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Wednesday, February 20, 2008
Grey Market - Rural Electrification, V-Guard
Rural Electrification 90 to 105 18 to 20
GSS America InfoTech 400 to 440 Discount
Bang Overseas 207 10 to 13
Shriram EPC 300 Discount (Listing Today!)
IRB Infra 185 12 to 15
Manjushree Extrusion 45 5 to 7
Tulsi Extrusions 85 10 to 12
V. Guard Ind. 80 to 85 10 to 12
Market may decline on weak global cues
The market may slide following weak global cues. However some rebound may come at lower levels in second half.
Meanwhile in an attempt to boost liquidity, the Securities and Exchange Board of India (Sebi) panel has recommended that the face value of shares be made a uniform Re 1 in two phases. In the first phase, said the primary market advisory committee of SEBI, all forthcoming IPOs be priced based on a mandatory Re 1 face value per share. In the second phase, listed entities having shares with more than Re 1 face value be asked to bring it down to the uniform value. The panel recommendation would be discussed at the next SEBI board meeting.
Asian markets were lower today, 20 February 2008. Japan's Nikkei (down 0.77% at 13,651.64), Hong Kong's Hang Seng (down 0.39% at 24,027.91), Taiwan's Taiwan Weighted index (down 0.29% at 8,000.74), Singapore's Straits Times index (down 0.71% at 3,076.16), South Korea's Seoul Composite index (down 0.56% at 1,710.92) and China’s Shanghai Composite index (down 0.98% to 4,618.51) edged lower
US markets slipped on Tuesday, 19 February 2008 as crude oil surged above $100 a barrel, erasing earlier gains on concerns that higher energy costs could fan inflation and cut consumer spending and profits. The Dow Jones industrial average declined 10.99 points, or 0.09%, to 12,337.22. The Standard & Poor's 500 index slipped 1.21 points, or 0.09%, to 1,348.78; and the Nasdaq composite fell 15.60 points, or 0.67%, to 2,306.20.
Back home, the 30-share BSE Sensex rose 27.61 points or 0.15% at 18,075.66 on Tuesday, 19 February 2008. The broader based S&P CNX Nifty gained 3.90 points or 0.07% at 5,280.80 on that day.
At current 18,075.66, Sensex trades at a PE multiple of 17.21 to 18.07, based on projected FY 2009 EPS of Rs 1000-to-Rs 1050 for 30 Sensex companies.
As per provisional data, foreign institutional investors (FIIs) purchased shares worth Rs 329.25 crore on Tuesday, 19 February 2008. Domestic institutional investors (DIIs) were net sellers of shares worth Rs 48.29 crore on that day
FIIs were net buyers to the tune of Rs 424.68 crore in the futures & options segment on Tuesday, 19 February 2008. They were net buyers of index futures to the tune of Rs 94.69 crore and bought index options worth Rs 218.01 crore. They were net buyers of stock futures to the tune of Rs 101.01 crore and bought stock options worth Rs 10.97 crore.
Crude oil slipped on Wednesday, 20 February 2008 after surging nearly 5% to a record above $100.10 a barrel a day ago amid an influx of fresh investor capital into the commodities sector and concerns that Organization of Petroleum Exporting Countries (OPEC) will not hike output next month. U.S crude slipped 61 cents to $99.40 a barrel. London Brent crude fell 68 cents to $97.88 a barrel.
Pre Market Watch - Feb 20 2008
The Indian Market is likely to have a negative opening due to unfavoring cues from the global markets. On Tuesday, the market closed with marginal gains after a strong start to the session. Taking the strong cues from the Asian markets, the domestic market opened with a bang and created a rally across the sectoral indices scrips. The market tumbled after the mid session to pare all its initial gains as the profit booking across the sectoral indices prevailed and finally managed to close with little gains. The Small Cap and Mid Cap scrips seemed to attract the investor''s confidence as most buying was seen from these baskets. The BSE Sensex closed higher by 27.61 points at 18,075.66 and NSE Nifty closed up by 3.9 points at 5,280.80. We expect that the market may remain range bound during the trading session.
On Tuesday, the US market was closed in negative. The Dow Jones Industrial Average (DJIA) closed lower by 10.99 points at 12,337.22. S&P 500 index fell by 1.21 points to close at 1,348.78 and NASDAQ dropped by 15.60 points to close at 2,306.20.
Indian ADRs closed mixed. In technology sector, Satyam grew by (0.42%) while Wipro fell by (0.35%) along with Infosys by (0.29%). In banking sector, HDFC bank and ICICI bank fell by (1.31%) and (1.04%) respectively.
Today, the major stock markets in Asia are trading weak. Japan''s Nikkei is trading lower by 106.27 points at 13,651.64 along with Hang Seng trading down by 95.26 points at 24,027.91 and Taiwan Weighted trading at 8,000.74 down by 23.67 points.
The FIIs on Tuesday stood as net seller in equity while buyer in debt. The gross equity purchased was Rs1,766.90 Crore and the gross debt purchased was Rs106.90 Crore while the gross equity sold stood at Rs21,882.80 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity reported was (Rs115.90 Crore) and net debt was Rs106.90 Crore.
Today, Nifty has support at 5,198 and resistance at 5,336 and BSE Sensex has support at 17,753 and resistance at 18,369.
Morning Call - Feb 20 2008
Market Grape Wine :
In House :
Nifty to be range bound between 5100 to 5500 for the time being .
Buy : ACC above 797 target 820 s/l 785
Sell : Gail target 400 s/l 421
Out House :
Markets at a support of 17717 & 17871 levels with resistance at 18208 & 18303 levels .
Buy : RIL & RelCap
Buy : Sail
Buy : SBIN
Buy : JpHydro & Neyvelli
Buy : MRPL & EssarOIL
Buy : Adhunik & PrimeSec
Buy : IndiaGlycol
Dark Horse : SKumar , RELCAP , MRPL , EssarOIL , Jphydro , RIL , Sbin , & Aban
Trading Calls - Feb 20 2008
Nifty (5281) Supp 5200 Res 5380
Buy Rel Cap (2553) SL 2530 target 2995, 3010
Buy Gitanjali Gems (304) SL 299 target 312, 315
Buy Cairn (214) SL 210 target 221, 224
Sell Idea (107) SL 111 target 100, 99
Sell BILT (144) SL 148 target 136, 13
Oil's not well in the markets!
Formula for success: Rise early, work hard, strike oil
If only we knew how to strike oil, life and markets would be a different ball game. Oil appears to be the latest spoilsport for the markets. US light crude oil for March delivery skyrocketed $4.51 to settle at $100.01 a barrel on the New York Mercantile Exchange. In fact, prices even briefly hit $100.10 a barrel.
US markets, which were positive at open came sliding down. High oil prices, increased worries about inflation, weakness in telecom stocks and financial sector woes pulled down the main US indices.
Asian markets too are weak. Worries about the impact of the rising oil prices took its toll on automakers and electricity producers.
Given the global weakness, we expect the markets to remain in the red at start. However, there is always a likelihood that some buying emerges to take the market into positive zone later in the day. The bulls and bears are a tired lot and that is evident from the low volumes on the bourses.
Remain light and in case you buy, do so only for the long term. Nothing prevents you from booking gains in the short term. But for doing that wait till you make some gains.
The primary market is showing some glimmer of hope. OnMobile made a decent debut yesterday. Today. Shriram EPC gets listed on the bourses.
Orchid Chemicals & Pharmaceuticals could gain as it has won approval to sell its version of GlaxoSmithKline Plc's antibiotic Ceftin in the U.S. The company was permitted by the Food and Drug Administration to sell tablets of cefuroxime axetil, or generic Ceftin.
FIIs turned net buyers of Rs940mn in Index Future and turned net buyers of Rs1.01bnin Single Stock Futures. In the Cash segment FIIs were net buyers by Rs3.29bn and DIIs were net sellers of Rs482.9mn.
Most of Asia's benchmarks open for trading were weak except in China. Japan's Nikkei 225 Stock Average was down 0.5 percent at 13,690.59.
Among the major bulk deals on Tuesday, Goldman Sachs sold over 1.6 lac shares of BL Kashyap at an average price of Rs1630 and Reliance Capital offloaded around 1.5 lac shares of Sundaram Finance at an average price of Rs660.
Lehman Brothers fell 2.5% after the Wall Street Journal reported the brokerage could face a considerable writeoff due to its exposure to bad mortgage bets.
Credit Suisse Group was down 5.2% after it said it would have to cut its profit by $1 billion.
Barclays, gained as it reported profit that topped expectations. However, it has lifted its 2007 writedowns related to assets tied to US subprime mortgages.
In media reports today:
National Hydroelectric Power Corporation (NHPC) is likely to come out with its initial public offering (IPO) only by early next fiscal as the company is still awaiting the appointment of the requisite number of independent directors on its board by the Government.
After restructuring its pharmaceuticals and investment businesses into two different entities, RPG Life Sciences hopes to get its pharmaceuticals business listed around March or April.
Reliance Industries Ltd (RIL) and Essar Oil Ltd have raised the retail selling prices of auto fuels – petrol and diesel – sold by them. The private sector retailers have increased the price of petrol by Rs 2 a litre and diesel by Re 1 per litre.
International Hospital Ltd a wholly owned subsidiary of Fortis Healthcare Ltd, along with Oscar Investments Ltd (OIL) has acquired 62.17 per cent equity of the Chennai-based Malar Hospitals Ltd (MHL) for Rs 34.68 crore.
Exide is planning to enter the US market in 2008-09, Gautam Chatterjee, Director -Industrial, was quoted as saying. The company is in dialogue with a few distributors there.
Bombay Dyeing plans to turn around its textile business in FY09.
NIIT Tech ties-up with Chinese province for setting-up IT training centers and training programs.
Plethico Pharma plans a manufacturing facility in Dubai to counter capacity crunch.
Mphasis sheds around 200 people at its Chennai centre.Market may continue to drift
Firm cues from the Asian markets coupled with buying momentum in scrip’s across the sectors lifted the markets to post a strong start. Key indices managed to hold on to their gains for major part of the session until, profit booking emerged in the last hour of trading session. Selling pressure was seen in the Realty, Power stocks and even the Mid-Cap and the Small-Cap stocks came under pressure. Sensex dropped 250 points and NSE Nifty slipped over 100 points from their respective days high. Finally, the 30-share Sensex closed at 18,075 adding 27 points. The NSE Nifty closed at 5,280 adding 4 points.
Overall about 1,507 stocks advanced, 1.238 stocks declined while 63 stocks remained unchanged. Among the BSE 30 index 19 stocks advanced while 11 stocks declined.
Among the BSE Sectoral indices, BSE Consumer Durable index (up 2.8%), BSE Auto index (up 1.6%), BSE Pharma index (up 1.3%). Among the losers were BSE Realty index (down 1.3%) and BSE Power index (down 1.1%)
OnMobile Global a provider of telecommunications value added software products and services got listed at Rs435 against issue price of Rs440. The scrip finally closed at Rs518 translating into a premium of 17.5% hitting an intra-day high of Rs579 and a low of Rs411 recording volumes of over 2,00,00,000 shares on NSE.
The company had entered the capital market with a public issue of 1.09crore equity shares at a price band of Rs425-450 and got subscribed 10.95 times. The IPO was subscribed 11 times. The QIB portion was subscribed 17 times, HNI 2.6 times and retail 1.3 times.
Shopper's Stop rallied by over 15% to Rs451 on report that Reliance Industries and Aditya Birla Group were interested in buying the retail chain. However, the company came out and clarified that the company was not on sale. The scrip touched an intra-day high of Rs467 and a low of Rs409 and recorded volumes of over 1,00,000 shares on NSE.
Ranbaxy spurted by over 4.5% to Rs415 after the Board of directors of the company approved demerger of research unit. The company declared that it would give 1 research unit share for every 4 held. The scrip touched an intra-day high of Rs419 and a low of Rs400 and recorded volumes of over 16,00,000 shares on NSE.
ABB slipped 2.7% to Rs1316. The company announced its Q4 results with net profit at Rs1.8bn (up 38.4%) and revenue at Rs18.6bn (up 29.1%). The scrip touched an intra-day high of Rs1374 and a low of Rs1291 and recorded volumes of over 2,00,000 shares on NSE.
3i Infotech surged by over 6% to Rs125 after the company announced that it entered into Joint Venture with for China’s Yucheng. 3i Infotech would hold 51% whereas, Yucheng would hold 49% in Joint Venture. The scrip touched an intra-day high of Rs127 and a low of Rs119 recording volumes of over 1,00,000 shares on NSE.
Canara Bank ended flat at Rs306. Media reports stated that the company would buy Indonesian bank with around 100 branches. The scrip touched an intra-day high of Rs312 and a low of Rs303 and recorded volumes of over 10,00,000 shares on NSE.
Educomp Solutions surged by over 6% to Rs4355 after reports stated that the company has entered into an agreement with Ansal Properties and Infrastructure to set up schools in 16 integrated townships with an investment of about Rs2.5bn over the next three years. The scrip touched an intra-day high of Rs4400 and a low of Rs4150 and recorded volumes of over 1,00,000 shares on NSE.
BEML surged by over 3.5% to Rs1222 as the company announced that they expect orders to rise to Rs40bn by March 31, 2008. The scrip touched an intra-day high of Rs1266 and a low of Rs1192 and recorded volumes of over 67,000 shares on NSE.
Castrol India gained 1% to Rs282 as the company posted a net profit after tax of Rs567.6mn for the quarter ended December 31, 2007 as compared to Rs380.8mn for the quarter ended December 31, 2006. Total income increased from Rs4.85bn for the quarter ended December 31, 2006 to Rs4.86bn for the quarter ended December 31, 2007. The scrip touched an intra-day high of Rs290 and a low of Rs281 and recorded volumes of over 57,000 shares on NSE.
News Snippets:
- Ranbaxy board approves de-merger of its R&D unit. The swap ratio has been fixed at 4:1.
- Reliance Capital gets RBI approval for ARC business. (ET)
- British Gas (BG) picks up stake in ONGC’s two deep water exploration blocks. (BS)
- M&M is targeting revenues worth US$3bn over the next ten years from deals in the defense space involving supply of land equipment systems to the armed forces. (ET)
- NTPC selects three foreign companies for a 40% stake in its renewable energy JV with ADB. (DNA)
- Reliance Communications likely to place an order for 5mn set top boxes for its proposed DTH broadcasting venture. (DNA)
- Bajaj Auto gets High Court approval for the proposed de-merger. (DNA)
- Bhel and Alstom bids for 740MW gas power project by ONGC Tripura Power Corporation. (FE)
- BEML order book to increase by 25% this fiscal. (DNA)
- Satyam Computers sets up a 350-seater delivery centre in Hyderabad. (BL)
- JSW Steel top increase its galvalume steel capacity to 0.6mtpa by October 2008. (BL)
- Tata Group invests an undisclosed sum in Singapore-based private jet operator, BJETS. (FE)
- UB Group to expand its product basket by launching about 80 wine brands including imported brands this year. (FE)
- BEML signs agreements with different companies to manufacture defence equipment in India. (BS)
- Bharat Electronics signs MoU with Israel’s defence equipment maker for making missile electronics and missile guiding systems for Indian military. (BS)
- Stand-alone tower companies such as Essar Telecom Tower, GTL Infra, Quipo, Xcel Telecom and TowerVision are planning to consolidate their businesses to compete with existing big three tower companies. (ET)
- Parsvnath Hotels, a subsidiary of Parsvnath Developers, has formed a JV with Royal Orchid Hotels which will develop ten hotels at an investment of Rs5bn. (ET)
- Biocon acquires majority 70% stake in Germany-based AxiCorp Pharmaceuticals for Euro 30mn. (ET)
- Patel Engineering in a JV with KNR Constructions has bagged a Rs2.1bn NHAI contract. (ET)
- Bhushan Steel sings an agreement with MP Government for setting-up coke and cement plants with an investment of Rs30bn. (BL)
- Coal India and IL&FS to form a JV to undertake project development for mine, power and other coal-based projects. (BL)
- 3i Infotech plans a JV with Chinese company for servicing its domestic clients. (BL)
- Sun TV to launch FM Radio stations in Kerala and Karnataka on February 20th and 21st respectively. (FE)
- Government may cut excise and custom duties on petroleum products. (ET)
- Rupee hits a 5-month low of Rs39.95 against the US Dollar. (ET)
- Large power projects including UMPPs may soon get a total duty waiver for purchasing equipments without going through international competitive biding. (ET)
- Railway freight earnings up 12.3% to Rs383bn in April’07-January’08. (ET)
- Finance Ministry extends the service tax refund scheme for exporters to include three more services - couriers, goods transport agencies and container transportation by rail. (BL)
Sail, NTPC, RCom February 2008 futures at discount
Turnover in F&O segment increases
Nifty February 2008 futures were at 5250.25, at a discount of 30.55 points as compared to spot closing of 5280.80.
The NSE's futures & options (F&O) segment turnover was Rs 36,397.03 crore, which was higher than Rs 32,416.67 crore on Monday, 18 February 2008.
Steel Authority of India (Sail) February 2008 futures were at discount, at 227.80, compared to the spot closing of 230.50.
NTPC February 2008 futures were at discount, at 203.05, compared to the spot closing of 204.80.
Reliance Communications (RCom) February 2008 futures were at discount, at 598, compared to the spot closing of 606.35.
In the cash market, the S&P CNX Nifty gained 3.9 points or 0.07% at 5280.80.
A new high for crude price
OPEC comments pushes crude above $100 mark
Crude prices ended substantially higher today, Tuesday, 19 February, 2008. Prices rose today after comments from Organization of Petroleum Exporting Countries (OPEC) officials hinted a production cut in the near term. Oil also rose after the U.S. dollar fell against the euro, enhancing the appeal of commodities as an inflation hedge.
Crude-oil futures for light sweet crude for March delivery today closed at $100.01/barrel (higher by $4.51/barrel or 4.7%) on the New York Mercantile Exchange. The price earlier rose to an intraday high of $100.1. Crude touched $100 a barrel in the first session of January and topped the historic mark in the second session.
Last week, two ministers of Organization of Petroleum Exporting Countries (OPEC) hinted that the cartel might go for a production cut in its next meeting at March, 2008. This spurted up crude prices and the same ended almost 4% higher on that day. At its 1 February meeting at Vienna, OPEC members decided to keep current output levels unchanged.
Again over this weekend, it was reported that Iranian oil minister said that reducing production is very normal for OPEC in March. Iran is OPEC’s second largest oil producer.
Brent crude oil for April settlement today rose $3.65 (3.9%) to $98.56 on the London-based ICE Futures Europe exchange. The London benchmark rose 54% in FY 2007, the most since 1999 when prices more than doubled.
Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.
Natural gas gains 20% this year
Natural gas price rose substantially today. Natural gas advanced to the highest in 15 months on forecasts that colder weather in the eastern half of the U.S. will spur demand and as crude oil touched a record. Natural gas for March delivery rose 31.7 cents (3.7%) to settle at $8.977 per million British thermal units. Gas has advanced 20% so far this year.
Against this backdrop, March reformulated gasoline advanced 10.93 cents (4.4%) to close at $2.6031 a gallon, after earlier touching $2.6169. March heating oil surged 11.54 cents, or 4.4%, to $2.7614 a gallon. Gasoline surged after an explosion yesterday shut Alon USA Energy’s Big Spring, Texas, refinery.
In a monthly report released last week, EIA said the world oil market is poised to ease over the next two years with production increases offsetting moderate growth in oil demand.
At the MCX, crude oil for February delivery closed at Rs 3,901/barrel, higher by Rs 110 (2.9%) against previous day’s close. Natural gas for February delivery closed at Rs 357.3/mmtbu, higher by Rs 7/mmtbu (2%).
Gold and silver soar
Gold and silver prices soar on higher demand as inflation hedge
Bullion metals were back in their rally and the same soared today, Tuesday, 19 February, 2008. Prices soared as other commodity prices also increased with slipping dollar. Silver prices ended higher for the day. On the other hand, crude prices closed above $100 mark for the first time ever today.
Gold generally moves in the opposite direction of the U.S. currency. Gold, as a dollar-denominated commodity, suffers from dollar strength.
Comex Gold for April delivery rose $23.7 (2.6%) to close at $929.8 an ounce on the New York Mercantile Exchange. On 30 January, 2008 prices had hit a high of $941 in the after hours trading. This year, prices have gained 11.6% till date. In January, prices gained 11%, the highest monthly gain since April 2006. Last week, gold prices suffered a loss of $16.2/ounce (1.8%).
Comex Silver futures for March rose by 39 cents (2.3%) to $17.508 an ounce. Silver has gained 15.8% in 2008. The metal had climbed 16% in FY 2007. The metal also has gained for seven straight years. In January this year itself, prices climbed 14%.
Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Rising crude increases inflationary pressures and vice versa. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Gold witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
In the energy market today, crude-oil futures surged nearly 5% to close above the $100 a barrel mark for the first time ever, as concerns that the Organization of Petroleum Exporting Countries may cut production boosted prices. Prices closed above the $100 mark at $100.1/barrel for the first time ever.
The dollar began day under pressure. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, dropped 0.4% to 75.945.
Gold dropped last week after the Group of Seven officials meeting in Tokyo over the last weekend said they supported the International Monetary Fund's effort sell its gold reserves in order to invest in higher-yielding assets. The IMF is the third largest holder of gold in reserves after the U.S. Federal Reserve and the German central bank.
As per the London-based World Gold Council, the global gold demand dropped to 843 metric tons from 1,013.4 tons in the last three months of 2007. Buyers from India, the world's biggest user, reduced purchases by 64% in the last quarter to 83.9 tons. About 68% of gold demand last year came from jewelers and jewelry use dropped 17% in that time.
At the MCX, gold prices for April delivery closed higher by Rs 258 (2.2%) at Rs 11,836 per 10 grams. Prices rose to a high of Rs 11,872 per 10 grams and fell to a low of Rs 11,587 per 10 grams during the day’s trading.
At the MCX, silver prices for March delivery closed Rs 434 (1.9%) higher at Rs 22,348/Kg. Prices opened at Rs 21,940/kg and went to a high of Rs 22,440/Kg during the day’s trading.
Today's Pick - ACC
We recommend a buy in ACC from a short-term perspective. It is clearly evident from the charts of ACC that the stock has been on a downtrend from its life-high of Rs 1,315 touched in mid October 2007. The stock found support at the key long-term support of Rs 700 in mid January and has been moving sideways since then. More recently, the stock breached the 21-day moving average and then began to move up. This up move was backed by positive divergence of the daily momentum i ndicator. This indicator has entered the neutral region from the bearish territory. We also see that there is an increase in volume in the last trading session. We notice a crossover in the daily moving average convergence divergence and it is steadily rising towards the positive levels. Our short-term outlook for the stock is bullish. We expect the stock’s current up move to prolong further to our target price of Rs 900 in the short-term. Investors with a short-term perspective can buy the stock while keeping the stop loss at Rs 725.
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