India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Buy Pantaloon at Rs517 with SL of Rs509 and Target of Rs540, 545
Buy IDFC at Rs127 with SL of Rs122 Target of Rs135, 139
Buy Renuka Sugars at Rs629 with SL of Rs620 and Target of Rs650, 655
Buy Cummins at Rs381 with SL of Rs373 and Target of Rs395, 400
Buy Tata Power at Rs702 with SL of Rs686 and Target of Rs730, 735After falling to a low 15,159.68 points, The Sensex closed 542 points lower at 15,234.57 while the Nifty ended 175 points down at 4445.20.
Select stocks managed to shine. ITC, Ranbaxy Laboratories and Ambuja Cements were the Sensex gainers. Losers on the Sensex included Tata Steel (down 7.37 per cent), BHEL (4.74 per cent), Reliance Communications (4.70 per cent), Hindalco (4.62 per cent) and HDFC Bank (4.43 per cent).
Declines on the BSE stood at 1,951 while advances were at 570. On the NSE declines were at 993 while advances stood at 143.
Following is a list of the Top 5 falls for the Sensex
Auto…A billion dollar acquisitions club in sight
There is no official word regarding Tata Motor’s planned bid for Ford’s marquee British brands - Jaguar and Land Rover. The question may well get answered when Tata Motors meets the media on Tuesday to announce their results. In fact, the other short-listed Indian candidate for the deal is Mahindra & Mahindra (M&M). Earlier, reports had stated that two Indian companies (Tata Motors and M&M) would be competing with several private equity firms like TPG Capital, Cerberus Capital Management, Ripplewood Holdings and One Equity Partners for purchasing Jaguar and Land Rover from Ford.
And to add to the auto buzz in India, reports say French carmaker Renault is in talks with two-wheeler major Bajaj Auto for a possible project to build economy vehicles costing around $3,000. The alliance will set up new platform at a new site. The cars and goods carriers made would be sold in India as well as abroad.
"Merger & acquisition (M&A) deals in the sector worth more than $515mn from 17 deals so far this year is almost equal to the value and volume of deals done by the sector in the whole of last year." said Bundeep Singh Rangar, Chairman, IndusView Advisors, the India-focused cross-border advisory firm. "Between Tata Motors and Mahindra & Mahindra, whoever walks away with the deal, the moment will be historic as it will mark the automotive sector’s entry into the elite billion dollar acquisitions club." said Rangar
The other reason why this deal will be significant is that it will further reinforce the prominence of the Indo-U.K. merger & acquisitions deal activity which has already seen the country’s two of the largest deals - the acquisition of Hutchison Essar Ltd India’s second largest GSM mobile service provider by the U.K.’s Vodafone Group Plc and the acquisition of the U.K.’s largest steel maker Corus Group Plc by India’s Tata Steel Ltd.
Aspirations have seen over 5,000 luxury cars added to the Indian roads in 2006, up from 3,000 in 2005 and just 1,000 in 2004, according to estimates. It’s just a matter of time, expect the global luxury car brands Volkswagen, Lamborghini, Rolls Royce Phantom, Bentley, Porsche, Aston Martin and Ferrari roll out their India plans in full steam.
And all fall down!
Are you lost or incomplete?
Do you feel like a puzzle, you can't find your missing piece?
Wall Street came crumbling down after long. US stocks fell on signs of further weakness in the housing sector. The domino effect came into play into the Asian as well as European Marekts with most of the Asian markets closing deep in the red. Habit of staging a record close almost everyday, finally took a toll on the bulls as they appear to be lost at the peaks on Dalal Street.
Bulls across the globe fell in a heap as Bears struck back in style dragging the key indices lower for the first time in last six weeks. China's stock market was a survivor in the global carnage and gained around 7% for the week. After May's record high , the government hiked the stock trading tax to cool speculation, causing shares to plunge. But better-than-expected corporate profits announced in recent days have reignited the bull run.
Key Indices in India fell the most in four months on concerns that U.S. housing slump will slow growth i the world's biggest economy and prompt investors to shun riskier assets. Tata Steel, Grasim,Gujarat Ambuja Cement and Hindalco were among the major losers for the week dragging the BSE 30-share Sensex down by 330 points or 2.1% to close at 15235. NSE Nifty fell 121 points or 2.6% to close at 4445.
Unwinding of positions on account of F&O expiry, turmoil in global equity markets, profit booking and jitters ahead of the RBI meet on credit policy spoiled the game for the bulls. Though, the rates are expected the stay unchanged, RBI has often in the past has thrown up plenty of surprises.
Selling was seen in Cement, Banking, Metal, Mid-Cap, Auto and Capital Good stocks. While FMCG stocks bucked the negative trend led by gains in ITC and HLL. While some stability returned in the technology stocks after the Indian Rupee fell from its nine year high of 40.19.
Cement companies were under pressure amid news reports that trade practices regulator MRTPC has ordered an investigation into an alleged price cartelisation by top 14 cement manufacturers. Cement socks also were badly beaten up frontline stock ACC lost over 10% to Rs990, Gujarat Ambuja declinwed over 7% to Rs125, Grasim lost over 5% to Rs2849 and Mangalam Cement slipped 5% to Rs163.
Some action was seen in Technology stocks, as Rupee ended its six weeks of gain after the stocks on the bourses tumbled sharply over the week. Indian Rupee fell 0.5% to 40.53 against the Dollar. Infosys was in the limelight after the company won a seven-year, US$250mn contract from Philips. Finally the scrip added 1% over the week. However, other IT stocks didn't fared well, Wipro lost over 2.2% to Rs493, TCS was down by 2% to Rs153.
Drop in prices on metal prices on LME dragged the metal stocks lower on Dalal Street. Tata Steel, SAIL and JSW Steel were among the major losers within the metal pack. Index Heavyweight Tata Steel plunged by over 9.5% to Rs647, the scrip was the second biggest loser among the 30-scrip's of Sensex, SAIL was also down by over 5.5% to Rs147 and Jindal Steel lost 0.2% to Rs3892.
ITC stood firm amid volatile week on expectations that strong Q1 growth in cigarettes sales will continue to drive the profits. ITC posted Q1 profit at Rs7.83bn (up 20%) and sales at Rs33.25bn (up 16.6%), above our expectations. ITC rose 5.4% during the week and was the top gainer among the 30-scrips of Sensex and Hindustan Unilever rose over 1.3% to Rs196. HUL was in the limelight after the company announced last week that the company is considering a buyback later this month. On Sunday, HUL will announce its half yearly financial results.
Profit booking was seen in Capital Good stocks. After a terrific run up in last couple of weeks, we saw some cooling off, as investors judged the current rally as excessive. L&T was among the top loser, the scrip lost over 2% to Rs2424, Siemens dropped over 4.3% to Rs1285 and Punj Lloyd fell by 2.5% to Rs265.
Having good cards is not enough. You should know to play them well.
The crash has finally come and as expected it was more to do with the global meltdown. Could Friday be termed as signs for things to come? Bulls and bears will have a lot of pondering to do over the weekend. But again a lot depends on global factors which are to an extent beyond our control. Investors will closely watch the developments of the RBI's meet on Tuesday. Though indices took a severe beating on Friday, concerns on valuations will continue.
Expectations of a quick 1000 point gain to 16K may have died down for the time being. In fact, today's fall suggest that market could fall below the 15K level briefly before staging a bounceback. The FII activity will be of utmost importance. Any pipe-burst in the FII flow could temporarily put the brakes on the march upwards. In times like these, earnings momentum and any positive development may be ignored by the markets. During the run-up, most negative news were also ignored.
The indices could well stage a smart bounce back on Monday. Only another global meltdown can keep the bears in control. Among the major firms announcing their earnings next week include, BEML, BHEL, Easun Reyrolle, HPCL, i-Flex, GE Ship, IB Real Esate, Hindalco, Tata Motors, Jet Airways, Nagarjuna Const, Tata Steel, Unitech, FT, and SUN TV. Market players will closely watch RIL earnings on Saturday and HUL's numbers expected on Sunday evening. India Infoline estimates RIL PAT to be up by 12.8% to Rs29.1bn and Net sales to be up 12.3% to Rs275bn.
Just yesterday, 23-year-old Shivani Singh was basking in the glow of a dividend cheque worth Rs 1,000 from her mutual fund investment. That the additional income was tax-free added to the joy she felt about investing smartly. But the joy turned into a worry overnight after the morning papers showed that the net asset value (NAV) of her mutual fund was now lower than the price at which she bought the scheme. After calling her fund agent, she came to know that since NAVs of all schemes fell after they issued dividends, there was no cause for concern. But that did not convince her as she believed that something was amiss.
Ms Singh is not alone. Many first-time investors like her don't realise that receiving dividends from mutual funds is unlike receiving the same from shares. In the case of mutual funds, part of the investment is actually paid back as the dividend, resulting in a reduction of the pre-dividend value of the investment.
The truth is that people like Ms Singh must understand various mutual fund scheme options, before trusting blindly on agents. Here are some simple questions, which new investors would do well to ask before they chose a dividend or growth scheme.
How is a dividend scheme different from a growth scheme?
Mutual funds generally provide their investors an option to invest their money either in a growth scheme or a dividend scheme. Dividend schemes are further classified as dividend payout and dividend reinvestment schemes. However, investing in dividend schemes does not imply that the mutual fund would distribute its share of profit as dividends. Getting a share of the profit has always been the privilege of shareholders. In case of mutual funds, those investing in the units are mere buyers of a financial product sold by the fund house. Investors gain only if the value of the stocks held by the fund appreciates over a period of time.
Dividend payout & dividend re-investment scheme
Since mutual fund dividend is nothing but the part payment of the investor's money back to him, its NAV deflates to the same extent as and when the fund pays dividend. That is the reason why the NAV of the dividend scheme is always lower compared with the NAV of the growth scheme of the same fund.
Dividend payout scheme
Say you have invested Rs 10,000 in a fund where a unit of face value Rs 10 is currently quoting at a NAV of Rs 40. This would give you 250 units in the fund. Let's say in six months, the NAV becomes Rs 50 and your investment is now worth Rs 12,500. Now, if the fund declares a dividend of 20% on face value, you would end up getting Rs 500 (250 units * Rs 2) as dividend. But post-dividend, the NAV will decline proportionately to Rs 48/- per unit. If you sell all your units now, you will receive Rs 12,000 (250 units * Rs 48). Thus, the total return in your hands would add up to same sum of Rs 12,500/- (Rs 12,000 + Rs 500).
Dividend reinvestment
Under this option, the fund does not repay the dividend to investors. Instead, the dividend is used to purchase additional units of the fund at the NAV arrived at after the declaration of dividend. To continue with the above example, the NAV of the fund declines to Rs 48 post-dividend. However, since you have opted for reinvestment of dividend, the dividend amount of Rs 500/- shall be used by the fund to allocate additional 10.42 units (Rs 500 divided by Rs 48) to you. The total number of units that you would now have would be 260.42 (250 units+10.42 units). Redemption of these units at the revised NAV of Rs 48/- would again end up giving the same returns of Rs 12,500 (260.42 units * Rs 48).
What is a growth option?
In this case, the earnings are ploughed back into the fund rather than distributing it to the investors. You can encash the profits only at the time of redemption. Unlike the dividend reinvestment option, the number of units will also remain constant throughout the period of investment. However, the NAV of the fund would always be higher vis-?-vis the other two options, thereby ensuring that you get the same returns as your peers from the other two options. In this example, as the NAV went up from Rs 40 to Rs 50 per unit, you would get Rs 12,500 (250 units * Rs 50) if redeemed at this price, thereby booking a profit of Rs 2,500. If you stay invested, the NAV would either increase or decrease from the level of Rs 50/-.
So when do I opt for a growth scheme and when for a dividend?
If you are sitting on idle cash and looking for a long-term investment option, then go for a growth scheme. But if you are looking for a steady cash flow and cannot afford to tie up your money for long, dividend payout is the one to opt for.
It has been proven empirically that in the long run, markets don't disappoint despite the fluctuations in the short run. This, however, is for investors who are willing to stay invested for at least five years.
However, if you are looking for a steady cash flow and cannot afford to tie up your money for a long time, the dividend payout is the one to opt for. Just remember though that declaring dividends is always the prerogative of the fund house and investment in mutual funds does not carry a guarantee card for periodic dividends.
With most of the frontline companies having already declared their Q1 June 2007 results, the market will closely watch the monetary policy review of RBI due on Tuesday, 31 July 2007. RBI is likely to keep rates steady. However, it remains to be seen whether the central bank will raise cash reserve ratio (CRR) to suck out excess liquidity in the banking system.
The 30-share BSE Sensex lost 330.98 points or 2.13% to 15,234.57 in the week ended 27 July 2007, on profit booking. The S&P CNX Nifty lost 120.85 points or 2.6% to 4,445.20 in the week. Prior to this, the market had been posting weekly gains since the past six weeks.
Latest Data released on Friday, 27 July 2007, showed India's wholesale price index rose 4.41% in the 12 months to 14 July 2007, higher than the previous week's 4.27% due to increase in food prices. The inflation is within the central bank's medium-term target of 4-4.5% and annual target of 5% for this fiscal. The Finance Minister, P Chidambaram, hinted recently that high crude oil and food prices did not necessary mean that money policy would be tightened further.
Among the frontline companies - Bharat Heavy Electricals, Bharat Electronics, Mahindra & Mahindra, Cairn India and i-flex Solutions, will declare their June 2007 quarter results in the coming week
Gujarat Mineral Development Corporation, India Cements, Balkrishna Industries, Bharati Shipyard, Dredging Corporation of India, Gitanjali Gems, India Infoline, Indiabulls Real Estate, Nagarjuna Construction Company, Wanbury, Asian Electronics, Development Credit Bank, Ashapura Minechem, Parsvnath Developers, Birla Corporation, Financial Technologies (India), Provogue (India), Madhucon Projects, Sterling Biotech and United Phosphorous, will also declare their result
Oil prices have held firm above $75 a barrel on fears of tight summer supplies would offset a fresh wave of risk aversion that struck US equities and dragged oil down a day ago. Any sharp rise from these levels, may dampen the sentiment
The market was gripped with intense selling pressure throughout the day's trading session, following sharp fall in US and Asian stocks. There was bloodbath on the street with all most sectoral indices on BSE posting sharp losses. Despite the sharp fall, the turnover was very high today, 27 July 2007.
All the Asian markets settled with sharp losses while most European markets were trading weak.
The BSE 30-share Sensex plunged 541.74-point, or 3.4%, to 15,234.57, its biggest rout in a single trading session in nearly four months. The Sensex had tumbled 617 points on 2 April 2007 following the Reserve Bank of India (RBI)'s surprise hike in interest rates announced after trading hours on 30 March 2007.
Sensex opened lower today, 27 July 2007 at 15,487.76 and recovered some ground to hit a high of 15,495.51. But the index was not able to sustain the recovery and succumbed to intense selling pressure. It slumped to a low of 15,159.68 at 12:24 IST. At day's low, the index suffered a sharp fall of 616.63 points
The S&P CNX Nifty plunged 174.20 points or 3.78% at 4,445.20. The Nifty August 2007 futures was at 4,392.85, a sharp discount of 52.35 points as compared to spot closing
All the Asian indices settled with sharp losses. Japanese stocks led Asian markets lower in a broad-based retreat today, 27 July 2007, as export stocks such as Canon Inc. and Honda Motor Corp. were hit hard on concerns over the outlook for the US economy. Nikkei tumbled 2.36% at 17,283.81.
Hang Seng (down 2.76% at 22,572.95), Taiwan Weighted (down 4.22% at 9,162.28), Singapore's Straits Times (down 2.43% at 3,492.70) and South Korea's Seoul Composite (down 4.09% at 1,883.22) declined sharply.
Shanghai Composite was down 0.03% to 4,345.35
Wall Street suffered one of its worst losses in this year so far on Thursday, 26 July 2007, as investors succumbed to months of worry about the mortgage and corporate lending markets. The Dow Jones plunged 311.50 points, or 2.26%, to 13,473.57. Broader market indicators also slid. The Nasdaq Composite index declined 48.83 points, or 1.84%, to 2,599.34, while the Standard & Poor's 500 slipped 35.43 points, or 2.33%, to 1,482.66.
The fall on the domestic bourses materialised after a recent solid surge as FIIs stepped up buying on strong Q1 June 2007 results and in anticipation of good results from companies which were yet to unveil their numbers. The Sensex has gained 5.5% in the past one month and nearly 42% in the past one year.
Small-cap and mid-cap shares lost ground. The BSE Mid-Cap index lost 192 points or 2.8% 6,598.32 to while the BSE Small-Cap index slipped 219 points or 2.7% to 7,926.45. The market breadth was weak on BSE with 630 shares advancing as compared to 1,991 that fell, while 62 remained unchanged.
Even as the markets declined, the turnover vaulted. The total turnover on BSE amounted to Rs 6,593 crore as against Rs 5,758 crore on Thursday, 26 July 2007.
The NSE F&O turnover was Rs 65,777.96 crore. The NSE F&O turnover was a record Rs 79,995.85 crore on Thursday, 26 July 2007, on the day of expiry of July 2007 derivative contracts.
Among the Sensex pack, 27 slumped, while three stood tall in the bloodbath.
India's largest cigarette manufacturer ITC jumped 2.67% to Rs 171 after its net profit rose 20% to Rs 782.87 crore in Q1 June 2007 over Q1 June 2006, exceeding market expectation. ITC raised cigarette prices by about 20% in the first quarter due to tax increases. Sales were up 16.6% to Rs 3,325.23 crore in Q1 June 2007 over Q1 June 2006. Sales growth was within market expectations. It was the top gainer from the Sensex pack.
The BSE FMCG Index outperformed the market. It shed just 0.12% to 1,927.86, led by ITC. Tata Tea rose 0.64% to Rs 759.60, after it on Thursday, 26 July 2007, said it has become the number one domestic packet tea company in terms of volume. For the first time ever, Tata Tea outperformed its nearest competitor Hindustan Unilever (HUL) in June 2007 by garnering a volume share of 19.2%, compared to HUL's 18.6%.
Ranbaxy Laboratories, India's largest pharma firm by sales, was up marginally by 0.16% to Rs 374. The stock rose for the second straight day after Ranbaxy yesterday, 26 July 2007, reached an agreement with GlaxoSmithKline (GSK) to end the litigation in the US on Valtrex (valacyclovir hydrochloride tablets) used in the treatment of herpes. The stock had jumped 9.95% to Rs 375 on Thursday, 26 July 2007, boosted by the announcement.
North India's largest-selling cement company Ambuja Cements rose 0.76% to Rs 125.35. Other cement stocks also recovered from their lows, still ending the day lower. UltraTech Cement Company (down 6.93% to Rs 865), India Cements (down 5.38% to Rs 195), and ACC (down 3.10% to Rs 990) slipped.
Metal stocks tumbled on intense selling pressure, with BSE Metal Index plunging 5.3% to 11,501.52. It was the biggest loser among the sectoral indices on BSE. India's largest private sector steel producer Tata Steel slumped 7.92% to Rs 647.75 on 11.53 lakh shares. It was the top loser from the Sensex pack.
JSW Steel (down 2.82% to Rs 727), Hindustan Zinc (down 5.52% to Rs 704), Sterlite Industries (down 4.54% to Rs 628), Hindalco Industries (down 5.68% to Rs 172.55), and Sail (down 5.10% to Rs 147.70) were the other losers from metal pack.
The BSE Bankex lost 3.2% at 7,920.19. Canara Bank (down 6.34% to Rs 263), Bank of Baroda (down 3.74% to Rs 292), HDFC Bank (down 3.54% to Rs 1175.90), State Bank of India (down 3% to Rs 1504.10), and ICICI Bank (down 3.18% to Rs 915), all edged lower.
Capital goods duo, the recent favourites of the market, suffered steep losses. India's largest power equipment maker Bhel lost 5.14% to Rs 1665 while L&T plunged 4.61% to Rs 2424.90. The BSE Capital Goods index was down 3.8% at 12,748.77.
India's largest power generation firm National Thermal Power Corporation slipped 4% to Rs 161.10 after it signed a joint venture agreement with Rashtriya Ispat Nigam to set up a 150-MW power plant at Vishakapatnam, Andra Pradesh.
The BSE IT Index lost 2.5% at 4,876.34. Infosys (down 1.25% to Rs 2009.50), Satyam Computers (down 4.67% to Rs 471.50), Wipro (down 4.18% to Rs 490.25), and TCS (down 2.56% to Rs 1155), slipped.
Telecom stocks declined on fresh selling. Reliance Communications, the country's second largest listed telecom company, plunged 5.40% to Rs 537 while Bharti Airtel, the country's largest telecom company based on subscribers, slumped 3.61% to Rs 892.
The country's second largest motorcycle maker Bajaj Auto declined 3.77% to Rs 2,310. French car maker Renault today confirmed that it is in talks with Bajaj Auto for producing a car for around Rs 1.20 lakh ($ 3000).
India's largest truck maker Tata Motors slumped 4.06% to Rs 701, after it announced that its small car would hit the market in the first half of 2008.
India's largest private sector company Reliance Industries (RIL) was down 4.12% to Rs 1861, on 21.90 lakh shares. RIL unveils its Q1 June 2007 results tomorrow, 28 July 2007.
The top losers from small-cap and mid-cap space were Sterling Biotech (down 11.8% to Rs 173.60), Tele Data Informatics (down 10.8% to Rs 61.45), NIIT Technologies (down 9.7% to Rs 491.10), Wire & Wireless India (down 8.2% to Rs 57.50), Bombay Rayon (down 8% to Rs 202.70), Emkay Share & Stock Brokers (down 9.5% to Rs 99), KS Oils (down 8.9% to Rs 52.70), Energy Development Corporation (down 7.9% to Rs 58.20) and Nectar Lifesciences (down 7.9% to Rs 227.65).
Select stocks, however, rose in an otherwise weak market: Timex Watches (up 10% to Rs 29.70), Triveni Engineering (up 9.7% to Rs 57.15), Assam Company (up 6.5% to Rs 17.80) and JK Tyres (up 5% to Rs 147.95), surged.
Shares from the real estate pack were hammered brutally, with the BSE Realty index declining 5.25% to 7,823.91. DLF (down 4.78% to Rs 602.55), Unitech (down 6.06% to Rs 557.60), Mahindra Gesco Developers (down 3.70% to Rs 572.95) and Sobha Developers (down 2.13% to Rs 893) declined from the real estate sector.
Venky's (India) jumped 14.31% to Rs 172.10 after its net profit jumped 197% to Rs 9.06 crore in Q1 June 2007 over Q1 June 2006. Sales moved up 37.88% to Rs 124.07 crore in Q1 June 2007 over Q1 June 2006.
GlaxoSmithkline Consumer Healthcare rose 3.63% to Rs 595 after its net profit moved up 36.80% to Rs 42.30 crore in Q2 June 2007 over Q2 June 2006. Sales were up 17.41% to Rs 315.60 crore.
Tata Chemicals lost 2.76% to Rs 250. It posted a 60.79% rise in net profit to Rs 121.16 crore in Q1 June 2007 over Q1 June 2006. Total income decreased 10.4% to Rs 681 crore in Q1 June 2007 over Q1 June 2006.
Moser Baer India rose 1.97% to Rs 311 after the company said its photo voltaic unit has entered into a agreement with Norway's REC Group for sourcing silicon wafers over an eight-year period beginning from 2008.
Ballarpur Industries jumped 7.29% to Rs 131.65. With an aim to create a large asset base company overseas, the company will transfer ownership of its three units at Bhigwan, Ballarpur and Kamalapuram to an overseas subsidiary for Rs 1,950 crore.
Alok Industries gained 5.54% to Rs 67.60 as buying continued after the scrip's 10.81% rally yesterday, 26 July 2007. The company will declare its Q1 results on 31 July 2007.
Lanco Infratech rose 0.81% to Rs 211 after its consolidated net profit spurted 1,103% to Rs 51.28 crore over Q1 June 2006. Total income rose 136.89% to Rs 603.27 crore. The results were announced after market hours on Thursday, 26 July 2007.
Crompton Greaves rose 2.45% to Rs 285 after its net profit rose 89.1% to Rs 68.76 crore in Q1 June 2007 over Q1 June 2006. Sales moved up 21% to Rs 896.07 crore. The diversified engineering company made the announcement after market hours yesterday, 26 July 2007.
India's third largest power generator and distributor in terms of revenue Tata Power Company dropped 0.86% to Rs 700 even as it reported a 56.09% rise in net profit in Q1 June 2007 to Rs 190.20 crore over Q1 June 2006. Sales rose 9.80% to Rs 1,511.48 crore.
Wholesale price-based inflation rate increased to 4.41% in the week ended 14 July 2007 from 4.27% in the previous week mainly on higher prices of fruits and vegetables, ragi, wheat, jowar, condiments and spices. The inflation numbers are still within the 5% annual target of the Reserve Bank of India, which is set to review the monetary policy on 31 July 2007. The annual rate of inflation was 4.62% in the corresponding week last year.
Meanwhile, a development that could increase domestic liquidity is the approval given by the Cabinet Committee on Economic Affairs on Thursday, 26 July 2007, to public sector companies enjoying Navratna and Miniratna status to invest up 30% of their surplus funds in equity mutual funds. The total surplus of central PSUs in 2005-06 was estimated at about Rs 2,39,500 crore, according to public enterprises survey. This means that about Rs 70,000 crore may flow to equity mutual funds. However, investments would be allowed only in public sector mutual funds.
A good rollover was witnessed to the August 2007 series from the July 2007 series when the July 2007 contracts expired on Thursday, 26 July 2007. According to one brokerage report, overall 83% positions have got rolled to August 2007 from July 2007. A good rollover of 73% was witnessed in index futures as well. Institutional investors rolled over short positions in Nifty following the hedging of their positions in the cash market.
Oil rose on Friday, 27 July 2007 holding firm above $75 a barrel as traders bet that fears of tight summer supplies would offset a fresh wave of risk aversion that struck US equities and dragged oil down a day ago. London Brent crude gained 41 cents to $75.59 a barrel. US crude rose 43 cents to $75.38
The BSE 30-share Sensex's 541.74-point, or 3.4%, decline to 15,234.57 is its biggest rout in a single trading session in nearly four months.
The previous biggest point fall in Sensex had occurred in early April 2007. The Sensex had tumbled 617 points on 2 April 2007 following the Reserve Bank of India (RBI)'s surprise hike in interest rates announced after trading hours on 30 March 2007. RBI had raised its short-term lending rate, the repo rate, by 25 basis points (bps) to 7.75%. It had also raised its cash reserve ratio (CRR) by half a percentage point.
On 27 April 2007, the Sensex had witnessed a big fall of 320 points when feeble Asian markets weighed on domestic bourses.
Today's fall was triggered by a setback in Asian markets. Stocks across Asia fell today, 27 July 2007, after the US market dropped 2.3% on Thursday, 26 July 2007, on signs of further weakness in the US housing market and deteriorating conditions for corporate buyouts. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down between 2.4% to 4%
The fall was broad based. All the sectoral and niche indices on BSE ended in the red. The market breadth was weak: 1,951 shares declined on BSE as compared to 570 that rose, while 55 were unchanged. Losers outpaced gainers by a ratio of 3.4:1.
The fall materialised after a recent solid surge as FIIs stepped up buying on strong Q1 results and in anticipation of good results from companies which were yet to unveil their numbers. Ths Sensex had gained 5.5% in the past one month and nearly 42% in the past one year.
The top losers from small-cap and mid-cap space were Sterling Biotech (down 11.8% to Rs 173.60), Tele Data Informatics (down 10.8% to Rs 61.45), NIIT Technologies (down 9.7% to Rs 491.10), Wire & Wireless India (down 8.2% to Rs 57.50), Bombay Rayon (down 8% to Rs 202.70), Emkay Share & Stock Brokers (down 9.5% to Rs 99), KS Oils (down 8.9% to Rs 52.70), Energy Development Corporation (down 7.9% to Rs 58.20) and Nectar Lifesciences (down 7.9% to Rs 227.65).
Select stocks, however, rose in an otherwise weak market: Venky's (India) (up 16% to Rs 175.25), Timex Watches (up 10% to Rs 29.70), Triveni Engineering (up 9.7% to Rs 57.15), Assam Company (up 6.5% to Rs 17.80), JK Tyres (up 5% to Rs 147.95), Ballarpur Industries (up 7% to Rs 131.65), and Alok Industries (up 5.5% to Rs 67.65)
Turnover surged on BSE to Rs 6,593 crore compared to Thursday's Rs 5,758 crore
The key event next week is the review of the monetary policy by RBI on Tuesday, 31 July 2007. RBI is likely to keep rates steady. However, it remains to be seen whether the central bank will raise CRR to suck out excess liquidity in the banking system.
Data released today, 27 July 2007, showed India's wholesale price index rose 4.41% in the 12 months to 14 July 2007, higher than the previous week's 4.27% due to increase in food prices
Meanwhile, a development that could increase domestic liquidity is the approval given by the Cabinet Committee on Economic Affairs on Thursday, 26 July 2007, to public sector companies enjoying Navratna and Miniratna status to invest up 30% of their surplus funds in equity mutual funds. The total surplus of central PSUs in 2005-06 was estimated at about Rs 2,39,500 crore, according to public enterprises survey. This means that about Rs 70,000 crore may flow to equity mutual funds. However, investments would be allowed only in public sector mutual funds.
The indices are expected to open with a gap. Trading, especially during the initial minutes is highly risky.
Any wrong decisions could wipe out a major part of your recent gains. So stay light. Watch the situation for the initial minutes and then take a call on the market. Else start your weekend early and stay away.
Long term investors can pick their fundamentally sound favorite counters, especially large caps at lower levels.