BSE Bulk Deals to Watch - Apr 27 2009

Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
27/4/2009 524598 AKSHARCHEM I MAHENDRA CREDIT AND INVESTMENT S 28900 7.00
27/4/2009 511728 KZLEASING KARAN MAHESHKUMAR HADVANI S 30000 32.65
27/4/2009 531611 PRRANET INDU CHANDRAKANT BHOGILAL SHAH B 500000 4.32
27/4/2009 533065 REISIX TENR GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD B 167333 999.08
27/4/2009 523445 RELIANCE INDUSTRIAL INFRASTRUC EXCEL FINCOM B 98792 836.77
27/4/2009 523445 RELIANCE INDUSTRIAL INFRASTRUC CHANDARANA INTERMEDIARIES BROKERS P. LTD B 164909 839.54
27/4/2009 523445 RELIANCE INDUSTRIAL INFRASTRUC OPG SECURITIES P LTD B 631669 833.52
27/4/2009 523445 RELIANCE INDUSTRIAL INFRASTRUC EXCEL FINCOM S 98792 839.57
27/4/2009 523445 RELIANCE INDUSTRIAL INFRASTRUC CHANDARANA INTERMEDIARIES BROKERS P. LTD S 171564 838.09
27/4/2009 523445 RELIANCE INDUSTRIAL INFRASTRUC OPG SECURITIES P LTD S 631669 834.34
27/4/2009 590020 TERASOFTWARE KOTAK MAHINDRA U K LTD B 57483 38.38
27/4/2009 531249 WELL PACK PA AMI STOCK AND SHARE BROKERS PVT LTD S 35000 152.50

NSE Bulk Deals to Watch - Apr 27 2009

Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
27-APR-2009,ABAN,Aban Offshore Ltd.,PRB SECURITIES PRIVATE LTD.,BUY,352872,468.61,-
27-APR-2009,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,BUY,1817276,154.17,-
27-APR-2009,IBREALEST,Indiabulls Real Estate Li,J P M S L A/c Copthall Mauritius Investment Ltd,BUY,2476997,131.82,-
27-APR-2009,REISIXTEN,REI Six Ten Retail Limite,GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD,BUY,165467,998.18,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,ADROIT FINANCIAL SERVICES PRIVATE LIMITED,BUY,162677,842.77,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,C D INTEGRATED SERVICES LTD.,BUY,490883,832.09,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,CHANDARANA INTERMEDIARIES BROKERS P. LTD,BUY,142559,834.91,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,DINESH MUNJAL(HUF),BUY,87819,833.86,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,GENUINE STOCK BROKERS PVT LTD,BUY,409653,833.88,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,GRD SECURITIES LIMITED,BUY,75351,833.93,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,HARBUX SINGH SIDHU,BUY,77994,830.48,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,PARWATI CAPITAL MARKET PRIVATE LIMITED,BUY,81044,842.95,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,PRB SECURITIES PRIVATE LTD.,BUY,200102,840.67,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,SMC GLOBAL SECURITIES LTD.,BUY,47383,823.57,-
27-APR-2009,ABAN,Aban Offshore Ltd.,PRB SECURITIES PRIVATE LTD.,SELL,366304,469.24,-
27-APR-2009,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,SELL,1817276,154.31,-
27-APR-2009,IBREALEST,Indiabulls Real Estate Li,Copthall Mauritius Investment Ltd,SELL,2750000,133.83,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,ADROIT FINANCIAL SERVICES PRIVATE LIMITED,SELL,162677,841.19,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,C D INTEGRATED SERVICES LTD.,SELL,490883,833.22,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,CHANDARANA INTERMEDIARIES BROKERS P. LTD,SELL,143904,833.40,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,DINESH MUNJAL(HUF),SELL,87819,834.73,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,GENUINE STOCK BROKERS PVT LTD,SELL,409653,834.52,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,GRD SECURITIES LIMITED,SELL,76151,835.15,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,HARBUX SINGH SIDHU,SELL,77994,831.95,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,PARWATI CAPITAL MARKET PRIVATE LIMITED,SELL,83444,835.13,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,PRB SECURITIES PRIVATE LTD.,SELL,212902,832.68,-
27-APR-2009,RIIL,Reliance Indl Infra Ltd,SMC GLOBAL SECURITIES LTD.,SELL,80283,830.28,-

Post Session Commentary - Apr 27 2009

The Indian market ended today’s volatile session on the flat note as investors took calculative steps ahead of F&O expiry on 29th April 2009. Zigzag movement was led by constant buying and selling witnessed in key stocks. Political uncertainty also contributed to the instability on the domestic bourses as voting is going on for the 15th Lok Sabha election.

The domestic market opened on negative note tracking weak cues from the Asian markets. However, US stock markets on Friday closed higher on the back of some better than expected results from Ford, Microsoft and American Express. Further, benchmark indices suddenly gained some ground and recovered from opening losses to trade above the previous sessions’ closing. During mid session market gathered decent momentum to touch day’s high on significant buying across the board. Despite sharp come back, market was not able to hold the same impetus as slipped again on profit booking ahead of F&O expiry. BSE Sensex ended around 11,370 level and NSE Nifty closed below 3,500 mark. From the sectoral front, Capital Goods, and Pharma stocks were also able to gain market favor. However, Consumer Durable, Reality, Power, PSU, Metal and Teck stocks witnessed most of the selling from these baskets. Mid Cap and Small Cap stocks also lost strength.

Among the Sensex pack 16 stocks ended in red territory and 14 in green. The market breadth indicating the overall health of the market remained negative as 1341 stocks closed in red while 1158 stocks closed in green and 83 stocks remained unchanged in BSE.

The BSE Sensex closed higher by 42.80 points at 11,371.85 whereas NSE Nifty ended down by 10.75 points at 3,470. BSE Mid Caps and Small Caps closed with losses of 15.81 and 41.12 points at 3,584.28 and 4,027.14 respectively. The BSE Sensex touched intraday high of 11,492.10 and intraday low of 11,176.55.

Gainers from the BSE Sensex pack are ICICI Bank (8.20%), Sterlite Industries (4.39%), Wipro Ltd (4.12%), TCS Ltd (3.58%), JP Associates (3.58%), Sun Pharma (2.87%), L&T Ltd (2.48%), BHEL (1.91%) and ITC Ltd (1.55%).

Losers from the BSE Sensex pack are Ranbaxy Lab (4.61%), Reliance Infra (3.90%), RCom (3.75%), HUL (3%), ACC Ltd (2.98%), Tata Steel (2.87%), Hindalco (2.37%), Tata Power (2.27%), SBI (1.96%) and Tata Motors (1.45%).

On the global markets front the Asian markets which opened before the Indian market, ended mostly lower on Swine flu fears that hit travel stocks. Shanghai Composite, Hang Seng, Straits Times index and Seoul Composite ended lower by 43.25, 418.43, 34.24 and 14.27 points at 2,405.35, 14,840.42, 1,818.61 and 1,339.83 respectively. However, Nikkei 225 gained 18.35 points at 8,726.34.

European markets which opened after the Indian market are trading in red as suffering from the outbreak of swine flu. In Frankfurt the DAX index is trading lower by 51.10 points at 4,623.22 and in London FTSE 100 is trading down by 27.64 points at 4,128.35

The BSE Bank index ended higher by (2.41%) or 134.89 points at 5,726.59, mainly on expectations that lower interest rates will boost lending growth. ICICI Bank (8.20%), Federal Bank (5.54%), Axis Bank (5.45%), Allahabad Bank (3.46%) and Yes Bank (3.20%) ended in positive territory.

The BSE Capital Goods stocks increased by (1.57%) or 125.08 points to close at 8,071.54. Major gainers are BEML Ltd (6.91%), Havell India (3.15%), Crompton Greaves (2.77%), Gammon Indi (2.65%) and Elecon Eng C (2.54%).

The BSE Consumer Durables ended down by (2.77%) or 50.12 points at 1,762.52. Losers are Videocon Ind (7.32%), Titan Ind (3.26%), Rajesh Export (2.05%) and Gitanjali GE (0.75%).

The BSE Reality index ended lower by (2.42%) or 54.54 points at 2,202.03 on profit booking. Main losers are Indiabull Real (11.08%), Anant Raj (4.95%), Ansal Infra (4.67%), Omaxe Ltd (3.58%) and Unitech Ltd (2.77%).

The BSE Power index dropped by (1%) or 21.55. points at 2,128.29. Scrips that lost are Lanco Infra (4.36%), Reliance Infra (3.90%), GVK Power (3.74%), Reliance Power (3.16%) and Power Grid (3%).

The BSE PSU index lost (0.96%) or 57.46 points to close at 5,919.22. Main losers are Hindustan Copper (4.99%), IDBI Bank (4.82%), REC Ltd (4.61%), Power Finance (3.68%) and Power Grid (3%).

Shares of ICICI Bank ended higher by 8.20%. The bank posted a 35.3% dip in quarterly profit over the weekend hurt by a fall in interest earnings and other income and said it expects moderate loan growth this year. ICICI''s net profit fell to Rs. 744 crore in its fiscal fourth quarter ending in March, from Rs. 1150 crore reported a year ago. The bank’s net profit for the year to March 31, 2009 (FY09) was down 9.6% at Rs 3758.13 crore. Despite a fall in profits, the bank has decided to maintain its dividend payout at Rs 11 per share.

Ranbaxy Laboratories closed down by around 4.61%. The company on Friday reported a huge quarterly net loss on derivative valuations and as a US ban hit sales, and forecast a second straight year of losses. It reported a consolidated loss of Rs. 761 crore in the March quarter, compared with a profit of Rs. 85.8 crore in the year-ago quarter.

Patni Computer Systems closed lower by 2.43%. It has been ranked as the No. 1 ''Gteen Innovative Information Technology Vendor'' by the prestigious 2009 Black Book Top Green Outsourcing Vendors Survey, an annual Industry survey of outsourcing service providers'' pro-environmental initiatives from the perspective of their client experience.

Pantaloon Retail India fell 4.45%. The company reported strong quarterly results for March ended 2009 as posted a net profit of Rs 343.70 million for the quarter ended March 31, 2009 as compared to Rs 321.00 million for the quarter ended March 31, 2008.

State Bank of India (SBI) lost 1.96%. The bank is looking at the option to cut the lending rates for education loans by 0.25 per cent very soon.

Turnover surges

Nifty April 2009 futures at discount

Nifty April 2009 futures were at 3465, at a discount of 5 points as compared to the spot closing of 3470. Turnover in NSE's futures & options (F&O) segment surged to Rs 75,777.22 crore from Rs 68,374.47 crore on Friday, 24 April 2009.

The near-month April 2009 futures contract will expire on Wednesday, 29 April 2009.

Jaiprakash Associates April 2009 futures were at premium at 132.25 compared to the spot closing of 130.30.

Reliance Industries April 2009 futures were at discount at 1780.20 compared to the spot closing of 1785.55.

Housing Development and Infrastructure April 2009 futures were at discount at 152.50 compared to the spot closing of 153.40.

In the cash market, the S&P CNX Nifty lost 10.75 points or 0.31% at 3470.

ICICI Bank vaults in choppy market

Key benchmark indices saw divergent trend - with the BSE Sensex advancing and its peer S&P CNX Nifty ending lower. Volatility was the hallmark of the day's trading session, with traders rushing to square open positions ahead of the expiry of the near month contracts on Wednesday, 29 April 2009. Brokerage firm UBS saying slowdown in Indian economy and corporate earnings could bottom out by the second half of the year ending March 2010 (FY 2010) helped Indian bourses outperform its global peers. The market breadth indicating overall health of the market was negative.

A deadly swine flu outbreak that originated in Mexico pulled stocks down in Asian and Europe on Monday, 27 April 2009. The BSE 30-share Sensex was up 42.80 or 0.38% up close to 110 points from the day's low and off 120 points from the day's high. Realty and metal stocks were weak even as banking stocks gained.

After a weak opening caused by weakness in Asian stocks triggered by concerns over the flu outbreak, Indian stocks bounced back shortly. The market extended gains in early afternoon trade as Japanese stocks ended a choppy trading session in green. The Sensex hits its highest level in more than six months. The market gave up all the gains and fell into red in afternoon trade before recovering to move into the green. The market moved between positive and negative zone later.

The expiry of the near-month derivatives contracts has been advanced to 29 April 2009 from 30 April 2009 as the stock market remains closed on 30 April 2009 on account of voting for the parliamentary elections in Mumbai on 30 April 2009. Rollover of Nifty positions from April 2009 series to May 2009 series stood at 38% while those of stock futures were 26%, as on Friday, 24 April 2009.

Political uncertainty may lead to volatile swings on the bourses in the next few weeks with polling underway for India's 15th Lok Sabha. The month-long parliamentary elections that began on 16 April 2009 will conclude on 13 May 2009 with results due on 16 May 2009. Poll estimates point to a fractured mandate.

European stocks fell on Monday as fears of a swine flu pandemic hit airline, bank and commodity shares on worries that travel and trade would be hit. Key benchmark indices in France, Germany and UK fell by between 0.86% to 1.35%.

The Conference Board's leading economic index (LEI) for the euro area rose 0.2% in March 2009 to 92.40. Positive contributions from the interest rate spread and the business expectations (services) index more than offset a negative contribution from stock prices, it said. "Although it is too soon to conclude that the second increase in the LEI in three months offsets the recessionary signal, a broad-based perspective on business cycle indicators suggests a more moderate outlook and that a recovery may still materialize as early as the end of 2009 and before the middle of 2010," said Jean-Claude Manini, The Conference Board Senior Economist for Europe.

Asian stocks slipped on Monday as the outbreak of swine flu in North America hurt shares of airlines and transport companies. Key benchmark indices in China, Hong Kong, Taiwan, South Korea, and Singapore fell by between 1.05% and 2.99%.

But Japan's Nikkei rose 0.21% even as Japan's government said on Monday that it expects the nation's economy to contract a record 3.3% for fiscal 2009, as overseas demand continues to decline.

China and Taiwan have agreed to raise the number of direct flights between the two and to broaden financial business relations in a bid to better deal with the global economic crisis. Chen Yunlin, president of mainland China's Association for Relations Across the Taiwan Straits, and Chiang Pin-kung, chairman of Taiwan-based Straits Exchange Foundation, signed the agreements Sunday 26 April 2009 in Nanjing, according to a report by China's state-run Xinhua news agency.

Trading in US index futures showed the Dow could fall 140 points at the opening bell on Monday, 27 April 2009.

Fears that any tentative green shoots in the global economy could be trampled by the deadly outbreak of swine flu put markets on edge on Monday, after world policymakers said over the weekend that a recovery could begin later this year but plenty of downside risk remained.

Obama administration officials declared a public health emergency on Sunday, 26 April 2009, over a deadly outbreak of swine flu, following an international warning from the United Nations' health agency and moves around the world to secure vaccine supplies. The US declaration came shortly after officials confirmed that students at a New York City high school were sickened by the same strain of swine flu that has killed people in Mexico, following similar cases in Texas, California and Kansas.

Later Sunday, Mexico's Health Minister Jose Angel Cordova was quoted in reports as saying that the number of Mexican deaths from the outbreak had risen to at 103. Cordova was also quoted as saying that over 1,600 swine flu cases have been reported in the country, although about 1,000 of those have since recovered.

The World Health Organization Saturday declared the outbreak of the previously unknown virus a public health emergency of international concern. In a statement posted on its Web site, the agency advised health workers in all countries to monitor patients closely for signs of flu-like illness and severe pneumonia.

US Treasury Secretary Timothy Geithner on 24 April 2009 said the global economy looks a little better recently but that it is way too soon for any victory laps. There are signs that the pace of deterioration in economic activity and trade flows has eased, Geithner said. Without giving any specifics, Geithner said that certain spending measures have stabilized and financial conditions have shown modest improvement. He also said that the US housing markets, the epicenter of the global crisis, are beginning to stabilize.

US stocks rallied on Friday, 24 April 2009, as earnings showed companies have weathered the recession and economic data raised hopes the economic cycle may have hit a bottom. The Dow Jones Industrial Average added 119.23 points, or 1.50%, to 8,076.29, the Standard & Poor's 500 Index rose 14.31 points, or 1.68%, to 866.23 and the Nasdaq Composite index gained 42.08 points, or 2.55%, to 1,694.29.

Closer home, the Reserve Bank of India (RBI) governor D. Subbarao on Saturday, 25 April 2009, said there are signs of improvement in demand in industries including cement and steel. While the short- and medium-term outlook for the economy is mixed, Subbarao said long-term growth drivers are still intact. He expects a swift and sharp recovery once global growth rebounds, adding that it may take a couple of years for India to resume expanding at 9%. The central bank will use various policy instruments to spur the economy, he said, declining to comment on whether he will cut interest rates further.

UBS's lead economic indicator in India has climbed for three consecutive months pointing to a strong recovery in industrial activity by June 2009, it said in a note late on Friday, 24 April 2009. UBS said the key variables which have boosted its lead indicator index was the government bond yield spread, real (M1) money supply and a revival in foreign capital inflows. "Our base-case scenario is for the Indian economy and corporate earnings to bottom out by the second half of 2009/10 and for full recovery in 2010/11," it said. UBS said it is positive on the Indian stock market on a 12 month view with overweight recommendation for autos, metals, banks, real estate and conglomerates.

The Reserve Bank of India (RBI) on Tuesday, 21 April 2009 cut its key short-term rates by 25 basis points each to shore up faltering growth in the face of the global economic slowdown. The Reserve Bank also repeated a call for banks to pass on its rate cuts to customers and said deposit rates should also fall. "There is scope for the overall interest rate structure to move down within the policy rate easing already effected by the Reserve bank," it said adding its latest rate cut reinforced the case.

Reacting to the RBI rate cut, ICICI Bank, India's largest private sector bank by net profit, announced a reduction in both deposit and lending rates after trading hours on Tuesday, 21 April 2009.

The RBI cut its growth estimate for the year ended March 2009 (FY 2009) to 6.5% to 6.7%, from 7% projected earlier. It has forecast growth of around 6% for the year ending March 2010 (FY 2010). The fiscal and monetary stimulus measures initiated during 2008-09 coupled with lower commodity prices could cushion the downturn in the growth momentum during 2009-10 by stabilizing domestic economic activity to some extent, RBI said in a statement. However, any upturn in the growth momentum is unlikely in view of the projected contraction in global demand during 2009, particularly decline in trade, it added.

Strong rural demand, lagged impact of monetary and fiscal stimuli, softening of domestic input prices, investment demand from brown-field expansion projects and some restructuring initiatives are expected to have a positive impact on industrial production in the coming months, the RBI said.

While moderation in internal accruals has an adverse effect on corporate investment, decline in input prices and reduction in borrowing costs may have a favourable impact on profitability of the corporate sector going forward, the RBI said at the time of announcing the monetary policy.

The central bank said that managing large government borrowing in FY 2010 in a non-disruptive manner would be a major challenge, and said it would used a mix of monetary and debt management tools to ensure this was done smoothly. Large borrowings also militate against the low interest rate environment that the RBI is trying to maintain to spur investment demand in keeping with the stance of monetary policy, the central bank said in its policy statement.

The RBI said wholesale-priced based inflation was expected to turn negative early in the current fiscal year, but this should not be interpreted as deflation for policy purposes. It projected WPI inflation would be around 4% at the end of FY 2010.

The RBI said a planned April 2009 review of the policy on foreign banks in India would now not go ahead until there was greater clarity regarding stability, recovery of the global financial system and better global coordination on regulation and supervision.

A good news for the economy is forecast of a near normal monsoon by the India Meteorological Department (IMD) on 17 April 2009. The IMD said rainfall in the June-September 2009 monsoon season was expected to be 96% of the long-term average. The outlook is among the nation's most widely watched indicator as monsoon rains are a major influence on output of key crops, economic activity and also affects sentiment in the country's financial markets.

Foreign funds are on aggressive buying mode. Foreign institutional investors (FIIs) bought shares worth a net Rs 513.50 crore on Friday, 24 April 2009. FII inflow in April 2009 totaled Rs 5,373.90 crore (till 24 April 2009). FII outflow in calendar year 2009 totaled Rs 1,297.70 crore (till 24 April 2009).

FIIs had resorted to heavy selling of Indian stocks in the first two months of calendar 2009. Domestic institutional investors had absorbed the selling by FIIs.

The BSE 30-share Sensex rose 42.80 or 0.38% to 11,371.85. At the day's high of 11,492.10 Sensex rose 163.05 points in afternoon trade, its highest level since 14 October 2008. At the day's low of 11,176.55, the Sensex fell 152.50 points in early trade.

However the S&P CNX Nifty slipped 10.75 points or 0.31% to 3,470. Nifty April 2009 futures were at 3465, at a discount of 5 points as compared to the spot closing of 3470. Turnover in NSE's futures & options (F&O) segment surged to Rs 75,777.22 crore from Rs 68,374.47 crore on Friday, 24 April 2009.

After accounting for today's gains, the BSE Sensex is up 1,724.54 points or 17.87% in calendar 2009 from its close of 9,647.31 on 31 December 2008.

Coming back to today's trade, the BSE Mid-Cap index down 0.44%, and the BSE Small-Cap index fell 1.01%,. Both the indices underperformed the Sensex.

The BSE Bankex (up 2.41%), the BSE Capital Goods index (up 1.57%), the BSE Healthcare index (up 0.95%) outperformed the Sensex.

The BSE Consumer Durables index (down 2.77%), the BSE Realty index (down 2.42%), the BSE Power index (down 1%), the BSE PSU index (down 0.96%), the BSE Metal index (down 0.95%), the BSE TECk (down 0.72%), the BSE Auto index (down 0.71%), the BSE Oil & Gas index (down 0.54%), the BSE FMCG index (down 0.08%), the BSE IT index (down 0.03%) underperfomed the Sensex.

The market breadth, indicating the overall health of the market, turned negative from a strong breadth earlier in the day. On BSE, 1,164 stocks advanced as compared to 1,357 that declined. A total of 57 shares remained unchanged.

BSE clocked a turnover of Rs 4,846 crore lower than Rs 5,254 crore on Friday, 24 April 2009.

From the 30 share Sensex pack, 16 stocks fell while rest gained.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) was flat at Rs 1,784.85. The stock hit a high of Rs 1,804.70 and a low of Rs 1,759.95. RIL's net profit fell 9.35% to Rs 3546 crore on 23.9% fall in sales to Rs 28,362 crore in Q4 March 2009 over Q4 March 2008. The company announced the results on Thursday, 23 April 2009.

As per reports, Reliance Industries has resumed crude oil production from one well in its east coast deepwater block. Reliance had stopped crude oil production form the Krishna Godavari block, popularly known as D-6, from 22 March 2009 to add more wells to raise the crude oil output.

Oil exploration firms fell after crude oil prices dropped. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) declined 0.88% and Cairn India fell 1.87%. US crude oil futures for June 2009 delivery fell $2.16 to $49.39 a barrel on Swine-flu fears. The fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms.

Auto stocks fell on profit taking after recent surge in prices. Tata Motors, Bajaj Auto, Hero Honda Motors fell by between 1.45% to 1.86%. While, Mahindra & Mahindra and Maruti Suzuki India rose by between 0.19% to 0.65%.

Banking stocks rose in choppy trade on hopes falling interest rates will boost lending growth and on rally in bond prices. India's largest private sector bank by net profit ICICI Bank rose 8.2% to Rs 467.95 after its rating was raised at Goldman, Sachs & Co. on improving core earnings. The stock was raised to "buy" from "neutral" at Goldman, which said the company's fundamentals were improving.

ICICI Bank's net profit fell 35.31% to Rs 743.76 crore on 11.42% fall in total income to Rs 9203.36 crore in Q4 March 2009 over Q4 March 2009. The bank's profit took a beating due to lower fee income, higher provisioning towards bad loans and an almost flat net interest income. As of 31 March 2009 bank's net non performing asset ratio was 1.96%.

ICICI Bank cut its lending rates by 50 basis points after the central bank cut official interest rates on Tuesday 21 April 2009. The benchmark advance rate, or the rate that it charges its top customers, now stands at 16.25% from 16.75%, effective from Wednesday, 22 April 2009.

ICICI Bank also cut rates for retail customers by 50 basis points. The rates on deposits have been cut between 25 to 50 basis points, with effect from Friday 24 April 2009.

India's second largest private sector bank by operating income HDFC Bank rose 0.5% to Rs 1,115.50. The stock hit a high of Rs 1,138 and a low of Rs 1,094. Its ADR gained 2.38% on Friday. The banks' net profit rose 33.9% to Rs 630.88 crore on 53.1% rise in operating income to Rs 5,365,52 crore in Q4 March 2009 over Q4 March 2008. The results were more or less in line with market expectations. The bank announced the results on Thursday 23 April 2009.

HDFC Bank's gross non performing assets (NPA) stood at 1.98% of advances as of 31 March 2009 compared to 1.91% as of 31 December 2008. Net NPA as of 31 March 2009 was at 0.63% of net advances.

India's largest bank in terms of assets and branch network State Bank of India (SBI) fell 1.96% to Rs 1,282.15. The stock hit a high of Rs 1,329 and a low of Rs 1,269. SBI chairman O.P. Bhatt on Tuesday 21 April 2009 said interest rate cuts by the Reserve Bank of India were a signal for commercial banks to lower their rates. He said a decision on whether SBI would lower rates would be taken after a meeting of the bank's asset-liability. SBI's advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.

India's biggest dedicated housing finance firm by operating income HDFC fell 0.05% to Rs 1,803.75.

Outsourcing focussed IT firms rose in volatile trade on a weaker rupee. India's third largest software services exporter, Wipro rose 4.12% to Rs 324.75. The stock hit a high of Rs 326.95 and a low of Rs 305. Its ADR rose 1.33% on Friday.

India's largest software services exporter by sales TCS rose 3.58% to Rs 603.45. The stock hit a high of Rs 608 and a low of Rs 550. India's second largest software services exporter Infosys Technologies was down 1.1% to Rs 1,432.60. The stock hit a high of Rs 1,450 and a low of Rs 1,417.50. Its ADR rose 0.98% on Friday.

The Indian rupee edged lower on Monday, as losses in other regional share markets raised expectations of outflows from local stocks, with the dollar's strength overseas also weighing. The partially convertible rupee was at 50.16 per dollar, weaker than its previous close of 49.81/82. A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.

Capital goods stocks rose after India's biggest engineering & construction firm by revenue L&T recently said it expect strong order inflow in the current year ending March 2010 (FY 2010). Larsen & Toubro, Bharat Heavy Electricals, Punj Lloyd, Crompton Greaves rose by between 1.16% to 2.77%.

Some FMCG stocks rose triggered by expectations of a surge in sales due to forecast of a good monsoon this year. ITC, Tata Tea, Marico, United Spirits, United Breweries rose by between 0.25% to 12.62%. FMCG firms derive a substantial revenue from rural markets.

India's largest drug maker by sales Ranbaxy Laboratories fell 4.61% after it reported a net loss of Rs 777.78 crore in Q1 March 2009 compared to a net profit of Rs 103.42 crore in Q1 March 2008. The company's sales fell 18.7% to Rs 802.22 crore in in Q1 March 2009 over Q1 March 2008. The stock was the biggest loser form the Sensex pack.

Realty stocks fell on profit taking after recent surge in prices Indiabulls Real Estate, Housing Development & Infrastructure, Unitech fell by between 0.03% to 11.08%.

Metal stocks fell on slide in copper prices on the London Metal Exchange. Steel Authority of India, National Aluminum Company, Hindalco Industries, Tata Steel, Hindustan Zinc fell by between 1.65% to 2.87%.

Jaiprakash Associates rose 3.58% as net profit rose 83.12% to Rs 385.32 crore on 63.13% to Rs 2,194.57 crore in Q4 March 2009 over Q4 March 2008. Jaiprakash Associates expects revenue to jump more than two-third in the year ending March 2010, driven by growth in all of its three business segments of construction, cement and real estate, its executive chairman Manoj Gaur said today at the time of announcing the results during trading hours

Cals Refineries clocked the highest volume of 4.98 crore shares on BSE. Unitech (2.19 crore shares), Reliance Natural Resources (1.63 crore shares), Jaiprakash Associates (1.55 crore shares) and Indiabulls Real Estate (1.31 crore shares) were the other turnover toppers in that order.

ICICI Bank clocked the highest turnover of Rs 366.67 crore on BSE. Reliance Industrial Infrastructure (Rs 273.58 crore), Reliance Capital (Rs 208.88 crore), Jaiprakash Associates (Rs 198.91 crore) and Reliance Industries (Rs 195.64 crore) were the other turnover toppers in that order.

Market may remain volatile

The market is likely to witness sideways movement on the back of a strong intra-day volatile move. Stocks across the sectors along with heavyweights may gyrate sharply. Overnight marginal gain in the US indices and weak Asian markets in mornings trades may further dampen the investors' sentiment. On the technical side, the Nifty has a stiff resistance at 3520-3550 levels and the downside strong support at 3450-3400, while the Sensex could test higher levels of 11450 and has a likely support at 11200.

US indices ended higher on Friday, with the Dow Jones gaining 119 points to close at 8076 and the Nasdaq ended 42 points higher at 1694.

Most of the Indian ADRs traded firm on the US bourses. Rediff led the pack with gains of 6.16% while Tata Motors, Patni Computers, ICICI Bank, HDFC Bank, Wipro and Infosys gained around 1-5% each. However, Satyam, Dr Reddy's Lab, and VSNL slipped around 1-4% each

Crude oil prices in the US market edged higher, with the Nymex light crude oil for June delivery up by $1.63 to close at $50.48 per barrel. In the commodity segment, the Comex gold for April series gained by $7.50 to settle at $914.10 an ounce.

Pre Session Commentary - Apr 27 2009

Today domestic markets are likely to open positive as the US markets closed in green with phenomenal gains. However the other Asian markets are reluctant to follow the trend. There is mixed opening of the Asian markets and therefore the domestic sentiments are likely to dwindle after the opening bell. One could witness some choppy trade in the early trading session as there is lack of cues from Asian markets and investors would be also concerned about the corporate earnings. Banking stocks could be under pressure as ICICI bank has declared its worse than expected FY09 results.

On Friday, domestic markets closed with phenomenal gains after a shy opening trade. The sentiments started building strong along with the advent of positive movements of European markets. Huge buying interest spurred across broader level as European markets exuded northward trend. Ignoring the poor performance of other Asian markets, domestic markets recorded its 7th consecutive week gain. Having broken the 11k mark the Sensex looks firm at 11300 level and Nifty seems to be heading towards 3500 level. The F&O expiry also compelled investors to cover their short coverings. The market breadth was positively firm on BSE as the advance to decline ratio strengthened at 1.58:1. The markets may trade volatile today.

The BSE Sensex closed higher by 194.06 points at 11,329.05 and NSE Nifty ended up by 57.05 points at 3,480.75. BSE Mid Caps and Small Caps closed with gains of 65.91 and 68.48 points at 3,600.09 and 4,068.26 respectively. The BSE Sensex touched intraday high of 11,362.88 and intraday low of 11,070.33.

On Friday, the US stock markets closed positive. The investors showed less risk aversion and therefore moved into early cyclical plays amid hopes of slowness in the economic downturn. The new home sales for March came in at a seasonally adjusted annual rate of 356,000, which was better than expected, but down 0.6% from an upwardly revised February reading. March durable goods orders and orders excluding transportation declined 0.8% and 0.6%, respectively. Neither was as bad as expected. Corporate results would be in focus as 20 companies may announce their quarterly results today before the opening bell. US light crude oil futures for June gained by 3.9% at $51.54 per barrel on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) inclined by 119.23 points to close at 8,076. The NASDAQ Composite (RIXF) index gained by 42.08 points to close at 1,694.29 and the S&P 500 (SPX) inclined by 14.31 points to close at 866.23.
Today major stock markets in Asia are trading mixed.

Shanghai composite is low by 29.45 at 2,419.15. Hang Seng is trading low by 401.24 points at 14,857.61 followed by Japan''s Nikkei which is high by 4.24 points at 8,712.23, Strait Times is low by 62.38 points at 1,797.60. While Taiwan Weighted is down by 157.45 points at 5,723.32 and Seoul Composite points is low by 15.20 points at 1,338.90 respectively.

Indian ADRs ended mostly higher. In technology sector, Infosys ended higher by 0.98% along with Wipro by 1.33%. Further, Patni Computers gained 4.31% whereas Satyam closed down by 1.60%. In banking sector ICICI Bank gained 2.96% and HDFC Bank advanced by 2.38%. In telecommunication sector Tata Communication lost 4.64% and MTNL remained unchanged. Sterlite Industries increased by 4.99%.

The FIIs on Friday stood as net buyers in equity and net seller debt. Gross equity purchased stood at Rs 1,406.10 Crore and gross debt purchased stood at Rs 87.80 Crore, while the gross equity sold stood at Rs 1,094.40 Crore and gross debt sold stood at Rs. 107.10 Crore. Therefore, the net investment of equity and debt reported were Rs 311.60 Crore and Rs (19.30) Crore respectively.

On Friday, the Rupee closed at Rs.49.81/82, 0.22% stronger than its previous close of Rs. 49.92/93. The rupee gained strength on the back of late gain in local stock market.

On BSE, total number of shares traded were 47.26 Crore and total turnover stood at Rs 5,278.66 Crore. On NSE, total number of shares traded was 96.32 Crore and total turnover was Rs 14,931.51 Crore.

Top traded volumes on NSE Nifty – Unitech with total volume traded 60816727 shares, followed by Suzlon Energy with 42178200 shares, DLF with 18998850 shares, Tata Steel 15293220 shares and Idea Cellular with 15048069 shares respectively.

On NSE Future and Options, total number of contracts traded in index futures was 1002231 with a total turnover of Rs 16,683.83 Crore. Along with this total number of contracts traded in stock futures were 592796 with a total turnover of Rs 22,975.89 Crore. Total numbers of contracts for index options were 1551604 with a total turnover of Rs 26,749.25 Crore and total numbers of contracts for stock options were 47245 and notional turnover was Rs 1,965.49 Crore.

Today, Nifty would have a support at 3,389 and resistance at 3,512 and BSE Sensex has support at 10,205 and resistance at 11,465.

Market seen lower in volatile trade

Key benchmark indices are likely to open lower mirroring weak Asian indices. The SGX Nifty futures for April 2009 expiry was down 37.50 point in Singapore. However buying support from foreign funds may cap downside. Stock specific activity will be high in companies that will be announcing their March 2009 quarterly results.

Tech Mahindra, Bank Of Baroda, JP Associates, Aban Offshore, Areva T&D, Bosch, Castrol India, Indian Bank, KPIT Cummins, Shree Renuka Sugars and United Spirits, among others will declare their March 2009 quarterly results today, 27 April 2009.

Aggregate results of 270 firms showed 10.20% fall in net profit on 2.2% rise in sales in Q4 March 2009 over Q4 March 2008.

Political uncertainty, with polling for India's 15th Lok Sabha underway, may lead to volatile swings on the bourses. The month-long parliamentary elections that began on 16 April 2009 will conclude on 13 May 2009 with results due on 16 May 2009. Poll estimates point to a fractured mandate.

Expiry of derivatives expiry on Wednesday, 29 April 2009 may prop the volatility further. Rollover of Nifty positions from April 2009 series to May 2009 series stood at 38% while those of stock futures
were 26%, as on Friday, 24 April 2009.

Turnover may take a hit as stock market will remain shut on Thursday, 30 April 2009 as voting takes place in Mumbai for the parliamentary elections on that day. The market is also shut on Friday, 1 May 2009, on account of Maharashtra Day.

Most Asian markets were trading weak today, 27 April 2009. Key benchmark indices in China, Hong Kong, Taiwan, South Korea, and Singapore fell by between 0.76% and 3.32%. However Japan's Nikkei 225 index gained 0.22%

However US stocks rallied on Friday, 24 April 2009, as earnings showed companies have weathered the recession and economic data raised hopes the economic cycle may have hit a bottom. The Dow Jones Industrial Average added 119.23 points, or 1.50%, to 8,076.29, the Standard & Poor's 500 Index rose 14.31 points, or 1.68%, to 866.23 and the Nasdaq Composite index gained 42.08 points, or 2.55%, to 1,694.29.

Back home, firm global cues lifted key benchmark indices on Friday, 24 April 2009 with the Sensex closing at highest level in more than six months. The BSE 30-share Sensex jumped 194.06 points or 1.74% to 11,329.05, its highest closing since 14 October 2008. The S&P CNX Nifty gained 57.05 points or 1.67% to 3,480.75 its highest closing since 15 April 2009.

Bulls were on the rampage with the market surging for the seventh week in a row in the week ended Friday, 24 April 2009 on the back of sustained buying by foreign funds and positive global cues. The 30-share BSE Sensex jumped 305.96 points or 2.78% to 11,329.05, in week ended 24 April 2009. The broader 50-unit Nifty jumped 96.35 points, or 2.84%, to 3480.75 in the week.

According to provisional data on NSE, foreign institutional investors (FIIs) were net buyers worth Rs 576.77 crore while domestic institutional investors funds bought shares worth Rs 15.31 crore on Friday, 24 April 2009. FII inflow in April 2009 totaled Rs 4,860.40 crore, till 23 April 2009

US stocks end week on a mixed note

Earnings dominate the week with topline missing in most cases

US market witnessed mixed end for the week that ended on Friday, 24 April, 2009. It was only tech heavy Nasdaq that managed to eke out gains for the week. The other two major indices – Dow and S&P 500 ended week with modest losses. This came despite stocks at Wall Street registering good gains on the last day of the week, Friday, 24 April, 2009. Earning reports dominated the week and in most cases, the reports checked in much better than feared. There were some merger and acquisition related news also during the week.

The Dow Jones Industrial Average lost 55.04 points (0.7%) for the week to end at 8,076.29. Tech - heavy Nasdaq gained 21.22 (1.3%) to end at 1,694.29. S&P 500 lost 3.37 (0.4%) to end at 866.23. Five of the ten economic sectors registered gains led by materials and technology sectors and five registered losses.

Earning reports dominated the entire week with thirteen Dow components reporting. In most of the cases, the topline failed to meet expectations. Some of the companies that beat or met earnings estimates included IBM, DuPont, Caterpillar, AT&T, McDonald's, Microsoft and American Express. Other technology names included Apple, eBay and Amazon.com. Companies that missed were 3M, Boeing and Merck.

In the financial sectors too, there were a couple of big names reporting earnings. Bank of America reported better-than-expected first quarter earnings, but the company increased its first quarter credit loss provisions to $13.4 billion, up almost $5 billion from the fourth quarter. But, Morgan Stanley reported a larger-than-expected loss and cut its dividend.

In the M&A arena, Sun Microsystems rallied during the week after Oracle announced it will acquire the company for $9.50 per share, which marked a premium of more than 40% above the company's last closing price. The news came after talks with IBM aquiring the company fell apart earlier during the month.

In the US market on Friday, 24 April, 2009, stocks started and ended the day with good gains. After starting the day 52 points higher earlier during the day, The Dow Jones Industrial Average ended higher by 119 points at 8,076. The Nasdaq Composite Index, ended higher by 42 points at 1,694. S&P 500 ended higher by 14 points at 866.

Earning and economic reports dominated the day on Friday. American Express was the primary leader among financial stocks. The company's stock went 20% higher after the company reported better-than-expected earnings.

In the tech sector, Microsoft reported earnings that matched expectations. That, combined with better-than-expected earnings from Amazon.com. In other earnings news, Ford posted a loss that wasn't quite as severe as many had expected.

Among economic reports of the day, new home sales for March came in at a seasonally adjusted annual rate of 356,000, which was better than expected, but down 0.6% from an upwardly revised February reading. In a separate report, March durable goods orders and orders excluding transportation declined 0.8% and 0.6% respectively. Neither was as bad as expected.

Among other economic news for the week at the US market, new unemployment claims for the week ended 18 April matched the consensus estimate of 640,000, representing a 4.4% increase from the 613,000 claims in the prior week. But continuing claims continued to trend in the wrong direction. They jumped 1.5% to another new record level of 6.137 million, implying the difficulty in finding a new job.

In the coming week earnings will remain in focus, as will the FOMC policy statement and economic data with first quarter GDP - both set for release on Wednesday.

For the year 2009, Dow and S&P 500 are down by 8% and 4.1% respectively. Nasdaq is up by 7.4%.

Pyramid of fraud

The Pyramid Saimira fraud doesn’t even have the attribute of being a complicated piece of skullduggery. A large number of people, a business journalist among them, got the stock price moving in a direction they wanted by using a forged letter. However, it is the very basic nature of this piece of crooked business that makes the implications deeply worrying. Full marks to Sebi, of course, for quickly investigating the fraud and strongly punishing those involved. This is not the first time, in India or elsewhere, that a journalist has been caught reinterpreting his reporting duties in a fashion that allows a steep rise in returns on a dodgy investment. Journalists covering high-stakes finance/corporate news need a particularly persuasive set of disincentives against moral malleability. That there are not too many of this kind of journalists is no comfort when put beside the evidence against the few who violate absolutely basic journalistic principles.

Sebi’s investigation also shows the extent to which apparently okay corporate entities—Pyramid Saimira looked like a straitlaced entertainment company—can manipulate the market. Shades of Satyam? Maybe even worse. The Saimira case involved 200-plus people in different institutions. That such a large number of market players, across different functions, helped perpetrate a fraud for a company with a turnover of less than Rs 800 crore is indication of the challenge that faces Sebi. The small fish is often harder to catch than the big fish and the damage can be equally big in both cases. The promoters’ role is another issue here. In the Saimira case, one of the promoters was using a mobile phone registered in someone else’s name, that someone acting as the proxy for manipulating market volumes. This is crookedness of the grubbiest kind and it is impossible not to wonder how many promoters entertain clever ideas like this to manipulate their stock price. Sebi has turned India’s stock market into a mature institution, a far cry from the days a bunch of brokers thought the market was their private fiefdom. Both the current Sebi chief and his predecessor have made large contributions towards that outcome. We haven’t had a monster market fraud since the Ketan Parikh case. But, remember, SEC in the US looked as surprised as everyone else when the Madoff scam broke. Sebi already inspires considerable fear. The fear factor has to be ramped up considerably.

via FE Editorial

Pyramid Saimira promoters barred from market

The Securities and Exchange Board of India on Thursday barred Nirmal N Kotecha, the promoter and one of the largest stakeholders in
Pyramid Saimira Theatre from dealing in the securities market till further directions.

A release issued by the regulator said that Mr Kotecha had "masterminded" the forgery of a Sebi letter directing the promoters of PSTL to make a open offer to minority shareholders. After the forged letter appeared in the media , Mr Kotecha used the temporary spurt in the stock price to offload a substantial portion of his holding in the firm.

"Shri Nirmal N Kotecha was also found to be using a large number of front accounts including his related persons/entities to manipulate the securities market and to route the funds through several layers in order to hide the source and flow of funds, and this prima facie appears to be a money laundering activity," the release said.

The regulator also barred PS Saminathan, the CEO of PSTL, also from dealing in the stock market till further notice. "Shri PS Saminathan has prima facie made misleading public announcements, only to create public interest in the scrip of PSTL for facilitating Nirmal Kotecha in off-loading the shares of PSTL at artificially inflated price in the market," the release said.

Sebi has passed a similar order against Rakesh Sharma, an exemployee of public relations firm Adfactors, and Rajesh Unnikrishnan, an employee of The Economic Times, for having allegedly "facilitated the publication in the media of the forged letter." ET is looking into the matter. Stock broking firm Keynote Capital has been barred from giving any trade recommendations on listed companies till further notice, while two other brokerages, India Capital Markets and Dynamic

Stock Broking have been barred from entering into any fresh agreements with new clients.

via ET

ACC

ACC

Daily News Roundup - Apr 27 2009

Reliance Industries will sell natural gas from its eastern offshore KG-D6 fields to ADAG power plant in AP at government-approved rates.(TOI)

ONGC Mittal Energy has got the Nigerian National Petroleum Corporation nod for its plan to set up a refinery in Nigeria.(BL)

Reliance Infrastructure may submit bids for retail power distribution in 11 cities in Uttar Pradesh and Bihar, according to company sources.(BL)

Reliance Infrastructure outlines plans to invest Rs13bn in its two power distribution companies in Delhi over the next couple of years for strengthening their electricity distribution networks.(BL)

Delhi HC allowed Cipla to manufacture and sell the generic version of lung cancer drug ‘Erlotinib’ of Swiss pharma company Hoffman La Roche.(TOI)

ONGC Videsh set to quit Sudan block, write off US$90mn.(TOI)

UTI asset management arm plans to offload 26% in three months.(FE)

Jet Airways has approached the US Exim Bank and European export credit agencies to reschedule a US$2bn loan that was raised to buy 27 Boeing and eight Airbus aircraft. (BS)

Satyam Computer board to meet on April 27 to "ratify the core Tech Mahindra nominees to its board", among others. (BS)

Indiabulls Real Estate board approves a plan to raise US$600mn through qualified institutional placement of securities. (BS)

SBI mulls reduction in education loan rates by 0.25%. (BS)

Renault is looking to introduce up to two new models in India with M&M this year. (ET)

Jindal Steel and Power to start producing gas in Bolivia in June for export to Argentina. (ET)

As part of cost-cutting measures, Tata Consultancy Services said that it will relocate staff abroad into India.(FE)

KEC International bags orders worth Rs950mn.(BL)

GAIL readies Rs10bn for city gas networks.(DNA)

Ranbaxy Laboratories has pared its operations in Europe, where it had been forced to cut product prices to cope with intense competition and posted a steep decline in revenue.(Mint)

ICICI Bank writes to Department of Industrial Policy and Promotion that it is not a foreign-owned bank and will not be covered by the new guidelines. (ET)

Aptech enters into a 51:49 JV with the Falgo Group to set up its training centre. (ET)

Jindal Stainless seeks more time to buyback FCCb’s. (ET)

SKF India to invest Rs1.5bn in a new ball bearing manufacturing plant at Haridwar. (ET)

Infosys BPO to acquire captive operations of customers. (ET)

The Department of Divestment to launch public offering to divest government stake in NHPC, Oil India and RITES. (ET)

JSW Energy is close to acquiring a sub-saharan African thermal coal mine for US$70mn. (ET)

Tamil Nadu Newsprint and Papers plans to invest Rs10bn for expansion. (BS)

Karnataka Bank is restructuring its loans worth Rs3-3.5bn that is under stress. (BS)

Tata to launch GSM with NTT DoCoMo co-branding. (BS)

Forex reserves fell by US$517mn in the week ended April 17.(BL)

Bill in US Senate to make H1B hiring tougher.(BL)

Banks to get Rs50bn for farm debt waiver.(Mint)

A government panel set up to resolve the critical issue of additional spectrum allocation is understood to have moved from the current user¬-based formula to revenue¬ generating auction model.(Mint)

Provisional safeguard duty mooted on hot rolled coils, sheets.(BL)

India Infrastructure Fund invests US$50mn in two toll road projects.(Mint)

Bank credit witnesses a moderate growth of Rs14bn in the first fortnight of the current financial year. (BS)

World Bank's private sector lending arm, IFC, to invest US$1bn in Indian companies during its financial year beginning June 2009. (ET)

The government is considering levying a safeguard duty of 25% on key steel products imported from countries like China and Japan. (ET)

Some cooling in the offing

One moment of patience may ward off great disaster. One moment of impatience may ruin a whole life.

Patience always pays whether its markets or life. Those who were patient enough to endure last year’s crash have reaped a rich harvest in the past month and a half. There are many who have missed the relief rally and are keen to cash in on the upswing. But, they should be careful as the advance may not sustain for too long. So, lock in some gains and wait for better opportunities when there is a fresh correction.

Today itself, there could be some easing as Asian stock benchmarks (barring Nikkei) are in the red. US stocks gained on Friday, spurred by better-than-expected results by Ford and encouraging data on new home sales. European shares too posted strong gains. The SGX Nifty in Singapore was last seen down a little less than 1%.

However, a short squeeze is not ruled out ahead of Wednesday’s F&O expiry, which could take the key indices further up. The overall mood is likely to remain upbeat. Markets are shut on Thursday and Friday. Election fever remains high with three more rounds still to go.

Major Results Today: Aban Offshore, Areva T&D, Bank of Baroda, Bosch, Castrol, Exide, Geometric, Indian Bank, Jaiprakash Associates, Mindtree, Noida Toll Bridge, OBC, Renuka Sugars, Shaw Wallace, Tech Mahindra, United Spirits and UB Holding.

FIIs were net buyers in the cash segment on Friday at Rs5.77bn (provisional) while the local institutions were net buyers of just Rs153.1mn. In the F&O segment, the foreign funds were net sellers at Rs494.5mn. On Thursday, FIIs poured in Rs3.11bn in the cash segment. Mutual Funds pumped in Rs4.6bn on the same day.

Week Ahead in the US: Roughly a third of the S&P 500 companies reports results this week. Major economic reports are due on first-quarter GDP growth and consumer spending. The Federal Reserve concludes its two-day policy meeting on Wednesday. Chrysler's fate hangs in the balance, as reports say that the UAW has reached an agreement with the struggling auto major on modifications in collective bargaining accord needed to keep the company out of bankruptcy. Investors will also brace for the release of the "stress tests" of the major US banks, due out in the following week.

Meanwhile, US health officials on Sunday declared a public health emergency over increasing cases of swine flu, saying that they had confirmed 20 cases of the disease and expected to see more as investigators fan out to track down the path of the outbreak. Although officials said that most of the cases had been mild and urged Americans not to panic, the emergency declaration frees resources to be used toward diagnosing or preventing additional cases and releases money for more antiviral drugs.

US stocks rallied on Friday after Ford, Microsoft and American Express reported results that met or topped analysts' expectations. The Nasdaq ended higher for its 7th week in a row, while the Dow and S&P 500 ended the week slightly lower after six straight weeks of gains.

The Dow Jones Industrial Average added 119 points, or 1.5% during the day to close at 8,076.29. The S&P 500 index gained 14 points, or 1.7%, to shut shop at 866.23. The Nasdaq Composite index rose 42 points, or 2.6%, to 1,694.29.

Stocks rallied on the last day of a turbulent week on Wall Street where investors showed some caution. Bets that the worst is over for the world's largest economy and companies lifted stocks. The S&P 500 climbed by more than 29% over the past six weeks prior to April 20, following a rout that left the index at 12-year lows.

US indices briefly trimmed gains after regulators released what was billed as a detailed report on how the government is running its "stress tests" of the leading banks. However, the report offered little new information. Results from the tests won't be announced until May 4.

Ford Motor, considered to be the healthiest of the three Detroit automakers, said that it lost $1.4 billion in the first quarter as it contended with the worst quarter for the industry in 26 years. Excluding special items, Ford lost $1.8 billion, or 75 cents per share, versus a profit of 20 cents per share a year earlier. Analysts had forecast a loss of $1.23 per share. Ford's revenue also plunged versus a year ago but topped estimates.

Ford CEO Alan Mulally said he believes the company can continue to function without receiving a federal bailout like rivals Chrysler and General Motors (GM). Ford shares jumped 11.4%.

Time is running out for Chrysler, which could enter Chapter 11 bankruptcy protection as soon as next week, according to reports, if it can't close deals with creditors and Italian automaker Fiat. Chrysler is privately owned.

Meanwhile, GM said late on Thursday that it will temporarily shut down 13 of 20 North American plants this summer to cut inventory. The company has until June 1 to cut its debt and labor costs or face Chapter 11 as well. Shares gained 4.3%.

After the close on Thursday, Microsoft reported lower-than-expected quarterly sales on weaker earnings that met estimates. Shares of the Dow component gained 10.5%.

Dow component American Express reported weaker quarterly earnings that topped estimates, also after the close on Thursday. Shares gained 20.7%.

3M reported weaker quarterly sales and earnings and cut its full-year earnings forecast for the second time. The company, which makes everything from Scotch tape to power lines, is seen as a proxy for the economy because of the broad range of its business. Shares gained 5%.

Amazon.com reported higher quarterly sales and earnings that topped estimates late on Thursday. Shares gained 4.8%.

Honeywell reported weaker quarterly sales that topped estimates on weaker earnings that met estimates. The company also cut its 2009 profit outlook, due to the global economic slowdown. Shares fell 2.9%.

Schlumberger reported weaker earnings that topped forecasts on weaker sales that missed estimates. The leading oilfield services company in the world also gave a dour forecast for the industry for the rest of this year and for 2010. Shares gained 7%.

March new home sales fell from the previous month, after that month's sales figures were revised higher, the Census Bureau reported. Sales fell to a 356,000 annual unit rate from an upwardly revised 358,000 unit annual rate in February. Economists expected sales at a 337,000 unit annual rate.

March durable goods orders fell 0.8% versus forecasts for a drop of 1.5%. Orders of goods meant to last three years or more rose 3.4% in February.

Treasury prices slumped, raising the yield on the benchmark 10-year note to 2.99% from 2.91% on Thursday.

Lending rates were mixed. The 3-month Libor rate fell to 1.07% from 1.09% on Thursday. The overnight Libor rate held stead at 0.2%. Libor is a bank-to-bank lending rate.

In currency trading, the dollar fell versus the euro and the yen.

US light crude oil for June delivery rose $1.94 to $51.56 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $7.50 to settle at $914.10 an ounce.

European shares advanced strongly on Friday with banks and oil producers leading the advance. The pan-European Dow Jones Stoxx 600 index rose 2.3% to 195.82, helping it close roughly flat for the week. Still, a weak session for several Nordic firms in particular kept gains for the Stoxx 600 in check.

Among national indexes, the UK's FTSE 100 index jumped 3.4% to 4,155.99, while Germany's DAX 30 index advanced 3% to 4,674.32 and the French CAC-40 index was up 3.1% at 3,102.85.

Indian markets ended the week on a high with the NSE Nifty index managing to sustain above the 200 DMA for the second straight trading session. The rally was led by the banking and the capital goods stocks followed by select telecom and auto stocks.

Even the mid-cap and the small-cap stocks attracted buying interest as both the indices added over 1.5% each.

The BSE Sensex surged 194 points to close at 11,328 and the NSE Nifty ended higher by 57 points at 3,480.

Among the 30-components of Sensex, 24 ended in positive terrain and 6 ended in the red. Among the major gainers were, M&M, JP Associates, Grasim, Bharti Airtel, ACC and Reliance Infra.

Among the major losers were, Ranbaxy, Hindustan Unilever, Tata Steel, NTPC, ITC and Infosys.

Among the BSE Sectoral indices BSE Bankex index was the top gainer, the index gained 2.5%. Among the other major gainers were BSE Consumer Durable index (up 2%), BSE Capital Goods index (up 2%), BSE Teck index (up 1.8%) and BSE Auto index (up 1.7%)

Market breath was positive, 1,526 advanced against 966 declines, while, 101 remained unchanged.

Shares of Pyramid Saimira ended at 5% lower circuit to Rs17.4 after market regulator ordered promoters of the company, Nirmal N. Kotecha, Rakesh Sharma, Rajesh Unnikrishnan and Pratheesh Kumar V.K. not to buy, sell or deal in the securities market including IPOs, in any manner, either directly or indirectly, till further directions.

These persons / entities prima facie have been found to have played a key role in the forgery, dissemination of the information contained in the forged SEBI letter to the media and misleading the media to believe the authenticity of the information that was circulated to them. Click here to read more…

The scrip touched an intra-day high of Rs17.4 and a low of Rs17.4 and recorded volumes of over 50,000 shares on BSE.

The stock had hit 52-week high of Rs410 on May 14, 2008 and 52-week low of Rs13.15 on March 5, 2009. The stock has dropped almost 57% from year to date.

SGX Nifty Live Update -2 - Apr 27 2009

April 3,433.0 -41.5

May 3,432.0 -50.5

Bullion metals register decent gains

Weak dollar and weak economic reports impart more shine to bullion metals

Weak set of economic reports and weak dollar continued to boost the appeal of precious metals as a safe bet for investment taking bullion metals higher on Friday, 24 April, 2009.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Friday, Comex Gold for June delivery gained $7.5 (0.8%) to close at $914.1 an ounce on the New York Mercantile Exchange. For the week, gold ended higher by 5.3%. Year to date, gold prices are higher by 3.3%.

For the month of March, gold fell 2.1%, down for the first month in five. But the metal gained 4.3% in the first quarter. Before March, for the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (15%) since then.

On Friday, Comex silver futures for May delivery gained 16.5 cents (1.3%) at $12.92 an ounce. Year to date, silver has climbed 13.2% this year. For 2008, silver had lost 24%.

In addition to the above, it was reported on Friday that China has increased its gold reserves by 76% in six years to 1,054 tons. The country has now the fifth- largest gold stockpile by country, behind Italy's 2,451.8 tons, according to data compiled by the World Gold Council.

The IMF forecast earlier during the month a 1.3% decline in the world economy, compared with a 0.5% expansion estimated in January, and said growth will be slower next year than previously expected. As per the report, the UK will see its economy shrink by 4.1%, Japan by 6.2%, and the U.S. economy is expected to decline by 2.8%

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

Weak dollar and strong rally take crude higher

Crude ends higher for fourth straight day

Crude oil ended higher once again on Friday, 24 April, 2009. Prices rose due to the week dollar and a batch of strong earning reports and a strong rally at Wall Street.

On Friday, crude-oil futures for light sweet crude for June delivery closed at $51.55/barrel (higher by $1.93 or 3.9%) on the New York Mercantile Exchange. For the week, crude ended higher by 2.4%.

Crude ended March trading up 10.9%. It rallied 11.3% in the first quarter. For the month of February, crude prices had ended higher by 1.5%.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 68.8% since then. Year to date, in 2009, crude prices are higher by 12.3%. On a yearly basis, crude prices are lower by 53%.

Earning reports dominated on Friday. American reported better-than-expected earnings. In the tech sector, Microsoft reported earnings that matched expectations. Even Ford posted a loss that wasn't quite as severe as many had expected.

EIA reported earlier during the week that crude inventories increased 3.7 million barrels (against an expected 3 million barrels) to 370.6 million barrels last week for the week ended 17 April, 2009, the highest level since September 1990. U.S. refineries operated at 83.4% of their operable capacity last week, higher than a week ago but still in a low range.

EIA had also reported that gasoline inventories rose 800,000 barrels and distillate stockpiles, which include heating oil and diesel, rose 2.7 million barrels. Market had expected a decline in both gasoline and distillate inventories. Total demand for petroleum products in the past four weeks fell 6.5% from a year ago. Among them, gasoline demand fell 0.4% while distillate consumption slumped 9.4%.

Also at the Nymex on Friday, May reformulated gasoline rose 4.6 cents, or 3.2%, to $1.4475 a gallon. May heating oil gained 5.04 cents, or 3.8%, to $1.3683 a gallon.

May natural-gas futures fell to $3.286 per million British thermal unit.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

Wipro

Wipro

Praj Industries

Shareholders can continue to remain invested in the stock of Praj Industries. While the company’s last quarter and full year performance have not been impressive, easing credit conditions worldwide and Praj’s established position in the field of bio-ethanol technology make the stock a good long term investment.

The stock was beaten down following the almost vertical plunge in crude oil price, led by concerns that low oil price may trim the spends by Praj’s user companies.

While that has proved to be true, what with the company seeing lower yearly and quarterly sales and tepid growth in order-book, what lends comfort is that the lower sales was driven more by the postponement or slowed investment by companies than any loss in sheen of investing in bio-ethanol facilities. At the current market price of Rs 72.6, the stock appears reasonably priced at about 10 times its likely FY10 per share earnings.

With the credit conditions beginning to look up, the company could see a revival of enquiries and order intakes in the coming quarters. Shareholders can wait a couple of quarters before adding or cutting their exposure to the stock. Till such time, trends in order inflows may bear a close watch.
US to go slow

The company has an entrenched presence in the global markets of the US, EU, Brazil and South-East Asia; exports make up for over 55 per cent of its revenues. However, with the recessionary trends in the US and EU, managing growth in these markets may no more be easy.

The management has said that the overall contributions from its US operations, where it had a couple of years back acquired the US-based CJ Schneider to establish manufacturing presence, is likely to drop this fiscal. That the existing ethanol plants in the US are not using up their capacities in full — a few have shut operations — also validates the anaemic demand trends in the country.

While, overall, the biofuels production levels in the US are expected to remain buoyant — likely production of 38 billion litres this fiscal as against 35 billion last year — Praj appears likely to see a slowing of its US operations. The management, however, expects to offset this by focusing more on the EU and domestic markets.
Growth avenues

Praj expects a significant increase in revenue contribution from the EU. EU’s directive that requires motor fuels to be 10 per cent ethanol-blended by 2020, starting 2011, offers an immense growth potential for Praj, which has a market share of about 30 per cent in the region.

This directive, when implemented in totality, will require an additional biofuel production of over 12-14 billion litres whereas Europe currently has a total production capacity of 3.5-4 billion litres only. In this regard, that the company has a presence in the EU through a joint venture BioCnergy Europa B. V., with Aker Solutions (60:40) lends comfort.

The joint venture company is operational and had previously even bagged an order (valued at Rs 120 crore) for the design of an ethanol plant for Vivergo Fuels.

But even as the favourable regulatory developments suggest a stable long-term revenue outlook for Praj, challenges such as funding constraints and fall in demand may weigh on performance in the near term.

It is in this context that the company’s diversified revenue base (in terms of global markets) provides relief. Praj’s strong presence in South-East Asia (50-55 per cent market share) and the domestic (75 per cent) market belie fears of any significant slowdown in revenues to a great extent. The company’s order books of over Rs 800 crore (roughly executable over the year) also assuage concerns.
Results card

Praj’s latest earnings scorecard appears to have mirrored the tepid business environment. For the financial year ended March-09, the company reported 10 per cent growth in sales, while its bottomline shrunk by 15 per cent.

Forex losses, higher depreciation and a three percentage points fall in operating margins to about 20.3 per cent were reasons for the fall in profits. On a consolidated basis too, the performance has been far from impressive. While the company managed to grow its topline by 26 per cent, its profits fell by bout 20 per cent.

For the coming year, the company expects more order inflows from the international markets vis-À-vis domestic markets. This may prove beneficial as international orders enjoy higher margins.

As for the existing contracts, the company may have little room to manoeuvre its margins since most of them are fixed price contracts. That the company books its raw material requirements as soon as it gets order also rules out any positive impact on the margins from a further fall in commodity prices.

Wipro

That both volumes and the pricing environment for Indian IT majors are set for downward pressure was apparent from the numbers of TCS and Infosys Technologies’ for the March quarter. But surprisingly, Wipro, the third in the ‘top three’ IT Services company has held on to its pricing, despite a turbulent macro environment.

Though volumes declined sharply at 6.3 per cent sequentially, the revenue decline at 1.1 per cent showed it fared better than peers. Wipro also managed to meet its guidance for the quarter. This fact has been treated by the markets with a fair degree of optimism.

But there are some key positives in the operating metrics, verticals and services offering, which may play out well for Wipro’s volumes over the next few years. That billing has not been significantly affected so far also means that there may be some leeway for the company on future price re-negotiations/discounts that clients may come back for.

At Rs 312, the stock trades at 12 times its likely 2009-10 earnings. At this valuation, and assuming that revenue and profits are likely to be under pressure over the next one year, there may not be scope for significant capital appreciation unless an investor has a two-three year horizon. Investors can, therefore, hold the stock, while betting on the fact that Wipro has the lowest exposure among IT majors to the troubled BFSI segment (26 per cent of revenues). Independent research bodies predict greater outsourcing in segments such as utilities, telecom and retail, where Wipro has a significant presence. It, thus, appears well-placed to tap opportunities ahead of peers.

This apart, increasing strength in winning domestic deals (partnering with Wipro Infotech) and benefits from the acquired Infocrossing operations, in the form of large deal wins in areas such as IT infrastructure outsourcing, are key positives for Wipro.
business metrics

Wipro has been able to increase the proportion of fixed-price contracts from 30 per cent levels at the start of FY-09 to 38.1 per cent in the latest March quarter. Fixed-price contracts ensure better realisations compared to time and material contracts. This also explains why billing was not under too much pressure last year. If the trend is sustained, some insulation can be had from imminent billing pressures. Clients may also prefer to structure contracts in this format for better manpower and resource utilisation within fixed timelines.

The offshore component of revenues has also increased steadily and is now 48.8 per cent. A greater offshore component means that costs are optimised for Wipro. While ramp up in utilisation has not been significant, this can largely be attributed to volume declines.

But Wipro does not plan to hire people to the extent that Infosys or TCS are set to do, suggesting that the company is looking to ramp-up utilisation levels. Hiring has been pegged to demand. A lower hiring level means that cost of bench is low. Of course, if the volumes in IT deals, especially large ones ($100 million plus) were to spike up, Wipro may face a challenge in recruiting several people and training them.

This apart, selling, general and administrative (SG&A) expenses and wage costs have been trimmed compared to last year. While the company has decided not to give any wage hikes this year, there may a marginal hike in SG&A for better mining of clients. Potential margin squeezers have, thus, been kept at bay.
Business prospects

Wipro has the lowest dependence on the BFSI segment among Tier-1 IT players. Manufacturing and healthcare (20.7 per cent of revenues), technology business (27.3 per cent of revenues, which includes telecom, media and technology) and retail and transportation (18.2 percent of revenues) all make for a well-diversified vertical-mix. A recent study by research firm TPI indicates that media, utilities, telecom and retail sectors are set to witness heightened increase in IT outsourcing as cost pressure builds on these firms.

Benefits also accrue to Wipro through its IT products arm — Wipro Infotech — especially in the domestic IT market. The nine-year deal entered into with Aircel last year at an estimated Rs 1,800-2,400 crore is a case in point.

Similarly, a Rs 1,182- crore worth contract has been won from the ESIC (Employees State Insurance Corporation). While Wipro Infotech may be the primary beneficiary of such deals, there will also be significant portions of such deals where Wipro’s expertise would come to play.

Infocrossing, the company Wipro acquired in 2007, has also started to contribute to deal wins. Infocrossing has been able to bag large deals ($100 million plus) to be executed over the course of the next few years. Being in the IT infrastructure outsourcing space, an area just beginning to catch up for Indian IT majors, Infocrossing could well be a shot in the arm for Wipro.
Risks

Pricing pressures may strain margins, while volumes could stutter over the next few quarters before witnessing an increase.

Top-client revenues and number of one-million dollar-plus annual revenues clients have slowed down as have the number of overall active clients. These facts are reflected in the volume decline. But as indicated earlier, the company could step up spends on SG&A for improved mining and ramp-up of existing and new clients.

Hero Honda

A market leader in two-wheelers, Hero Honda has outpaced rivals with a 12 per cent sales growth in 2008-09, as against a flat growth of 3 per cent for the industry this year. Good growth in sub-125 cc segment and a strong foothold in the semi-urban and rural markets has helped Hero Honda weather uncertainties such as lower credit availability and a slowdown in urban purchases relatively well.

However, with a 42 per cent gain over the past year (the Sensex declined 32 per cent in the same period), the stock has completely sidestepped the market meltdown and now trades at a sizeable valuation premium over the market.

At the current market price of Rs.1147, stock price discounts the company’s trailing four quarters earnings by 17 times. Though Hero Honda may continue to deliver reasonable profit growth in the coming quarters, this premium valuation limits the scope for substantial upside in the stock. Investors can thus take advantage of this opportunity choose to book profits on the Hero Honda stock.

Zip-zap-zoom

Of the three key sub segments in the motorcycles category — sub-125 cc, 125-250 cc and above-250 cc — Hero Honda has a presence in the first two.

The sub-125 cc segment accounts for over 70 per cent of Hero Honda’s motorcycle sales, with the base variants Splendor and Passion helping Hero Honda command a strong market position. The low cost of ownership and lower reliance on credit purchases have contributed to good growth in Hero Honda’s sub-125 cc bikes over the past year. The Sixth Pay Commission arrears have also helped sales of two-wheelers in this period. Bajaj Auto’s shift in focus to premium bikes in recent years has also helped Hero Honda gain the extra mileage to increase its market share from 70 per cent to 79 per cent between March 2008 and March 2009.

This strategy has proved to be a success, but the situation may change if more players stage an entry into the sub-125 cc segment, to take advantage of the stronger growth in this space. Honda Motors’ (which provides technical support to Hero Honda and holds 26 per cent stake in the latter) planned foray into the 100 cc market, after success with premium launches, may pose a threat to the company’s market share.

Moreover, a shift in consumer preference to higher variants from the sub-125 cc segment is evident. The proportion of above-125 cc bikes in the total motorcycle sales has increased from 26.6 per cent in 2007-08 to 29.1 per cent this fiscal. This category targets the youth in metro and rural areas, who give priority to style, efficiency and value for money.

In 2008-09, Pulsar, the flagship model of Bajaj Auto in this space, ceded market share to new entrants such as Honda Motors and Yamaha. A flurry of product launches from competitors limited Hero Honda’s growth and it was unable to cash in on this segment as it did with sub-125 cc bikes. It has just been able to maintain its 11.6 per cent market share.

While the motorcycles segment accounts for over 85 per cent of the total revenues, the rest is contributed by scooters. Targeted at urban women, Pleasure is the only scooter from Hero Honda, whose share in sales has risen from 9.8 to 12.8 per cent this year. The growth is reported to be driven by an increase in the proportion of cash purchases.
Pan-India presence

Launched in December 2007, Har Gaon – Har Aangan, the company’s rural initiatives target 23,360 villages. The programme established a strong rural distribution network — the important reason for Hero Honda’s success in the sub-125 cc segment. Factors such as farm loan waiver, better agricultural output and farm product prices and better access to credit in rural areas are said to be the key drivers of rural demand. For the year 2008-09, sales generated from semi-urban and rural areas constituted 45-50 per cent of the company’s total revenues.
Strong financial position

For the five years to 2007-08, Hero Honda posted compounded annual (gross) sales growth of 15 per cent. This moderated to 12 per cent for 2008-09; but remained well ahead of rivals. While operating profits expanded by 6.5 per cent for the year, benefits from the commissioning of the Haridwar plant (which enjoys excise, sales tax and income tax exemptions) aided net profit growth at 10 per cent for 2008-09. Fuller utilisation of the Haridwar plant in the coming year may further augment profits growth.

Steel and aluminium procured at spot prices account for 70 per cent of the total materials cost for the company. With these prices declining by 60 per cent from their July 2008 peak, margin pressures for Hero Honda have eased off significantly. There is further scope for savings as the company’s long term contracts for other materials such as alloy wheels and rubber, are likely to conclude by first quarter of 2010.
Launches

The company had seven launches in 2008-09, which kept sales buoyant. However, most of these are extensions of existing models (for example CBZ to CBZ Xtreme). Keeping up the momentum of product launches may be crucial to sustaining sales growth. The company has lined up nine launches in 2009, but it remains to be seen if they replicate the success of the original brands.

While Hero Honda has managed a difficult year, risks persist over the next couple of years. The company’s product portfolio is highly skewed towards sub-125cc segment and any slowdown in this category would certainly impact volumes. A major portion of Hero Honda’s sales in 2008-09 has been cash funded. It is quite possible that once credit availability increases, consumers may shift preference to higher end bikes. The farm loan waiver and Pay Commission revision may have delivered a one-off fillip to two-wheeler sales; it remains to be seen if sales growth is sustained in the coming months once the impact of these initiatives wears off.

BGR Energy Systems

Investors with a three-year perspective can consider buying the stock of BGR Energy Systems.

The company’s strong financials, the resilience shown in the current slowdown and the ability to achieve financial closure in large projects during a liquidity crunch, suggest that the company will be able to capitalise on the huge business opportunity in the power and oil and gas space.

An order book of over Rs 10,000 crore (7 times FY08 sales) provides revenue visibility for the medium term. The company’s move to tie-up technology for power equipment manufacturing, if successful, could result in a significant re-rating of the stock over the next couple of years. At the current market price of Rs 180, the stock trades at 10 times its expected earnings for FY10. The stocks can be bought on declines linked to broad markets.

For the nine-months ended December 2008, BGR recorded 30 per cent growth in sales as well as net profits compared with a year ago numbers. This performance stands out at a time when most companies in the engineering space have witnessed either a slow down in their business or were heavily burdened with raw material and interest costs.

Profitability remained intact for the above nine months with operating profit margins holding at 10.5 per cent. While BGR did see a rise in its interest costs, higher profits provided sufficient cushion. The company’s superior debt servicing capabilities enabled it to tie up funding for two huge projects for state electricity boards (SEBs), thus achieving financial closure on time.

At the time of its IPO in 2007, BGR was primarily a turnkey player in oil and gas and also executed Balance of Plant (BOP) for power projects. From an engineering project executor, BGR has graduated into a full fledged Engineering Procurement and Construction (EPC) player with backward integration of manufacturing a good proportion of components in-house.

The company’s two EPC power projects, bagged after competing with top power equipment makers, is an indication of the above transition. Its in-house manufacturing for some components could also have come to its aid in bidding at competitive rates. However, timely execution in these projects would act as a point of reference for future projects.

While BGR would import the power equipment for its existing SEB projects, in a move to improve cost viability of projects and avoid the hassle of imported technology, the company has recently tied-up with US-based Foster Wheeler North America, for sub-critical and super-critical boilers.

With plans to have a manufacturing unit in India, this strategy would support its EPC business and do away with technology related setbacks involved in some imported power equipment.

Idea Cellular

We recommend a buy in the Idea Cellular stock from a short-term trading perspective. The stock has been trending up since October 2008 low of Rs 34 as is clearly evident from the charts. In late March 2009, the stock conclusively penetrated its 21 and 50-day moving averages and is trading well above these lines.

On April 21, the stock conclusively broke through the resistance level of Rs 57 by gaining 4 per cent, accompanied with good volume. Moreover, it also surged almost 5 per cent on April 24, reinforcing the bullish momentum. We notice that there is a gradual increase in weekly volumes. The daily relative strength index (RSI) is featuring in the bullish zone and weekly RSI is steadily raising in neutral region towards the bullish zone.

We are bullish on the stock from a short-term horizon. We expect the stock’s up-move to continue further until it hits our price target of Rs 67 in the approaching trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 57.

Sesa Goa

Sesa Goa

Indian AMC's Portfolio

Indian AMC's portfolio

Bajaj Hindustan

Bajaj Hindustan

Zee Entertainment

Zee Entertainment

SGX Nifty Live Update -Apr 27 2009

SGX Nifty April 3,475.0 +0.5

SGX Nifty May 3,470.0 -12.5

BFSI

BFSI

Weekly Watch - Apr 27 2009

Weekly Watch - Apr 27 2009

Bharti Airtel

Bharti Airtel

Rolta Ltd

Rolta

Hero Honda Ltd

Hero Honda

Reliance Capital Ltd

Reliance Capital

Axis Bank Ltd

Axis Bank

Reliance Infrastructure Ltd

Reliance Infrastructure Ltd