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Monday, March 16, 2009

Dream over, wake up to reality!


If you can react the same way to winning and losing, that is a big accomplishment.

Some cooling is sure to set in after a dream week for the bulls when the Top 10 Indian companies added nearly Rs200bn in market cap. There were always doubts regarding the revival in sentiment. The Indian economy remains in a rough patch. The silver lining of a sharp fall in inflation has already been factored in.

The markets may open flat and drift lower unless global cues are strong through the day. The domestic markets remain in a peculiar situation where arbitrage opportunities are given the miss for long. The large counters have been turning more volatile than the mid-caps or small-cap stocks.

Asian stocks are up led by financial companies and automakers. With lack of triggers, positive or negative, the main indices will be at the mercy of global cues especially from the US. This week, investors will await the outcome of Federal Reserve’s two-day policy meeting starting Tuesday. No rate cut is expected but the tone of the Fed will be watched very closely.

Federal Reserve Chairman Ben Bernanke said the US government is laying the groundwork for an economic revival and that a "depression" can be avoided. He however acknowledged that a full recovery will take time and there are still obstacles. That's something you and I know well, isn't it?

AIG, said it released the list of trading partners, along with the sums they received, because the company "recognizes the importance of upholding a high degree of transparency with respect to the use of public funds." AIG said it made the announcement after consulting with the Federal Reserve, which has led the bailout of the company.

Among the other headlines in the media today:

Infosys is reportedly eyeing a US$200mn healthcare buyout.

TTSL-NTT DoCoMo deal faces regulatory spanner.

Reliance Industries may propose to sell or lease out its 1,432 petrol pumps to IOC. Earlier reports said it would be HPCL.

ONGC plans to invest Rs15bn more in onshore assets.

Bharti Airtel says it will restructure its business in to 9 arms.

DLF Metro says it will approach India Infrastructure Finance Company to seek lower cost funds for the Rs7.4bn project of building 6.1km of metro rail tracks in Haryana.

The Finance Ministry has accepted Unitech’s request to allow it to raise foreign capital through the automatic route.

Tata Steel declined to comment on a newspaper report that it had held informal talks with bankers on restructuring debt at its UK unit Corus Group.

Satyam winner may be barred from selling assets for three years.

Indian markets ended the week on a high as Friday the 13th turned out to be lucky for bulls. Both the key indices, the NSE Nifty and the BSE Sensex ended above the 2,700 and 8,700 mark respectively. Markets continued to catch up with the global indices in style. The US, Asian and European markets recorded smart gains and continued to extend gains.

The metals, banking and IT stocks were in demand also the mid-cap and the small-cap stocks attracted buying interest. The BSE Sensex surged 412 points to close at 8,756 and the NSE Nifty rose 101 at 2,719.

Among the 30-components of Sensex, 28 stocks ended in positive terrain and only 2 stocks ended in the red. Reliance Industries, Infosys, ICICI Bank, HDFC and L&T were among the major gainers. NTPC and Sun Pharma were among the major losers.

Shares of Dr. Reddy’s Labs advanced by 3.3% to Rs412 after the company won a U.S. court ruling that bolsters its bid to sell a copy of AstraZeneca Plc’s Prilosec heartburn drug without a prescription. The scrip touched an intra-day high of Rs425 and a low of Rs406 and recorded volumes of over 62,000 shares on BSE.

Shares of Strides Arcolab rallied by over 7% to Rs70 after the company announced that it terminated 'License and Supply Agreement' with KV Pharmaceutical Company, USA, due to the recent developments at KV Pharm which included recall of their products, regulatory actions, filing of a series of class actions by shareholders etc. The scrip touched an intra-day high of Rs76 and a low of Rs66 and recorded volumes of over 0.2mn shares on BSE.

Shares of Tata Steel gained by 7% to Rs166. According to reports, the company has held informal talks with bankers on restructuring debt at the Corus Group Ltd.

The parent company may ask its U.K. business, which owns Corus, to amend covenants on about 3bn pounds in loans for the acquisition added reports. The scrip touched an intra-day high of Rs167 and a low of Rs157 and recorded volumes of over 3.2mn shares on BSE.

Shares of Reliance Industries further gained by 6% to Rs1232 as the company is reportedly said to start producing gas from its field off India’s east coast by mid-April.

Reliance will start gas output from eight wells in the field, which may produce 5mn cubic meters a day, output may rise to 40mn cubic meters a day by August and peak at 120mn cubic meters a day,

The scrip touched an intra-day high of Rs1294 and a low of Rs1212 and recorded volumes of over 1.4mn shares on BSE.

Shares of SRF gained by 0.6% to Rs71 after the company announced that it restarted its polymerization, spinning lines at Tamil Nadu plant. The scrip touched an intra-day high of Rs72.9 and a low of Rs70 and recorded volumes of over 0.1mn shares on BSE.

Shares of SBI surged by over 4% to Rs953 after LIC raised its stake in the bank by 2.12% to 9.16% through open market.

LIC acquired 13.46mn shares between November and March. The scrip touched an intra-day high of Rs955 and a low of Rs922 and recorded volumes of over 0.9mn shares on BSE.

The headwinds remain in place and it won’t take long for the mood to change from good to bad and then from bad to worse. How we wish we are wrong! Hate to sound so pessimistic at the end of a short and sweet happy week. But then we need to remind you, short spurts coinciding with some positive news keeps happening in a bear market.