Market Close: Left was not right for the market..

Political Uncertainity weighted on the Indices as Investors went for profits pushing indices into deep red. Indices Opened up in green but sell off trigger looking at the Political issue. Global Markets opened strong looking at US indices but HangSeng witnessed Heavy selling before ending marginally in red. Stocks from Realty, Banks, Metals and Pharma all felt the selling pressure. IT was the only sector which traded in green. Smallcap & Midcaps also underperformed as they slipped by 4% with the heavyweights. Asian markets traded in mixed while European markets were subdued.

Sensex ended down by 363 points at 17410.59. Weighing on the Sensex were losses in ACC (1104.05,-6 percent), Rel Energy (1358.9,-6 percent), Ranbaxy (409,-6 percent), TISCO (787.1,-5 percent) and NTPC (203.5,-5 percent). Losses were restricted by gains in Satyam (455.5,+2 percent), TCS (1082,+1 percent), HDFC Bk (1415,+1 percent), Wipro (464.5,+1 percent) and BHEL (2168.3501,+1 percent).

On the reports that Government might delay the issue of fertliser bonds which drove down the fertliser stocks. The bond was announced two months ago and this may be delayed till the end of the current financial year. The bonds were proposed to resolve the working capital crunch faced by fertilizer units and spare the exchequer from subsidy burden worth hundreds of crore. This has left the fertiliser industry wondering if the bonds will help resolve the fund crunch faced by them at least marginally. Even at this juncture it is not clear to both the ministry and the industry, whether the finance ministry is planning to make the bonds tradable across the board or leave the industry will no option but to pledge it with banks. But a possible delay in relief in the form of subsidy given to the fertiliser sector has the stocks of these companies reversing the rally which they began after the Government's proposed investment policy. Stocks like Nagarjuna Fertilizers (-16%), Chambal Fertilizers (-13%), Godavari Fertilizers and Deepak were hit badly for the day.

Esab India had an event report which was underplayed by the media. Charter Plc, the parent has managed to increase stake in the company by around 19% to 55%. The company is one of the two large organised players in the welding consumable space. The market is around 1500 cr and 50% of that is unorganized. The Parent has increased stake with an open offer at a premium to market. We expect the increased stake to lead to higher commitment from the parent. Howden, another division of Charter is a player in gas handling equipment. It's just a guess that this increased stake could lead to Howdens offering be introduced sooner than latter in the Indian opportunity. The valuations are attractive at just around 14 x FY07 (Dec end) earnings. Do read our detailed note on this. We have positive view here.

Technically Speaking: Sensex open with a gap of 130 points but Selling pulled it down as it made days low of 17322 and High of 17982. Advances were outnumbered by Declines 1:5 ratio. Sensex turnover stood good at Rs 7206. Sensex support at 17183, 16922 and Resistance at 17844, 18423. Traders better to exit long if Sensex slips below 17300 and to stay in cash for now.

Sensex scales new peak but closes below 17,500

The market witnessed another day of heavy selling, and the indices fell around 2% each at the close in a choppy trading session. Rising political instability, a flat open in European markets and a slide in Asain indices urged bears to strike back after the flat close of Friday. Taking cues from positive Asian indices, the Sensex opened on a firm note and rallied sharply to touch an all-time high of 17,983. However, the market steadily kept losing the momentum thereafter, and a widespread selling in the afternoon nearly dragged the index below 17,350 to the day's low of 17,322, a drop of 661 points from its intra-day high of all times. The Sensex managed to erase the loss of 169 points towards the close and ended the session at 17,491, down 282 points. The Nifty declined by 1.94% and was down 101 points to close at 5,085.

The market breadth was extremely negative, with losers outnumbering gainers by 4.81:1. Of the 2,783 stocks traded on the Bombay Stock Exchange (BSE) 2,263 stocks declined, 474 stocks advanced and 46 stocks ended unchanged. Except the BSE IT Index all the sectoral indices came under sharp hammering and shed over 1-3% each. Among the heavy losers, the BSE PSU Index, the BSE Metal Index and the BSE Realty Index dropped over 3.50% each.

Among the 30 Sensex stocks, 23 ended weak, while 7 managed to close with the gains. Index heavyweight Tata Steel declined by 5.27% at Rs789, ACC plunged 5.23% at Rs1,115, Ranbaxy dipped 4.82% at Rs412, Reliance Energy plummeted 4.67% at Rs1,380, NTPC slumped 4.57% at Rs205, Hindalco lost 4.52% at Rs162, SBI tumbled by 4.33% at Rs1,783, Dr Reddy's Lab fell by 3.73% at Rs629, M&M 3.51% at Rs725 and Grasim slipped by 3.50% at Rs3,420. However, Satyam Computer, Wipro and BHEL gained over 1-2%, while TCS, Infosys, HDFC Bank and HDFC closed with moderate gains.

Over 3.12 crore IFCI shares changed hands on the BSE followed by Power Grid Corporation (2.80 crore shares), Ispat Industries (2.75 crore shares), Reliance Natural Resources (2.24 crore shares) and Tata Teleservices (1.81 crore shares).

Welspun Gujarat was the most widely traded counter and registered a turnover of Rs355 crore followed by Reliance Energy (Rs339 crore), Reliance Industries (Rs279 crore), Power Grid Corporation (Rs274 crore) and IFCI (Rs247 crore).

Sensex sheds 282 points

The market drifted lower today, falling for the third day in a row, due to concerns arising on the political front. BSE IT index was the only index among sectoral and niche indices on BSE which was in the green. Market breadth was quite weak. Metal, auto and realty stocks plunged.

BSE Mid-Cap and BSE Small-Cap indices underperformed the Sensex. Reliance Industries lost ground. Asian markets were trading mixed. European markets were subdued.

The market had opened on a firm note taking cue from firm global markets. The Sensex hit all-time high at the onset of the trading session. It later slipped into the red as political concerns took centrestage.

The BSE 30-share Sensex lost 281.97 points, or 1.59%, to 17,491.39 points. It opened with an upward gap of 128.58 points at 17,901.94 and soon surged to all-time high of 17,982.59. Sensex hit an intra-day low 17,322.14 in afternoon trade. At day's low of 17,322.14, Sensex had lost 451.22 points for the day.

BSE clocked a turnover of Rs 7206 crore compared to Friday (5 October 2007)'s Rs 7,778.58 crore.

The S&P CNX Nifty ended down 100.75 points, or 1.94%, to 5,085.10. It had hit a high of 5,249.30 in early trade. It hit a low of 5,024.75 in afternoon trade.

NSE F&O segment clocked a turnover of Rs 69,842.2 crore today, 8 October 2007 compared to turnover of Rs 64,188.48 crore on Friday, 5 October 2007.

Nifty October 2007 futures were at 5071.80 , a discount of 13.30 points or 0.26% to the spot price of 5085.10.

BSE Mid Cap index declined 273.91 points or 3.66% to 7,211.60 and BSE Small Cap index was down 300.87 points or 3.31% to 8,801. Both these indices underperformed the market.

BSE Metal index (down 3.77% to 13,589.61), BSE Oil & Gas index (down 3.09% to 9,797.65), BSE Realty index (down 3.61% to 9,283.22), BSE Health Care index (down 3.06% to 3,709.31), BSE PSU index (down 3.79% to 8,024.21), BSE Bankex (down 2.6% to 8,984.86) underperformed the Sensex.

BSE Auto index (down 1.77% to 5,270.71), BSE Capital Goods index (down 1.89% to 15,445.63), BSE IT index (up 0.63% to 4,770.31) outperformed Sensex.

Speculation of mid-term polls gained strength after Congress President Sonia Gandhi on Sunday, 7 October 2007, indicated her party’s readiness to face elections by saying those opposing the nuclear deal were enemies of development and peace. Gandhi said that there was a need to keep a certain pace in power generation if the pace of the country's progress has to be maintained.

Though Gandhi did not specifically refer to the opposition to the deal from the Left Front, her comments assume importance, coming in the wake of the standoff between the government and the Left Front over the nuclear deal.

A day after Congress president Sonia Gandhi attacked the opponents of the India-United States civil nuclear deal, the Left parties today, 8 October 2007, said India need not surrender its "vital interests" to America on the agreement. "The Left parties categorically reiterate that the nuclear deal with the US is against the interests of India. Those who advocate the deal, should know that India is capable of developing nuclear energy primarily on a self-reliant basis," top Left leaders said in a statement. "We need not surrender our vital interests to America on this plea," CPI (M) general secretary Prakash Karat, CPI leader A B Brdhan, Forward Bloc's Deabrata Bisws and RSP's Abani Roy said in the statement.

While the operationalisation of the Indo-US nuclear deal has been put on hold by the government pending the findings of a committee set up by the government to look into Left Front’s concerns over the deal, it cannot be stalled forever.

The Communists want the government to defer the Indo-US nuclear accord by six months and have warned of a political crisis if it is implemented. The four Communist parties have 60 members of the parliament (MPs) in the 545-member lower house of parliament. The Congress-led United Progressive Alliance (UPA) government at the centre could fall or be reduced to a minority if the Left withdraws support.

On the flip side, political turmoil arising from nuke deal will not impact India’s basic economic fundamentals though some infrastructure projects may get delayed. India’s economy is expected to post strong growth for a long period of time mainly due to favourable demographics.

Of the 30 shares of the Sensex, 7 had moved up, while the remaining were trading down. The market breadth was quite weak on BSE: 450 scrips advanced, 2,252 declined, while 371 remained unchanged on BSE.

Metal index was the biggest loser from sectoral indices on BSE. Steel shares declined after global steel industry association IISI said China, one of the largest consumers of the metal, would be a net steel exporter of 50-55 million tonnes in 2007.

Tata Steel (down 5.27% to Rs 789), Sail (down 5.2% to Rs 192.40) JSW Steel (down 5.58% to Rs 804.20), edged lower. Other metal stocks Sterlite Industries (down 2.66% to Rs 741.95) and Hindalco Industries (down 4.52% to Rs 161.55) also declined.

IT stocks gained ahead of Q2 September 2007 results. Infosys begins the earning season on 11 October 2007. BSE IT index was the only gainer from the sectoral indices on BSE. Infosys (up 0.54% to Rs 2,000.45), TCS (up 0.78% to Rs 1,078.50), Satyam Computer Services (up 2.5% to Rs 455.55) and Wipro ( up 1.84% to Rs 469.65), moved higher.

Bharat Heavy Electricals rose 1.73% to Rs 2,190.75. It hit a all time high of Rs 2,250 today.

Reliance Energy (down 4.67% to Rs 1,379.50, ACC (down 5.23% to Rs 1,115.10), Ranbaxy Laboratories (down 4.82% to Rs 412.30) and NTPC (down 4.57% to Rs 204.65) were the major losers from the Sensex pack.

India’s largest private company in terms of market capitalisation and oil refiner Reliance Industries lost 2.7% to Rs 2,416.95.

Bharti Airtel was down 0.83% to Rs 984.80 on reports that it may sell around 10% stake in its unit, Bharti Infratel to a private equity player for $1.1 billion.

Jai Balaji Industries was locked at 5% upper limit of Rs 208.75 on BSE, after it signed a memorandum of agreement with the Government of West Bengal for setting up a steel plant, a cement plant and a captive power plant in the state.

Kotak Mahindra Bank down 4.96% to Rs 911.85 on reports that the bank is in talks with some strategic investors to raise around $400 million via a qualified institutional offering

Patni Computer Systems was up 4.77% to Rs 480.05 on reports that two of its directors Gajendra Patni and Ashok Patni have ceased to be executive directors of the company effective 1 October 2007.

iGate Global Solutions surged 9.76% to Rs 264.25 ahead of the company announcing its Q2 September 2007 results on 10 October 2007.

Dollex Industries declined 6.77% to Rs 104.70 on BSE, after it announced today, 8 October 2007, it has signed a memorandum of understanding with the state government of Madhya Pradesh for Agro-Energy complex.

Housing Development Finance Corporation was up 0.13% to Rs 2,458.30 on hopes of a higher valuation of its insurance business as the company is expected to finalise a partner for its insurance venture by end of this month.

Rajesh Exports was down 0.74% to Rs 879.75 after it said its net profit rose 156% in Q2 September 2007.

McNally Bharat Engineering Company declined 3.48% to Rs 190.05 on BSE, after it announced today, 8 October 2007, it has received a Rs 38.31 crore order from Maharashtra State Power Generation Company for its new Parli thermal project.

Simplex Projects declined 4.47% to Rs 271.55, after it announced today, 8 October 2007, it has recently bagged orders for piling, foundation and residential complex in Kolkata from various agencies.

Among side counters, Intelvisions Software (up 19.96% to Rs 123.20), Phoenix International (up 20% to Rs 25), Surana Corporation (up 19.92% to Rs 44.25) , Panchmahal Steel (up 16.95% to Rs 310.50) and Patspin India (up 14.27% to Rs 13.77) edged higher.

Nagarjuna Chemicals & Fertiliser (down 15.13% to Rs 51.05), ITL Industries (down 14.53 % to Rs 50.30) and Mangalore Chemicals & Fertilisers (down 17.12% to Rs 32.20) were major losers.

Asian markets, which opened before the Indian markets, were mixed today. Taiwan's Taiwan Weighted (up 1.04% to 9,717.17) edged higher. Singapore’s Straits Times (down 0.06% to 3,820.31) and Hong Kong’s Hang Seng (down 0.22% to 27,770.29) edged lower.

European markets, which opened after the Indian markets, slipped into the red after starting on a positive note. France’s CAC (down 0.05% to 5,840.43), FTSE 100 (down 0.16% to 6,585.20) and Germany’s DAX (down 0.11% to 7,993.37) edged lower.

American markets galloped on Friday,5 October 2007. The Dow gained 95.36 points, or 0.68 %, on the day, closing at 14,069.67. The S&P 500 had a record session on Friday, posting new closing and intraday high records. rose 14.17 points, or 0.92 %, on the day to close at 1,557.01. US markets surged as non-farm payrolls report released on Friday 5, October 2007 showed US employers added 1,10,000 jobs in September 2007 and August 2007 job losses were revised to a gain, helping lift worries about a US recession in the near term.

Markets set to open on a positive note taking global cues

Indian markets looked set to open higher today as US markets surged on Friday, 5 October 2007 boosted by a solid US jobs report. Asian markets opened on a positive note today. Volatility may persist as investors may look to book profits ahead of the result season starting this Thursday. Current bleak political situation would further affect the sentiments.

Q2 September 2007 results are the next major trigger for the market. Figures of advance tax suggest that earnings will be decent to strong. IT bellwether Infosys Technologies kickstarts reporting season on Thursday, 11 October 2007.

Political situation turned bleak again as Congress president Sonia Gandhi went about signaling her party’s preparedness to face elections and hit out at the Left for opposing the Indo-US civilian nuclear deal on Sunday 7 October 2007. Left will decide the fate of the government at the end of this month.

Two leading Indian industry lobby groups urged the central bank on Saturday to reduce interest rates to sustain 9% percent economic growth. The Confederation of Indian Industry (CII) said that high interest rates were affecting investments.

Annual inflation, based on the wholesale price index (WPI), moved up 3.42% in the week ended 22 September 2007 from 3.23% in the week ended 15 September 2007. The market estimate was 3.22%. Annual inflation stood at 5.43% in the corresponding week last year.

Asian markets, which opened before the Indian markets, were trading on a positive note today. Taiwan's Taiwan Weighted (up 1.27% to 9,739.36), Hong Kong’s Hang Seng (up 1.93% to 28,377.04), Singapore’s Straits Times (up 1.27% to 3,871.14) were trading up. Japan's Nikkei (down 0.16% at 17,065.04) edged lower.

American markets galloped on Friday,5 October 2007. The Dow gained 95.36 points, or 0.68 %, on the day, closing at 14,069.67. The S&P 500 had a record session on Friday, posting new closing and intraday high records. rose 14.17 points, or 0.92 %, on the day to close at 1,557.01. US markets surged as non-farm payrolls report released on Friday 5, October 2007 showed US employers added 1,10,000 jobs in September 2007 and August 2007 job losses were revised to a gain, helping lift worries about a US recession in the near term.

As per provisional NSE data, foreign institutional investors (FIIs) were net buyers of Rs 948.06 crore of equities, while domestic institutional investors (DII) were net sellers of Rs 201.61 crore of equities on Friday, 5 October 2007.

The BSE 30-share Sensex ended down 3.78 points, or 0.02%, to 17,773.36 on Friday, 5 October 2007. The S&P CNX Nifty closed down 22.8 points, or 0.44%, to 5,185.85.

The market had snapped its 10 days’ winning streak since Thursday, 4 October 2007. The market had been on a roll with the Sensex hitting a record high in trading sessions from 19 September 2007 to 3 October 2007. Heavy FII buying and hopes of a further cut in interest rates by the US Federal Reserve at its next policy meeting on 30-31 October 2007 had boosted the bourses. From a low of 13,989.11 on 21 August 2007, the Sensex has galloped a whopping 3,857.93 points, or 27.57%, to 17,847.04 on Wednesday, 3 October 2007.

Stock Picks

Stocks with +ve bias: Bharti, Idea, Aban lloyd & Punj

Stocks for Short-term delivery: Mercator Lines, Gateway Distripaks

Stocks for Investment: BL Kashyap, Shiv vani Oil, Glenmark Pharma

Firm global cues help market to advance further

The market is likely to see further action on the back of a firm US markets and over 1% gains in majority of the Asian indices in the prevailing trades. Investors should also take into account the prevalance of strong intra-day volatility. Although FIIs have been providing cushion by remaining net buyers which may help the sentiment remain bullish. Among the key domestic indices, the Nifty may resist at 5210 and on breaching this level could touch the index all-time high of 5260. The Sensex has a likely support at 17650 and may test higher levels at 18200.

Major US indices rose on Friday after a strong September jobs report indicating that the economy will be able to avoid a recession. While the Dow Jones flared up by 92 points at 14066, the Nasdaq moved up by 47 points to close at 2780.

The Nymex light crude oil for November delivery fell by 22 cents to close at $81.22 a barrel. In the commodity space, the Comex gold for December delivery jumped $3.40 to settle at $747.20 an ounce.

Pre Market Watch

Indian market is likely to have a positive opening as the global cues are in favor. On Friday, the Indian markets ended marginally lower as BSE Sensex closed at 17,773.36 slipped by 3.78 points while Nifty closed lower by 22.8 points at 5, 185.85. We expect the market to trade higher during the trading session.

Friday, the US markets closed in green. The Dow Jones Industrial Average (DJIA) surged 91.70 points to close at 14,066.01. The S&P 500 (SPX) index increased by 14.75 points to close at 1,557.59 and the NASDAQ Composite (RIXF) grew 46.75 points to close at 2,780.32.

Indian ADRs ended in green. In technology sector, Infosys grew by (2.70%) along with Satyam by (2.30%), Wipro by (2.15%) and Patni computers by (1.22%). In banking sector, HDFC bank and ICICI bank rose by (3.88%) and (0.19%) respectively. VSNL and MTNL grew by (3.46%) and (0.62%) respectively. In Metal sector, Sterlite industries surged by (2.86%).

The major stock markets in Asia are trading strong. Hang Seng Index surged by 478.05 points to trade at 28,309.57. Singapore''s Straits Times index trading higher by 41.50 points at 3,864.12. Taiwan Weighted advanced by 109.22 points to trade at 9,726.48.Seoul Composite trading up by 20.10 points at 2,016.13.

On Friday the FII activity was, the gross equity purchased was Rs4, 403.80 (in crores) and the gross debt purchased was Rs237.30 (in crores). The gross equity sold was Rs3,828.80 (in crores), and the gross debt sold was Rs33.50 (in crores). The net investment of equity was Rs575 (in crores) and the net debt investment was Rs203.80 (in crores).

Today, Nifty has support at 5,155 and resistance at 5,280 and BSE Sensex has support at 17,650 and resistance at 18,090.

Maruti, Sintex, HT Media, Zee Entertainment, Ashok Leyland, Banks, Strategy

Maruti, Sintex, HT Media, Zee Entertainment, Ashok Leyland, Banks, Strategy

Trading Calls

Nifty (5186) Sup 5126 Res 5248

Buy Bharti Airtel (994) SL 986 Target 1010, 1015

Buy GNFC (158) SL 154
Target 165, 167

Buy M&M (752) SL 745
Target 770, 774

Buy DLF (851) SL 845
Target 864, 868

Sell Canara Bank (271) SL 275 Target 264, 261

Time for selection and election?

Democracy is the only system that persists in asking the powers that be whether they are the powers that ought to be.

Even as the dream run of the bulls continues, the question of power at the Center is an issue the markets will have to pay close attention. The Sensex looks set to flirt and probably breach the 18,000 mark today itself. However, Congress president Sonia Gandhi’s tough words against the Left parties for attacking the Indo-US nuclear deal could give the market jitters going ahead. At a speech made in Haryana over the weekend, the Congress president more or less hinted at the end of the association with the Left. In short, if things do not smoothen, the country will face an early election. That makes it even more vital to ensure that your selection of stocks can withstand the political drama coming up.

Today, we see a strong opening following a firm trend in Asian markets. However, we do not rule out some cooling at higher levels. DLF, Kotak Bank, RCOM, Peninsula Land, Shree Ram Mills and Bharti Airtel are the stocks that could see some positive action. Buzz of a stock-split in Reliance will also keep this counter in action.

Global equity markets have received another shot in the arm with the threat of a recession in the US receding a little on the back of the latest jobs report. There is no dearth of liquidity and a slew of key global indices are scaling new peaks now. The yen has fallen to the lowest in two months against the euro as gains in global stocks have restored confidence among global investors. As a result, the risk appetite is once again going up, which in turn helps emerging markets such as India a great deal. Global investors have stepped up the so-called carry trades whereby they invest in high-yielding assets funded with money borrowed in Japanese yen. The Australian dollar today rose to the strongest in 23 years and New Zealand's gained against the US currency, fueled by the spurt in carry trades.

Overseas investors have pumped in more than US$5bn (only cash market) inflows into Indian equities over the past 11 trading sessions. The unprecedented foreign capital inflows have pushed the benchmark BSE Sensex and the NSE Nifty to new all-time highs. Given the ongoing momentum, the bulls may just be able to lift the Sensex above the 18,000 mark today itself. The benchmark BSE index needs some 220-odd points to reach the new milestone. The rival Nifty is already over 5000. Having said that, much will depend on the foreign capital inflows. Any slowdown on this front will have a direct bearing on the market.

That in turn will hinge on the upcoming results, especially that of the IT companies. Infosys will announce its Q2 results on Oct. 11. Though most of the bad news is already in the price, any fresh bad news will lead to further sell-off in software firms. But, the market is not just about IT companies and results from the old economy companies will also be crucial. Expect the intra-day gyrations to continue though the bias remains positive.

US stocks rallied on Friday, with the Standard & Poor's 500 index touching a new lifetime high, as investors took heart from better-than-expected job additions in September, and a surprise upward revision in August data.

Bond prices fell, raising the corresponding yield, amid speculation that if the world's biggest economy manages to avert a recession, then the Federal Reserve will not have to cut rates further.

Nevertheless, the S&P 500 rose 14.75 points, or 1%, to 1,557.59, above its July 19 closing high of 1,553.08. The Dow Jones Industrial Average gained 91.70 points, or 0.7%, to 14,066.01. The 30-stock blue chip index climbed to as high as 14,124.54, above its previous intra-day record. The Nasdaq Composite Index added 46.75 points, or 1.7%, to 2,780.32.

The S&P 500 gained 2% on the week; the Dow, which closed at a record on Oct. 1, gained 1.2%. The Nasdaq advanced 2.9% for its biggest weekly increase since March.

Treasury prices slumped. The weakness lifted the yield on the 10-year note to 4.63% from 4.51% late on Thursday. In currency trading, the dollar slipped versus the euro and gained versus the yen. COMEX gold for December delivery rose US$3.40 to US$747.20 an ounce.

US light crude for November delivery fell 22 cents to settle at US$81.22 a barrel on the New York Mercantile Exchange.

European shares closed higher on Friday after a stronger than expected jobs data from the US. The UK's FTSE 100 rose 0.73% to 6,595.80, while the German DAX 30 advanced 0.72% to 8,002.18 and the French CAC-40 increased 0.67% to 5,843.24.

Emerging markets closed sharply up on Friday. The Bovespa in Brazil was up 3.2% at 62,319 while the IPC index in Mexico gained 1.5% at 31,504. The RTS index in Russia rose 1.2% to 2115 and the ISE National 30 index in Turkey rose 3.8% to 72,261.

Most Asian markets have rallied this morning. The Hang Seng in Hong Kong surged by 480 points to 28,291 while the Kospi in Seoul was up 22 points at 2018 and the Straits Times in Singapore advanced 45 points to 3867. Japan is closed for a holiday today.

The Morgan Stanley Capital International Asia-Pacific excluding Japan Index rose 0.8% to 552.29 as of 10:05 a.m. in Tokyo, exceeding its record close of 549.66 set Oct. 2. All of the measure's 10 industry groups advanced.

Australia's S&P/ASX 200 Index climbed 1% to a record, while the Straits Times was headed for a new high. Benchmarks rose in all other markets open for trading.

All eyes on results

After coming within striking distance of the 18k mark, bulls once again failed to breach the psychological hurdle as traders preferred to book profits ahead of the week-end. Volatility was the order of the day as key indices often stepped in to positive and negative territory. The benchmark index swung almost 270 points from its days high of 17,979 and a low of 17,708.

Finally, BSE 30-share benchmark Sensex ended flat to close at 17,773. NSE Nifty slipped 23 points to close at 5,185.

Among the BSE sectoral indices only the Capital Good index was in the limelight gaining over 3%. However, BSE Bankex index (down 2.02%), BSE PSU index (down 2%) and BSE Metal index (down 1.82%)

Markets breath was also in red with 1,825 stocks declining as compared to 940 stocks which advanced on BSE. Among the Sensex pack only 7 stocks managed to end in positive terrain while, 23 stocks were on the receiving end.

Power Grid Corp India's biggest power transmission company, got listed at a premium of 74% at Rs85 against the issue price of Rs52. The scrip closed at Rs100 up 93% touching an intra-day high of Rs109 and a low of Rs85 and recorded volumes of over 3,00,00,000 shares on NSE.

The company raised 29.8 billion rupees. The company sold 573.9 million shares at Rs52 per piece, the upper end of the range offered to investors.

Bombay Dyeing dropped 4% to Rs657. According to reports the Indian textile maker tied up with United Arab Emirates' luxury retail chain Rivoli to sell its products in that country. The scrip touched an intra-day high of Rs695 and a low of Rs645 and recorded volumes of over 2,00,000 shares on NSE.

Lanco Infratech declined 3.4% to Rs390. The company won Rs 730mn order to build university in the southern Indian town of Tirupati. The scrip has touched an intra-day high of Rs422 and a low of Rs385 and recorded volumes of over 20,00,000 shares on NSE.

Ashok Leyland plunged 5% to Rs42. The company’s September sales fell 11% to 7,263 units. The scrip touched an intra-day high of Rs44 and a low of Rs41 and recorded volumes of over 33,00,000 shares on NSE.

Capital Good stocks were among the major gainers. BHEL surged by over 3% to Rs2154, L&T spurred by over 6% to Rs3089, Siemens edged higher 0.6% to Rs1424 and Punj Lloyd added 1% to Rs324.

IT stock continued to be under pressure after rupee rose for a seventh week. Index heavyweight Infosys slipped 1% to Rs1982, Satyam Computer lost 1.6% to Rs444 and TCS slipped 0.8% to Rs1072. Polaris, Moser Baer and NIIT Ltd were the major losers among the mid-Cap stocks.

Stocks in News:

Bharti Airtel may divest 10% in its tower arm to PE company for $1.1bn

Powergrid Corporation to invest Rs20bn to boost its existing telecom network in the next two years

Wockhardt may buy US Pharma company Morton Grove, a company focused on niche area of oral liquid medicines and topical liquid products

JSW Steel reports 21% rise in crude steel production for September quarter at 0.78mn tonnes

MRF lines up Rs6bn investment in 500-acre greenfield plant near Trichy; Rs1.5bn plant for aircraft tyres for defence is also under consideration

Jet Airways to buy 20 aircrafts from Boeing with option to buy ten more to augment its fleet

Bharti Airtel, Vodafone Essar and Idea Cellular may merge their combined 70,000 towers to form a separate company

National Aviation Company of India, the Air India and Indian combine, to offload 15% equity through an IPO

Cairn India may have to pay US$9/barrel as cess for shifting delivery point from Rajasthan to coast

Kotak Mahindra Bank to raise around US$400mn through QIBs; to issue 17mn equity shares

The Cabinet may clear Rs240bn worth of oil bonds to be issued to oil marketing companies

The Government may announce auction of 85 oil and gas blocks under NELP VII in the first week of November

Excise duty on big cars may be cut to 16% to bring it on par with that on small cars

Fund Activity:

FIIs were net buyers of Rs9.48bn (provisional) in the cash segment on Friday while the local institutions pulled out Rs2.01bn. In the F&O segment, foreign funds were net buyers at Rs104mn.

On Thursday, FIIs were net buyers to the tune of Rs5.75bn in the cash segment. With this, the net investment by overseas investors in the past 11 days has crossed the US$5bn mark.

Mutual Funds were net sellers of Rs5.33bn on Thursday.

Major Bulk Deals:

Upper Circuit:

RIIL, Bag Films, Usher Agro, Victoria Mills, Goldstone Tele and Jai Corp.

Lower Circuit:

Tourism Finance and Jain Studious.

Morning Call

Market Grape Wine :

In House :

Nifty at a supp of 5164 and 5110 with resis at 5221 and 5263. Mkt to open on a positive note.

Intra Day: Buy Relcap above 1682 with a TGT of 1714 with a SL of 1676

Sell Tatasteel below 819 with a TGT of 801 and a SL of 826

Positional: Buy Sunil Hitech.



Out House :

Markets at a support of 17577 & 17371 levels with resistance at 17997 & 18077 levels .

Buy : RIL

Buy : Relcap & REL

Buy : HDIL

Buy : Bharti & RComm

Buy : JpHydro & RNRL

Buy : DLF & GMRinfra

Buy : NTPC

Buy : JpAsso & CenTextile

Buy : COLGATE

Dark Horse : GMrInfra , Colgate ,RPL , REL , HDIL , NTPC , RNRL & SBIN

Bullet for the Day : Bharti & RelCap with stop loss .

Top Picks - Oct 2007

Top Picks - Oct 2007

Weekly Futures and Options Strategy

Weekly Futures and Options Strategy

Pre Market Watch

Equities are likely to open higher Monday on the back of positive global cues. But it needs to be seen whether indices can hold on to the gains as volatility is foreseen.

Speculations of mid-term polls gained strength after Congress President Sonia Gandhi said that she was not at all concerned about its prospect. At an iftar get-together at Prime Minister Manmohan Singh’s residence, she said, “If there are polls, we will face it.”

“Political tensions pose a threat to the market, though fundamentally there is nothing to worry about. Infosys’ report card (due on Oct, 11) will be the next trigger for the market, till then indices will be range bound,” said Amit Dalal, managing director of Amit Nalin Securities.

“The immediate support for Nifty Futures is at 5157 and below that it may test the 5100 levels. As long as it sustains above 4980 on declines, the uptrend remains strong and intact. The market is likely to open in the positive on strong global cues. It may continue to display high volatility so caution is advised,” said Religare Securities.

US markets closed higher with the Dow and S&P 500 surging to all-time intraday highs on Friday after a solid employment report rekindled optimism about the US economy and corporate profits. Asian markets also opened in the positive Monday.

Friday, the Sensex closed flat with a negative bias at 17,773.36, while the Nifty ended 0.44 per cent or 23 points lower at 5185.85. National Stock Exchange’s Nifty ended 0.44 per cent or 223 points lower at 5185.85. It touched an intra-day high of 5248.55 and low of 5164.50.

Foreign institutional investors were net buyers of equity worth Rs 948.06 crore on Friday, while domestic institutional investors net sold Rs 201.61 crore, according to provisional data on NSE.

Weekly Stock Ideas

Shree Renuka Sugars
Research: Deutsche Bank
Rating: Buy
CMP: Rs 725

Deutsche Bank has initiated a coverage on Shree Renuka Sugars (SRES) with a ‘buy’ rating at a price target of Rs 776. SRES is one of the few sugar mills which will continue to post profits over the next two years despite a bleak sector outlook. A flexible and scalable business model aided by synergistic expansion makes SRES the best sugar mill in the country.

Located near the west coast of peninsular India, SRES has the advantage of a flexible business model over its north Indian counterparts. With a higher crop yield and an optimum business contribution from co-products, we expect SRES to be sufficiently shielded from cyclical variability of sugar as a commodity.

Backed by the timely and significant expansion in ethanol and power cogeneration, SRES will post an earnings CAGR of 59% (FY06-FY09E). Deutsche Bank sees neutral free cash flow from FY07E to FY09E with a consolidated earnings CAGR of over 30% (FY06-FY09E). Deutsche Bank values the recent engineering business’ EV of 1x one-year forward revenues at Rs 15 crore and 5x PE to overseas operations, leading to one-year target price of Rs 776/share. SRES is also likely to post significantly higher profits compared to all other sugar producers.

Ranbaxy
Research: Merrill Lynch
Rating: Buy
CMP: Rs 433

Merrill Lynch has maintained a ‘Buy’ on Ranbaxy with a price target of Rs 492 per share. Ranbaxy signed a definitive agreement to increase its stake in Hyderabad-based Zenotech Labs to 45% from the current 7%, involving an investment of ~$53 million. The deal makes strategic sense as it solidifies Ranbaxy’s presence in biopharma, oncology and specialty injectibles. The deal will accelerate Ranbaxy’s EPS growth from CY09E. In 1QFY07, Zenotech posted revenues of Rs 3.55 crore and loss of Rs 6.2 lakh. Zenotech’s agreement with Ranbaxy will involve the marketing of 14 injectible ANDAs for the US and Canada for which seven oncology US ANDA filings are expected shortly. Zenotech also has seven biologics and two monoclonal antibodies in the pipeline addressing a $21 billion market.

Like Zenotech, Ranbaxy also has strategic stakes in two other companies viz., Jupiter Biosciences (for peptides) and Krebs Biochem (for fermentation based products). Merrill Lynch estimates robust core earnings growth of 24% in CY07E and 32% in CY08E, driven by higher growth and EBITDA margin in the coming quarters from the US and emerging markets. Further, there is a possibility of 14-23%+ EPS upside in CY08E from generic Lipitor launch in Canada and possible unlocking of R&D value through spin-off.

Redington India
Research: CLSA
Rating: Buy
CMP: Rs 370

CLSA has initiated coverage on Redington with a `Buy’ recommendation and indicates a 27% upside. The company buys out the products from vendors on cash and lets its downstream channel partners (customers) avail the merchandise on credit. Hence, the inventories of products as well as the receivables from channel partners are on the company’s balance sheet. This allows the company to make better margins, albeit with higher capital employed. With the Indian IT market showing 20% CAGR, a 30% CAGR in Redington’s sales are driven by entry into new verticals and a 200-bps annual market share gain in IT.

A dedicated credit team spread across the country and an integrated IT backbone and prudential systems like credit against post-dated cheques only, have ensured that average bad debts are 0.09% and 0.03% of sales in India and Middle East. Inventory risk stems from technology obsolescence and price downturns. Although vendors try to buttress the downside on such occasions, inventory markdown is an uncertainty that cannot be completely insulated. We expect a 32% CAGR in EPS over next three years, while improving current ROAE of 19% by 400 bps.

Reliance Petroleum
Research: UBS
Rating: Buy
CMP: Rs 159

UBS initiates coverage of RPL with a `Buy’ rating and a price target of Rs 190. This year has seen lengthy delays in refining projects in Asia and a significant run-up in the cost of building new refining capacity. UBS believes that this suggests supply could remain tight in the long term and expects benchmark Reuters Singapore refining margins (GRMs) to be $7/bbl, $6.3/bbl and $5.7/bbl in ’07, ’08 and ’09 respectively.

With a Nelson Complexity Index of 14, RPL outperforms the benchmark GRMs by $8-9/bbl. Hence, even when Reuters Singapore refining margins fall to $4.5/bbl, RPL should still be able to earn GRMs upwards of $12/bbl and EPS of over Rs16. Driven by high refining margins and tax incentives on account of being located in a special economic zone, UBS forecasts RPL to generate operating cash flow and free cash flow of $11.6 billion and $9.3b billion respectively, over FY09-13. UBS forecasts free cash flow yield to increase to over 12% from FY10. Tax incentives could add $3.8billion over the first 10 years of RPL’s operations.

Puravankara Projects
Research: Citigroup Global
Rating: Buy
CMP: Rs 460

Citigroup has initiated coverage of the stock with a `Buy/Medium Risk’ rating and a target price of Rs 536, based on a 5% discount to the estimated core NAV of Rs 564. Puravankara has a strong brand and a proven record. Citigroup attributes a discount to the stock for the company’s overdependence on Bangalore (~73% of gross NAV) and residential projects.

Citigroup sees structural opportunities in the Indian property market, which faces near-term challenges that can be addressed by falling interest rates, lower prices or relaxation in regulations. There is the: 1)quality land bank of 107m sq ft, largely within the city limits of Bangalore; 2) a direct sales model, which tends to reduce speculative activity; and 3) in-house construction expertise. These factors should drive a three-year EPS CAGR of 65%, positioning it as a quality midscale developer. Puravankara’s large exposure to Bangalore and Chennai is an advantage over North India-based developers. South India appears to have lower supply risks, more reasonable property prices and lesser speculation.

Maruti Udyog
Research: Merrill Lynch
Rating: Buy
CMP: Rs 1,035

Merrill Lynch has reiterated its `Buy’ recommendation with a raised price target of Rs 1,240, implying 20% potential upside. Merrill Lynch views Maruti as driving growth for Indian auto majors, rather than a defensive entity facing competitive onslaught. Over FY07-10E, the company is expected to register a 20% EPS CAGR, the fastest in the autos space. Still, the stock trades at par with the sector, and a historic 30% discount to the market.

The stock is to re-rate to 15x FY09E EPS (earlier 13.5x), justified by 10% growth premium over the auto sector, and narrowing of P/E discount to the market in line with historical average. Merrill Lynch has also included a contribution of Rs 35/share, being Maruti’s 30% stake in the diesel engine unit. Merrill Lynch is raising EPS forecasts by 2.2% in FY08 and 2.8% in FY09, driven by stronger value mix, without meaningfully altering margin and volume assumptions and remaining above consensus, being 14% higher on FY09E. The markets are exaggerating competitive risks impacting Maruti’s profits. The company has demonstrated an ability to manage growth mainly through productivity improvements, much ahead of auto peers.