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Wednesday, June 13, 2007
Investsmart - Morning Call
Market Grape Wine :
In House :
Nifty at a support of 4120 & 4100 levels with resistance at 4150 & 4180 levels .
Markets to open negetive but might find buying at lower levels .
Yesterday heavy short covering took place at fag end of the market .
Out House :
Markets at a support of 14004 & 13949 levels with resistance at 14242 & 14325 levels .
Buy : RIL
Buy : IFCI
Buy : Praj bullet 570 by week end s/l of 514
Buy : ABB
Buy : GujNre
Buy : GlenMark & Lupin & Auropharma
Buy : IBulls & Unitech at dips
Buy : SKumar
Dark Horse : Praj , GujNre ,IFCI , Glenmark , Asian , ABB & Divis
Anand Rathi - Daily Technical Note
Nifty and Sensex have exhibited a bullish candlestick.
Technically, one may use the level of 4100 (Nifty) and 13900 (Sensex) as the stop loss level.
Nifty faces resistance at 4210 and Sensex at 14250.
BSE Small cap and BSE Midcap also exhibited bearish candlesticks.
CNX IT has lost ground.
In the Punter's zone we have a Sell Parsvnath.
In the Technical call section, we have a Sell in ICICI Bank, Ibrealest and Ivrclinfra.
Anand Rathi - Daily Technicals
Weakness in global markets may weigh
Overnight fall in US markets and weak Asian indices in current trades likely to weigh on the local indices in early trades. The market is likely to exhibit weak trends on the back of a strong intra-day volatile moves. The sentiment is likely to remain bearish on weak global indices. Also the FIIs remaining net sellers of equities in the domestic market may see the investors remain jittery. However, the yesterday's smart rally towards the close could release some pressure. Among the local indices, the Nifty could test higher levels at 4180 and has a support at 4100. The Sensex on the downside may slip to13900 and may face resistance at 14300.
US indices finished weak on Tuesday amid concerns that the Federal Reserve may have to raise interest rates later this year. While the Dow Jones declined 130 points at 13295, the Nasdaq dropped 22 points to close at 2550 on weakness in tech stocks.
Most of the Indian ADRs battered on the US bourses. VSNL tumbled over 3% and Infosys, Satyam, Dr Reddy's, HDFC Bank, MTNL, VSNL and Patni computers fell 1-2% each. While, ICICI Bank and Rediff gained around 1% each.
Crude oil prices fell marginally, with the Nymex light crude oil for July delivery slipped by 62 cents at $65.97 a barrel. In the commodity segment, the Comex gold for August series was down by $5.90 to settle at $653.10 a troy ounce.
Market may remain under pressure
Market is expected to remain under pressure tracking weak cues from global markets. Strong support exists for Sensex at the physiological 14,000 level, which was tested yesterday, but it managed to close well above it.
Also a stronger-than-expected industrial production numbers announced by noon on 12 June 2007, increased risks of more monetary measures by the Reserve Bank of India. Industrial production in April rose 13.6%, higher than street expectations of 11.3% rise. The figure for March was also raised upwards from 13% to 14.5%.
However value buying may not be ruled out, in later half of the day
Asian indices also edged lower mirroring weak US markets, with export-related shares such as Toyota Motor Corp. retreating on concerns over global growth, while Sumitomo Metal Mining and BHP Billiton lost ground on weaker metals prices. Japan's Nikkei slipped 114.10 points or 0.64% at 17,646.81 while Hong Kong's Hang Seng index slumped 77.44 points or 0.38% to 20,558.95.
South Korea's Seoul Composite (down 0.61% at 1,719.28), Singapore's Straits Times (down 0.20% at 3,554.42) also declined.
Wall Street shares plunged on 12 June 2007, as investors grappled with a seemingly relentless rise in bond yields. The Dow Jones industrial average slipped 129.95 points, or 0.97%, to 13,295.01. The blue chip index is now 381 points, or 2.8%, below its all time closing high of 13,676.32, reached on 4 June 2007.
The broader stock indexes also declined. The Standard & Poor's 500 index fell 16.12 points, or 1.07%, to 1,493.00, while the Nasdaq composite index dropped 22.38 points, or 0.87%, to 2,549.77.
Crude oil was little changed in New York after falling with gasoline yesterday on speculation U.S. fuel stockpiles rose a sixth week as refiners increased output. Crude oil for July delivery was $65.29 a barrel, down 6 cents, in after-hours electronic trading on the New York Mercantile Exchange in Singapore.
As per provisional data, FIIs were buyers in equities to the tune of Rs 335.30 crore while Domestic Institutional Investors (DIIs) sold Rs 80.86 crore of equities, on 12 June 2007
Indiainfoline - Intraday Stock Ideas
NIFTY (4155) SUP 4133 RES 4188
BUY KTKBANK (172)
SL 166 T 182, 185
BUY BIOCON (447.85)
SL 442 T 458, 561
BUY SCI (200.30)
SL 196 T 209, 211
SELL SRF (161.9)
@ 165 SL 169 T 155, 153
@ 178 SL 182 T 169, 166
Get used to choppiness
Life is not fair; get used to it. – Bill Gates
On the face of it, it looks like the bulls managed to triumph yesterday after yet another volatile day. But, a close look will tell you that it was only select index heavyweights, particularly Reliance, which won the day for the bulls. And don’t be surprised if Reliance alone pulls down the bulls later. The broader market remained weak. Market breadth was also negative though traded volume and the turnover climbed. FIIs too have turned net sellers of late though yesterday's provisional figure shows they were net buyers. Coming to today's session, we expect a lower opening on the back of the overnight fall on Wall Street and weak Asian markets. Intra-day gyrations is something one will have to get used to.
Global markets are witnessing lot of choppiness over the past few days owing to renewed worries over inflation and its fallout on interest rates. In India too, similar concerns are still weighing on the markets. The stronger than expected IIP data for April and FY07 could heighten the pressure on inflation and hence interest rates in the next few weeks or months. The market will not take kindly to another monetary tightening measure from the RBI.
The monsoon factor is yet to play out fully. It may have some bearing on the economy in the current fiscal though its contribution to the GDP has shrunk considerably. A Bank of Japan meeting this week followed by a Fed meeting on June 28th will provide enough ammunition to the bulls and bears to keep markets choppy.
In the next few days, we will have some idea of India Inc's health by way of the advance tax numbers. Q1 results, especially that of IT companies, will play a key role in deciding the next course of action for the bulls.
FIIs were net buyers of Rs3.35bn (provisional) in the cash segment yesterday while the local institutions offloaded stocks worth Rs808.6mn. In the F&O segment, foreign funds were net sellers to the tune of Rs2.57bn. On Monday, FIIs were net sellers at Rs546mn in the cash segment. Mutual Funds pulled out Rs249mn from the cash segment on the same day.
Time Technoplast Ltd. will list today on NSE & BSE. The premium being talked about on listing is in a range of Rs100-100 per share. The company had fixed a price band of Rs290-315 per share and the issue price was set at Rs315 per share.
US stocks slid after bond yields touched a five-year high. AT&T., JPMorgan Chase and Wal-Mart led the Standard & Poor's 500 Index and Dow Jones Industrial Average to their first drop in three days.
The 10-year Treasury note extended a five-week slump, pushing the yield to as high as 5.27%, on expectations that central banks from China to the UK will raise interest rates to curb inflation.
The S&P 500 slid 16.12 points, or 1.1%, to 1493. The Dow Jones Industrial Average plunged 129.95 points, or 1%, to 13,295.01. The Nasdaq Composite Index lost 22.38 points, or 0.9%, to 2549.77.
After the close, the 10-year Treasury note went as high as 5.3%, the highest in five years. Bond prices have been tumbling, and yields rising, in the last few days on worries that rising price pressures coupled with a possible pick up in the economy will force the Fed to raise its target rate.
In currency trading, the dollar rose versus the euro and the yen. COMEX gold for August delivery fell $5.90 to settle at $653.10 an ounce. US light crude oil for July delivery fell 62 cents to settle at $65.35 a barrel on the New York Mercantile Exchange.
European stocks weakened. The pan-European Dow Jones Stoxx 600 index declined 0.5% to 387.11. The UK's FTSE 100 closed down 0.7% at 6,520.40, the German DAX Xetra 30 dropped 0.4% to 7,678.26 and the French CAC-40 lost 0.7% at 5,898.16.
Stocks in Brazil and Mexico fell, as investors weighed concerns about the impact of rising US Treasury bond yields and possible interest rate increases in other emerging markets. In Brazil, the Bovespa index fell 980 points, or 1.9%, to 51,797.14. IPC index of 35 most-traded stocks fell or 225 points, or 0.7%, to 31,608.59.
Asian stocks fell after US bond yields climbed to a five-year high. The Morgan Stanley Capital International Asia-Pacific Index dropped for the fourth time in five days after yields on 10-year US Treasury notes rose to the highest in five years. Toyota and Samsung Electronics led declines among companies that rely on global sales.
The MSCI index slid 0.7% to 149.66 as of 10:10 a.m. in Tokyo, poised for the lowest close since May 30. BHP Billiton led mining shares lower after metals prices retreated. Benchmarks declined around the region, with Japan's Nikkei 225 Stock Average dropping 0.8% to 17,623.78.
A measure of six metals traded on the London Metal Exchange dropped 2.4% yesterday. Copper slipped 2.5%, zinc fell 1.1% and nickel slumped 5.8%.
Bulls made a come back in the final hour of the trading session as heavy weights like Tata Steel, ONGC, ACC, Reliance Industries and ICICI Bank lifted the benchmark Sensex 14100mark after hitting the day’s low of 13946.99. The Oil & Gas index led from the front and others like Banking and Metal index followed suit. Cement stocks gained ground on back of fresh buying however, Auto and Technology socks were the major laggards. Finally, the 30-share Sensex added 47 points to close at 14130. NSE-50 Nifty was up by 9 points to close at 4155.
Tata Steel surged by over 4% to Rs603 after Corus announced that they would increases Wire Rod prices by atleast 7%. The scrip touched intra-day high of Rs608 and a low of Rs580 and recorded volumes of over 55,00,000 shares on NSE.
L&T marginally gained by 0.5% to Rs1906 after the company announced that they have secures Rs1.14bn order from SAIL and Rs8.77bn order from ONGC. The scrip touched intra-day high of Rs1929 and a low of Rs1881 and recorded volumes of over 9,00,000 shares on NSE.
IKF Technology was frozen at 5% upper circuit to Rs8.31 after the company announced that they would mull bonus issue on 23rd June. The scrip touched intra-day high of Rs8.31 and a low of Rs7.99 and recorded volumes of over 55,00,000 shares on NSE.
Rajesh Exports edged lower by 0.4% to Rs515. The company announced that they would develop 5 properties from its Land bank. The scrip touched intra-day high of Rs529 and a low of Rs508 and recorded volumes of over 2,00,000 shares on NSE.
Diamond Cables was down 0.2% to Rs164. The company announced that they have secured order worth Rs750mn. The scrip touched intra-day high of Rs166 and a low of Rs150 and recorded volumes of over 1,00,000 shares on NSE.
Cement stocks witnessed fresh buying after being on the side lines in previous weeks. ACC advanced by 5.6% to Rs805, Gujarat Ambuja gained by 0.7% to Rs110, Grasim was up by 1.5% to Rs2388 and India Cement surged 3.7% to Rs173.
Banking stocks slipped lower on back of selling pressure. Frontline stock like SBI slipped by 0.6% to Rs1332, HDFC Bank was down by 1% to Rs1088, Union bank, Bank of India and Bank of Baroda were the major losers among the Mid-Cap stocks. However ICICI Bank gained 2% to Rs919.
Metal stocks also reversed its losses led by gains in heavy weight Tata Steel as the scrip surged by over 4% to Rs603, SAIL advanced by 3% to Rs130 and Sterlite Industries gained 1% to Rs704. However, National Aluminum declined 1.5% to Rs253.
Technology stocks also slipped as Indian rupee again strengthened against the US Dollar. Satyam Computer has dropped by 3.88% to Rs478, Wipro was down by 0.8% to Rs538, Polaris declined by 2.3% to Rs158 and HCL Tech slipped 1.8% to Rs339.
Results Today:
Asian hotels, EIH Associated Hotels, Rajshree Sugars and Wyeth.
Insider Trades:
Shree Renuka Sugars Limited: Dr. Bantval Prabhakara Baliga, Director has purchased from open market 10000 equity shares of Shree Renuka Sugars Limited on 5th June 2007.
Prime Securities Limited: N Jayakumar, President has purchased from open market 50000 equity shares of Prime Securities Limited on 6th june, 2007.
Aurobindo Pharma Ltd: Standard Chartered Private Equity (Mauritius) Ltd. Has sold in open market 1334630 equity shares of Aurobindo Pharma Ltd from 15th May to 4th June, 2007.
Lower Circuit:
Ruby Mills, Tripex Overseas, SREI Infrastructure, Mercator Lines, Marksons and BF Utilities.
Upper Circuit:
Shree Ashtavinyak, UTV, Mascon Global, XL Telecom, IKF Technology, Yashraj Securities, Godrej Industries
and Shaw Wallace.
Delivery Delight (Rising Price & Rising Delivery):
Amtek Auto, Apollo Hospitals, Bajaj Hindustan, Biocon, Federal Bank, Gujarat Ambuja Cements, HCL Infosystems, Hexaware, HLL, HPCL, ICICI Bank, Jaiprakash Associates, Reliance Industries, Tata Chemicals, TISCO and UTI Bank.
Abnormal Delivery:
Tata Steel, Punjab Tractors, ICICI Bank, Dabur India, GlaxoSmithKline Pharma, Gujarat Heavy Chemicals, Kotak Mahindra Bank, Finolex Cables and Aventis Pharma.
News Headlines:
FM says India intends to reduce demand in Real Estate, Housing
Corus increases Wire Rod prices by at least 7%
IKF Technologies to mull bonus issue on 23rd June
Gulf Cement signs accord with Simplex for Qatar plant
Rajesh Exports to develop 5 properties from its Land bank
Diamond Cables gets order worth Rs750mn
Cadila gets tentative approval for Amlodipine Besylate
L&T gets Rs8.77bn order from ONGC
Praj Industries forms a JV with Aker Kvaerner Netherlands
Citigroup - India Technicals
Citigroup in their report on India Technicals,
Nifty — The index exhibited high intra-day volatility. It opened on a flat note, traded sideways in the morning session, dipped down towards 4100 in the afternoon session, and saw a rally towards the close. The index ended the day up 9 points.
10&20dma crossover — The moving average crossover in the daily chart is negative
(i.e. the 10dma has crossed the 20dma from above); 10dma=4222 and 20dma=4231. Intra-day pullback will likely face stiff resistance around the averages. [dma = daily simple moving average]
Support — The index has support around 4126 (intra-day it whipsawed 4126 but closed above it) and 4072 (low of 14 May 07). Intra-day volatility can be expected if Nifty breaks the 4126 level.
Conclusion — Intra-day pullback will face resistance around 4200 levels.
Sucheta Dalal on DLF - Don't lose focus
A few months ago, 17 investor associations in one of their regular interactions with the Securities and Exchange Board of India (Sebi) passed a unanimous resolution appreciating the regulator’s tough stand on the DLF issue. That was when Sebi had refused to clear DLF’s earlier proposal to relist its shares and raise Rs 13,500 crore from the capital market.
Sebi had refused to clear the initial public offering (IPO) until the ministry of company affairs (MCA) resolved the issue of DLF’s minority shareholders. A little later, the regulator raised pertinent questions about the absurd disparity in the valuation of DLF’s land bank as well as the quality of its disclosures. In fact, Sebi told its board of directors that the runaway increase in realty valuations was triggered by DLF’s fund-raising plans and the manner in which DLF’s properties were valued. In that board meeting Sebi cleared the proposal of IPO ratings after accepting that investors do need expert help in understanding complex disclosures.
But only a part of the original investor concerns were addressed when Sebi finally cleared its revised prospectus (for the record, Sebi only offers comments on the offer document and does not specifically clear it). Investor associations which praised Sebi’s handling of DLF in the past, aren’t too happy with the regulator anymore. They are surprised that the new valuation norms applicable to DLF conveniently, do not apply to the issue nor did the IPO have to be rated.
In fact, Midas Touch Investors Association, a Sebi registered group, insists that disclosures in the DLF prospectus remain inadequate. It says that though Sebi had assured the association that the lead managers to the issue would be asked to respond to its concerns, the IPO was cleared without this happening. Specifically, it has questioned the lack of transparency about the big increase in profits through sales to group companies, it has not received any reply. If that happens to an investor association, how is an ordinary investor, whose awareness level is poor, assess a complex public offering?
One example of pitiable investor awareness is the story of DLF’s minority shareholders, who were slated to receive what can only be described as a jackpot deal after they fought for their rights. DLF’s plan to re-list its shares in 2006 was stymied after it attempted to deprive 1,100 minority shareholders (who had held on to their shares, when these were delisted approximately four years ago) the massive profits arising out of its capital restructuring. These shareholders moved court and also petitioned the regulator and the media, which forced the company to include them in the restructuring bonanza.
We now discover that barely 280 investors availed of the company’s massive debenture-to-bonus share offer that gave each minority shareholder a minimum of 31,328 share (face value Rs two) valued at a minimum of Rs 1.56 crore even before the IPO opens. If the issue trades at a premium on listing, the valuation could be significantly higher. Surely, a savvier or better-advised company would have done its homework and evaluated the cost of taking 280 minority investors along, or buying them out before the restructuring with a lucrative offer. That so many minority investors missed this bonanza again reflects poor investor awareness in India, it also shows that DLF could have avoided much of the damage to its reputation with smarter planning and an honest effort to contact its investors.
On the eve of DLF’s IPO, some of the same arrogance is on display again. It appears that DLF’s distributors and brokers are doling out as much as 3 per cent in cash kick backs to investors in their effort to lure them into subscribing. The commissions range from Rs 50 to Rs 225 per form. At the same time there is an attempt to whip up frenzy and create an active grey market in the scrip. In addition, DLF hopes to rope in more retail investors by permitting them to apply for partly paid up shares, but this too has a catch. Those who are lured by cash incentives on application forms and the option of paying only Rs 27,000 per application for shares worth Rs one lakh need to be aware that part-paid shares cannot be sold on listing.
This is important if they have funded the purchase with borrowed money. The remaining money has to be coughed up after allotment and there will be no opportunity to flip them on listing and cash in on any immediate price run up. Shouldn’t Sebi have looked closely at all these issues? Especially since it had made an example out of DLF to its own board and the company has a fairly patchy record of regulatory compliance (Sebi has penalised it for at least two other market violations besides its attempt to deprive minority investors of the benefits of capital restructuring).
Ironically enough, while DLF has a poor compliance record, it has built a fairly formidable record for the quality of its construction and its ability to deliver classy projects and modern townships, especially in and around Delhi. As the first of the mega IPOs, that are set to take away considerably liquidity from the Indian capital market, large institutional investors believe that the many sales gimmicks and incentives will indeed help the DLF IPO sail through despite what is clearly an aggressive pricing strategy.
The question is, how will retail investors, who follow the dictum of caveat emptor make up their minds? If they only go by fundamentals and also factor in the decisive slow down in the realty market, there is a good chance that they would have lost an investment opportunity. Equity investment is indeed a risky business.
Via Indian Express
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