Anand Rathi - Daily Fundamental Snippets

House of Pearl Fashions Ltd has bagged orders for USD 7.5 Mn (Rs 30 Crs) from US Buyers, including JC Penney / H & M/ GAAP / KOHLS.

Autoline Industries Ltd and Stokota NV have entered into a MOU to execute a merger of the two Companies where in the Company will acquire a 51% stake in Stokota's Global Operations for a consideration of approximately INR 66.8 Cr in cash and equity.

HOV Services has acquired Lason Inc for $ 148 million.

GE Shipping has entered into an agreement to sell its investment held in Routes Travel.

Plethico Pharmaceuticals Ltd will raise $75 million from overseas markets.
Petron Engineering Construction Ltd has received LOI for orders worth Rs 4.82 crore.

Bharat Heavy Electricals Limited (BHEL) has bagged an Rs 144 crore order from Power Grid Corporation of India Limited (PowerGrid).

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Anand Rathi - Daily Strategist

The NIFTY futures saw a rise in OI 8.15% with prices showing lot of volatility finally took support of 3850 levels and closed at the end of session at 3953.95 levels marginally positive. The nifty futures closed at 10 points premium to spot nifty indicating that the sharp recovery led to heavy short covering in futures .The whole day saw a lot of volatility with bulls and bears both becoming aggressive as indicated by price movement and heavy volumes in both the nifty futures and F&O market as a whole . The FIIs were a seller in nifty futures to the tune of 1036 crs The PCR has come down from 1.44 to 1.35 levels again indicating weakness in the market .The volatility is in a range of 27 indicating volatile trading sessions ahead.

Among the Big guns, ONGC saw OI flat with prices going up indicating that both bulls and bears were not aggressive in the counter as market became very volatile & RELIANCE saw OI coming up significantly to the tune of 4.48 with prices after showing lot of volatility closing above 1400 levels which is positive for the counter if market recovers this counter may gain quicker.

On the TECH front, we saw OI rising in TCS & SATYAMCOMP with prices goinh up indicating long positions are formed in these counters indicating strength in these counters whereas WIPRO & INFOSYSTCH saw OI rising with fall in prices indicating short positions are formed in these counters indicating weakness in these counters..
The BANKING counter lead by SBIN, BANKBARODA,BANKNIDIA saw OI coming down and prices going up indicating short covering in these counters whereas ICICIBANK saw fall in OI with prcies flat to negative indicating liquidation of positions by both bulls and bears ,HDFCBANK saw built up of short positions.

In the METALS TATASTEE, HINDALCO, STER,JSWSTEEL saw fresh buying coming in these counters indicating further strength in metal pack, Considering the overall scenario and the markets being volatile and wobbly, we feel one should hedge the positions as uncertainties prevail as budget is near . Traders are advised to place strict stop losses.

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Market may remain edgy

Market may resume on a weak note as Asian markets are trading down followed by overnight fall in the US markets. Yesterday, the Sensex swung over 300 points during the intra-day trades on budgetary jitters and gained marginally which may release some pressure on investors sentiment. However, caution should be maintained on prevalence of intra-day volatility. On the positive side, FII have turned net buyers for last few sessions. Among the local indices, the Nifty may trade higher in the 3980-4010 band , while on the downside the index has a support at 3900. The Sensex has a likely support at 13568 and may face resistance at 13780.

Major US gauges ended weak on Monday as investors maintained caution over a $45 billion deal in utilities. While the Dow Jones slipped by 15 points at 12632, the Nasdaq was down by 11 points at 2505.

Indian ADRs had a mixed outing in the US bourses. MTNL gained over 2% while Satyam, Tata Motors, Rediff and Patni Computers ganined around 1% each. Among the laggards HDFC Bank declined by 2.06% and Infosys, Wipro, DR Reddy's Lab, ICICI Bank, and VSNL ended with marginal losses.

The Nymex light crude oil for April delivery rose by 25 cents to close at $61.39. In the commodity space, the Comex gold for April series moved up by $3.10 to settle at $689.80 a troy ounce.

ICICIDirect - Suven Life Sciences - Initiating coverage (Price: Rs 153, HOLD)

Suven Life Sciences (SUVPHA)

Current Price: Rs 153 HOLD

Suven Life Sciences, a pioneer in Contract Research and Manufacturing
Services (CRAMS), has successfully leveraged its R&D expertise and
relationships with top MNC pharmaceutical firms by venturing into drug
discovery and development support (DDDSS) and collaborative research partner
(CRP) services. It also has its own drug discovery research program and is
expected to file an application for an investigational new drug (IND) for
its lead molecule in the therapeutic area of central nervous system (CNS) in
Q1FY08. We initiate coverage on the company with HOLD rating.

Steady growth in base businesses: Suven's main businesses are CRAMS, DDDSS
and clinical research. We expect these businesses to grow at a CAGR of 22%
over FY06-08E to Rs 133.89 crore. The CRAMS model will continue to be the
mainstay of the company. The company will leverage its business
relationships with global life science majors. It is also forging new
alliances with other players in the life sciences industry across the globe.

Big break expected from out-licensing of lead molecule: The company's
focused R&D is in the therapeutic area of central nervous system (CNS). It
has developed tremendous in-house R&D competencies and has in-house drug
discovery research pipeline of 30 molecules. It is likely to file an
investigational new drug (IND) application for its lead candidate for
Alzheimer's disease in Q1FY08, which would trigger clinical trials. The
company can be in for windfall gains if the molecule shows encouraging
results in the clinical trials.

Robust clinical research order book: The company is sitting on an order book
position of Rs 14 crore from CRO services. It expects to realize Rs 5 crore
in FY07E, Rs 8 crore in FY08E and rest in FY09E. We expect further traction
in the business going forward as the company leverages its competencies and
infrastructure.

Valuations: We expect that the company would report an EPS of Rs 4.01 in
FY07E and Rs 5.34 in FY08E from its base businesses. However, in FY08E we
expect significant gain in the form of a milestone payment from
out-licensing deal for its lead molecule for Alzheimer's. We believe the
company would be able to strike a deal between US$50-250 million. On the
basis of the few out-licensing deals in the Indian pharma industry, we have
simulated various deal sizes and the pay-offs. On a minimum deal size of
US$50 million, the estimated EPS would flare up by around 54% to Rs 8.23. At
the upper end of the deal size, the EPS would spike by 555% to Rs 35. The
FY08E P/E would be in the range of 4.43x to 18.83x depending on the actual
deal size.

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Intra-day Stock Ideas

NIFTY (3942) SUP 3908 RES 3975

BUY CESC (351.6)
SL 346 T 361, 363

BUY IOB (108.9)
SL 105 T 117, 119

BUY BHARATFORG (334.55)
SL 330 T 344, 346

SELL IOC (416.5)
@ 421 SL 425 T 409, 407

SELL INFOTECENT (353.6)
@ 358 SL 363 T 347, 345

STRATEGY INPUTS FOR THE DAY

No lull before the storm

There are some things you learn best in calm, and some in storm.

You often hear the advice - don't time the market. But when it is time for an event risk, it is prudent to resist the temptation of budget gains (if any). If a storm is what investors expect in the market tomorrow, don't expect a lull today. It was indeed a Manic Monday after all yesterday. Lalu Prasad Yadav's budget happened to be at the right time. We really can't rule any correlation between the railway budget and bounce back.

Though the bulls managed to rebound after a highly volatile day, one should not take it to mean that things are going to be easy. In fact, yesterday's session goes to show how choppy the market has become off late. Today, we expect a flat to lower opening as markets in the US fell overnight and Asian stock indices are also in the red. Keep an eye on the Parliament as there could be further disruption on the back of the release of Ottavio Quattrocchi in Argentina. This could affect the tabling of the Economic Survey by the Finance Minister. We are also going to have the results from the assembly polls in Punjab and Uttarakhand. So, brace yourself for another rocky and topsy-turvy ride.

The uncertainty will continue to cast its shadow on the market for a while. The trend will become clear over the next few days. One should stay cautious and guarded as trading at this juncture is fraught with a lot of risks. Plus, we have the usual worries over inflation and rising interest rates. Oil prices have crossed the $61 per barrel mark. Global markets are not exhibiting any clear signs.

FIIs were net sellers to the tune of Rs5.96bn (provisional) in the cash segment yesterday. In the F&O segment, they offloaded stocks worth Rs6.46bn. On Friday, they pumped in Rs42.87bn or $967mn in the cash segment. Market regulator SEBI says the amount includes some prior adjustments, including sub-accounts from January 1.

Corporation Bank's Board will meet today to discuss the takeover of Primary Dealer Business activity by the bank from its wholly owned subsidiary - CorpBank Securities Ltd. Nirlon's Board will also meet today to consider the development of the company's IT Park at Goregaon.

CRISIL will announce audited financial results and recommend dividend, if any, for the financial year ended December 31, 2006. Thomas Cook India's Board has decided to sub-divide the face value of its shares from Rs10 to Re1.

HOV Services could be in action after the company said that its 100% subsidiary in the US will acquire Lason for $148mn. ORG Informatics might also attract some attention as it has acquired 17.94% equity stake in Six Dee Telecom Solutions for Rs26.5mn.

IT People India is proposing to make a Follow-on Public Offering (FPO) of equity shares to the tune of Rs452.5mn through 100% book building process and has filed its Draft Red Herring Prospectus (DRHP) with SEBI and Bombay Stock Exchange (BSE).

US stocks ended lower on Monday, extending their week-long decline as persistent concern about mortgage defaults overshadowed the biggest leveraged buyout in history.

The S&P 500 closed nearly flat at 1449.37 for its fourth day of losses. The Dow dropped 15.22, or 0.1%, to 12,632.26, the lowest since Feb. 12. The Nasdaq decreased 10.58, or 0.4%, to 2504.52.

Stocks initially rose after TXU agreed to a $45bn offer from Kohlberg Kravis Roberts and Texas Pacific. Dow Chemical advanced amid reports that the largest US chemical maker may receive a takeover offer worth as much as $54bn from private equity investors within the next few weeks.

Oil prices advanced for a fourth day to the highest close this year. Crude oil futures increased 0.4% to $61.39 a barrel in New York on speculation that an Energy Department report this week will show US fuel inventories declined.

Treasuries rose on expectations weakness in housing will slow the economy and the dollar fell against the yen. Gold futures climbed near $690 an ounce, sending the benchmark contract to a seven-month high.

European shares rose, with several indexes breaching new highs. The pan-European Dow Jones Stoxx 600 index rose 0.4% to 382.17. The German DAX Xetra 30 increased 0.5% to 7,027.59, after the stocks benchmark hit a fresh multiyear high of 7,040.20 in the session. The index broke through 7,000 last week for the first time since November 2000.

The French CAC-40 climbed 0.8% to 5,762.54, after hitting a high not seen since February 2001 of 5,771.69 during the session . The UK's FTSE 100 rose 0.5% to 6,434.70.

In Asia, most big markets were down sharply. The Nikkei in Tokyo was down 97 points at 18,117 while the Hang Seng in Hong Kong slumped 226 points to 20,282. The Straits Times in Singapore was down 64 points to 3243 and the Kospi in Seoul fell 8 points to 1461.

Stocks in Mexico fell nearly 2%. Meanwhile, higher crude-oil prices helped stocks in Brazil finish higher. In Mexico City, the IPC index fell 460 points, or 1.6%, to 28,046.16, extending a 0.9% decline on Friday. In Sao Paulo, the Bovespa index rose 192 points, or 0.4%, at 46,207.40.

Market Watch & Insider Trades

Insider Trades:

Vishal Exports Overseas Limited: Pradeep S Mehta, Director has sold in open market 3826920 equity shares of Vishal Exports Overseas Limited from 20th Feb to 23 Feb, 2007.

Orchid Chemicals & Pharmaceuticals Ltd: HSBC Global Investment Funds - A/C HSBC Global Investment Funds (Mauritius) Limited along with the PAC - Halbis Capital Management (Hong Kong) Limited has sold in open market 189000 equity shares of Orchid Chemicals & Pharmaceuticals Ltd on 20th February, 2007.

Market Volumes:
The turnover on NSE was down by 9.8% to Rs90.46bn. BSE Metal index was the major gainer and gained 2.29%. BSE FMCG index (up 1.45%), BSE Bank index (up 0.63%) and BSE Auto index (up 0.54%) were among the other major gainers. However, BSE technology index lost 0.87%.

Volume Toppers:
IFCI, Power Finance, Firstsource, SAIL, ITC, TTML, IDFC, Tata Steel, Gujarat Ambuja, Zee News, India Cement, Balrampur Chini, Satyam Computer, Ashok Leyland, IVRCL Infrastructure, Rolta, Aptech, Indiabulls and Praj Industries.

Lower Circuit Filters:
Anant Raj Industries, GMR industries, Shree Precoated, SwanMills, Ansal Housing, BSEL Infrastructure, Country Club, Crew BOS, DS Kulkarni, Heritage Foods, Ganesh Housing, KS Oils, BF Utilities, Tanla, Atlanta, Shah Alloys, PSTL, Shree Ashtavinyak and Autoline Industries.

Delivery Delight:
ABG Shipyard, Bajaj Hindustan, Balrampur Chini, BEML, CESC, Dr Reddys Laboratories, Gateway Distriparks, IVRCL Infrastructures, Jyoti Structures, Maruti, Nagarjuna Construction, Reliance Capital, Rolta, Satyam Computer, Sesa Goa and Tisco.

Brokers Recommendations:
Suzlon – Buy from Edelweiss
Wockhardt – Overweight from Morgan Stanley

Long Term investment:
BEML

Major News Headlines

Govt cuts Rail freight rates on Diesel, Petrol by 5%; on Iron ore by 6%

Network 18 Board to mull rights issue on 5th March

NTPC bids for acquiring power project in Egypt

Nissan, to build car plant with Renault, Mahindra in Chennai

BHEL gets order worth Rs1.44bn

House of Pearl gets orders worth Rs300mn from US Buyers

Shoppers Stop, Hyper City retail sign preliminary accord

McNally Bharat gets Rs5.5bn order

GE Shipping to sell stake in unit

Plethico Pharma to raise funds for acquisition in US

Ram Informatics receives letter of indent from Sunrise Systems

Autoline Industries acquires 51% stake in Stokota of Belgium for Rs668mn

Petron Engineering secures orders worth Rs48.1nm

Kaveri Telecom bags contract from Idea Cellular

HOV Services buys Lason Inc for US$148mn

From the Research Desk - Sun Pharma

Sun Pharma Industries Ltd.
Q3 FY07
Rating: Maintain BUY
CMP: Rs981.65
Target Price: Rs1,119

Sun Pharma Industries Ltd (Sun) reported yet another consistent quarter with sales growing by 27.2% to Rs5.4bn and profitability growing by 35.9% to Rs2bn. Export formulations recorded a growth of 48% to Rs1.9bn with Caraco recording sales of US$31.3mn for the quarter (51% growth yoy) with a profit of US$10.1mn. Domestic formulations witnessed a growth of 18.5% to Rs2.9bn whereas for 9M FY07 it increased by 16.4% to Rs8.7bn. The market has grown at 18.5% for the quarter. Sun holds 3.2% market share as per the latest data. Margins have remained flat at 32.1% on account of higher material cost due to change in product mix and increase in R&D spending. PAT witnessed a growth of 36% to Rs2bn, translating into an annualized EPS of Rs41.9.

We remain positive on Sun’s business prospects given its lean cost structure and specialty focus. With focus on niche areas with specific technology, Sun has a strong pipeline of products to be launched over 2007-09. We estimate US sales to witness a CAGR of 38.1% to Rs9.7bn over FY06-09. For the European market, Sun is looking at a partnership model approach rather than setting up its own front end. We estimate Sun to witness earnings CAGR of 24.4% to Rs11bn over FY06-09. We maintain BUY on the stock with a target price of Rs1,119 (21x FY09E). With a war chest of US$500mn, an acquisition is round the corner, which holds potential upsides to our estimates. We believe Sun will target acquisition of a distressed asset and turn it around in three-four years time.

HOW MARKET FARED

Hope the worst is over

Bulls were back on the bourses fighting against all odds as the markets staged a strong recovery towards the end led by gains in heavy weights like ACC, SBI, Tata Motors, ITC and Hindalco. After opening in green the markets derailed in the opening trades with benchmark Sensex hitting a low of 13383.88, but managed to come on track in the closing hours of the day. Auto stocks regained momentum, Bank and Pharma stocks also were back lifting the markets to close higher. Finally, the 30-share benchmark Sensex gained 16 points to close at 13649. NSE Nifty was up 3 points to close at 3942.

Hindustan Zinc spurred over 8% to Rs668 after the company raised prices for the second time in 10 days to match global rates. Prices were raised by Rs6900 a metric ton, or 4.2%, to Rs170600. The scrip touched an intra-day high of Rs676 and a low of Rs633 and recorded volumes of over 3,00,000 shares on NSE.

Petron Engineering edged lower 0.2% to Rs138 after the company announced that they have received Letter of Intents for a total value of Rs48.1mn from Vedanta Alumina Ltd. The scrip touched an intra-day high of Rs149 and a low of Rs135 and recorded volumes of over 3,000 shares on NSE.

Metal stocks stood firm throughout the trading session. Tata Steel advanced 2.2% to Rs470, SAIL was up 1.8% to Rs113 and Hindalco added 1% to Rs145, Nalco spurred by over 2.5% to Rs236 and Sterlite Industries added 1.7% to Rs508.

Select stocks like Hind Rectifiers and Stone India were in the limelight today benefiting from the outcome of Rail Budget. Hind Rectifiers surged by over 4.5% to Rs800 and Stone India was up by 3.5% to Rs159.

FMCG stocks also ended with gains. McDowell rose over 3% to Rs819, Tata Tea was up 1% to Rs656 and Dabur added 1% to Rs99. While ITC was the major gainer among the heavy weights the scrip gained 2% to Rs170.

Select Auto stocks also shifted to higher gear towards the end. Tata Motors advanced by 2.8% to Rs839, Maruti was up by 1.7% to Rs878. However, Bajaj Auto, Hero Honda were among the major losers.

Caution may prevail

Market may take direction from outcome of assembly polls in three states; caution may prevail ahead of budget

The market will take direction today from the outcome of assembly elections in three states. The counting for assembly elections held in Punjab, Uttarakhand and Manipur began at 8:00 IST today. The performance of the ruling Congress party in Punjab and Uttarakhand holds key, given that Congress leads the UPA government at the Centre.

The market witnessed a strong intra-day rebound after a near sharp fall on Monday 26 February 2007 following the announcement of the Railway budget where freight rates on petrol, diesel, iron ore and limestone were cut by 5-6%. Nifty March futures settled at 3953.95, a premium of 11.95 points over spot Nifty closing of 3942.

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 current 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 pressed heavy sales in index-based futures for the second day in a row on Monday. FIIs were net sellers to the tune of Rs 1036 crore in index based futures on Monday. They were net buyers to the tune of Rs 219 crore in individual stock futures. As per provisional data, FIIs were net sellers to the tune of Rs 596 crore in the spot market on Monday.

Asian markets drifted lower on Tuesday (27 February). Key benchmark indices in Hong Kong, Japan, South Korea and Singapore were down by between 0.26% to 1.7%.

US stocks skidded on Monday as resurgent economic worries and a jump in oil prices outweighed excitement about a bid for Texas power company TXU Corp., which would be the largest private-equity buyout ever. The Dow Jones industrial average declined 15.22 points, or 0.12 percent, to end at 12,632.26. The Standard & Poor's 500 Index slipped 1.82 points, or 0.13 percent, to finish at 1,449.37. The Nasdaq Composite Index dropped 10.58 points, or 0.42 percent, to close at 2,504.52.

US crude rose for a fifth day, up 23 cents to $61.62 a barrel on Tuesday and just below a 2007 peak, as a cold snap in the United States ignited heating fuel demand, and as world powers decided to work on a new UN sanctions resolution to pressure Iran over its nuclear programme.

Anagram - Daily Call

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Anand Rathi - First Call - Daily Tech

Nifty and Sensex have exhibited a DOJI - like candlestick.

Technically, one may use the level of 3855 (Nifty) and 13380 (Sensex) as the stop loss level.

Nifty faces resistance at 4065 and Sensex at 13380.

BSE Smallcap exhibited a DOJI - like candlestick and BSE Midcap Indices have exhibited a bullish candlestick.

CNX IT has lost ground.

In the Punter's zone we have a Buy in A.C.C., IVRCL Infra & POLARIS
In the Technical call section, we have a Sell in S.B.I. & Buy in Satyam Computers and India Cements.

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Investsmart - Morning Call

Market Grape Wine :

In House :

Maintain strict stop loss as markets to be under pressure at all higher
levels .

Nifty at a support of 3915 & 3872 levels with resistance at 3987 & 4030
levels .

Buy : Sail above 115.6 target 121 s/l 113

Buy : TCS above 1295 atrget 1330 s/l 1280

Buy : CMC positional target 1300 s/l 1040 above 1100


Out House :

Economic Survey today .

Sensex at a support of 13515 & 13383 levels with resistance at 13786 &
13833 levels .

Maintain strict stop loss as markets to see selling pressure at higher
levels .

Buy : RIL & RelCap

Buy : ONGC

Buy : Polaris & Mphasis

Buy : NDTV & Adlabs

Buy : IFCI , RNRL & NagarFert

Buy : M&M

Buy : Gitanjali & Glenmark

Dark Horse : Sesagoa , Sail , JSW , Gitanjali , Glenmark , UtiBank , KTK ,
Adlab , NDTV & IFCI

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Emkay - Morning Notes, Railway Budget Highlights

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Deutsche Bank - India Capital Markets

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