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Friday, January 19, 2007

Auto, IT and metal stocks punctured


The market settled in the red as profit-booking dominated proceedings in an extremely volatile day of trades. Brisk selling in autos, IT and metal stocks weighed heavily on the benchmark index.

The 30-shares BSE Sensex lost 35.04 points, ending at 14,182.71.

The BSE benchmark index had opened with a spurt, at 14,271.24, and surged to a high of 14,300.11, buoyed by stronger-than-expected results of index heavyweight Reliance Industries (RIL) and a fall in global crude oil prices. However, selling began soon enough and continued till the benchmark index slipped to 14,067.52.

The S&P CNX Nifty lost 18.55 points, to finish at 4,090.50.

After remaining strong in the past couple of sessions, the market-breadth also succumbed to profit-booking. For 1,642 shares declining, 1,030 advanced and 41 remained unchanged on BSE.

The total turnover on BSE amounted to Rs 4126 crore.

Among the 30-Sensex pack, 19 declined while the rest advanced.

Reliance Communications was the top gainer, up 3.11% to Rs 449.90, on a volume of 14.79 lakh shares. The stock recovered sharply from a low of Rs 431, also attaining a high of Rs 450.

Gujarat Ambuja Cements advanced 2.24% to Rs 148.50, anticipating strong results from the company.

Cigarette maker ITC gained 1.77% to Rs 175, on a volume of 11 lakh shares.

Index heavyweight Reliance Industries rose 0.88% to Rs 1379, on a volume of 12.75 lakh shares. It had also surged to an all-time high of Rs 1409, in early trade. RIL reported 57.6% surge in net profit in December 2006 quarter to Rs 2799 crore from Rs 1776 crore, much ahead of market expectations, after trading hours on Thursday. Net sales rose 45.7%, from Rs 18168 crore to Rs 26472 crore.

RIL’s gross refining margin stands at $11.7 a barrel, much higher than Singapore refining margins during the quarter. However, margins in the petrochemicals business declined during the quarter. "Robust economic growth along with a stable operating environment promises a positive outlook for all our businesses," the company said in a statement.

During the quarter, RIL doubled the estimated natural gas output from its field in the Krishna-Godavari basin to 80 million cubic metres a day, when it starts production in the second half of the fiscal year to March 2009.

ICICI Bank advanced 1.46% to Rs 986. It recovered sharply from its low of Rs 955.40. There are reports that Sangli Bank's merger had hit a roadblock as minority shareholders move to CBL against promoters.

Satyam Computers was the top loser, down 5.75% to Rs 485.70, on 26.91 lakh shares. The stock plunged to a low of Rs 476, as results belied expectations. It had surged to a high of Rs 524.90 in opening trade. Satyam Computer Services reported 5.45% sequential growth in consolidated net profit in December 2006 quarter, to Rs 337.23 crore, compared to a net profit of Rs 319.81 crore in September 2006 quarter. Net profit was within estimates. Operating profit rose 13.1% on a sequential basis, from Rs 362.49 crore to Rs 409.99 crore. Operating profit beat market expectations.

Consolidated sales rose 3.7% on a sequential basis, from Rs 1601.88 crore to Rs 1661.12 crore. Consolidated net sales growth was below market expectations. Five brokerages had forecast 4.9 - 6.7% sequential growth, between Rs 1680 crore and Rs 1708.90 crore.

Ranbaxy (down 3.77% to Rs 414), ONGC (down 2.68% to Rs 892.25) and Wipro (down 3.23% to Rs 620.25) were the other chief losers.

Reliance Energy (REL) lost 2.89% to Rs 512.90. Its Q3 December total income rose Rs 1,820 crore (Rs 1,137 crore), while net profit advanced to Rs 201 crore (Rs 164 crore).

The BSE IT index was the biggest loser among the BSE sectoral indices, down 98.63 points (1.82%), to 5,309.84. Financial Technologies (down 3.65% to Rs 1798), Hexaware (down 2.44% to Rs 177.90), TCS (down 1.66% to Rs 1293), Infosys Technologies (down 0.93% to Rs 2199) and Mphasis BFL (down 0.26% to Rs 290) edged lower.

The BSE Auto index was down 73.23 points (1.29%), at 5,619.82. M&M (down 3.20% to Rs 936), Bajaj Auto (down 2.11% to Rs 2725), Maruti Udyog (down 0.78% to Rs 911), TVS Motor Company (down 0.75% to Rs 79.30), and Punjab Tractors (down 1.15% to Rs 240), had slipped.

The BSE Metal index lost 96.58 points (1.06%), at 8,972.95. Hind Zinc (down 3.03% to Rs 768), Welspun Guj Stahl Rohren (down 2.84% to Rs 109.35), Jindal Saw (down 2.04% to Rs 436.50), SAIL (down 2.28% to Rs 96.50), and Ispat Industries (down 3.27% to Rs 15.40) declined.

OCL India jumped 3.64% to Rs 185, after its board approved demerger of the sponge iron and real estate operations into separate companies. OCL India reported 339.10% spurt in Q3 December 2006 net profit to Rs 17.7 crore, compared to Rs 4 crore in Q3 December 2005. Net sales rose 33% to Rs 225 crore (Rs 173 crore).

Dena Bank lost 4.4% to Rs 38.70, after the state-run bank posted 15% fall in net profit for the December 2006 quarter. Dena Bank posted 15% drop in net profit to Rs 70.53 crore in December 2006 quarter from Rs 83.18 crore in December 2005 quarter. Dena Bank’s net interest income rose 3% to Rs 209.79 crore (Rs 203.58 crore). Other income rose 16.7% to Rs 166.32 crore (Rs 142.51 crore).

Tech Mahindra plunged 6.88% to Rs 1769.50. On a sequential basis, Tech Mahindra’s consolidated profit-after-tax (PAT) before write back of tax provision grew 17% to Rs 166.70 crore. Consolidated revenue rose 10% on a sequential basis to Rs 769.80 crore. The contribution of British Telecom (BT) rose to 65% (64% in September 2006 quarter) of total revenues during the quarter.

Premier Explosives jumped 5% to Rs 48.70, after the company secured a ten-year maintenance contract from ISRO. The contract worth Rs 7 crore per year requires maintenance of a propellant plant for the premier space organisation.

JK Lakshmi Cement surged 7.90% to Rs 181.65, on posting 386% surge in net profit for December 2006 quarter, to Rs 55.06 crore. Net sales jumped 50% to Rs 228.64 crore. For April-September 2006, net profit rose 269% to Rs 117.28 crore and net sales 44% to Rs 580.59 crore.

Hindustan Construction Company dropped 2.53% to Rs 154, after it reported a 2.9% fall in net profit in December 2006 quarter to Rs 21.99 crore from Rs 22.66 crore in December 2006 quarter. Total income rose 17.4% to Rs 536.31 crore (Rs 456.60 crore). The company said the balance work on hand (till 31 December 2006) was Rs 9604 crore, which also includes a share of Rs 1940 crore in an order secured by a joint venture.

BOC India dropped 4.81% to Rs 157.25, after it reported 65.8% fall in net profit in December 2006 quarter to Rs 3.77 crore (Rs 11.04 crore). Net sales declined to Rs 115.29 crore (Rs 163.31 crore). The company said performance in Q3 December 2006, was affected due to a shutdown of a plant at Jamshedpur for 20 days during the quarter due to technical reason. The company continues to monitor its condition and will opt for planned shutdowns to rectify the situation in the future.

PSU telecom major, MTNL, jumped 5% to Rs 169.85 after media reports that the public sector telecom firm is talking to builders for developing commercial properties on large tracts of land it owns in prime locations across Mumbai, Delhi and the National Capital Region (NCR). The stock rose on a heavy volume of 41.3 lakh shares.

Titan Industries gained 4.8% to Rs 935.95, following reports that it had set a turnover target of Rs 1,250 crore for the current fiscal on the back of robust sales of its jewellery brands "Tanishq" and "Gold Plus". Last year, both brands together accounted for a turnover of Rs 780 crore. The company today opened its fourth Gold Plus showroom in Tamil Nadu, the sixth in the country. Titan proposes to open 20 Gold Plus showrooms across the country with special focus on Andhra Pradesh, Maharashtra and Karnataka in the next financial year.

As regards Tanishq, four showrooms, including one in Bangalore, will be opened before March 2007. Titan's board will meet on 25 January 2007, to consider a restructuring plan for its associate companies. Titan announces December 2006 quarter results on the same day.

Shringar Cinemas jumped 8% to Rs 63.05, on posting turnaround results in December 2006 quarter. Shringar Cinemas posted a net profit of Rs 3.64 crore in December 2006 quarter compared to a net loss of Rs 1.99 crore in December 2005 quarter. Total revenue rose 101.3% to Rs 15.42 crore (Rs 7.66 crore).

The inflation rate rose to a two-year high at the start of 2007, raising speculation of an interest rate increase, when the central bank reviews monetary policy at the end of January.

The wholesale price index rose 6.12% in the 12 months to 6 January, higher than previous week's annual rise of 5.58% due to costlier food and energy. It was the highest inflation rate since 25 December 2004.

The Nikkei share average lost 0.35% on Friday, as chip gear makers such as Nikon Corp fell on concerns about earnings' outlooks and investors grabbed profits in drug shares including Eisai Co. The Bank of Japan (BoJ) left interest rates unchanged, helping shares of consumer loan firms such as Aiful Corp. Property stocks, often burdened by heavy borrowing, also rose.

The benchmark Nikkei average was down 60.49 points, to 17,310.44. On the other hand, Hong Kong’s Hang Seng index was up 50.21 points (0.25%) for the day, at 20,327.72.

FIIs resumed buying after their recent heavy sales, which had caused a steep market fall recently. FIIs were net buyers to the tune of Rs 91.20 crore on Wednesday (17 January 2007). They were net buyers in four out of five trading sessions, from 11 January to 17 January.

As per provisional data, FIIs were net buyers to the tune of Rs 155 crore on Thursday (18 January). FIIs were net buyers of Rs 678 crore in index-based futures on 18 January. They were net buyers to the tune of Rs 111 crore in individual stock futures that day.

US stock indices ended lower on Thursday, after a conservative forecast from Apple sparked worries about the health of the technology sector. The Dow Jones industrial average ended the day down 9.22 points, or 0.07%, at 12,567.93. The Standard & Poor's 500 Index fell 4.25 points, or 0.30%, to finish at 1,426.37, while the Nasdaq Composite Index dropped 36.21 points, or 1.46%, to close at 2,443.21.

US crude oil futures for February delivery touched $49.90 a barrel, the lowest since May 2005, and settled down $1.76 at $50.48 a barrel on the New York Mercantile Exchange. The price of NYMEX crude oil has tumbled 36% from a record peak of $78.40 struck last July.

Sharekhan Highnoon dated January 19, 2007


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Sharekhan Commodities Buzz dated January 19, 2007


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Motilal Oswal Results Reports


Bajaj Auto

Federal Bank

HCL Tech


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Infosys

Infotech Enterprises


Jaiprakash Associates

Jubilant Organosys

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MOST Midcaps


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Siemens India

TCS


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UTI Bank


Wipro

Wire and Wireless


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Indiainfoline - RPG Transmission


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Positive bias may continue


The decent earning numbers reported by Reliance, Ranbaxy, Tech Mahindra and strong fund inflows in the last few sessions likely to persist the bullish sentiment. However, weak US markets and Asian indices in morning trades may put pressure on the domestic indices. The Nifty could test higher levels between 4140 and 4200 and may dip around 4040, while the Sensex has a likely support at 14100 and may face resistance at 14325.

US indices ended weak on Thursday amid worries about the strength of technology earnings in the fourth quarter. While the Dow Jones dropped by 9 points to close at 12568, the Nasdaq ended 36 points lower at 2443.

Most of the Indian ADR closed in the red on the US bourses. Rediff fell sharply and tumbled over 6% , Wipro lost 3% and Infosys, Satyam and HDFC Bank declined over 2% each while VSNL and Dr Reddy's ended with marginal gains.

Crude oil prices sipped further. The Nymex light crude oil for February delivery slipped $1.76 to close at $50.48. In the commodity space, the Comex gold for February series declined $5.20 to settle at $628.10 a troy ounce.

Indiainfoline - Jubilant Organosys


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Weak Asian markets may cap upside


Stronger-than-expected Q3 results from Reliance Industries (RIL) and falling global crude oil prices will trigger a firm opening on the bourses. However, subdued Asian markets may cap gains for the day.

The corporate results announced so far are strong. Results from IT and cement sector have been robust. A number of firms are yet to unveil their results, which will dictate the near-term trend on the bourses. The major result scheduled today is that of Satyam Computer Services.

After trading hours on Thursday, RIL reported 57.6% surge in net profit in December 2006 quarter to Rs 2799 crore from Rs 1776 crore, much ahead of market expectations. Net sales rose 45.7% to Rs 26472 crore from Rs 18168 crore.

FIIs have resumed buying after their recent heavy sales, which had caused a steep market fall recently. FIIs were net buyers to the tune of Rs 91.20 crore on Wednesday (17 January 2007). FIIs were net buyers in four out of five trading sessions from 11 January to 17 January.

As per provisional data, FIIs were net buyers to the tune of Rs 155 crore on Thursday 18 January. They were net buyers of Rs 678 crore in index-based futures on 18 January. They were net buyers to the tune of Rs 111 crore in individual stock futures that day.

Asian markets were in the red on Friday. Key benchmark indices in Hong Kong, Japan, South Korea and Taiwan were down between 0.12 - 1.7%.

US stock indices ended lower on Thursday, after a conservative forecast from Apple sparked worries about the health of the technology sector. The Dow Jones industrial average ended the day down 9.22 points, or 0.07%, at 12,567.93. The Standard & Poor's 500 Index fell 4.25 points, or 0.30%, to finish at 1,426.37, while the Nasdaq Composite Index dropped 36.21 points, or 1.46%, to close at 2,443.21.

US crude oil futures for February delivery touched $49.90 a barrel, the lowest since May 2005, and settled down $1.76 at $50.48 a barrel on the New York Mercantile Exchange. The price of NYMEX crude oil has tumbled 36 percent from a record peak of $78.40 struck last July.

Intra-day Stock Ideas


NIFTY (4109) S 4893 RES 4141

BUY Dr Reddy Labs (816)
SL 810 T 828, 831

BUY Polaris (217)
SL 213 T 225, 227

BUY Bharti Airtel (673)
SL 666 T 683, 686

BUY Wipro (642)
SL 637 T 651, 654

STRATEGY INPUTS FOR THE DAY


Fear is better than greed for now

One of the weaknesses of our age is our apparent inability to distinguish our needs from our greed.

The greed in recent times may have given a backseat to fear. After the turn of IT heavyweights, Reliance Industries has got into action by posting an impressive 58% growth in its Q3 net profit. Apart from RIL, other Index Majors like Ranbaxy, REL, have also announced strong quarter growth, which would power the bulls forward. Notwithstanding Thursday's sudden and sharp fall and recovery from day's low, stay cautious as we expect a cool off. Among the prominent results to watch out for are Satyam, i-flex and Jet Airways.

Pyramid Saimira Theatre could see action as we hear the company may announce some alliance with a Korean firm next week. Market buzz is that Lakshmi Niwas Mittal may take some stake in a refinery project of HPCL.

The Nasdaq fell yesterday for a second straight session following Apple's poor earnings forecast. The Nasdaq was down 36.21 points at 2,443.21, down nearly 1.5%. The Dow Jones was down 9.22 points at 12,567.93.

Crude oil slipped 3.4% to $50.48 a barrel in New York yesterday. Futures earlier fell as low as $49.90, the lowest intraday price since May 25, 2005. February crude was trading at $50.34, down 14 cents from the New York close.

After the close, IBM reported quarterly sales and earnings that topped estimates. However, shares slumped in after-hours trading. Additionally, GE confirmed it will buy two diagnostic units from Abbott Labs for $8.13bn.

Treasury prices climbed, lowering the yield on the benchmark 10-year note to 4.74% from 4.78% late on Wednesday. In currency trading, the dollar hit a nearly four-year high versus the yen after the Bank of Japan opted to hold interest rates steady, but the greenback slipped against the euro. COMEX gold for February delivery fell $5.20 to settle at $628.10 an ounce.

Among the Indian ADRs, VSNL was up 1.9%, Infy was down 2.3%, Wipro shed 3%, Satyam dipped 2.25%, HDFC Bank slid 2.6%, ICICI Bank gave up 1.6% and MTNL slumped 1.8%.

Select Asian markets like Japan and Korea are down this morning. The Nikkei was down 92 points at 17,278 92 while the Kospi in Seoul dropped 23 points at 1359. The Hang Seng in Hong Kong and the Straits Times in Singapore were trading near the breakeven point.

European shares finished mixed. The pan-European Dow Jones Stoxx 600 index closed a fraction of a percentage point lower at 371.58. The CAC-40 lost 0.1% to 5,555.04 and the German DAX Xetra 30 declined 0.1% to 6,689.62. The UK-based FTSE 100 rose 0.1% at 6,210.30.

In the emerging markets, the Bovespa in Brazil was down 0.6% at 42,477 while the IPC index in Mexico dived 1.7% to 26,112 and the RTS index in Russia declined 0.2% to 1807.

Results Today:
BILT, Dabur, Dena Bank, Granules India, Marico, IDFC, PTC India, Sonata Software, Texmaco, Wyeth, Deccan Chronicle, GNFC, Hindustan Construction, ING Vysya Bank, Jain Irrigation, NIIT, Orchid Chem, Raymond, Shringar Cinema, Tata Teleservices (Maharashtra), Zensar Tech.

Insider Trades:
Eveready Industries India Limited: HDFC Mutual Fund has purchased from open market 1538237 equity shares of Eveready Industries India Limited on 8th January, 2007.

Market Volumes:
The turnover on NSE was up by 16% to Rs101.7bn. The Oil & Gas index was the major gainer and gained 1.62%. BSE PSU index (up 1.28%), BSE FMCG index (up 1.13%) and BSE Capital Good index (up 0.61%) were among the other major gainers. However, BSE Consumer Durable index lost 1.86%.

Volume Toppers:
IFCI, DCB, IDBI, SAIL, Nagarjuna Fertilizers, Ashok Leyland, Cairn India, ITC, IDFC, Aftek, Wire & Wireless, Welspun Gujarat, Dabur, Exide Industries, Satyam Computer and Reliance Industries.

Upper Circuit Filters:
Amara Raja, Texmaco, Zandu Pharma, Goldiam International, NIIT Technologies, DS Kulkarni, Ganesh Housing and Suven Life.

Delivery Delight:
Adlabs Films, Ahmednagar Forgings, ACC, Bank of India, BHEL, Bharti Airtel, BPCL, Entertainment Network India Ltd, Glenmark, HCL Technologies, HPCL, ING Vysya Bank, Jet Airways, Kesoram Industries, L&T, Patel Engineering, Prithvi, Reliance Industries Ltd, Satyam, SBI, Sun TV, Taneja Aerospace, TCS and VSNL.

Brokers Recommendations:
Jubilant Organosys - Buy from Citigroup with target of Rs368
NIIT Tech - Buy from Man Financial with target of Rs492

Long Term Investment:
Punj Lloyd

Major News Headlines:
Reliance Q3 profit at Rs27.99bn (up 57.6%), total income (net of excise) is up 44.5% at Rs265.14bn
REL Q1 net at Rs2.01bn (up 22%), revenue at Rs18.2bn (up 60%)
Bharti Airtel gets offer to provide phone services in Sri Lanka
Siemens India Q1 profit at Rs980.7mn (up 100%), sales at Rs16.27bn (up 91%)
ONGC makes major discovery in Mahanadi
Tech Mahindra Q3 profit at Rs1.67bn (up 122%), revenues at Rs7.7bn (up 131%)
Tech Mahindra agrees to buy iPolicy Networks
Kirloskar Bros Board declares interim dividend of Rs2
Subex Azure to buy Syndesis
Nicholas Piramal Q3 profit at Rs433mn (up 81%), sales at Rs4.08bn (up 14%)
Chambal Fertilizers Q3 profit at Rs701.3mn (down 9.9%), sales at Rs7.92bn (down 25%)
Pantaloon Retail forms JV with Staples
Dollex Industries to set up Rs200mn Ethanol plant
TCS says no plans to merge CMC with itself
Biocon licenses its cancer drug to Ferozsons for Pakistan sale
Sobha Developers wins Rs150mn contract from Gold Plus Glass Industry
OCL India approves demerger of Sponge Iron and Real Estate businesses
Elecon Engineering signs MoU with Gujarat Govt for investing Rs4bn

How Market Fared


Reliance may power bulls

Volatile markets ended higher with benchmark index rising 0.61% or 82 points and NSE Nifty gaining 0.80% or 32 points. Decision of the Japanese central bank of keeping the benchmark rates unchanged aided the bourses to register strong openings. However, Profit booking gripped the bourses in the later half of the session dragging the key indices off days high. But frontline stocks like RIL, ONGC, HDFC, Satyam Computer, ITC, HLL and BHEL kept the markets intact aiding the key indices to close with healthy gains. Finally, the BSE benchmark Sensex surged 86 points to close at 14217. NSE Nifty was up by 32 points at 4109.

Reliance Industries announced its Q3 result with net profit at Rs27.99bn (up 57%), beating our expectations. The scrip surged 1.3% to Rs1367 touching an intra-day high of Rs1384 and a low of Rs1349 and recorded volumes of over 35,00,000 shares on NSE.

Siemens edged lower 0.8% to Rs1214. The Company announced its Q1 result with net profit at Rs980.7mn (up 100%) and sales at Rs16.27bn (up 91%). The scrip touched an intra-day high of Rs1245 and a low of Rs1157 and recorded volumes of over 14,00,000 shares on NSE.

ONGC spurred over 2.5% to Rs918 after the company made a major discovery in Mahanadi. The scrip touched an intra-day high of Rs936 and a low of Rs896 and recorded volumes of over 16,00,000 shares on NSE.

Oil & Gas stocks were in limelight as crude oil hovered around the $52 per barrel still down. HPCL surged over 2.3% to Rs321, IOC spurred 3.7% to Rs493 and BPCL added 2.3% to Rs368. Oil exploration major’s also recorded smart gains RIL and ONGC were among the major gainers.

FMCG stocks also recorded smart gains. Heavy weight ITC, HLL, Dabur and Nirma were among the major gainers.

Frontline Technology stocks also were in action. Satyam Computer has surged 1.2% to Rs514, Wipro was up 1.2% to Rs641 and Infosys rose 0.9% to Rs2224. NIIT Ltd, Rolta and HCL Tech were the major gainers among the 50-scrip’s of Nifty.

Pharma stocks also ended with gains. Wockhardt Pharma surged by over 2.2% to Rs364, Glenmark was up 2.6% to Rs617 and Glaxo edged higher by 0.2% to Rs1156. However, Ranbaxy slipped 0.5% to Rs430 and Aurobindo Pharma lost 1.5% to Rs737.

Cement stocks were a mixed bag. ACC was up by 0.2% to Rs1095, Gujarat Ambuja advanced by 0.6% to Rs145. However, Mangalam Cement lost 1% to Rs247, Grasim was down by 0.3% to Rs2865, Madras Cements fell 1.7% to Rs3610. The Board of Directors of the company has announced that they would consider interim dividend on 30th January.

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Sharekhan Eagle Eye (equities) & Derivatives Info Kit for January 19, 2007


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