Gateway Distripaks, Jubliant Organosys
India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Wednesday, July 18, 2007
Last minute buying lifts market.
While majority of the Asian markets took a sharp dip today, the domestic indices shrugged off the intra-day volatile moves and registered decent gains at close. Earlier, the Asian market’s fall was led by the Japanese Nikkei 225, which crashed by 1.14% or 207 points at 18,010, followed by the Hang Seng Index (down 0.42% or 97 points at 22,960) and the Jakarta Index (down 0.32% or 7.46 points at 2,293).
Back in the domestic market, the Sensex moved six points up, above its previous close to open at 15,296 and advanced further to touch an intra-day high of 15,326 in the early trades. After displaying sideways movement for a while the Sensex drifted into the red. It tumbled sharply in the early noon trades to touch the day's low of 15,160, down 130 points from its last close.
The last hour of the trading session witnessed hectic activity, before selective buying saw the Sensex end in the green with a gain of 11 points at 15,301. The Nifty, too, after a mixed outing, moved up three points to close at 4,500.
However, the broader market was positive. Of the 2,705 stocks traded on the BSE, 1,480 stocks declined, 1,151 stocks advanced and 74 stocks ended unchanged.
The BSE Reality index led the surge in the sectoral indices and rose 1.62% at 8,078. The BSE CD index, the BSE Auto index, the BSE Teck index and the BSE Metal index were the other notable gainers while the BSE CG, the BSE FMCG index and the BSE Oil & Gas index ended weak.
Buying was led by Hindalco, which notched up gains of 3.22% at Rs184. Among the other gainers Bajaj Auto advanced 2.85% at Rs2,282, Bharti Airtel added 2.29% at Rs883, Grasim Industries moved up 2.09% at Rs2,915, ACC jumped by 2.03% at Rs1,133, RCOM gained 1.14% at Rs567 and TCS was up 1.09% at Rs1,164. However, L&T, ONGC, Reliance Energy, Satyam, ITC, Dr Reddy’s and HDFC were down 1% each.
A sharp rally was witnessed in realty stocks today. DLF soared 5.78% at Rs645, Akruti Nirman scaled up 4.34% at Rs539, Sobha Developers surged 2.71% at Rs930 and Mahindra Gesco moved up 2.50% at Rs558. Penland, Anant Rajin and Parsvanath also ended at a higher level.
Hectic buying was seen in pharma stocks as well. Zee News, Himachal Futuristic, Bharti Airtel, VSNL, HT Media, Idea Cell, Financial Technologies, IOL Broadband and Sasken Communication flared up 1-19% each.
Over 2 crore RNRL shares changed hands on the BSE followed by KS Oils (1.04 crore shares), Mangalore Chemical (90.30 lakh shares), IDBI (89.75 lakh shares) and IFCI (75.03 lakh shares).
Value-wise, DLF registered a turnover of Rs375 crore on the BSE followed by India Bulls Reality (Rs226 crore), GMR Infra (Rs165 crore), RIL (Rs126 crore) and Akruti Nirman (Rs125 crore).
Sensex settles just above 15,300
The market settled with marginal gains, characterised by volatility right from the opening bell, which turned intense in last hour of the session.
The Sensex struck intra-day high and intra-day low in the last one hour of trade. A sharp fall triggered by profit booking after the recent rally was reversed by short covering and value buying. Asian and European markets were subdued.
Real-estate stocks were in action, led by developer DLF. Shares from metal, cement and auto also logged decent gains. However, capital goods, FMCG and sugar stocks saw profit booking.
The BSE 30-share Sensex gained 11.35 points to 15,301.17. It was extremely choppy, hitting intra-day high and intra-day low in the last one hour of trade. It opened slightly up at 15,296.06, but was not able to sustain at higher levels and, hence, soon succumbed to selling pressure. It touched a low of 15,160.27 at 14:33 IST. From a low, it staged a solid recovery to hit an intra-day high of 15,325.78 at 15:23 IST
The S&P CNX Nifty settled with a gain of 2.80 points to 4,499.55. Nifty July 2007 futures settled at 4491.10, a discount of 8.45 points as compared to spot closing
The total turnover on BSE amounted to Rs 5,720 crore as against Rs 6,099.87 crore on Tuesday, 17 July 2007. The turnover in NSE’s F&O segment amounted to Rs 45052.64 crore as against Rs 45837.68 crore on Tuesday, 17 July 2007.
The market breadth, which indicates the overall health of the market, was negative on BSE, with 1,496 shares declining as compared to 1,158 that advanced, while 89 remained unchanged. The breadth was positive in the morning session.
The BSE Mid-Cap index was down 0.20% to 6,776.19 while the BSE Small-Cap index lost 0.29% to 8,184.11
From the Sensex pack, 16 gained, while the rest slipped.
Aluminium and copper major Hindalco Industries surged 4.62% to Rs 186.80 on 14.59 lakh shares. It was the top gainer from the Sensex pack. It saw intense volatility, swinging in the range of Rs 173 – Rs 187.90.
Tata Steel (up 0.52% to Rs 684) and Sail (up 1.60% to Rs 155.90), were the other gainers from metal sector
Telecom pivotals Reliance Communications (up 1.62% to Rs 569.90) and Bharti Airtel (up 3.45% to Rs 893.10) saw strong buying interest. Both the firms had reported robust subscriber additions in the month of June 2007.
Bharti Airtel today awarded a $2 billion contract to Sweden's Ericsson for network expansion in the world's fastest-growing cellular market.
Two-wheeler major Bajaj Auto advanced 3.24% to Rs 2,291. Recently, there were reports that the company is looking for a big-ticket acquisition in the European motorcycle market, and that bike companies Ducati Motor Holding of Italy and Triumph Motorcycles of the UK are among the possible targets. The BSE Auto index rose 0.68% to 5,051.90.
Cement stocks, quiet for most part of the day, suddenly firmed up in the last one hour of trade. ACC (up 2.74% to Rs 1141), Grasim (up 2.10% to Rs 2915), and Birla Corporation (up 3.06% to Rs 303.10), gained from the cement pack.
Shares from capital goods sector took a breather after the recent rally, with the BSE Capital Goods index declining the most among the sectoral indices on BSE. The index shed 1% to 12,675.13. Engineering and construction major L&T slumped 2.20% to Rs 2340, on 2.44 lakh shares. It was the top loser from the Sensex pack.
Bharat Bijlee (down 2.96% to Rs 2330), Alstom Power (down 2.85% to Rs 814) and Punj Lloyd (down 1.56% to Rs 268.50), were the other losers from the capital goods space.
Reliance Energy (REL) slipped 1.35% to Rs 689.15 despite reporting a net-profit rise of 25.45% to Rs 221.56 crore in Q1 June 2007 as against Rs 176.61 crore in Q1 June 2006. Total income rose 49.62% to 1983.93 crore (Rs 1325.97 crore). The results were announced during market hours today.
ONGC (down 1.72% to Rs 892), ITC (down 1.57% to Rs 153.25) and Satyam Computers (down 1.38% to Rs 481.55) slipped on profit booking.
Reliance Industries (RIL) declined 0.89% to Rs 1,811.10 on 6.89 lakh shares on profit booking after hitting an all-time high of Rs 1,849 earlier during the day. The company had announced after market hours yesterday, 17 July 2007, that it had hit gas in the first well in the Cauvery deep-water basin off the east coast of India.
The deep-water block, located in the Cauvery Basin in an area of 14,325 square kilometers, was awarded to RIL under the bidding round of NELP III. RIL holds a 100% participating interest in this block. Rumours about the company’s oil & gas find were floating in the markets since pre-market hours on 17 July 2007, with the stock surging 2.86% on that day itself.
Real-estate major DLF vaulted 6.34% to Rs 648.85 on bagging a Rs 6,000-crore project from the Delhi Development Authority for design, development and operation of an international convention centre, proposed to be developed in Sector 24, Dwarka, New Delhi.
Shares from the real-estate sector surged on momentum buying after KV Kamath, Managing Director and CEO of ICICI Bank, said on Tuesday, 17 July 2007, that interest rates seem to have peaked and should come down soon. The Reserve Bank of India (RBI’s) quarterly monetary policy review is due on 31 July 2007.
Parsvnath Developers (up 1.10% to Rs 369), Sobha Developers (up 2.71% to Rs 929.80), Akruti Nirman (up 4.11% to Rs 538) and Orbit Corporation (up 2.26% to Rs 345.75), advanced from the real-estate pack. The BSE Realty index advanced 1.67% to 8,077.67, and was the top performing sectoral index on BSE.
Sun Pharma Advanced Research Company (SPARC) was locked at 20% upper circuit at Rs 87.15 over the base price of Rs 72.65 on BSE on the day of its debut today, 18 July 2007. About 3.84 lakh shares changed hands in the counter on BSE. Stock exchanges had set Rs 72.65 as base price for the purpose of calculating the daily circuit filter of 20% for the first day of trading.
The listing of the company follows a scheme of arrangement at Sun Pharmaceutical Industries (SPIL). The research division of SPIL was demerged and vested with SPARC on a going-concern basis.
Zee News (up 20% to Rs 59.20), Basant Agro (up 10.48% to Rs 58), BF Utilities (up 10% to Rs 2142.85), Kewal Kiran Clothing (up 15.71% to Rs 226.50), and Agro Tech Foods (up 10% to Rs 162.80), surged from the small-cap and mid-cap packs.
K S Oils clocked high volumes of 1.04 crore on BSE after it went 10:1 stock split from today. The stock settled at Rs 59.70
CESC spurted 4.80% to Rs 500. It has fixed a meeting of shareholders on 27 July 2007, for considering the scheme of amalgamation of Pathik Foods with itself
Pidilite Industries gained 4.72% to Rs 155.35. On 10 July 2007, The company said it entered into an agreement for acquisition of plant, machinery, technology, patent and trademark of an international specialty chemical company.
Kotak Mahindra Bank galloped 3.54% to Rs 707.45 ahead of its June 2007 quarterly results on 24 July 2007.
ICRA jumped 6.06% to Rs 1078 after it signed an agreement with state-run Indian Bank to assign ratings to small-scale industries and enterprises that are borrowers of the bank. The company made the announcement during market hours today, 18 July 2007.
Plethico Pharmaceuticals rose 1.67% to Rs 397 after reporting a 40.65% rise in net profit in Q3 June 2007 to Rs 32.66 crore as against Rs 23.22 crore in Q3 June 2006. Sales moved up 51.17% to Rs 122.50 crore (Rs 81.03 crore). The company declared the results during market hours today, 18 July 2007.
Himatsingka Seide rose 1.30% to Rs 132 on media reports that the textile firm is close to buying a US-based bed-linen brand. The US bed-linen brand that the company is targeting to acquire has annual sales of about $50-60 million. The report hit the market during trading hours today, 18 July 2007.
IDBI declined 3.35% to Rs 115.35 on reporting a marginal 1.69% rise in net profit in Q1 June 2007 to Rs 153.12 crore as against Rs 150.57 crore in Q1 June 2006. Operating income rose 31.4% to Rs 2193 crore (Rs 1668.34 crore). IDBI announced the results during trading hours today, 18 July 2007
Hexaware Technologies tumbled 11.89% to Rs 143.45 after the company’s net profit declined 28.06% in Q2 June 2007 on a sequential basis to Rs 18.92 crore as against Rs 26.30 in Q1 March 2007. Sales dropped 4.69% to Rs 112.61 crore in Q2 June 2007 compared with Rs 118.16 crore in Q1 March 2007. The company declared results during market hours today, 18 July 2007.
Rajesh Exports rose 1.36% to Rs 559.50 after the jewellery maker said it got an order worth Rs 272 crore to supply gold jewellery to Lazorde Jewellery of Kuwait. The order would be completed by 15 November 2007.
Gitanjali Gems jumped 10.81% to Rs 265.50 after 4.03 lakh shares changed hands in a block deal at Rs 243.50 per share on BSE. The block deal constituted 0.7% of the company's equity.
Sun Pharma was down 0.24% to Rs 999.95 on 6.33 lakh shares, after 3 block deal of 1.50 lakh shares each were struck on the counter on BSE in opening trade at average price of Rs 1015.50 per share
GMR Infrastructure slumped 3.48% to Rs 866 following NSE's ban on fresh contracts in the derivatives market as its derivative contracts crossed 95% of the market-wide position limit.
Biocon advanced 0.54% to Rs 463.10 following a 63% surge in net profit in Q1 June 2007 to Rs 44.86 crore as against Rs 27.57 crore in Q1 June 2006. Sales moved up 23.78% to Rs 227.4 crore (Rs 183.7 crore). The company announced the result during market hours today, 18 July 2007.
KPIT Cummins Infosystems lost 1.96% to Rs 135 after its wholly owned BPO subsidiary KPIT Cummins Global Business announced partnering with Cummins Inc to deliver finance and accounting (F&A) services to Cummins entities worldwide. GBS revenues from this partnership are expected to be $1 million in the first year with a potential to grow into a $15-million BPO business annually in 48-60 months.
KPIT Cummins Infosystems' net profit rose a massive 160.5% to Rs 15.81 crore in Q1 June 2007 as against Rs 6.07 crore in Q1 June 2006. Sales rose 53.4% to Rs 102.61 crore in Q1 June 2007 compared to Rs 66.89 crore in Q1 June 2006. The results were announced on 17 July 2007 after trading hours.
All the Asian markets moved lower today, 18 July 2007, with Japanese shares declining sharply following the powerful earthquake in northern Japan on Monday, 16 July 2007. Japan's Nikkei tumbled 1.11% to 18,015.89.
Hong Kong's Hang Seng (down 0.93% at 22,841.92) and Singapore's Straits Times (down 1.84% at 3,583.97) also edged lower.
However, Shanghai Composite was an exception, advancing 0.87% to 3,930.06.
All the European indices were trading weak, except Spain’s Madrid General which rose 0.26%.
Shares surged on Wall Street on Tuesday, 17 July 2007, with the Dow hitting 14,000 for the first time as several blue-chip companies reported better-than-expected quarterly earnings. The Dow Jones rose 20.57 points, or 0.15%, to close at 13,971.55. Broader stock indicators ended mixed. The Standard & Poor's 500 index slipped 0.15 points, or 0.01%, to 1,549.37 having set its own record highs in recent sessions. The Nasdaq Composite index rose 14.96 points, or 0.55%, to 2,712.29.
Oil prices edged up on Wednesday, 18 July 2007, after two days of losses, as traders awaited the release of US weekly inventory data for further proof that recovering refinery operations had lifted gasoline supplies. London Brent crude for September 2007 rose 12 cents to $75.65 a barrel. US light crude for August delivery rose 23 cents to $74.25 a barrel
Market to consolidate at higher level
The Market is expected to consolidate at higher levels after a recent rally. The BSE 30-share Sensex lost 21.40 points, or 0.14%, to 15,289.82, on Tuesday, 17 July 2007. It surged to strike an all-time high of 15,440.20 on that day.
Asian markets moved lower today, 18 July 2007, with Japanese shares declining sharply on electricity producer Tokyo Electric Power Co. and insurers such as Mitsui Sumitomo Insurance Co. in the wake of a powerful earthquake that hit northern Japan on Monday, 16 July 2007. Japan's Nikkei tumbled 1.14% or at 18,009.91.
Hong Kong's Hang Seng (down 0.55% at 22,931.44) and Singapore's Straits Times (down 0.38% at 3,637.29) also edged lower. However, Taiwan's Taiwan Weighted gained 0.45%, or 42.57 points, to 9,552.30.
Shares surged on Wall Street on Tuesday, 17 July 2007, with the Dow hitting 14,000 for the first time as several blue-chip companies reported better-than-expected quarterly earnings. The Dow Jones rose 20.57 points, or 0.15%, to close at 13,971.55. Broader stock indicators ended mixed. The Standard & Poor's 500 index slipped 0.15 points, or 0.01%, to 1,549.37 having set its own record highs in recent sessions. The Nasdaq Composite index rose 14.96 points, or 0.55%, to 2,712.29.
As per provisional data, foreign institutional investors (FIIs) bought shares worth a net Rs 359.06 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 164.93 crore on Tuesday, 17 July 2007.
Morning Call - July 18 2007
Market Grape Wine :
In House :
Nifty at a support of 4474 & 4450 levels with resistance at 4521 & 4541 levels .
Sell : Mphasis below 278 target 270 s/l of 282
Buy : HDFC above 1213 target 1240 s/l of 1198
Out House :
Markets at a support of 15015 & 15151 levels with resistance at 15393 & 15454 levels .
Buy : IciciBank & SBIN at dips
Buy : RIL & RelCap
Buy : IndiaInfo & Aptech
Buy : Bhel & Tatapower
Buy : Century
Buy : Sterlite
Buy : Sail & Kotakbank
Buy : DLF , IBulls & IbullReal
Dark Horse : IBulls , IndiaInfo ,Sterlite , SBIN , REL , Ibullreal , Aptech & Skumar
Bullet for the Day : IbullRealty & Murudeswar & Aban with strict stop loss
Chennai Petroleum Corporation Q1FY08 Result Update (Accumulate)
Higher GRM boosts profitability
Chennai Petroleum Corporation Ltd. (CPCL) reported a sizeable growth in operating profit of 23% YoY and 47% QoQ, on the back of buoyancy in international refining margins and operating efficiencies, in spite of supply constrains. GRM of US$8.76/bbl for Q1FY08 is more than 30% higher than, US$6.64/bbl in Q1FY07 and US$6.42/bbl in Q4FY07. The stock is trading at EV/EBITDA of 4.3x and PER of 6x FY08E, a significant discount to its domestic and international peers. We believe global refining margin will remain buoyant due to tight demand-supply situation for petroleum products, which will eventually benefit the company. We recommend ‘Accumulate’ rating on the stock.
Chennai Petroleum Corporation Q1FY08 Result Update (Accumulate)
TCS Q1FY08 Result Update (Accumulate)
Robust demand environment; valuation looks expensive
Tata Consultancy Services Ltd’s (TCS) Q1FY08 results were in line with its peer Infosys’ Q1FY08 results, with revenue in line with estimates, but higher than estimated net income on account of higher forex gains and tax write-back. During the quarter, TCS reported 1.1% sequential increase in revenue and net profit to Rs52.03bn and Rs11.85bn respectively. EBITDA margin fell 280bps sequentially in Q1FY08 on account of rupee appreciation and salary hikes.
On account of better than expected Q1FY08 and higher yield on investments, we are increasing our FY08E and FY09E EPS estimates by 6% and 2% to Rs51.7 and Rs60.1 respectively, a two-year EPS CAGR of 19.3%. Our FY08E and FY09E estimates are based on Rs/USD rate of Rs40.5 and Rs40.0 respectively.
TCS, like its peers have underperformed the indices in the last few months on account of sharp rupee appreciation. The company is currently quoting at FY08E and FY09E PER of 21.8x and 18.8x respectively. This is at 10% discount to Infosys’ FY08E and FY09E PER.
Though the demand environment looks robust, we believe that with EPS growth slowing down (19.3% in case of TCS), the company and its larger peers don’t deserve higher valuations. Further, with these companies required to pay full taxes from FY10E onwards, three-year EPS CAGR would be lower. We therefore downgrade TCS from ‘Buy’ to ‘Accumulate’ with a price target of Rs1,130, 5% discount to our targeted Infosys PER. At our target price, TCS would be quoting at 21.8x and 18.8x FY08E and FY09E earnings. However, we would revisit our recommendation if the rupee starts depreciating from the current levels.
TCS Q1FY08 Result Update (Accumulate)
Subscribe to:
Posts (Atom)