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Sharekhan Investor's Eye dated January 23, 2007

Omax Autos
Cluster: Apple Green
Recommendation: Buy
Price target: Rs134
Current market price: Rs93

Margins improve

Result highlights

• The Q3FY2007 results of Omax Autos are ahead of our estimates due to higher margins during the quarter.
• The net sales for the quarter rose by 9% to Rs179.4 crore, led by a 7.9% growth in the domestic revenues and a 32% growth in the export revenues.
• The operating profit for the quarter rose by 52.8% to Rs18.5 crore mainly due to a 300-basis-point improvement in the operating profit margin (OPM) to 10.3%. This is a result of various cost saving initiatives implemented by the company in order to bring down its power, personnel and other manufacturing costs.
• The other income is higher than estimated at Rs2.72 crore. Aggressive capacity expansion plans of the company have also led to higher interest and depreciation costs. The profit after tax (PAT) for the quarter stood at Rs6.66 crore, rising by 34.3%.
• The company has also announced that it would set up a new manufacturing unit in Lucknow to manufacture chassis for Tata Motors. The unit would be set up with an initial capacity of 48,000 chassis and is expected to deliver revenues of Rs120 crore by FY2009 and of about Rs225 crore by FY2011.
• At the current market price of Rs93, the stock discounts its FY2008E earnings by 6.3x and quotes at an enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA) of 3.7x. We maintain our Buy recommendation on the stock with a price target of Rs134.

Bank of India
Cluster: Apple Green
Recommendation: Buy
Price target: Rs220
Current market price: Rs196

Another excellent quarter

Result highlights

• For Q3FY2007 Bank of India (BOI) reported numbers well above the market?s and our expectations. The growth in its net interest income (NII) and other income was in line with the expectations of a good set of numbers. What made the good results look even better was the restrain the bank showed in case of operating expenses.
• The NII grew by 26.9% to Rs920 crore against our estimate of Rs936.3 crore. The 26.9% growth in the NII was brought about by a 22.3% growth in the assets and a 16-basis-point improvement in the global net interest margin (NIM) year on year (yoy) to 3.18%.
• The other income reported a 22.8% growth with the trading income showing a very high growth of 144.5% yoy to Rs55.5 crore. The core fee income was up 22.6% yoy while the recoveries declined by 49% to Rs14.9 crore.
• The operating expenses grew by a sedate 15.3% to Rs627.9 crore as the staff expenses grew by only 7.8% and the other expenses grew by 29.6% yoy.
• The operating profit was up by 38.7% yoy to Rs614.4 crore and the core operating profit excluding the treasury income was up 33% yoy to Rs558.9 crore.
• The provisions increased by 16.6% to Rs289.8 crore with the non-performing asset (NPA) provisions up 55.6% to Rs190.9 crore. Lower taxes during the quarter also helped the profit after tax (PAT) to report a 78% year-on-year (y-o-y) growth while the profit before tax (PBT) grew by 67% yoy.
• At the current market price of Rs196, the stock is quoting at 8.1x its FY2008E earnings per share, 3.3x its FY2008E pre-provisioning profits and 1.5x FY2008E book value. We maintain our Buy recommendation on the stock with a revised price target of Rs220.

Cadila Healthcare
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs425
Current market price: Rs345

Extraordinary income boosts net profits

Result highlights

• The net sales of Cadila Healthcare (Cadila) increased by 24.7% year on year (yoy) to Rs460.9 crore in Q3FY2007. The growth was driven by a 105.1% growth in the formulation exports and a 13.4% rise in the exports of active pharmaceutical ingredients (APIs). The sales growth was ahead of our expectations.
• The 105.1% jump in the formulation exports was driven by the improved performance of the French business (a growth of 188.3% year on year [yoy]) and US business (a growth of 105% yoy). New launches in the USA and regulatory reforms in France led to the strong growth of the US and French businesses respectively.
• An 84.5% rise in the company's generic research and development (R&D) expenses, along with an increased advertising spend in the consumer business, caused Cadila's operating profit margin (OPM) to shrink by 200 basis points to 17.4% in Q3FY2007. However, in view of the fact that the increased advertising spend for the consumer business was a one-time charge, we expect the margin to bounce back in the future quarters.
• Consequently, the operating profit (OP) of the company rose by 12.3% to Rs82.3crore in the quarter.
• Cadila's adjusted net profit grew by a robust 66.4% to Rs65.9 crore, on the back of a one-time extraordinary income of Rs19.6 crore from the sale of the French branded business. The profit growth surpassed our expectations. However, on excluding the extraordinary income, the reported net profit stood at Rs46.3 crore, up by 12.9% yoy. The earnings for the quarter stood at Rs3.7 per share.
• The company has signed three new contract manufacturing contracts during the quarter with international companies, taking the cumulative number of contracts to 20, with peak revenue potential of $27.5 million. Cadila has also filed three abbreviated new drug applications (ANDAs) in the quarter, taking the total number of filings to 44 ANDAs.
• At the current market price of Rs345, the company is quoting at 14.7x its FY2008 estimate earnings. We maintain our Buy recommendation on the company with a price target of Rs425.

Bharti Airtel
Cluster: Apple Green
Recommendation: Buy
Price target: Rs820
Current market price: Rs689

Price target revised to Rs820

Result highlights

• Bharti Airtel has announced a robust revenue growth of 12.8% quarter on quarter (qoq) and 62.4% year on year (yoy) to Rs4,912.9 crore for Q3FY2007. The sequential revenue growth was evenly driven by a 13.8% rise in the mobile revenues and a 12.4% growth in the non-mobile businesses.
• The company has positively surprised on the margin front, with a 170-basis-point sequential improvement in the operating profit margin (OPM) to 40.8%--one of the highest ever reported in any quarter. Consequently, the operating profit grew by 17.7% qoq and 81% yoy to Rs2,005 crore.
• In addition to the healthy growth in the operating profit, the earnings growth was also boosted by the foreign exchange fluctuation gains of Rs219.2 crore on the forward hedges (as compared with a marginal gain in Q2). Consequently, the consolidated earnings grew at an exponential rate of 30.1% qoq and 122.9% yoy to Rs1,215 crore, way ahead of the market expectations of around Rs1,070 crore.
• The other key highlights include the proposed acquisition of 100% stake in the submarine cable network from India to Singapore for a consideration of $110 million. The cable link is currently equally owned by SingTel and one of the Bharti group companies.
• The company introduced call card for international calls from the USA to India that would enable it to generate an alternate source of revenues from the 2.5 million strong non-resident Indian (NRI) community based in the USA. It also announced some new initiatives during the quarter, including the approval to launch wireless mobile (2G and 3G) services in Sri Lanka, a new venture to introduce direct-to-home (DTH) broadcasting services and a possible launch of (Internet Protocol) IP-based television channel distribution (IPTV) system after a successful testing in the National Capital Region (NCR).
• To factor in the better than expected performance, we have revised upwards our earnings estimates by 17% and 7.1% for FY2007 an FY2008 respectively.
• At the current market price the stock trades at 31x FY2007 and 22.2x FY2008 estimated earnings. We maintain our Buy call on the stock with a revised on-year price target of Rs820 (24x rolling four quarters forward earnings).

State Bank of India
Cluster: Apple Green
Recommendation: Buy
Price target: Rs1,380
Current market price: Rs1,174

Sequential growth disappoints

Result highlights

• The Q3FY2007 results of State Bank of India (SBI) are below expectations with the bank's profit after tax (PAT) reporting a decline of 4.5% to Rs1,065 crore as against our estimate of Rs1,195 crore.
• The reported net interest income (NII) at Rs3,951 crore is slightly below our estimate of Rs4,034 crore. However the total other income at Rs1,811 crore is much above our expectation of Rs1,551 crore, mainly due to a higher than expected "Others" component in the "Other income" category. The operating expenses are in line with our expectations; however the provisions have risen more than expected, due to an unexpected investment depreciation. A higher than expected growth in the other income has offset the more than expected rise in the provisions to some extent, as it has actually reduced the gap between the actual PAT and the estimated PAT.
• The reported NII is down by 6.4% year on year (yoy) to Rs3,951.3 crore. However the third quarter saw many one-time items adjusted for which the NII growth stands at 33% yoy. But sequentially the NII has grown by only 1.4%.
• The other income is marginally down by 1.6% to Rs1,811 crore, however adjusted for the India Millennium Deposit (IMD) gains, the growth is strong at 38.3%. The core fee income is up 22.9% yoy and the trading income has risen by 139.3%; the same was expected as the bank planned to make up for the low trading income of Rs7.7 crore reported in Q2FY2007. Though the year-on-year (y-o-y) growth rates are good, the core fee income has seen a sequential growth of only 1.9%.
• The operating expenses are down 16% yoy, however adjusting for the voluntary retirement scheme (VRS), wage arrear and extra gratuity payments made to the tune of Rs641 crore, the growth in the operating expenses remains contained. The operating profit is up 9.8% yoy, however the core operating profit is up 27.3% yoy and 1% quarter on quarter (qoq).
• The provisions and contingencies are up 148.2% yoy and 71.2% qoq to Rs1,166.2 crore. The provision base was lower in Q3FY2006 as there was a Rs102.6-crore write-back in the non-performing asset (NPA) provisions during the quarter. This coupled with the unexpected investment depreciation of around Rs158 crore in Q3FY2007 brought  about the sharp rise in the total provisions.
• The adjusted numbers reflect a good core income growth on a y-o-y basis, however there has been no sequential improvement which is a cause for concern. With the deposit costs rising steadily and another interest rate hike looking imminent, the pressure on the margin going forward remains the key issue. Hence, the scrip may remain under pressure in the short term until there is more clarity on how the Reserve Bank of India (RBI) wants to tackle inflation as well as on the measures that the central bank may announce in the latest review of the monetary policy scheduled on January 31, 2007.

Ceat
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs190
Current market price: Rs146

A brilliant performance

Result highlights

• Ceat's Q3FY2007 results are ahead of our expectations. The net sales have risen by a brilliant 30.7% to Rs536.7 crore on the back of a 14% tonnage growth and a very strong realisation growth. The sales to original equipment manufacturers (OEMs) have marked a significant improvement of 130% during the quarter whereas the replacement sales have continued to grow at a handsome pace of 25%.
• The operating profit margin (OPM) has expanded by 250 basis points to 7.3% as a result of a lower raw material cost during the quarter as well as avings in the manpower cost and the other overheads. With several price hikes effected in the last one year, the OEM business has also become a lot more profitable, leading to further margin improvement. As a result, the operating profit has grown by 98.3% to Rs39 crore.
• Stable interest and depreciation costs have helped the company to report a 665% growth in the net profit, which stands at Rs11.8 crore.
• Though the rising rubber prices are a concern, we are pretty confident of the pricing power of the tyre industry and expect another price hike from the tyre majors in the next two to three months.
• At the current market price of Rs146, the stock is trading at 9.4x its FY2008E earnings and at an enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA) of 4.7x. We maintain our Buy recommendation on the sock with a price target of Rs190.

ORG Informatics
Cluster: Emerging Star
Recomendation: Buy
Price target: Rs190
Current market price: Rs172

Maintains growth momentum

Result highlights

• ORG Infomatics (ORG) reported a 273.5% growth in its net revenues to Rs108.5 crore during the third quarter ended December 2006. The revenue growth was driven by the execution of some its large orders, especially the Mahanagar Telephone Nigam Ltd (MTNL) order.
• The operating profit margin (OPM) declined by 190 basis points to 8.4% as the initial part of the MTNL order involves low-margin hardware supplies.
• However, the jump in the other income (that included a one-time gain of Rs0.8 crore from the sale of assets) aided the overall growth in the earnings. Consequently, the consolidated earnings grew by 70.6% to Rs5.2 crore during the quarter, which is ahead of our expectation of Rs4.6 crore.
• The fresh order intake continues to be robust and the company has been able to maintain the pending order position of around Rs600 crore (marginally lower than Rs625 crore reported in September 2006). The management also indicated that it is pursuing some more large-sized orders and expects to close one to two large orders in the coming months.
• Along with the results the company has also announced the acquisition of 100% sake in the Bangalore-based TechUnified Pvt Ltd (UT) for a total consideration of Rs49 crore (partly paid through issue of 8.93 lakh shares at a price of Rs181 per share). UT is a profitable company at the net level and is expected to report net profit of around Rs7 crore in the current fiscal. It offers wireless, speech and e-Business solutions to financial companies and telecom operators. This is the second acquisition in the month as the company had recently announced the acquisition of a 100% stake in DGIT Solutions.
• At the current market price the stock trades at 17x FY2007 and 11.7x FY2008 estimated earnings. The estimates do not include the impact of the acquisitions as details of the same are awaited. However, the equity dilution has already been factored in the calculation of the earnings per share (EPS). We maintain our Buy recommendation on the stock with a price target of Rs190 (10x rolling four quarters forward earnings).

Universal Cables
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs179
Current market price: Rs115

Capacity expansion to drive revenue growth

Result highlights

• 
  The net sales of Universal Cables Ltd (UCL) grew by 25% and the growth is in line with our expectations. However the net profit growth of 10.6% is slightly below our expectations on account of a higher than expected increase in the other expenses.
• The net sales for the quarter grew by 25% to Rs87.64 crore. The power cable business grew by 22% to Rs81.66 crore, the capacitors business grew by 9% to Rs3.41 crore and the telephone cable sales stood at Rs2.60 crore against nil in the corresponding quarter of the previous year.
• The operating profit margin (OPM) for the quarter declined by 211 basis points to 9.32% as the other expenses to sales ratio increased to 17.09% from 14.60% last year. Hence the operating profit for the quarter grew by just 1.62% to Rs8.17 crore.
• Going forward, we expect the OPM to improve, as the company focuses on the high-end products that have better margins and as its 100% subsidiary, Optic Fibre Goa Ltd (OFGL), turns profitable. The segmental losses from the telephone cable division stood at Rs0.33 crore in this quarter as against Rs0.79 crore in the previous quarter.
• The interest expense for the quarter increased by 48% to Rs1.54 crore, while the depreciation cost for the quarter increased by 81% to Rs1.92 crore.
• Consequently the net profit growth was lower at 10.6% to Rs5 crore.
• At the current market price of Rs115, the stock is quoting at 8.7x its FY2008E earnings per share (EPS) and 5.2x its FY2008E enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA). We maintain our Buy recommendation on the stock with a price target of Rs179.

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VIEWPOINT

Zee Entertainment Enterprises

Blow-out performance
Zee Entertainment Enterprises Ltd (ZEEL) declared its first set of quarterly numbers after its incorporation on demerger of the erstwhile Zee Telefilms Ltd (ZTL). As of now ZEEL comprises ZTL?s global broadcasting business and direct-to-home (DTH) business. Post-formation of Dish TV India Ltd (Dish TV; likely to be listed in February 2007) the DTH business will be allocated to the new company, leaving ZEEL with the broadcasting operations. Thus the results for Q3FY2007 include the performance of these two revenue streams.

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SECTOR UPDATE

Cement

Import duty on cement slashed to zero
With the headline inflation crossing 6%, the government has slashed the customs duty on cement, various raw materials and capital goods to check inflationary pressures. The changes in the duty structure would come into effect immediately. The duty cut comes as no surprise for the cement sector as cement prices have risen unabated in the last one year

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Sharekhan Daring Derivatives for January 24, 2007

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Market Close: Custom Cut bring in Profit booking

Government nod for cut in custom duty brought in selling in Indian Indices and weakness in Global markets added fuel to the fall. FNO Expiry too kept Indian Indices to trade weak. Selling intensified in Cement, Banking stocks along with Engineering, Construction, Automobile, Energy, Pharma and Software. Heavyweights like Bharti and Hindalco were the gainers while selective Mid caps and Small caps saw buying interest on the back of good results. The Asian markets traded mixed for the day and also European Markets currently trading mixed.

Sensex clsoed down by 168 points at 14041.24. Weighing on the Sensex are losses in ACC (1037,-7 percent), Guj Ambuja (136.9,-7 percent), Dr Reddys (770,-5 percent), SBI (1173.95,-4 percent) and Grasim (2805.3501,-3 percent). Losses are restricted by gains in Bharti Tele (689.15,+2 percent), Hindalco (164.95,+0 percent).

Maruti results for the 3Q were not spectacular. Net profits at Rs 376 cr up 11%, The lower-than-expected profit was due to adjustment on account of the merger of wholly-owned subsidiary Maruti Suzuki Automobiles India (MSAIL) with effect from April 1, 2006. MSAIL's Rs 54.6-crore loss had the profits down. The sentiment however turned positive on its intention to launch the diesel Swift, in the next couple of days. The government stake sale is another trigger. MUL has been aggressive in discounting to get sales with risks coming in fom higher material costs, rising interest rates, increasing competitive intensity. However valuations at 16 times FY07 earnings seems to offer scope given the fact that this Diesel initiative could kick off well. Telco dominates the Diesel car segment which is growing rapidly.

SBI has declared its Q3 results for FY07. Its third quarter Net Profit stood at Rs 1,065 cr down by 4.5% vs Rs 1,115.1 cr yoy. The company's Net profit (excluding exceptional) was at Rs 1065 cr vs loss of Rs 620 cr. SBI had extraordinary income of Rs 2,048 cr in Q3 last year. Its Q3 NII has gone down by 6.4% at Rs 3951 cr against Rs 4219.8 cr yoy. The NII (Excluding Extraordinary Income) was up by 46% at Rs 3951 cr. SBI provisions and contingencies stood at Rs 1166 cr compared to Rs 470 cr. Banks CAR was at 11.86% vs 12.49%. The Banking sector results were not much encouraging as rising deposit rates had impacted their Net profits. The Bank stocks closed in red and SBI closed down by 4.5%.

Technically Speaking: Sensex traded weak as selling intensified till the closing. Sensex touched intraday high of 14212 and low of 14025. Market turnover stood decent at Rs 4040 cr. Overall breadth was in favor Declines where Declines stood at 1723 and advances stood at 913. The Resistance level was at 14156 -14277 while Support at 13969 -13904 levels.

FII: +Rs 319.80cr, MFs - Rs 54.23cr

FII Gross purchases Rs 2236.20 Cr Gross Sellers Rs 1916.40 Cr Net Buyers Rs 319.80 Cr.
MF Gross Purchases Rs 468.40 Cr Gross Sellers Rs 522.63 Cr Net Sellers Rs 54.23 Cr.

Our View:

Market continued to range ahead of F&O week.. One can say it is a consolidation process.. Moment ahead will be directed by liquidity inflow..

Sharekhan Eagle Eye (equities) & Derivatives Info Kit for January 24, 2007

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ASK RJ - India Cements

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ENAM - Ranbaxy

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Emkay - Kirloskar Oil Engines

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Market takes a hit

The market exhibited nervousness throughout the trading session. It witnessed a correction as weak Asian markets and flat US indices dampened the sentiment. After opening weak at 14212, the Sensex declined further under the selling pressure in heavyweights, banking, cement and pharma stocks. The decent earnings from several Sensex stocks failed to help the Sensex to recover from its losses. As trading progressed the Sensex lost its strength and slipped further towards the close to touch the intra-day low of 14026. The Sensex finally ended the session with losses of 168 points at 14041, while the Nifty shed 36 points and closed at 4066.

The broader market remained weak. Of the 2,679 stocks traded on the BSE, 1,722 stocks declined, 899 stocks advanced and 58 stocks ended unchanged. All the sectoral indices ended in negative territory. The BSE Bankex index dropped 2.17% to 7315, the BSE HC index shed 1.66% to 3834 and the BSE CD index was down 1.53% to 3802.

Among the major losers, ACC slumped 7.06% to Rs1,037, Gujarat Ambuja dropped 6.88% to Rs137, Dr Reddy's Lab shed 4.93% to Rs770, SBI lost 4.10% at Rs1174, Grasim declined 2.93% at Rs2,810 and HDFC Bank slipped by 2.50% at Rs1,030. NTPC tumbled 2.31% at Rs135, Maruti Udyog declined 2.05% at Rs919, Tata Motors lost 1.49% at Rs950 and Reliance Communication slipped 1.42% at Rs441. However, Bharti Airtel gained 1.89% at Rs689 and Hindalco rose 0.30% at Rs165.

The banking stocks came under sharp selling pressure. UTI Bank tumbled by 6.60% at Rs509, Canara Bank slipped 5.22% at Rs249, Kotak Bank slumped 4.09% at Rs462, BOI fell 3.94% at Rs196, PNB declined 2.14% at Rs515, Union Bank shed 1.62% at Rs116, Indian Overseas Bank was down 1.41% at Rs112 and ICICI Bank slipped 1.24% at Rs965.

Over 32.95 Crompton Greaves shares changed hands on the BSE followed by Ispat Industries (32.46 lakh shares), Cairn India (29.38 lakh shares), Dena Bank (19.70 lakh shares) and Welspun Gujarat (18.81 lakh shares).

Value-wise SBI registered a turnover of Rs115 crore on the BSE followed by Reliance Communication (Rs75 crore), India Cement (Rs56 crore), Gujarat Ambuja Cement (Rs55 crore) and Bharat Forge (Rs53 crore).

Cement, banks, FMCG stocks fall headlong

The Sensex, which had opened weak, kept sliding as the day progressed. Squaring up of long positions and covering of short positions today itself, ahead of the expiry of January 2007 derivatives contracts on Thursday (25 January 2007), contributed to the fall. Shares of cement makers, banks and FMCG firms were the major losers.

The 30-shares BSE Sensex lost 168 points (1.18%), to end at 14,041.24. It had opened a bit higher, at 14,212.12 (also the day’s high), but started declining due to heavy selling. It also plunged to a low of 14,025.74, in the late-afternoon session of trade.

The S&P CNX Nifty was down 36.35 points (0.89%), to 4,066.10.

The market-breadth was weak, as a host of small-cap and mid-cap stocks came under pressure. For 1,723 shares that declined, only 913 advanced and 60 scrips remained unchanged on BSE.

The total turnover on BSE amounted to Rs 4040 crore, higher than Rs 3,719 crore on Monday.

Among the 30-Sensex pack, 28 declined and only 2 eked out gains.

Cement shares were drubbed by the lifting of customs duty on all varieties of the commodity. ACC (down 6.97% to Rs 1038) was the top loser. It had also slipped to a low of Rs 1031.

Gujarat Ambuja Cements tanked 6.78% to Rs 136.80. It had slipped to a low of Rs 135.10. The counter clocked 39.13 lakh shares on BSE.

Other cement shares to suffer were Grasim (down 2.93% to Rs 2810), Mangalam Cement (down 8.93% to Rs 224.35), Mysore Cement (down 6.97% to Rs 62), Birla Corporation (down 7.83% to Rs 338), Ultratech Cement (down 4.65% to Rs 1060), Shree Cement (down 4.54% to Rs 1425), JK Lakshmi Cement (down 4.42% to Rs 173.15), Anjani Portland (down 13.53% to Rs 36.10), India Cement (down 8.73% to Rs 220.65) and Madras Cement (down 4.86% to Rs 3455).

The customs duty on all varieties of cement, except white cement, has been cut to zero from 12.5%. Analysts reckon that cement prices in only a few regions, mainly restricted to Bangladesh, and to some extent Sri Lanka, could be impacted due to increase in imports following the lifting of the import duty. Cement being a bulky commodity, freight costs account for a large portion of its retail cost. Prices in the interior regions are unlikely to be affected as a result.

Dr Reddy’s Lab (DRL) plunged 5.28% to Rs 767.10, after results missed street expectations. The drugmaker reported a surge in net profit in December 2006 quarter after trading hours on Monday. However, the stock managed to recover from a low of Rs 772.

The Hyderabad-based drugmaker, which acquired Germany's Betapharm last year, said quarterly net profit rose to Rs 188 crore from Rs 62.80 crore in December 2005 quarter. Total revenue jumped to Rs 1540 crore from Rs 590 crore.

DRL's foreign acquisitions and better sales of generics in the United States drove growth, while overseas sales are seen rising as drugs with annual sales of $30 billion are likely to go off patent in the next two years. Dr Reddy's Labs generics revenue rose to Rs 768 crore from Rs 83.10 crore.

PSU bank SBI declined 4.53% to Rs 1168.75. Its third quarter net profit stood at Rs 1,065 crore, down 4.5% from Rs 1,115.1 crore in the corresponding quarter of the previous year. The bank’s net profit (excluding exceptional items) was at Rs 1065 crore versus loss of Rs 620 crore. SBI had extraordinary income of Rs 2,048 crore in Q3 last year. Its Q3 NII declined 6.4% to Rs 3951 crore (Rs 4219.8 crore). The NII (Excluding Extraordinary Income) was up 46%, to Rs 3,951 crore.

SBI's provisions and contingencies stood at Rs 1166 crore, compared to Rs 470 crore in the corresponding period of the previous fiscal. SBI's CAR was 11.86% versus 12.49%.

Index heavyweight Reliance Industries (RIL) was down 1.05% to Rs 1359, on a volume of 3.65 lakh shares. It had also struck a high of Rs 1381.

Bharti Airtel was the top gainer, up 1.60% to Rs 687.15, on a volume of 3.93 lakh shares. The company posted a net profit of Rs 1043.69 crore for the quarter ended December 2006, compared to Rs 538.68 crore for the quarter ended December 2005. Total revenue increased to Rs 4723.68 crore (Rs 2936.03 crore).

A solid surge in user base in the world's fastest growing mobile market, sent Bharti Airtel's shares to a life high of Rs 700.80. The company’s consolidated net profit, as per Indian GAAP, zoomed over 90% to Rs 1,033.34 crore for the third quarter ended December 2006, when compared with Rs 543.54 crore in the quarter ended December 2005.

Chairman Sunil Mittal said demand for telecom services continued to be strong. The company, India's top mobile services firm, added five million new subscribers in the three months to December, the highest-ever in a quarter.

The board of Bharti Airtel approved transferring the company's towers for mobile communications and related infrastructure, to a wholly-owned subsidiary, Bharti Infratel, for better operational efficiency.

The company also announced commencement of Direct-To-Home (DTH) services to address the fast-growing home entertainment segment through Bharti Telemedia, another wholly-owned subsidiary. It also approved acquisition of a submarine network cable system from Network i2i (jointly owned by Singtel and a Bharti group company) for an overall consideration of $ 110 million.

The BSE Bankex fell 162.09 points (2.17%), to 7,314.61. UTI Bank (down 7.25% to Rs 505.60), Canara Bank (down 5.03% to Rs 249.20), Bank of India (down 4.11% to Rs 196), Kotak Mahindra Bank (down 4.54% to Rs 460), and Bank of Maharashta (down 3.76% to Rs 44.75), ended with losses.

The FMCG index slipped 21.91 points ( 1.11%), to 1,954.15. Colgate (down 4.06% to Rs 359.15), ITC (down 1.67% to Rs 176.15), Marico (down 1.46% to Rs 556.10), HLL (down 0.78% to Rs 222.35), Dabur India (down 1.17% to Rs 160.10), Tata Tea (down 1.07% to Rs 722), and P&G (down 0.86% to Rs 892) declined.

Among side-counters, Geodesic Information Systems rose 0.55% to Rs 245.35, after its board approved merger of the Bangalore-based wholly-owned subsidiary, Picopeta Simputers, with the company. The board also approved purchasing 100% stake in Chandamama India. Geodesic reported Q3 net profit of Rs 24.3 crore for the quarter ended December 2006, compared to Rs 21.7 crore for the quarter ended September 2006 (QoQ). Net sales increased to Rs 45.3 crore (Rs 39.1 crore).

Torrent Cables surged 5.89% to Rs 167.20. It had posted 65.6% growth in net profit for Dec-2006 quarter to Rs 7.02 crore (Rs 4.24 crore). Net sales jumped 55.1% to Rs 50.73 crore (Rs 32.70 crore).

Branded apparel major Kewal Kiran Clothing plunged 8.58% to Rs 242, after a mere 7.7% growth in net profit for Dec-2006 quarter. Kewal Kiran Clothing (KKCL)’s net profit rose 7.7% in December 2006, to Rs 3.62 crore (Rs 3.36 crore). Net sales rose 20.6% to Rs 31.56 crore (Rs 26.16 crore).

The company, however, said the results were not strictly comparable. After restructuring, the apparel manufacturing and marketing business is vested in the company. The results for FY-2006 (year ended 31 March 2006) includes the effect of the above for part of the year, and hence the previous year figures are not strictly comparable, the company warned.

National Aluminium Company gained 4.14% to Rs 221.50, on reporting 46% growth in net profit for Dec-2006 quarter to Rs 572.60 crore (Rs 393.03 crore). Net sales rose 9.3% to Rs 1448.57 crore (Rs 1324.91 crore). Nalco posted results after trading hours on Monday (22 January 2007).

Zee Entertainment Enterprises surged 4.6% to Rs 316.10. On Monday, Zee had reported 175% surge in net profit in December 2006 quarter, to Rs 87.53 crore (Rs 31.86 crore). The scrip rose 2.3% to Rs 301.95 on Monday (22 January) following announcement of results during trading hours.

Asahi India Glass rose 4% to Rs 142.35, after the company reported a surge in net profit in December 2006 quarter, to Rs 13.92 crore (Rs 2.88 crore).

Orchid Chemicals rose 4% to Rs 225.40, after its betalactam unit in Maharashtra received regulatory approval from the UK. The approval for this plant, from UK's Medicines and Healthcare products Regulatory Agency, will help Orchid market its betalactam product, Piperacillin-Tazobactam, across Europe.

TRF jumped 9% to Rs 468, after the company posted 154.4% surge in net profit for Dec-2006 quarter to Rs 4.96 crore (Rs 1.95 crore). Net sales rose 100.1% to Rs 80.37 crore (Rs 40.16 crore).

Suven Life Sciences jumped 5% to Rs 167.25, after its board decided to consider sub-division of equity shares along with a bonus issue on 29 Jan 2007.

The Central Government on Monday cut customs duty on key inputs with immediate effect. The customs duty on ferro-alloys stainless steel and other alloy steel was cut to 5% from 7.5%; calcined alumina to 5% from 7.5%; pipes and tubes of aluminium, copper and zinc to 7.5% from 12.5%.

Other cuts include project imports to 7.5% from 12.5%; specified capital goods and their parts to 7.5% from 12.5%. The reduced customs duty of 7.5% on project import has now been extended to airport development and metro rail projects. A government statement read the step will reduce the cost of manufacturing and infrastructure development.

The Nikkei average closed little changed on Tuesday, as Nippon Steel Corp jumped after a rival hiked product price, offsetting losses in tech shares including Advantest Corp.

The tech-sensitive Nikkei ended down 15.61 points (0.09%), at 17,408.57, after rising as high as 17,442.00 late in the afternoon. The broader TOPIX index added 0.02% to 1,730.76.

FIIs were net buyers to the tune of Rs 77 crore on Friday (19 January), the day when the Sensex lost 35 points. FIIs have resumed buying after heavy inflows earlier during the month, which triggered a sharp market fall. FIIs were net buyers in 6 out of 7 trading sessions, from 11 January to 19 January. As per provisional data, FIIs were net buyers to the tune of Rs 218 crore on Monday (22 January), the day when the Sensex rose 27 points.

FIIs were net buyers to the tune of Rs 288 crore in index-based futures on 22 January. They were net sellers to the tune of Rs 85 crore in individual stock futures that day.

US stocks slid on Monday as investors sold shares of technology firms on worries about their earnings outlook, while a brokerage downgrade hurt shares of aircraft maker Boeing Company, pushing the blue-chip Dow average down to record its steepest one-day drop in two months.

The Dow Jones fell 88.37 points, or 0.70%, to end at 12,477.16. The Standard & Poor's 500 Index declined 7.55 points, or 0.53%, to finish at 1,422.95. The Nasdaq Composite Index lost 20.24 points, or 0.83%, to close at 2,431.07.

Oil prices slipped slightly in Asian trading hours due to a build-up in US stockpiles, easing concerns about heating fuel demand during the winter in the northern hemisphere.

The New York Mercantile Exchange's main contract, light sweet crude for delivery in March, was down $0.04 at $52.54 a barrel, from its level of $52.58 in late trading in the US overnight. The February contract expired at $51.13. Brent North Sea crude for March was at $54.64, down $0.06.

Kotak - Pfizer

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Anand Rathi The First Call (Daily Technical Note)

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Edelweiss - Daily Market Outlook 23rd Jan, 07

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PowerYourTrade Trading Calls

Ashwani Gujral

Buy Glenmark Pharma with stop loss of Rs 600 for target of Rs 750

Buy Eicher Motors with a stop loss of Rs 340 for target of Rs 500

Deepak Mohoni

Short sell Glaxo Pharma above Rs 1130 with stop loss of Rs 1155. Its an intra-day recommendation.

Buy Rolta below Rs 321 with stop loss of Rs 313; Its an intra-day recommendation.

Rajat K Bose

Buy JB Chemicals around the last close with a stop loss below Rs 99.80 for target of Rs 113

Buy Centurion Bank around the last close with a stop loss below Rs 33.90 for target of Rs 40.