Citigroup - INDOCHINA CONFERENCE 2007

Citigroup - INDOCHINA CONFERENCE 2007

ENAM - Result Estimates

ENAM - Result Estimates

USE PASSWORD: deadpresident.blogspot.com

Indiainfoline - Banswara Syntec, GAIL, Nestle, Proctor and Gamble, RPG Transmission

Banswara Syntec

GAIL

Nestle

Proctor and Gamble

RPG Transmission

Weekly Stock Ideas

BUY Infosys (2001)
SL 1940 T 2090, 2110

BUY Renuka Sugar (527)
SL 510 T 570, 576

BUY IDBI (94)
SL 90 T 100, 102

BUY BHEL (2437)
SL 2390 T 2520, 2530

BUY Kotak Bank (531)
SL 523 T 550, 555

Indiainfoline - Weekly Newsletter

Inflation softens further
The slew of monetary and fiscal measures taken by the Government coupled with a high base effect seems to be paying some dividends as far as inflation is concerned. India's inflation, based on the Wholesale Price Index (WPI), declined further to 5.66% in the week ended April 28, the government said on Friday. The reading on wholesale prices came in ahead of consensus estimates for a fall to 5.71-5.73%. Inflation stood at 5.77% in the previous week and was at 3.9% during the corresponding week of the previous year. If this trend continues for a while, the Reserve Bank of India (RBI) and the Government won't have to unleash new sets of measures to contain spiraling prices in a booming economy. Interest rates may well remain stable at current levels unless there is a renewed spike in inflation.

March industrial output growth at 12.9%
A separate report showed that India's industrial sector continued to be on a high growth path in March. The Index of Industrial Production (IIP) grew by an impressive 12.9% in the last month of FY07 as against 8.9% in the same month last year, data from the Commerce & Industry Ministry showed today. Average expectations among economists ranged between 10-10.5%. The Government revised the IIP growth figure for February, from a provisional estimate of 11% to 10.8%. Manufacturing, the cornerstone of the current boom in the industry, led the expansion in March with a strong 14.1% growth over the 10.1% growth registered in the corresponding month last year. For the whole year (2006-07), the IIP grew by 11.3% compared to 8.2% in the year 2005-06.

Market loses ground

It has been a roller-coaster ride for the bulls yet again. As we have mentioned earlier, liquidity will play an important role in driving the markets forward. After an excellent April driven by strong corporate growth and increase in FII activity, the month of May is turning out to be pretty dull for the bulls. Other than liquidity problem, lack of confidence among the investors is making difficult for bulls to make their presence felt on Dalal Street.

The intra-day reversals in the last few trading sessions pressurized the bulls and made it difficult to hold on to their gains. Over the week, the BSE Sensex lost almost 1% 138 points to close at 13796. The NSE Nifty also shed 1% or 41 points to shut shop at 4077. The weakness was led by selling in IT and Pharma stocks. IT stocks continued to bear the burnt of the rising rupee. Infosys, TCS and Wipro were among the major losers.

Select steel stocks shone brightly following reports that the Government would not intervene to control rising steel prices. Index heavy weight Tata Steel gained 3% to Rs569, SAIL was up by 1% at Rs135, Jindal Steel advanced 3.6% to Rs3030 and Bhushan Steel surged by over 5% to Rs565.

Banking stocks recovered much of the losses suffered earlier during the week. The latest IIP numbers, which were released on Friday afternoon indicated strong industrial growth. India's industrial production growth unexpectedly accelerated in March, output at factories, utilities and mines gained 12.9% from a year ago. Also, reports that Reserve Bank of India may cut the minimum SLR limit from the present level of 25% boosted Banking stocks. The index marginally gained by 0.4%. Frontline stocks like HDFC Bank slipped 1% to Rs997, ICICI Bank were down 0.8% to Rs848. However, SBI rose 1.8% to Rs1149. Others like J&K Bank, Corp Bank and IndusInd Bank were major losers.

Sugar stocks were in action on Friday on speculation that new Government in UP will provide some sops to the sugar companies. Talks of hike in Sugarcane price are already going around in the market. After a long period of time some sweetness returned to the Sugar counter as the Sugar stocks cheered the outcome of UP State elections. Renuka Sugar jumped by over 9% to Rs526, Balrampur Chini advanced 4.3% to Rs68, Bajaj Hindusthan was up 1.7% to Rs169 and Dwarikesh Sugar gained 1.8% to Rs69.

IT stocks continued to be a laggard as concerns of rising rupee played spoilsport in the minds of investors. Heavyweights like Infosys, TCS and Wipro underperformed the key indices. The IT index was the major loser as it lost 3.1% during the week. Front line stocks were the most hit, Wipro lost by over 3.5% to Rs545, Infosys was down by over 3.5% to Rs2000, Satyam Computer declined 3.5% to Rs454 and TCS slipped 1.7% to Rs1252.

Pharma stocks also were in poor health. The index was down 1.7% during the week. Cipla was among the major loser. The scrip lost by over 5.5% to Rs204, Dr Reddy's Lab was down by over 5% to Rs683, Wockhardt declined over 5.5% to Rs399 and Lupin fell 4.1% to Rs707.

Bajaj Auto, India's second biggest motorcycle maker gained momentum after the company announced that the Board of Directors would consider a proposal to split the company. The scrip was the top gainer among the Nifty scrip's gaining nearly 6% to finally close at its week's high of Rs2718 after hitting a low of Rs2391.

Uncertain times for bulls

The market needs fresh impetus to move forward. The Fed meet is out of the way and so is the outcome of the UP elections. When not much on earth is happening, the markets may look towards the sky Gods and the predictors to get a whiff of what lies ahead as far as the monsoon is concerned. The market is likely to consolidate in the near term with no major triggers available at the moment. One may have to wait for a while before the major indexes hit new historic peaks.

Given the volatile movement of the indices, the relatively low confidence of investors at these levels, especially the retail ones we see another volatile trading week and extremely high intra-day gyrations. Global cues will also be watched closely as they have assumed a lot of significance off late. After all, its more of the the weakness across the world indices that has led to the decline in local indices as well.

Rupee snaps 9-week winning streak

The rupee on Friday broke the sequence of nine consecutive weekly gains due to growing dollar demand from importers following the local currency's unprecedented rise this year. A stronger rupee means importers have to convert less to purchase foreign exchange. The rupee lost 0.9% on the week to 41.25 against the dollar. This is the Indian currency's weakest level since April 23 and its biggest weekly loss in almost a year. On Thursday, it fell by nearly 37 paise to shut shop at 41.28/30 as call money rates slumped amid improving liquidity. The partially-convertible currency had touched a nine-year high of 40.5450 on May 7, the strongest since May 1998. The rupee has rallied by 8.4% in the past nine weeks through May 4, its best winning streak since May 2003, due to growing foreign capital flows in Asia's fourth-largest economy, which is estimated to grow by 9.2% in FY07.

UP polls...BSP gains huge lead as SP flounders

The Mayawati-led Bahujan Samaj Party (BSP) dealt a brutal blow to Mulayam Singh Yadav's Samajwadi Party (SP) in the just concluded assembly polls in the country's largest state. Beating all optimistic forecasts, Mayawati's BSP broke the 200-seat barrier in the 403-member UP Assembly with surprising ease and is now all set to form the next government on its own. Mayawati will decide her future course of action after meeting her party legislatures on Saturday evening. She is likely to meet the UP Governor TV Rajeshwar after the meeting to stake her claim to form the next government. Meanwhile, UP chief minister Mulayam Singh Yadav blamed the Election Commission (EC) for his party's defeat after submitting his resignation to the state governor. Yadav accused the EC of running a parallel government and said it was not good for the democracy.

Monsoon sets in over Bay of Bengal: IMD

Southwest monsoon, which is key for the growth of India's agriculture sector, set in over parts of southeast Bay of Bengal, Nicobar islands and Andaman Sea, the India Meteorological Department (IMD) said on May 10. The monsoon arrived about eight days earlier than normal. Rains typically start in the east coast by May 18. "Conditions are favourable for further advance of southwest monsoon over some more parts of Andaman Sea and southeast Bay of Bengal during next 48 hours," the IMD said on its Web site. The monsoon will be 95% of the long-term average, the weather department said in its April 19 forecast. The IMD may forecast the onset of the monsoon over the southern Kerala coast on May 12 or May 14. The four-month rainy season typically begins on June 1.

Govt mulling easing 5-yr norm for overseas flights

There is some good news for those who dream of flying in the jumbo Airbus A-380, courtesy Kingfisher Airlines. According to newspaper reports, the Government is toying with the idea of relaxing the mandatory five-year experience limit in the domestic market for local airlines to fly abroad. The Ministry of Civil Aviation is reportedly looking at granting permission to domestic carriers to launch international flights on a case-by-case basis. The Government plans to review, by the end of the year, the current norms for domestic airlines flying abroad, Civil Aviation Minister Praful Patel said. "The issue would be reviewed on the basis of the need of the sector and the ability of the carrier to be able to serve international routes," he added. What's more, soon private airlines such as Jet Airways and Air Sahara will be able to launch flights to the Gulf region as the Centre is planning to open up the sector to private airlines by the beginning of 2008.

OVL consortium strikes it big in Persian Gulf

ONGC Videsh Ltd. (OVL), along with Indian Oil Corp. (IOC) and Oil India Ltd. (OIL), struck a large reservoir of oil and gas off the Iran coast in the Persian Gulf. OVL and its public sector peers will prepare a plan in the next three months on commercial production from the field, ONGC Chairman R.S. Sharma was quoted as saying. Gas reserves in the block are estimated to go up to 10 trillion cubic feet, while oil reserves in the block are estimated to be in the region of 1 billion barrels, according to a financial daily. Production from the field is estimated to begin in another five years, the newspaper said. In Dec. 2002, the consortium signed a contract with National Iranian Oil Co. to carry out exploration in the Farsi block. OVL and IOC hold 40% each while OIL holds the rest.

Maha Mumbai SEZ still in Govt cold storage

Smarting from the ugly episodes of violence in West Bengal over the issue of land acquisition for Special Economic Zones (SEZ), the Board of Approvals (BoA) deferred a decision on the controversial Maha Mumbai SEZ promoted by Reliance Industries Ltd. (RIL). Out of the 23 proposals for conversion of in-principle approval to formal approval considered, the BoA granted formal approval in 16 cases. Among the prominent ones that got the go-ahead included SEZs from Suzlon, Vedanta, DLF and Unitech. The May 9th meeting was the first in six months as the Government had put all new SEZ proposals on hold in the wake of the political storm raised by Tata Motors' Singur car project and violence at Nandigram in West Bengal.

Govt exits Maruti with Rs23.7bn in pocket

The Government approved the sale of its remaining 10.27% stake in Maruti Udyog Ltd. to banks, financial institutions and insurance companies at an average price of Rs797 per share. The sale would fetch the Government Rs23.68bn, P.V. Bhide, Secretary in the Department of Disinvestment said after a meeting of a Group of Ministers headed by Finance Minister P. Chidambaram. The Government had set a floor price for the bidding at Rs760 a share. The shares were sold to 32 bidders. LIC got the biggest portion of 13mn shares. SBI got 5mn shares. Corporation Bank was the highest bidder at Rs850 and got 588,235 shares. Reliance MF got 2mn shares. HDFC MF got 1mn shares and UTI MF 88,998 shares.

DLF IPO gets SEBI nod

DLF received an approval from capital market regulator SEBI for its much-delayed IPO. The real estate giant is expected to raise around Rs136bn according to reports. The approval comes nearly a year after the company first filed the draft red herring prospectus. DLF proposes to enter the capital market with a public issue of 175mn shares of Rs2 each through 100% book building process. Ramesh Sanka, CFO, DLF was quoted as saying that the company has got the nod from SEBI and will update the document and file with the Registrar of Companies (ROC). The IPO is expected to hit the market in three months. The IPO will involve at least 10% of equity dilution, say reports. Kotak Mahindra and DSP Merrill Lynch along with four others are the Lead Book Managers.

Fortis Healthcare makes dull debut

Fortis Healthcare Ltd., a Ranbaxy promoter group company, made a lackluster debut on May 9 with the stock slipping below the Rs100 mark amid talk of high valuation. The stock opened at Rs105 on the BSE as against the issue price of Rs108 per share. It finally ended at Rs100 after touching a high of Rs109.1 and a low of Rs97.9. The stock finished the week at Rs. Fortis had fixed the issue price towards the upper end of the IPO price band of Rs 92-110 per share. The IPO was subscribed 2.78 times with the company receiving bids for over 127.4mn shares as against 45.7mn shares on offer in the public issue.

Rate hikes hit auto sales

Rising interest rates has started to pinch the automobile industry. Though India's passenger car sales grew by 11.3% last month to 82,934 units (74,542), domestic sales of two-wheelers fell 6% to 570,381 units, the Society of Indian Automobile Manufacturers (SIAM) said. Bike sales have been the hardest hit as it is the most price-sensitive segment in the entire industry. Motorcycle sales fell by 9.7% in April to 463,091 units. Sales of commercial vehicles (CV) grew by 6.5% to 30,836 units in April and exports surged by 19.3% to 90,551 units, data released by the New Delhi-based automobile industry body showed. Total automobile vehicle sales were down 3.2% in April at 732,724 units, according SIAM.

Bajaj Auto to mull demerger on May 17

Shares of Bajaj Auto Ltd. rose after the company said that its Board will consider the proposal for the demerger on May 17. The demerger involves splitting Bajaj Auto into two separate units - one for manufacturing and the other for financial services business. This is the first formal announcement by Bajaj Auto on the demerger issue and comes four years after founder Rahul Bajaj first talked about it in 2003. Some time back, the Bajaj family patriarch had denied newspaper reports that the split was due to differences between his two sons - Rajiv and Sanjeev, and was aimed at enhancing shareholders value. Some part of the company's huge cash surplus is likely to be transferred to the demerged finance company to fund its growth. The Pune-based two-wheeler major will also consider the audited financial results for the year ended March 31, 2007 and dividend for the said year.

There is no end in sight to the big-ticket mergers and acquisitions. Alcoa Inc. said it had made a US$26.9bn bid for Alcan Inc. after merger talks between the North American rival aluminum producers fell through. Each Alcan share would be exchanged for US$58.60 in cash and 0.4108 of an Alcoa share. That values Alcan at US$73.25, or 20% more than its closing price on May 4, New York-based Alcoa said in a statement. Including debt, the deal would be valued at US$33bn. Montreal-based Alcan said that its board is reviewing the offer and asked shareholders to wait for its recommendation before taking action. Separately, shares of Rio Tinto touched a record high amid market grapevine that bigger rival BHP Billiton had made an unsuccessful takeover bid for the world's third-largest mining firm. BHP shares also hit a record high. But, Rio Tinto denied speculation that BHP had approached it with a takeover proposal.

Thomson to buy Reuters for US$17.6bn

Thomson Corp. on Tuesday confirmed that it was in talks to acquire Reuters Group Plc for about £8.8bn (US$17.6bn) to create a global leader in the business-to-business information markets. Reuters shareholders would get 352.5 pence in cash and 0.16 share of Thomson stock per share under the transaction being discussed, the two companies said. Woodbridge, the Thomson family holding company, would own about 53% of Thomson-Reuters, while other Thomson shareholders will hold about 23% and Reuters shareholders about 24%. The enlarged group would be called Thomson-Reuters and the combined Thomson Financial unit and Reuters financial and media businesses would be called Reuters.

More global deals...

In more news on deals, BAE Systems made its largest acquisition since it sold its stake in Airbus last year. Europe's biggest defence contractor and a key supplier to the Pentagon agreed to pay US $4.1bn for Armor Holdings, which makes, among other things, armaments for Humvees. In addition, UniCredit SpA, Italy's biggest bank, said that it was considering acquisitions of France's Societe Generale SA or Capitalia SpA in a record year for European bank takeovers. Meanwhile, a private-equity consortium conceded defeat in its attempt to buy Qantas Airways. Led by Australia's Macquarie Bank, it missed a deadline to gain the support of 50% of shareholders (though it later claimed that it had collected just enough votes). The Australian airline's directors, who backed the A$11.1bn (US$9.2bn) bid last year, were criticised for not doing enough to get investors on board.

Emkay - Bharat Bijlee, Canara Bank, Jindal South West Holdings

Bharat Bijlee

Canara Bank

Jindal South West Holdings

BNP Paribas - US Retail Sales

BNP Paribas - US Retail Sales

Sharekhan Investor's Eye dated May 11, 2007

Lupin
Cluster: Apple Green
Recommendation: Buy
Price target: Rs840
Current market price: Rs707

Price target revised to Rs840

Result highlights

• Lupin's net sales increased by 22.8% year on year (yoy) to Rs518.1 crore in Q4FY2007. The growth in the top line is above our expectations. The sales growth was driven by a 12% rise in the domestic formulation business to Rs144.3 crore and a 53.4% increase in the formulation exports to Rs165.9 crore.
• Lupin's operating profit margin (OPM) expanded by 460 basis points yoy to 14.5% in Q4FY2007; the same was lower than our expectation of 15.7%. The OPM was below expectations on account of a higher than anticipated rise in the company's raw material cost and higher research and development (R&D) expenses. Consequently, the company's operating profit grew by 80.0% yoy to Rs75.0 crore in Q4FY2007.
• The company's reported net profit stood at Rs137.1 crore, up by 173.1% yoy. However, this includes the one-time income related to the sale of the Perindopril patent. Based on our estimates, the net profit excluding the post-tax consideration received from the sale of the Perindopril patent stood at Rs61.3 crore, a jump of 22% yoy. The same was above our estimate of Rs57.5 crore.
• For FY2007, the company's net sales increased by 22.7% to Rs1,970.9 crore, which was above our estimate. The OPM expanded by 70 basis points to 14.9% as against our estimate of 15.7%, driven largely by higher R&D expenses. The company's reported net profit stood at Rs302.1 crore, up by 65.3% yoy. However, this includes the one-time income related to the sale of the Perindopril patent. Based on our estimates, the net profit excluding the post-tax consideration received from the sale of the Perindopril patent stood at Rs226.2 crore, a jump of 23.8% yoy. The same was in line with our estimate of Rs228.4 crore.
• Lupin ’s FY2007 profit performance (exclusive of the one-time gain) was just in line with our expectations. Hence, we are maintaining our FY2008 sales and profit estimates at Rs2,600 crore and Rs328.9 crore respectively. For FY2009, we expect the revenue to grow by 18% to Rs3,054.4 crore and the profit to rise by 25% to Rs410.5 crore. As per FY2009 estimates, the revenue and profit (exclusive of the one-time gain from the patent sale) would grow at compounded annual growth rate (CAGR) of 24% and 35% respectively. We have not included the earnings upside from the R&D pipeline in our estimates.
• The management has given an impressive revenue guidance of Rs3,000 crore for FY2008 (a 50% growth) and of Rs4,200 crore (a 40% growth) for FY2009. The growth would be achieved through various initiatives in the USA, Europe and semi-regulated markets. As per the management, a small part of the growth would also come from acquisitions. However, as per our organic growth estimates, at the current price Rs707 the stock is available at Rs19x its FY2008E and 15.2x its FY2009E earnings. We maintain our Buy recommendation on the stock with a revised price target of Rs840 (18x of FY2009E earnings).

Bharat Bijlee
Cluster: Apple Green
Recommendation: Buy
Price target: Rs1,730
Current market price: Rs1,637

Q4FY2007 results: first-cut analysis

Result highlights

• The Q4FY2007 results of Bharat Bijlee Ltd (BBL) are much ahead of our expectations.
• The revenue for the quarter grew by 73% to Rs179 crore on the back of a strong order book. The net profit increased by a superb 123% to Rs29.07 crore, much ahead of our expectations.
• The operating profit for the quarter grew by 105% to Rs44.5 crore, as the operating profit margin (OPM) for the quarter improved by 370 basis points to 24.8% against 21.1% on a year-on-year (y-o-y) basis.
• The improvement in the OPM is on account of a lower raw material/sales ratio, which stood at 62.8% as against 64.9% in the same quarter last year. The OPM also improved because of other operational efficiencies as the other expenses/sales ratio declined to 5.9% from 7.6% on a y-o-y basis.
• The interest cost for the quarter decreased by 20% while the depreciation charge increased by 89%.
• The company has declared a dividend of Rs25 (250%) per share.
• The timely expansion of its transformer manufacturing capacity, by 3000MVA to 8000 MVA per annum, has benefited the company. Going forward, the huge investments lined up in the power sector and the continuing activity in the industrial sector will drive BBL's order book.
• At the current market price of Rs1,637, the stock is discounting its FY2007 earnings by 16.3x and earnings before interest, depreciation, tax and amortisation by 8.6x. Excluding the value of the cash and cash equivalents, the stock is trading at 13x its FY2007 earnings. In view of the better than expected results and strong order backlog, we maintain our Buy recommendation on the stock with a price target of Rs1,730. We shall be upgrading our FY2008 earnings estimates and price target after analysing the annual report of the company. Watch this space.

Sharekhan Investor's Eye dated May 11, 2007

Angel - Dabur India

Angel - Dabur India

Macquarie - Hunting Stocks - Steeling Indian Ore and Coal

Macquarie - Hunting Stocks - Steeling Indian Ore and Coal

Sharekhan High Noon, Commodities, Eagle Eye, Riveting Metals

Sharekhan Riveting Metals dated May 11, 2007Sharekhan Commodities Buzz dated May 11, 2007Sharekhan Eagle Eye (commodities) for May 11, 2007Sharekhan Highnoon dated May 11, 2007

Edelweiss -Global Tele Buy Back Offer

Edelweiss -Global Tele Buy Back Offer

Bajaj Auto leads Sensex’ recovery

The local indices finished in the green even though the other Asian markets reported losses and witnessed high volatility for a major portion of the trading session. The Sensex plunged nearly 217 points in the early trades on massive selling in front-line stocks. Lower than expected inflation numbers and sustained buying in heavyweights, IT and auto stocks lifted the market sentiment and the Sensex touched an intra-day high of 13864. Thereafter, the market witnessed choppy trades and with some range-bound moves the Sensex slipped into the red in the afternoon again. The market bounced back from its lows towards the close, led by Bajaj Auto, Infosys Technologies, TCS, State Bank of India and NTPC. The Sensex finally ended the session with gains of 25 points at 13796. The Nifty ended the session at 4077 by adding 10 points.

The breadth of the market was neutral. Of the 2,626 stocks traded on the BSE, 1,266 stocks advanced, 1,281 stocks declined and 79 stocks ended unchanged. Among the sectoral indices the BSE IT index advanced by 0.94% at 4924 followed by the BSE Teck index (up 0.81% at 3666) and the BSE PSU index (up 0.62% at 6395). However, the BSE FMCG index, the BSE Metal index, the BSE CG index and the BSE CD index closed in negative territory.

Select blue chips notched up significant gains. Bajaj Auto jumped 4.20% to Rs2,719 on plans to split its business. Reliance Communication rose 2.86% at Rs478, NTPC advanced 2.51% at Rs155, SBI climbed 2.29% at Rs1,149, TCS surged 1.88% at Rs1,253, Infosys scaled up 1.40% at Rs2,000 and Ranbaxy added 1.26% at Rs391 while ICICI Bank, Reliance Industries and Tata Motors ended with marginal gains. Among the laggards ACC tumbled by 2.84% at Rs850 and Grasim dropped 2.42% at Rs2,429 while HLL, Gujarat Ambuja, Cipla, Hindalco, HDFC, Tata Steel, Reliance Energy and Wipro ended with marginal losses.

Over 2.26 crore Reliance Natural Resources shares changed hands on the BSE followed by IFCI (1.34 crore shares), Reliance Petroleum (1.17 crore shares), Nagarjuna Fertilizers (83.28 lakh shares) and Page Industries (65.76 lakh shares).

Value-wise Page Industries registered a turnover of Rs300 crore on the BSE followed by Reliance Industries (Rs209 crore), Reliance Communication (Rs125 crore), India Bulls (Rs121 crore) and Orbit Corporation (Rs111 crore).

Major events keep market under pressure

The market was under pressure throughout the week, weighed by lot of domestic and global events. High degree of volatility was seen throughout the week.

The BSE Sensex lost 1.06% to 13,796.16 while the S&P CNX Nifty was down 0.98% to 4,076.6

The week started on a weak note, with the Sensex declining 55.02 points to 13,879.25, on Monday due renewed selling, led by IT pivotals.

The weak trend continued at day later, as the BSE Sensex lost a further 113.79 points to 13,765.46, due to lack of buying support, as investors watched from the sidelines ahead of major local and global events scheduled later in the week. Subdued Asian and European stocks also were of not much help.

The 30-shares BSE Sensex settled 16.05 points higher on Wednesday at 13,781.51, as buying resumed for index pivotals. Strong global markets also helped the sentiment.

The barometer index lost 10.28 points, to 13,771.23, on Thursday as a late sell-off pulled the market in the red at closing bell.

Sensex gained 24.93 points on Friday to settle at 13,796.16, amidst intense volatility. Global markets, Uttar Pradesh election results, inflation and industrial production figures, made it swing sharply.

Tata Steel was up 2.97% to Rs 569.70. The steel major is seen reporting strong numbers when it unveils its FY 2007 (year ended 31 March 2007) results on 17 May 2007 on higher steel prices.

Ranbaxy Laboratories gained 2.30% to Rs 390.75. The pharma major is planning to invest around Rs 60 crore to upgrade the recently acquired Be-Tabs Pharma units in South Africa. With the revamp of the Be-Tabs facilities, the company expects to lead the way for generics manufacturing in South Africa, says a company statement. The acquisition substantially strengthens the basket of products that Ranbaxy brings to the market, specially in the acute and over the counter product streams.

IT major TCS slipped 1.70% to Rs 1252.70, on renewed selling. TCS, a leading global IT services, business solutions and outsourcing firm, announced its tie-up with Microsoft Corporation to deliver RFID (radio frequency identification) solutions to global companies. It launched an initiative to develop RFID solutions built on Microsoft BizTalk

Bajaj Auto advanced 5.90% to Rs 2718.60, on its proposal to split the company into two. The market has been agog with talks of a split since the last two years. Transferring some of the Rs 6500-crore cash will improve the finance and insurance businesses, chariman Rahul Bajaj had said earlier. Bajaj Auto is in both general as well as life insurance businesses through Bajaj Allianz General Insurance Company and Bajaj Allianz Life Insurance Company, respectively. Bajaj Auto holds a 74% stake in both firms with the rest held by Allianz. Bajaj Auto is also into the business of lending money through Bajaj Auto Finance, a listed entity. Bajaj Auto holds over 38% stake in Bajaj Auto Finance.

Reliance Industries (RIL) rose 0.58% to Rs 1590.25. RIL is silently lining up a Rs 3,000-crore home solutions retail venture. Its retail arm, Reliance Retail, will roll out a chain of 100 stand-alone specialised home solution outlets, each spread over 40,000-60,000 sq ft, over the next three years.

State Bank of India (SBI) edged higher by 1.81% to Rs 1149.20 on expectations of good Q4 ending March 2007 results.

ACC declined 1.01% to Rs 850.35. Swiss cement maker Holcim had acquired an additional 3% stake in ACC, bringing its total stake to around 41%. Holcim today acquired 58.59 lakh shares of ACC, constituting a little above 3% equity of the company through a block deal executed on NSE for a weighted average price of Rs 899.07, on 8 May.

Maruti Udyog (MUL) slipped 1.37% to Rs 795.30. The Union government exited the country’s largest car maker on Thursday, 10 May 2007,selling its residual stake for Rs 2,360 crore to a clutch of financial institutions led by Life Insurance Corporation (LIC). The government had offered 2.96 crore shares in the company, representing 10.27% stake. Of this, LIC got all the 1.3 crore shares it had bid for at a price of Rs 800 per share. LIC now controls 12.5% and has become the second-largest shareholder in the company.

In all, 32 financial institutions and mutual funds have been alloted shares. State Bank of India (SBI) emerged as the second most successful bidder with 83 lakh shares at Rs 775 each. Corporation Bank and Exim Bank submitted the highest bids at Rs 850 per share. Both were granted 5.88 lakh and 1.18 lakh shares respectively.

Among mutual funds, Reliance Mutual Fund and HDFC Mutual Fund got 20 lakh and 10 lakh shares, respectively. SBI MF also got 49.76 lakh shares at Rs 775 per share and Punjab National Bank 12.29 lakh shares at Rs 815 per share.

Tech Mahindra lost 8.43% to Rs 1511. Tech Mahindra’s consolidated net profit (excluding exceptional items) jumped 120% in Q4 March 2007 at Rs 196.1 crore compared with Rs 89.1 crore in the corresponding quarter of the previous financial year. Revenue surged 108% to Rs 874.5 crore compared with Rs 421.2 crore in the fourth quarter of the previous year. Tech Mahindra incurred a one-time exceptional charge towards an upfront payment of Rs 524.9 crore to a customer and has reported a net loss of Rs 328.9 crore in Q4 March 2007.

Fortis Healthcare, which listed on 9 May, settled at Rs 100, a discount over the IPO price of Rs 108 per share. The stock debuted at Rs 105, and surged to a high of Rs 109.10. Its low for the day was Rs 97.90.

Fortis Healthcare had priced its 4.59-crore equity shares at Rs 108. The price band for the IPO was Rs 92 to Rs 110 per share. The issue, which had opened for subscription on 16 April 2007 and closed on 20 April 2007, was subscribed 2.78 times. The qualified institutional buyers (QIB) portion was subscribed 2.72 times, non-institutional portion 1.74 times and the retail portion 3.26 times

On 9 May 2007, US Federal Reserve’s decision kept interest rates steady. On that very day, the European Central bank (ECB) held its rates steady at 3.75%

The Bank of England raised interest rates to a six-year high of 5.5% on 10 May 2007, as it voiced concern that diminishing spare capacity in the UK economy and greater pricing power skewed inflation risks to the upside. On the same day, the European Central Bank kept its key lending rate unchanged at 3.75%

India's industrial production rose 12.9% per annum in March 2007, from a year earlier, higher than downwardly revised annual growth of 10.8% in February, due to strong manufacturing output, government data showed on Friday, 11 May 2007. Analysts had forecast annual industrial output growth of 10.40%.

Full year 2006-07 industrial output jumped 11.3% from the same period a year earlier. Manufacturing production, which represents more than 75% of industrial output, surged 14.1%per annum in March 2007, from March 2006 compared with a 12.30% annual growth in February 2007. Annual industrial output growth in March 2006 was 8.9%. Annual manufacturing growth in March 2006 was 10.10%.

India's wholesale price index rose 5.66% in the 12 months to 28 April 2007, lower than the previous week's increase of 5.77% per annum due to a decline in some food prices, data released showed on 11 May. The figure was lower than a forecast of 5.73% in analyst poll.

India’s largest real estate developer DLF said on Monday (7 May) an initial public offering of 10.2% of the company should take place in the next three months as it had received regulatory approval for the sale. In 2006, the New Delhi-based DLF had dropped plans for what would have been India's biggest IPO due to a sharp market fall. At that time, the IPO was expected to raise up to $3.5 billion.

Global markets, next batch of Q4 results to dictate trend

The market may edge higher next week as Mayawati’s Bahujan Samaj Party (BSP) is set to emerge as the single largest party in the Utar Pradesh (UP) assembly contrary to fears of a hung assembly.

As a result, domestic bourses shrugged off the impact of weak global equities on Friday 11 May 2007, as the trend of UP polls filtered during trading hours. Data showing moderating inflation and strong industrial output in March 2007 aided the recovery on that day.

The market will take direction next week from trends in global equities. It will also take its cue from some prominent Q4 March 2007 results. The key result this weekend (Saturday, 12 May 2007)is that of State Bank of India.

Suzlon Energy and LIC Housing Finance unveil Q4 results on Monday, 14 May 2007. Bajaj Auto and Tata Steel report Q4 results on Thursday, 17 May 2007. The board of Bajaj Auto will also consider proposal to split the company into two along with results. Tata Motors and Dr Reddy’s Laboratories unveil Q4 results on Friday 18 May 2007.

Some of the other Q4 results scheduled next week are Welspun-Gujarat Stahl Rohren, Shree Cement, Sobha Developers and Voltas on Monday,14 May 2007; Sun Pharma, Havell’s India and JK Lakshmi Cement on Tuesday,15 May 2007; ICI (India), Balaji Telefilms, J B Chemicals and Pharmaceuticals on Wednesday, 16 May 2007; and Federal Bank on Friday, 17 May 2007.

US stocks underwent correction on Thursday, 10 May 2007, and Asian stocks followed suit on Friday, 11 May 2007, as disappointing US retail sales and a widening US trade deficit renewed worries about the economic outlook for the world’s biggest economy. In recent days, a spate of merger and acquisition activity as well as increasingly eye-popping takeover bids have helped propel many global indices to record highs. However, the sharp and swift surge has raised concerns of a steep correction.

A strong rebound on the domestic bourses had materialized, last month as the initial Q4 March 2007 results were strong and Infosys issued a strong guidance for FY 2008 on 13 April 2007. From 12,455.37 on 2 April 2007, the Sensex had surged 1,773.51 points (14.2%) to 14,228.88 on 26 April 2007. It has since turned volatile.

India’s long-term growth prospects remain strong. The long-term growth drivers are a favourable demography (large share of young population), robust domestic consumption and acceleration in infrastructure creation.