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Wednesday, March 21, 2007
Investsmart - Morning Call
Market Grape Wine :
In House :
Nifty at a support of 3675 & 3640 levels with resistance at 3725 & 3755
levels .
Sell : Praj below 375 target 362 s/l 379
Sell : RComm : below 396 target 387 s/l of 401
Sell : Infy below 2050 target of 2015 s/l of 2065 levels .
Buy : CanBk above 188.5 target 196 s/l of 185
Out House :
Sensex at a support of 12616 & 12545 levels with resistance at 12786 &
12898 levels .
Buy : RIL & RelCap
Buy : ACC , Grasim & IndiaCem
Buy : Polaris & Mphasis
Buy : Bharti & IciciBank
Buy : EKC , Voltam & Gujfluro
Buy : Centextile & Praj
Buy : Aban & SesaGoa
Dark Horse : Aban , Mphasis , Skumar , IDEA , SesaGoa , Centextile &
Unitech
Bullet fot the Day : Praj ( stop loss of 372 ) & Titan stop loss of 818
Market Watch & Insider Trades
Insider Trades:
Alfa Laval India Ltd: Franklin Templeton Mutual Fund (through its various schemes) has purchased from open market 502794 equity shares of Alfa Laval India Ltd on 14th March, 2007
EID Parry India Ltd: Murugappa Group (Promoters) has purchased fro open market 1000000 equity shares of EID Parry India Ltd on 15th March, 2007.
Market Volumes:
The turnover on NSE was up by 18% to Rs60.56bn. BSE Bank index was the major gainer and gained 1.18%. BSE Pharma index (up 1.13%), BSE PSU index (up 0.86%), BSE Oil & Gas index (up 0.76%) and BSE Metal index (up 0.53%) were the other major gainers.
Volume Toppers:
ITC, SAIL, India Cement, R Com, Idea Cellular, Gujarat Ambuja, Satyam Computer, TTML, IVRCL Infrastructure, Bank of India, Hindalco, HLL, IDFC, Ranbaxy, Jayshree Tea, Rolta, Abishek Mills, Maruti and Tata Steel.
Upper Circuit:
GMR Industries, Harrison Lalyalam, Alps industries, McLeod Russel and Tanla
Delivery Delight:
ABB, Adlabs Films, ACC, Bajaj Hindustan, Bank of India, BEML, Bharat Forge, BPCL, Bombay Dyeing, Canara Bank, Century Textiles, Crompton Greaves, Grasim Industries, HDFC Bank, Hindalco, HPCL, ICICI Bank, India Cements, IVRCL Infrastructures, Jet Airways, M&M, Maruti, NDTV, Opto Circuits, Praj Industries, Ranbaxy, Reliance Capital, Satyam Computer and SBI.
Brokers Recommendation:
AIA Engineering – Buy from Kotak with tgt of Rs1510
Long Term investment:
Sun Pharma
Major News Headlines:
Rupee rises to an 18-month high
Ranbaxy opts out of Merck unit bid: reports
MSK Projects led group gets road orders of Rs5.9bn
Bharti to launch services in Sri Lanka next fiscal year
IVRCL to pay Rs2.28bn for Noida Land
Wockhardt gets USFDA nod to sell painkiller
Jubilant Organosys signs international contracts worth US$60mn
Global cues need not always be followed Doubt is part of all religion. All the religious thinkers were doubters. Market may move sideways
The market may exhibit optimism after registering the steady gains in yesterday's trades. The overnight gains in US markets and mixed Asian indices in morning trades may put pressure on the domestic indices. The current net outflows from the market and rise in international crude oil prices remains a cause of concern. The market may witness sideways movement during intra-day trades. The Nifty could test higher levels between 3722 and 3750 and may dip around 3640, while the Sensex has a likely support at 12550 and may face resistance at 12750.
US indices gained Tuesday, rising for a second straight session as investors welcomed a strong report on housing and the start of the two-day Federal Reserve policy meeting. While the Dow Jones advanced by 62 points at 12288, the Nasdaq was up 14 points at 2408.
Among the Indian ADRs MTNL ended weak out of 11 floats trading on the US bourses. Satyam, ICICI Bank, HDFC Bank and VSNL gained over 1-2% each, while Infosys, Tata Motors, Rediff, Patni Computers, Wipro and Dr Reddy's were up with steady gains.
The Nymex light crude oil for April delivery rose 14 cents to close at $56.73. In the commodity space, the Comex gold for April series gained $4.70 to settle at $653.90 a troy ounce.
STRATEGY INPUTS FOR THE DAY
Global cues need not always be followed
Doubt is part of all religion. All the religious thinkers were doubters.
The markets have off late been religiously following just global cues and discounting any positives that may be in the Indian market. This time around there seems to be selling or rather to an extent some basket selling taking place at higher levels. Going by Tuesday's movements looks like some more pressure could develop at higher levels. So remain cautious as the indices swing wildly. The market is expected to be rangebound and lackluster with low volume. The next big development is going to be the latest quarterly results. Till then, we'll have the intermittent bouts of buying and selling with no clarity on direction.
FIIs were net buyers of Rs1.47bn (provisional) in the cash segment yesterday. However, on Monday they offloaded stocks worth Rs2.5bn. In the F&O segment yesterday, foreign funds pumped in Rs5.66bn. Mutual Funds were net buyers of Rs330.7mn on Monday.
US stocks gained on Tuesday, rising for a second straight session as investors welcomed a strong report on housing starts.
Consumer and utility shares lifted the S&P 500 to its best two-day gain since August after a home construction report reassured investors that the world's largest economy is growing without fueling inflation.
Duke Energy rose the most this year, while Wal-Mart posted its biggest gain in a month, pushing the Dow Jones Industrial Average to its second straight advance. The Nasdaq Composite closed at its March high, led by SanDisk and Juniper Networks.
The S&P 500 rose 8.88, or 0.6%, to 1410.94. The Dow increased 61.93, or 0.5%, to 12,288.10. The Nasdaq added 13.80, or 0.6%, to 2408.21.
New housing starts in the US climbed more than expected in February, easing concern that a housing slump is slowing economic growth. The government also said building permits fell.
Investors awaited the outcome of the two-day policy meeting of the Federal Reserve. The central bank is widely expected to keep rates on hold for a sixth consecutive meeting, maintaining its federal funds rate target at 5.25%. However, traders will focus on the accompanying statement for hints on whether the Fed is inclined to cut rates should the US economy turn weaker.
The dollar fell against the yen and euro, surrendering early gains on fresh concerns over the US subprime-lending market and after a news that China will stop stockpiling foreign-exchange reserves.
US light crude oil for April delivery rose 14 cents to settle at $56.73 a barrel in volatile trading on the New York Mercantile Exchange. The front-month contract was quoting 30 cents higher at $59.55 a barrel in extended trading in Asia.
COMEX gold for April delivery rose $4.70 to settle at $659 an ounce. Treasury prices rose, lowering the yield on the 10-year note to about 4.54% from 4.56% late on Monday.
European shares turned higher. The pan-European Dow Jones Stoxx 600 index climbed 0.7% at 366.89. Banking stocks were up 0.9% after ABN Amro and Barclays confirmed that they were in merger talks. The UK's. FTSE 100 closed up 0.5% at 6,220.30, the German DAX Xetra gained 0.4% to 6,700.29 and the French CAC-40 added 0.8% to 5,503.27.
Most Asian markets were up for a third day on Wednesday, with Australia and Singapore leading the region higher. Investors bought BHP Billiton and other resource-related shares following gains in base-metal prices. Sydney's S&P/ASX 200 was up 0.3% at 5,896.10 in morning trading while Singapore's Straits Times Index was up 0.7% at 3,137.11.
Japanese financial markets are closed for a public holiday. Hong Kong's Hang Seng was down 16 points at 19,340 while the Kospi in Seoul advanced 6 points to 1437. The H-share index, a gauge of Hong Kong-listed shares in China companies, was up 0.3%.
In the emerging markets, the Bovespa in Brazil rose 1.5% to 44,350 while the IPC index in Mexico surged 1.9% to 27,407 and the RTS index in Russia was down 0.8% to 1831.
In metals, copper prices extended a rally to a three- month high on optimism that demand for the metal will rise in the US following the housing report
HOW MARKET FARED
Rally fizzles out
Markets ended in positive territory for the second straight day although the markets gave up some gains towards the end finally closing near the days low. Once again global cues directed the key indices at open today lower oil prices also aided the market to open in green. The Banking, Pharma, Aviation and Cement stocks led from the front and the Mid-Cap and the small cap stocks also contributed.
Further, decision of Bank of Japan to keep the interest unchanged also lifted the sentiment on D-Street aiding the benchmark Sensex to hit an intra-day high of 12798.80. Finally, the 30-share benchmark Sensex gained 60 points to close at 12705. NSE Nifty was up 18 points to close at 3697. MTNL, Infosys and Britannia were the major losers however, Ranbaxy, REL and BPCL were the major gainers among the 50-scrip’s of NSE Nifty.
Ranbaxy was in the limelight after a very long time the scrip jumped by over 6% to Rs336 on reports that the company has opted out of Merck unit bid because of higher valuations. The scrip was the top gainer among the 50-scrip’s of NSE Nifty touching an intra-day high of Rs343 and a low of Rs318 and recorded volumes of over 23,00,000 shares on NSE.
Jet Airways was flying higher as US light crude oil for April delivery fell 52 cents to settle at $56.59 a barrel on the New York Mercantile Exchange. The scrip surged by over 8% to Rs632 touching an intra-day high of Rs639 and a low of Rs584 and recorded volumes of over 4,00,000 shares on NSE.
Oil & Gas refinery stocks were on the move. BPCL nearly by 4% to Rs319, IOC spurred over 3.5% to Rs419 and HPCL advanced by 2.5% to Rs264. Oil exploration stocks also were up Reliance Industries gained 0.7% to Rs1322.
Metal stocks were a mixed bag. Hindalco surged by over 3.6% to Rs133, Sterlite Industries rose 1% to Rs445 and Hindustan Zinc was up 1% to Rs569. However, Tata Steel lost 1.5% to Rs423 and
Auto stocks were under some pressure. Hero Honda declined 0.8% to Rs635, Bajaj Auto slipped 0.6% to Rs2501, Tata Motors edged lower by 0.4% to Rs769 and TVS Motors declined 1% to Rs62.
Technology stocks witnessed profit booking as India's Rupee rises for fourth day to an 18-month high. Heavy weight Infosys slipped 1.5% to Rs2055, Wipro was down by 0.9% to Rs573, Rolta declined 3.5% to Rs254 and HCL Tech dropped 0.6% to Rs301.
Market may extend gains; low volumes may cap upside
The uptrend on the domestic bourses may continue today with most Asian markets in the green. China's main index whose sharp drop late last month triggered a global flight from risk and sent equity markets tumbling -- hit an all-time high. Japanese markets were closed on Wednesday for a holiday.
US stocks rose on Tuesday, as a series of takeover deals bolstered investor confidence and offset apprehension about the latest Federal Reserve rate-setting meeting. The Dow Jones industrial average ended up 61.93 points, or 0.51%, at 12,288.10. The Standard & Poor's 500 Index closed up 8.88 points, or 0.63%, at 1,410.94. The Nasdaq Composite Index finished up 13.80 points, or 0.58%, at 2,408.21.
Volumes on the bourses have dropped over the past few days, partly due to a decline in FII volumes and partly due to advance tax payments. The call money rate at which banks lend funds to each other, jumped to 60% on Tuesday (20 March 2007), its highest since January 1998.
Daily volumes on BSE have dropped since the middle of March. It had hovered in 17.6 - 20.8 lakh shares a day from 12 March to 20 March compared to 22.94 - 29.57 lakh shares a day from 1 March to 9 March.
FII volumes as reflected in their daily gross purchases and gross sales figures have markedly declined in the past few days even as there lacks clear direction regarding their inflows. Gross purchases aggregated Rs 1056.60 crore and gross sales aggregated Rs 1306.50 crore on Monday (19 March 2007). Earlier in March, the daily gross purchases and gross sales figures fluctuated in the Rs 2000 crore to over Rs 3000 crore range.
At the net level, FIIs were net sellers to the tune of Rs 250 crore on Monday, the day when the Sensex had surged 215 points in a rally across Asian markets. As per provisional data released by NSE, FIIs were net buyers to the tune of Rs 147 crore on Tuesday (20 March 2007), the day when the Sensex rose 61 points in volatile trade.
The Fed's policy-making Federal Open Market Committee began its two-day meeting on Tuesday. The Fed is expected to hold its benchmark federal funds rate steady at 5.25%, but investors will focus on its statement on the outlook for the economy and future interest rate policy.
Back home, volatility may rise over the next few days ahead of the expiry of the March 2007 derivative contracts next Thursday (29 March 2007). With the market scheduled to remain closed next Tuesday (27 March) for a public holiday, only six trading sessions are left before the expiry of the March 2007 contracts.
The next major trigger for the domestic bourses is Q4 March 2007 earnings, reports of which by corporates will start next month. Market men will closely watch what company managements have to say about the outlook for FY 2008.
The undercurrent on the bourses remains cautious due to high inflation and rising interest rates. Strong industrial production data released early last week makes a strong case for the Reserve Bank of India (RBI) to raise interest rates at its annual policy review for FY-2008 on 24 April 2007. Industrial output rose 10.9% in January 2007 from a year earlier. The wholesale price index rose 6.46% in the 12 months to 3 March 2007, up from the previous week's annual increase of 6.10% due to higher edible oil and naphtha prices.
The long-term India story remains intact. India’s long-term growth drivers are a favourable demography (large share of young population), robust domestic consumption and an acceleration in infrastructure creation.
Market Close: Continues to look for direction !
Markets had a positive second consecutive day backed by strong value buying in Cement, Pharma, Airlines and Oil stocks. Markets opened on a strong note following positive global cues and falling crude prices. The Mid-Cap and the small caps also moved and helped the markets trade positive. Indices did slip in mid session but selective banking stocks especially the index major SBI rallied and helped indices back up in strong green. IT stocks traded weak on the back strong trade by Indian Rupee which touching an 18 month new high and was below 43.75 against the Dollar, the highest since Sept 2005.
Global markets were mixed with Asian closing up while European indices trading in red due to concerns over surprisingly high inflation in UK for February.
Sensex ended up by 61 points at 12705.94. It was helped up by gains in Ranbaxy (336.35,+6 percent), Rel Energy (476.15,+4 percent), Grasim (2124.1499,+4 percent), Guj Ambuja (110.9,+3 percent) and Hindalco (132.85,+3 percent). Restricting the gains were BHEL (2043.85,-2 percent), Infosys (2054.3999,-2 percent), TISCO (424.1,-1 percent), Wipro (573.3,-1 percent) and Hero Honda (635.3,-1 percent). It was a low volume day as well and that is not confidence driving still.
Ranbaxy rallied after it opted out of Round-II in the bid for Merck's generic business and cited stretched valuations for the same. Ranbaxy was the only Indian company in the race for Merck in Round-II after Dr Reddy's had officially pulled out of the race on similar grounds. Merck's acquisition at 15 times of EBITDA would not have been EPS accretive for Ranbaxy over the next four-five years. The stock surged by 7%. Expect some more here.
A leading business daily reported that the steel industry has asked the government to place a competitive restriction on iron ore exports at 90 MT for the current year in a move to conserve this key raw material required by the steel industry. The industry has also asked for a 15% reduction on the cap on iron export every year until the exports are brought to zero. India currently exports close to 100 MT of iron ore mostly to China. Restricting exports is a long-standing demand of the steel industry, which feels that iron ore needs to be preserved to meet the capacity expansion plans of the indigenous steel sector. In the budget the government has already tried to address the issue of iron ore exports by imposing export duty. However, when the steel industry reaches a capacity of 200 MTPA, it will require 350 MT of ore. Sail and Tisco traded weak. Both were slated for downtrades for today in our hunters pick. Do read that.
According to a leading business daily, the government has imposed a seven-months ban on new flights to and from Delhi and Mumbai. The ban would apply to any new flight that an airline wants to operate during the peak hours. The government has sought this measure in order to keep congestion at these airports at the bare minimum levels owing to the lack of infrastructure to handle the 'movement' along these airports. An aircraft 'movement' refers to the take-off or landing of a flight. The problem of congestion is also compounded by the fact that there is a shortage of trained air traffic controllers in the country. The ban will affect all the domestic airlines that had anticipated increasing their capacity on the Delhi-Mumbai route in anticipation of the forthcoming summer season. Less competition in the holiday season was seen as a positive and so also lower crude prices. Airline stocks were up with Jet up by 9%.
Technically Speaking: Yoyo trading for the day. Advances Declines ratio stood at 1:1. Today's Trading witnessed low volume at Rs. 2,841 cr. Resistance for the Sensex lies at 12,674, 12798 levels while the Support lies at 12,640 12,595 levels. Sensex has faced a major resistance at 12800. This will be a level to watch in the coming days. On the lower side supports are at 12650 and 12525.
FII: - Rs 250 cr, MF + Rs 33 cr...
Mkt Sources:
FII Gross purchases Rs 1057 Cr, Gross Sellers 1306 Cr, Net Sellers Rs 249 Cr.
MF Gross Purchases Rs 242 Cr, Gross Sellers Rs 208 Cr, Net Buyers Rs 33 Cr.
Our View:
FIIs sellers for yesterday is a surprise. Markets had jumped yesterday and there was hope that this was on the back of FIIs being buyers. But not to lose hope.. The futures buying and selling has its impact.. All in all, expect markets to be ranged...
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