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Monday, January 28, 2008
Post Session Commentary - Jan 28 2008
The Sensex opened with a negative gap of 350 points at 18,012 on global cues. The index dropped to a low of 17,443 - down 919 points from the previous close - in morning deals.
Buying at lower levels, mainly seen in auto and financial stocks, saw the index touch a high of 18,213 - a recovery of 770 points from the day's low.
The Sensex eventually closed with a loss of 209 points (1.1%)at 18,153.
The NSE Nifty declined 109 points (2%)to 5,274.
The BSE Auto index surged 1.7% to 4,843, and the Bankex moved up over 1% to 11,521.
The BSE market breadth was extremely negative - out of 2,747 stocks traded, 1,851 declined, 865 advanced and 31 were unchanged today.
INDEX SHAKERS...
DLF and Wipro slumped around 5.5% each to Rs 893 and Rs 406, respectively.
Bharti Airtel and Infosys tumbled around 5% each to Rs 870 and Rs 1,447, respectively. Ranbaxy shed 4.8% at Rs 350.
NTPC and SBI plunged over 4% each to Rs 213 and Rs 2,308, respectively.
BHEL and Reliance Communications slipped 3.3% each to Rs 2,092 and Rs 646, respectively. TCS tumbled over 3% to Rs 854.
Tata Steel, Grasim and Satyam dropped around 2% each to Rs 698, Rs 2,970 and Rs 399, respectively.
Ambuja Cements and Reliance declined 1.8% each to Rs 115 and Rs 2,564, respectively.
...AND THE MOVERS
Bajaj Auto zoomed 8.6% to Rs 2,459. Maruti soared 4.4% to Rs 866, and Mahindra & Mahindra moved up 1.8% to Rs 686.
HDFC rallied 2.5% to Rs 2,782. ICICI Bank advanced over 1% to Rs 1,274.
Reliance Energy surged 3.3% to Rs 2,098. ACC added 1.4% to Rs 799.
VALUE & VOLUME TOPPERS
Reliance Natural Resources topped the value chart with a turnover of Rs 239.40 crore followed by Reliance Capital (Rs 179.30 crore), Reliance Energy (Rs 164.50 crore), Essar Oil (Rs 164.40 crore) and Reliance Petroleum (Rs 150.40 crore).
Reliance Natural Resources led the volume chart with trades of around Rs 1.73 crore shares followed by Ispat Industries (1.48 crore), Reliance Petroleum (91.10 lakh), IFCI (76.25 lakh) and Essar Oil (74.80 lakh).
BSE Bulk Deals to Watch - Jan 28 2008
Deal Date Scrip Code Scrip Name Client Name Deal Type * Quantity Price **
28/1/2008 505506 AXON INFOTEC SRIDHAN TIE UP LTD S 5100 55.00
28/1/2008 505506 AXON INFOTEC MARUMEGH TRADE PVT LTD S 4200 55.00
28/1/2008 505506 AXON INFOTEC KASTURI TOWER LIMITED S 5100 55.00
28/1/2008 505506 AXON INFOTEC J S CREDIT CAPITAL PVT LTD S 5000 55.05
28/1/2008 523736 DHUNSE TEA I SPARK SECURITIES P LTD S 75000 136.25
28/1/2008 516078 JUMBO BAG LT MOSS TRADERS PVT LTD S 45000 27.20
28/1/2008 513519 PITTI LAMINA MICRO MANAGEMENT LTD S 90000 56.00
28/1/2008 520073 RAUNAQ AUT C IFL PROMOTERS LIMITED S 52316 21.30
28/1/2008 532886 SEL MANUF SHIVALIK SECURITES LIMITED B 96260 177.20
28/1/2008 509945 THACKER AMIT JAIN S 400 168.95
28/1/2008 530155 TONIRA PHARM IPCA LABORATORIES LIMITED B 369450 24.34
28/1/2008 530155 TONIRA PHARM LOVIN TRADING CO P LTD S 295000 24.33
28/1/2008 590048 TYCHE PERIPH RNA BUILDERS NG B 50250 90.98
25/1/2008 590049 APOLLO SINDH SSPL SHARE TRADING ACCOUNT B 15000 534.10
25/1/2008 500820 ASIAN PAINTS OJASVI TRADING PRIVATE LIMITED B 517150 1052.50
25/1/2008 507944 BAJAJ STEEL SHEETAL RAJESH JAIN B 18553 164.95
25/1/2008 531750 ENCORE SOFT CLIMATE PACK TECH PVT LTD S 59460 24.30
25/1/2008 500186 HIND.OIL EXP MATTERHORN VENTURES B 416000 106.93
25/1/2008 511131 KAMAN HSG CAMEL FOODS P LTD B 32468 127.55
25/1/2008 511131 KAMAN HSG DREAMLAND BUILDTECH P LTD S 57798 127.08
25/1/2008 532886 SEL MANUF CHITRA JITENDRA MAYEKAR B 98000 174.99
25/1/2008 532765 USHER AGRO CHITRA JITENDRA MAYEKAR S 235260 181.60
24/1/2008 505506 AXON INFOTEC ASHOK JHAWAR B 4666 58.98
24/1/2008 505506 AXON INFOTEC ASHOK JHAWAR S 4666 59.76
23/1/2008 505506 AXON INFOTEC SNEH SANDEEP AGARWAL S 4000 61.10
Highlights of Macroeconomic and Monetary Developments in India
The Reserve Bank of India today released the document `Macroeconomic and Monetary Developments: Third Quarter Review 2007-08` to serve as a backdrop to the Third-Quarter Review of the Annual Policy Statement for 2007-08 being announced on Jan. 29, 2008.
The highlights of macroeconomic and monetary developments during 2007-08 so far are:
The Real Economy
* The Indian economy continued to exhibit robust growth during the second quarter (July-September) of 2007-08, albeit with some moderation. According to the estimates released by the Central Statistical Organisation (CSO) in August 2007, real GDP growth was 8.9 per cent during the second quarter of 2007-08 as compared with 10.2 % during the same period in 2006-07. While `agriculture and allied activities` recorded higher growth during the first half of 2007-08 over the corresponding period of the previous year, the growth of industrial and services sectors was somewhat lower than that during the first half of the previous year.
* The cumulative rainfall during the South-West monsoon season 2007 (June 1 to September 30) was 5 % above normal as compared with one per cent below normal during the corresponding period of the previous year. Cumulative rainfall during the North-East monsoon (October 1, 2007 to December 31, 2007) was 32 % below normal as compared with 21 %below normal during the corresponding period of the previous year. The reported sown area of kharif crops (up to October 26, 2007) increased by 2.7 per cent, while that of rabi crops (up to January 18, 2008) was about 3.7 % lower than a year ago.
* During April-November 2007, the index of industrial production (IIP) rose by 9.2 % as compared with the increase of 10.9 % recorded during the corresponding period of the previous year. The manufacturing sector registered a growth of 9.8 % during April-November 2007 as compared with 11.8 % during April-August 2006.
* During April-November 2007, the infrastructure sector recorded a growth of 6.0 % as compared with 8.9 % a year ago, with all the sectors exhibiting growth rates lower than a year ago.
* The services sector continued to record double-digit growth (10.5 %) in April-September 2007. Leading indicators of service sector activity for April-October 2007 show that growth rates in revenue earning freight traffic of the railways, commercial vehicles production, new cell phone connections, passengers handled by civil aviation at domestic terminals, cement and steel moderated albeit over a high base.
Fiscal
Situation
* According to the latest information on Central Government finances for 2007-08 (April-November), key deficit indicators, viz., revenue deficit and GFD, were placed lower than those in the corresponding period of the previous year, both in absolute terms and per cent of the budget estimates. Apart from the lower revenue deficit, contraction in defence capital outlay also moderated the fiscal deficit. There was a primary surplus of Rs. 73.74 billion during April-November 2007 as compared with a budgeted surplus of Rs. 80.47 billion.
* Gross and net market borrowings (including 364-day Treasury Bills) of the Central Government during 2007-08 (up to January 25, 2008) were Rs.1,734.29 billion and Rs.1,030.92 billion, respectively, accounting for 91.8 % and 94.1 % of the estimated borrowings for the year.
* During 2007-08 (up to January 25, 2008), the States raised market loans amounting to Rs.474.49 billion through auctions, as compared with Rs. 142.04 billion during the corresponding period of the previous year.
Price Situation
* Headline inflation firmed up in major economies during the third quarter of 2007-08, reflecting the combined impact of higher food and fuel prices as well as strong demand conditions, especially in emerging markets. The monetary policy response during the quarter, however, was mixed in view of heightened concerns about the implications of credit crunch arising out of the US sub-prime crisis on financial stability.
* Global commodity prices firmed up during the third quarter of 2007-08 led by food and crude oil prices, although there was some moderation in prices of metals. International crude oil prices, represented by the West Texas Intermediate (WTI), touched a historical peak of USD 99.6 a barrel level on January 2, 2008. Although the prices eased somewhat subsequently, they continued to remain at an elevated level (USD 89.9 a barrel on January 23, 2008). International food prices firmed up further during the third quarter of 2007-08 led by wheat and oilseeds/edible oils, reflecting surging demand (both consumption demand and demand for non-food uses such as bio-fuels production) and low stocks of major crops, partly on account of weather related disturbances.
* In India, headline inflation, based on movement in the wholesale price index (WPI) was 3.8% on January 12, 2008 (3.4 % at end-September 2007) as compared with 5.9% at end-March 2007 (and 6.2% a year ago). The easing in inflation from a year ago was mainly led by primary food articles and some manufactured products items.
* Primary articles` inflation, y-o-y, eased to 3.9 % on January 12, 2008 from 6.2%at end-September 2007 and 9.5 % a year ago; it was 10.7 % at end-March 2007. The deceleration was mainly due to easing of food articles`` inflation. Manufactured products inflation, y-o-y, eased to 3.9 % on January 12, 2008 from 4.5 % at end-September 2007 and 6.1 % at end-March 2007; it was 5.8 % a year ago. The deceleration in manufactured products inflation, y-o-y, was mainly due to decline in the prices of non-ferrous metals, textiles and sugar. Fuel group inflation, which was negative during June-November 2007, turned positive from the beginning of December 2007 (3.7 % on January 12, 2008) partly reflecting the base effects of fuel (petrol and diesel) price cuts last year and increase in the prices of some petroleum products such as naphtha, furnace oil and aviation turbine fuel.
* Inflation based on year-on-year variation in consumer price indices (CPIs) also eased during November/December 2007 (from a year ago) but continued to remain above the WPI inflation, mainly reflecting the impact of food prices and their higher weights in the CPI vis-a-vis WPI. CPI inflation measures were placed in the range of 5.1-5.9 % during November/December 2007 as compared with 5.7-7.9 % in September 2007 (and 6.7-9.5 % in March 2007).
Monetary and Liquidity Conditions
* Growth in broad money (M3), year-on-year (y-o-y), was 22.4 %(Rs. 6,869.25 billion) on January 4, 2008 as compared with 20.8 % (Rs. 5,265.66 billion) a year ago.
* Aggregate deposits of banks, y-o-y, increased by 23.8 % (Rs.6,170.35 billion) on January 4, 2008 as compared with 21.5 % (Rs. 4,590.21 billion) a year ago.
* Growth in bank credit moderated after the strong pace in the preceding three years. Non-food credit by scheduled commercial banks (SCBs) moderated to 22.2%(Rs.3,821.55 billion), y-o-y, as on January 4, 2008 from 31.9 % (Rs.4,164.18 billion) a year ago.
* Reserve money expanded by 30.6 %, y-o-y, as on January 18, 2008 as compared with 20.0 % a year ago. Adjusted for the first round impact of the hike in the cash reserve ratio, reserve money growth was 21.5 % as compared with 17.5 % a year ago.
* Liquidity conditions continued to be influenced by movements in capital flows and cash balances of the Governments. The Reserve Bank continued with the policy of active management of liquidity through increase in the cash reserve ratio (CRR), issuances of securities under the market stabilisation scheme (MSS) and operations under liquidity adjustment facility (LAF).
Financial Markets
* During the third quarter of 2007-08, international financial markets remained volatile as uncertainties about the US sub-prime mortgage market and other credit markets exposures persisted.
* Indian financial markets remained generally orderly for the most part of the third quarter of 2007-08 except for some volatility in the equity market. Swings in cash balances of the Government and capital flows were the main drivers of liquidity conditions in the financial markets.
* Interest rates in the overnight money markets mostly remained within the informal corridor set by reverse repo and repo rates during the third quarter of 2007-08. Interest rates in the collateralised segment of the overnight money market hardened but remained below the call rate during the quarter.
* In the foreign exchange market, the Indian rupee generally appreciated during the quarter vis-a-vis all major currencies (US dollar, Euro, Pound sterling and Japanese yen).
* Yields in the Government securities market remained range-bound, partly reflecting global trends in yields. Yields softened beginning in the first week of January 2008. The 10-year yield moved in a range of 7.42-8.32 % during 2007-08 (up to January 23, 2008).
The External Economy
* India`s balance of payments position continued to remain comfortable during the first half of 2007-08 (April-September). The merchandise trade deficit, on balance of payments basis, widened to USD 42.4 billion in April-September 2007 from USD 33.8 billion in April-September 2006. Net surplus under invisibles (services, transfers and income taken together) was higher at USD 31.7 billion in April-September 2007 (USD 23.4 billion in April-September 2006). The net invisible surplus offset a large part of the trade deficit (74.7 % during April-September 2007 as compared with 69.4 % during April-September 2006).
* Despite large merchandise trade deficit, higher net invisible surplus, mainly emanating from private transfers, contained the current account deficit at USD 10.7 billion in the first half of 2007-08 (USD 10.3 billion in April-September 2006). The current account deficit was financed by capital flows which have remained large during 2007-08 so far.
* During 2007-08 (up to January 11, 2008), net inflows by FIIs amounted to USD 26.8 billion (USD 2.5 billion in the corresponding period of 2006-07). Inflows under foreign direct investment (FDI) were USD 13.8 billion during April-November 2007 as against USD 10.1 billion during the corresponding period of the previous year. During the current financial year 2007-08 (April-September), inflows (net) under external commercial borrowings (ECBs) amounted to USD 10.6 billion (USD 5.7 billion during April-September 2006). The ECB approvals (including under the automatic route) amounted to USD 23.3 billion during April-December 2007 as compared with USD 15.3 billion during April-December 2006. Non-resident Indians? deposits registered net outflows of USD 433 million during April-September 2007 as against net inflows of USD 3.0 billion during April-September 2006.
* According to the data released by the Directorate General of Commercial Intelligence and Statistics (DGCI&S), during 2007-08 so far (April-November), merchandise exports posted a growth rate of around 22 % moderating from the growth rate of 26.2 % during April-November 2006, while growth in imports at 26.9 % was marginally lower than that of 27.4 % in April-November 2006. Non-oil imports recorded a substantial increase, while oil imports showed a sharp deceleration in growth. Overall, the merchandise trade deficit widened to USD 52.8 billion in April-November 2007 from USD 38.5 billion in April-November 2006.
* India`s foreign exchange reserves were USD 284.9 billion as on Jan. 18, 2008, showing an increase of USD 85.7 billion over end-March 2007.
Market recovers from day's lows
A late recovery in auto and bank shares on Monday helped the Bombay Stock Exchange 30-share index rebound from early lows, but still ended down 209 points as market continued to confuse investors with its unpredictable movements.
Bank stocks came of initial lower levels on reports that a surprised rate cut by the US Federal Reserve last week has increased possibility of a repo rate cut by the Reserve Bank of India in its quarterly review of monetary policy to be released tomorrow.
The late bounce aided the BSE barometer recover by more than 700 points from its intra-day low of 17,443.29.
The Sensex ended the day at 18,152.78, a fall of 208.88 points, or 1.14 per cent, from Friday`s close of 18,361.66.
A smart rise in REL, Maruti Suzuki, HDFC, Bajaj Auto, Mah&Mah, and ICICI Bank also mitigated the Sensex`s losses.
The broader S&P CNX Nifty of the National Stock Exchange also closed 109.25 points, or 2.03 per cent, lower at 5,274.10 from previous close of 5,383.35.
Technical analysts termed the fall as expected after the Sensex hit the major target at 18,270 in a more than 1,000 points upswing on Friday.
Attributing initial weakness to a sharp slide in global markets, brokers said positive FII activity after their long absence helped inject some confidence among local investors.
Asian indices ended sharply lower by about 3.0 to 7.0 per cent, also extending their losses for another day today.
The rollover to February series was hit hard as operators preferred to lighten commitments rather than square off ahead of the expiry of derivatives current contract on Thursday.
Investors mood remained cautious as global markets are still under pressure with anticipation of continued volatility before the meeting of Federal Reserve and US monthly jobs report on February 1.
The trading volume was extremely low at Rs 3,923.76 crore compared to Rs 6,379.33 crore on Friday. RNRL continued to be the most active scrip with highest turnover of Rs 239.44 crore followed by Reliance Capital (Rs 179.29 crore), REL (Rs 164.57 crore), Essar Oil (Rs 164.43 crore) and RPL (Rs 150.44 crore).
The market breadth turned extremely negative with 1,852 losers against 863 gainers.
The broad-based BSE-100 index dropped by 96.34 points to 9,745.29 from previous close of 9,841.63.
The BSE-200 index and the Dollex-200 were quoted lower at 2,304.80 and 973.18 at close compared to last close of 2,326.30 and 983.33 respectively. The BSE-500 Index declined by 65.85 points to 7,386.64 from 7,452.49 and the Dollex-30 ended down at 3,779.71 from 3,827.38.
RIL dipped by 45.55 to 2564.00, Infosys Tech by 74.50 to 144.50, TCS by 27.35 to 854.20, Wipro by 22.95 to 406.25, Satyam Computer by 7.80 to 398.50, DLF by 52.60 to 892.50, BHEL by 72.70 to 2092.30, L&T by 45.90 to 3844.50, NTPC by 9.4 to 212.85, ONGC by 14.65 to 1000.80, Bharti Airtel by 44.90 to 89.70, Reliance Com by 22.15 to 46.25, Grasim by 85.90 to 2947.55, HDFC Bank by 16.40 to 1585.00, SBI by 97.30 to 2307.70, Ranbaxy by 17.55 to 350.40, Tata Steel by 15.70 to 98.40, ACL by 2.05 to 115.05 and ITC by 1.85 to 196.35.
However, Bajaj Auto rose by 195.20 to 2459.35, Maruti by 32.95 to 862.60, M&M by 12.05 to 86.25, Tata Motors by 2.35 to 714.70, ICICI Bank by 14.45 to 1273.70, HDFC by 68.40 to 2781.75, REL by 67.45 to 2097.70 and ACC by 10.95 to 798.65.
Post Market Commentary - Jan 28 2008
The Indian market made a smart recovery in the final trading hours of the session on the back of selective buying across the sectoral indices scrips. The market opened with heavy losses on the back of weak cues from the global markets and drifts down further there after but managed to pare most of its initial losses towards the end of the session. The banking shares gained on the back of RBI quarterly review, which is scheduled on tomorrow. There are rumors that there is a possibility of a 25 basis point repo rate cut by RBI after a sharp cut in US interest rates last week. The Mid Caps and Small Caps also remained out of favor as they faced heavy selling pressures across the counters. The BSE Sensex closed lower by 208.88 points at 18,152.78 and NSE Nifty fell by 109.25 points to close at 5,274.10. The BSE Mid Cap and Small Cap indices decreased by 34.44 points and 117.39 points to close at 7,986.68 and 10,303.51 respectively.
BSE Realty index declined by 508.65 points to close at 10,689.41. Scrips that fell are HDIL (7.30%), Unitech (6.51%), DLF (5.57%), Ansal Infra (4.18%) and Sobha Dev (4.45%).
BSE Metal index fell by 161.04 points to close at 15,442.75. Scrips that fell are SAIL (5.93%), Nalco (5.87%), Maharash Sea (4.73%), Bhuhan Steel (3.76%) and Tata Steel (2.20%).
BSE Oil & Gas index slipped by 119.73 points to close at 11,078.11. Losers are Cairn India (4.15%), BPCL (4.04%), HPCL (2.90%), RPL (2.72%), IOCL (1.53%).
BSE Auto index grew by 83.27 points to close at 4,926.14. Gainers are Bajaj Auto (8.62%), Maruti Suzuki (3.97%), M&M (1.9%), Hero Honda (0.44%), MRF (0.44%) and Tata Motors (0.33%).
BSE Capital Goods index closed lower by 346.82 points at 17,116.36. Scrips that fell are Bharat Elec (9.49%), Suzlon Ener (7.08%), BEML (5.50%), AIA Eng (4.96%), BHEL (3.36%).
BSE Bankex index closed higher by 796.89 points to close at 11,379.77. Scrips that gained are Canara bank (5.11%), Yes bank (5.05%), BOI (3.78%), Axis bank (3.66%) and Oriental bank (3.10%).
Market Close: Smart recovery; regains 18k level!
It was one more calamity start for the global indices. Hang Seng ended down by 4.25% points while Nikkei down by 3.97%. Shanghai hit lower circuit for the day and ended down by 7.19%. India too had weak start. Sensex opened with a gap down of 600 points. Till the mid session Indian indices traded ranged in negative region. Value buying post mid sessions in index heavy weights like Bajaj Auto, Maruti, HDFC and M&M pulled indices from days low and managed to recover around 600 points smartly. Short covering ahead of FNO expiry also helped. RBI will meet tomorrow to decide on credit policy. Lot of expectations are build up on rate cut tomorrow. This may be one of the reason for optimism. It was relatively better day for the Midcaps and Small caps than the frontline counters. Sensex regained 18k levels however closed down by 208 points. Asian markets ended in deep red; while European markets trading in red.
Markets are expecting rate in the RBI's monitory policy which is scheduled tomorrow. Banking and Auto are the two counters which are sensitive to interest rate. Major action was seen here. Realty, IT and Capital Goods hit badly. Overall day for the markets was weak and disappointing proceeds following the global weakness.
Sensex closed down by 209 points at 18152.779. Weighing on the Sensex are losses in Dr Reddys (565.05,-7 percent), Wipro (406.25,-5 percent), Bharti Tele (869.7,-5 percent), Infosys (1446.5,-5 percent) and Ranbaxy (350.4,-5 percent). Losses are restricted by gains in Bajaj Auto (2459.3501,+9 percent), Maruti (862.6,+4 percent), Rel Energy (2097.7,+3 percent), HDFC (2781.75,+3 percent) and ACC (798.65,+1 percent).
KEI Industries Ltd (KEI) reported good results for the quarter ended 31st December 2007. The top line grew by 48% to Rs 233 cr while the bottom line grew by 22% to Rs 14 cr on yoy basis. EBIDTA enhanced by 23% to Rs 30 cr on annualized basis. Ebidta margins stood at 13% down by 200 bps due to increase in cost of raw material. KEI commenced the new plant at Chopanki near Bhiwadi, Rajasthan for manufacturing of HT and LT Power Cables. This new unit is registered as 100% EOU. It has production capacity of 10,000 Kms and expected to generate revenue of approximately Rs 300 cr annually, at its full productivity. This is the best time as the capacities have come. Even the EOU unit gets tax benefit this certainly helps to enhance the margins. Valuation seems to be eye catching at the current price of Rs 86, the stock trades at 10 times of trailing earnings. For more details do read our analysis on this.
Bharat Heavy Electricals has secured orders worth over Rs 15,000 cr for supplying power plant equipments. BHEL has recently signed an MoU with Tamil Nadu Electricity Board for supplying super critical boilers for the 2X800 MW thermal power station near Chennai. The boilers would be manufactured with the technology from Alstom, US. The PSU was also augmenting well with its capacity expansion plans and has increased its manufacturing capacity to 10,000 MW in the phase I. The ongoing phase II expansion at an investment of Rs 732 cr was the single largest quantum of investment in the history of BHEL, Tiruchirapalli. BHEL reported a steady jump in net profit for the quarter ended December 2007. During the quarter, BHEL experienced a 15.61% rise in profit to Rs 772 cr from Rs 668 cr in the quarter ended December 2006. Net sales for the quarter rose 14.38% to Rs 4964 cr compared with Rs 4340 cr in the corresponding quarter, a year ago. Total income rose 15.55% to Rs 5229 cr for the quarter ended December 2007 from Rs 4525 cr for the same period, last year.
Technically Speaking: It was smart pull back after a gap down start. Sensex traded in negative region throughout the day. Sensex touched intraday high of 18,213 and low of 17,443. Overall breadth was in favor of Decliners with Advancers at 881 while Decliners at 1844. The turnover was pretty less at Rs 3901 cr. On the higher side Sensex Resistance lies at 18,300 and lower side support lies at 17,750. Sensex is on a pullback rally. We expect this rally to get exhausted near 19200--19300. Traders are advised to reduce their exposure to midcaps on rise.
Sensex trims losses on late buying
The Sensex bucked the major downtrend across the Asian markets and trimmed 770 points of losses on late buying in heavyweights, auto, and banking stocks. The market was once again hit by a substantial selling pressure and the indices tumbled by around 5% each amid a choppy trading session. Taking cue from weak global markets, the Sensex opened on a negative note at 18,012 and fell sharply to touch an intra-day low of 17,443. While the market witnessed a fluctuating trend for a while, the afternoon trades saw sudden buying interest in frontline stocks and the Sensex chopped off most of its losses to close at 18,152, down 209 points or 1.14%. The Nifty, too, bounced back sharply and closed at 5,274, down 109 points or 2.03%.
The market breadth was negative, with the losers outpacing the gainers in the ratio of 2.14:1. Of the 2,747 stocks traded on the Bombay Stock Exchange (BSE), 1,852 stocks declined, 863 stocks advanced and 32 stocks ended unchanged. The sectoral indices were largely weak. The BSE Realty index lost 4.54%, the BSE IT index declined by 3.69% and the BSE Tech shed 3.67%. However, the BSE Auto index rose 1.72% and the BSE Bankex index gained 1.24%.
Among the 30 Sensex stocks, 18 ended in the red. Among the major losers DLF tanked by 5.57% at Rs893, Wipro tumbled by 5.35% at Rs406, Bharti Airtel declined by 4.91% at Rs870, Infosys plunged by 4.90% at Rs1,447, Ranbaxy dropped 4.77% at Rs350, NTPC crumbled by 4.23% at Rs212, SBI slumped 4.05% at Rs2,308 and BHEL fell by 3.36% at Rs2,092. However, Bajaj Auto advanced 8.62% at Rs2,459, Maruti Suzuki jumped 3.97% at Rs863, Reliance Energy surged 3.32% at Rs2,098 and HDFC gained 2.52% at Rs2,782, while M&M, ACC, ICICI Bank, Cipla, Tata Motors and Hindalco closed with marginal gains.
Over 1.73 crore RNRL shares changed hands on the BSE followed by Ispat Industries (1.47 crore shares), Reliance Petroleum (9.11 crore shares), IFCI (7.62 crore shares) and Essar Oil (7.48 crore shares).
RNRL was the most actively traded counter on the BSE and registered a turnover of Rs239 crore followed by Reliance Capital (Rs179 crore), Reliance Energy (Rs164 crore), Essar Oil (Rs164 crore) and Reliance Petroleum (Rs150 crore).
Auto, bank shares in focus ahead of monetary policy review
The market staged a sharp recovery in late trade on buying in banking and auto shares and in index heavyweights Reliance Industries and L&T. The market had declined sharply in afternoon trade due to fall in Asian markets. Volumes remained low for the second day in a row. Banking and auto shares were in focus ahead of the monetary policy review tomorrow, 29 January 2008.
European markets, which opened after Indian market were trading lower today. Asian markets, which opened before Indian market, settled lower today, 28 January 2008. US markets tumbled on Friday, 25 January 2008.
The BSE Sensex declined 208.88 points or 1.14% at 18,152.78. It opened with downward gap of 349.77 points at 18,011.89 and dipped further to touch a low of 17,443.29 in afternoon trade. At the day's low, the Sensex lost 918.37 points. Sensex hit a high of 18,213.21 in late trade. At the day's high, Sensex was down 148.45 points for the day.
The broader CNX S&P Nifty was down 109.25 points or 2.03% at 5,274.10. Nifty January 2008 futures were at 5,253.30, a discount of 20.80 points as compared to spot closing.
Turnover was low. BSE clocked a turnover of Rs 3901 crore as compared to Rs 5,221.62 crore on Friday, 25 January 2008.
Turnover in NSE’s futures & options segment rose to Rs 43395.88 crore as compared to Rs 39007.70 crore on Friday, 25 January 2008.
Though the market breadth was negative, it improved from earlier in the day. On BSE, 1844 shares declined as compared to 881 that advanced. 34 shares remained unchanged. In opening trade 1553 shares had declined as compared to 251 that advanced.
The BSE Mid-Cap index was down 0.43% to 7,986.68 while the BSE Small-Cap index was down 1.13% to 10,303.51. Both these indices outperformed the Sensex.
Most sectoral indices on BSE settled lower. BSE Bankex (up 1.24% at 11,521.22), BSE FMCG index (down 0.54% at 2,148.45), BSE Oil & Gas index (down 1.07% at 11,078.11), BSE Consumer Durables index (down 0.59% to 5,258.50), BSE Metal index (down 1.03% at 15,442.75), outperformed the Sensex
BSE Capital Goods index (down 1.99% at 17,116.36), BSE Health Care index (down 1.25% at 3,645.71), BSE Power index (down 1.50% at 3,912.66), BSE Realty index (down 4.54/% at 10,689.41), BSE PSU index (down 1.39% to 8,543.89), BSE Auto (up 1.72% at 4,926.14), BSE IT index (down 3.69% at 3,659.96) and BSE TecK index (down 3.67% to 3,299.84), underperformed the Sensex
Among the BSE 30-share Sensex pack, 21 declined. In morning trade, all the 30-members of Sensex pack were down.
Auto stocks staged a sharp comeback from early losses on value buying. India’s second largest bike manufacturer in terms of sales Bajaj Auto advanced 6.22% to Rs 2405. It was the top gainer from Sensex pack. It swung in a wide range of Rs 2101 and Rs 2490 in the day.
Maruti Udyog (up 4.38% to Rs 866) and Mahindra & Mahindra (up 2.79% to Rs 693), also posted gains.
Banking shares though trading with losses, recovered from early lows, ahead of Reserve Bank of India (RBI)’s quarterly monetary policy review scheduled on Tuesday, 29 January 2008. India’s largest commercial bank in terms of net profit State Bank of India slumped 4.25% to Rs 2302.90. The stock hit a low of Rs 2200 in early trade.
HDFC Bank was down 1.96% to Rs 1570, off day’s low of Rs 1440 while ICICI Bank gained 1.17% to Rs 1274, off day’s low of Rs 1201. As per media reports, a sharp cut in US interest rates last week has increased the possibility of a 25 basis points repo rate cut by Reserve Bank of India.
Development Credit Bank surged 7.69% to Rs 124), Syndicate Bank rose 6.97% to Rs 109, Yes Bank gained 5% to Rs 245 and Union Bank of India rose 2.46% to Rs 208.50.
India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) was down 2.07% to Rs 2555.50. It moved in a range of Rs 2440 and Rs 2591. 4.91 lakh shares were traded on the counter on BSE. As per reports RIL plans to foray in engineering, procurement and construction business to clock a turnover of Rs 5,000 crore in first year itself and double it in second year.
India’s largest private sector engineering company in terms of order book position Larsen & Toubro was down 1.55% to Rs 3830, off sharply from day's low of Rs 3675. It today reported 40.10% surge in net profit to Rs 481.79 crore on 53.48% rise in total income to Rs 6483.55 crore in Q3 December 2007 over Q3 December 2006. European markets opened lower.
Housing Development Finance Corporation (up 3.30% to Rs 2803), Reliance Energy (up 2.11% to Rs 2073), and ACC (up 2.55% to Rs 807.80), edged higher from the Sensex pack
India’s largest real estate developer DLF slipped 5.20% to Rs 896 on 2.78 lakh shares. It was the top loser from Sensex pack.
Ranbaxy Laboratories (down 5.10% to Rs 349.20), Bharti Airtel (down 4.87% to Rs 870.05), and Infosys Technologies (down 4.60% to Rs 1451), were the other losers from Sensex pack
Reliance group stocks dominated turnover charts with four out of five turnover toppers being from Reliance pack. Reliance Natural Resources was the most active counter on BSE with turnover of Rs 239.08 crore followed by Reliance Capital (Rs 178.76 crore), Reliance Energy (Rs 164.34 crore), Essar Oil (Rs 164.13 crore) and Reliance Petroleum (Rs 150.18 crore), in that order.
Reliance Natural Resources topped in terms of volumes on BSE clocking volumes of Rs 1.73 crore shares followed by Ispat Industries (1.48 crore shares), Reliance Petroleum (91.10 lakh shares), IFCI (76.25 lakh shares) and Essar Oil (74.80 lakh shares), in that order.
Ashok Leyland declined 2.67% to Rs 36.50 on reporting 14.2% rise in net profit to Rs 120.21 crore on 1.3% rise in net sales rose to Rs 1800.08 crore in Q3 December 2007 over Q3 December 2006.
VSNL declined 5.21% to Rs 526 on posting 93.3% decline in net profit to Rs 9.52 crore on 0.11% rise in total income 0.11% to Rs 1113.52 crore in Q3 December 2007 over Q3 December 2006.
JSW Steel declined 1.32% to Rs 954.70. It reported 9.38% fall in net profit to Rs 328.18 crore on 10.80% rise in total income to Rs 2,598.19 crore in Q3 December 2007 over Q3 December 2006.
Tata Tea rose 0.21% to Rs 795.10. It reported 37.5% fall in net profit to Rs 58.88 crore on 6.28% rise in total income to Rs 1189.65 crore in Q3 December 2007 over Q3 December 2006.
Welspun Gujarat Stahl Rohren rose 1.69% to Rs 505. As per reports it is in talks to acquire Remi Metals Gujarat, an integrated steel and seamless pipe maker, from the Saraf family.
ING Vysya Bank slipped 1.87% to Rs 312 despite reporting 198.3% surge in net profit to Rs 42.75 crore in on 42.10% rise in total income to Rs 546.44 crore in Q3 December 2007 over Q3 December 2006.
Nicholas Piramal India dropped 3.44% to Rs 302.90 after the company said on Friday, 25 January 2008, it has signed a memorandum of understanding with Pierre Fabre Laboratories to collaborate on oncology research.
Glenmark Pharmaceuticals India gained 2.43% to Rs 511. The company today said it has received US Food and Drug Administration approval for its state-of-the-art semi-solids manufacturing plant at Baddi, Himachal Pradesh.
Key benchmark indices in United Kingdom (down 1.82% to 5762.40), Germany (down 1.69% to 6,701.35) and France (down 2.17% to 4,772.35) slipped
Asian markets settled lower today, 28 January 2008. Hong Kong's Hang Seng (down 4.25% at 24,053.61), Japan's Nikkei (down 3.97% at 13,087.91), Taiwan's Taiwan Weighted (down 3.28% at 7,485.79), Singapore's Straits Times (down 4.81% at 3,007.54), China’s Shanghai Composite (down 7.19% to 4,419.29) and South Korea’s Seoul Composite (down 3.85% at 1,627.19), edged lower.
US markets declined on Friday, 25 January 2008 led by financial companies, on concern that banks will be saddled with more credit market losses and the Federal Reserve won't cut interest rates enough to stimulate growth. Dow Jones industrial average slipped 171.44 points or 1.38% to 12,207.17. The Nasdaq Composite lost 34.72 points or 1.47% to 2,326.20.
Asian stocks had surged on Friday, 25 January 2008 led by several factors including strong corporate sentiment in Germany and a return of some confidence in the US economy after solid employment data and a congressional fiscal package. The Bush administration's fiscal package includes $150 billion of tax rebates and business incentives meant to prevent a slowdown in the country's economy.
India's wholesale price index rose 3.83% in the 12 months to 12 January 2008 marginally higher than the previous week's rise of 3.79%, government data showed on Friday, 25 January 2008. The annual inflation rate was 6.15% during the corresponding week of the previous year.
Crude oil prices dropped on Monday, 28 January 2008 with the light, sweet crude for March delivery sliding 63 cents to $90.08 a barrel in electronic trading on the New York Mercantile Exchange in Singapore. Brent crude fell 50 cents to $90.40 a barrel on the ICE Futures exchange in London.
Market may open low on weak global cues
The Indian stock market may open lower today tracking the pale Asian and US markets. Action today is likely to be stock-specific. The Asian indices like Nikkei 225, Hang Seng index, Kospi index and Straits Times index are down nearly 2-4% each in the ongoing trades. With the concerns of recession in Japanese and US economy the investors in the domestic market would be closely watching the possible interest rate cut from Federal Reserve for further cues. Among the local indices, the Nifty could test 5600 on the upside and may slip to 4800 on the downside. The Sensex has a likely support at 16000 and may face resistance at 18700.
Concerns of recession spooked the US markets on Friday, with the Dow Jones registering its loss of 171 points at 12207, while the Nasdaq declining by 35 points to close at 2326.
Indian ADR's had a mixed outing on the US bourses. Dr Reddy's was the major loser and tanked 5.99% while VSNL, Wipro, Infosys and Satyam slumped over 1-2% each. However, Rediff jumped by 12.28% and ICICI Bank surged over 5% while HDFC Bank, Tata Motors and MTNL ended with the gains of over 2% each.
International crude oil prices moved up marginally, with the Nymex light crude oil for March delivery gaining by $1.30 to close at $90.71 per barrel. In the commodity space, the Comex gold for February series surged $4.90 to settle at $910.70 a troy ounce.
Morning Call - Jan 28 2008
Market Grape Wine :
In House :
Nifty at a supp of 5310 and 5223 intraday with resis at 5410 and 5545
5030 wld act as a major support level for Nifty , a break below which cld take it to 4650
Intra Day: Sell RPL below 163.70 with a TGT of 152 and a SL of 167.50
Sell ACC below 754 with a TGT of 720 and a SL of 765
F&O: Buy JPHYDRO above 86.70 with a TGT of 94 and a SL of 83
Buy Indian Bank above 210.50 with a TGT of 220 and a SL of 204
Out House :
Markets at a support of 17786 & 18018 levels with resistance at 18445 & 18786 levels .
Buy : RIL & RelCap at dips
Buy : IBulls
Buy : SBIN
Buy : JPASSO
Buy : Adlabs
Buy : IOLBroad
Dark Horse : Adhunik , IOlBroad , Aban , Kotak , RIL , Sbin , Relcap & REL
Market likely to open lower
The market may edge lower tracking weak global cues. Meanwhile all eyes will be on the Reserve Bank of India (RBI)’s meet scheduled on Tuesday, 29 January 2008 to review key rates. Analysts expect RBI to leave borrowing costs unchanged at 7.75% as it assesses whether last week's emergency U.S. interest rate cut will spark a flood of capital inflows, spurring inflation. India’s central bank had raised its benchmark interest rate nine times since October 2004 to keep inflation below the 5% mark.
Third quarter December 2007 results so far have been decent. A total of 844 companies reported 37.60% rise in net profit on 21.10% rise in net sales for Q3 December 2007 over Q3 December 2006.
Asian markets were trading weak today, 28 January 2008. Hong Kong's Hang Seng (down 3.15% at 24,330.48), Japan's Nikkei (down 2.60% at 13,274.93), Taiwan's Taiwan Weighted (down 1.83% at 7,598.27), Singapore's Straits Times (down 2.76% at 3,072.33), China’s Shanghai Composite (down 5.39% to 4,505.84) and South Korea’s Seoul Composite (down 1.98% at 1,658.97), edged lower.
US markets declined on Friday, 25 January 2008 led by financial companies, on concern that banks will be saddled with more credit market losses and the Federal Reserve won't cut interest rates enough to stimulate growth. Dow Jones industrial average slipped 171.44 points or 1.38% to 12,207.17 and the Nasdaq Composite lost 34.72 points or 1.47% to 2,326.20.
Stocks across the globe rallied on Friday, 25 January 2008 led by several factors including strong corporate sentiment in Germany and a return of some confidence in the US economy after solid employment data and a congressional fiscal package. The Bush administration's fiscal package includes $150 billion of tax rebates and business incentives meant to prevent a slowdown in the country's economy.
The 30-share BSE Sensex soared 1,139.92 points or 6.62% to 18,361.66, its biggest ever singe day rise in absolute terms on a closing basis on Friday, 25 January 2008. The broader CNX S&P Nifty jumped 349.90 points or 6.95% to 5383.35 on Friday, 25 January 2008
The BSE Sensex lost 652.04 points or 3.42% to 18,361.66 in the week ended Friday, 25 January 2008. The S&P CNX Nifty fell 321.95 points or 5.64% to 5,383.35 in the week.
Meanwhile, India's wholesale price index rose 3.83% in the 12 months to 12 January 2008 marginally higher than the previous week's rise of 3.79%, government data showed on Friday, 25 January 2008. The annual inflation rate was 6.15% during the corresponding week of the previous year.
As per provisional data, foreign institutional investors (FIIs) bought shares worth Rs 208.48 crore on Friday, 25 January 2008 while Domestic institutional investors (DIIs) were net buyers of shares worth Rs 248.35 crore
FIIs were net buyers to the tune of Rs 2,878.77 crore in the futures & options segment on Friday, 25 January 2008. They were net buyers of index futures to the tune of Rs 2,045.63 crore and bought index options worth Rs 170.68 crore. They were net buyers of stock futures to the tune of Rs 673.34 crore and sold stock options worth Rs 10.87 crore.
Crude oil prices dropped on Monday, 28 January 2008 with the light, sweet crude for March delivery sliding 63 cents to $90.08 a barrel in electronic trading on the New York Mercantile Exchange in Singapore. Brent crude fell 50 cents to $90.40 a barrel on the ICE Futures exchange in London.
Grey Market - IRB Infrastructure, Shriram EPC, Onmobile Global, KNR Constructions
Future Capital Holding 765 410 to 415
Reliance Power 450 190 to 200
Emaar MGF 610 to 690 220 to 230
J. Kumar Infraprojects 110 to 120 5 to 7
Cords Cable Ind. 125 to 135 22 to 25
KNR Construction 170 to 180 15 to 18
OnMobile Global 425 to 450 100 to 120
Bang Overseas 200 to 207 32 to 35
Shriram EPC 290 to 330 35 to 37
IRB Infrastructure Developers 185 to 220 50 to 60
Markets likely to remain volatile
Global news flow will play a key role in determining the direction of the equity market this week. Events, like the Reserve Bank of India (RBI) meet on Tuesday and the F&O expiry on Thursday, will also play a crucial role and as such most market players expect a volatile session going forward.
Broking houses are advising their clients to stick to frontline stocks, even as large players appear reluctant to take fresh positions. While last week did witness some wild swing in the indices, analysts are not yet convinced that the worst is over. A further fall in the range of 500-1,000 points is what most experts are betting on.
“To me, the worst is over. Considering Friday’s run up, I guess there could be a further correction of about 500 points,” said India Infoline vice-president (research) Amar Ambani. “Market would be a bit unstable in the near term. Investors should start investing in large-cap stocks now,” he added.
In a similar context, Religare Securities president-equity Amitabh Chakraborty feels that frontline stocks will lead the rally, while mid-caps will follow. However, a shock from the US has the potential to upset the optimism, he adds.
Already, there have been enough indications that US-based financial majors, who have been reeling under the ongoing subprime crisis, are advising their Indian arms to reduce exposure towards Indian equities. There is a lurking possibility of subprime crisis spreading to vehicle finance and credit card loans in the US, feels Mr Chakraborty.
Global news flow will play a key role in determining the direction of the equity market this week. Events, like the Reserve Bank of India (RBI) meet on Tuesday and the F&O expiry on Thursday, will also play a crucial role and as such most market players expect a volatile session going forward.
Broking houses are advising their clients to stick to frontline stocks, even as large players appear reluctant to take fresh positions. While last week did witness some wild swing in the indices, analysts are not yet convinced that the worst is over. A further fall in the range of 500-1,000 points is what most experts are betting on.
“To me, the worst is over. Considering Friday’s run up, I guess there could be a further correction of about 500 points,” said India Infoline vice-president (research) Amar Ambani. “Market would be a bit unstable in the near term. Investors should start investing in large-cap stocks now,” he added.
In a similar context, Religare Securities president-equity Amitabh Chakraborty feels that frontline stocks will lead the rally, while mid-caps will follow. However, a shock from the US has the potential to upset the optimism, he adds.
Already, there have been enough indications that US-based financial majors, who have been reeling under the ongoing subprime crisis, are advising their Indian arms to reduce exposure towards Indian equities. There is a lurking possibility of subprime crisis spreading to vehicle finance and credit card loans in the US, feels Mr Chakraborty.
Via ET
US Markets tries to recover from recession fears
All sorts of recession warding plans come into play in the US Market
US Market showed some erratic movements during the week that ended on Friday, 25 January, 2008. Ultimately, the Dow Industrials and the S&P 500 managed to dodge losses after weeks and closed marginally higher. Nasdaq, however failed to buck the trend. Federal Reserve’s sudden decision to slash benchmark interest rates by 75 basis points to 3.5% dominated the headlines during the week. Other than that, market focused on earning reports.
Earlier during the week, technology heavyweights Motorola and Apple both issued disappointing guidance and this led market sentiments lower. Even on the last day of the week, Friday, 25 January, 2008, the market opened higher led by a strong earnings report and reassuring outlook from software giant Microsoft but retraced its gains to finish noticeably lower.
The Dow Jones Industrial Average gained 107 points for the week. Tech - heavy Nasdaq lost 14 points. S&P 500 gained 14 points.
U.S. markets were closed on Monday, 21 January, 2008 in recognition of the leader Martin Luther King Jr., markets worldwide plunged on spreading fears that a U.S. recession and tighter credit will hurt the global economy.
On Tuesday, 22 January, before the opening bell, at 08:20 ET it was announced that the Federal Open Market Committee (FOMC) approved a 75 basis point intermeeting cut in the fed funds rate to 3.50%. The Board of Governors also approved a 75 basis point cut in the discount rate to 4.00%. US Market responded by plunging deep but recovering partly going at the end. Dow plummeted by almost 465 points in the morning session. But then, with the help of bluechips, stocks managed to make a modest comeback. Federal Reserve’s sudden decision surprised all and was made to ward of recession in US in the coming months.
In affirmation of this decision, the FOMC said it took this action "in view of a weakening of the economic outlook and increasing downside risks to growth." The statement added that, "Appreciable downside risks to growth remain." The latter statement added further hopes that the market is expecting there will be another substantive rate cut at the 29-30 January FOMC meeting.
Following five straight down days, U.S. stocks staged a striking comeback on Wednesday, 23 January and on Thursday, 24 January. News that troubled bond insurers, might benefit from a rescue plan of some sort fuelled a decent rally on Wall Street on Wednesday.
On Thursday, stocks managed to extend their gains after new jobless claims data showed that businesses are not entering into recessionary mode. Also, a stimulus package from the Bush administration to ward off recession in US cheered investors and stocks rallied in the post lunch hours.
On Friday, 25 January, indices ended in the red as traders took some money off the table. Dow ended lower by more than 170 points.
Among other important earning reports during the week, Honeywell International and fellow Dow component Caterpillar both reported strong earnings results for the fourth quarter and offered encouraging outlook. eBay reported fourth quarter results that beat analysts' expectations, but warned about its profit outlook. Bank of America reported that fourth quarter net income dropped 95%.
On the economic front during the week, December existing home sales came in at a worse than expected. December existing home sales was reported at 4.89 million. This was short of the consensus estimate of 4.95 million. Existing sales are down 2.2% compared to last month's reading of 5 million. The median sale price of an existing home is down 6% against last year.
Also, weekly jobless claims came in at 301,000, lower than the expected reading of 320,000. The good part was that the figure is less than the typical recessionary levels of over 450,000
Executive Summary
For the week, indices ended mixed. DJIx and S&P 500 closed up by 0.9% and 0.4% respectively. Nasdaq shed 0.6%.
US stocks tried to regain some ground during the week as Fed slashed interest rates by 75 bps. Market showed some erratic movement while reacting to this week, but at the end showed some gratitude. Some tech heavy names, Apple and Motorola dampened investor sentiments during the week. But recession worries continued to haunt the market. Even good guidance and earnings report from Microsoft failed to chher sentiment.
All sorts of recession warding plans are rightly in play in the US Market currently. For the year, Dow, Nasdaq and S&P 500 are down by 8%, 12.3% and 9.4% respectively.
Pre Market Watch - Jan 28 2008
The Indian Market is likely to have a negative opening as the cues from the global markets are not in favor. On Friday, the Indian market surged to close with handsome gains as the investors showed their eagerness in buying to book their positions. Taking the favoring cues from the global market, the Indian market opened with handsome gains and kept on marching forward throughout the trading session. The Mid Cap and Small Cap also joined the rally of the benchmark indices. India''s wholesale price index grew 3.83% in the 12 months to 12 January 2008 higher than the previous week''s growth of 3.79%. The BSE Sensex closed higher by 1139.92 points at 18,361.66 and NSE Nifty grew by 349.9 points to close at 5,383.35. We expect that the market may remain cautious during the trading session.
On Friday, the US market closed in red. The Dow Jones Industrial Average (DJIA) closed lower by 171.44 points at 12,207.17. S&P 500 index fell by 21.46 points to close at 1,330.61 and NASDAQ slipped by 34.72 points to close at 2,326.20
Indian ADRS closed in mixed. In technology sector, Patni Comp grew by (14.32%) while Wipro, Satyam and Infosys fell by (2.85%), (1.32%) and (0.25%) respectively. In banking sector, ICICI bank and HDFC bank grew by (5.42%) and (2.31%) respectively.
The major stock markets in Asia are trading weak. Hang Seng is trading lower by 791.89 points at 24,330.48. Japan''s Nikkei trading down by 350.23 points at 13,274.93 and Taiwan Weighted is trading at 7,598.27 down by 141.32 points
On Friday, the FIIs stood as net seller in equity while net buyer in Debt. The gross equity purchased was Rs5,347.20 Crore and the gross debt purchased was Rs70.80 Crore while the gross equity sold stood at Rs6,698.40 Crore and gross debt sold stood at Rs49.60 Crore. Therefore, the net investment of equity reported was (Rs1351.20 Crore) and net debt was Rs21.30 Crore.
Today, Nifty has support at 5,192 and resistance at 5,428 and BSE Sensex has support at 17,604 and resistance at 18,539.
Long Term Recommendations
Jindal Steel & Power
Voltas
Karnataka Bank
BPCL
M&M
The recommendations are for long-term purpose and one should hold on to these scrips for at least six months to earn reasonable returns.
Via Indiainfoline
Four events and pay-in!
Price is what you pay. Value is what you get. – Warren Buffet
Market participants (can’t decide whether to say investors or traders) have been paying the price of lapping up stocks despite high valuations. Four big events will set the trend for the market in the near term. Besides, even pay-in is turning out to be a pain, which is closely watched.
Today, we expect a gap-down opening on the back of a fresh meltdown across global markets, especially in Asian markets. Expect wild intra-day gyrations through the day. It will be pretty risky to trade in this sort of a market. There is no other option but to wait for a clear trend. Long-term investors can continue to nibble in high-quality scrips at lower levels, though.
Among the events, one is of course tomorrow's RBI quarterly policy review. The second is Wednesday's FOMC meeting. Third, we have to grapple with the F&O expiry on Thursday. The fourth event on Friday (Feb. 1st) will be a big day for our markets, as FIIs will be allowed to short sell from that day.
As far as RBI is concerned, most expect a 25 bps cut in the repo rate to counter any threat to the Indian economy from a global slowdown and boost local demand. However, it remains to be seen whether Governor Y.V. Reddy does a Bernanke by giving into market demand. If he does, there could be a relief rally in our markets, led by the bank stocks of course. In any case, bank shares are poised to do better than most other sectors.
The Fed too is expected to announce a minor rate cut followed by last week's 75 bps cut. That may again cheer up the mood across global markets. Against this background, the derivative settlement is likely to be quite volatile. There are expectations that the F&O rollover may be lower than what it has been in the past few months. On Friday, one will have to see what the foreign funds do, as the short selling option will be available to them.
Asian markets have opened sharply down this morning. The Nikkei in Tokyo was down 354 points at 13,274 while the Hang Seng in Hong Kong slumped 1028 points at 24,093. The Kospi in Seoul was down 39 points at 1652 while the Straits Times in Singapore dropped 93 points to 3066. The Shanghai Composite in China shed 259 points to 4502 while the Taiex in Taiwan was down 163 points to 7576.
FIIs were net buyers of Rs2.08bn (provisional) in the cash segment on Friday. Domestic funds were net buyers of Rs2.48bn. In the F&O segment, FIIs were net buyers of Rs28.78bn buyers. On Thursday, foreign funds were net sellers of Rs13.51bn. With this, they have pulled out well over US$3.5bn in the past seven days (excluding Friday). Mutual Funds were net buyers of Rs3.46bn on Thursday.
Results Today: Adhunik Metaliks, Allied Digital, Apar Industries, Arvind Mills, Aztecsoft, BGR Energy, Bharati Shipyard, Britannia, Core Projects, Crew BOS, Deccan Chronicle, Diamond Cables, Divi's Labs, eClerx, Educomp, FDC, GHCL, Godfrey Phillips, Gokaldas Exports, Great Offshore, GSPL, GVK Power, HCL Info, Helios Matheson, HFCL, HM, HTML Global, Indian Hotels, Indo Asian Fusegear, Ingersol Rand, IOL Broadband, Jet Airways, Jindal Steel, JSW Steel, Kirloskar Electric, Kopran, Kolte Patil, L&T, M&M Financial, Max India, Mercator Lines, Nitin Fire, Prajay Engineers, RCF, Sadbhav Engineering, Shoppers' Stop, Shringar Cinema, Simplex Infra, Sundram Fasteners, Suven Life, Tata Tea, Venus Remedies, Videocon Industries, VIP Industries, Zensar Tech and Zylog.
US stocks tumbled again on Friday, as investors became more cautious after a two-session rally that followed a turbulent start to the week. However, on the week all the three major indices posted first weekly gain of 2008 after a surprise rate cut and the announcement of a stimulus plan.
The S&P 500 added 0.4% to 1,330.61 for the week. The Dow Jones Industrial Average climbed 0.9% to 12,207.17. The Nasdaq Composite posted its fifth straight weekly loss, declining 0.6% to 2,326.2 as shares of Apple lost 19%.
The rise, led by the biggest climb in almost five years for financial shares was limited as the S&P 500 slipped on Friday on concern that the Fed rate cuts won't be enough to lift the US economy out of the abyss.
The S&P 500 is still down 9.4% for the year, while the Dow has dropped 8%. Stock market volatility in the US climbed to the highest in five years on Jan. 22, a day after the MSCI World Index had its biggest rout since 2002 on concern global growth is slowing.
US shares rallied early in the morning on Friday, as investors looked to extend the rally, thanks to Microsoft's earnings and outlook. But the sentiment turned negative in the afternoon, with financials leading the downturn.
Treasury prices rallied, lowering the corresponding yields as investors again sought safety in government debt, as they had earlier in the week. The dollar was mixed versus other major currencies.
US light crude oil for March delivery rose $1.30 to $90.71 a barrel on the New York Mercantile Exchange. COMEX gold rallied $4.90 to $910.70 an ounce.
Market breadth was negative. On the NYSE, losers beat winners by 9 to 7 on volume of 1.88bn shares. On the Nasdaq, decliners edged advancers by 8 to 7 on volume of 2.64bn shares.
The two-day FOMC meeting, which ends on Wednesday, will be the focus of the week.
Late on Thursday, Microsoft reported higher second-quarter revenue and profit that topped Wall Street estimates. The software leader also forecast higher sales and earnings for the next two quarters and 2008 fiscal year. Shares of the Dow component initially jumped 3% before giving up those gains and turning lower.
European shares closed mixed on Friday. Key indices traded higher for most part of the session but became unstable as US markets dipped into the red and as insurers came under pressure on speculation about fresh profit warnings from the sector. The pan-European Dow Jones Stoxx 600 index inched 0.1% higher to 322.23. The French CAC-40 fell 0.8% to 4,878.12, while Germany's DAX 30 lost 0.1% at 6,816.74 and the UK's FTSE 100 closed down 0.1% at 5,869.00.
In the emerging markets, the Bovespa in Brazil surged by 6% to 57,463 while the IPC index in Mexico was down nearly 1.9% at 27,379. The RTS index in Russia gained 2.3% at 2033 and the ISE National-30 index in Turkey was up 0.7% at 57,433.
Bulls rely on Reddy, Fed
Bulls bounced back on Dalal Street on Friday with benchmark Sensex posted its biggest ever gain of 1,140 points. Once again global cues coupled with buying momentum in the index heavyweights like RIL, L&T, ICICI Bank Infosys and Bharti Airtel lifted the key indices higher. All the 30 scrips in the benchmark index rose. Banks and real estate stocks gained on hopes the Reserve Bank of India would cut interest rates at a policy review. Finally, the 30-share Sensex closed at 18,361, surging 1139 points (6.6%).. The NSE Nifty advanced 349 points or 6.9% to close at 5,383.
The BSE Realty, Metal and Bankex index were among the major gainers each gaining over 7%.Even the Mid-Cap and the Small-Cap stocks were back in demand as both the indices closed over 4% each.
Gujarat Industries gained 2.8% to Rs113 after the company announced its Q3 net profit at Rs371.20 down 4.05% and revenue at Rs2.49bn Vs Rs2.37bn. The scrip touched an intra-day high of Rs114 and a low of Rs105 and recorded volumes of over 2,00,000 shares on NSE.
GMR Infrastructure surged by over 19.7% to Rs194 after it posted a net profit from ordinary activities after tax of Rs156.8mn for the quarter ended December 31, 2007 as compared to Rs5.5mn for the quarter ended December 31, 2006. Total income increased from Rs64.7mn for the quarter ended December 31, 2006 to Rs235.4mn for the quarter ended December 31, 2007. The scrip touched an intra-day high of Rs197 and a low of Rs167 and has recorded volumes of over 1,00,00,000 shares on NSE.
Tata Steel advanced by 6.6% to Rs715 after the company announced its Q2 result with net profit at Rs33.08bn. Net income includes a one-time gain of Rs18.5bn from an increase in the value of investments held by the pension trust of Corus Group Plc, Sales were Rs324.25bn. The scrip touched an intra-day high of Rs719 and a low of Rs675 and recorded volumes of over 14,00,000 shares on NSE.
SBI gained 2.7% to Rs2407 after the company posted a 56.3% growth in net profit it was at Rs23836.60mn for the quarter ended December 31, 2007. Total Income increased from Rs170451.30 million for the quarter ended December 31, 2006 to Rs243809.90mn for the quarter ended December 31, 2007. The scrip touched an intra-day high of Rs2458 and a low of Rs2360 and recorded volumes of over 13,00,000 shares on NSE.
GTL Ltd spurred over 4% to Rs266. The company’s gross profit for the quarter was Rs1.15bn (25.56% of revenue) as against Rs648.4mn (22.09% of revenue) during the corresponding quarter in the previous year. The scrip touched an intra-day high of Rs270 and a low of Rs253 and recorded volumes of over 4,00,000 shares on NSE.
Reliance Industries gained 5% to Rs2615 it announced that it was in race for supplying 8mscmd of gas to Karnataka Power Corp’s 1,400MW power project at Bidadi according to reports. The scrip touched an intra-day high of Rs2625 and a low of Rs2525 and recorded volumes of over 29,00,000 shares on NSE.
Britannia Industries slipped 1.3% to Rs1477. According to reports the company has planned to enter ready-to-eat foods and strengthen presence abroad. The scrip touched an intra-day high of Rs1490 and a low of Rs1415 and recorded volumes of over 2,000 shares on NSE.
BEML ended flat at Rs1433. The Company announced its quarterly figures with a net profit of Rs592.4mn for the quarter ended December 31, 2007 as compared to Rs529.7mn for the quarter ended December 31, 2006. Total income increased from Rs5.59bn for the quarter ended December 31, 2006 to Rs6.4bn for the quarter ended December 31, 2007. The scrip touched an intra-day high of Rs1492 and a low of Rs1411 and recorded volumes of over 68,000 shares on NSE.
TTML spurred by over 7% to Rs40. The company’s cash Profit for the year has gone up to Rs8mn against Rs4mn for the corresponding quarter in the previous year. Revenue touched Rs46mn for the quarter against of Rs36mn for the corresponding quarter in the previous year. The scrip touched an intra-day high of Rs40 and a low of Rs37 and recorded volumes of over 1,00,00,000 shares on NSE.
News Snippets:
Reliance Industries is all set to enter into building an engineering, procurement and construction services (EPC). (ET)
Seven promoters of Reliance Energy including Anil Ambani have raised their stake in the company by 2.37% to 35.66%. (FE)
ONGC to hire a deepwater rig for 2.3 meter water depth. (Mint)
Punjab National Bank plans to raise Rs15bn before end-March to fund business growth.(BL)
Kingfisher Airlines to buy around 40 Airbus planes in a deal worth about 5bn Euros.(FE)
CERC has adopted the Rs2.33296 per unit tariff quoted by Reliance Power for the 4,000MW Krishnapatnam power project in AP. (FE)
The Chhattisgarh Govt has cancelled the contract awarded to CMEC and has awarded the same to BHEL for a 600MW thermal power plant in Korba district. (BS)
Dr Reddy’s and US based Mylan are among six generic-drug makers to be sued by Forest Labs and Merz Pharma to block sales of lower-cost copies of the Namenda Alzheimer’s treatment.(FE)
Reliance Industries plans to invest in the petrochemical sector of Poland.(Mint)
SBI has received the US central bank’s approval to set up a new branch in New York.(FE)
Standard Chartered Bank is in talks with at least two leading Indian groups to sell its mutual fund business.(FE)
Welspun Gujarat is in talks to acquire Remi Metals Gujarat.(ET)
Nicholas Piramal India has signed a research agreement with France’s Pierre Fabre Laboratories.(BL)
GMR Infrastructure has bagged a 300-MW hydropower projects in Nepal.(BL)
HDFC Bank will set up over 250 new branches in next 2-3 months.(ET)
GSPC Pipavav Power Co has signed a Rs20bn loan agreement with Rural Electrification Corporation.(BL)
Jet Airways may invest US$8-10mn in its cargo airline by June 2008.(BL)
ICICI Venture will partner with the Indian Express Group for its Express Towers property.(FE)
Tata Motors is planning to provide loans for the Nano either through Tata Motors Finance (TMFL), a wholly owned subsidiary, or existing financing channels.(BS)
ICICI Securities aims to raise up to US$1bn through a pre-IPO placement of shares.(FE)
PTC plans US$1bn fund to acquire coal mines.(Mint)
ADAG firm signs US$100mn gaming deal with exclusive for three-years with Manchester United Football Club.(BS)
Voltas is planning for acquisitions in its electro-mechanical projects and services business with a view to accelerate growth.(BS)
Ultratech Cement has decided to acquire the 0.5mn ton Kankesanthurai cement plant in Jaffna that has been closed for more than 17 years. (BS)
Bhushan Steel Limited, which is setting up a 1.5mn ton steel plant at Meramundali in Dhenknal district, has closed down two of its four sponge iron making kilns following public agitation over pollution.(BS)
Bharati Shipyard Limited is focusing on building rigs with its plans to construct Rs6bn greenfield shipyard at Usagaon in Maharashtra.(FE)
IFCI has put on sale the Goa and Thane units of Vishawa Steels to recover debt.(BL)
Aditya Birla Group is picking up 5% stake in Core Projects & Technologies, for Rs135mn.(ET)
Shipping Corp to partner PSUs in manufacturing ship engines.(Mint)
HCC plans to partner with European companies in the engineering and design space as part of its plans to transform itself from a construction company to an integrated infrastructure player.(Mint)
BPL is exploring fund raising options to start services in 22 circles in the next two years.(BS)
Private equity firm Red Fort Capital plans to invest about Rs27bn in real estate by 2009, including acquisition of 2,500 acres of land in over 20 cities across the country.(BS)
Lupin is planning to acquire a mid-sized branded formulation company in the US.(BS)
Philip Morris International is in talks with Godfrey Philips India(GPI) to manufacture and market marquee cigarette brand Marlboro through GPI’s facility.(ET)
Tata group plans to buy a stake in a high-tech unit of Germany’s Deutsche Telekom.(ET)
GMR Infrastructure will bid for the modernization of Prague airport in Czech.(ET)
Jagson Airlines will start operations as a scheduled regional carrier in about three months.(ET)
HCL Technologies has signed a MoU with four colleges in Bangalore, as part of its Campus to Corporate career development programme to develop the next generation of corporate community.(BS)
Alembic to foray into US and European markets.(BS)
NY based hedge fund BlackRock Inc has acquired the 40% stake held by Merrill Lynch in mutual fund DSP Merrill Lynch Fund Managers.(BS)
Dutch brewer Heineken is set to buy UK-based Scottish & Newcastle’s (S&N) 37.49% stake in Vijay Mallya’s United Breweries. (BS)
Essar Steel to build a jetty at Hazira as its existing port facilities are unable to handle expansion pressure. (BS)
Volvo is taking a plunge into the used-truck market, similar to its competitors Tata Motors and Ashok Leyland. (BS)
Cipla to consider launching generic Tenofovir Disoproxil Fumarate, an HIV/AIDS drug, if Gilead Sciences does not challenge the decision to overturn its patent on the drug. (BS)
JSW group is close to roping in foreign partners for its Rs20bn plate mill project and Rs16bn shipyard at Ratnagiri in Maharashtra. (BS)
JSW group is planning to build a deep sea port in West Bengal. (BS)
Economic News
The government will discuss the 5,000-hectare restriction on building multi-product SEZs at the eGoM meeting, scheduled for Feb 4. (FE)
The proposed fourth commodity exchange, planned by Indiabulls and MMTC, may start functioning by November. (BL)
Sugar export may increase up to 3mn tons in 2007-08, according to National Federation of Cooperative Sugar. (ET)
RBI has asked NBFCs to obtain its prior approval for setting up subsidiaries, joint ventures and representative offices abroad. (BS)
Insurance companies will be allowed to invest in bonds floated by developers of SEZs, with IRDA giving its nod to broaden the definition of infrastructure. (ET)
The Government’s draft on gas allocation policy will be ready in the next couple of weeks. (BS)
21 oil and gas operators including BP, ENI, BG, Cairn, RIL and ONGC have decided to form a joint pool of scarce equipment and services to save cost. (ET)
Weekly Wrap - Jan 25 2008
During the week ended Jan. 25, 2008 the broad based Sensex fell 652.04 points and Nifty declined 321.95 points.
On Monday (Jan. 21, 2008), the 30 share index, Sensex witnessed the biggest ever fall in history of Indian market. The index opened with a negative gap of 94 points and continued to trade weak throughout the day. Relentless selling pressure was seen among the traders in frontline stocks.
BSE Sensex tumbled 1,408.35 points, or 7.41%, to close at 17,605.35 while the broad-based NSE Nifty closed at 5,208.80, down 496.5 points, or 8.70%.
On Tuesday (Jan. 22, 2008), the BSE Sensex opened with a negative gap of 721 points at 16,884. The index was down 9.8%, or 1,716 points, at 15,889. The NSE Nifty crashed over 12%, or 630 points, to 4,578 in the initial trading hour. The trading was suspended for one hour as a result of 10% lower circuit. The Indian markets again broke all the important technical and psychological levels.
BSE Sensex tumbled 875.41 points, or 4.97%, to close at 16,729.94 while the broad-based NSE Nifty closed at 4,899.30, down 309.5 points.
On Wednesday (Jan. 23, 2008), the BSE Sensex opened with a positive gap of 685 points at 17,415.26 on the back of 75 basis points rate cut by the US Federal Reserve.
The index continued to trade strong in the subsequent trading hours and by later half it gained more than 1,000 points on back of sustained buying interest across board, after the stock prices valuation came to an attractive level.
BSE Sensex gained 864.13 points, or 5.17%, to close at 17,594.07 while the broad-based NSE Nifty closed at 5,203.40, up 304 points.
On Thursday (Jan. 24, 2008), the 30-share index, BSE Sensex opened with a positive gap of 327 points at 17,920.98. The index traded strong on back of intense buying interest in the frontline stocks among investors in the early sessions of trade. The index however lost all its firmness on account of profit booking at higher levels.
BSE Sensex lost 372.33 points, or 2.12%, to close at 17,221.74; while the broad-based NSE Nifty closed at 5,033.45, down 169.95 points.
On Friday (Jan. 25, 2008), the 30-share index, Sensex opened with a positive gap of 282.26 points at 17,504.00. The index traded strong on back of intense buying interest in the frontline stocks and global cues.
BSE Sensex gained 1,139.92 points, or 6.62%, to close at 18,361.66; while the broad-based NSE Nifty closed at 5,383.35, up 349.9 points.
Corporate Results
Oil & Natural Gas Corporation (ONGC) registered a fall of 6.46% in net profit to Rs 43,665.40 million for the quarter ended December 2007 as compared with Rs 46,683.10 million in the corresponding quarter, last fiscal. Total income for the quarter dipped 1.75% to Rs 159,838.10 million from Rs 162,690.10 million in the corresponding quarter, last year.
IT major, Satyam Computer Services on Consolidated basis (as per Indian GAAP), posted a 28.59% jump in net profit at Rs 4,336.30 million for the quarter ended December 2007 as compared to Rs 3,372.30 million for the quarter ended December 2006. Total Income has increased 35.59% to Rs 22,660.50 million for the quarter ended December 2007 from Rs 16,712.90 million for the quarter ended December 2006.
Kotak Mahindra Bank reported a jump of 2.14 times in consolidated earnings in the quarter ended Dec. 31, 2007, to Rs 3,637.33 million compared with Rs 1,695.77 million in the the same quarter, last year. The consolidated total income for the quarter surged 2.08 times to Rs 24,827.16 million compared with the corresponding quarter, a year ago.
Grasim Industries registered a rise of 34.55% in earnings in the quarter ended Dec. 31, 2007, to Rs 5,537.90 million compared with Rs 4,115.80 million in the previous year period. The earnings per share (EPS) for the quarter climbed 34.53% to Rs 60.39 compared with Rs 44.89 in prior year period.
Chennai Petroleum Corporation disclosed a phenomenal jump in net profit for the quarter ended December 2007. During the quarter, the company experienced a 9.27 times rise in profit to Rs 2,256.20 million from Rs 243.50 million in the quarter ended December 2006. Total income rose 20.11% to Rs 71,029.90 million for the quarter ended December 2007 from Rs 59,137.60 million for the same period, last year.
Iron ore exporter Sesa Goa reported a phenomenal 2.53 times jump in net profit to Rs 4,927.08 million for the quarter ended December 2007 as compared with Rs 1,949.38 million in the corresponding quarter, last fiscal. Total income for the quarter surged 98.20% to Rs 11,889.16 million from Rs 5,998.48 million for the corresponding quarter, last year.
Bangalore-based public sector lender Canara Bank reported 26.39% increase in net profit to Rs 4,588.30 million for the quarter ended December 2007 as compared with Rs 3,630.20 million for the corresponding quarter, last fiscal. Interest income for the quarter rose 19.88% to Rs 35,501.60 million as against Rs 29,613.60 million for the same quarter, a year ago.
Leading realty player, Housing Development and Infrastructure (HDIL) reported a profit of Rs 2,702.30 million for the quarter ended Dec. 31, 2007 on total revenue of Rs 5,165.10 million. The company posted earnings per share of Rs 12.61 in the quarter ended Dec. 31, 2007.
India`s biggest lender, State Bank of India (SBI) reported a substantial rise of 56.36% in consolidated earnings in the quarter ended December 2007, to Rs 23,836.60 million compared with Rs 15,244.20 million in the same quarter, last year. The consolidated total income for the quarter jumped 43.03% to Rs 243,809.90 million compared with the corresponding quarter, a year ago.
Economy News
Inflation rose to 3.83% for the week ended Jan. 12, 2008, as against 3.79% during the previous week.
The Telecom Regulatory Authority of India (TRAI) suggested abolition of the existing practice of levying Access Deficit Charges (ADC) on private operators, a move that could hit the revenues of state-owned telecom major Bharat Sanchar Nigam (BSNL).
With a view to stop misuse of area-based exemptions, the finance ministry disallowed excise duty exemptions to firms undertaking peripheral activities in Himachal Pradesh, Uttarakhand and the North-East. Non-manufacturing units will now have to pay duty. In a notification, the government excluded such units from the benefit of area-based exemption with effect from January 18.
The total import of sensitive items increased 11.8% for the period April-November 07 to Rs 187.02 billion, as compared to Rs 167.26 billion during the corresponding period of last year.
The gross import of all commodities during same period of current year was Rs 6,123.57 billion as compared to Rs 5,446.74 billion during the same period of last year. Thus import of sensitive items constitute 3.07% and 3.05% of the gross imports during last year and current year respectively.
Titan Industries , Tata Metaliks, Spicejet, HDFC Bank
| Titan Industries Brokerage: IL&FS Current market price: Rs 1,220 Target price: Rs 1,686 Upside: 38 % |
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| For Q3FY08, Titan Industries posted a 50.5 per cent growth in net sales to Rs 802 crore. The growth in the company’s net profits by 11.3 per cent to Rs 30.84 crore, however, was below expectations; this growth was restricted due to the sharp increase in gold prices coupled with investments in new outlets. |
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| Titan Industries’ operating margins fell sharply by 430bps to 6.2 per cent due to lower margins of the jewellery division. IL&FS has lowered its EPS estimates by 9.6 per cent for FY08 from Rs 36.3 to Rs 32.8. EPS estimates for FY09E and FY10E have also been reduced by 10 per cent and 10.4 per cent. |
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| The research firm believes that the recent fall in the stock price is overdone and presents an attractive investment opportunity, even after taking into account the revised EPS estimates. |
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| At the current market price, the stock is trading at PE multiples of about 24.8x and 18.6x FY09E and FY10E earnings respectively. Maintain buy rating on the stock with a new price target of Rs 1,686 based on DCF valuation. |
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| Tata Metaliks Brokerage: PINC Research Current market price: Rs 152 Target price: Rs 185 Upside: 21 % |
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| Tata Metaliks reported net sales of Rs 270 crore (+60 per cent) in Q3FY08. This was due to increased production volumes from its Redi unit, coupled with higher realisations for pig iron. TML’s production volumes in Q3FY08 have shown a rise of 81 per cent y-o-y to ~150,000 mt, led by increased contribution from its Redi unit. Growth in net sales also resulted from improved realisations, which at ~Rs 18k/mt was up 7.7 per cent on a y-o-y basis. |
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| OPM for Q3FY08 stood at 9.3 per cent, lower by 120 bps on a q-o-q basis as rising iron ore and coke prices dampened profitability. At the CMP of Rs 140, the stock trades at a P/E of 3.8x and EV/EBDIT of 2.3x its FY09E earnings. |
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| In view of the buoyant pricing for pig iron, increasing capacity utilisation at Redi unit and an upcoming facility, the research firm believes that the stock is a buy with a 12-month price target of Rs 185, which is 5x times its FY09E earnings. |
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| SpiceJet Brokerage: Prabhudas Lilladhar Current market price: Rs 69 Target price: Rs 98 Upside: 42 % |
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| SpiceJet reported 97 per cent growth in its operating revenue, driven by a 72 per cent capacity addition to 1,647m ASKMs and better load factor at 76.2 per cent in Q3FY08. Yields were also better during the quarter with average fare increasing by 17 per cent to Rs 3,150 per passenger. Higher fuel cost increased cost/ASKM by 9 per cent to Rs 1.2, which was the primary reason for costs/ASKM going up to Rs 2.59 in Q3FY08 (Rs 2.5 in Q3FY07). |
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| However, other income of Rs 29.5 crore helped the company post net profit of Rs 9.3 crore. The third quarter saw the company’s cost rising to Rs 2.59/ASKM, mainly due to higher fuel costs. However, since ATF prices have again been revised downwards by 4 per cent (Rs 2/litre) w.e.f. January, and crude settling down below $90 levels, the research firm feels that fuel cost will not affect the company’s profitability to a considerable extent. |
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| With signs of improving yield evident and costs under control, it is expected that the airline will be profitable in FY09. The airline will report a profit of Rs 20.2 crore in FY09 and Rs 79.3 crore in FY10. SpiceJet is currently trading at about 1.9x FY09E and 1.8x FY10E adj. EV/sales, which appear attractive for a low cost player with strong growth prospects. Maintain buy rating on the stock with a price target of Rs 98. |
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| HDFC Bank Brokerage: Emkay Current market price: Rs 1,608 Target price: Rs 1,700 Upside: 5 % |
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| HDFC Bank reported strong Q3FY08 results with net interest incomes growing at 65.6 per cent y-o-y driven by robust advances growth and better than expected net interest margins. The operating profit grew by 67.5 per cent y-o-y to Rs 1,060 crore driven by higher fee income and treasury gains which compensated for higher operating expenditure. |
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| However net profit grew by only 42.2 per cent, as the bank made a higher provisioning of Rs 420 crore in the quarter as compared to Rs 210 crore in the corresponding quarter last year. The research firm says that the robust business model of HDFC Bank and quality of its earnings as well as assets stand it in good stead. |
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| The firm revised its earnings estimates for FY08-10E by 1-15 per cent. At current valuations of about 20.7x its FY2010E EPS and 3.4x FY2010E P/ABV, the stock seems quite attractive. Emkay gives it a accumulate rating on the stock with a revised one year price target of Rs 1,700. |
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| Union Bank of India Brokerage: MF Global Current market price: Rs 203 Target price: Rs 227 Upside: 11 % |
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| The bank reported net interest income growth of 15 per cent y-o-y on the back of high credit growth. High treasury gains of 420 per cent y-o-y to Rs 156 crore and strong recoveries worth Rs 42 crore aided the 109 per cent growth in the other income. Advances showed a healthy growth of 27.4 per cent y-o-y to Rs 743bn. |
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| Deposits registered a y-o-y growth of 28.4 per cent to Rs 992bn; the low-cost deposit mix increased by 60bps on a sequential basis to 33.10 per cent. The research firm expects the bank to register a moderate credit growth of 21 per cent over FY07-10. Margins are expected to stabilise going forward as the bank sheds high cost bulk deposits. |
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| The credit to deposit ratio will improve which will add to the margins going forward. Non fund based income is expected to register healthy growth of 16.6 per cent over FY07-10 driven by growth in fee income and forex income. Maintain outperformer rating on the stock based on price target of Rs 227. |
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