Onmobile Global IPO Analysis

OnMobile Global (OnMobile) was promoted in September 2000 by OnMobile Systems, Inc (OMSI) and Arvind Rao, a B Tech from IIT Mumbai and management graduate from Wharton school, University of Pennsylvania, and Chandramouli Janakiraman, a B Tech and a former Infosys Technologies employee, to develop telecommunication software platforms and applications for the mobile telecommunications industry. Initially, it was incorporated as Onscan Technologies India The name was changed to OnMobile Asia Pacific in April 2001 and to OnMobile Global in August 2007.

OnMobile provides value-added services (VAS) in the telecommunications space and software products in India with an expanding international presence, particularly in the emerging markets in Asia. It has a broad range of applications delivered by its carrier customers (telecom service providers) to their end-user subscribers. These products include ringback tones, voice portals, ringtone downloads, subscription manager, contests, music messaging, on-device client software, mobile radio, dynamic voicemail, voice SMS, and missed call alerts. The company sources content for its applications from over 65 content owners and content suppliers and delivers to its customers through its delivery platforms.

Besides delivering interactive media solutions such as tele-voting, interactive programming and mobile auditioning to leading media companies, OnMobile provides a range of mobile commerce solutions, enabling subscribers to buy movie tickets, railway tickets, refill their pre-paid mobile phone cards and pay bills using their mobile phones. It provides end-to-end turnkey solutions to its carrier customers and manages those for them on an outsourced service basis through long-term contracts and receives a share in the revenue generated by the carriers from their end-user subscribers. Most of the company’s applications are not network- or handset-specific and deployable across major networks regardless of the technical capabilities of the mobile device. OnMobile earned about 67% of its net revenue from its ringback tones and music-related services in the financial year ended March 2007 (FY 2007) and half year (H1) of FY 2008. The number of permanent and contracted employees has grown from 58 is FY 2004 to 819 by end December 2007.

The IPO to rise Rs 490.52 crore –Rs 463.27 crore comprises 109 lakh shares in the price band of Rs 425 – Rs 450 per share, including fresh issue of 86.13 lakh shares and offer for sale of 22.87 lakh shares. Of the net proceeds of the issue (Rs 387.60 crore- Rs 366.07 crore), Rs 180.52 crore will be used to purchase equipment for OnMobile’s offices in Bangalore, Mumbai and Delhi and various customers, Rs 5 crore for working capital requirement, Rs 35 crore for repayment of loan, and the balance for acquisition of companies, expansion of facilities, strategic initiatives and general corporate purposes.

Strengths

l The customer base includes all the major telecom operators in India and more than 10 international telecom operators in over eight countries including Optus in Australia, Banglalink in Bangladesh, Maxis in Malaysia, and BTEL and Indosat in Indonesia. In addition, markets products and services to media companies such as AOL, Disney, ESPN, India Today Group digital, Star India and Nokia.

l Due to competitive industry dynamics, mobile tariffs have been falling and there has been pressure on the average revenue per subscriber (ARPU) of telecom operators. Thus, telecom operators would be looking for more VAS revenue at very little incremental capital expenditure. This is a potential lever to counter the trend of falling ARPUs. It will result in decent growth opportunity for OnMobile as VAS will have higher growth trajectory on lower base and increasing acceptability.

l Reaches about 95% of India’s telecom subscribers as all the leading telecom operators are customers. According to Cygnus Business Consulting & Research, India is one of the fastest emerging markets in the world for mobile VAS. Over the years, the VAS revenue in India has been growing at a rapid pace of 70%-90%. The VAS market in India is expected to be about 10% of the service providers’ revenue. The fast-grow telecom subscriber base in India will turn in more customers for VAS.

l Enjoys long-term relationship with customers. Has not lost any major customer since its inception and consistently achieved a year-on-year revenue growth with each of them. Hardware systems and software applications are embedded deeply into carriers’ network infrastructure and integrated into their core network systems. This works as an entry barrier for new players.

Weaknesses

l More than 80% of the revenue from just five largest customers (major telecom service providers), constituting less than 10% of total customers, in the six months ended September 2007. The loss of any major customer or decrease in the volume of work from them or dip in revenue sharing may adversely impact revenue and profitability.

l Substantial portion of the revenue — more than 90% in the first half (H1) of FY 2008, FY 2007 and FY 2006 — was through revenue-sharing agreement with customers. Revenue is earned as a percentage of the retail price that telecom companies charge to their end-user for the use of applications or content. Revenue may be adversely affected on the pricing decisions of telecom companies and competitive scenario.

l VAS would be the next focus area for telecom players. In an attempt to improve the profitability by rationalising costs, telecom service providers may develop some or all of the carrier application services in-house. This could result in significant loss of revenue and may have a material adverse impact on future business as over 90% of the net revenue is derived from carrier-application services.

Infosys Technologies, (17.9% stake in OMSI), issued a letter to the board of directors of OMSI on 1 October 2007 stating Infosys was not consulted when OMSI decided to sell its holding in OnMobile. It indicated the only option was to refer the matter to the appropriate authorities to protect its interests and get relief, including opposing the current IPO.

Valuation

Revenue grew at a CAGR of 99% and net profit at a CAGR of over 100% over the three-year period ended March 2007. However, operating profit margin has been declining over the couple of years though is still decent at above 40%. Performance improved significantly in the six months ended September 2007, achieving revenue of Rs 112.51 crore (82% of the revenue in FY 2007) and net profit of Rs 30.52 crore (87% of net profit realised in FY 2007). Share of revenue with telecom operators is about 20% on an average ranging between 15%-40%. Overseas revenue was about 9.1% of total revenue in H1 of FY 2008 as against 5.1% in FY 2007.

On annualised EPS of Rs 10.2 in the six months ended September 2007 on post-issue equity capital of Rs 60.09 crore, the P/E works out to 41.8 – 44.3 at the price band of Rs 425 – Rs 450. The trailing 12-month (TTM) P/E of Tanla Solutions (broadly providing similar services outside India) is 20.5.

Bank of India, Ranbaxy Labs

Ranbaxy Laboratories
Cluster: Apple Green
Recommendation: Buy
Price target: Rs500
Current market price: Rs340

Generic Imitrex—exclusivity opportunity for CY2008

Key points

• As part of its settlement with Glaxo SmithKline, Ranbaxy Laboratories (Ranbaxy) has been awarded the 180-day exclusivity for Sumatriptan Succinate, the generic version of Glaxo SmithKline's Imitrex. Ranbaxy will launch the product sometime in December 2008 in the US market.
• The annual market sales for Sumatriptan Succinate (Imitrex®) were USD985 million (IMS- MAT: September 2007). Assuming a market share of 40% for Ranbaxy and a price erosion of 60%, the product can generate revenues and profits of $79 million and $47 million respectively for Ranbaxy during the 180-day exclusivity period. This will translate into incremental earnings of Rs4.5 per share.
• Ranbaxy's strategy of monetising the Para IV first-to-file (FTF) pipeline has paid off and Ranbaxy has four opportunities, including the recently announced deal on Imitrex, addressing a collective market opportunity of $12 billion lined up until 2010. Based on our discount-cash-flow (DCF) calculations, we believe that the FTF opportunities announced so far are collectively valued at Rs2,724 crore, translating into a per share value of Rs68.
• We are in the process of upgrading our revenue and earnings estimates for Ranbaxy and will update you shortly. At the current market price of Rs340, Ranbaxy is discounting our CY2008 earnings estimate by 19.3x. We maintain our Buy recommendation on the stock with a price target of Rs500.
  

Bank of India
Cluster: Apple Green
Recommendation: Buy
Price target: Rs432
Current market price: Rs391

Q3FY2008 results: First-cut analysis

Result highlights

• Bank of India's (BoI) profit after tax (PAT) during Q3FY2008 grew by a whooping 101% year on year (yoy) and 20.4% quarter on quarter (qoq) to Rs511.9 crore. The PAT growth was significantly above our and consensus estimates. The strong PAT growth was on the back of robust rise in the interest income, spike in the non-interest income led by treasury gains, and contained operating expenses.
• The net interest income (NII) of Rs1,079.5 crore during the quarter indicates a robust growth of 25.7% yoy mainly due to continued strong growth in advances coupled with an improvement in the net interest margin (NIM).
• The reported NIM of 3.14% for the quarter reflects an improvement of 10 basis points yoy from 3.04% for the year-ago period. The NIM improvement was mainly due to the improvement in yields on advances (115 basis points) and the investments (105 basis points), which outweighed the 83-basis-points year-on-year (y-o-y) increase in the cost of funds.
• During the quarter, the advances grew by a strong 30% yoy to Rs103,657 crore indicating an uptick in the credit off take compared with H1FY2008. The growth in advances was led by a strong growth in foreign advances (up 32.7%). Meanwhile the deposits grew by 27.4% yoy to Rs135,835 crore on the back of a 36% y-o-y growth in the term deposits and a 32.5% y-o-y growth in the current account deposits. However, due to the higher growth in the term deposits, the current account and saving account (CASA) ratio declined to 37% for the quarter from 40.7% a year ago.
• The non-interest income witnessed a whooping growth of 72% yoy to Rs554.1 crore. The growth in the non-interest income was primarily due to the surge in treasury gains, which were up 109% yoy. Meanwhile the fee income grew by a strong 39.5% yoy.
• Notably, the operating expenses were up by only 5.5% yoy, whereas it declined by ~2% qoq to Rs 662.2 crore. The lower operating expense growth can be traced to the decline in other operating expenses (down 13% yoy), whereas the staff expenses were up 17% yoy. As a result of lower operating expenses and strong income growth, the cost-income ratio for the quarter improved significantly to 40.5% compared with 50.6% for the year-ago period.
• Asset quality continued to improve yoy with a 10% y-o-y decline in the gross non-performing assets to Rs1,969.3 crore and a 29.5% decline in the net non-performing assets to Rs633.5 crore. Consequently, the provision coverage for the quarter improved significantly to 78% from 66% for the year-ago period.
• Capital adequacy remains healthy with the capital adequacy ratio (CAR) at 12.5% at the end of December 2007 compared with 11.7% at the end of December 2006.
• At the current market price of Rs391, BoI trades at 10.1x its 2009E earnings per share (EPS), 5x its 2009E pre-provisioning profit (PPP) and 2x its 2009E book value. In view of the higher-than-expected Q3FY2008 numbers, we intend to revisit our earnings model.

India Strategy - Jan 24 2008

India Strategy - Jan 24 2008

Market jumps on Fed move

The Sensex opened with a positive gap of 685 points at 17,415 after the 75 basis points rate cut by the US Federal Reserve yesterday.

After extending gains in the initial trades, the index pared gains and dropped to a low of 16,951 in late morning deals.

The index then rallied to a high of 17,997 - up 1,267 points from its previous close - in early noon trades.

Some profit-taking towards the end saw the Sensex pare gains and finally settle at 17,594 - up 864 points (5.2% ) - the third best single-day gain.

The index thus broke its seven-day losing streak of 19% (4,097 points).

The BSE Midcap Index zoomed over 8% (587 points) to 7,789, and the Smallcap Index surged 4% (397 points) to 10,425.

The NSE Nifty ended with a gain of 304 points (6.2% ) at 5203.

The BSE market breadth was marginally negative - out of 2,722 stocks traded, 1,401 declined, 1,300 advanced and 21 were unchanged today.

INDEX MOVERS

Reliance Energy zoomed 16% (Rs 274) to Rs 1,990. NTPC soared 13.7% (Rs 27) to Rs 224. Satyam surged nearly 11% to Rs 393.

SBI, TCS and Reliance rallied 8.5% each to Rs 2,344, Rs 867 and Rs 2,555, respectively.

BHEL gained 8% at Rs 2,146. Bajaj Auto advanced 7.5% to Rs 2,215.

Hindalco and Reliance Communications moved up 7% each to Rs 161 and Rs 615, respectively.

HDFC Bank and DLF added 6.5% each to Rs 1,535 and Rs 924, respectively. Grasim was up 5.8% at Rs 3,025.

Mahindra & Mahindra and ITC rallied nearly 5% each to Rs 641 and Rs 193, respectively.

Cipla, ACC and Tata Steel were up around 4% each at Rs 182, Rs 750 and Rs 697, respectively.

VALUE & VOLUME TOPPERS

Reliance Natural Resources topped the value chart with a turnover of Rs 466 crore followed by Reliance Petroleum (Rs 356.80 crore), Reliance (Rs 332.30 crore), ICICI Bank (Rs 256.80 crore) and Reliance Energy (Rs 231.10 crore).

Ispat Industries led the volume chart with trades of around 3.46 crore shares followed by Reliance Natural Resources (3.44 crore), Reliance Petroleum (2.13 crore), Tata Teleservices (1.53 crore) and IFCI (1.49 crore).

Bank of India, Tech Mahindra, Idea Cellular

Bank of India, Tech Mahindra, Idea Cellular

Eveninger - Jan 23 2008

Eveninger - Jan 23 2008

Market Close : Fed leads smart recovery

It was a good day for the markets which saw biggest single day gain of over 1200 points and finally ended with substantial gains. After few turmoil sessions in Indian markets today it saw a clear bounced back after US fed cuts rate by 0.75 Bps. Even Asian markets also responded smartly. Rate cut by US will lead to more money inflow into emerging markets as to leverage the arbitrage available between economies. Markets with this perception continued its upward journey in green. Major large caps especially in the FnO segment which were smashed in the break down rally bounced back with vigor with superb gains. Investors and traders which saw red blood in recent sessions remained cautious. Value buying was seen across the board as long term investors saw this fall as an ?opportunity?. Realty and Power counter were the frontliners followed by other sectors. All other sectoral indices were up over 4% Hang Seng ended up 2330 points (+10%) while Asian indices ended in green. Europe is trading weak under cautious mood.

Sensex closed up by 864 points at 17594.07.It was helped up by gains in Rel Energy (1989.95,+16 percent), NTPC (223.7,+14 percent), Satyam (393.1,+11 percent), TCS (867.1,+8 percent) and RIL (2554.8501,+8 percent). Restricting the gains were Bharti Tele (846.75, 0 percent)

Titan posted good set of numbers for Q3 FY2007-08. Revenue stood at Rs.802 crs with an annualised growth of 52% led by higher gold prices. EBITDA margins stood at 6.2% vs 11% on yoy basis which were a bit disappointing, due to high gold prices. PAT stood at 31crs up by 6% compared to same period last year. Margins tend to be reduced in a high gold price scenario as making charges are not related to gold prices. Making charges are of fixed nature for the gold jewelry in terms of Rs/per gm for the pure gold jewelry. Titan is the largest player with 50% market share among organised player followed by HMT in watches.Titan has strong brand and now its trying to leverage on this. The new segment that the company intends to cater is exciting. There is a risk though. We have been positive on Titan for a while and the stock has lived upto expectations. Post the recent fall the stock seem more attractive to get in. It seems good bet. Do read our note to know more?

Greenply continued its superb performance. Top line grew by 39% to Rs.139crs. EBITDA improved significantly on yoy basis as the plant streamlined. The company is basically a interior infrastructure company manufacturing plywood and laminates. Unorganised sector was the major road block to growth but Greenply has managed well to overcome this. Greenply is a bet on growth in housing and commercial office. Increasing earning and desire for better standard of living makes Greenply a perfect play on lifestyle. So far unorganised sector was a spoiled brat but with implementation of VAT there the unorganised sector clearly faces strong headwinds. Greenply is the undisputed leader here. The stock has performed will since our coverage and we remain positive on this one. Do read our note.

Technically Speaking: Sensex managed to record the highest ever gains in its history. Sensex made an intra day high of 17997 and low of 16951. The breadth was taken over by Declines as there were 1401 Declines against 1302 Advances. Market turnover was low at Rs 7099 crs. Sensex was on a pullback rally. We expect this rally to get over near 18900. Traders are advised to sell on rise.

Omaxe, Sterlite, Edelweiss all lead the pack

Sterlite Technologies, Ispat Industries, Lanco Infratech and Edelweiss Capital are among the other gainers.

Real estate developer Omaxe surged 42.31% to Rs 319.85. It topped gainers in the BSE's A group shares.

Telecom cables maker Sterlite Technologies soared 41.88% to Rs 224.10. It was the second biggest gainer in the A group.

Steel maker Ispat Industries spurted 30.56% to Rs 44 and stood third among the top gainers in A group.

Engineering and construction firm Lanco Infratech moved up 30.13% to Rs 563.45. It was the fourth biggest gainer in A group.

Brokerage Edelweiss Capital rose 29.73% to Rs 1,112.95. It was the fifth biggest gainer in A group.

Poll - Are you bull or bear now?

Just to get a sense of what the visitors are thinking, we'll have this quick poll - its up for only 2 days

Vote now and let us know what you are!

Poll on the right top :)

Market rebounds with vengeance

The market showed a big sign of relief after the Federal Reserve cut the interest rates by 75 basis points to hold the US economy from slipping into recession. After battering for two consecutive sessions, the market had a sharp turn-around today helped by strong buying in realty, power, oil, and metal stocks. The bounce-back came after a steep fall of over 4,000 points in the market since the downslide began the last week. Despite resuming 685 points higher over its last close at 17,415, the index faltered under selling pressure and quickly touched the day's low of 16,951. However, the sentiment turned bullish by the afternoon and the Sensex surged 1,267 points or 7.57% to touch the day's high of 17,997. The Sensex finally ended the session with gains of 5.17% or 864 points at 17,594, whereas the Nifty soared by 6.21% or 304 points at 5,203.

However, the market breadth was negative. Of the 2,722 stocks traded on the Bombay Stock Exchange (BSE) 1,401 stocks declined, 1,300 stocks advanced and 21 stocks ended unchanged. All the sectoral indices were back in action and moved up sharply. The BSE Realty Index was the major gainer and rose 11.44%. The BSE Power Index jumped 9.81%, the BSE Oil & Gas Index added 8.73%, the BSE Metal Index gained 6.85% and the BSE PSU Index was up 6.77%.

Several index heavyweights notched up significant gains. Among the major gainers, Reliance Energy flared up 15.94% at Rs1,990, NTPC zoomed 13.73% at Rs224, Satyam Computer shot up by 10.84% at Rs393, TCS flared up 8.48% at Rs867, Reliance Industries vaulted 8.35% at Rs2,555, BHEL advanced 8.09% at Rs2,146, SBI scaled up 7.64% at Rs2,324, Bajaj Auto surged 7.44% at Rs2,215 and Hindalco added 6.95% at Rs161. Other front-line stocks also moved up by 2-6% each. However, Bharti Airtel dropped marginally at Rs847.

Over 3.45 Ispat Industries shares changed hands on the BSE followed by RNRL (3.44 crore shares), Reliance Petroleum (2.12 crore shares), Tata Teleservices (1.53 crore shares) and IFCI (1.49 crore shares).

Valuewise, RNRL clocked a turnover of Rs466 crore followed by Reliance Petroleum (Rs357 crore), Reliance Industries (Rs332 crore), ICICI Bank (Rs256 crore) and Reliance Energy (Rs231 crore)

Market bounces back after two-day carnage

The market surged today after a two-day rout on speculation more funds will move to emerging markets after an emergency 75 basis points announced by the US Federal Reserve on Tuesday, 22 January 2008. Despite the sharp spurt, the market breadth was negative on BSE.

Trading was choppy throughout the day. The market opened with a spurt but immediately pared gains. It started firmed up again in mid-morning trade supported by firm Asian markets. European markets opened higher but most of them slipped in the red as the day progressed.

The BSE Sensex advanced 931.61 points or 5.57% to 17,661.55, as per provisional closing. Sensex today registered its biggest ever intra-day rise in absolute terms. It had surged to an intra-day high of 17,997.11. At the day’s high, the Sensex gained 1267.17 points. Sensex hit a low of 16,951.03 in early trade. At the day’s low, the Sensex was up 223.02 points for the day.

The broader CNX S&P Nifty surged 318.95 points or 6.51% to 5,218.25 as per provisional closing. It struck a high of 5,328.05 in mid-afternoon trade.

The US Federal Reserve in a surprise move on Tuesday, 22 January 2008, cut Fed funds rate and discount rate by 75 basis points each. The Fed funds rate is now at 3.5%. It is the largest rate cut in one shot for the first time in 24 years. The US central bank's move followed two days of steep losses in Asian and European equities on worries that a deteriorating US economy would drag other regions down with it.

The total turnover on BSE amounted to Rs 7099 crore as compared to Rs 5545 crore by 14:30 IST.

Despite the rally, the market breadth was negative on BSE: 1401 shares declined as compared to 1302 that rose. 23 shares remained unchanged.

The BSE Mid-Cap index surged 8.15% to 7,789.31 and the BSE Small-Cap index gained 3.96% to 10,425.34, as per provisional closing

All the 30-members of Sensex pack advanced.

India's largest power utility company Reliance Energy surged 16.76% to Rs 2004 after the company today said it had won a railway project worth Rs 2500 crore from the Delhi Metro Rail Corporation, in consortium with Spain's CAF. It was the top gainer from Sensex pack.

India’s largest generation company in terms of net profit National Thermal Power Corporation galloped 13.25% to Rs 222.75 on high volumes of 65.99 lakh shares. As per reports the company plans to invest Rs 1,729 crore for development of the Jharkhand coal mine.

IT pivotals saw value buying. Satyam Computers (up 10.25% to Rs 391), TCS (up 7.47% to Rs 859), Infosys (up 2.86% to Rs 1417), and Wipro (up 1.43% to Rs 435) logged gains

Banking and financial shares surged on hopes of a rate cut from the Reserve Bank of India following the Fed rate cut. India’s largest dedicated housing finance company in terms of revenue Housing Development Finance Company surged 3.21% to Rs 2560.

ICICI Bank, the country’s largest private sector bank in terms of net profit, gained 4.89% to Rs 1179.70. State Bank of India, the country's largest bank in terms of net profit vaulted 8.56% to Rs 2344

HDFC Bank jumped 6.83% to Rs 1538. On Monday, 21 January 2008, HDFC Bank reported 45.2% rise in net profit to Rs 429.36 on on 59.70% rise in total income to Rs 3405.79 crore in Q3 December 2007 over Q3 December 2006.

India’a largest private sector firm by market capitalization and oil refiner Reliance Industries surged 8.48% to Rs 2558. 13.10 lakh shares changed hands on the counter on BSE

India's top commercial vehicles maker by sales Tata Motors rose 1.76% to Rs 669.80 on reports that the company has signed a development contract with Chrysler LLC for developing electric vehicles.

European markets, which began trading after Indian markets, slipped into the red. Key benchmark indices in Germany (down 1.51% to 6,667.45), France (down 0.23% to 4,831.33), and United Kingdom (down 0.19% to 5,729.40) declined.

Asian markets, which began trading before Indian markets, were trading higher today 23 January 2008. Hong Kong's Hang Seng (up 10.72% at 24,090.17), China’s Shanghai Composite (up 3.14% to 4,703.77), Japan's Nikkei (up 2.04% at 12,829.06), and South Korea's Seoul Composite (up 1.21% at 1,628.42) advanced.

However, Taiwan's Taiwan Weighted slipped 2.29% at 7,408.40

The Dow Jones industrial average which was down 465 points at one point of time staged a solid intra-day rebound to close 128.11 points lower at 11,971.19 on Tuesday after the Fed rate cut. The Standard & Poor's 500 index, fell 14.69, or 1.11%, to 1,310.50, while the Nasdaq Composite index lost 47.75, or 2.04%, to 2,292.27.

Back home market suffered fall for the seventh straight day on Tuesday, 22 January 2008 triggered by selling by foreign institutional investors (FIIs), margin calls and weak global markets. The BSE Sensex plunged 875.41 points or 4.97% to 16,729.94, on Tuesday 22 January 2008. The S&P CNX Nifty lost 309.50 points or 5.94% to settle at 4,899.30, on Tuesday 22 January 2008.

As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 4265.19 crore on Tuesday, 22 January 2008, their highest single day outflow since they started investing in the market in 2001. Domestic institutional investors (DIIs) were net buyers of shares worth Rs 2278.71 crore on Tuesday, 22 January 2008.

FIIs were net buyers to the tune of Rs 7,669.88 crore in the futures & options segment on Tuesday, 22 January 2008. According to data released by the NSE, FIIs were net buyers of index futures to the tune of Rs 2,823.06 crore and sold index options worth Rs 137.26 crore. They were net buyers of stock futures to the tune of Rs 4,989.56 crore and sold stock options worth Rs 5.49 crore.

Buying from insurance firms and mutual funds has supported the market at declines in recent months. Insurance firms have been raising lots of funds through unit-linked insurance plans with high weightage for equity. The money is being pumped in the secondary market. It now remains to be seen whether the investors in a unit-liked insurance plan (ULIP) stick to a plan with high exposure to equity if the market continues to remain weak. Insurance companies provide ULIP investors an option to switch over to debt funds from equity funds with certain restrictions.

Fundamentals of the Indian economy remain strong. Corporate profits continue to grow at a good pace

Meanwhile, Bhartiya Janata Party (BJP) has decided to take a measured approach to the crisis with no demand for the resignation of Finance Minister P Chidambaram, reacting to second sharp day of market meltdown on 22 January 2008. Instead, party president Rajnath Singh has asked party workers to wait at least for a week and allow the panic to die down.

Post Market Commentary -Jan 23 2008

The market closed on a strong note on the back of heavy buying across the sectoral indices scrips. The market opened with hand some gains backed by favoring cues from the Asian markets and soon pared some of its gains but gained the momentum there after to closed on an upbeat note. The market also took the news by surprise of an intermeeting cut in the fed funds rate 75 basis point to 3.50% by the Federal Open Market Committee and a 75 basis point cut in the discount rate to 4.00%. The BSE Sensex touched an intraday high of 17,997.11 and low of 16,951.03. The BSE Sensex closed up by 864.13 points at 17,594.07 and NSE Nifty grew by 304.1 points to close at 5,203.40. The BSE Mid Cap and Small Cap closed higher by 587.06 points and 396.95 points at 7,789.31 and 10,425.34 respectively.

BSE Realty index surged 1,088.83 points at 10,609.67 as Omaxe (42.31%), Penland (41.05%), Ansal Infra (30.24%), Anant Raj (20%), Sobha Dev (18.18%) and Unitech (11.99%) closed in green.

BSE Metal index closed higher by 966.97 points at 15,081. Scrips that advanced are Ispat Inds (30.56%), Hind Zinc (15.73%), Sesa Goa (15.45%), Jindal Stainless (14.52%) and SAIL (12.12%).

BSE Oil & Gas index grew by 870.80 points to close at 10,845.58. Scrips that jumped are Essar Oil (27.11%), RNRL (20.68%), RPL (15.30%), GAIL India (8.64%) and Reliance Inds (8.35%).

BSE Capital Goods index grew by 768.40 points to close at 17,221.13. Scrips that gained are Elecon Eng (17.80%), Kir Oil Eng (17.12%), Praj Inds (15.10%), Bharat Elec (13.26%), BHEL (8.09%) and Areva (7.37%).

BSE Bankex index closed up by 572.89 points at 10,731.24. Scrips that grew are Union bank (21.94%), Allahabad bank (19%), Andhra bank (15.47%), IOB (11.99%), BOB (11.78%) and Oriental bank (10.18%).

BSE IT index advanced by 187.78 points to close at 3,631.37 as NIIT Techno (15.37%), Aptech (13.50%), GTL Ltd (12.70%), Rolta India (11.92%), Satyam (10.84%) and TCS (8.48%) closed higher.

Fed cuts rates, can it boost the market ?

The market may advance today, reversing its seven day fall on the back of global recovery, triggered by the US Federal Reserve’s surprise rate cut. The US Federal Reserve in a surprise move on Tuesday, 22 January 2008, cut Fed funds rate and discount rate by 75 basis points each. The Fed funds rate is now at 3.5%. This comes as an attempt to limit the risks of a recession, after huge selling in global financial markets. It is the largest rate cut in one shot for the first time in 24 years.

Most Asian markets were trading higher today, 23 January 2008. Hong Kong's Hang Seng (up 7.28% at 23,342.18), Japan's Nikkei (up 3.35% at 12,994.32), Singapore's Straits Times (up 2.97% at 2,951.82), and South Korea's Seoul Composite (up 1.74% at 1,637.02) advanced. However, Taiwan's Taiwan Weighted (down 0.17% at 7,569.05) and China’s Shanghai Composite (down 0.24% to 4,548.80) declined..

The Dow Jones industrial average which was down 465 points at one point of time staged a solid intra-day rebound to close 128.11 points lower at 11,971.19 on Tuesday after the Fed rate cut. The Standard & Poor's 500 index, fell 14.69, or 1.11%, to 1,310.50, while the Nasdaq Composite index lost 47.75, or 2.04%, to 2,292.27.

Back home market suffered fall for the seventh straight day on Tuesday, 22 January 2008 triggered by selling by foreign institutional investors (FIIs), margin call and weak global markets. the BSE Sensex plunged 875.41 points or 4.97% to 16,729.94, on Tuesday 22 January 2008. At one point of time it was down 2273.93 points. But value buying and short covering helped the markets erase some of sharp losses. The S&P CNX Nifty lost 309.50 points or 5.94% to settle at 4,899.30, on Tuesday 22 January 2008.

The BSE Sensex lost 4,097.51 points or 19.67% in just seven consecutive sessions from a recent high of 20,827.45 on 11 January 2008. The S&P CNX Nifty lost 1300.80 points or 20.98% from 6200.10 on 11 January 2008.

Sensex has now pared 4476.83 points or 21.11% from its record high of 21,206.77 hit on 10 January 2008. The S&P CNX Nifty is down 1457.80 points or 22.93% from all-time high of 6,357.10 hit on 8 January 2008.

As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 4265.19 crore on Tuesday, 22 January 2008, their highest single day outflow since they started investing in the market in 2001. Domestic institutional investors (DIIs) were net buyers of shares worth Rs 2278.71 crore on Tuesday, 22 January 2008.

FIIs were net buyers to the tune of Rs 7,669.88 crore in the futures & options segment on Tuesday, 22 January 2008. According to data released by the NSE, FIIs were net buyers of index futures to the tune of Rs 2,823.06 crore and sold index options worth Rs 137.26 crore. They were net buyers of stock futures to the tune of Rs 4,989.56 crore and sold stock options worth Rs 5.49 crore.

Buying from insurance firms and mutual funds has supported the market at declines in recent months. Insurance firms have been raising lots of funds through unit-linked insurance plans with high weightage for equity. The money is being pumped in the secondary market. It now remains to be seen whether the investors in a unit-liked insurance plan (ULIP) stick to a plan with high exposure to equity if the market continues to remain weak. Insurance companies provide ULIP investors an option to switch over to debt funds from equity funds with certain restrictions.

Fundamentals of the Indian economy remain strong. Corporate profits continue to grow at a good pace

Reliance Energy gets New Delhi order

Reliance Energy (REL) has reportedly bagged the New Delhi-Indira Gandhi International Airport link of the Delhi metro. Delhi Metro Rail Corporation (DMRC) has issued a letter of intent (LOI) to a consortium of REL and CAF of Spain, the reprots suggested.

Infosys and Wipro may reportedly bid for specific verticals of $13-billion Capgemini. The Indian IT majors who have enough cash assets for a large buyout are not interested in complete company acquisition because of stringent labour laws in France (where the Capgemini is headquartered) and other parts of Europe, reports suggested.

GHCL is reprotedly demerging its businesses into three separate firms which would all be listed entities. According to reports, the firm is likely to demerge into three companies which would be involved in soda ash, home textiles and retailing.

Consolidation of associate banks’ of State Bank of India (SBI) with their parent bank is likely to get delayed. The crucial board meeting of the six associate banks of SBI slated on 24 January 2008 to consider an in-principle nod for merger with their parent bank has been put off, the reports suggested.

Balaji Telefilms reported 13.55% decline in net profit to Rs 18.82 crore 5.95% fall in sales to Rs 79.97 crore in Q3 December 2007 over Q3 December 2006.

SpiceJet reported net profit of Rs 9.34 crore in the quarter ended December 2007. Sales reported at Rs 408.51 crore in the quarter ended December 2007

Punjab Tractors reported 3.25% rise in net profit to Rs 25.40 crore 15% increase in sales to Rs 302.90 crore in Q3 December 2007 over Q3 December 2006.

Lanco Industries reported 30% rise in net profit to Rs 8.06 crore on 28.28% increase in sales to Rs 130.29 crore in Q3 December 2007 over Q3 December 2006.

Swaraj Engines reported 24.80% rise in net profit to Rs 4.68 crore on 12.28% increase in sales to Rs 38.96 crore in Q3 December 2007 over Q3 December 2006.

Tamil Nadu Newsprint & Papers reported 27.71% rise in net profit to Rs 28.48 crore on 9.65% increase in sales to Rs 235.14 crore in Q3 December 2007 over Q3 December 2006.

Tata Teleservices Maharashtra (TTML) reported net loss of Rs 27.43 crore in the quarter ended December 2007 as against net loss of Rs 59.17 crore during the previous quarter ended December 2006. Sales rose 21.25% to Rs 439.76 crore in Q3 December 2007 over Q3 December 2006.

Ballarpur Industries, Bank Of Maharashtra, Bongaigaon Refinery & Petrochemicals, Canara Bank, Chennai Petroleum, Dena Bank, Fortis Healthcare, Hind Zinc, Mid-Day, Nagarjuna Fertiliser, Polaris Software, PVR, Shree Renuka Sugars, Shriram Transport Finance, Sonata Software, SRF, Sun TV Network, Bank Of Rajasthan, Union Bank of India, Varun Shipping, will declare their December 2007 ended results today.

Pre Market Watch - Jan 23 2008

The Indian Market is likely to have a positive opening due to favoring cues from the Asian markets. Yesterday, the Indian market closed in red but considering the initial set back, it has managed to recover some ground during the final trading hours of the session. The market opened with circuit down on the back of negative cues from the global markets and was suspended for an hour. The BSE Sensex closed lower by 875.41 points at 16,729.94 and NSE Nifty fell by 309.5 points to close at 4,899.30. We expect that the market may remain volatile during the trading session. The Federal Open Market Committee has approved the 75 basis point inter meeting cut in the fed funds rate to 3.50%.

On Tuesday, the US market closed in red. The Dow Jones Industrial Average (DJIA) closed lower by 127.62 points at 11,971.68. S&P 500 index slipped by 14.69 points to close at 1,310.50 and NASDAQ dropped by 47.75 points to close at 2,292.27

Indian ADRS closed in mixed. In technology sector, Satyam grew by (3.46%) along with Wipro by (1.32%) and Infosys by (0.13%). In banking sector, HDFC bank and ICICI bank slipped by (4.61%) and (1.06%) respectively. MTNL and VSNL dropped by (17.22%) and (12.05%) respectively.

The major stock markets in Asia are trading firm. Hang Seng is trading higher by 1584.55 points at 23,342.18 along with Japan''s Nikkei trading up by 421.27 points at 12,994.32 and Singapore Starit Times is trading at 2,951.82 up by 85.27 points.

On Tuesday, the FIIs stood as net seller both in equity and debt. The gross equity purchased was Rs4,896.90 Crore and the gross debt purchased was Rs142.40 Crore while the gross equity sold stood at Rs7,322.50 Crore and gross debt sold stood at Rs236.40 Crore. Therefore, the net investment of equity reported was (Rs2,425.70 Crore) and net debt was (Rs93.90 Crore).

Today, Nifty has support at 4,789 and resistance at 5,043 and BSE Sensex has support at 16,372 and resistance at 17,681.