India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Monday, November 05, 2007
Post Market Commentary
The market closed the session on a deep red note on the back of weak Asian markets as well as statement by the Citigroup that it may suffer $11 billion in writing down of losses caused due to subprime. This led to the prevailing of selling pressure across the sectoral indices scrips. The Benchmark index Sensex fell 385.45 points to close at 19,590.78 while Nifty slipped by 85.1 points to close at 5,847.30. The BSE Sensex touched an intraday low of 19,502.45 and high of 20,009.35 during the trading session. Though the Sensex opened on a positive note but all of a sudden lost the grip to trade in red throughout the trading session. The selling pressure again ignites on the later half of the day as the investors tries to sell off their stocks to clear off their positions. BSE Capital goods, Bankex, Metal and Oil & Gas was the most hit as they fall with heavy points. Overall, the market breadth was little strong as 1433 stocks are closed in green while 1321 stocks are closed in red. The BSE Mid Cap and Small Cap closed higher by 54.01 points and 104.59 points at 8,057.81 and 9,847.02 respectively.
The oil and gas index closed lower by 230.89 points at 11,505.54. Pushing it down are ONGC (4.91%), IOCL (2.26%), Reliance industries (1.81%) and CAIRN India (0.96%) closed in red.
The capital goods index fell 334.13 points to close at 20,052.28 as L&T (3.89%), ABB (2.17%), Siemens (2.07%), BHEL (1.91%) and Suzlon energy (1.87%) closed in red.
BSE Metal index slipped by 291.97 points to close at 17,401.69. Leading the losers pack are Jindal saw (4.63%), Sterlite industries (3.46%), Hindalco (2.08%), Tata Steel (1.65%) and SAIL (1.63%).
BSE bankex index decreased by 233.58 points to close at 11,007.95 as ICICI bank (4.49%), Canara bank (3.70%), Kotak bank (2.72%), Union bank (1.28%) and SBI (0.51%) closed lower.
The IT index dropped by 67.51 points to close at 4,567.13. Pushing it lower are Patni computers (2.79%), Infosys (2.72%), Wipro (1.44%) and TCS (0.94%) closed in negative.
Sensex sheds 385 points as US credit worries resurface
Weakness in Asian markets caused by on worries about the credit market triggered by US financial giant Citigroup's announcement that it may suffer up to $11 billion in write-downs for subprime losses, hit domestic bourses today. Weakness persisted almost throughout the day and selling was seen in most sectors. Market breadth was positive.
Reliance Industries declined. Auto, banking, FMCG and metal stocks witnessed selling pressure. Bharti Airtel bounced back after recent sharp fall.
The Sensex lost 385.45 points or 1.93% to 19,590.78. It hit a low of 19,502.45 in late trade. At day’s low of 19,502.45, Sensex had lost 473.78 points.
The broader based S&P CNX Nifty was down 85.1 points or 1.43% to 5,847.30.
The market had opened on a positive note with Sensex crossing 20,000 at the onset of the trading session. It had soon slipped into the red.
The market breadth was positive on BSE: 1,403 scrips advanced as compared to 1,320 that declined while 354 remained unchanged. 4 of the 30 Sensex stocks were trading with gains.
The BSE Mid Cap index rose 0.77% to 8,083.66 and BSE Small Cap index rose 1.05% to 9,845.20. Both these indices outperformed Sensex.
All the sectoral indices on BSE outperformed Sensex. BSE Auto index(down 1.8% to 5,325.59), BSE Bankex (down 1.89% to 11,029.51), BSE Capital Goods index (down 1.47% to 20,087.55), BSE IT index(down 1.41% to 4,569.38), BSE Metal index (down 1.67% to 17,398.26), BSE Oil & Gas index (down 1.76% to 11,530.06) and BSE Realty index (up 0.34% to 10,363.04) outperformed Sensex.
Nifty November 2007 futures were at 5861, at a premium of 13.70 points as compared to spot closing of 5847.30.
BSE clocked a turnover of Rs 9,011 crore, higher than Friday (2 November 2007)'s Rs 8,120 crore.
NSE’s futures & options (F&O) segment turnover was Rs 77,646.90 crore, which was higher than Rs 76,145.01 crore on Friday, 2 November 2007.
Banking majors declined reflecting a weak sentiment on financials elsewhere in Asia on renewed credit worries. BSE Bankex was the major loser among BSE sectoral indices.ICICI Bank (down 4.49% to Rs 1,270.85), HDFC Bank (down 2.32% to Rs 1,718) and State Bank of India (down 0.51% to Rs 2,240.25) edged lower.
FMCG majors also declined. ITC (down 2.34% to Rs 171.25) and Hindustan Unilever (down 1.33% to Rs 193.15) edged lower.
Auto stocks declined across the board. India’s largest truck maker by sales Tata Motors declined 2.07% to Rs 739.55. Tata Group is learnt to be leading the race to buy Land Rover and Jaguar after the second-round bidding in the auction of Ford's British brands closed on Friday, 2 November 2007.
Mahindra & Mahindra (down 1.68% to Rs 742.85), Hero Honda Motors (down 1.56% to Rs 663.90), Maruti Suzuki India (down 2.53% to Rs 995.45) and Bajaj Auto (down 1.18% to Rs 2,394.90) edged lower.
Larsen & Toubro (L&T) declined 3.89% to Rs 4,287.30 after the company said it has entered into a joint venture (JV) agreement with Mitsubishi Heavy Industries (MHI) for setting up a supercritical steam turbine and generator manufacturing facility in the country, with a capital outlay of around Rs 880 crore.
Metal stocks plunged. Sterlite Industries (down 3.46% to Rs 991), Hindalco Industries (down 2.08% to Rs 183.60), Steel Authority of India (down 1.63% to Rs 255.70) and Tata Steel (down 1.65% to Rs 879.10) edged lower.
India's largest private sector entity by market capitalisation and oil refiner Reliance Industries (RIL) declined 1.81% to Rs 2,663.65.
Bharti Airtel, the country's top mobile operator in terms of market share, rose 5.29% to Rs 942.20 on fresh buying after the stock fell more than 11% in the last two sessions on concerns about allocation of additional spectrum.
Satyam Computer Services (up 0.42% to Rs 463.95), NTPC (up 0.87% to Rs 236.80), Cipla (up 1.84% to Rs 176.8076.80) edged higher.
India's largest oil exploration firm by sales ONGC declined 4.91% to Rs 1,299.05 and was the top loser from Sensex pack.
India’s second largest IT services provider by sales Infosys Technologies declined 2.72% to Rs 1,856.35.
Reliance Natural Resources surged 25.74% to Rs 178.55 on reports that the company has responded to the offer made by Reliance Industries to form a team and resolve the KG Basin gas controversy across the table. The stock rose on heavy volume of 7.96 crore shares on BSE. The move follows a recent Bombay High Court order asking both parties to resolve their differences amicably within four months.
Among other side, Shree Digvijay Cement (up 20% to Rs 34.80), and Camlin (up 20% to Rs 224.40) edged higher.
CNI Research (down 30.08% to Rs 13.95), Sarda Plywood Industries (down 11.31% to Rs 29), Disa India (down 10% to Rs 2,182) and Welcast Steels (down 10% to Rs 1,246.45) edged lower.
Reliance Natural Resources clocked the highest volume of 7.96 crore shares on BSE. Reliance Petroleum clocked the second highest volume of 3.17 crore shares. It declined 0.69% to Rs 267.55. Jaiprakash Hydro Power clocked third highest volume of 1.69 crore shares on BSE. The stock rose 10.72% to Rs 90.90.
Tata Teleservices Maharashtra rose 2.39% to Rs 44.95 and clocked fourth highest volume of 1.55 crore shares on BSE. National Organic Chemical Industries rose 20% to Rs 48.35. On BSE, 1.1 crore shares changed hands in the counter.
Reliance Natural Resources clocked the highest turnover of Rs 1,345.61 crore on BSE. Reliance Petroleum clocked the second highest volume of Rs 868.96 crore. Reliance Industries (Rs 441.22 crore),Reliance Energy (Rs 300.04 crore) and Larsen & Toubro (Rs 213.24 crore) were other major turnover grossers on BSE
European markets, which opened after Indian market, were in the red. France’s CAC 40 (down 1.03% to 5,661.23), Germany’s DAX (down 0.7% to 7,795.38) and UK’s FTSE 100 (down 1.38% to 6,440.70) edged lower.
In Asia, Hang Seng (down 5.01% at 29,942.32), Nikkei (down 1.5% at 16,268.92), Singapore's Straits Times (down 1.21% at 3,670.18) and South Korea's Seoul Composite (down 0.18% at 2,015.76) edged lower. The Hong Kong stock market was the major loser today after Chinese Premier Wen Jiabao said China needed new laws before going ahead with a programme allowing mainland Chinese to invest directly in Hong-Kong-Listed securities. Taiwan's Taiwan Weighted (up 0.38% at 9,308.60) edged higher.
US stocks eked out a small gain on Friday, 2 November 2007, following strong October 2007 jobs data, pushing the blue-chip Dow and technology-laden Nasdaq Composite Index modestly higher. The crucial US jobs report showed payrolls surged in October at twice the expected rate, suggesting the world's biggest economy was strong enough to handle a deep housing slump without falling into recession
Market slumps on weak global cues
The market went into a correction mode and remained in the negative territory all through the session. Weak global markets and rising crude prices weighed on the sentiment. Despite resuming 33 points above its previous close, the Sensex went into a major correction mode on account of selling in heavyweights, banks, information technology, and oil stocks. The index slipped below 19,600 mark by afternoon and a strong bout of selling towards the close saw the Sensex touch the day's low of 19,502. However, select buying towards the close saw the Sensex pare some losses and end the session at 19,591, down 1.93% or 385 points, while the Nifty shed 85 points or 1.43% and closed at 5,847.
The market breadth was positive. Of the 2,812 stocks traded on the Bombay Stock Exchange (BSE), 1,433 stocks advanced, 1,321 stocks declined, and 58 stocks ended unchanged. Among the sectoral indices the BSE Bankex index shed 2.08% at 11,008, while the BSE Oil & Gas index declined 1.97% at 11,506. The BSE CD index and the BSE Realty were only gainers and moved up around 0.5%.
Select heavyweights declined sharply on strong selling pressure. ONGC tanked 4.91% at Rs1,299, ICICI Bank dropped 4.49% at Rs1,271, L&T fell 3.89% at Rs4,287, Infosys shed 2.72% at Rs1,856, Maruti Suzuki lost 2.53% at Rs995, ACC declined 2.36% at Rs1,008, ITC dipped 2.34% at Rs171 and HDFC Bank slumped by 2.32% at Rs1,718. Among the select gainers Bharti Airtel advanced by 5.29% at Rs942, Cipla added 1.84% at Rs177, while NTPC and Satyam Computer closed with marginal gains.
Over 7.96 crore Reliance Natural Resources shares changed hands on the BSE followed by Reliance Petroleum (3.17 crore shares), JP Hydro (1.69 crore shares), Tata Teleservices (1.54 crore shares) and NOCIL (1.10 crore shares).
Value-wise Reliance Natural Resources registered a turnover of Rs1,345 crore on the BSE followed by Reliance Petroleum (Rs868 crore), Reliance Industries (Rs440 crore), Reliance Energy (Rs299 crore) and L&T (Rs213 crore).
Morning Call - Nov 5 2007
Market Grape Wine :
In House :
Nifty at a supp of 5901 and 5845 with resis at 6010 and 6060
Positive opening expected with volumes to remain low for the week
Intra day: Buy Reliance above 2713 with a TGT of 2756 and a SL of 2690
Buy Grasim above 3781 with a TGT of 3945 and a SL of 3739
F&O: Buy sterlite above 1046 with a TGT of 1090 and a SL of 1020
Delivery calls: PTC and Fintech
Out House :
Markets at a support of 19595 & 19449 levels with resistance at 20122 & 20242 levels .
Buy : RIL
Buy : REL
Buy : Petronet bullet
Buy : IBullsFinanace bullet
Buy : JpAsso
Buy : Primesecurities bullet
Buy : Centextile
Buy : ONGC
Dark Horse : ABAN , GeShipping , REL, JpAsso , IBulls , ONGC , LNGPetronet & SBIN
Bullet for the Day : REL & Primesecurities with stop loss .
BSE Bullet : LokHsng
Market may drift lower on weak Asian equities
The market may edge lower tracking weakness in Asian stocks caused by on worries about the credit market after US financial giant Citigroup said it may suffer up to $11 billion in write-downs for subprime losses. For a while now, domestic markets have been taking cues from Asian markets.
A slowdown in FII inflow at the fag end of last month and at the onset of this month may cap upside. FIIs bought shares worth a net Rs 228 crore on Wednesday 31 October 2007, followed by an inflow of Rs 180.60 crore on Thursday, 1 November 2007.
The Q2 September 2007 results of India Inc.were decent to strong which means that strong fundamentals would support Indian equities at declines. Mutual funds are said to be sitting on a strong cash pile of about Rs 14000 crore and they may step up buying if and when there is a steep correction on the bourses.
Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 0.73% to 2.3%. The Hong Kong stock market was the major loser today after Chinese Premier Wen Jiabao said China needed new laws before going ahead with a programme allowing mainland Chinese to invest directly in Hong-Kong-Listed securities
On Wall Street, stocks eked out a small gain on Friday, 2 November 2007, following strong October 2007 jobs data, pushing the blue-chip Dow and technology-laden Nasdaq Composite Index modestly higher. The crucial US jobs report showed payrolls surged in October at twice the expected rate, suggesting the world's biggest economy was strong enough to handle a deep housing slump without falling into recession.
The Indian market had surged on Friday, 2 November 2007, in what was an intra-day turnaround. Sensex rose 252 points or 1.28% to settle at 19,976.23, after an initial sharp fall during the day. As per provisional data, FIIs sold shares worth a net Rs 1230.86 crore on Friday, 2 November 2007 on that day. Domestic institutions had bought shares worth a net Rs 444.74 crore on that day.
Market likely to remain edgy
The market is likely to see some choppy trading on the back of weak Asian indices in current trades. However, gains in the US markets, surging FII investments and bullish trend may help market to add gains. But, rise in oil prices may put some pressure on investors' sentiment. Among the domestic indices the Nifty could taste 6000 level on the upside and has a strong support at 5700 levels. The Sensex has a strong support at 19000 and has a resistance at 20500 levels.
US indices saw a late-session rally to finish modestly higher on Friday. While the Dow Jones moved up by 27 points at 13595, the Nasdaq moved up by 16 points to close at 2810.
Crude oil prices advanced further, with the Nymex light crude oil for December delivery gaining by $2.44 cents to close at $95.93 a barrel. In the commodity space, the Comex gold for December delivery gained $14.80 to settle at $808.50 an ounce.
Pre Market Watch
Indian market is likely to have a negative opening, as the Asian markets are trading in red territory. On Friday, the benchmark index Sensex ended up with the gain of 251.88 points at 19,976.23, whereas Nifty closed with a gain of 65.95 points at 5,932.40. We expect that the market will trade in negative zone during the day.
On Friday, the US markets ended marginally higher as the Dow Jones Industrial Average (DJIA) ended 27.23 points up to close at 13,595.10. Further the NASDAQ Composite & S&P 500 (SPX) index moved up by 15.55 points & 1.21 points at 2,810.38 & 1,509.65 respectively.
Indian ADRs ended mixed. In telecommunication sector, VSNL & MTNL surged 3.68% & 2.82% respectively. Further in Banking sector ICICI bank & HDFC bank increased by 3.64% & 0.62%. In Technology sector, Patni Computers decreased by (10.47%), along with Satyam by (0.20%), whereas Infosys and Wipro moved up by 1.40% and 0.49% respectively.
The major stock markets in Asia are trading weak. Hang Seng is trading in red with a loss of 209.94 points at 30,258.40. Along with this, Japan''s Nikkei is trading 154.84 points down at 16,362.64. Singapore''s Straits Times index is also trading lower by 14.81 points at 3,700.51, whereas Seoul Composite lost 6.72 points to trade at 2,012.62.
On Friday, the FIIs were net buyers as the gross equity purchased was Rs.5179.40 (in crores), and the gross debt purchased was Rs.49.60 (in crores) as against the gross equity sold was Rs.4998.80 (in crores) and the gross debt sold was nil. The net investment of equity was Rs.180.60 (in crores) and the net debt investment was Rs.49.60 (in crores).
Today, Nifty has support at 5,750 and resistance at 6,050 and BSE Sensex has support at 19,550 and resistance at 20,100.
Stock Picks
Stocks with +ve bias: SBI, Punj Lloyd, Infosys & Divis Lab
Stocks for short term Delivery: Petronet LNG,
Stocks for Investment: Maruti, Aditya Birla Nuo, JP Associates & Shivvani Oil
Credit related upheaval in market send indices lower
Nasdaq manages to score little gains in a week when Citigroup plays the spoilt sport
A strong start ended in a lackluster mode in the US Market for the week ending on Friday, 2 November, 2007. Federal Reserve’s key decision on interest rate remained the focal point during the week. High crude oil prices, a few misses on the earning front and renewed mess in the financial sector led to quite a roller coaster ride in the stock market during the week.
The Federal Open Market Committee gave the market what it wanted when it decided to cut the fed funds rate and discount rates by 25 basis points each to 4.5% and 5% respectively. Though stocks took some time to react, they rallied after the rate cut.
But led by the Financial sector which led to a huge sell-off in the market on Thursday, 1 November, 2007, indices, barring Nasdaq, closed lower for the week. The loss came despite indices closing higher on Friday, 2 November, led by a modestly strong employment report from the Labor Department.
The Dow Jones Industrial Average lost 211 points for the week. Tech - heavy Nasdaq gained 6.2 points. S&P 500 lost 25.6 points.
Microsoft, Apple and Google were the main reasons for Nasdaq’s gains. Google crossed the $700 mark for the first time ever during the week. Apple gained on solid numbers from its Leopard operating system sales. Verizon shares were up on reports that the company was in talks with Google to come out with a product against Apple’s iPhone.
After Merrill Lynch, it was Citigroup’s turn this week to lead the subprime mess rally. But Merrill Lynch too continued to be in the headlines. The subprime story once again started after CIBC World Market downgraded Citigroup. Estimates that the company will have to raise more than $30 billion by either selling assets, cutting its dividend or raising capital imparted a sense of feeling that all in still not so well in the financial market.
Merrill Lynch also fell and continued to be in the news after its chief executive Stan O’Neal resigned. Also on Friday, 2 November, Deutsche Securities downgraded Merrill Lynch to Hold from Buy amid its concerns that new write-downs of the company for collateralized debt obligations could approach $10 billion.
All financial stocks – Citigroup, AIG, JP Morgan and American Express ended considerably lower for the week spurring of a huge sell-off both on Thursday, 1 November and Friday, 2 November.
On the earnings front, Dow component Verizon beat market expectations. On the other hand, cereal maker Kellogs reported earnings beating estimates but issued FY 2008 guidance that was below expectations. P&G missed on meeting Wall Street estimates and it started a huge sell-off in the market on Tuesday, 30 October.
Another important Dow component which failed to keep up to Wall Street’s expectations was Exxon Mobil. The company announced that third-quarter income fell 10% as the rising cost of oil raised expenses. It was the worst drop in profit for the company in three years and the company could not get comparative better price for its products.
Among major economic news hitting the market during the week, the Labor Department reported on Friday that non-farm payrolls rose 166,000 in October (against an expected increase of 80,000). The September increase in payrolls was revised slightly lower, but it did not negate the strong October gain. The unemployment rate remained at a low 4.7%.
Also, the Conference Board's reading on consumer confidence fell to 95.6 for October from 99.8 in September, amid record oil prices and persisting weakness in the housing market. This was against a consensus estimate which called for an increase to 99 or 100.
Third quarter real GDP rose at a 3.9% annual rate. Also good news came from the fact that GDP deflator (inflation measure) was up at just a 0.8% annual rate in the quarter. The figures were quite surprising in nature given the nature of housing slump and sub prime mess market has witnessed this quarter.
The only economic news that led to some metal stocks losing ground was the Institute of Supply Management. The ISM data showed that manufacturing in USA expanded at its slowest pace since March because of tight credit conditions and a housing downturn. The dollar fell against most of its rival currencies. The Institute for Supply Management's factory index fell to 50.9, against an expectation of 51.5.
Executive Summary
For the week, indices ended mixed. Dow and S&P 500 slipped while Nasdaq was almost unchanged. DJIx closed down by 1.6% and S&P 500 closed down by 1.7%. Nasdaq gained a paltry 0.2%. Credit-related upheaval in the financial market once again spurted sell-off in the market. P&G and Exxon Mobil were two big Dow names that reported below-expected earnings during the week.
Crude for December delivery gained $2.44 to a record close of $95.93 a barrel, while the benchmark gold contract rallied to close above $800 at their highest level in nearly 28 years, finishing up $14.80 to end at $808.50 an ounce.
For the year, Dow is up by 9.1%, Nasdaq is up by 16.4% and S&P 500 is up by 6.4%.
Crude takes a giant leap
Crude prices are just $3 away from touching the $100 mark
Crude-oil future prices for sweet light crude for December delivery which had ended at $91.86/bbl last week (26 October) finished $4.07 (4.4%) higher this week (02 November) at $95.93/bbl. Prices shot up thrice during the week due to a variety of reasons.
Oil rose on Monday, 29 October, after Mexico's state-owned Petroleos Mexicanos, one of the largest crude suppliers to the U.S, said that it halted production owing to bad weather. Then on Wednesday, 31 October, unexpected drop in crude inventories taking fuel inventories to two-year low level sent crude prices to a new all time high closing above $94/barrel for the first time ever.
On Friday, 1 November, prices increased $2.44 (2.6%) to close at $95.93/ barrel. Prices increased after traders speculated that demand for oil will increase after Labor Department’s report showed U.S. employment grew more than expected last month.
As per the weekly inventory report by the Energy Department, U.S. commercial crude oil inventories, fell by 3.9 million barrels to 312.7 million barrels in the week ending 26 October, the lowest since October 2005. Market was expecting a build up of 1.25 million barrel in crude inventories. Refinery capacity utilization fell sharply by 0.9% to 86.2%.
Also, the EIA reported that gasoline supplies rose by 1.3 million barrels to 195.1 million barrels in the latest week, down from last year's 206.4 million, while distillate stocks, which include heading oil, diesel and jet fuel, grew by 800,000 barrels to 135.3 million barrels, down from 144.1 million of the same period in last year.
OPEC has said previously that a falling dollar justified higher prices because oil- producing countries sell crude oil in dollars and often buy goods in euros.
OPEC has planned to boost daily oil production by 500,000 barrels. OPEC's production target is 27.2 million barrels a day, beginning 1 Nov. OPEC, has decided to raise their daily output by 500,000 barrels per day, starting 1 November.
Daily Trading Calls
Nifty (5932) Sup 5860 Res 5993
Buy CESC (587) SL 581
Target 598, 602
Buy ICICI Bank (1333) SL1320 Target 1362, 1367
Buy Sterlite (1032) SL 1022 Target 1058, 1065
Sell M&M (755) SL 761
Target 744, 740
Sell Tata Chem (315) SL 320 Target 307, 304
Subscribe to:
Posts (Atom)