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Thursday, January 03, 2008
Morning Call - Jan 3 2008
Market Grape Wine :
In House :
Nifty at a supp of
Tech Problem could not LOG .
Out House :
Markets at a support of 20012 & 19786 levels with resistance at 20591 & 20552 levels .
Buy : RIL & REL at dips
Buy : Kohinoor & Adhunik at dips
Buy : JpAsso & Jphydro at dips
Buy : Kotak Bnak
Buy : VSNL at dips
Buy : IBUllsreal & IBullsFin
Buy : EssarOil
Buy : SBIN
Buy : Murudeshwar
Dark Horse : REL , MURU , Kohinooor , JpAsso , IBullReal , Adhunik , RIL & SBIN
Short Term Trading Calls
Buy Everest Kanto Cylinder with stop loss of Rs 340 for a target of Rs 440.
Buy Hindustan Dorr-Oliver with a stop loss of Rs 166 for short-term target of Rs 208.
Buy Axis Bank with stop loss of Rs 985 for a target of Rs 1150.
Reliance Power - Apply or Not
The Initial Trends in our Poll (Right Side top)
Votes so far: 222
Yes ! Anil bhai's dream! 165 (74%)
No! Scam !! 57 (25%)
Have you voted yet ?
Grey Market Premium of Reliance Power
Market may decline on weak global cues
The market may decline today, 3 January 2008, on weak global cues. Asian markets were trading weak today, 3 January 2008. Hong Kong's Hang Seng (down 1.80% at 27,063.18), Taiwan's Taiwan Weighted (down 2.22% at 8,138.33), Singapore's Straits Times (down 1.68% at 3,403.02), South Korea's Seoul Composite (down 1.06% at 1,833.89) edged lower.
US markets tumbled on Wednesday, 2 January 2008, after crude oil hit $100 per barrel. The December Institute of Supply Management (ISM) Index, a national purchasing manager survey, also disappointed as it dropped to 47.7, compared to November's reading of 50.8. The number also came in short of the consensus estimate of 50.5, and is the lowest level seen since April 2003.
The Dow Jones industrial average plunged 220.86 points, or 1.67%, to 13,043.96. The Standard & Poor's 500 index fell 21.20 points, or 1.44%, to 1,447.16, and the Nasdaq Composite index declined 42.65 points, or 1.61%, to 2,609.63.
Back home, the 30-share BSE Sensex surged 164.59 points or 0.81% to settle at record closing peak of 20,465.30, on Wednesday, 2 January 2008. Sensex hit a record high of 20,529.48 in late trade. The broader CNX S&P Nifty was up 35.05 points or 0.57% at 6179.40, a record closing high on that day. It struck an all time high of 6197 in late trade
As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 628.68 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 427.11 crore today, 2 January 2008.
FIIs were net sellers of Rs 223 crore in the futures & options (F&O) market on Wednesday, 2 January 2008. They were net sellers of Rs 1,037 crore in stock futures. They were net buyers of Rs 781 crore in index options and Rs 33 crore in index futures.
Crude oil for February delivery jumped $3.64, or 3.8%, to a record close of $99.62 per barrel after touching $100 per barrel earlier in the session yesterday, 2 January 2008, which is the highest since trading began in 1983.
Oil worries may drag market
The market may remain under pressure owing to an overnight fall in the US markets and the Asian indices mirroring the trend by sailing in negative territory in the ongoing trades. In the last three sessions, the market advanced by over 258 points breaching the all-time high in yesterday's trades despite weak international markets amid renewed optimism amongst the local investors. The market will also be focusing on the global crude oil front as the crude prices has hit the $100 mark in yesterday's trades. Among the local indices, the Nifty could test higher levels at 6,200 or 6,400 and on the downside it has support at 5,850. The Sensex has a likely support at 19,500 and may face resistance at 21,000.
US indices continued to reel under oil price surge and worries about the expected recession. Markets slumped on Wednesday, the first trading day of the new year, as oil and gold prices reached their record highs and weak manufacturing report indicated a possible recession. The Dow Jones slumped 221 points to close at 13,044 while the Nasdaq ended 43 points lower at 2,610.
With the exception of few, rest of the Indian floats fell in tune with the broader market. Infosys, Satyam, Wipro, HDFC Bank and VSNL dropped over 2-3% each. However, MTNL surged 8.34% while, Dr Reddy's, Tata Motors, ICICI Bank and Rediff gained 1-3% each.
Crude oil and gold traded near records after a slump in the dollar against major currencies. Oil reached a record $100 a barrel yesterday and gold soared to its highest ever. The Nymex light crude oil for February delivery came off its high of $100 a barrel and ended $3.62 higher at $99.62 per barrel. In the commodity space, the Comex gold for February series jumped $22 to settle at $860 an ounce.
Grey Market - Future Capital, Reliance Power
Future Capital Holdings 700 to 765 300 to 320
Reliance Power 405 to 450 360 to 370
BGR Energy 480 360 to 380
Burnpur Cement Ltd. 12 6 to 8
SVPCL 42 DISCOUNT
Aries Agro 130 25 to 30
Manaksia Ltd. 160 10 to 15
Porwal Autocomponents 75 DISCOUNT
Precision Pipes & Profiles 150 20 to 22
Pre Market Watch
The Indian market on today is likely to have a negative opening on the back of negative cues from global markets. Yesterday the market made a huge turnaround from the lower levels to touch a record high in the final trading hours of the session. The market opened on a firm note but lost the momentum all of a sudden and pared all its initial gains as the profit booking across the counters prevailed. But buying at the lower levels led the market to recover and closed with handsome gains. However, the Mid Caps stocks remain the centre of attraction as most buying was seen since the initial bell. The BSE Sensex closed higher by 164.59 points at 20,465.30 and NSE Nifty grew by 35.05 points to close at 6,179.40. We expect that market may remain volatile during the trading session.
On Wednesday the US market closed in deep red. The Dow Jones Industrial Average (DJIA) declined by 220.86 points at 13,043.96. S&P 500 index fell by 21.20 points to close at 1,447.16 and NASDAQ dropped by 42.65 points to close at 2,609.63.
Indian ADRS closed in mixed. In technology sector, Patni Computers grew by (1.78%) while Satyam fell by (3.85%) along with Wipro by (2.83%) and Infosys by (2.05%). In banking sector, ICICI bank rose by (1.06%) while HDFC bank slipped by (2.39%). MTNL increased by (8.34%)
The major stock markets in Asia are trading weak. Hang Seng is trading lower by 497.34 points at 27,063.18. Taiwan Weighted is trading down by 184.72 points at 8,138.33. Singapore Strait Times is trading at 3,403.02 slipped by 58.20 points.
The FIIs on Wednesday stood as net buyer in equity while net seller in debt. The gross equity purchased was Rs1,437.60 Crore while the gross equity sold stood at Rs1,295.30 Crore and gross debt sold stood at Rs3 Crore. Therefore, the net investment of equity reported was Rs142.30 Crore and net debt was (Rs3Crore).
Today, Nifty has support at 6,052 and resistance at 6,261 and BSE Sensex has support at 20,074 and resistance at 20,719.
Trading Calls
Nifty (6179) Sup 6078 Res 6225
Buy GAIL (531) SL 526
Target 540, 544
Sell India Cements (307) SL 312 Target 298, 295
Buy Andhra Bank (120) SL 116 Target 127, 129
Buy WWIL (99) SL 95
Target 105, 108
Sell Wipro (511) SL 516
Target 503, 500
Lower start, raise your standard
"Success will not lower its standard to us. We must raise our standard to success."
With crude oil hitting $100 per barrel mark and global markets in a tizzy over disappointing manufacturing data from the US, stock benchmarks in India will soften at start after touching new record yesterday. FIIs too were net sellers (provisionally) in yesterday's trade, which could also have some sobering effect on the bulls.
The bulls would hate to surrender the advantage at this stage. So, there is a possibility of a rebound after a lower opening. Use this to get into better counters as many have been dangerously taking positions in risky counters. Remember, markets recovered from most falls in recent times only because leverage was less. The situation may be changing now with habit of winning causing risk abilities to increase. Stay cautious.
We mentioned select banking stocks yesterday and right enough the sector dominated. A lot of news-based action is expected today, especially in the energy and oil & gas space. Oil PSUs could be in the thick of things amid reports of an impending price hike next month. Reliance Energy might lead other stocks in the power sector higher on news that Reliance Power will allow retail investors an option to pay only 25% at the time of application. Pantaloon could also hog the limelight as Future Capital Holding has announced the price band for its IPO.
We also expect stocks in the infrastructure and media (WWIL and Dish TV) sectors to do well today. In a nutshell, the bullish trend in small-cap and mid-cap counters could continue. Chettinad Cement, Grasim, India Cements, Madras Cements and Ultratech Cement could be under pressure amid news that the Tamil Nadu Government may nationalise state cement companies if they do not slash prices. A couple of listings are also there today. BGR Energy and Burnpur Cement will make their stock market debut.
Among other counters Dewan Housing could see buying as the company will soon convene an EGM to raise funds. Adani Enterprises too is looking at raising resources. Total Exports will consider entering into JV for media foray and explore other investment opportunities. Kohinoor Broadcasting Board will meet next week to announce results and consider merger with Tagore Theaters with itself.
US stocks tumbled on the first trading day of the year, as record high oil and gold prices coupled with a weak manufacturing sector report raised worries about the state of the world's biggest economy. Banks and technology companies led the decline after the biggest decline in manufacturing in five years sent the Dow Jones Industrial Average to its worst start since 1983.
Intel, the largest semiconductor maker, fell the most in almost a year after Bank of America cut its rating and investors speculated companies will spend less on technology. Caterpillar, the largest maker of earthmoving equipment, and IBM led the Dow to a 1.7% fall.
The Standard & Poor's 500 Index lost 21 points or 1.4%, to 1,447.16, the most to start a year since it fell 2.8% on Jan. 2, 2001. The Dow slipped 221 points to 13,043.96. The Nasdaq Composite Index slid 43 points, or 1.6%, to 2,609.63.
Market breadth was negative. More than three stocks fell for every one that rose on the New York Stock Exchange.
US stocks briefly trimmed losses after the release of the minutes from the last Federal Reserve meeting raised bets that more interest rate cuts are on the way. But any recovery attempt was short lived.
US light crude oil for February delivery briefly topped $100 a barrel for the first time ever, before pulling back a bit to end at a record settle price of $99.62 a barrel. COMEX gold for February delivery surged $23.20 to $861.20 an ounce, an all-time high, rising in tune with other dollar-traded commodities.
Treasury prices rallied, as investors sought safety in the comparatively safer haven of government debt, lowering the yield on the 10-year note to 3.9% from 4.03% late on Monday. In currency trading, the dollar slipped versus the euro and the yen.
European stocks slipped on the first day of trade in 2008, with higher oil prices and data showing a contraction in US factory activity offsetting M&A speculation. The pan-European Dow Jones Stoxx 600 index dropped 1.3% to 360.11.
The data dampened the mood in London as well. The UK's FTSE 100 which had gained earlier, closed down 0.6% to 6,416.70. The French CAC 40 fell 1.1% to 5,550.36. Germany was the laggard after a 22% gain last year, as the German DAX 30 slipped 1.5% to 7,949.11.
In the emerging markets, the Bovespa in Brazil was down 1.7% at 62,815 while the IPC index in Mexico plunged 2.8% at 28,699. The RTS index in Russia finished flat at 2290 and the ISE National-30 index in Turkey was down 1.8% at 69,208.
Most Asian markets are in the red this morning. The Hang Seng in Hong Kong was down 477 points at 27,083 while the Kospi in Seoul was down 11 points at 1842. The Taiex in Taiwan was down 130 points at 8192 and the Shanghai Composite in China dropped 34 points at 5239. The Straits Times in Singapore fell 50 points at 3410.
Bulls hope to extend rally
It was a see-saw trading session as after opening with a positive gap, markets slipped in to deep red following weak cues from the Asian markets. However, after hitting the days low of 20,007 in the afternoon trades benchmark Sensex recovered over 390 points; crossing its previous all time high of 20,498. The late recovery was led by gains in the banking, Realty and Pharma stocks.
Finally, 30-share Sensex closed at 20,465 adding 164 points and Nifty gained 35 points to close at 6,179.
Parvnath Developers edged lower 0.4% to Rs475. Reports stated that the company is close to tying up with JW Marriott, Starwood, Intercontinental and ITC for several hotels it is planning to build. The scrip touched an intra-day high of Rs492 and a low of Rs462 and recorded volumes of over 27,00,000 shares on NSE.
Bhushan Steel gained 6% to Rs1658 amid reports that the company would expand steel manufacturing capacity to 7mtpa over the next five years. The scrip touched an intra-day high of Rs1688 and a low of Rs1575 and recorded volumes of over 68,000 shares on NSE.
GMR Infrastructure was down 0.6% to Rs248. Reports stated that the company would set-up a subsidiary in Mauritius for routing equity investments in overseas ventures. The scrip touched an intra-day high of Rs251 and a low of Rs245 and recorded volumes of over 32,00,000 shares on NSE.
UCO Bank rallied by over 16% to Rs81 after reports stated that the company has planned to raise Rs4.5bn from the proposed FPO. The scrip touched an intra-day high of Rs84 and a low of Rs72 and recorded volumes of over 44,00,00,000 shares on NSE.
HCL Technologies slipped 2.7% to Rs314. According to reports the company won Rs1bn contract from RBI to set-up two large data centres in Maharashtra and for completely overhauling the latter’s IT infrastructure. The scrip touched an intra-day high of Rs325 and a low of Rs313 and recorded volumes of over 4,00,000 shares on NSE.
Maruti Suzuki was up 0.6% to Rs997. The company declared its December sales at 62,515 units (up 9.7%) the company’s December exports were at 4,114 units (down 75%). The scrip touched an intra-day high of Rs1009 and a low of Rs978 and recorded volumes of over 3,00,000 shares on NSE.
Bajaj Auto ended flat at Rs2602. The company’s December sales were at 1,99,470 units (down 7.1%) its 11th straight month of declines. The scrip touched an intra-day high of Rs2629 and a low of Rs2560 and recorded volumes of over 1,00,000 shares on NSE.
TVS Motors slipped 1% to Rs72 after the company announced that its December two-wheeler sales declined 5.4% yoy to 97,576 units. The scrip touched an intra-day high of Rs73 and a low of Rs71 and recorded volumes of over 21,00,000 shares on NSE.
What the FIIs are doing
FIIs were net sellers of Rs6.3bn (provisional) in the cash segment on Wednesday while the local institutions pumped in Rs4.27bn.
In the F&O segment, foreign funds were net sellers of Rs2.15bn.
On Tuesday, FIIs were net buyers of Rs1.42bn in the cash segment.
News Snippets:
The Government is considering a hike of Rs4 and Rs2 per litre for petrol and diesel respectively in February. (ET)
MTNL is likely to get pan-India mobile license. (ET)
LN Mittal in talks with HPCL to make joint bids for offshore oil & gas blocks. (ET)
Future Capital fixes its IPO price band at Rs700-765 for its IPO. (BS)
RIL and ONGC to face competition from LN Mittal for NELP blocks. (ET)
ONGC revives Kakinada refinery after shelving it in 2006. (Mint)
Bharti Airtel cut its local call rates to a flat Re1 per minute. (ET)
Retail investors may get an option of paying 25% at application stage in Reliance Power IPO. (ET)
Auto companies report low sales in December (ET)
Rotterdam Port in talks with L&T for investing in a Greenfield project in India. (Mint)
The JV between Verizon and Videocon to start offering internet services; awaits security clearance. (ET)
Nuclear Power Corporation may team up with BHEL to build turbines. (BL)
ONGC to pay subsidy of Rs170bn in FY08. (BL)
Tata group plans to transfer Tata Powers’ strategic electronic division (SED) to Nelco. (ET)
Oil PSUs to buy 10% stake in Oil India (OIL) at issue price (ET)
Essar led consortium likely to bag Ratna and R-series oilfields. (ET)
ONGC and Hinduja plan to invest US$10bn for developing oil and gas fields in Iran. (ET)
Petronet’s upcoming LNG terminal in Kochi will be delayed, to be ready by 2011. (BS)
Oil PSUs plan to open 3,000 outlets this year. (BS)
Abu Dhabi awards US$460mn contract to Japan’s Sumitomo, Germany’s Salzitter and Jindal Saw of India. (BS)
UB to seek out a JV partner to grow its Rs15bn business. (BS)
Religare to sell stake in its NBFC arm, Religare Finvest to Societe Generale, Goldman Sachs, Blue River Capital and a couple of other PE funds. (BS)
Ashok Leyland develops multi point fuel injection engines for CNG carriers. (BL)
Parsvnath gets a go ahead from Haryana Government for its IT Park. (BS)
Sebi has ruled out flexibility for PSUs in complying with Clause 49. (ET)
Broadcasters to receive duty cuts in line with IT and telecom sectors. (ET)
Tamil Nadu to nationalize cement plants if companies don’t cut prices. (ET)
The Government says Goa's decision on seeking de-notification of three SEZs legally untenable. (BS)
The Government plans to bear 80% of the cost of generating solar power. (BS)
Singapore Exchange plans launch of BSE products. (BS)
The Government may revive ailing fertilizer firms. (FE)
The Government may clear civil aviation policy today. (FE)
The Government allows 28 new SEZ approvals, including SAIL's Salem SEZ in Tamil Nadu. (BL)
Reliance Power - Part Payment Option
Reliance Energy is going all out to woo retail investors for the upcoming initial public offer (IPO) of its subsidiary, Reliance Power. After deciding to offer shares to retail investors at a 5% discount to the price band of Rs 405-450, the Anil Ambani Group entity intends to provide this investor segment with a “staggered payment” option in this IPO.
Accordingly, retail investors need to pay only 25% of the total investment amount at the time of submitting the application and the rest at the time of allotment on first call.
By availing this option, the investor does not have to lock in the entire amount for which he has applied in the IPO. This means, if a retail investor intends to apply for 100 shares at Rs 450 per share (Rs 427.50 after discount), he would need to pay only Rs 10,687.5 (25% of Rs 42,750 while applying and the rest during allotment, as against the lumpsum of Rs 42,750.
This option brings a level playing field for retail investors vis-Ã -vis qualified institutional buyers(QIBs), who are allowed to bid in an IPO with just 10% margin while submitting the bids in a public issue. Prominent public issues, which enabled the staggered payment options in recent times include ICICI Bank and Reliance Petroleum.
US markets end in a big loss
Manufacturing report and high commodity prices take entire steam out of market
US Market welcomed FY 2008 on a somber note after stocks slumped o the very first trading day of the year today, Wednesday, 02 January, 2008. A below-expected report on the manufacturing front dampened investor sentiment on the very first day. Crude prices kissing the $100/barrel mark for the first time ever weighed further on the investor sentiment. Other commodity prices, ie. gold also hit record high. Nine out of ten sectors ended in the red, the only exception being Energy sector, which got help from the soaring crude price.
The Dow's slide today marked its biggest point drop yet for the first trading day of the year, and its largest percentage decline since 198. The Dow Jones industrial Average ended the day with a huge loss of 220.86 points at 13,043.96. The Nasdaq Composite Index, finished lower by 42.65 points at 2,609.63. S&P 500 finished lower by 21.2 points at 1,447.16.
Twenty-nine out of thirty Dow stocks ended in the red today. IBM and Intel were the main Dow laggards. Intel was affected after Banc of America Securities downgraded the stock. Pfizer managed to be the day’s sole winner, registering marginal gains.
The December Institute of Supply Management (ISM) Index, a national purchasing manager survey, disappointingly dropped to 47.7, compared to November's reading of 50.8. The number also came in short of the consensus estimate of 50.5, and is the lowest level seen since April 2003. Because the number is below 50, it indicated a contraction in manufacturing.
Indian ADRs have a mixed day
In the morning, market enjoyed some god moment for a very brief period of time after the release of minutes from the Federal Reserve's 11 December meeting that suggested that the central bank sees more interest-rate cuts ahead. But the good time was very short-lived and sellers crept in.
Indian ADRs ended mixed today. ICICI Bank and Tata Motors managed to eke out some gains other than Rediff and Dr Reddys Laboratories. Tata Motors and ICICI Bank ended the day up 3.1% and 1.1% respectively. MTNL and VSNL were the main losers shedding 8.3% and 3% respectively.
Just as a reminder, for 2007, the Dow Jones Industrials average gained 6.4%, while the broader S&P 500 and the tech-heavy Nasdaq Composite gained 3.5% and 9.8%, respectively. Nasdaq was a clear winner, aided by Apple, Google and RIMM stocks.
It was day for commodities today at US Market
In the currency market today, the dollar extended losses against most major rivals, mainly against the yen after a weak Institute of Supply Management report. The ISM report said the U.S. factory sector contracted in December for the first time in nearly a year as new orders collapsed. The dollar index, which measures the greenback against a basket of six major currencies, was down about 0.8% at 75.970. Dollar lost more than 1% against the euro.
Comex Gold for February delivery rose $22 (2.6%) to close at $860 an ounce on the New York Mercantile Exchange on Wednesday, 02 January, 2008. prices touched $864.5 during intraday trading. Today’s closing prices was the highest price after a record $873 that gold hit on 21 January, 1980.
Fresh violence in Nigeria and supply concerns pushed crude oil prices to record territory today. Crude-oil futures for light sweet crude for February delivery closed at $99.62/barrel (higher by $3.64/barrel or 3.8 %) on the New York Mercantile Exchange. Earlier, during the lunch hours, crude oil for February delivery rose $4.02 (4.2%) to $100 a barrel on the New York Mercantile Exchange, the highest since trading began in 1983.
Volume on the New York Stock Exchange hit 1.4 billion, with declining stocks outpacing those advancing about 9 to 7. On the Nasdaq, more than 2 billion stocks exchanged hands, and declining issues outran advancers 9 to 5.
Tomorrow will be another day when investors will focuss on the economic reports to set the tone of trading. November's Factory Orders are one of the major reports expected. Other than that, weekly jobless claims data are due before the market's open while the Energy Information Administration (EIA) will announce its weekly petroleum data shortly after opening bell
Ahluwalia Contracts India
We recommend a buy in Ahluwalia Contracts India at current market price. From the weekly chart, we note that it has been on a steady long-term uptrend from June 2007 low of Rs 78. The daily chart shows that after touching an all-time high of Rs 400 on December 20, the stock declined and has been moving sideways around Rs 350. The stock is currently trading near the 21-day moving average line, which is repeatedly supporting the stock. The weekly momentum indicator is featur ing in the bullish region and the daily momentum indicator is likely to re-enter this region from the neutral region. The stock’s long-term trend is intact. All these are positive signals. The immediate support for the stock is at Rs 310 and the next support is at Rs 250 levels. We expect the stock to move up to the resistance level of Rs 400 in the short-term. The short-term investors can buy the stock with stop loss at Rs 308.
Via BL
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