India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Wednesday, January 24, 2007
PowerYourTrade Trading Calls
Ashwani Gujral
Sell Canara Bank with a stop loss of Rs 280 for target of Rs 190
Sell Dr Reddy Laboratories with a stop loss of Rs 800 for target of Rs 680
Deepak Mohoni
Short Sell State Bank of India above Rs 1165 with stop loss of Rs 1180. Its a day-trading recommendation.
Buy Nucleus Software below Rs 840 with stop loss of Rs 820. Its a day-trading recommendation.
Rajat K Bose
Sell Voltas around last close with stop loss above Rs 106.10 for target of Rs 95.20
Buy Nagarjuna Fertiliser with stop loss below Rs 15.85 for target of Rs 18.50.
STRATEGY INPUTS FOR THE DAY
Concrete gains likely
The most important thing is not to stop questioning.
Yesterday the cement counters cracked following the Government's decision to slash import duties on cement, capital goods and select raw materials. This was done to curtail inflation. Cement shares were hit amid fears that the move could lead to cheaper imports and hurt local players. After some questioning, investors will realize that the panic selling was overdone. Portland cement accounts for just over 30% of total output in the country, according to estimates. So, expect a bounce back this morning in cement stocks to begin with. Banking stocks were hammered following the disappointing results from leader SBI. However, other banks have reported good numbers. As a result, here too, we could see a rebound today.
Do not get trapped in the bounce back. Remember, the key indices are trading near their record levels. Signs from the F&O segment are not very encouraging. Open interest in Nifty January Futures is down with the premium between the Spot Nifty and the Futures narrowing. This indicates that long positions have been liquidated. The difference between the underlying index and the Nifty February Futures too has reduced with a sharp rise in open interest. This shows that some short positions have been created. Hence, one should remain on guard for any untoward development.
We expect a higher opening in line with the firm trend in Asian markets. US stocks too closed higher. The Nasdaq, however finished flat. There's one bad news though. Oil prices climbed past the $55 per barrel mark in New York yesterday. In extended trading in Asia, the front-month crude contract was quoting 17 cents higher at $54.87 a barrel. FII inflows are not too exciting at the moment. They were net buyers of Rs1.27bn (provisional) in the cash segment yesterday. In the F&O segment, they offloaded stocks worth Rs3.43bn. On Monday, foreign funds pumped in Rs3.19bn. Mutual Fund on the other hand pulled out Rs542.3mn.
Some of the key results today include: Allahabad Bank, Apollo Hospitals, BoB, Bombay Dyeing, Corporation Bank, HDFC, Petronet LNG, Prithvi Info, HCL Infosystems, IOB, M&M Financial, OBC, Rolta and Sasken.
On Wall Street, the Dow Jones and the S&P 500 rose, while the Nasdaq was little changed, as investors struggled to absorb a nearly 5% jump in oil prices and a spate of mixed earnings reports.
The Dow industrials added 56.64, or 0.5%, to 12,533.80, its first gain in five days. The S&P 500 rose 5.04, or 0.4%, to 1427.99. The Nasdaq ended static at 2431.41.
Among the Indian ADRs, Patni surged 7.8%, Infy rose 1.5%, Satyam gained 1.7%, Tata Motors lost over 1%, Dr. Reddy's dropped 4.7%, HDFC Bank advanced 1.7% and ICICI Bank tacked on 1.8%.
European shares closed in the red, hit by technology-sector weakness. The pan-European Dow Jones Stoxx 600 index lost 0.1% at 372.61. The German DAX Xetra 30 closed down 0.1% at 6,678.93 and the French CAC-40 slipped 0.1% to 5,575.07. The UK's FTSE 100, however, gained 0.2% to 6,227.60.
Asian markets are on firm footing this morning. The Nikkei was up 113 points at 17,552 while the Hang Seng in Hong Kong too climbed 128 points to 20,898.
The Morgan Stanley Capital International Asia-Pacific Index rose 0.4% to 142.17 at 12:11 p.m. in Tokyo, heading for the highest close since May 10. The gauge is within 1% of its record close on May 8.
Stock benchmarks in Australia, China, Hong Kong and Singapore were set to close at all-time highs. Indexes in markets open for trading gained, except in Indonesia.
In emerging markets, the Bovespa in Brazil gained 1.4% while the RTS index in Russia was up 0.8%.
Major Bulk Deals:
Morgan Stanley has picked up Lloyd Electric; Citigroup has sold Orient Hotels; Deutsche Securities has purchased Phoenix Mills; Tata MF has sold Punjab Chemicals; Morgan Stanley has sold REI Agro; Goldman Sachs has sold Shriram Transport; Goldman Sachs has bought Sical Logistics from Lloyd George Investment; Citigroup has sold Venus Remedies; HSBC has picked up Vyapar Industries.
Market Volumes:
The turnover on NSE was up by 5.9% to Rs80.26bn. BSE Bank index was the major loser and lost by 2.17%. BSE Pharma index (down 1.66%), BSE Consumer Durable index (down 1.53%), BSE PSU index (down 1.29%) and BSE FMCG index (down 1.11%) were among the other major losers.
Volume Toppers:
IFCI, Nagarjuna Fertilizers, SAIL, India Cement, TTML, Shree Ashtavinayak, IDBI, R Com, Satyam Computer, Aftek, Balrampur Chini, Hindalco, ITC, MTNL, IDFC, KPIT Cummins, Ispat Industries, Ashok Leyland and Voltas.
Upper Circuit Filters:
Flex Industries, Heritage Foods, Pyramid Saimira, Nesco, Crest Animation, Ganesh housing, Hindustan Dorr and Suven Life.
Delivery Delight:
Apollo Tyres, Bharat Forge, Cambridge Solutions, Educomp Solutions, Gammon India, GTC Industries, Indiabulls, Jammu and Kashmir Bank, Orchid Chemicals, Sun TV, Tata Power and Zee Entertainment.
Brokers Recommendations:
Great Offshore – Buy from Kotak with target of Rs878.
Long Term Investment:
Jyoti Structures.
Major News Headlines:
Bharti Airtel Q3 profit at Rs12.15bn (up 122%); revenues at Rs49.13bn (up 62%)
SBI Q3 net at Rs10.65bn (down 9.5%); total income at Rs115.47bn (up 1.2%)
Glenmark developing asthma drug with Forest Labs
Neyveli Lignite Q3 profit at Rs1.52bn (up 11.7%), revenues at Rs6.42bn (down 6.5%)
BEML Q3 profit at Rs529.7mn (down 5%); revenues at Rs5.59bn (up 5.6%)
Tata Motors Q3 profit at Rs5.13bn (up 11.5%), sales at Rs69.56bn (up 37%)
Cipla Q3 profit at Rs1.84bn (up 5.1%), sales at Rs8.81bn (up 12.5%)
Hindustan Zinc cuts prices by 2.3% to Rs188,000 per ton
Indian Hotels Q3 profit at Rs879.9mn (up 42.9%), revenues at Rs4.12bn (up 25%)
Grasim Q3 profit at Rs4.12bn (up 154%), sales at Rs22.79bn (up 37%)
LIC Housing Finance Q3 profit at Rs766.1mn (up 31%), total income at Rs4.05bn (up 27%)
Research Desk - Bank of India
Bank of India
Q3 FY07
Result Update
Profit growth was not only above expectation, but was qualitatively better as well. Bank managed 16bps margin expansion on an expanded loan book of 28%. BOI’s growth story of recovering asset quality along with improving loan mix leading to margin expansion is playing out well. Despite factoring in an equity dilution of 20%, we expect ROE to remain around 19%. We rate BOI as the best play on the Indian Banking sector among the PSU banks. We reiterate our positive stance on the stock with a BUY rating and a price target of Rs268, implying an upside potential of 31%
Rapid asset growth, though managed well through rising CASA ratio
Digressing from its guidance of 24-25% loan growth, bank grew its loan book by 28%, aided mainly by the retail segment (55% growth yoy). However, this was managed well through higher CASA mobilization, which grew by 22% yoy to 41.3% up from 40.4% in Q2 FY07.
Rising share of retail loan book now forming 32.3% from 27% in Q3 FY06, along with improving mix of international loan book expanded yields by 78bps yoy to 8.4%. Funding cost also remained under control with rising CASA ratio, restricting deposit cost rise to 30bps yoy to 4.4%. This expanded margins by 16bps yoy to 3.2%, while domestic NIMs expanded by a huge 21bps to 3.8%.
BOI’s main investment theme of improving asset quality continued to play out well with gross NPAs coming down by Rs334mn qoq to Rs21.8bn, while net NPAs fell by Rs404mn to Rs7.5bn. Net NPAs on a proportionate basis have come down to less than 1% from 1.1% in Q2 FY07.
How Market Fared
Volatility likely to continue
The markets ended on a weak note as profit booking was witnessed in the scrip’s across the sectors. Weak openings were led by subdued global cues. Decision of the government to cut import rates further dragged the benchmark index to hit an intra-day low of 14025.74. All the key indices closed in red as profit booking in the blue chips like Dr Reddy’s Lab, SBI, Tata Steel, Tata Motors, HLL, RIL and Infosys. Finally, the BSE benchmark Sensex lost 168 points to close at 14041. NSE Nifty slipped by 36 points to close at 4066. The bank index was the major loser and lost 2.17%, Consumer Durable, FMCG and Pharma followed suit.
BEML declined 2.5% to Rs1125 after the company announced its Q3 result with profit at Rs529.7mn (down 5%) and revenue at Rs5.59bn (up 5.6%). The scrip touched an intra-day high of Rs1175 and a low of Rs1080 and recorded volumes of over 1,00,000 shares on NSE.
SBI slipped 4.1% to Rs1174 after the company declared its Q3 result with net profit at Rs10.65bn (down 9.5%) and total income at Rs115.47bn (up 1.2%). The scrip touched an intra-day high of Rs1231 and a low of Rs1167 and recorded volumes of over 21,00,000 shares on NSE.
Nalco surged nearly by 4% to Rs221 after the company declared its Q3 result with net profit at Rs5.72bn (up 46%) and sales 14.48bn (up 9.3%). The scrip touched an intra-day high of Rs223 and a low of Rs212 and recorded volumes of over 4,00,000 shares on NSE.
Reliance Industries was down 1% to Rs1360. The company announced that it has no plans to spin off KG basin oil and gas fields. The scrip touched an intra-day high of Rs1380 and a low of Rs1357 and recorded volumes of over 12,00,000 shares on NSE.
Cement stocks slipped heavily as government decision to cut import rates dragged them down. Heavy weight ACC lost.7% to Rs1036, Gujarat Ambuja slipped over 7% to Rs136, Mangalam Cement dropped over 9% to Rs224 and India Cement slipped over 8% to Rs220.
Auto stocks were in reverse gear led by selling pressure. Maruti dropped 2.1% to Rs918, Tata Motors slipped 1.3% to Rs950, Hero Honda lost 1% to Rs717 and M&M edged lower 0.8% to Rs921.
Metal stocks also lost their shine on back of profit booking. Tata Steel fell 1.5% to Rs464, SAIL was down by 1.2% to Rs97, Sterlite Industries dropped 2.3% to Rs516 and Hindustan Zinc was down 1.5% to Rs757Market may remain under pressure
The Asian indices in the ongoing trades are in green and overnight gains in global market may help the local bourses to open on a positive note in early trades. However, it likely to extend its downward trend on account of unwinding of position of Jan series derivative contracts and yesterday's correction likely to keep the sentiment bearish. Among the major domestic indices, the Nifty could test 4044 on the downside and faces resistance at 4100. The Sensex has a likely support at 13940 and test higher levels of 114150.
US indices registered gains on Tuesday amid fresh rise in crude oil prices and worries of mixed earnings reports. While the Dow Jones rose by 57 points to close at 12534, the Nasdaq ended 0.34 points up at 2431.
Most of the Indian ADRs gained on the US bourses. Rediff gained 2.8% while MTNL, Infosys, Satyam,ICICI Bank and HDFC Bank gained over 1-2% each. While Dr Reddy's lab lost 4.69% and Tata Motors, Wipro , VSNL declined over 0.5-1% each.
Crude oil prices gained strength after slipping in the last few sessions. The Nymex light crude oil for March delivery rose $2.46 to close at $55.04. In the commodity space, the Comex gold for February series added $11.80 to settle at $645.90 a troy ounce.
Market may recover tracking firm Asian equities
The market may recover from Tuesday’s 168 points, fall tracking firm Asian markets and with data showing a surge in FII inflow. But volatility may prevail ahead of Thursday (25 January)’s expiry of January 2007 derivatives contracts.
FIIs stepped up buying on Monday 22 January. FIIs were net buyers to the tune of Rs 320 crore on 22 January compared to their Friday (19 January)’s inflow of Rs 76.80 crore. There has been sustained buying by FIIs over the past few days, which followed their substantial sales earlier this month. FIIs have been net buyers in seven out of the last eight trading sessions.
As per provisional data, FIIs were net buyers to the tune of Rs 127 crore on Tuesday 23 January, the day when Sensex had lost 168 points. FIIs were net buyers to the tune of Rs 30 crore in index-based futures on that day. They were net sellers to the tune of Rs 510 crore in individual stock futures on that day.
After trading hours on Tuesday, Tata Motors reported 11.5% growth in net profit in December 2006 quarter to Rs 513.17 crore from Rs 460.23 crore in December 2005 quarter. The key result today is that of housing finance major HDFC. Four brokerages expect a between 20.1% to 27.1% growth in HDFC’s Q3 net profit to between Rs 341.80 crore to Rs 361.70 crore compared to a net profit of Rs 284.52 crore in December 2005 quarter.
Asian stocks rose on Wednesday, with Japan's Nikkei nearing a 6-1/2-year high. A more than 4 percent surge in oil and rising gold and base metals prices boosted commodities-related stocks, sending Australia's resource-heavy main index to a record high and pushing Hong Kong's Hang Seng to a new peak.
US stocks gained on Tuesday as a spike in crude oil prices lifted shares of energy companies, including Exxon Mobil Corp., while strong profits from United Technologies Corp. gave investors a reason to buy aerospace stocks. The Dow Jones industrial average gained 56.64 points, or 0.45 percent, to end at 12,533.80. The Standard & Poor's 500 Index added 5.04 points, or 0.35 percent, to finish at 1,427.99. The Nasdaq Composite Index inched up just 0.34 of a point, or 0.01 percent, to 2,431.41
Oil dipped back below $55 a barrel, after racing nearly $2.50 higher on Tuesday as the United States announced plans to build up its emergency crude reserves and as colder weather pushed up demand in the world's top consumer. NYMEX crude for March delivery edged down 7 cents to $54.97 a barrel.
Subscribe to:
Posts (Atom)