Dead Presidents! - India Equity Research

Thursday, May 03, 2007

Intra-day Stock Ideas

NIFTY (4087) S 4053 R 4121

BUY GESHIP (247)
SL 242 T 257, 260

BUY RALLIS (328)
SL 324 T 338, 341

BUY BRFL (188)
SL 184 T 197, 200

SELL APIL (474)
@ 478 S 482 T 465, 462

SELL POLARIS (171)
@175 S 178 T 164, 161

STRATEGY INPUTS FOR THE DAY

Opportunities to get in and get out!

Never read a book through merely because you have begun it.

Just because you've got into a stock doesn't mean you have to stick to it. The coming days will give you ample opportunities to get into counters and exit counters as the markets are expected to witness bouts of buying and selling in select counters. A crash on Friday followed by a volatile and mixed day on Monday. Then came the two holidays. Thankfully nothing untoward has happened in the international markets in the interim. Locally too, there's hardly anything to bother about except for the last few results that are still trickling in. Going by the global cues, we may open higher. But, considering that we will head into the weekend after two days of trading, the market may remain rangebound and choppy. FIIs have also turned net sellers in the last couple of days. We expect more stock specific action amid lower volume given the fact that there are hardly any triggers in the immediate future. Inflation will of course continue to hog the limelight and as will the rupee. There is a newspaper report that says that volatility is all set to rise this year and it may not be such a smooth ride for the bulls after a four-year rally. So, it pays to be a little cautious after a big rally as most positive factors are in the stock prices. But then for the day, no major worries in sight.

FIIs were net sellers of Rs4.4bn (provisional) in the cash segment on Monday while the local institutions put in Rs2bn on the same day. In the F&O segment, FIIs offloaded stocks worth Rs8.35bn on Monday. Foreign funds were net sellers to the tune of Rs1.95bn on April 27.

In global fund flows, money returned to US Equity Funds during the fourth week of April as the benchmark Dow Jones posted a series of new record highs on the back of a better than expected first quarter earnings season, according to EPFR Global Fund Data Monitor. But uncertainty about China’s response to higher than expected economic growth may have dampened flows into emerging markets funds. And, after three weeks of solid gains, investors pulled significant amounts of money out of Western European Equity Funds.

Wockhardt could be in action amid reports that it will acquire French pharma company Negma Lerads SAS. Moser Baer has recommended 1:2 bonus share issue and plans to raise as much as $150mn for expansion.

Saregama India is to announce its results today. Market grapevine has it that the RPG Group media major is expected to report bumper profit. Nearly 10% equity of Reliance Petroleum held by institutions like LIC, SBI and Goldman Sachs will come out of the lock-in period.

Hero Honda's April sales rose 4.86% to 262,544 units. Bajaj Auto's sales last month declined 10%. TVS Motor could be under pressure as it has reported a 16% drop in sales in April because demand for motorcycles declined. Tata Motors has posted a 10.7% rise in its April sales.

Suzlon Energy may attract some attention as one of its units has won a 400 MW wind turbine contract from US-based PPM Energy.

The Dow Jones Industrial Average hit another record high on Wednesday, clocking its longest winning streak in almost 52 years as investors welcomed strong earnings, lower oil prices, media deals and a strong reading on manufacturing.

The Standard & Poor's 500 Index climbed to a six-year high, propelled by MasterCard and Time Warner earnings that topped analysts' forecasts. The S&P 500 added 9.62 points, or 0.7%, to 1495.92, the highest since September 2000.

The Dow gained 75.74 points, or 0.6%, to a record 13,211.88 as a stronger-than-expected factory orders report lifted Honeywell International Inc. shares. The average recorded its 18th record close this year. The Nasdaq Composite climbed 26.31 points, or 1%, to 2557.84, the highest since February 2001.

Treasury prices slipped, lifting the yield on the 10-year note to about 4.64% from around 4.63% late on Tuesday. COMEX gold for June delivery fell $2.20 to settle at $675.10 an ounce. In currency trading, the dollar eased against the euro and gained versus the yen.

US light crude oil for June delivery fell 72 cents to settle at $63.68 a barrel on the New York Mercantile Exchange, after the government said that supplies of gasoline fell and crude oil inventories climbed. The front-month contract was quoting 6 cents higher at $63.74 a barrel in extended trading in Asia.

European shares rose on Wednesday, led by media stocks after BSkyB reported surprisingly strong customer addition and News Corp offered to buy Dow Jones for $5bn. The pan-European Dow Jones Stoxx 600 index rose 0.4% to 388.52. The UK's FTSE 100 closed up 1% at 6,484.50, the German DAX Xetra 30 rose 0.6% to 7,455.93 and the French CAC-40 climbed 0.5% to 5,990.13.

In Asian markets, the Hang Seng in Hong Kong surged by 226 points to 20,614 while the Kospi in Seoul added 5 points to 1558 and the Straits Times in Singapore climbed 31 points to 3449. Markets in Japan and China are shut for public holidays.

In the emerging markets, the Bovespa in Brazil gained 1% to 49,471 while the IPC index in Mexico rose 0.9% to 29,259 and the RTS index in Russia slumped 1.2% to 1911.

HOW MARKET FARED

Market may remain dull and choppy

Key Indices closed flat recouping most of the early morning’s fall as buying in late afternoon trades in lifted the markets higher from day’s low. Impressive numbers by R Com and value buying I Tech stocks led the recovery as BSE 30-share Sensex settled at 13872, down by 36 points after touching an intra-day low of 13693.59 and a peak of 13901.12. Though, the Indian Bulls managed to fight back from day’s low, picture was grim in other major Asian Indices. Asian stocks fell to a one-week low amid concern about economic growth in the US and China. Hang Seng Index lost over 200 points to close at 20319.

Infosys, TCS, R Com and Tisco were the major gainers lifting the markets higher from days low. IT, Metal, Auto and capital Good stocks were among the major gainers. While Banking and FMCG stocks closed lower on account of profit booking.

Among the major results announced today, R Com advanced by over 3.5% to close at Rs477 after company’s Q4 profit doubled to Rs10.24bn. However, HLL closed lower by 5% to Rs199 after company’s net income fell by 13% to Rs3.93bn.

Tech stocks held the markets from a major fall after Rupee declined by the most in more than a month today. Satyam Comp is up by over 1% to Rs473, Wipro has gained by 1% to Rs572 and Infosys advanced by 2.28% to Rs2051.

Selling pressure was seen in banking stocks led by ICICI Bank. The scrip lost over 7% to Rs866 on plan for plan for India's biggest stock sale. SBI closed flat at Rs1102, Can Bank lost 2% to Rs217 and Bank of Baroda was down by 3% to Rs236.

Insider Trades:
Praj Industries Ltd: Berjis Desai, Non-Executive and Independent Director on 23rd April 2007 sold 100000 equity shares and Sivaramakrishnan Iyer, Non-Executive and Independent Director on 25th April 2007 sold 50000 equity shares of Praj Industries.

Indiabulls Real Estate Limited: Goldman Sachs Investments (Mauritius) I Limited on 23rd April 2007 from market purchased 715000 equity shares of Indiabulls Real Estate.

Market Volumes:
The turnover on NSE was down by 7.9% to Rs75.71bn. BSE IT index was the major gainer and gained 2.01%. BSE Auto index (up 1.10%), BSE Mid Cap index (up 1.08%) and BSE Capital Good index (up 0.57%) were among the other major gainers. However, BSE Bank index lost 2.88%.

Volume Toppers:
IFCI, TTML, SAIL, HLL, IDFC, Idea, RNRL, ICICI Bank, Bharti Airtel, Cipla, Vijaya Bank, Tata Steel, ITC, HFCL, IBREAL, RPL, IVRCL Infra, Hindalco, Arvind Mills, FSL and UCO Bank.

Upper Circuit:
DCHL, Pratibha Industries, Silverline Tech, Sona Koyo, HOV Services, Genus Overseas and Maxwell Industries.

Results Today:
Century Textiles, Colgate, Coromandel Fertilizers, DCB, Eicher Motors, GTL Infra, HDFC, IFCI, Info Edge India, Orchid Chem, Sterlite and United Phosphorous.

Delivery Delight:
Alstom Projects India, Bharat Forge, Castrol India, Century Textiles, Colgate, Reliance Capital, SCI, Tata Power, TVS Motor and UTI Bank.

Abnormal Delivery:
Ranbaxy, BPCL, Bank of Baroda, ONGC, HPCL, SAIL, Arvind Mills, MTNL, Voltas, Balrampur Chini and VSNL.

Stock Futures with Largest Increases in OI:
Bharat Forge, J&K Bank, ICICI Bank, Chennai Petro, HLL, Tata Motors, Polaris, SCI and Kotak Mahindra Bank.

Stock Futures with Largest Decreases in OI:
OBC, TCS, Mphasis BFL, Renuka Sugars, Sesa Goa, NTPC, Alok Industries, Ranbaxy, Gateway Distriparks.

Results Corner:

HLL Q1 sales at Rs31.84bn (up 13.97%), net income falls to Rs3.93bn (down 11.3%)

Reliance Com Q4 net (up 10.7%) to Rs10.23bn and revenue (up 4.8%) to Rs39.37bn QoQ

JSW Steel Q4 profit at Rs4.13bn (up 0.4%), sales (up 31%) to Rs25.79bn

Alstom Projects Q4 profit at Rs362mn (up 75.7%), revenue at Rs4.32bn (up 66.7%) and to pay Rs10 per share as dividend

BEL Q4 profit at Rs3.57bn (up 27%), revenue at Rs17.9bn (up 12.5%)

Castrol India Q1 net profit at Rs415.2mn (up 29%), net sales at Rs4.42bn (up 18%)

Vijaya Bank Q4 profit at Rs636.5mn against loss of Rs345.3mn and revenue at Rs8.88bn (up 32.7%)

Brokers Recommendation:
Idea Cellular – Outperform from Macquarie with target of Rs130.

Long Term investment:
IVRCL Infrastructure

Major News Headlines:
Gateway Distriparks announces 1:4 bonus issue

Silverline Tech to buy BPO Business in North America

Bharti Shipyard gets $64.8mn offshore Vessel Contract

Ashok Leyland to buy Detroit Company for $17mn

JSW Steel acquires 3 coalmines in Africa to secure supplies

TCS unit FNS gets multi million Dollar Order

Anagram - Daily Call - May 3 2007

Morning Call - May 3 2007

Market Grape Wine :

In House :

Nifty at a support of 4059 & 4025 and resistance at 4130 and 4185 levels .

Buy : Jet above 726 target 740 s/l 717

Buy : RelCap above 718 target of 735 s/l of 709.5

Buy : BEL positional s/l of 1670 above 1718 target 1925

Buy : in F&O ArvindMill above 45.5 target of 48 s/l of 44

Out House :

Markets at a support of 138818 & 13717 levels with resistance at 14041 & 14194 levels .

Buy : RIL & RelCap

Buy : TataTea

Buy : PFC & ICRA & FSL

Buy : Praj & GlenMark

Buy : TELCO & M&M

Buy : JSW & Tisco

Buy : SesaGoa & ABAN

Dark Horse : Praj , Tisco , SKumar , JSW , Bata , Unitech , IFCI , Sail & ACC

Stock-specific activity to continue

Stock-specific buying is likely to continue in the near-term, as the Q4 earnings season is in full swing. Even as Sensex had lost 36 points on Monday (30 April), the broader market was a picture of strength as select side-counters were in demand, either due to their strong Q4 results or on expectations of good earnings. The major Q4 result today is that of housing finance major HDFC.

The Union Budget 2007-08 is due to be passed by the Parliament today and the market will keep an eye open for any rollback measures from Budget Day (28 February 2007). The market will keep a close vigil on whether the finance minister rolls back the export duty on iron ore exports, which has hit shipments to China, and any changes to bring employee stock options plans (Esops) under the fringe benefit tax (FBT). However, as per one report no major changes are likely with respect to FBT on Esops.

FIIs turned sellers over the past two trading sessions after their heavy inflows over the past few days. FIIs sold shares worth a net Rs 195 crore on Friday (27 April), the day when the Sensex had plunged 320 points. Their inflow has been robust this month. As per provisional data, FIIs were net sellers to the tune of Rs 440.51 crore on Monday. Domestic institutional investors were net buyers to the tune of Rs 200.65 crore on Monday. The market was closed on Tuesday (1 May) and Wednesday (2 May) on acctoun of public holidays.

The outcome of the ongoing seven-phased Uttar Pradesh assembly elections, is a key political event to watch out for. The assembly poll gets over in early this month and the vote is seen as a barometer of national political trends. Some opinion polls show the opposition Bharatiya Janata Party (BJP) emerging second in the race, further adding to the woes of the ruling Congress, which is already battling rising prices.

Global markets remain firm. Asian markets edged higher on Thursday (3 May) after US stocks hit fresh record high on Wednesday. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and China were up by between 0.28% to 2%.

US stocks rallied on Wednesday, as robust profits and a flurry of buyout offers powered the Dow Jones industrials to a record high and the S&P 500 to its highest level in over six years. Shares of manufacturing companies that sell their products abroad, such as appliance maker Whirlpool Corp. and lawn mower maker Toro Co., posted sharp gains after government data showed bigger-than-expected increases in US factory orders. The Dow Jones industrial average was up 75.74 points, or 0.58 percent, at 13,211.88. The Standard & Poor's 500 Index was up 9.62 points, or 0.65 percent, at 1,495.92. The Nasdaq Composite Index was up 26.31 points, or 1.04 percent, at 2,557.84.

Dow makes its 17th record close this year

Strong factory orders and deal news coupled with lower crude price takes US Market once again to unchartered territory

Deal making news, good economic data and a carryover of momentum took the US market to unchartered territory once again today. US stocks once again rallied on Wednesday and set a new milestone with the Dow crossing and settling above the 13,200 mark for the first ever time. For the 17th time this year the Dow closed in record territory. S&P 500 struck a new six and half year high record and is just 5 points away from touching the 1500 mark.

25 out of 30 Dow stocks closed higher for the day. For the day (2May, Wednesday) the Dow Jones Industrial Average closed higher by 75.74 points at 13211.88, Nasdaq higher by 26.31 points at 2557.84 and S&P 500 higher by 9.62 points at 1495.92. American Express, Du-Pont, GM and Verizon were the main Dow winners while IBM, Johnson & Johnson and P&G were the main Dow losers.

Yesterday’s news about Rupert Murdoch’s bid for Dow Jones was followed today by another deal news in media sector. Cablevision Systems has agreed to be taken private by the founding Dolan family in a deal worth $10.5 billion. Cablevision stock closed up by almost 10%.

Factory orders rise 3.1% (expected 2.2%) in March; Yum Brands and Chipotle deliver yummy results

Stocks rallied straight out of gate as a carryover of yesterday’s momentum. The indices were extending their reach to the upside as all 10 economic sectors remained positive and Consumer Discretionary was pacing the way, getting a big lift from Restaurants after Yum! Brands beat analysts' expectations and raised its 2007 earnings outlook last night. Chipotle Mexican Grill also posted good earnings report.

Then came some good economic data. News that factory orders rose 3.1% in March, ahead of the 2.2% expected by Wall Street economists, reassured investors about economic growth. At the same time, the market overcame a pre-opening report from ADP, which said private-sector jobs rose by only 64,000 in April, the weakest monthly growth in four years.

Technology was another influential leader to the upside. Cisco Systems surged 3% after Goldman Sachs urged investors to buy the stock ahead of its Q3 earnings report next Tuesday. Financials was also in focus after Dow component American Express climbed noticeably up after competitor MasterCard posted a blowout earnings report.

Crude prices slumps on second consecutive buildup in crude inventory

Crude-oil futures for light sweet crude for June delivery closed at $63.68/barrel (lower by $0.72/barrel or 1.12%) on the New York Mercantile Exchange. Crude prices fell today on U.S. government weekly report that refiners increased gasoline output and there was a second weekly rise in crude inventories. As per today’s inventory report, the Energy Department said that crude supplies rose 1.1 million barrels for the week ended 27 April. After a two-week climb of 3.2 million barrels, total inventories stood at 335.6 million last week.

In the broad market for equities, trading volumes showed 1.6 billion shares exchanging hands on the New York Stock Exchange and 2.1 billion on the Nasdaq stock market. Advancing issues topped decliners by 3 to 1 on the NYSE and by 20 to 9 on the Nasdaq.

The economic reports expected for tomorrow are Q1 Productivity and an update on Initial Claims followed by ISM Services data. Also, tomorrow brings another large batch of quarterly results, among which GM is one major name.