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Tuesday, February 16, 2010

Not worth the chance!


Choice, not chance, determines destiny.

The uncertainness in recent times does not really offer much of a choice to take a chance. Brazil’s market is shut on account of the Carnival while a few Asian markets are closed for the Lunar New Year. For India and other world markets that are open for trading, there are hardly any reasons to celebrate - at least for the time being.

If anything, worries have got compounded of late. Concerns over China’s monetary tightening, debt troubles in the EU and the jobless economic recovery in the US are among the woes. Back home, while things appear to be getting better for the economy, inflation, at the same time, is threatening to cross double digits soon.

Budget is just a few days away and could herald partial and calibrated rollback of the fiscal stimulus. Monsoon will be crucial, as India can hardly afford another bad rainy season.

We expect a steady start today. Japan and South Korea have gained modestly while stock benchmarks in Europe rose marginally. Avoid taking any major call on either side. Use the uncertainty and consolidation to rejig your portfolio.

European shares closed higher on Monday, buoyed by gains in the airline sector and a broker upgrade for automaker Renault. The pan-European Dow Jones Stoxx 600 index rose 0.4% to end at 241.92, extending gains from the previous week when the index rose 1.5%.

Disgruntled German voters, the European Commission's new point man on economic and monetary affairs and European Central Bank President Jean-Claude Trichet put added pressure on Greece to further tighten its belt Monday and the euro declined 0.6% to $1.3603 against the dollar.

The UK's FTSE 100 index finished 0.5% higher at 5,167.47, the German DAX index rose 0.2% to end at 5,511.10 and the French CAC-40 index added 0.3% to settle at 3,609.22.

The US equity market was closed Monday for the Presidents Day holiday.

Renault shares jumped 2.4% after the French auto maker was upgraded to overweight from underweight at Morgan Stanley. The broker said the three cash-flow issues that kept it underweight have begun to recede.

Shares of Norwegian fertilizer group Yara International dropped 6.9%. It said that it will pay $41.10 a share, or $4.1 billion in total, for Terra Industries
Yara said the deal will improve its position in the U.S.

Shares of British Airways jumped 2.6%. Over the weekend, AMR Corp.'s American Airlines said that the U.S. Department of Transportation has tentatively approved a proposed transatlantic travel alliance with British Airways, Iberia Airlines, Finnair and Royal Jordanian.

German-based tourism firm Tui AG climbed 9.3% after reporting that its fiscal first-quarter net loss narrowed to 102.8 million euros from 155.1 million euros in the year-earlier period.

Indian markets ended almost near days low on Monday starting off the week with a negative bias. The slide was led by heavy selling in the telecom major Bharti Airtel after it offered to acquire Zain’s African operations. Accelerating inflation numbers coupled with weak cues from the equity markets in Japan and Europe further dampened the sentiments.

The consumer durables index which was the top gainer in the previous week ended shedding 1.5% on Monday. Among the other major losers were, the BSE Teck and Oil & Gas index. Even the Mid-Cap and the Small-Cap indices ended in the red.

The BSE Sensex fell 114 points to end at 16,038 after touching a high of 16,227 and a low of 16,011. The Nifty was down 25 points to end at 4,802.

Markets in China, Taiwan, Hong Kong, Singapore, South Korea and Malaysia are shut today for the Lunar New Year. The Nikkei in Japan ended lower by 0.8%, while Australia's S&P/ASX edged lower by 0.4%.

In Europe, stocks were trading higher. The DAX in Germany was up 0.6% and the CAC 40 index in France was up 0.8%. The FTSE in the UK was up 0.8%.

Coming back to India, among the BSE sectoral indices, the BSE Consumer Durables index was the top loser, shedding 1.5%, followed by Teck index that was down 1.3% and BSE Oil & Gas index was down 1%. The BSE Mid-Cap and BSE Small-Cap index slipped 0.5% each.

Among the 30-components of Sensex, 20 ended in the negative terrain and 10 ended in the green. Bharti Airtel, RCom, Sterlite, Tata Power and Reliance Infra ended in the red. Among the top gainers were Hindalco, BHEL, HDFC Bank and Tata Steel.

Outside the frontline indices, the big losers in the broader market were Bank of India, Shriram Transport, OBC and Videocon Ind. On the other hand, gainers included Jain Irrigation, KSK Energy, Castrol India and EIH.

Shares of Bharti Airtel plunged by over 9% to end at Rs285 after the company offered US$10.7bn for most of the African assets of Kuwait’s Zain. According to reports, Zain is said to have accepted the US$10.7bn offer from Bharti Airtel

Zain entered into exclusive talks with Bharti for the sale of Zain Africa BV until March 25, the Kuwait-based company announced. The proposal does not include Zain’s Morocco or Sudan operations and is subject to due diligence and regulatory approval. There is no guarantee the transaction will be completed, according to the statement.

Tata Motors Group global sales stood at 85,714 nos. in January 2010, a growth of 93% over January 2009. Cumulative sales for the fiscal (April 2009 – January 2010) are 681,480, higher by 13% compared to the corresponding period in 2009-10.

The stock ended flat at Rs682. The scrip opened at Rs690 it touched an intra-day high of Rs702 and a low of Rs680 and recorded volumes of over 0.52mn shares on BSE.

Adani Power received a Letter of Intent by Madhya Pradesh Government for development of 1320 MW Power Project at Chhindwara in Madhya Pradesh. This is a unique project in as much as the project comes with land and other infrastructure facilities and requisite support from the M.P. Government.

The stock ended flat at Rs107. The scrip opened at Rs108 it touched an intra-day high of Rs108.5 and a low of Rs105.3 and recorded volumes of over 0.67mn shares on BSE.

ONGC is reportedly planning to invest US$25-US$30bn in the next 10 years on buying and developing energy assets abroad. ONGC Videsh, is looking at assets in West Africa, Russia and other countries that emerged from the former Soviet Union, and in South America, reports added.

Shares of ONGC fell 1.1% to end at Rs1088. The scrip opened at Rs1101 it touched an intra-day high of Rs1110 and a low of Rs1079 and recorded volumes of over 91,000 shares on BSE.

Indiabulls Real Estate announced that the board of directors discussed a proposal to consider various alternatives to restructure/ reorganize the wholesale trading business of the Company by way of a demerger, on a going concern basis, of the undertakings, business, activities and operations of the Company pertaining to its wholesale trading, including its shareholding in Indiabulls Wholesale Services Ltd., a wholly owned subsidiary of the Company. The restructuring is expected to unlock value and also streamline the operations and ownership structure of the Company.

Shares of Indiabulls Real estate advanced by 1% to end at Rs179. The scrip opened at Rs179.9 it touched an intra-day high of Rs181 and a low of Rs174 and recorded volumes of over 0.68mn shares on BSE.

Ansal Properties plans to set up a biotech park in Lucknow, Uttar Pradesh. The proposed biotech park is being planned within the Company's mega town ship in Lucknow, Sushant Golf City.

Shares of Ansal Properties edged lower by 0.5% to end at Rs69. The scrip opened at Rs69.5 it touched an intra-day high of Rs71 and a low of Rs68 and recorded volumes of over 0.136mn shares on BSE.

Shares of Stone India surged 6.7% to end at Rs76.75 after the company announced that it has executed a Technical Collaboration agreement with Sumitomo Electric Industries, Japan in Nov 2007 for selective manufacturing and assembly of Air Spring systems for Railways in India. Subsequently Stone India commenced bulk supply of Air Springs to Indian Railways.

Shares of Castrol India advanced by 3% to end at Rs701 after the company announced that the board of directors would meet on February 18, 2010 to mull bonus issue. The scrip opened at Rs686 it touched an intra-day high of Rs724 and a low of Rs680 and recorded volumes of over 0.5mn shares on BSE.

Shares of Indore based Syncom Healthcare started trading at Rs90 per share on the NSE as against its issue price of Rs75 per share. After a volatile day of trades on is debut the stock finally ended adding up 17% in comparison with its issue price of Rs75 per share.

The company entered the capital market to raise Rs487.5-562.5mn with the price band of Rs65-75 per equity share from the issue. The issue constituted 42.86% of the fully diluted post issue paid up capital of the company.

On the other hand, Vascon Engineers ended at Rs147 falling 10% as against its issue price of Rs165 on the BSE.