to 6,760.54, while BSE Small-Cap index fell 0.59% to 8,133.04. Both these indices underperformed the Sensex.

India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries fell 2.63% at Rs 2401.65.

India’s largest private sector bank by assets ICICI Bank was down 1.13% at Rs 788.30.

The top Sensex gainers were, Housing Development Finance Corporation (up 5.59% at Rs 2569.15), Ranbaxy Laboratories (up 4.77% at Rs 528.65), Bharat Heavy Electricals (up 3.89% at Rs 1662.15), HDFC Bank (up 2.53% at Rs 1357.85).

India’s largest engineering & construction firm by revenue Larsen & Toubro soared 3.19% at Rs 2981.35. The company, on Thursday (29 May 2008) recommended a liberal 1:1 bonus issue and a total dividend of Rs 17 per share for the year ended March 2008. The company reported a 37.95% rise in net profit to Rs 966.76 crore on a 34.79% increase in total income to Rs 8715.92 crore in Q4 March 2008 over Q4 March 2007.

The top Sensex losers were, Jaiprakash Associates (down 5.39% at Rs 213.20), Ambuja Cements (down 2.66% at Rs 95.20), Mahindra & Mahindra (down 2.26% at Rs 592.50), State Bank of India (down 1.43% at Rs 1443.35), and Reliance Infrastructure (down 1.25% at Rs 1230.75).

The BSE IT index outperformed the Sensex, gaining 2.11% at 4,643.79. Infosys Technologies (up 3.64% at Rs 1,957.55), TCS (up 3.41% at Rs 1,029.25), and HCL Technologies (up 0.92% at Rs 312.90), gained. However, Wipro (down 0.88% at Rs 508) and Satyam Computer (down 0.485 at Rs 523.75), slipped.

The BSE Power index underperformed the Sensex, falling 3.69% at 2,936.24. Power Grid Corporation of India (down 3.48% at Rs 98.50), GVK Power & Infrastructure (1.85% at Rs 47.75), Torrent Power (down 1.45% at Rs 115.50) and Tata Power (down 0.65% at Rs 1,356.65), slipped.

Reliance Power traded ex-bonus on a bonus of 3:5 at Rs 235.85. The record date for bonus issue is on Monday, 2 June 2008.

State-run oil firms, which were marginally up earlier in the day, fell even as the Reserve Bank of India (RBI) raised banks' borrowing limit to state-run refining companies to 25% keeping in mind the current situation in the oil sector. The BSE Oil & Gas index underperformed the Sensex, falling 1.65% at 10,396.85. HPCL (down 1.94% at Rs 244.655), BPCL (down 0.33% at 357.70), declined.

Among the private sector oil firms, Essar Oil (down 2.78% at Rs 223.65), Reliance Petroleum (down 1.02% at Rs 174.55) and Cairn India (down 0.64% at Rs 285.65), slipped.

AIA Engineering galloped 5.95% to Rs 1559.15 after the company scheduled a board meet on 4 June 2008 to consider stock split proposal.

Stock brokerage firm Geojit Financial Services vaulted 4.09% to Rs 56.05 on reports the Reserve Bank of India has cleared French bank BNP Paribas’ open offer for Geojit Financial Services shareholders.

Steel products maker Sujana Metal Products surged 4.42% to Rs 24.80 after the company announced the acquisition of three steel units with an investment of Rs 180 crore.

Pharmaceuticals firm Cadila Healthcare gained 1.35% to Rs 295.50 after the company said it has acquired 100% stake in Laboratories Combix, a Spanish pharmaceutical company, for an undisclosed amount.

Real estate developer Sobha Developers gained 2% to Rs 498.85 after posting 13.23% rise in net profit to Rs 228.3 crore on 32.77% increase in total income to Rs 476.50 crore in Q4 March 2008 over Q4 March 2007.

Tamil Nadu Newsprint & Papers rose 1.11% to Rs 100.10 after posting 26.1% rise in net profit to Rs 27.38 crore on 10.9% increase in net sales to Rs 250.22 crore in Q4 March 2008 over Q4 March 2007.

Among the side counters, Spice Communication (up 10% at Rs 59.65), Bhushan Steel (up 8.67% at Rs 909.15), Hindustan Construction Company (up 7.25% at Rs 119.10) and Sintex Industries (up 7.06% at Rs 418.55) and Sun TV Network (up 6.81% at Rs 354.35), soared.

Indian Overseas Bank (down 5.93% at Rs 115.75), Adani Enterprise (down 5.79% at Rs 794.05), Indiabulls Financial Services (down 5.56% at Rs 367.15), and Dish TV (down 5.50% at Rs 46.40), lost ground.

Reliance Power clocked a highest turover of Rs 354.21 crore on BSE. Reliance Industries (Rs 290.11 crore), larsen & Toubro (Rs 224.07 crore), Piramal Life Sciences (Rs 169.61 crore) and IFCI (Rs 166.31 crore), were the other turnover toppers on BSE in that order.

IFCI reported a highest volume of 2.62 crore shares on BSE. Reliance Power (1.44 crore shares), Spice Communication (1.35 crore shares), Ispat Industries (1.20 crore shares) and Reliance Natural Resources (88.22 lakh shares), were the other volume toppers on BSE in that order.

Reliance Power Bonus

Reliance Power has gone ex-Bonus today -

Bonus ratio is 3:5

Daily Report - May 30 2008

Daily Report - May 30 2008

Market Outlook - May 30 2008

Market Outlook - May 30 2008

Daily Technicals - May 30 2008

Daily Technicals - May 30 2008

Trading Calls - Parenteral Drugs

Buy Parenteral Drugs SL - Rs 139 Target - 196

Market likely to move sideways

The market is likely to move sideways on account of strong intra-day volatility. Stocks across sectors including the heavyweights may gyrate sharply. However, US indices closed on a positive note last night. The mixed Asian markets in the morning trades may further dampen the investor sentiment. On the technical side, the Nifty has a stiff resistance at 4965 and downside cap at 4795 while the Sensex could test higher levels of 16500 and has a likely support at 16195.

Among the major corporates, Colgate, GSFC, Deepak Fertilizers, Nagarjuna Construction, Punj Lloyd, Sobha Developers, Sun Pharma and Tata Tea are expected to announce their quarterly numbers today.

US indices registered steady gains on Thursday with the Dow Jones gaining 52 points to close at 12646 and the Nasdaq rising 22 points at 2508.

Indian floats largely had a mixed trend on the US bourses. Satyam rose 3.89% at $27.51, Wipro gained 2.37% at $13.83 and Infosys advanced 2.19% at $45.35. Dr Reddy's and Rediff ended with steady gains. Among the laggards, Tata Motors was the major loser with a loss of 4.68% at $13.85 and MTNL lost 3.81% at $4.55. VSNL dropped 1.99% at $23.66, ICICI Bank tumbled 0.97% at $37.71, HDFC Bank lost 0.83% at $97.62 and Patni Computer was down 0.53% at $13.08.

Crude oil prices in the US market slipped sharply on Thursday, with the Nymex light crude oil for July delivery falling by $4.41 to close at $126.62 a barrel. In the commodity space, the Comex gold for August series lost $23.80 to settle at $881.20 a troy ounce.

Pre Session Commentary - May 30 2008

The Indian Market is likely to open in positive zone on the back of favorable global cues as the US market closed in green and the Asian markets are showing positive trend. On Thursday, domestic markets closed in red after giving up its initial gains due to heavy selling through last trading hours and fuel price worries. the government postponed the decision on a possible oil price hike for next two to three days. Also, the expiry of the May 2008 derivatives contract adds to the sentiment. The Nifty rollover for May 2008 stood at 57% as against 62% in April 2008 contract. The market opened with gain tracking the global cues but was unable to sustain the momentum and turned volatile. Further, it was not able to recover from negative sentiment and took back steps to close in negative. The banking, oil & gas and auto stocks remained out of favor till the end of trading session while the capital goods stocks were in limelight as most of the buying was seen from this basket. The BSE Sensex closed down by 209.11 points at 16,316.26 and NSE Nifty fell by 83.05 points to close at 4,835.30. We expect that the market may remain volatile and also investors’ attitude will depend on the inflation figures, which will come out today.

Market controller SEBI has modified the registration guidelines for FIIs. Now institutions formed by non-resident Indians can also register as FIIs and invest in the Indian stock markets. To be registered as FIIs they do not have to invest as proprietary funds and can invest in collective investment schemes. Now sovereign wealth funds, pension funds and endowment funds also allowed to be registered as FII.

On Thursday, the US market closed in positive. The Dow Jones Industrial Average (DJIA) closed higher by 52.19 points at 12,646.22 along with NASDAQ went up by 21.62 points to close at 2,508.32 and S&P 500 by 7.42 points to close at 1,398.26.

Indian ADRS ended mixed In technology sector, Satyam raised by (3.89%) along with Wipro by (2.37%), Infosys by (2.19%) while Patni Computers dropped by (0.53%). In banking sector, ICICI bank and HDFC bank decreased by (0.97%) and (0.83%) respectively. In telecommunication sector, MTNL and Tata Communication fell by (3.81%) and (0.83%). Sterlite industries went up by (0.47%).

Today the major stock markets in Asia are trading mixed. Japan’s Nikkei is trading up by 115.88 points at 14,240.35 along with Hang Seng index trading high by 15.24 points at 24,399.23 while Taiwan Weighted trading down at 8,579.90 by 105.02 points.

The FIIs on Thursday stood as net seller in equity. The gross equity purchased was Rs3,264.4 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs3,998.3 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity reported was Rs(733.9) Crore and net debt was Rs0.00 Crore.
Today, Nifty has support at 4,726 and resistance at 4,928 and BSE Sensex has support at 15,925 and resistance at 16,583.

Market to stay cautious ahead of IIP, inflation data

Local equities are likely to stay cautious as investors will keenly await the index of industrial production and inflation data.

Inflation rate in the week ended 17 May 2008 will be released by noon today. Inflation has surged to 7.82% in the week ended 10 May 2008.

However the marketmen will keenly watch the revision in provisional rate for 22 March 2008 fromthe earlier stated 7%, after data for 15 March 2008 was last week revised sharply upwards to 8.02% from 6.68% in previous week, making it the highest inflation rate since September 2004.

GDP data for the January-March quarter and revised numbers for 2007-08 will also be watched.

Derivative contracts for May 2008 series expired yesterday. As per reports, rollover of Nifty positions from May 2008 series to June 2008 series stood at 66% as compared to 71% in the April 2008 to May 2008 series. Marketwide rollovers were 82% as compared 81% in the previous series.

Global cues were mixed. In absence of any near term major domestic trigger with Q4 March 2008 results almost over, market is likely to dance in line with global cues.

However in June 2008, markemen would be looking at two triggers. One would be progress of monsoon and second would be the advance tax figures.

Meanwhile in a move that could boost sentiment, market regulator Sebi yesterday, 29 May 2008 has revised the registration guidelines for foreign instutional investors (FIIs). Institutions set up by non-resident Indians can now register as FIIs and invest in the Indian stock markets.

Sebi has amended regulations for easier registration of FIIs and sub-accounts. It has also made AMCs, Investment Managers or advisors owned by NRI eligible for FII registration.

Sebi has allowed FIIs to invest in collective investment schemes. It has said that NRIs can register as FIIs if they do not invest their proprietary funds

Asian markets were trading mixed today, 30 May 2008. Shanghai Composite (up 0.74% at 3,426.53), Japan's Nikkei (up 0.82% at 14,240.35), Hong Kong's Hang Seng (up 0.06% at 24,399.23), rose.

However, Taiwan's Taiwan Weighted (donw 1.21% at 8,579.90), South Korea's Seoul Composite (down 0.39% at 1,833.98|) and Singapore's Straits Times (down 0.03% to 3,159.68) declined.

US markets advanced for a third straight day yesterday, 29 May 2008. The rally was lead by strength in the financial sector and a big decline in oil prices.The Dow Jones industrial average advanced 52.19 points, or 0.41%, to 12,646.22. The Standard & Poor's 500 index rose 7.42 points, or 0.53%, to 1,398.26, and the Nasdaq composite index gained 21.62 points, or 0.87%, to 2,508.32.

Back home, the 30-share BSE Sensex lost 209.11 points or 1.27% to 16,316.26 and the broader based S&P CNX Nifty plunged 83.05 points or 1.69% at 4835.30, yesterday 29 May 2008.

As per provisional data, foreign funds sold shares worth a net Rs 1277.63 crore yesterday, 29 May 2008. Domestic funds bought shares worth a net Rs 698 crore on that day.

IFCI - stake sale again ?

Reliance Industries and Standard Chartered may reportedly be the surprise co-bidders for a strategic stake in lender IFCI. On Thursday (29 May 2008), IFCI revived its plan to get on board a strategic investor, after an earlier plan in December fell apart, the reports added.

Tata Teleservices Maharashtra (TTML) is reportedly in merger talks with Quippo Telecom Infrastructure, a Srei group company, for its tower arm Wireless Tata Telecom Infrastructure.

Hanung Toys and Textiles is reportedly close to acquiring a US home furnishing marketing company and may sign a preliminary agreement with the $20 million firm in the next two weeks.

Bombay Dyeing has reportedly sold off its dimethyl terephthalate (DMT) plant situated at Patalganga, Maharastra to a Gujarat-based trading company Laxmiraj for an undisclosed amount.

Reliance Power goes ex-bonus on a bonus of 3:5 today. New futures and options (F&O) contracts will be issued today. F&O lot size 500 shares, options strike prices between Rs 10-1230.

Tamil Nadu Newsprint & Papers reported a 26.1% rise in net profit to Rs 27.38 crore on a 10.9% increase in sales to Rs 250.22 crore in Q4 March 2008 over Q4 March 2007.

Aegis Logistics reported a 74.9% rise in net profit to Rs 12.03 crore on a 75.8% increase in sales to Rs 115.14 crore in Q4 March 2008 over Q4 March 2007.

Punj Lloyd, Dabur Pharma, Deepak Fertilizers, Evinix Accessories, Gujarat State Fertilizers, Indo Tech Transformers, LG Balakrishnan, Nagarjuna Construction, Nitin Spinners, Northgate Technologies, Sobha Developers, Sun Pharmaceuticals, Tata Tea, Welspun India, among others will declare their March 2008 ended results today.

Morning Call - May 30 2008

Out House :

Markets at a support of 16262 & 16161 and resistance at 16456 & 16591 levels .

Buy : INFY & Satyam at dips

Buy : LT at dips

Buy : RPower at dips

Buy : BombayDye

Buy : Suzlon

Buy : Bharti

Buy : Core & Emami

Buy : HLL & ITC at dips

Dark Horse : Emami , ITC , Core , Wipro , BombayDye & INFY

TGIF : Thank God Its Friday : Markets to be very choppy and volatile buy low sell high call for the Day .

US Market closes higher for third straight day

Revision of first quarter GDP figure and lower crude price help market post decent gains

US Market ended higher with good gains today, Thursday, 29 May, 2008 and it was the third day of straight gains for the indices. An upward revision to the first quarter economic growth rate and a sharp drop in crude prices were the main catalysts behind today’s market movements. Eight out of ten sectors ended the session in positive territory, led by telecom and financial sectors. Energy was one of the two losers.

Among major economic news of the day in US, first quarter GDP was revised higher to 0.9% from 0.6%, matching the consensus estimate. The reading remained below the 3% normal growth rate but the result was much better than expected. In a separate report, the weekly jobless claims reading held mostly steady at 372,000, which was in-line with expectations.

At midday, the stock market is posting a solid gain at session highs, after fluctuating near the unchanged mark for much of early trade. But at the end, the Dow Jones industrial Average ended the day with a gain of 52.2 points at 12,646. The Nasdaq Composite Index, finished higher by 21.6 points at 2,508. S&P 500 finished higher by 7.4 points at 1,398.

Twenty-four out of thirty Dow stocks ended in the green today. Johnson & Johnson and Citigroup were the main Dow winners today. The decliners were led by Intel.

The earning report section was dominated by retailers once again today. Discount retailers Costco and Big Lots both posted better-than-expected quarterly earnings results, benefiting from consumers' search for bargains. But Sears Holdings reported a loss.

Barring the technology stocks, all other Indian ADRs ended in the red today. Wipro Technologies, Infosys Tech and Stayam registered gains of 2.4%, 2.2% and 3.9% respectively. VSNl was the largest loser shedding almost 2%.

Crude-oil futures marked a sharp drop today, after the dollar strengthened and also after the inventory report was out by the Energy Department. Prices initially rose after the report hit the wires, but soon it started losing grounds and ended substantially lower for the day. Crude-oil futures for light sweet crude for July delivery today closed at $126.62/barrel (lower by $4.4/barrel or 3.4%) on the New York Mercantile Exchange. Oil climbed as high as $132.9 after the inventory data was released.

As per the weekly inventory report by the Energy Department, crude supplies dropped by 8.8 million barrels to 311.6 million for the week ended 23 May. The drop was reportedly due to temporary delays in crude oil tanker off-loadings. Refinery utilization was unchanged last week from the previous week at 87.9% of capacity.

At the currency markets on Thursday, the dollar advanced the most in three weeks against the euro as the government said gross domestic product was stronger last quarter than initially estimated. The dollar climbed as much as 0.8% against a weighted basket of the euro, yen and four other major currencies. The dollar index, which tracks the greenback against a basket of six major currencies, was at 72.971, compared with 72.522 in the previous day.

On the New York Stock Exchange, volume hit more than 1.2 billion shares, and advancers topped decliners nearly 2 to 1. On the Nasdaq, 838 million issues were exchanged, and advancing stocks overtook decliners 8 to 5.

For tomorrow, the April personal income and spending report are the main reports expected before market opens. After that, the Chicago PMI, a regional manufacturing survey, will be released followed by the University of Michigan Consumer Sentiment Index.

Trading Calls - May 30 2008

Nifty (4835) Supp 4780 Res 4890

Buy L&T (2882) SL 2857
Target 2930, 2940

Buy Tata Steel (896) SL 889 Target 912, 918

Sell Satyam (526) SL 532
Target 516, 512

Sell ICICI Bank (796) SL 803 Target 783, 777

Sell Unitech (237) SL 242
Target 226, 224

Friday…market hopes to figure it out!

Numbers are intellectual witnesses that belong only to mankind - Aristotle.

It’s Friday and besides the weekly inflation data today, which is likely to increase from 7.82%, the Centre will also come out with GDP data for the Q4 and the entire year. There are concerns that GDP growth may slip below 8% owing to high interest rates, slowing global demand and rising cost pressures.

The Government on Thursday said agriculture growth will be higher by almost a percentage point to 3.5%. But, given its low weightage in GDP, it may not be able to help arrest the slide in overall economic growth.
Any negative surprise in either of the reports may pull down the key indices. On the positive side, a better-than-expected data (inflation or GDP) could help revive buying.

Global cues are quite encouraging though, with US stocks rising for a third day in a row and oil prices falling below $127. Asian markers are mixed this morning, which may check gains.

Concerns about higher inflation appeared to get the better of the bulls as the Government inched closer to announcing an impending hike in retail fuel prices. Though no announcement was made yesterday the Centre is likely to take a final call before the weekend. An increase in petrol and diesel (this is still being debated), will push up inflation further from the near 8% level. And, given the cascading effect it will have on various other items of consumption, inflation may even touch double-digit mark. This fear seemed to hurt market sentiment yesterday.

On the F&O side, FIIs are believed to have let their short positions in May Nifty futures expire, which may be the reason behind the sharp sell-off yesterday afternoon. What's more, the June Nifty futures have seen strong addition in open interest with the contract ending at a substantial premium of 23 points to the spot index. The overall rollover was lower than last month, which actually is good as most of the positions were shorts.

We expect the market to open on a positive note, mainly due to positive global markets and encouraging F&O indicators. However, the bulls could turn wary ahead of the release of inflation and GDP reports. Having said that, the Government's decision to ease the norms for FII investments, both for equity and debt, coupled with the relaxed ECB measures may just be able to lift the mood.

The stocks to watch out for include IFCI, Bombay Dyeing, SREI Infra and Hanung Toys.

Key Results Today: Colgate, Dabur Pharma, Deepak Fertilizers, GSFC, Indo Tech Transformers, Nagarjuna Construction, Northgate Technologies, Punj Lloyd, Sanghvi Movers, Sobha Developers, Sun Pharma, Swaraj Mazda, Tata Tea and Welspun India.

FIIs were net sellers of Rs12.78bn (provisional) in the cash segment on Thursday while local institutions were net buyers of Rs6.98bn. Foreign funds were net buyers of Rs13.69bn in the F&O segment yesterday.

On Wednesday, FIIs offloaded Indian shares worth Rs7.34bn from the cash segment. Mutual Funds were net buyers of Rs1.85bn.

Asian stocks were trading mixed this morning, with Japanese and Chinese shares bucking the overall weak trend across the region. However, a regional benchmark advanced as a drop in oil prices reduced concerns that higher energy costs will hit profits and consumer spending.

Sony climbed to a two-week high. Bridgestone gained. Boart Longyear rose the most since March after the Australian drilling-services company lifted its sales forecast.

The MSCI Asia Pacific Index added 0.4% to 149.23 as of 9:51 a.m. in Tokyo. The index is set to decline 0.9% this week and lose 0.5% in May. Nine of 10 industry groups climbed today.

Japan's Nikkei 225 Stock Average gained 0.8% at 14,240.73.

US stocks gained for the third day running as investors cheered a steep fall in oil prices, a stronger dollar and a government report that showed that first-quarter GDP growth was better than initially reported.

After the close, Dell reported quarterly sales and earnings that topped estimates, sending shares almost 10% higher in after-hours trading. MasterCard's forecast of increased profit growth helped fuel a rally in financial shares while tumbling oil prices boosted consumer-centric companies.

Citigroup, Bank of America and JPMorgan Chase helped send the KBW Bank Index to its steepest rally in two weeks after MasterCard said consumers are using credit and debit cards more.

Target and Best Buy led retailers to their first three-day advance in a month as crude slid more than $4 a barrel on signs that record prices are reducing demand. Google gained after the most popular Internet search engine had more clicks on its US text advertisements in April.

The S&P 500 Index added 7.42 points, or 0.5%, to 1,398.26, capping its biggest three-day gain in almost a month. The Dow Jones Industrial Average rose 52.19 points, or 0.4%, 12,646.22. The Nasdaq Composite Index gained 21.62 points, or 0.9%, to 2,508.32.

Market breadth was positive Almost two stocks climbed for each that fell on the New York Stock Exchange.

Wall Street seesawed throughout the morning session in tune with the volatile oil market, but stocks finally moved higher around midday as crude prices again slumped. Stocks are seeing a little bit of a relief rally as oil prices continue to back off the high above $135 a barrel hit last week.

Still, the outlook for US stocks remains largely weak over the next few months, with the market likely to see slow growth amid a struggling economy and ongoing problems in the financial sector.

Friday brings economic reports on personal income and spending and the report's inflation component before the start of trade. After trading begins, reports are due on manufacturing in the Midwest and consumer sentiment.

Meanwhile, futures traders have sharply raised their bets that the Federal Reserve will raise interest rates back to 2.25% in late October, encouraged by more positive economic news and a spate of inflation warnings.

Oil prices fell by over US$4 on Thursday amid wild gyrations despite crude supplies tumbling and the US economy doing better than expected in the first quarter. News of a six-month government probe into oil trading added to the volatility.

Crude oil for July delivery touched a high of US$133.12 a barrel on the New York Mercantile Exchange after the supply data were released. That was its strongest intraday level since Friday. But the contract eventually lost US $4.41 to close at US $126.62, its weakest level since May 16.

The 3.37% decline was the biggest on a percentage basis since March 19, according to the Energy Information Administration (EIA).

In its weekly inventory report, the EIA said crude stocks decreased by 8.8mn barrels last week. Analysts were looking for an increase of 750,000 barrels, according to a survey from Platts, an energy research firm.

But the report issued online by the EIA said that the drop was due to temporary delays in crude oil tanker off-loadings on the Gulf Coast.

News of a government investigation into oil trading came later in the day. The Commodity Futures Trading Commission said it launched a nationwide investigation into the purchase, transportation, storage, and trading of crude oil and other petroleum product contracts back in December.

The commission said that details of the investigation remain confidential, but announced a handful of other initiatives designed to increase transparency of U.S. and international energy futures markets.

The national average price for a gallon of regular unleaded gas rose to a record $3.952 from the previous day's record of $3.944, AAA reported.

Gold also slumped on the dollar's rise. COMEX gold for August delivery fell $23.30 to settle at $881.70 an ounce. The dollar gained versus the euro and yen. Treasury prices tumbled, raising the yield on the 10-year note to 4.08% from 4%.

Economic growth in the first quarter grew at a faster paced than initially thought, the government reported. US GDP rose at an annual rate of 0.9%, as expected, versus the initial reading of 0.6%. The Core PCE deflator, the report's closely-watched inflation component, was 2.2%.

The number of Americans filing new claims for unemployment rose 4,000 to 372,000 last week, topping expectations.

As expected, the majority of Bear Stearns shareholders endorsed JPMorgan Chase's proposed takeover of the brokerage, which nearly collapsed amid the subprime mortgage market meltdown. Both stocks gained.

European shares ended a volatile session higher. The pan-European Dow Jones Stoxx 600 index rose 0.2% to 320.91, extending gains of 1% on Wednesday. UK's FTSE 100 closed virtually unchanged at 6,068.10, while Germany's DAX 30 rose 0.3% to 7,055.03 and the French CAC-40 gained 0.1% at 4,975.90.

In the emerging markets, the Bovespa in Brazil dropped 1.85% to 71,797 while the IPC index in Mexico was up 0.6% at 31,837. The RTS index in Russia jumped 1.8% to 2439 while the ISE National 30 index in Turkey shed 0.8% to 47,413.

GDP, inflation may decide direction

A highly volatile F&O expiry session ended with losses. Bulls managed to extend yesterday’s gains in the early trades tracking firm cues from the US and the Asian markets, but were unable to hold on as key indices turned highly choppy. After trading in a range for major part of the day, markets took a nosedive after a sudden bout of selling all over, dragged the Nifty below the 4,850 mark.

Barring the Capital Goods index al the other key Sectoral indices ended in red, with the BSE Auto index slipping the most (down 3.3%). Others like Bankex and Oil & Gas indexes were down by 2% each.

Finally, the BSE benchmark Sensex ended 209 points lower to close at 16,316 and the Nifty index lost 83 points to close at 4,835.

Overall about 1,116 stocks advanced; 1,539 stocks declined while 105 stocks remained unchanged. Among the 50-Nifty 41 stocks ended in red and 9 stocks ended in green.

NTPC ended down by over 3% to Rs171 after the company announced that its Q4 net profit fell 23% to Rs13.4bn and net sales were at Rs107.4bn (up 21%). The scrip touched an intra-day high of Rs178 and a low of Rs168 and recorded volumes of over 25,00,000 shares on NSE.

HTMT Global slipped by 2% to Rs355. The Company reported consolidated results for the quarter ended 31st March 2008. The revenues stood at Rs1864.6mn up by 16%. The EBITDA were at Rs412.5mn. The net profit gone up by 49% at Rs241.2mn. The company has added 17 new customers during the year. The scrip touched an intra-day high of Rs381 and a low of Rs354 and recorded volumes of over 2,000 shares on NSE.

Hindustan Zinc gained by 1.5 percent to Rs641. The company said that it has cut zinc prices by Rs4,000 per ton and lead prices by Rs5,800 per ton. The scrip touched an intra-day high of Rs677 and a low of Rs630 and recorded volumes of over 63,000 shares on NSE.

L&T rallied by over 6.5% to Rs2889 after the board of directors of the company approved bonus issue at ratio of 1:1. Further on the company announced its Q4 results with net profit at Rs9.66bn (up 37.8%) and its net sales rose 35.7% to Rs84.7bn. The scrip touched an intra-day high of Rs2949 and a low of Rs2715 and recorded volumes of over 15,00,000 shares on NSE.

HPCL edged higher by 0.3% to Rs249. The company announced its Q4 results with net profit at Rs3.85bn (down 30%). However, the company’s were up by 44.2% at Rs317.9bn. Also the company said that they would pay final dividend of 30%. The scrip touched an intra-day high of Rs259 and a low of Rs246 and recorded volumes of over 6,00,000 shares on NSE.

Shares of IFCI have surged by over 6.5% to Rs62 after the company announced that the board of directors of the company would today meet to consider induction of strategic investor. The scrip touched an intra-day high of Rs65 and a low of Rs57 and recorded volumes of over 5,00,00,000 shares on NSE.

Sun Pharma declined by over 5% to Rs1388 after Taro rejected merger plans. Israel's Taro Pharmaceutical Industries on Wednesday announced that its Board of Directors unanimously voted to terminate the merger agreement with Sun Pharmaceutical Industries. The merger agreement of May 18, 2007 provided for the acquisition of Taro Pharma by Sun Pharma for US$7.75 per share and allowed either party to terminate after December 31, 2007.

Taro Pharma's Board determined that permitting the merger agreement to remain in force is no longer in the best interests of the company. The Board determined that the merger agreement had become stale and does not reflect the dramatic operational and financial turnaround that the company has achieved since last year, the future value that the company expects to achieve from the changes made in its business model and the value in its new product pipeline, Taro Pharma said. The scrip touched an intra-day high of Rs1480 and a low of Rs1376 and recorded volumes of over 50,00,000 shares on NSE.

After taking a short breather, the bears were back on the bourses with a vengeance. On Thursday it was the expiry jitters that dragged the Indian bourses to deep red. For Friday important economic data like the quarterly GDP figures and the inflation data to be released would be tracked closely. So, one could again expect a day full of gyrations.

Corporate News

Reliance Industries and Standard Chartered Bank may co-bid for strategic stake in IFCI. (DNA)

Sun Pharma may take legal action against Israel’s Taro Pharma, for terminating merger. (BS)

L&T schedules first of three IPOs for 2009-10. (BL)

Jubilant completes acquisition of Canada's Draxis Speciality Pharma for US$253mn. (BS)

Exide plans investment worth Rs350mn to acquire lead smelter company. (BL)

SAT sets aside SEBI penalty on Holcim. (BS)

Tata group is setting up a BPO on its proposed steel plant site in Orissa. (BS)

Tata’s small car Nano is hit by rising input costs. (DNA)

Videocon is planning to set up a 1,000MW hydropower project in Uttaranchal. (DNA)

Piramal Life to invest Rs2bn p.a. for next 2-3 years on R&D. (DNA)

Gujarat Industries Power Co. (GIPCL) is expected to start work on the 500MW lignite based power plant soon. (DNA)

PTC plans to raise US$500mn. (BL)

Kavveri Telecom signs MoU with MS Ramaiah School of Advanced Studies to augment its R&D. (BL)

TCS to spend Rs19bn in the current fiscal year. (BL)

ABG Infralogistics is set to get deals for two Haldia dock terminal operations. (BL)

Havells India among 14 FDI plans cleared for issuing shares and warrants. (BL)

NMDC and Spice Minerals sign MoU for a JV to seek overseas acquisitions. (BL)

Linde Group, Germany plans to invest euro 1bn in its unit BOC India over 7-10 years. (FE)

ICICI Prudential ties-up with American Express Banking Corp.(FE)

Karuturi Global to raise US$250mn for agri project in Ethopia. (FE)

Dish TV to increase borrowing limits by Rs10bn. (FE)

Orchid Chemicals to convert business alliance with Ranbaxy into an agreement next month. (FE)

Hindustan Aeronautics to manufacture over 1,000 Honeywell TPE331 aircrafts engines for the US Company. (FE)

HPCL decides to put on hold Rs317.5bn worth of capital investment. (FE)

TDSAT directs BSNL to restore connection to Bharti Airtel in parts of Bangalore. (FE)

L&T proposes to set up 15-hector IT SEZ in Gujarat. (FE)

BoA to consider the in-principle approval to SEZ proposals of Gremach Infrastructure. (FE)

Maharashtra government delays land acquisition process, slows down Tata Power, Reliance Energy power project development. (FE)

Hanung Toys to acquire frontline US home furnishing marketing company. (ET)

Wipro wins an interim court ruling against bulb maker KK Lamps. (ET)

JB Group announces foray into food business by forming a new company JB N JEG Foods. (ET)

TTML in talks with Srei Group company Quippo Telecom to merge its tower arm. (ET)

Bombay Dyeing sold off its DMT plant to Gujarat Company. (ET)

Economic News

Government allows infrastructure firms to borrow US$100mn abroad through ECBs for rupee expenditure under the approval route. (BS)

Railways considers aluminium coaches to up payload and save fuel cost. (BS)

Sebi eases registration norms for FIIs and sub accounts. (BS)

FIIs can issue participatory notes to entities like hedge funds. (FE)

Monsoon misses May 29th date to reach Kerala. (BL)

Telecom players divided over WiMax spectrum pricing. (BL)

RBI to revise exposure limit to 25% of capital funds for oil companies. (FE)

Spread over Libor eased to benefit SMEs accessing foreign debt. (FE)

Government to meet on June 4, 2008 to consider 15 new SEZ proposals. (FE)

Petroleum ministry says India to have a total refining capacity of 242mn tons by 2011-12. (FE)

Government clears FDI proposals worth Rs8.26bn. (ET)

No plans to raise notified prices of coal this year: Government. (ET)

AAI freezes all kind of airport charges to aid airlines tide over crises. (ET)

RBI to allow Co-operative banks to raise capital through innovative instruments. (ET)

Market Gossip -May 30 2008

Shorties make a sweet killing

The sharp fall in indices in the last 30 minutes of trade on Thursday caught many people by surprise. Some analysts attribute this fall to some smart work by traders at a time when market was nervous ahead of the expiry of the May series on Thursday. These deep-pocketed traders are believed to have made a killing in the late fall on Thursday.

A derivatives analyst from a leading brokerage said there was a sharp rise in the premium of Nifty 4,900 puts just ahead of the late fall, indicating some traders would have had prior knowledge of a sell-off.

According to provisional data on the BSE, foreign institutional investors net sold Rs 1,277 crore worth of shares. Indices traded choppy for most of Thursday’s session. The Nifty closed at 4,835.30, down 83 points or 1.7% from Wednesday’s close.

Lacking embedded value

The embedded value (EV) concept was widely used till early January by analysts to justify the sharp jumps in share prices beyond their real value. In this, analysts take into account the valuation of the companies’ subsidiaries, listed or unlisted, and certain assets including real estate, that are not part of its core business.

The fall in stock markets, however, does not seem to deter analysts from using this concept widely. For example, real estate shares have tumbled 40-50% on an average from their record levels to factor in a likely slowdown in the realty sector in the coming years.

But, the same logic does not seem to be applicable to companies with real estate arms. Some analysts continue to factor in value of real estate arms, while assigning price targets to the parent stock.

Traders prefer to go short

It may not be the best of times for investors, but the sustained bearishness in the market is turning out to be a relief for day traders. Till the second week of January this year, the safest strategy was to go long first thing in the morning and then unwind those positions later in the day.

But ,with the mood having changed, traders have reversed their strategy. Given the gloomy outlook, these players now go short at frontline counters first thing in the morning, hoping to cover their positions at a lower price later in the day. And of late, this strategy appears to be yielding fruit.

via ET