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Thursday, January 25, 2007
No Updates in the next week
Dear Visitors,
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Intra-day Stock Ideas
NIFTY (4089.9) SUP 4073 RES 4106
BUY GOLDIAM (149.65)
SL 145 T 157, 159
BUY BAJAJHIND (192.40)
SL 188 T 200, 202
BUY STER (532.85)
SL 527 T 542, 545
SELL AIRDECCAN (147.10)
@ 149 SL 153 T 141, 138
SELL HINDLEVER (214.40)
@ 217 SL 221 T 209, 207
STRATEGY INPUTS FOR THE DAY
F&O expiry; birth of budget swing
There is nothing new under the sun but there are lots of old things we don't know.
It happens every month and most market players are all too familiar regarding what to expect on F&O expiry. The swing, most of it unnecessary will now be blamed on budget expectations. Given the long weekend ahead and uncertainty about the near-term direction of the market, we may see the indices continuing to swing wildly on an intra-day basis. The action will remain stock specific and in some cases, sector centric. Also, with less than a week to go for the RBI credit policy review, concerns over spiraling inflation and its fallout on interest rates might prove to be a spoil sport.
FII inflows have not been great in the first month of the new year. There has been some heavy selling by Mutual Funds in the past couple of days as well. Inflows from overseas investors have to improve substantially to take the market up sharply from these levels. This may take a while to happen, as FIIs could be waiting for the budget, as are all the other players.
Global cues are mixed. One big worry could be the sudden rebound in oil prices to the $55 per barrel mark. In equity markets, US stocks rose last night while in Asia the scene is pretty lackluster. We expect a cautious to higher opening and another volatile trading ahead. Some more short-covering in the derivative segment could help lift the market before we break for the extended weekend.
We've had two straight months of consolidation. This trend may continue for some time and the key indices could remain rangebound with a positive bias. Some observers are also talking about a possible pre-budget rally. But, as always FII inflows will continue to be the trump card, before the budget or after the budget.
Steel stocks were in the limelight on Wednesday and outperformed the key indices with the BSE Metal index rising over 3% on speculation that rising profit at U.S. producer Steel Dynamics Inc could provide an improved outlook for the industry. Q4 net income for the Steel Dynamics, the fifth-largest U.S. steelmaker rose by 68%.
Major Bulk Deals:
Citigroup Global has bought Asian Hotels; Franklin Templeton MF has picked up Hindalco; Deutsche Securities has purchased IFCI while Morgan Stanley has sold it; BNP Paribas has bought KEI Industries but Emerging Capital has sold the stock; CLSA has picked up Kotak Mahindra Bank; Goldman Sachs has purchased Pitti Laminates; Citigroup Global has sold Venus Remedies.
Insider Trades:
Usha Martin Limited: HSBC Global Investment Funds - A/c HSBC Global Investment Funds (Mauritius) Limited has purchased from open market 500000 equity shares of Usha Martin Limited on 17th January, 2007.
Mercator Lines Limited: Mr. Anil Khanna, Director sold in open markets 2000 equity shares of Mercator Lines Limited on 18th January, 2007.
Results Today:
Apollo Tyres, Arvind Mills, Aurionpro Solutions, BHEL, Century Textile, Century Enka, Crompton Greaves, Cummins India, Federal Bank, Four Soft, GE Shipping, Hindalco, Hindustan Motors, Kale Consultants, Mawana Sugars, Moser Baer, MRF, Pantaloon Retail, Renuka Sugar, Titan, Tata Coffee, Union Bank of India, TVS Motors and Uttam Galva.
Market Volumes:
The turnover on NSE was up by 2% to Rs81.87bn. BSE Metal index was the major gainer and gained by 3.72%. BSE Capital Good index (up 1.52%), BSE PSU index (up 1.34%) and BSE Bank index (up 0.95%) were among the other major gainers. However, BSE Auto index lost 1.10%.
Volume Toppers:
IFCI, SAIL, IDFC, KPIT Cummins, Gujarat Ambuja, Indiabulls, Reliance Communication, Ashok Leyland, Essar Steel, IDBI, Tata Steel, TTML, Cairn India, Balrampur Chini, Hindalco, Ispat Industries, Aptech and ITC.
Upper Circuit Filters:
Crisil, Heritage Foods, Radha Madhav, Fedders Lloyd, Aurionpro Solutions, Crest Animation, Electrotherm, Ganesh Housing, Goldiam International and BF Utilities.
Delivery Delight:
Amtek Auto, Aptech, Bank of Baroda, BEL, BHEL, Cambridge Solutions, Crompton Greaves, Infotech Enterprises, IDFC, Jain Irrigation, Jyoti Structures, L&T, ONGC, Sesa Goa and Tisco.
Major News Headlines:
Tata Steel Singapore subsidiary hikes stake in three of its own units
Bombay Dyeing Q3 net profit at Rs72.1mn (down 72.5%), sales at Rs1.07bn (down 60%)
HDFC Q3 profit at Rs3.56bn (up 25%), total income at Rs14.58 (up 38%)
XL Telecom to declare interim dividend on 27th January, 2007
Max India recommends splitting each share into five
Tata Power in pact with Chhattisgarh State for 1000MW Plan
GMR Infra Q3 group profit at Rs532.6mn (up 49%), revenue at Rs3.68bn (up 67%)
Savita Chemicals to give two bonus shares for every three held
Bank Of Baroda Q3 profit at Rs3.29bn (up 63%), total income at Rs27.2bn (up 33%)
Maruti to invest Rs2500 crores in Diesel plant
OBC Q3 net profit at Rs1.82bn (up 27%) and total income at Rs14.47bn (up 23%)
IOB Q3 profit at Rs2.47bn (up 25%), total income at Rs16.72bn (up 28%)
Indian Regulator cuts roaming charges by 22% to 56%
BHEL wins contract for 1000 MW plant
Apollo Hospital Q3 net at Rs179mn (up 6%), sales at Rs2.34bn (up 27%)
L&T gets order worth Rs3.55bn
Brokers Recommendations:
Jain Irrigation - Buy from CLSA with target of Rs450
NALCO - Outperformer from Man Financial with target of Rs249.
Long Term Investment:
Sterlite Industries
How Market Fared
F&O expiry holds the key
The markets recovered today as bulls accumulated healthy gains with benchmark index gaining over 60 points and NSE Nifty adding over 20 points. Key indices started off well following firm global cues ignoring the spurt in crude oil prices. The key indices fell from days high as investors preferred to book some profit in heavy weights like Tata Motors, HLL, ACC, Bajaj Auto and Reliance Communication. However, Short covering lifted the indices higher. Buying was also seen in Bank, Capital Good and Metal stocks holding the markets from slipping into red lifting the BSE benchmark Sensex to hit an intra-day high of 14156.46. Finally, the BSE benchmark Sensex gained 69 points to close at 14110. NSE Nifty was up by 23 points to close at 4090.
Maruti gained 1.7% to Rs934 after the company announced that they would invest Rs2500crores in Diesel plant. The scrip touched an intra-day high of Rs936 and a low of Rs914 and recorded volumes of over 10,00,000 shares on NSE.
Bank of Baroda advanced over 4.5% to Rs245 after the company declared its Q3 result with net profit at Rs3.29bn (up 63%) and total income at Rs27.2bn (up 33%). The scrip touched an intra-day high of Rs248 and a low of Rs233 and recorded volumes of over 12,00,000 shares on NSE.
Corporation Bank gained 1.2% to Rs315 after the company announced its Q3 result with net profit at Rs1.46bn (up 26.9%), total income at Rs1.46bn (up 33.5%). The scrip touched an intra-day high of Rs318 and a low of Rs309 and recorded volumes of over 1,00,000 shares on NSE.
Metal stocks were in the limelight as metal prices firmed up on LME. SAIL, Hindalco, Tata Steel and Sterlite Industries were among the major gainers.
Capital Good stocks recorded smart gains. BHEL surged 2.7% to Rs2367, L&T advanced 3% to Rs1583, Punj Lloyd advanced 1.3% to Rs1030 and Jyoti structure was locked at 5% upper circuit to Rs176.90.
Pharma stocks also witnessed profit booking. Cipla fell 3.2% to Rs246 the Company announced its Q3 result with profit at Rs1.84bn (up 5.1%) and sales at Rs8.81bn (up 12.5%), Sun Pharma declined 2.5% to Rs1021, Dr Reddy’s Lab was down by 1.1% to Rs762 and Glaxo slipped 0.4% to Rs1138.
Oil & Gas marketing stocks fell as crude oil prices rose over 7% to $55 per barrel. HPCL dropped by 2.1% to rs311, IOC was down by 1.9% to Rs482 and BPCL fell 1.25 to Rs353. However, oil exploration stocks ONGC advanced 2.4% to Rs912 and RIL was added 0.7% to Rs1369.
Positive outlook on global Mining stocks by Foreign Brokerage spurred Sesa Goa by over 10% to Rs1816. The scrip touched an intra-day high of Rs1835 and a low of Rs1650 and recorded volumes of over 12,00,000 shares on NSE.
Volatility ahead
Yesterday's pull back after consecutive two weak sessions followed by strong global markets, the bias remains positive. However, today is being the last day of derivatives expiry for January series and there has not been too much roll over from investors followed by weak Asian markets in the morning trades, caution should me maintained on account of intra-day volatility. Although most of the quarterly numbers announced so far have met market expectations, players are concerned over sliding FII & MF inflows. Among the local indices, the Nifty could test higher levels around the 4100 level and has a support at 4060. The Sensex on the downside may slip to 14040 and may face resistance at 14157. On the results front BHEL, Century Textiles, TVS Motors, Titan Industries, Hindalco, Great Eastern Shipping are scheduled to announce their numbers.
US indices ended in the positive territory with Dow hitting the new record all-time high on Wednesday on account of upbeat quarterly results from Yahoo and Sun Microsystems . While the Dow Jones rose by 88 points to close at 12622, the Nasdaq ended 35 points up at 2466.
Most of the Indian ADRs were gainers on the US bourses. Rediff rallied sharply and soared over 5.44% followed by Patni Computers gained 4.53% while Wipro, HDFC Bank, MTNL, VSNL ,ICICI Bank ended with steady gains. Tata Motors fell sharply and tumbled over 2.75% and Satyam declined by 0.87%.
Crude oil prices gained in the last session. The Nymex light crude oil for March delivery rose 33 cents to close at $55.37. In the commodity space, the Comex gold for February series added $2.30 to settle at $648.20 a troy ounce.
Volatility may remain high ahead of derivatives expiry
Volatility may remain high ahead of today’s expiry of January 2007 derivatives contracts. But volumes may be low due to a slew of holidays. The market remains closed on Friday (26 January) on account of Republic Day and again on next Tuesday (30 January) on account of Moharram.
The rollover in Nifty futures has been about 47% and in individual stock futures at about 55% to 60% according to a derivatives dealer with a local brokerage.
As per provisional data, FIIs were net buyers to the tune of Rs 159 crore on Wednesday 24 January, the day when Sensex had risen 69 points. They were net buyers to the tune of Rs 194 crore in index-based futures on 24 January. They were net sellers to the tune of Rs 255 crore individual stock futures on that day.
The major Q3 results today are Bhel and Hindalco. The Q3 results announced so far were good. The season is in its last lap and the focus will shift to the Union Budget 2007-08 and related expectations. The RBI meeting for monetary policy is on 31 January 2007. With inflation surging to a two-year high of over 6%, the central bank is widely expected to raise interest rates.
Asian equity markets were mixed on Thursday. Tokyo's Nikkei was up 0.3 percent at the midsession, after hitting its highest level since July 2000.
US stocks rose sharply on Wednesday, driving the Dow Jones industrial average to a record high, after profit reports from Yahoo Inc. and Sun Microsystems Inc. renewed optimism about tech company profits. The Dow Jones industrial average was up 87.97 points, or 0.70 percent, at 12,621.77. The Standard & Poor's 500 Index was up 12.14 points, or 0.85 percent, at 1,440.13. The Nasdaq Composite Index was up 34.87 points, or 1.43 percent, at 2,466.28.
The Dow hit an all-time intraday high of 12,623.45 and recorded its first-ever close over 12,600. The S&P 500 rose to its highest close since September 2000 and recorded its best one-day percentage gain in a month.
Oil gave up some of the previous day's gains but held above $55 a barrel, as US plans to boost strategic reserves and colder weather in the northeastern United States, the world's top heating oil market, offset swelling crude stockpiles. NYMEX crude for March delivery eased 13 cents, or around a quarter of a percent, to $55.24 a barrel.
No major correction expected tomorrow
As we get closer to Jan derivative contracts expiry, the cost of carry is getting lower. Reliance Jan contracts and the cash segment prices were almost at par. Sail Jan futures were trading at a discount.
Last month, the Nifty rollover was around 65 – 70% levels. This month, the figure until yesterday was pegged at 47%. For individual stocks, the rollovers haven’t been too bad until now at 55 – 60% levels. Long positions were not rolled over aggressively.
The implied volatility for Feb futures contracts has come down to around 20 % levels from the 24 - 25% levels seen a few days back.
The Put-Call ratio has corrected to 1.59 as of yesterday.
I am bullish on the market and don’t see a major correction coming in tomorrow in the event of expiry. But if the high premiums continue in individual stocks in the first half of the day, then we may see some correction in the last half an hour of trade tomorrow.
- Zeal Mehta, Derivatives Analyst, Emkay Shares
ENAM Reports
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