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Thursday, January 10, 2008
Aar ya Paar - RNRL v RPL
New game - yay ! :-) . We select two stocks .. you tell us which one will outperform in the next 7 days (end of Jan 16 2007)!
RNRL or RPL
RNRL - CMP - 228.70
RPL - CMP - 232.10
Leave a comment and tell us why you think so :). Tell us if you short on both of these :)
Morning Call - Jan 10 2008
Market Grape Wine :
In House :
Intra Day: Buy bank baroda above 475 with a TGT of 489 and a SL of 469
Buy IDBI above 171 with a TGT of 179 anda SL of 168
Out House :
Markets at a support of 20502 & 20678 levels with resistance at 20978 & 21112 levels .
Buy : RIL & REL
Buy : RelCap
Buy : NTPC
Buy : SwanMills & SimplexInfra delivery call bullet
Buy : TataMotor
Buy : IBUllsreal & IBullsFin
Buy : ITC & HLL
Buy : SBIN
Buy : Religare bullet
Dark Horse : REL , JpAsso , IBullReal , Aban , RIL & SBIN
Grey Market - Reliance Power, Future Capital
Future Capital Holdings 700 to 765 625 to 635
Reliance Power 405 to 450 390 to 400
SVPCL 42 DISCOUNT
Aries Agro 130 20 to 25
Porwal Autocomponents 75 DISCOUNT
Precision Pipes & Profiles 150 30 to 35
Pre Market Watch
The Indian market is likely to have positive opening as the cues from the US market is in favor. Yesterday, the market closed on a negative note after coming off sharply from the higher levels in the final trading hours of the session. The Sensex after a flat opening dipped down by taking negative cues from the global markets but managed to recover towards the mid session to touch an intraday high of 21,113.13. The BSE Mid Caps and Small Caps stocks remained out of favor as most selling was seen from these baskets. The BSE Sensex closed with marginal loss of 3.55 points at 20,869.78 and NSE Nifty closed lower by 15.85 points at 6,272. We expect that the market may remain range bound during the trading session and volatility may rule the market.
On Wednesday, the US market closed in positive territory. The Dow Jones Industrial Average (DJIA) grew by 146.24 points to close at 12,735.31 along with S&P 500 index by 18.94 points at 1,409.13 and NASDAQ by 34.04 points at 2,474.55.
Indian ADRS closed in positive. In technology sector, Patni computers rose by 2.84% along with Infosys by 2.07% and Satyam by 0.04%. In banking sector, HDFC bank and ICICI bank grew by (3.49%) and (2.95%) respectively. VSNL inched up by (0.18%).
The major stock markets in Asia are trading mixed. Hang Seng is trading lower by 110.38 points at 27,505.47. Japan''s Nikkei is trading down by 116.94 points at 14,482.22 while Taiwan Weighted is trading up by 70.15 points at 8,155.21.
On Wednesday, the FIIs stood as net buyer both in equity and in debt. The gross equity purchased was Rs5,529.90 Crore and the gross debt purchased was Rs744 Crore while the gross equity sold stood at Rs4,476.50 Crore and gross debt sold stood at Rs86.80 Crore. Therefore, the net investment of equity reported was Rs1053.40 Crore and net debt was Rs657.20 Crore.
Today, Nifty has support at 6,182 and resistance at 6,357 and BSE Sensex has support at 20,548 and resistance at 21,149.
FII activity holds key
The key trigger for the domestic market in the near term is earnings surprises. Some of the top brokerages expect slowdown in earnings growth of 30-Sensex firms in Q3 December 2007.
Interestingly, the market has been hitting record highs almost everyday notwithstanding an expected slowdown in earnings growth. Expectation of pick up in FII inflow is perhaps keeping the market firm.
With the beginning of the new calendar year, FIIs are expected to make fresh fund allocations. FIIs pumped in Rs 71486.50 crore or $17.23 billion in Indian equities in calendar year 2007.
As per provisional data, FIIs sold shares worth a net Rs 392 crore on Wednesday, 9 January 2008. Domestic funds bought shares worth a net Rs 85.51 crore on that day.
FIIs were net sellers to the tune of Rs 889.98 crore in the futures & options segment on Wednesday. According to data released by the NSE, FIIs were net sellers of index futures to the tune of Rs 533.28 crore and bought index options worth Rs 195.28 crore. They were net sellers of stock futures to the tune of Rs 556.03 crore and bought stock options worth Rs 4.05 crore.
Even as Sensex has been hitting record highs, small-cap and mid-cap shares have witnessed profit taking in the last two days as investors are staying in cash to subscribe to the mega IPO of Reliance Power which opens for subscription next week.
Stock-specific activity may rule the roost in the near term based on expectations of results of individual firms. Telecom sector is expected to continue to post strong earnings growth in Q3 December 2007 on the back of rising new subscriber additions whereas healthy order book will ensure that capital goods firms such as Larsen & Toubro and Bharat Heavy Electricals will turn out good performance for yet another quarter.
Media sector, too, is expected to post decent to strong growth on the back of higher advertisement rates. On the other hand, the IT sector is likely to be hit by the appreciation of the rupee against the dollar.
Steel sector is expected to show strong growth on the back of volume growth and higher price realizations. The performance of the auto sector is expected to be sluggish due to sluggish sales and pressure on margins on account of higher input costs. The banking sector is expected see increase in margins due to cut in deposit rates, and higher fee based income. Increase in costs and dismal volume growth is expected to weight on the performance of the cement sector.
IT bellwether Infosys Technologies kickstarts the reporting season on Friday, 11 January 2008.
US stocks rose on Wednesday, 9 January 2008, and the Nasdaq broke an eight-day losing streak, as talk of recession pushed investors into health care and other defensive sectors seen as resistant to a slowdown. The Dow Jones industrial average surged 146.24 points, or 1.16%, at 12,735.31. The Standard & Poor's 500 Index rose 18.94 points, or 1.36%, at 1,409.13. The Nasdaq Composite Index surged 34.04 points, or 1.39%, at 2,474.55.
But key Asian stocks edged lower today, 10 January 2008. Hong Kong’s Hang Seng was down nearly 1% and the Nikkei 225 average in Japan was down 0.87%.
Trading Calls - Jan 10 2008
Nifty (6272) Sup 6199 Res 6350
Buy NDTV (482) SL 477
Target 491, 494
Buy 3i Infotech (154) SL 150
Target 162, 164
Buy BILT (182) SL 178
Target 190, 192
Sell Matrix Labs (228) SL 232
Target 220, 218
Sell Redington (402) SL 407
Target 392, 390
Hey, where you going?
If you don't know where you are going, any road will get you there.
The markets seem to be going nowhere. But stocks are hitting extreme ends during intra-day trade. Expected volatility is on as the results season has kicked off. Infosys will declare its results tomorrow and other software biggies will follow suit next week. The IT sector has lost its charm over the past few months, with a confluence of headwinds (a strong rupee being the topmost) weakening the outlook for the industry. Not many brokerages are gung-ho about the IT sector though some expect mid-cap IT firms to prop up. There could be some positive surprise in store that could revive interest in these stocks temporarily. We expect a cautious to slightly positive opening today and another choppy day. Counters like ITC can be picked up at lower levels for investment purpose. RNRL may see wild swings on expectations of a court verdict today.
Coming to the broader market, earnings from the old economy space will also be critical if the bulls are to retain their hold over the market. As will be the global factors and trend in money flows. Over the last couple of days a lot of small- and mid-cap shares have been hammered. Whether this is a larger trend or just a temporary blip remains to be seen. One must remain highly alert and take an honorable exit from stocks that have rallied purely on speculative activity. Among the other concern is that the market breadth was negative yesterday and the volume too was sharply down from Tuesday. As the market adjusts to swings and sideways movement, make sure you know where you and your stocks are going.
Results Today: Gallant Metal, Jaypee Hotel, Motilal Oswal, Rajesh Exports, Solar Explosives, Steel Exchange and Supreme Petro.
M&M may attract attention as a business news channel says that Goldman Sachs is eyeing a stake in the tractor and utility vehicle giant. However, there is still no official confirmation with both parties denying any such move. Kopran will issue and allot on a preferential basis 581,656 shares to IDBI Bank and 200,000 shares to LIC as a part of the settlement of their dues. Pyramid Saimira's Board will meet on January 16, to consider a proposal to raise additional funds through overseas debt issue. Ispat Industries may also gain as a financial daily says that the steel maker will sell about 25% stake in Ispat Energy to PE funds for Rs8bn.
Atlanta has received a contract of Rs629.8mn in Pune for the construction and concreting of road from Hotel Green Park to bypass at Balewadi stadium crossing. DCW's Board will meet on January 15, to consider, issue of shares or any such instruments / securities to QIBs. Surana Industries says it would acquire 49% equity shares of PT Agate Resources Indonesia, Sbn Bhd from the present holders for Rs400mn. Agate Group Indonesia is into coal mining and the acquisition will give the company assured supply of coal for the integrated steel plant being set up at Raichur at Karnataka.
The RBI has allowed FIIs to purchase fresh shares of Gujarat NRE Coke through primary markets and stock exchanges up to 74% of the paid up capital of the company. Hindustan Construction has formed a SPV i.e. HCC Singapore Enterprises Pte Ltd for promoting its business overseas. HCC Real Estate has also incorporated a SPV i.e. Charosa Wineries for undertaking wine business.
US shares reversed the weak trend of the past few days and closed higher on Wednesday after Warren Buffett's Berkshire Hathaway said it may invest in municipal bond insurers and HP said earnings will withstand an economic slowdown.
Technology stocks led the rally, with the Nasdaq registering its first positive day in nine, as bargain hunters returned to a market reeling under the weight of worries with regard to a possible recession. The Dow has seen more than 500 points taken away so far this year.
Bear Stearns, Merrill Lynch and Morgan Stanley helped financial shares rebound from a four-year low. HP led technology shares higher for the first time in seven days. Gilead Sciences and Pfizer advanced after Goldman Sachs said earnings at some drugmakers will continue to rise.
The Standard & Poor's 500 Index added 19 points or 1.4%, to 1,409.13, rallying from a 10-month low. The Dow Jones Industrial Average climbed 146 points, or 1.2%, to 12,735.31, erasing an 87-point drop. The Nasdaq gained 34 points, or 1.4%, to 2,474.55.
The S&P 500 rebounded from the lowest level since March after Berkshire said it may buy stakes in municipal bond insurers, which account for two of the eight worst-performing shares in the S&P 500 this year. Banks and brokerages fell as much as 2.3% earlier after Countrywide Financial said foreclosures are rising.
Banks also rose after Bear Stearns CEO Alan Schwartz told CNBC that the firm won't take more writedowns because it is adequately marked to market on its investments. Stock-index futures climbed in extended trading after Alcoa reported profit that topped estimates. Alcoa shares gained 4% in extended trade.
Also after the close, Target said its CEO will retire in May amid slumping sales. He will be replaced by the retailer's president. Target shares were little changed in after-hours trade.
There are no big market-moving earnings or economic reports scheduled for Thursday. Fed chairman Ben Bernanke is slated to deliver a speech in the afternoon in Washington DC, on the economic outlook and monetary policy.
Treasury prices slumped, raising the corresponding yields on the 10-year note to 3.82 percent from 3.77 percent late on Tuesday. In currency trading, the dollar gained versus the yen and euro.
US light crude oil for February delivery fell 66 cents to settle at $95.67 a barrel on the New York Mercantile Exchange. The price of oil seesawed following the morning release of a mixed oil inventories report.
COMEX gold for February delivery rose $1.40 to settle at $881.70 an ounce, nearing record highs hit on Tuesday.
European stocks markets finished in the red after British retailer Marks & Spencer posted its worst quarterly sales in more than two years, heightening worries about trends in consumer spending and economic growth.
The pan-European Dow Jones Stoxx 600 index shed 1.3% to 348.77, the sharpest percentage drop since last Friday. London's FTSE 100 index slipped 1.3%, or 83.80 points, to 6,272.70 while the French CAC-40 lost 1.1% at 5,435.42 and the German DAX 30 fell 0.9% to 7,782.71.
In the emerging markets, the Bovespa in Brazil gained nearly 1% at 62,673 while the IPC index in Mexico rose 0.5% at 28,401. The RTS index in Russia was up almost 0.3% at 2296 and the ISE National-30 index fell 1% to 66,235.
Asian markets were trading mixed this morning. The Nikkei in Tokyo was down 117 points at 14,482 while the Hang Seng in Hong Kong dropped 160 points at 27,455. The Kospi in Seoul and the Shanghai Composite in China were flat at 1848 and 5434, respectively. The Straits Times in Singapore was unchanged at 3344 and the Taiex in Taiwan rose 36 points to 8121.
Bulls hope to sustain gains
Markets ended on a flat note showing strong resilience against the US slump. The index heavyweights witnessed fresh buying interest as stocks like HDFC, NTPC, RCOM and DLF lifted the benchmark Sensex to hit the 21k mark for the second time. However, it was yet another volatile session as alternate bouts of buying and selling tossed the key indices into negative and positive terrain. The Sugar, Mid-Cap IT and banking stocks recorded smart gains ahead of the earning season. Finally, 30-share Sensex closed flat at 20,869 and Nifty ended at 6,272 down 15 points.
Omnitech surged by over 4% to Rs218 after the board of directors of the company announced that they would meet on January 14 to mull fund raising plan. The scrip touched an intra-day high of Rs224 and a low of Rs201 and recorded volumes of over 2,00,000 shares on NSE.
ICRA edged lower by 0.8% to Rs940. The company announced that it entered in MoU with state Bank of Mysore to rate bank loans. The scrip touched an intra-day high of Rs980 and a low of Rs906 and recorded volumes of over 4,000 shares on NSE.
EMCO rallied by over 9% to Rs1559 after the Board of Directors of the company declared that they would consider a stock split on January 17. The scrip touched an intra-day high of Rs1623 and a low of Rs1500 and recorded volumes of over 15,000 shares on NSE.
Taneja Aerospace rose over 6.5% to Rs237 after the company announced that it has entered in to MRO facility agreement with Awacs. The scrip has touched an intra-day high of Rs249 and a low of Rs210 and has recorded volumes of over 4,00,000 shares on NSE.
Bajaj Auto ended flat at Rs2533. According to reports the company unveiled the prototype of its small car; company to roll out its LCV by 2009. The scrip touched an intra-day high of Rs2579 and a low of Rs2500 and recorded volumes of over 39,000 shares on NSE.
Power Grid ended 0.6% lower to Rs143. Reports stated that the company has planned to enter entertainment and telecom business. The scrip touched an intra-day high of Rs145 and a low of Rs142 and recorded volumes of over 55,00,000 shares on NSE.
Sugar stocks, especially south based ones like Shree Renuka Sugars and Sakthi Sugars, reacted positively today to reports that government issued notification to the extent which effectively allows only sugar companies to manufacture ethanol from sugarcane. This put a spanner in the plans of companies like Reliance Industries and HPCL, which were earlier planning to bid for closed sugar mills in Bihar to make ethanol. Renuka Sugar rallied by over 12% to Rs1254 and Sakhti Sugar surged over 15% to Rs125.
The Mid-Cap banking stocks were in limelight on back of expectation of good results. Bank of India surged by over 6.5% to Rs400, Bank of Baroda was up 2.2% to Rs462 and Andhra Bank gained 2% to Rs118. Axis Bank rose over 3% to Rs1009 after the company announced its Q3 result with net profit rising 66% to Rs3.07bn from Rs1.85bn a year earlier.
The Mid-Cap IT stocks also gained momentum ahead of the result season. I-flex jumped by over 8% to Rs1585, Polaris was up by over 6% to Rs138, Mphasis advanced 6.2% to Rs304 and Rolta added 2% to Rs716.
What the FIIs are doing
FIIs were net sellers of Rs3.92bn (provisional) in the cash segment on Wednesday while the local institutions were net buyers of just Rs855.1mn. In the F&O segment, foreign funds were net sellers of Rs8.9bn.
On Tuesday, FIIs were net buyers of Rs10.53bn in the cash segment. Mutual Funds were net buyers of Rs125mn on the same day.
News Snippets:
Bajaj Auto is looking at acquiring a car company to break into the higher segments of the market and plans an electric car for Europe. (BS)
Goldman Sachs is in advanced talks to invest in the Mahindra group. (BS)
SC stays PIL against Reliance Power IPO. (BS)
ICICI bank to unlock value in four of its subsidiaries and the process could begin in the next six months. (ET)
Aditya Birla Nuvo will raise Rs42bn through preferential allotment of warrants to the Kumar Mangalam family in the next 18 months. (ET)
ITC plans to launch new energy bars and breakfast cereals to extend its product profile. (FE)
UTI Mutual Fund to offer ESOPs to all its employees. (ET)
Unitech to go for US$1.5bn QIP in the next couple of months.
Tata Power and Reliance Energy are among the six short- listed companies by the Maharashtra Government for the proposed Dhopave project. (ET)
RIL and RNRL have moved the Mumbai High Court over the gas supply dispute between the two companies. (ET)
PE players JPMorgan and IDFC are eyeing a minority stake in Hyderabad-based logistics player, Seaways. (ET)
Kingfisher Airlines would be permitted to fly abroad this year. (BS)
European aerospace giant EADS is acquiring 24% stake in India Aero Ventures, promoted by ex-BPL mobile chief Rajeev Chandrashekar for Rs1.3bn. (ET)
The DoT is reconsidering the applications of six companies for telecom licenses, which it had rejected on Tuesday. (ET)
The Government assures TDSAT that enough spectrum would be available for existing as well as new players after allotting radio frequencies to RCOM. (ET)
Private cement producers in Tamil Nadu agree to set aside two million bags per month for economically weaker section and lower middle class people at a price of Rs200 per bag. (ET)
Pharma companies unlikely to get sops for R&D outfits. (ET)
Stainless steel companies have asked the Government to increase customs duty on value added stainless steel cold rolled coils to prevent China from dumping into India. (ET)
The Government may bring procurement contracts of defence ministry under tax collected at source (TCS) in this budget. (ET)
Indian Bank Association members to meet on interest rate cut. (FE)
Commerce Minister Kamal Nath says that the Government might consider importing more cement to meet the demand – supply mismatch situation. (BL)
Short Term Trading Calls - Jan 10 2008
Buy Reliance Capital with a stop loss of Rs 2780 for a target of Rs 3000
Buy RSWM with a stop loss of Rs 206 for a target of Rs 350
US Markets make a comeback
Nasdaq ends higher for the first time in 2008 ending eight day losing streak
With the help of Financial and Technology stocks, US stock market made a sudden but modest comeback today, Wednesday, 09 January, 2008 and all the three indices closed higher simultaneously for the first time in FY 2008. The stock market oscillated between positive and negative territory for the entire day. At the end, each of the ten economic sectors finished in positive territory. Gold prices struck another new record today but crude witnessed marginal drop.
Dow component Du Pont raising its profit estimate for FY 2007 and FY 2008 also fuelled today’s rally. After being down by almost 84 points earlier in the day, the Dow Jones industrial Average finally ended the day with a good gain of 146.2 points at 12,735.3. The Nasdaq Composite Index, finished higher by 34 points at 2,474. S&P 500 finished higher by 19 points at 1,409.
Twenty-four out of thirty Dow stocks ended in the green today. Du-Pont headed the group of winners while GM headed the team of losers. Among the financials, Citigroup and JP Morgan made a late comeback and closed 1.3% higher. Du-Pont stock ended higher by 4.8%.
Stocks today opened modestly higher today on news that Dow Component DuPont raised its earnings guidance for 2007 and 2008. But economic concerns again weighed on traders, after Goldman Sachs said the U.S. is likely in a recession or will be there shortly. Stocks started trading in negative territory. But in between, they crept back in the green.
Indian ADRs ended mixed today but majority of them ended in green. Tata Motors and HDFC Bank were the topmost winners gaining 5.2% and 3.5% respectively.
Crude prices went through a volatile session today and ultimately ended lower for the day. Prices rose today initially after chances of recession hitting US increased. But at the end prices closed lower as Energy Department reported buildup in fuel stockpiles. Crude-oil futures for light sweet crude for February delivery closed at $95.67/barrel (lower by $0.66/barrel or 0.7%) on the New York Mercantile Exchange. Earlier, the contract hit an intraday high of $97.97 and a low of $95.42. Prices are 72% higher on a yearly basis.
Volume on the New York Stock Exchange neared 2.1 billion shares, and advancing stocks racing ahead of those declining 3 to 1. On the Nasdaq, more than 2.8 billion shares exchanged hands, and advancers topped decliners by about 7 to 6.
Tomorrow, the weekly initial jobless claims and wholesale inventories readings are slated for release.
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