Value, not momentum - Chetan Parikh

In a brilliant book, Hedge Hogging, the author, Barton Biggs, writes about buying on the basis of value and not momentum.

“Investing on the basis of value, not price momentum, is our religion.

Warren Buffett articulated this philosophy best with his manic-partner analogy. At a talk I attended, in one of his musings, he expressed it something like this:

Suppose you are an equal partner in a good business with a manic-depressive partner named Mr. Market. From time to time, Mr. Market will only see the favorable factors affecting your business and will then become so euphoric about the prospects of the business that he will come to you and offer to buy your half at a ridiculously high price. So, of course, you should sell it to him.

At other times, seeing only trouble ahead for your firm, he becomes deeply and in his despair offers to sell you his share at an outrageous discount to its intrinsic value. Then, you should buy it from him.

Buffett went on to say that it was irrational, the height of foolishness, to sell an asset you were confident was undervalued just because its price was falling. In other words, Mr. Market can be an old fool (or maybe a young fool) who, from time to time, becomes hysterical. Sometimes, in his madness, he sees ghosts. At others, he imagines the good fairy touching him with her long golden fingers.

You are perfectly free to ignore Mr. Market or to take advantage of him, but it will be disastrous if you fall under his influence. Suppose the price you could sell your home at was quoted every day. For several months the quotation steadily declined. Would you then sell your home, the home you were comfortable in and satisfied with, just because its price was declining? Of course not! In this sense, an attractive investment is similar to a home you are happy to inhabit.

Mr. Buffett’s value philosophizing sounds eminently sensible, but it doesn’t work when you are trafficking in commodities and you have short-term-performance sensitive clients.”

Emkay - PTC India

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Indian Bank Listing

Indian Bank will list on March 1st 2007

Don't Panic

Citigroup - L&T, India Cement Sector, Indian IT Services, Reliance Industries

L&T

• Downgrade to Hold — Downgrade L&T to Hold/Low Risk on account of (1) significant stock outperformance, (2) fair valuations, and (3) lower margin of error on operating performance. Our new target price of Rs1,733 (up from Rs1, 579.5) leaves limited upside potential, and hence we downgrade the stock.
• Significant outperformance — L&T has outperformed the BSE Sensex over the past year. The outperformance has been even more significant in the past 6 months, as the company has been consistently surprising analysts on EBITDA and earnings. But now the stock looks fairly valued.
• Fairly valued — Post 44% yoy earnings growth in FY07E, momentum should moderate to ~30% in FY08E-09E as high base effects on revenue growth and core EBITDA margins parameters are bound to catch up. The stock trades at an adjusted P/E (adjusted for value subsidiaries) of 22.7x FY08E, which in our view fairly captures the growth profile of the parent business.
• Lower margin of error — We expect L&T to end FY07E with a core EBITDA margin of 8.8%, a 231bp YoY increase. Although improvements of ~50bps from these levels cannot be ruled out, progressively this becomes tougher given the nature of the business. Further, at current valuations the margin of error in terms of sales growth and EBITDA margins is lower.
• Fairly priced — Although we think L&T remains the best E&C company from an operational point of view, the stock looks fairly priced.

Flash: Indian Cement Sector - Negative Budget Expectations

• Reports of cement export ban, higher excise duty — Stock prices of Indian cement majors have come off 7-14% in the past week. Reasons behind this fall are media reports of (1) a possible ban on cement exports in the budget and (2) introduction of a differential excise duty for cement to control inflation.
• Export ban would be a potentially bigger negative — About 10mn tonnes of cement and clinker (6% of FY07E demand) are likely to be exported in FY07. Any ban would disproportionately affect the largest exporters, Gujarat Ambuja and UltraTech. The cement flowing back would then create oversupply in Gujarat (capacity 17m tpa, demand 9m tpa, more than 70% of cement exports).
• Differential excise duty regime — Expected to remain at Rs408/t (Rs20/bag) upto a certain price level and may be higher, reportedly Rs600/t (or Rs30/bag), if the price crosses a certain benchmark. While the industry would be able to pass on this hike, it would limit the price upside available to producers.
• New regime could be ambiguous and difficult to implement — Cement is largely billed ex-factory and a plant may have to pay a higher excise duty only because a higher freight cost means a higher price. The price differs in each locality is subject to various discounts and incentives and hence difficult to define.
• Fundamentally positive; Grasim top pick — The industry has considerable pricing power in the next 6-9 months. However, the direction of cement stock prices would be determined by the severity of measures announced in the budget. Our top pick remains Grasim, for its cheapness and defensiveness.

India IT Services

• Demand remains very strong — Our interaction with Indian players (including Cognizant) highlighted that demand conditions remain very strong – particularly in US and Europe. A sharp US slowdown would likely be the only speed breaker. Offshoring is a key theme across the US and European players we met. However, Indian companies have a long way to go in Continental Europe.
• "Defend and Extend" strategy as MNC's turn aggressive — Accenture's "Defend and Extend" strategy highlights that MNC's are ready to take on Indian vendors in smaller contracts and at their price points to stop them from entering clients and ramping up.
• Domain knowledge and GDM appear to be the key differentiators — Domain knowledge and global delivery capabilities are becoming key differentiators – Tier I companies are investing more in subject matter expertise, global delivery and customer penetration.
• Supply and linearity cited as challenges — Supply in terms of hiring large numbers, training and retaining employees remains the top concern across the sector. With hiring requirements increasing as companies grow, companies are also trying to find ways to reduce linearity in the business model.
• We prefer Tier I; TCS and Infosys are our top picks — With deals getting bigger and complex and more services being bundled, Tier I companies appear better placed on demand. This coupled with better ability to manage supply should give them the winning edge.

Reliance Industries

• Promoters infusing equity — RIL Board has approved preferential issue of 120m warrants to the promoter group ( 8.6% dilution), potentially taking promoters' stake to 54.5% (from 50.6%). Notwithstanding healthy internal accruals, under-leveraged balance sheet and treasury stock to fund capex plans (E&P, retail), we see this intent as positive for short-term sentiment. Though fundamentally difficult to attribute value to, it could also be a precursor to (1) increasing visibility and hence higher capex in E&P and (2) strategic sale in E&P assets.
• Warrants exercisable over 18 months — Promoters would make upfront payment of 10%, with remainder at the time of exercise. The pricing will be decided post the shareholder approval (which could take 30-60 days) based on SEBI formula – higher of two weeks and 26-weeks average closing price. At current market price, the equity infusion would be Rs169bn (US$3.8bn).
• New petrochemical unit at Jamnagar — RIL also announced a 2mtpa petrochemical unit at Jamnagar at a total cost of US$3bn, to be commissioned by 2010-11. The unit, which will produce ethylene/propylene from refinery off gases/byproducts is aimed at competing with the gas-based crackers coming up in the Middle East. Besides being super-sized, it improves RIL's feedstock mix and competitiveness in the long run.
• KGD6 update — RIL also disclosed two additional gas discoveries (AA-1 and Q-1) in a new seismic area besides reiterating its development time lines for gas and oil. While the two gas discoveries (partially included in our SOP) have been notified to DGH, there is no estimate of the prospective reserves as yet. Our valuation of E&P assets at Rs408/share includes Rs240/share for KGD6 based on ultimate recovery of 16.3tcf and a development capex of US$7.0bn.
• Retain Hold/Low Risk — We believe the current valuations factor in a large part of the core business fundamentals, value accretion from KG gas reserves, as well as the new initiative of organized retailing. We retain Hold/Low Risk (2L) rating with a target price of Rs1,450.

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Sharekhan Investor's Eye dated February 26, 2007

PULSE TRACK

• Interest on CRR to be positive for the sector

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RAILWAY BUDGET SPECIAL

Railway Budget 2007-08

Railway minister Lalu Prasad Yadav continues to guide the Indian Railways (IR) on a profitable growth path. Announcing his fourth budget for the IR today, he indicated that the capital expenditure (capex) binge of IR would continue. In a move to boost IR’s key revenue stream (ie freight), the minister also extended major concessions on the freight rate front. He also reduced the passenger fares in a bid to increase the passenger traffic. The other salient features of the Railway Budget 2007-08 are an impressive reduction in the operating cost of IR, significant policy shifts to turn around the loss-making businesses of the national carrier, continued freight rationalisation and an increase in the capex of IR to make the railways more competitive.

The major beneficiaries of these moves are likely to be Texmaco, Kalindee Rail Nirman Engineers (Kalindee Rail) and Stone India. A few days back, in our special note “Turnaround Express going strong”, dated February 22, 2007, we had mentioned how we expected companies like Hind Rectifiers, Simplex Casting, Stone India and Texmaco to show a healthy growth in their earnings on the back of the growing capex of IR.

Besides these companies, oil refiners, cement, steel and iron ore companies would benefit from the railway budget due to the reduction announced in the freight rates, though the impact on earnings is expected to be marginal.

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SECTOR UPDATE

Information Technology

Policy tangles

The Indian information technology (IT) service companies have been demanding the extension of the prevailing tax exemptions on software technology park (STP) registered units under the Section 10A/10B of the Income Tax Act. As per the current guidelines, the tax exemptions for such units would cease to exist with effect from March 2009. But the industry associations are lobbying for the extension of the exemptions for another ten years in line with the proposed tax exemptions for the units located in the special economic zones (SEZs).

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Sharekhan Daring Derivatives for February 27, 2007

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Sharekhan Eagle Eye (equities) & Derivatives Info Kit for February 27, 2007

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Railway Budget 2007-08: Sharekhan Railway Budget Special dated February 26, 2007

Railway Budget 2007-08

Railway minister Lalu Prasad Yadav continues to guide the Indian Railways (IR) on a profitable growth path. Announcing his fourth budget for the IR today, he indicated that the capital expenditure (capex) binge of IR would continue. In a move to boost IR’s key revenue stream (ie freight), the minister also extended major concessions on the freight rate front. He also reduced the passenger fares in a bid to increase the passenger traffic. The other salient features of the Railway Budget 2007-08 are an impressive reduction in the operating cost of IR, significant policy shifts to turn around the loss-making businesses of the national carrier, continued freight rationalisation and an increase in the capex of IR to make the railways more competitive.

The major beneficiaries of these moves are likely to be Texmaco, Kalindee Rail Nirman Engineers (Kalindee Rail) and Stone India. A few days back, in our special note “Turnaround Express going strong”, dated February 22, 2007, we had mentioned how we expected companies like Hind Rectifiers, Simplex Casting, Stone India and Texmaco to show a healthy growth in their earnings on the back of the growing capex of IR.

Besides these companies, oil refiners, cement, steel and iron ore companies would benefit from the railway budget due to the reduction announced in the freight rates, though the impact on earnings is expected to be marginal.

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Deutsche Bank - Reliance Industries

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Goldman Sachs - Curtain Raiser to Indian Budget

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Citigroup - Flash: India Banks - CRR Returns - Some Concessions, Not Structural

Summary

• Banks get a little gain in FY07, and going forward — The RBI made a few changes to the returns it offers to banks on their CRR balances. This should add about 5bp in margins for FY07 (back-ended in 4Q07), and about 3bp going forward, across the sector. Supports profitability, to a limited extent.
• But, CRR remains a fundamental drain on bank profitability — Raised returns do not materially change the drain that is the CRR. We estimate an opportunity cost, and effective loss, of 55-60bp of margin for banks. This is estimated at current market rates, and the increased returns only provide an offset of about 3bp.
• Two changes - retrospective and prospective — RBI had announced 0% returns on CRR in June 06. Since the notification has only been effected in January 07, RBI is a) Compensating banks over the June – Feb 07 period, at a higher rate (350-200bp) level; b) Raising returns from 0% to 1%, prospectively. The effective yield for banks is substantially lower – they do not get any returns on the first 3% of CRR, and so effective returns are only 0.5% on 6% CRR assets.
• The concession – Likely driven by rising P&L impact of CRR — We would believe RBI has made a slight concession to its June 06 change as the financial impact of the CRR has increased since June 06 as a) CRR itself has been raised to 6% from 5% since; and b) the cost of funding the CRR has risen by 150-200bp since. This is only a mild concession, but potentially reflects some cognizance of onerous regulatory requirements on the banking system.
• Positive, but only a mild one — This does come as a slight positive for banks – private and Government, against a slew of more onerous regulatory developments in the recent past. However, not structural or meaningfully directional.

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Budget 2007-08: Real Estate: black of white ! there are many demands here !

Industry expectations are as follows:

Continuation of section 801B of the income tax which gives tax relief to the builders for construction of units, which are less than 1000 square feet built up in metros. Special incentives for making small houses i.e. one BHK apartments less than 400 square feet carpet area especially in Mumbai. --> Really the FM has little love for Mumbai though it is the place which gets in the biggest revenue. Cheaper housing certainly could go a long way with the Common Man Theme.

Increase in exemption limit under section 24 of the Income Tax act which is regarding the exemption of the interest alone on the home loan should go up from the present Rs 1.5 lakh to Rs 3 lakh effective from the date of Booking and not from the date of Possession. This is hope really but with the FM looking to reduce exemptions this would mean asking for the moon.

TDS to be brought down from 16.83% to 10% especially for NRIs and a flat slab of 15% should be considered on rental income for NRIs, as this is their only income against the property. --> With bursting Forex reserves the reason to appease NRIs seems unreasonable.. We dont think this will happen.

Standard deduction of 30% towards maintenance should be increased to 40% for local residents and 50% for NRIs. Again a hope and demand for more.. However if this is allowed against bills, it would improve demand for cement. Currently demand for Cement is driven by new house construction and big way by reconstruction / repairs. Its a guess whether this will happen.

Abolition of service tax on builders when a builder hires an outside contractor to build the units. --> With service tax having a pass through, its unlikely this will be agreed to.

Reduction in Stamp Duty from the existing 5% to 2.5% More steps to curb Black money. ---> Really it would be a step in the right direction however this revenue goes to the States who are already fighting the centre for the loss in sales tax. Unlikely to be agreed we think. Most houses have a cash and chq component when they are sold. Really, tough to curb it unless the stamp duty is lowered. The real estate market is quite illiquid.

Complete scrapping of Urban Land Ceiling Act. Rationalizing Property tax on both Residential as well as Commercial properties. and there are more demands.

Close: A seesaw ride - and a positive finish

The Railway budget was on expected lines. There was the aura of reforms of digitisation and also the populism. Passenger fares have been cut across the board. This is to compete with airlines. There is no direct increase in freight rates and rationalisation has been done with regards to freight in an attempt to become more competitive. The idea is to sweat the assets more. The positive is from the East West dedicated Freight corridor which is expected to commence in 2007-08 at a cost of Rs 30,000 cr. There is a focus to use IT to increase efficiency ! - Its hats off to the Railway Minister as he has done which no other Railway Minister has done. Lower fares and increase profitability.

Coming back to markets it was a seesaw ride and a volatile one at that. Sugar, Cement, Steel stocks saw some buying but it was the banks which were the big gainers. Reliance was volatile post the Friday announcement of promoters intending to increase stake on profit selling once the news was out.

Sensex closed up 17 points at 13649.52 helped up by gains in Guj Ambuja (127.55, ACC (945.9) Tata Motors (839.6, Grasim (2341.14) and Satyam (461.45) Restricting the gains were Bharti Tele (732.4,), RCVL (425.9,), BHEL (2258.75,), Ranbaxy (351.2,) and Wipro (614,).

Banks made a smart come back. They were part of our hunters pick. Clearly they have been on the receiving end. However, the RBI offered them a largesse post close on Friday. They would be eligible for some interest income retrospectively on the CRR balances and that will help the bottomlines. SBI closed up and so did PNB and other banks.

Sesa Goa was one of the winnders today. The talk is that the buyer countries have agreed to a price hike of of ore by about 10%. Companies having their own ore will certainly do well and Sesa gets the direct benefit.

Rayban was smashed. The Italian Partner has asked the company for No objection to start a 100% subsidiary for doing business in India. Its likely to have been bitten by the Sebi rule of takeover which has asked it to give an open offer when it acquired Rayban's sunglasses business globally. We are positive on the business but these developments have negative implications.
Technically Markets: Sensex is poised for a pullback which could happen upto 14030. Resistance will be found at 13710 and 13830. On the lower side 13440 seems to be a good support. Below which we could fall upto 13330 and 13040.

Sensex exhibits resilience

The Sensex began the trading session with a positive gap of 52 points at 13685 and touched an intra-day high of 13723 amid considerable volatility in early trades. However the market slipped and in the first half of the session exhibited a range-bound trend with alternate bouts of buying and selling. A sharp bout of selling towards the close saw the Sensex slip into the red and touch a low of 13384, but renewed buying at lower levels in several front-line stocks saw the index erase its losses and end the session with gains of 17 points at 13650. The Nifty advanced three points and closed at 3942. The breadth of the market was negative. Of the 2,593 stocks traded on the BSE, 1,227 stocks advanced, 1,319 stocks declined and 47 stocks ended unchanged.

The sectoral indices were mixed. The BSE Metal index, the BSE FMCG index, the BSE Bankex, the BSE PSU index, the BSE Auto index and the BSE HC index ended in positive territory. On the other hand the BSE Teck index, the BSE CD index, the BSE IT index, the BSE Oil & Gas index and the BSE CG index exhibited weakness.

Among the gainers Gujarat Ambuja surged 3.83% at Rs128, ACC gained 3.30% at Rs946, Grasim jumped 3.08% at Rs2,341, Tata Motors added 3.07% at Rs840, SBI advanced 2.87% at Rs1,089, Satyam Computers was up 2.87% at Rs461, ITC advanced 2.59% at Rs170 and Tata Steel was up 2.29% at Rs470. Dr Reddy's, Maruti Udyog and Hindalco closed with steady gains. However, Bharti Airtel dropped 3.13% at Rs732, Reliance Communications shed 1.49% at Rs426 and Wipro dipped 1.48% at Rs614. Ranbaxy, L&T, Bajaj Auto, Infosys, BHEL, HDFC Bank and Reliance Industries closed with marginal losses.

Over 1.17 crore Power Finance Corporation shares changed hands on the BSE followed by Reliance Communications (32.93 lakh shares), IDBI (28.66 lakh shares) and Rolta India (23.07 lakh shares).

Value-wise Reliance Industries registered a turnover of Rs235 crore on the BSE followed by Reliance Communications (Rs138 crore) and Power Finance Corporation (Rs130 crore).

Market ekes out nominal gains amid volatility

The market pulled off an almost incredible rebound after a steep intra-day fall in mid-afternoon trade. The sharp fall came soon after the railway minister completed his budget speech in Parliament. Cement, banking, auto and steel shares were behind the Sensex’s rebound. The rise in cement and steel shares was due to a cut in rail freight rate on key raw materials in their manufacture. Index heavyweight, Reliance Industries (RIL), also recovered.

The 30-share BSE Sensex advanced 16.99 points (0.12%), to 13,649.52. It had come off the lower level after plunging 248.65 points, to 13,383.88, by 14:15 IST. The S&P CNX Nifty gained 3.05 points (0.08%), to 3,942. The Nifty March 2006 futures were at 3,969 compared to the spot Nifty closing of 3,942. On Friday (23 February), Nifty March futures had settled at a discount of 5.20 points.

The market was extremely volatile. The Sensex swung 1000 points, between some of the vital intra-day tops and bottoms of the day. The barometer index also swung 339.52 points between a low of 13,383.88 and a high of 13,723.40.

Railway Minister Lalu Prasad Yadav today announced a 5% cut in freight transportation rates for diesel-petrol, and a 6% reduction for all minerals, including iron ore and limestone. The lowering of freight rates is part of the rationalisation of tariffs announced by the minister even as he refrained from announcing any across the board increase in freight rates.

Lalu Yadav also introduced a commodity-based tariff policy, which will take effect from 1 April 2007, on an experimental basis for major commodities to provide a stronger base to the Railways' competitive capabilities. "We will introduce this new policy through an exclusive package for cement," he said.

The market-breadth evened out by the end of trading. Against 1,287 shares rising on BSE, 1,279 declined. Just 48 scrips were unchanged. In mid-afternoon trade, the ratio of losers to gainers was 1.8:1. The BSE Small-Cap Index lost 9.98 points (0.14%), to 6,894.45, while the BSE Mid-Cap Index advanced 31.82 points (0.5%), to 5,696.71.

The BSE Metal Index was the biggest gainer in percentage terms among BSE’s sectoral indices. It rose 201.61 points (2.2%), to 9,000.54. The BSE FMCG Index advanced 25.98 points (1.4%), to settle at 1,812.26. The BSE’s banking sector Index, the Bankex, advanced 42.87 points (0.6%), to 6,802.45. The BSE IT Index lost 16.42 points (0.3%), to 5,245.42.

The turnover on BSE was Rs 3793 crore, compared to Friday’s Rs 4552 crore.

Fears of nasty surprises in the Union Budget 2007-08, have caused a sharp correction on the bourses in the past few days. It plunged 723 points last week (week ended 23 February). At 13,649.52, it is off 6.8% from the lifetime high of 14,652.09 of 8 February 2007. It is down about 1% in calendar 2007 thus far.

Market men fear that short-term capital gains tax on the sale of shares may be hiked from 10% to between 12.5%-15% in the budget. The securities transaction tax (STT) may also go up further. The STT was raised in the previous budget. The removal of 10% corporate surcharge may be offset by removal of certain open-ended exemptions. On the flip side, analysts also expect the finance minister to give a big impetus to agriculture and infrastructure in the budget.

FIIs have resorted to profit-taking over the past two days. Their net outflow was Rs 225.20 crore on Thursday (22 February) compared to an outflow of Rs 40.20 crore on Wednesday (21 February 2007). An intermittent surge in inflow has been witnessed this month following an upgrade in India’s rating to investment grade by foreign rating agency, Standard & Poor's, late in January 2007. The cumulative FII inflow for February 2007 stands at Rs 3950.20 crore (till 22 February) compared to their purchases of Rs 492 crore in January 2007.

Earnings growth for India Inc remains strong. Growth in recent years has hovered near the breakneck pace of more than 20%. The long term India growth story remains intact. India’s long-term growth drivers are a favourable demography (large share of young population), robust domestic consumption and acceleration in infrastructure creation.

In today’s trade, battered cement shares edged higher on bargain-hunting. ACC jumped 4% to Rs 952, Grasim gained 3.6% to Rs 2354 and Gujarat Ambuja Cements advanced 4.5% to Rs 128.40. Cement shares had tumbled over the past few days with the government keeping a close watch on cement prices. In late-January 2007, the Centre scrapped 12.5% import duty on cement to rein in domestic prices. The recovery in cement shares was also due to reduction in freight rate on limestone – a key input in cement making by 6%.

Buying was conspicuous in PSU banks after the Reserve Bank of India (RBI) said it will resume paying interest on eligible cash reserve ratio (CRR) balances it held. State Bank of India gained 4.4% to Rs 1105, Punjab National Bank gained 5.5% to Rs 459, Bank of India gained 5% to Rs 166, Canara Bank rose 3.9% to Rs 218, and Bank of Baroda rose 2.5% to Rs 219.

Auto shares recovered on expectations of an excise duty cut on cars. Tata Motors gained 3.8% to Rs 846, and Maruti Udyog rose 3% to Rs 889.50. Market expects excise duty on cars to be brought down to 16% from 24% in the Union Budget 2007-08. In the last budget, the government had slashed excise duty on small cars to 16% from 24%.

Steel shares were in demand on expectations that steel makers will raise prices by Rs 1000 per tonne after the budget due to firm global prices. Tata Steel rose 2.5% to Rs 470.95, while Steel Authority of India (Sail) gained 2% to Rs 114. The upmove in steel shares was also due to reduction in freight rate on iron ore – a key input in steel making by 6%.

Reliance Industries shed 0.7% to Rs 1402.20. The stock recovered from the lower level after losing as much as 2.7%, to Rs 1373.50, by 14:09 IST. Reliance Industries (RIL) on Saturday (24 February 2007) unveiled a plan for an integrated cracker and petrochemicals complex, with a total capacity of 2 million metric tonnes per annum in the special economic zone (SEZ) at Jamnagar.

RIL’s board also approved a preferential issue of 12 crore warrants, exercisable into equal number of equity shares of Rs 10 each, to promoters as per SEBI guidelines for preferential issues. On exercise of the rights, the paid-up capital of RIL will increase from Rs 1393 crore to Rs 1513 crore.

Iron ore exporter Sesa Goa jumped nearly 7% to Rs 2012, after freight rate on transport of iron ore was cut by 6% in the Railway Budget.

IT bellwether ended 0.2% to Rs 2232. The stock was quite volatile. It moved between a low of Rs 2161.10 and a high of Rs 2248.70. Satyam Computer Services gained 2.8% to Rs 461.45 on market talk that the company may soon announce a large outsourcing deal.

C & C Constructions settled at Rs 239.90. The stock today debuted at Rs 350 compared to the IPO price of Rs 291.

Copper producer Sterlite Industries rose 1.5% to Rs 508.05, after Shanghai futures rose by their 4% limit on Monday, following sharp gains in the metal on the London Metal Exchange (LME).

Hindustan Zinc jumped nearly 8% to Rs 668, after the company raised zinc prices by 4.2% Saturday (24 February 2007) onwards.

Gas transporter, Gujarat Gas Company, ended flat at Rs 1300. The company said on Friday its net profit jumped 67% to Rs 18.23 crore (Rs 10.90 crore). Net sales for the same quarter surged 46.5% to Rs 234.49 crore (Rs 159.96 crore).

Indiabulls Financial Services ended flat at Rs 438. The company said on Friday three Merrill Lynch units acquired 2.93 million shares in the company, raising its stake to 5.13%.

Sugar shares edged higher following reports that some sugar companies have started hedging their risks in the futures market at a time when sugar prices are falling. Bajaj Hindustan jumped nearly 6% to Rs 169.75, and Balrampur Chini Mills gained 2.3% to Rs 57.80.

IFCI rose 1.2% to Rs 28.15. Volumes in the stock were a huge 1.3 crore shares on BSE. The stock has been consistently clocking huge volumes over the past few days.

Power Finance Corporation jumped 5% to Rs 117.15. The stock debuted at Rs 105 on Friday (23 February 2007) compared to the IPO price of Rs 85.

Civil engineering firm, McNally Bharat Engineering, jumped 5% to Rs 168.90 after the company said on Monday it had secured a Rs 556 crore order from Rashtriya Ispat Nigam, to construct a new sinter plant at Visakhapatnam.