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Friday, May 16, 2008

Bulls batting...enjoy the match


We're so busy watching out for what's just ahead of us that we don't take time to enjoy where we are,.

More exciting than the market would be today's 20-20 cricket match between Mukesh Ambani’s Mumbai Indians and Shah Rukh Khan’s Kolkata Knight Riders. The bulls seem to have been inspired by Sanath Jayasuriya’s blazing knock the other evening and stocks like RIL did manage to send many a bears to the fence.

But then it is that day of the week again, when Inflation jitters seem to make the bulls nervous. Hopefully, most of the bad news on this front has already been factored in by the market with expectations that inflation may even hit 8%. So it can’t get worse than it. Though oil prices remain at highly elevated level, the Government is not even talking about a price hike due to political compulsions. On the contrary, the Finance Minister has reportedly refused to increase the quantum of oil bonds to oil PSUs. The Centre has also forced steel and cement companies to cut prices to rein in inflation.

These three sectors are likely to bear the brunt of the Government's inflation-fighting efforts. Aviation is another sector where Government apathy has dragged the sector into deep losses. Most sectors are facing increasing number of challenges amid high interest rates, soaring inflation, currency fluctuations, slowing economic growth and uncertain market conditions. This may reflect in their performance over the next few quarters.

Coming to the market, the outlook for the day appears to be brighter after Thursday’s strong finish and firm global cues. Inflation figures may not hurt that much, and the bulls might just decide to extend their gains into a third straight day. However, one should look to reduce one's holdings at every rally as the key indices will face some resistance at higher levels. The near-term outlook continues to be one of cautious optimism.

FIIs were net buyers of Rs7.07bn (provisional) in the cash segment yesterday while local institutions poured in Rs3.63n. In the F&O segment, foreign funds were net buyers of Rs5.22bn. On Wednesday, FIIs were net buyers of Rs2.58bn while Mutual Funds too were net buyers of Rs1.33bn.

Key Results Today: Bank of India, Bongaigaon Refinery, Edelweiss Capital, Emkay Share, HT Media, NMDC, Redington, Saksoft, Shriram EPC, SAIL, Stone India and Texmaco.

Asian stocks rose for a fifth day, led by commodity producers and shipping companies, on renewed speculation that China is seeking a stake in BHP Billiton and after the price of transporting freight jumped to a record.

BHP shares climbed to a high in Sydney after the Australian newspaper reported that Chinese interests want to team up with an Australian fund to purchase a 9% stake in the mining giant. Mitsui OSK Lines, Japan's largest shipping company, rose to a six-month high.

Mizuho Financial Group rallied in Tokyo after forecasting profit will almost double this year.

The MSCI Asia Pacific Index gained 0.8% to 153.32 as of 10:55 a.m. in Tokyo, set to complete its longest winning streak since October 3. The index is headed for a 3% advance this week. About four stocks rose for every three that declined.

All Asian benchmark indexes advanced. Japan's Nikkei 225 Stock Average added 0.2% to 14,276.08. The country's economy grew faster than economists estimated last quarter as exports to Asia and emerging markets helped the nation weather the US slowdown.

US stocks rose on Thursday, with technology leading the way. The S &P 500 Index touched a four-month high, as analysts said chipmakers will benefit from rising global demand and energy shares are cheap relative to crude prices.

Intel and Nvidia led semiconductor shares to their highest level of the year on a Friedman Billings Ramsey & Co. report that orders are improving. Exxon Mobil helped push the S&P 500 Energy Index to a record after UBS said the oil industry is notably inexpensive.

Tiffany advanced to the highest level since November after the second-largest luxury-jewelry retailer boosted its dividend by 13 percent.

The S&P 500 added 14.91, or 1.1%, to 1,423.57. The Dow Jones Industrial Average increased 94.28, or 0.7%, to 12,992.66. The Nasdaq Composite Index gained 37.03, or 1.5%, to 2,533.73.

Market breadth was positive and volume was moderate. More than five stocks rose for every two that fell on the New York Stock Exchange.

US indices struggled to rise in the morning amid rising oil prices, mixed economic reports and a string of M&A news. But the tone turned positive in the late morning, despite volatile oil prices.

US stocks have been rising over the past two months as investors bet that the worst of the credit market crisis is behind them and the world's biggest economy appears to be stabilizing.

US light crude oil for June delivery fell 10 cents to settle at $124.12 a barrel in New York following a volatile session.

Meanwhile, the national average price for a gallon of regular unleaded gas rose to a record $3.776 from $3.758 the previous day, according to AAA. It was the eighth record in a row.

COMEX gold for August delivery rose $13.30 to settle at $884.10 an ounce. The dollar rose versus the euro and slipped versus the yen. Treasury prices rose, lowering the yield to 3.83% from 3.90% late on Wednesday.

Yahoo shares climbed 2.3%. Activist shareholder Carl Icahn launched a campaign to overthrow Yahoo's board as part of an effort to restart deal talk with Microsoft.

Media giant CBS said it would buy CNet Networks for a 45% premium in a move to expand its reach further onto the Web. Also on the online front, Comcast said it is buying social networking site, Plaxo, and IAC/Interactive will acquire Lexico Publishing Group.

GE has reportedly hired Goldman Sachs to seek buyers for the sale of its appliances business, which could be worth between $5- $8bn. GE shares inched lower.

JC Penney reported weaker quarterly results that beat forecasts. The retailer also said second-quarter earnings would come in just ahead of analysts' forecasts, but that full-year conditions will be difficult amid the tougher consumer spending environment. Shares gained more than 4%.

Thursday's economic news was mixed. Jobless claims rose a bit, New York-area manufacturing worsened and Philadelphia-area manufacturing weakened less than had been expected. Industrial production and capacity utilization declined more than expected in April and homebuilder confidence fell again in May.

Friday brings economic reports on housing starts, building permits and consumer sentiment.

Stocks in Europe closed higher thanks to a late-afternoon rally. The pan-European Dow Jones Stoxx 600 index, down about 10% this year, finished 0.4% higher at 328.41, with advancing stocks outpacing those declining roughly 3 to 2.

The UK's FTSE 100 ended up 0.6% at 6,251.80. The German DAX 30 finished nearly unchanged at 7,081.05 and the French CAC-40 finished virtually unmoved at 5,057.51.

Most emerging markets closed higher. The Bovespa in Brazil was up 2% at 71,492 while the IPC index in Mexico climbed 0.7% at 31,542. The RTS index in Russia gained 0.25% to 2411 while the ISE National 30 index in Turkey rose 0.4% to 52,599.

Can bulls maintain tempo

Bulls had a stellar session as bears were shrugged of the bourses amid firm global cues and all round buying in the scrips across the sectors. Bulls completely dominated the whole session. A sudden bout of buying in the index heavyweights like Reliance Industries, Infosys, L&T and RCom lifted the Nifty index to close above the 5,100 mark and the benchmark Sensex closed above the 17,300 mark.

The Capital Good, Realty, Oil & Gas, Banking and Power stocks were in demand. However, the FMCG stocks were slightly under pressure. Finally, the BSE benchmark Sensex ended 375 points higher to close at 17,353 and the Nifty index gained 103 points to close at 5,115.

Overall about 1,771 stocks advanced; 909 stocks declined while 74 stocks remained unchanged. Among the 50-Nifty 39 stocks ended in green and 11 stocks ended in red.

PNB surged by over 5.5% to Rs537 after the company announced its results for the quarter and year ended March 31, 2008. The Bank posted a net profit of Rs5437.6mn for the quarter ended March 31, 2008 as compared to Rs2377mn for the quarter ended March 31, 2007. Total Income increased from Rs37127.9mn for the quarter ended March 31, 2007 to Rs44170mn for the quarter ended March 31, 2008.

The Bank posted a net profit of Rs20487.6mn for the year ended March 31, 2008 as compared to Rs15400.8mn for the year ended March 31, 2007. Total Income increased from Rs129665.4mn for the year ended March 31, 2007 to Rs162625.8mn for the year ended March 31, 2008. The scrip touched an intra-day high of Rs540 and a low of Rs503 and recorded volumes of over 6,00,000 shares on NSE.

Torrent Power gained by 2% to Rs132 after the company announced its results for the quarter and year ended March 31, 2008. The company posted a net profit of Rs504.6mn for the quarter ended March 31, 2008 as compared to Rs443.2mn for the quarter ended March 31, 2007. Total Income increased from Rs7762mn for the quarter ended March 31, 2007 to Rs9483.8mn for the quarter ended March 31, 2008.

The company posted a net profit of Rs2112.4mn for the year ended March 31, 2008. Total Income is Rs37220mn for the year ended on March 31, 2008. The scrip touched an intra-day high of Rs136 and a low of Rs132 and recorded volumes of over 4,00,000 shares on NSE.

MLL rose over 14% to Rs114 after country’s fourth biggest shipping company by market value quadrupled earnings for the quarter ended March 31 to Rs740.4mn. The scrip touched an intra-day high of Rs117 and a low of Rs102 and recorded volumes of over 81,00,000 shares on NSE.

Reliance Industries gained momentum towards the fag end of the trading session. The scrip performed like the ‘Mumbai Indians’ the IPL team which won in handsome style against the ‘Chennai Super Kings’ on Wednesday. The scrip ended higher by over 3.5% to Rs2622 and touched an intra-day high of Rs2633 and a low of Rs2535 and recorded volumes of over 6,00,000 shares on NSE.

Madras Aluminium surged by over 9% to Rs894 after the company said that they would consider stock split on May 16, 2008. The scrip touched an intra-day high of Rs897 and a low of Rs790 and recorded volumes of over 71,000 shares on NSE.

Syndicate Bank gained by over 3% to Rs77. According to reports, the company repriced its bulk deposits. The company also on Wednesday announced its Q4 results with PAT rising over 21% to Rs1263mn. However, the company’s revenues for the fourth quarter fell by 6.8% to Rs5,626mn. The scrip touched an intra-day high of Rs77 and a low of Rs75 and recorded volumes of over 2,00,000 shares on NSE.

Neyveli Lignite gained by over 4.5% to Rs142 after the company announced that they would develop 1000MW coal based power plant and would spend Rs49.1bn to develop the power project. The scrip touched an intra-day high of Rs142 and a low of Rs137 and recorded volumes of over 90,00,000 shares on NSE.

Flawless Diamond gained by 3% to Rs68 after the company said that they secured Rs670mn order from Hong Kong’s M/s Jewelmax Company and Fine Jewellery. The scrip touched an intra-day high of Rs71 and a low of Rs66 and recorded volumes of over 1,00,000 shares on NSE.

Corporate News

Bihar Tubes' Board will meet today to consider various fund raising options for the proposed expansion plans and modernization of existing manufacturing facilities of the company.

BASF SE has announced an open offer for buying up to 6,289,591 shares or 22.31% of the voting capital of BASF India at a price of Rs 274 per share. The offer will start on July 9 and will close on July 28. The stock was up 1.2% yesterday.

Welspun India has denies media news that it was planning to acquire Linen N Things of USA. "The news reported by various TV channels and newspapers is not true and is based on speculation," the company said in a statement.

Realty firm Omaxe proposes to take up low-cost urban housing through its subsidiary National Affordable Housing and Infrastructure and other group companies. The company has already started identifying and acquiring various tracts of land for this purpose and will be finalizing the design, costs, etc., in due course.

OnMobile Global has signed an agreement to acquire 100% of Telisma SA, a leading provider of speech recognition software for Service Providers and Enterprises. Telisma is based out of Paris, France.

Jain Irrigation and the Government of Maharashtra have signed a MoU for investment of Rs5.5bn in the state through two projects.

Reliance Industries is in talks with three overseas oil companies to bid for oil and gas blocks in the seventh round of NELP. (ET)

Tech Mahindra has bagged US$700mn contract from BT. (ET)

Reliance Infratel and MCX public offers get SEBI nod. (BS)

Bharti Airtel crosses 4mn subscribers in Delhi. (ET)

Reliance Communications gets Rs30bn loan from China Development Bank to fund its nationwide GSM foray. (ET)

L&T to utilize Lafarge money for expanding shipping, power and infrastructure projects. (BS)

Government files a petition before TDSAT seeking to recover Rs20.2bn from Tata Teleservices. (ET)

Infosys is race for acquiring Aptara, a third-party BPO in technology publishing. (ET)

Wipro is planning to enter in renewable energy business. (ET)

Essar Steel to join the race for CSN’s iron ore mines. (BS)

Nalco shortlists 2-3 coal mines in Indonesia. (BS)

Neyveli Lignite gets government approval for development of 1,000MW coal based thermal power project in Tamil Nadu. (BS)

Jain Irrigation to set-up two projects in Jalgaon, Maharashtra, at an investment of Rs5.5bn. (BS)

BASF to make an open offer to BASF India’s shareholders for acquiring over 22% stake for Rs1.72bn. (BS)

PGCIL is looking for opportunities for expanding overseas especially in Africa and Middle East. (DNA)

Zydus Cadila gets nod from US FDA to market four products. (ET)

Sterling Group expects to launch DTH services by 2009. (BL)

Phoenix Mills to build 25 hotels in five years. (DNA)

Lupin is looking for acquisitions in US and emerging markets to expand its overseas operations. (DNA)

Sanyang, a Taiwan based two-wheeler maker, joins the race for acquiring controlling stake in Kinetic Motors. (BS)

SAIL to set-up a processing unit in Himachal Pradesh. (FE)

Voltas plans to acquire overseas companies to expand electro-mechanical projects business. (BS)

Rane Group earmarks Rs2bn for expanding product facilities across the country. (BL)

Wanbury plans to acquire CRAMS companies in US and Europe. (BS)

Economic News

The six core infrastructure sectors record a growth of 9.6% in March 2008. (ET)

The Supreme Court asks UP sugar mills to pay Rs110/quintal to sugarcane farmers for the 2007-08 season within three weeks. (ET)

The annual policy review on ECBs is likely to ease end-user restrictions and quantum of borrowings. (ET)

Finance Minister rules out any cut in import duty on crude oil and rollback of export duty on steel. (ET)

Government is set to review the restrictions imposed on participatory notes. (FE)

The Finance Ministry rejects NTPC’s follow-on public issue. (ET)

Liquor companies to increase prices on high input cost. (BS)

Government expects a further cut in cement prices. (BS)

Petroleum Ministry may go to Cabinet for tax breaks for natural gas production. (FE)