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Tuesday, May 27, 2008

Let go a little!


It's all right letting yourself go, as long as you can get yourself back.

Some bargain picks in recent days may make you some money today. With the US market taking a day's break and no fresh negative news emerging overnight, the key indices could just witness some relief. In case it turns into a rally, use it to pocket some quick gains. Today we see a bounce at the opening bell and perhaps a brighter day though the undertone has yet again turned weak.

The firm trend across Asia this morning may just prove to be enough of a catalyst for the bulls to stage some kind of a comeback. However, be on guard as selling pressure will return at higher levels amid a slew of concerns, local as well as global.

The trend over the next few days will be choppy as market players brace for Thursday's F&O expiry and Friday's GDP numbers. Of course, weekly inflation will continue to cast its gloomy shadow on the market. What's more, things on inflation front could get worse as and when the Government announces the impending hike in retail fuel prices. This won’t happen till Friday at least.

The market may also get jitters due to the emerging political situation, which doesn't seem to favour the ruling coalition. There are fears that following the recent electoral setbacks, the Congress-led regime may unveil more populist measures. On the flip side, there is a school of though which reckons that a BJP-led government (if it wins next year's general elections) will actually be good for the markets.

FIIs were net sellers of Rs13.37bn (provisional) in the cash segment on Monday while local institutions were net buyers of Rs8.42bn. On Friday, FIIs offloaded Indian shares worth Rs5bn from the cash segment. Mutual Funds were net buyers of Rs186mn.

Key Results Today: Bajaj Electricals, Camlin, Emco, Jindal Steel & Power, Neyveli Lignite, Opto Circuits, Plethico Pharma, Tata Coffee and ZF Steering.

Asian stock benchmarks rose for the first time in six days, rebounding from their steepest fall in more than two months, as investors snapped up battered stocks after the recent declines.

Toyota rallied after its price sank to the lowest in more than a month relative to earnings. Samsung advanced in Seoul after Nomura Holdings raised its rating. Oji Paper Co. led gains by Japanese papermakers after UBS said higher selling prices will help counter rising costs.

The MSCI Asia Pacific Index added 1% to 148.79 as of 10:43 a.m. in Tokyo, snapping a 4.5% decline in the previous five sessions, the sharpest drop and the longest losing streak since the period ended March 5.

More than two stocks advanced today for each that dropped on the MSCI Asia Pacific index, and all 10 industry groups gained. Most Asian benchmark indexes also rose, with Japan's Nikkei 225 Stock Average gaining 1% to 13,828.08.

US markets were shut on Monday on account of Memorial Day. Markets were also closed in the UK. In the rest of Europe, stock indices ended marginally higher.

The pan-European Dow Jones Stoxx 600 index edged 0.2% lower to 318.37. The German DAX 30 rose 0.2% to 6,957.50 and the French CAC 40 added 0.2% to 4,941.61. The Swiss SMI fell 1.3% to 7,363.90.

Markets in Europe and the US declined last week after a report showed that the number of unsold US homes piled up to a 23-year high in April.

Shares of UBS, which on Tuesday will trade without rights to a discounted stock offer, dropped 5.8%. The Swiss bank said in a prospectus that it may take more losses tied to international real estate.

Oil prices rose above $133 per barrel on persistent worries about global supplies, the fate of the US economy and the dollar. Reports of an attack by militants on an oil pipeline in Nigeria, one of Africa's largest oil exporters, also helped boost prices.

Light, sweet crude for July delivery on the New York Mercantile Exchange was up 88 cents at $133.07 a barrel in electronic trading by late afternoon in Europe. The contract rose $1.38 to settle at $132.19 a barrel on Friday.

The dollar has weakened over the last week, making dollar-denominated commodities like crude attractive to global investors. Oil and other hard commodities are seen as hedges against a weakening dollar and inflation.

This week, Wall Street investors will be awaiting economic data on US consumer confidence, new home sales and gross domestic product (GDP). The reports are sure to have some impact on the dollar and oil prices.

The dollar was lower against the yen, but rose a bit against the euro in currency trading during the afternoon in Europe after losing ground Friday in New York.

In the emerging markets, the Bovespa in Brazil rose 0.25% to 71,628 while the IPC index in Mexico was up 0.8% at 31,314. The RTS index in Russia added 0.06% at 2436 while the ISE National 30 index in Turkey slid 1.7% to 47,956.

Warren Buffett says that the US economy is already in a recession. Asked by Germany's Der Spiegel weekly whether he thinks the US could still avoid a recession, he said as far as the average person is concerned, it is already here.

"I believe that we are already in a recession," Buffet was quoted as saying in an interview published on Sunday. "Perhaps not in the sense as defined by economists. ... But people are already feeling the effects of a recession. It will be deeper and longer than what many think," he added.

Market may turn choppy

Markets ended the way it started on a weak note. Losses were extended to third straight trading session on back of negative cues from the US and the Asian markets. The large cap stocks were under pressure during today’s session. Further no positive trigger on the horizon with even the European markets taking off on a dull note dragged the Nifty index to close below the 4,900 mark.

Finally, the BSE benchmark Sensex ended 301 points lower to close at 16,348 and the Nifty index slipped 71 points to close at 4,875.

Overall about 669 stocks advanced; 2,041 stocks declined while 48 stocks remained unchanged. Among the 50-Nifty 40 stocks ended in red and 10 stocks ended in green.

Bajaj Auto Limited manufacturers and distributors of motorized two & three wheeler motorcycles got re-listed on the bourses on Monday and started trading at Rs784. The stock finally ended at Rs604 hitting an intra-day high of Rs945 and a low of Rs556 recording volumes of over 23,00,000 shares on NSE.

Similarly, Bajaj Finserve, Rahul Bajaj's new firm, also got listed on the bourses on Monday. Bajaj Finserve comprises of financial services and wind farm businesses of Bajaj Auto and has major presence in insurance, consumer finance and distribution space. Apart for this, Bajaj Finserve is considering a foray into the MF business, as Bajaj group is in negotiations with Allianz group. Bajaj Finserve got listed at Rs530 per share and finally ended at Rs514 hitting an intra-day high of Rs999 and a low of Rs503 recording volumes of over 21,00,000 shares on NSE.

The auto major Bajaj Auto was de-merged into three new entities Bajaj Holdings & Investments, Bajaj Auto and Bajaj Finserv. Bajaj Holdings & Investment, formerly Bajaj Auto, now functions as an investment company and focuses on new business opportunities. The new Bajaj Auto focuses on the automotive business, while Bajaj Finserv is engaged on wind energy generation, insurance and finance.

GMR Infrastructure declined by 3.2% to Rs134. The company said that they may partner Petronas to jointly bid for oil blocks in India, reports stated. The scrip touched an intra-day high of Rs138 and a low of Rs132 and recorded volumes of over 13,00,000 shares on NSE.

Hindustan Unilever also lost ground and slipped by 2% to Rs231 as reports stated that it hiked prices between 3-28% over the past one and a half months. The scrip touched an intra-day high of Rs239 and a low of Rs229 and recorded volumes of over 1,00,000 shares on NSE.

NIIT Technologies slipped 5% to Rs147. The global IT services provider announced a collaboration with the National Aviation Company of India (NACIL) and Singapore Airport Terminal Services (SATS) consortium (AI SATS Airport Services), involving the implementation of a Cargo Operations System (COSYS) to support the consortiums cargo handling operations at the new Bengaluru International Airport.

The scrip touched an intra-day high of Rs154 and a low of Rs146 and recorded volumes of over 2,00,000 shares on NSE.

HDIL lost by over 5% to Rs722. The company plans to bid for 10 of the 57 NELP VII hydrocarbon blocks, according to reports.

HDIL is reportedly foraying into the oil and gas segment. The report added that HDIL was likely to bid with a foreign partner for its oil and gas foray. The scrip has touched an intra-day high of Rs750 and a low of Rs716 and recorded volumes of over 9,00,000 shares on NSE.

SBI ended lower by 2.3% to Rs1537. The company announced that it raised deposit rates for 3-5 years deposits by 35bps to 8.85% and raised deposit rates for 5-10 years deposits by 50bps to 9%. The scrip touched an intra-day high of Rs1561 and a low of Rs1530 and recorded volumes of over 3,00,000 shares on NSE.

Omaxe ended 2% lower to close at Rs210. The company announced that it posted a net profit of Rs3988.03mn for the year ended March 31, 2008 as compared to Rs1248.30mn for the year ended March 31, 2007. The total Revenue has increased from Rs9475.65mn for the year ended March 31, 2007 to Rs18120.34mn for the year ended March 31, 2008.

The Board of Directors of the Company at its meeting held on May 26, 2008 has recommended a final dividend of 25% on paid up Equity Share Capital subject to approval of Shareholders. The scrip touched an intra-day high of Rs220 and a low of Rs209 and recorded volumes of over 2,00,000 shares on NSE.

With the US stocks being closed on account of ‘Memorial Day Holiday’, there would be no cues coming in from the US markets. So one could expect another dull day with slight volatility.

Corporate News

Reliance Power and GMR Infrastructure are planning to bid for PowerSeraya and Senoko Power, which account for more than 60% of the power produced in Singapore. (BS)
TCS has signed a five-year deal worth US$100mn with NXP Semiconductors. (ET)
Reliance Industries is in talks with PSU oil refining companies to sell its crude oil to be produced from MA field in its prolific D6 Block in offshore Krishna-Godavari Basin. (DNA)
Indiabulls Real Estate plans to sell 353mn shares of Indiabulls Properties Investment Trust at between US$1 and US$1.1 apiece. (DNA)
Taj GVK plans to invest over Rs5bn in its existing and new properties in south India over the next 2-3 years. (DNA)
NMDC may review exports to Japanese steel mills and South Korea's Posco to increase domestic availability of iron ore. (BS)
Tata Chemicals has launched Tata Salt Lite, a new brand of low sodium salt. (BL)
Eicher Goodearth Investments, the holding company of Eicher Motors, plans to buy back 13.12% of public holding at Rs691.68/share. (ET)
Eicher Motors plans to buy back the 3.6% stake held by German auto major Daimler Motors. (ET)
Tata Motors is in the process of re-organizing its manufacturing facilities for commercial vehicles, and intends to create hubs for a particular category of vehicle at each of its various production units. (BL)
Educomp Solutions is planning to raise US$500mn through ADR, GDR, FCCB, or QIP. (BL)
Omaxe is entering into power generation by forming a JV with Isolux, a Spanish firm. (ET)
Kirloskar Electric bids for acquiring German’s Lloyd Dynamowerke at an estimated enterprise valuation of ~US$100mn. (ET)
Amara Raja Batteries has forayed into two-wheeler battery segment. (ET)
Apollo Hospitals is scouting for inorganic opportunities in Spain and Peru. (ET)
HTMT Global plans to acquire a mortgage-specific company in the UK soon with an investment of over US$150mn. (DNA)
Warburg Pincus-controlled WNS Holdings is working on an outright acquisition or a strategic merger with Firstsource Solutions. (ET)
UTV New Media, the digital media arm of UTV Software is acquiring a controlling stake of 76% in 'IT Nation', a leading online infomediary. (ET)
Power Finance Corp.’s subsidiary PFC Consulting has formed three SPVs, for power projects in Orissa. (Mint)
Videocon may merge some of its factories to improve efficiencies and boost sales in a bid to gain an upper hand on competitors Samsung, Whirlpool and LG. (BS)
Fidelity Mutual fund has acquired a further 1.55% stake in Jyothy Labs, raising its holding to 5%. (ET)
RPG Group plans to invest Rs90bn in the power, tyre and carbon black industries as part of its expansion in the coming two years. (ET)
The Essel group owned Dish TV, is aiming to double its customer base to two lakh a month. (ET)
Leading Australian financial services firm Link Group plans to acquire a majority stake in Intime Spectrum Registry. (ET)
Harrisons Malayalam is planning to invest Rs560mn in its various plantations in Kerala. (BS)
Over 650 drugmakers have asked the Government to immediately increase prices of 33 bulk drugs. (ET)
BlackBerry vendor Research-In Motion (RIM) is not willing to hand over the message encryption key to the Government. (ET)

Economic News

The DoT has called a meeting with operators on May 28 to discuss the allocation and pricing of 3G spectrum. (BS)
The Finance Act 2008 has modified and rationalised the CENVAT Credit Rules, 2004 (Credit Rules) and removed some anomalies. (BS)
The Government may consider 49% FDI in gems & jewellery and apparel. (ET)
The Government is working on a dual track strategy of fuel price hikes and duty cuts to protect consumers as well as cash strapped oil companies. (ET)
The Gujarat government is planning to invite private companies to invest in five new power projects worth Rs200bn during the upcoming Vibrant Gujarat Global Investors' Summit. (BS)
Cotton production outlook for the next season (August-July) has been kept unchanged at a record 33mn bales (of 170 kg each). (BL)
SEBI has proposed a maximum post-issue capital of Rs250mn for companies to be eligible to participate in the proposed SME exchange. (BL)
The Himachal Pradesh Government has sought the Centre’s approval to levy generation tax on hydropower projects in the state and extension of the industrial package till 2013. (Mint)
India could miss by 20%, or 13,855MW, its target of adding almost 70,000MW of power over the next four years because of poor transport infrastructure. (Mint)
A shortage of globally-recognized testing labs could impact India’s drugs and chemical exports to Europe, worth some US$2.7bn in 2007. (Mint)