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Tuesday, October 20, 2009
Ashoka Buildcon files DRHP with Sebi
Plans to raise Rs 225 crore via IPO
Ashoka Buildcon, engaged in construction business of roads and bridges, has filed the draft red herring prospectus (DRHP) with market regulator the Securities and Exchange Board of India (Sebi) for its proposed Rs 225 crore initial public offer (IPO).
Price of the issue will be determined through 100% book-building process. The equity shares offered through this IPO, are proposed to be listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Ashoka Buildcon is engaged in the business of building and operating roads and bridges.
The company will utilize the issue proceeds for investment in capital equipment, working capital requirements, prepayment / repayment of project loans of the company and funding certain subsidiaries for prepayment / repayment of their loans.
Small-cap, mid-cap indices survive market slide
Key benchmark indices edged lower as a glut in share sales by Indian firms may suck liquidity from the secondary market. Investors took some profits off the table after a recent sharp surge in share prices triggered by huge foreign fund inflows. Intraday volatility was immense. Index heavyweight Reliance Industries (RIL) led the decline as the Supreme Court began hearing arguments on gas tussle with Reliance Natural Resources (RNRL). The BSE 30-share Sensex fell 103 points or 0.59%, off close to 135 points from the day's high and up about 35 points from the day's low.
As per provisional data, foreign funds today, 20 October 2009, bought equities worth a net Rs 275.89 crore. Domestic funds offloaded stocks worth a net Rs 140.80 crore
Capital goods and telecom stocks fell. But, realty and metal stocks rose. The market breadth was negative in contrast to a strong breadth earlier in the day.
The market was volatile. The market surged in early trade as the government's decision to sale stake in two state-run power firms indicated a resolve to speed up reforms. The S&P CNX Nifty hit its highest level in more than 17 months in early trade. The market regained positive territory after slipping into the red for a brief period in morning trade. The market pared gains in choppy trade later. The market weakened again in mid-afternoon trade on lower European stocks.
A solid rebound was witnessed at about 14:40 IST when the Sensex moved into green from red. A sharp fall was witnessed soon after the intraday recovery with the Sensex hitting a fresh intraday low in late trade. The market cut losses at the fag end of the trading session.
The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market. As per reports, Indian firms have garnered about $9 billion (Rs 32,400 crore at the current exchange rates) through sale of shares and convertible bonds to institutional buyers since April 2009. Indian companies are taking advantage of a surge in liquidity to recapitalize and fund capital expenditure after being starved of cash last year.
Most of these companies - from industries ranging from liquor and spirits to infotech - issued equity shares to a select group of investors by way of qualified institutional placement or QIP. If the enabling resolutions passed by the companies are any indication, Indian firms are gearing up to raise $15 billion (Rs 69,427 crore) in the next six months. The list includes Hindalco (Rs 2,900 crore), JSW Steel ($1 billion), India Cements ($100 million), Essar Oil ($2 billion), Tata Steel (Rs 5,000 crore), Jet Airways ($ 400 million) and Bharat Forge ($150 million),
Unlisted Reliance Infratel announced on 22 September 2009 its intention to raise Rs 5,000 crore from the primary market. Divestment of state-run firms by the government may also increase the supply of paper in the market.
The government on Monday approved stake sales in state-run power producer NTPC and another unlisted power firm Satluj Jal Vidyut Nigam which reflects the country's resolve to speed up reforms and raise more resources for social schemes. On Monday, Trade Minister Anand Sharma said the Union Cabinet had approved a 5% stake sale in NTPC, and 10% in, an unlisted power producer. On Friday, 16 October 2009, Prime Minister Manmohan Singh said many state-run firms are eager to list their shares in the stock market as it would help unlock their value.
Singh said on Tuesday the Indian economy will expand at 6-6.5 %in the year to March 2010, despite uncertainty whether signs of a global recovery will lead to a return to a sustained growth path. Singh also said the drought in the country, the worst in decades, had further hit the poorest sections of its people.
Meanwhile, the Union Cabinet has approved a plan to release the key wholesale inflation number every month rather than on a weekly basis to improve the measurement of price movements. The new wholesale price index with 2004 as the base year will debut on 14 November 2009, Commerce Minister Anand Sharma said on Monday. The base year used for the current weekly index is 1993.
Faster industrial output growth and rising inflationary pressures have strengthened case for an end to the RBI's accommodative monetary stance next year. Industrial output grew at its fastest pace in 22 months in August at 10.4 %.
The RBI pumped in massive liquidity in the banking system in the past one year or so to help revive the domestic economy in the aftermath of the global financial crisis. While as exit from the loose monetary policy is imminent, speculation on the bourses is the timing of the exit policy. The RBI is expected to keep its benchmark lending and borrowing rates on hold at a quarterly monetary policy review on 27 October 2009.
Stock and sector-specific activity may dominate trade in the coming days based on expectations on Q2 September 2009 results. Auto firms are seen reporting strong Q2 results on strong volume growth and on lower input costs. Lower interest rates and pay hike for government employees has boosted auto sales this year after last year's slowdown in demand. Government employees have started receiving the balance 60% of their wage arrears as per the recommendations of the VIth Pay Commission.
Cement firms, too, are seen reporting good Q2 numbers on the back of volume growth, higher realisation and decline in costs like imported coal. Metal firms are seen reporting fall in net profit due to a sharp fall in metal prices on year-on-year basis.
Fall in volumes in the commercial property segment and lower realisations in both commercial and residential property segments, will pull earnings of realty firms lower.
Banks are seen reporting a sedate growth in core lending amid sluggish credit offtake. On the flip side, PSU banks will benefit from treasury gains amid volatility in prices of government securities during the quarter.
Strong growth in new subscriber additions will aid topline growth of telecom firms. But falling average revenue per user (ARPU) and revenue per minute due to intense competition will cap bottom line growth.
The aggregate net profit of 196 companies which have announced results so far, rose 22.5% to Rs 8242 crore on 6.9% rise in sales to Rs 51671 crore in Q2 September 2009 over Q2 September 2008.
European shares rose in a volatile trade on earnings optimism. Key benchmark indices in France, Germany and UK were up by between 0.14% to 0.39%.
Earlier in the day Asian stocks rose after reassuring earnings reports in the US from Apple and Texas Instruments on Monday. Key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.03% to 1.52%. Bu, Singapore's Straits Times fell 0.02%.
China's economy is growing faster with every month and its overall recovery is improving, Vice Premier Li Keqiang was quoted as saying on Tuesday. The comments by Li, reported by the official Xinhua news agency, were among the most optimistic by Chinese officials since the economy began to bounce back from the global financial crisis.
Trading in US index futures indicated the Dow could rise 33 points at the opening bell on Tuesday, 20 October 2009.
US markets rallied to new 2009 highs on Monday, 19 October 2009, on earnings optimism. The S&P 500 closed just shy of the 1,100 mark. The Dow added 96.28, points or 1%, to 10,092.19. The S&P 500 index rose 10.23 points, or 0.9%, to 1,097.91. The Nasdaq Composite Index rose 19.52 points, or 0.9%, to 2,176.32.
In important earnings from the US, tech major Apple's profit and sales beat analysts' forecasts. The company reported fourth quarter earnings at nearly 2 dollars a share, up from little over a dollar per share in the same period last year. This was above analyst estimates of around 1.4 dollars per share. Texas Instruments, a maker of microchips for phones and other uses, provided stronger-than-forecast earnings guidance.
Federal Reserve Chairman Ben Bernanke warned on Monday that Asian export-promotion policies and large US budget deficits could refuel global economic imbalances and put efforts to achieve more durable growth at risk if not curbed. Throwing his weight behind a recent call by leaders of the Group of 20 major powers to rebalance the global economy in the wake of a devastating financial shock, Bernanke said Asian nations like China that enjoy large trade surpluses should discourage excess saving and boost consumption.
At the same time, he said the United States needed to increase its saving and "substantially reduce federal deficits over time."
Hedge funds attracted $1.1 billion from investors in the third quarter ended September 2009, ending a one-year streak of net withdrawals, according to Hedge Fund Research Inc. More than two-thirds of hedge funds experienced inflows in the quarter. Funds with assets of more than $5 billion experienced outflows while those with less than $500 million attracted money in the quarter.
Meanwhile, hedge fund manager Galleon Group's founder Raj Rajaratnam was arrested Friday, 16 October 2009, on charges of insider trading. Galleon Hedge Fund, which currently has assets under management of about $3.7 billion, has a 7% stake in broking firm Edelweiss Capital, 4.6% stake in construction firm Shriram EPC and 0.3% stake in Pipavav Shipyard.
Rajaratnam's lawyer has insisted his client isn't guilty of the charges. But investors in the group's funds could follow the lead of Rochdale Investment Management, which said Monday it was liquidating its stake in the Galleon Diversified fund. If enough investors left Galleon, managers at the firm could be forced to sell shares of companies it owns in order to meet those redemptions. Galleon could also seek to prevent investors from redeeming money immediately.
Galleon's troubles already had an impact Monday in Sri Lanka, where Rajaratnam was born and is a citizen--he is also a citizen of the US. That market's benchmark lost as much as 3% early Monday, and ended down 1.6% for the day.
Emerging-market equity fund inflows surged in the second week of October 2009 on optimism improving US earnings and China's trade figures signal increased demand for commodities, fund tracker EPFR Global said on Friday, 16 October 2009. Heavy inflows were seen in funds specialized in BRIC countries -- Brazil, Russia, India and China. Asia ex-Japan funds received $823 million in the week ended 14 October 2009.
The BSE 30-share Sensex lost 103 points or 0.59% to 17,223.01. The Sensex rose 131.25 points at the day's high of 17,457.26 in early trade. The barometer index fell 140.97 points at the day's low of 17,185.04 in late trade.
The S&P CNX Nifty fell 27.35 points or 0.53% to 5,114.45. It hit a high of 5,181.95 in early trade, its highest since 6 May 2008. Nifty October 2009 futures were at 5,107, at a discount of 7.45 points as compared to the spot closing of 5,114.45. Turnover in NSE's futures & options (F&O) segment surged to Rs 74,134.92 crore from Rs 56,190.92 crore on Friday, 16 October 2009.
BSE clocked a turnover of Rs 5328 crore, lower than Rs 6237 crore on Friday, 16 October 2009.
The market breadth, indicating the overall health of the market turned negative. Breadth was strong in early trade. On BSE, 1315 shares advanced as compared with 1466 that declined. A total of 52 shares remained unchanged.
Among the 30-member Sensex pack, 18 fell while the rest rose.
With foreign funds making heavy purchases, the Sensex is up 7,575.70 points or 78.52% in calendar year 2009 as on 20 October 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 9062.61 points or 111.05% as on 20 October 2009. FII inflow in the calendar year 2009 totaled Rs 66,706.30 crore (till 16 October 2009).
Coming back to today's trade, the BSE Mid-Cap index rose 0.06% and the BSE Small-Cap index rose 0.16%. Both the indices outperformed the Sensex.
Sectoral indices on BSE displayed mixed trend. The BSE Realty index (up 0.9%), the BSE Metal index (up 0.81%), the BSE IT index (up 0.34%), the BSE Auto index (up 0.2%), the BSE PSU index (down 0.36%), the BSE FMCG index (down 0.36%), the BSE Bankex (down 0.37%), the BSE Teck index (down 0.41%), outperformed the Sensex.
The BSE Oil & Gas index (down 1.7%), the BSE Consumer Durables index (down 1.5%), the BSE Capital Goods index (down 1.21%), the BSE Healthcare index (down 0.71%), the BSE Power index (down 0.69%), underperformed the Sensex.
Index heavyweight Reliance Industries (RIL) fell 1.84% to Rs 2,183.65. It came off a day's high of Rs 2240.30. Supreme Court, which on Tuesday began a hearing in the high-profile gas supply dispute between Reliance Industries and Reliance Natural Resources, will continue to hear the case on Wednesday, a lawyer for one of the firms said on Tuesday.
This is the first hearing on the case after Anil Ambani offered to make peace with Mukesh Ambani. The younger brother had earlier accused the Ministry of Petroleum and Natural Gas of siding with Mukesh.
RIL had first moved the apex court, challenging the decision of the Bombay High Court delivered on 15 June 2009 and which had asked RIL to provide 28 million metric standard cubic metres per day (mmscmd) of gas to RNRL at a price of $2.34 per million British thermal unit (mBtu). The government had also moved a special leave petition in the case, asserting its right on pricing and distribution of natural gas. RNRL argued that the government has no role to play either in the utilisation or the fixation of gas price on its contract with RIL. However, RIL has contended that it was only a contractor for the gas from the KG-D6 block and did not have the power to fix the price.
PSU OMCs rose as a stronger rupee has partly negated the effect of the rally in crude prices. BPCL, HPCL and Indian Oil Corporation (IOC) rose by between 0.02% to 1.81%. Higher crude oil prices normally result in increase in under recoveries for PSU OMCs on domestic sale of petrol, diesel, kerosene and LPG at controlled prices. The rupee has surged in the past few days against the dollar. It is currently hovering near one year high against the dollar.
US crude futures rose more than half a percent on Tuesday to a one-year high of $80.05 a barrel on a weak dollar and firm US stock markets.
Realty stocks rose on recent reports that demand for residential projects in major cities is picking up on lower home loan rates, property price cuts by developers and a recovery in the job market. Realty market had slumped last year amid a global credit crunch and buyers fearing job losses. Anant Raj Industries, DLF, Housing Development & Infrastructure rose by between 0.33% to 1.6%.
Unitech rose 1.77% after the Cabinet Committee on Economic Affairs (CCEA) on Monday approved Norway-based Telenor's proposal to hike stake in Unitech Wireless, its telecom venture with Unitech, to 74%.
Metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange, rose 3.16% on Monday. Hindalco Industries, National Aluminum Company, Hindustan Zinc rose by between 0.43% to 4.74%.
Steel Authority of India (Sail) rose 4.03% on renewed market talk the government is considering a stake sale in the state-run firm. The government holds 85.82% % stake in Sail.
But, India's largest copper maker by sales Sterlite Industries fell 1.15%. The company, last week, raised $500 million in convertible senior notes and plans to use the proceeds primarily for expansion of its copper business. The notes are convertible into American depositary shares at $23.33 per share.
India's largest engineering and construction firm by sales Larsen & Toubro fell 1.02%. Strong project execution is seen driving growth in L&T's top line and bottom line in Q2 September 2009. A total of five brokerages expect a between 19% to 42.3% growth in L&T's net profit at between 546.30 crore to Rs 654.70 crore in Q2 September 2009 over Q2 September 2008. L&T unveils Q2 September 2009 results on Thursday, 22 October 2009
India's largest power maker by sales Bharat Heavy Electricals fell 1.3%. The government, last week, ruled out any immediate plan to disinvest its stake in the power equipment maker. The government owns 67% stake in Bhel.
Among other capital goods stocks, ABB, Praj Industries, BEML, Siemens, Punj Lloyd, fell by between 0.61% to 2.08%.
India's largest thermal power generator by sales NTPC rose 1.01% after Union Cabinet approved a 5% stake sale in the firm by the government.
Among other power stocks, Torrent Power, Reliance Infrastructure, GVK Power & Infrastructure rose by between 0.22% to 3.76%.
Telecom stocks fell. India's second largest mobile services provider by sales Reliance Communications (RCom) fell 2.85%. Anil Ambani chairman of RCom on Thursday, 15 October 2009, alleged there was a 'vicious and malafide' campaign against his telecom company Reliance Communications by a 'known rival group' and dubbed the special audit report, which claimed that RCom was mis-stating its revenues as 'biased and prejudiced'. But the auditor, Parekh & Co defended its work and also denied a claim by Mr Ambani that it had not sought feedback from RCom.
India's largest mobile services provider by market share Bharti Airtel fell 1.31%.
Bank stocks fell on profit taking after recent strong gains. India's largest private sector bank by net profit ICICI Bank fell 0.44% even as its ADR rose 1.8% on Monday. The bank recently reduced auto loan rates by 50 basis points.
India's second largest private sector bank by net profit HDFC Bank fell 0.92% even as its ADR rose 1.65% on Monday. The bank's net profit rose 30.2% to Rs 687.46 crore in Q2 September 2009 over Q2 September 2008. The results, which hit the market last week, were more or less in line with market expectations.
But, India's largest bank by branch network State Bank of India rose 0.12%.
The central bank will reportedly hike the ceiling on the portion of government securities that banks can park in held-to-maturity (HTM) category. Banks do not have to make any mark-to-market provisions on securities held this basket if prices of securities fall. Provisions have to be made out of profit and therefore, impact a bank's bottom line. Yields on ten-year government bonds have risen sharply this year. Bond prices and bond yields are inversely related.
Indian banks can put bonds equal to 25% of the value of deposits in their HTM accounts. The market expectations is for an increase in the ceiling by up to 2 percentage points, possibly at a quarterly monetary policy review on 27 October 2009.
India's largest dedicated housing finance firm HDFC fell 1.15%. HDFC, last week, announced its net profit rose 24.27% to Rs 663.94 crore in Q2 September 2009 over Q2 September 2008. The results beat market expectations.
Jaiprakash Associates rose 2.04% to Rs 265.15 ahead of its Q2 results on Wednesday, 21 October 2009. Strong order book and higher cement realization are seen driving growth at construction and cement firm Jaiprakash Associates (JAL) in Q2 September 2009. A total of 6 brokerages expect a between a 4.7% fall to a 21.7% growth in JAL's net profit at between Rs 193.50 crore to Rs 247.20 crore in Q2 September 2009 over Q2 September 2008. Their expectations peg a between 64.4% to 83.6% growth in revenue at between 1944.80 crore to Rs 2170.80 crore in Q2 September 2009 over Q2 September 2008.
Reliance Infrastructure rose 0.38% after company announced today it had won an order worth Rs 590 crore.
Auto stocks rose on expectation of strong Q2 September 2009 results. India's largest motor bike maker by sales Hero Honda Motors rose 0.59%. Hero Honda is seen reporting robust Q2 results on the back of higher volumes and surge in profit margins due to fall in input costs. A total of nine brokerages expect a between 59.1% to 83.1% growth in Hero Honda's net profit at between Rs 487.20 crore to Rs 560.70 crore in Q2 September 2009 over Q2 September 2008. The company unveils Q2 results on Wednesday, 21 October 2009.
India's top small car maker by sales Maruti Suzuki India rose 1.65%. The company's total sales rose 17.3% to 83,306 vehicles in September 2009 over September 2008. The figures were released during trading hours on 1 October 2009.
India's largest truck maker by sales Tata Motors rose 0.36%. Tata Motors is planning to ramp up production of its Nano, billed as the world's cheapest car, by a fifth this month, Rajiv Dube, head of the company's passenger car business said last week. The company said during market hours on 16 October 2009 said it has raised $750 million through an issue of global depositary receipts (GDRs) and convertible bonds. The company said it will use the funds to repay debt taken for acquisition of Jaguar Land Rover (JLR).
Bajaj Auto rose 0.54%. Bajaj Auto's net profit jumped 117.85% to Rs 402.83 crore in Q2 September 2009 over Q2 September 2008. The company announced the Q2 results during trading hours on Thursday, 15 October 2009.
But, India's largest tractor maker by sales Mahindra & Mahindra fell 3% on profit taking after recent surge. Total sales rose 10.94% to 28434 vehicles in September 2009 over September 2008. The company unveiled the sales figures during trading hours on 1 October 2009.
Total domestic automobile sales in the country in the first half of the financial year 2009-10 rose by 14.51% year-on-year to 57,82,920 units, according to automobile sales figures released by the Society of Indian Automobile Manufacturers (Siam). The jump in sales for the April-September period came from the double-digit growth posted by the passenger vehicle segment (comprising cars and sports utility vehicles) which grew by 13.46%, by the 15.68% spurt in two-wheeler sales and by an increase of 12.37% in sales of three-wheelers.
FMCG stocks fell on profit taking. Hindustan Unilever, ITC, Tata Tea, Nestle India, REI Agro fell by between 0.02% to 1.75%.
Ultratech Cement fell 1.83% extending Friday's fall after the company issued a cautious outlook at the time of announcing Q2 results on Friday, 16 October 2009. Net profit jumped 53% to Rs 251 crore in Q2 September 2009 over Q2 September 2008.
UltraTech said the performance was affected on a sequential basis due to lower demand in Southern India. The net profit dropped 39.94% to Rs 250.90 crore in Q2 September 2009 over Q1 June 2009.
The company said the cement demand may grow 9% in the year ending March 2010 on the back of government's initiative to boost rural development, infrastructure and housing. It, however, said new capacities which at various stages of implementation will result in pressure on margins.
The company said its focus on higher volume growth, captive power generation and capital productivity will help offset the impact of lower prices on margins.
Among other cement stocks, ACC, Grasim Industries, Birla Corporation and Ambuja Cements, fell by between 0.36% to 1.82%.
IT stocks rose after US tech major Apple reported better-than-expected results on Monday. India's third largest software services exporter Wipro rose 1.88% as its ADR rose 2.51% on Monday.
India's largest software services exporter TCS rose 2.09% after the company after market hours on Friday, 16 October 2009, reported stronger-than-expected Q2 September 2009 results. Consolidated net profit as per US accounting standards rose 6.81% to Rs 1623.90 crore on 3.16% growth in revenue to Rs 7435.10 crore in Q2 September 2009 over Q1 June 2009.
TCS has a good business pipeline and is pursuing 20 to 25 large outsourcing deals, chief executive N. Chandrasekaran said. The management is seeing signs of recovery but it believes it will be slow. The discretionary spent is still tight but there is spent seen in banking, finance services and insurance (BFSI), retail, utility and pharma verticals, TCS said at a conference call after the results. However, a continuous improvement in volumes cannot be expected, it said. The company is seeing stability in demand environment. The management expects to maintain margins at current levels provided there is no adverse rupee movement.
But, IT bellwether Infosys Technologies fell, 0.36%. Infosys raised its earnings and revenue guidance in both dollar and rupee terms for the year ending March 2010 (FY 2010) at the time of announcing Q2 September 2009 results before trading hour on 9 October 2009.
Infosys, however, said strengthening rupee is a big concern for its earnings. A stronger rupee negatively impacts operating margins of IT firms as the sector earns a lion's share of revenue from exports. The rupee is hovering near its highest level in more than a year.
Sugar stocks rose on firm global sugar prices. Bajaj Hindustan, Balrampur Chini, Shree Renuka Sugars and Dhampur Sugars rose by between 3.23% to 8.25%.
Cals Refineries clocked highest volume of 9.94 crore shares on BSE. Reliance Natural Resources (1.5 crore shares), Ispat Industries (0.99 crore shares), GVK Power & Infrastructure (0.96 crore shares) and Unitech (0.88 crore shares) were the other volume toppers in that order.
DLF clocked highest turnover of Rs 161.91 crore on BSE. State Bank of India (Rs 137.43 crore), Reliance Industries (Rs 134.26 crore), Reliance Natural Resources (Rs 132.47 crore) and Educomp Solutions (Rs 130.29 crore) were the other turnover toppers in that order.
Pre Session Commentary - Oct 20 2009
Today domestic markets are likely to open positive amid by strong start in Asian Market, robust rally in US Market overnight and strong trade of SGX Nifty. The session would be followed by volatility in a narrow range. One could expect fresh buying in IT, Metals and Banking sphere. Sector and stocks specific buying could help the broader market to make an upward move. Today domestic market is likely to trade range bound with positive bias.
For Muhurat trading, the market closed on a flat note after strong start. The Markets pared early gains on account of profit booking pressure on frontline stocks and negative sentiments across US markets as Bank of America reported dismal set of numbers. Banks are seen reporting a sedate growth in core lending amid sluggish credit offtake. However, better than expected Q2 results of TCS provided some support to bourses but that was short lived. According to fund tracker EPFR Global-Emerging-market equity fund inflows surged in the second week of October 2009 on optimism improving US earnings and China''s trade figures signal increased demand for commodities. Extensive inflows were seen in funds specialized in BRIC countries - Brazil, Russia, India and China. Asia ex-Japan funds received $823 million in the week ended 14 October 2009. CD, Teck, Metals and IT Indices were major gainers with gains of 0.71%, 0.69%, 0.65% and 0.39% respectively whereas Banking, FMCG, Realty and CG were losers with loss of 0.30%, 0.09%, 0.04% and 0.01% respectively.
The BSE Sensex closed higher by 3.19 points or 0.02% at 17,326.01 and NSE Nifty declined 0.35 points or 0.01% at 5,141.80. BSE Mid Caps and Small Caps closed with gains 43.07 and 104.12 points at 6,651.56 and 7,771.12 respectively. The BSE Sensex touched intraday high of 17,493.17 and intraday low of 17,260.66.
On Monday, the US stock market closed higher amid by broad-based buying in stocks.
Strong global cues shrugged positive tone for participants in the early trade, but weakness in the financial sector quickly swipes away the broad market’s opening gains. Regional banks were the major draggers for the financial sector. BB&T released better-than-expected earnings of $0.23 per share. However, broad-based purchase pushed all three major indices to new highs for the year. Further, S&P 500 weren''t able to push through the psychologically 1100 level, but they didn''t roll over after being rebuffed, either. Meanwhile, material stocks spurted from both broader market interest and higher commodity prices, which pushed the CRB Commodity Index to fresh high for the year. Weakening dollar benefited commodities as well as stocks this session. The greenback slipped 0.3% against a basket of major foreign currencies this session. That pushed the Dollar Index marginally above its 12-month lows. US light crude oil futures for November delivery closed up 1.2 % at $79.44 per barrel, on the New York Mercantile Exchange.
The Dow Jones Industrial Average (DJIA) ended with gain of 96.28 points at 10,092.19. NASDAQ index spurted 19.52 points to 2,176.32 and the S&P 500 (SPX) closed higher by 10.23 points at 1,097.91.
The Indian ADR was ended mostly higher yesterday. In the IT space, Infosys was up 0.78%, Wipro was up 2.51%, Patni was up 1.91%, while Satyam was down 1.54%. In the banking sector, ICICI Bank was up 1.80% and HDFC Bank was up 1.65%. In the telecom pack, Tata Comm was up 1.56% and MTNL was up 3.24%. In the other sectors, Sterlite was up 1.12%, Tata Motors was up 0.65%, while Dr Reddys was up 0.54%.
The FIIs on Friday stood as net buyers in equity and debt. Gross equity purchased stood at Rs. 3,924.20 crore and gross debt purchased stood at Rs. 1,173.20 crore, while the gross equity sold stood at Rs. 2,961.10 crore and gross debt sold stood at Rs. 81.70 crore. Therefore, the net investment of equity and debt reported were Rs. 963.10 crore and Rs 1,091.50 crore respectively.
On Friday, the partially convertible rupee ended at 46.29/30 per dollar, 0.13% weaker than previous closing at 46.23/24 per dollar. The rally in rupee was paused by demand for the U.S. unit from importers and oil refiners, but sharper losses were limited by gains in the local share market and managed to post its sixth straight weekly rise.
On BSE, total number of shares traded were 17.32 crore and total turnover stood at Rs. 1,735.55 crore. On NSE, total number of shares traded were 21.06 crore and total turnover was Rs. 3,806.11 crore.
Top traded volumes on NSE Nifty – Unitech with total volume traded 7340406 shares, followed by Suzlon Energy with 4727915, Bharti Airtel with 4316320, DLF with 3846607 and Reliance Communication with 3583253 shares.
On NSE Future and Options, total number of contracts traded in index futures was 100323 with a total turnover of Rs. 2,502.63 crore. Along with this total number of contracts traded in stock futures were 156963 with a total turnover of Rs. 5,324.65 crore. Total numbers of contracts for index options were 192470 with a total turnover of Rs. 4,931.86 crore and total numbers of contracts for stock options were 14532 and notional turnover was Rs. 491.19 crore.
Today, Nifty would have a support at 5,134 and resistance at 5,192 and BSE Sensex has support at 17,263 and resistance at 17,398.
Latest Grey Market Premium - Indiabulls Power
| Company Name | Offer Price (Rs.) | Premium (Rs.) |
| Thinksoft Global | 125 | 4 to 5 |
| Indiabulls Power | 40 to 45 | 1.50 to 2 |
Market may gain on positive Asia; RIL eyed
The market may extend recent strong gains on positive global cues on earnings optimism. The market reopened after a long holiday. A special one hour Muhurat trading was held on Saturday on the bourses to mark the beginning of the new Samvat year as per the Hindu calendar. The market remained closed on Monday, 19 October 2009 on account of Diwali.
Sesa Goa, Tech Mahindra, Apollo Tyres, Gati, Polaris Software, Radico Khaitan, Sterlite Technologies, Subex Azure, JK Paper, Nectar Life, Prakash Industries, TVS Electronics among others will announce their Q2 September 2009 result today.
Index heavyweight Reliance Industries will be in action as the Reliance Industries (RIL) and Reliance Natural Resources (RNRL) gas dispute is scheduled to be taken up by the Supreme Court in an afternoon hearing today. A three-judge bench, headed by Chief Justice K G Balakrishnan and comprising Justices P Sathasivam and RV Raveendran, will hear the case. Raveendran replaces Justice B S Chauhan. This is the first hearing on the case after Anil Ambani offered to make peace with Mukesh Ambani. The younger brother had earlier accused the Ministry of Petroleum and Natural Gas of siding with Mukesh.
RIL had first moved the apex court, challenging the decision of the Bombay High Court delivered on 15 June and which had asked RIL to provide 28 million metric standard cubic metres per day (mmscmd) of gas to RNRL at a price of $2.34 per million British thermal unit (mBtu).The government had also moved a special leave petition in the case, asserting its right on pricing and distribution of natural gas. RNRL argued that the government has no role to play either in the utilisation or the fixation of gas price on its contract with RIL.However, RIL has contended that it was only a contractor for the gas from the KG-D6 block and did not have the power to fix the price.
Meanwhile, the government on Monday approved stake sales in state-run power producer NTPC and another unlisted power firm Satluj Jal Vidyut Nigam which reflects the country's resolve to speed up reforms and raise more resources for social schemes. On Monday, Trade Minister Anand Sharma said the federal cabinet approved a 5 % stake sale in NTPC, and 10 % in, an unlisted power producer. On Friday, Prime Minister Manmohan Singh said many state-run firms are eager to list their shares in the stock market as it would help unlock their value.
India's cabinet approved a plan to release the key wholesale inflation number every month rather than on a weekly basis to improve the measurement of price movements. The new wholesale price index with 2004 as the base year will debut on 14 November 2009, Commerce Minister Anand Sharma said. The base year used for the current weekly index is 1993.
Inflation based on the wholesale price index (WPI) rose 0.92% in 12 months to 3 October 2009, slightly above previous week's annual rise of 0.7%, data released by the government on Thursday showed.
Faster industrial output growth and rising inflationary pressures have strengthened case for an end to the RBI's accommodative monetary stance next year. Industrial output grew at its fastest pace in 22 months in August at 10.4 %.
Stock and sector-specific activity may dominate trade in the coming days based on expectations on Q2 September 2009 results. Auto firms are seen reporting strong Q2 results on strong volume growth and on lower input costs. Lower interest rates and pay hike for government employees has boosted auto sales this year after last year's slowdown in demand. Government employees have started receiving the balance 60% of their wage arrears as per the recommendations of the VIth Pay Commission.
Cement firms, too, are seen reporting good Q2 numbers on the back of volume growth, higher realisation and decline in costs like imported coal. Metal firms are seen reporting fall in net profit due to a sharp fall in metal prices on year-on-year basis.
Fall in volumes in the commercial property segment and lower realisations in both commercial and residential property segments, will pull earnings of realty firms lower.
Banks are seen reporting a sedate growth in core lending amid sluggish credit offtake. On the flip side, PSU banks will benefit from treasury gains amid volatility in prices of government securities during the quarter.
Strong growth in new subscriber additions will aid topline growth of telecom firms. But falling average revenue per user (ARPU) and revenue per minute due to intense competition will cap bottom line growth.
The aggregate net profit of 169 companies announced so far rose 21.1% to Rs 7624 crore on 7.5% rise in sales to Rs 46895 crore in Q2 September 2009 over Q2 September 2008.
Asian stocks rose, today as earnings reports boosted confidence in the global recovery. The key benchmark indices in China, Hong Kong, Japan, South Korea, Siingapore and Taiwan rose by between 0.15% to 1.19%.
US markets rallied to new 2009 highs on earnings optimism on Monday, 19 October 2009. The S&P 500 closed just shy of the 1100 mark. The Dow added 96.28, points or 1%, to 10,092.19. The S&P 500 index rose 10.23 points, or 0.9%, to 1,097.91. The Nasdaq Composite Index rose 19.52 points, or 0.9%, to 2,176.32.
In important earnings from the US, tech major Apple's profit and sales beat analysts' forecasts. The company reported fourth quarter earnings at nearly 2 dollars a share, up from little over a dollar per share in the same period last year. This was above analyst estimates of around 1.4 dollars per share.
Closer home, the key benchmark indices closed the Muhurat trading session held on Saturday to mark the start of new Hindu year on a flat note after an upbeat start. The BSE 30-share Sensex rose 3.19 points or 0.02% to 17,326.01, its highest closing since 16 May 2008 on that day after gaining 0.74% on Friday.
A section of the market is concerned that a glut in share sales may suck liquidity from the secondary market. As per reports, 30 companies have filed their draft red herring prospectuses in September 2009 with market regulator Securities & Exchange Board of India (Sebi) for raising funds through initial public offering.
The corporate sector has raised large sums of money through equity and equity related instruments in the past six months or so to either to retire high cost debt or to fund expansion. The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market.
As per one report, companies plan to raise over Rs 50,000 crore through initial public offers (IPOs), follow-up public offers, divestment of stake sale in the second half of the current financial year. Reliance Infratel also announced on 22 September 2009, its intention to raise Rs 5,000 crore from the primary market. A number of companies are also in the fray to raise funds by way of qualified institutional placement (QIP), reports suggest. Divestment of state-run firms by the government may also increase the supply of paper in the market.
Daily News Roundup - Oct 20 2009
Sterlite Industries raises US$500mn via convertible bonds. (ET)
A cabinet committee has approved the sale of 5% stake in NTPC which is likely to fetch the government around Rs90bn. (ET)
Reliance Industries has been asked to rework certain technical aspects in its investment proposal for bringing to production, gas finds from its Mahanadi Basin. (BL)
HCL Infosystems raised Rs4.7bn through qualified institutional placement (QIP) of equity shares. (BL)
Government approves stake sale in power firms NTPC and Satluj Jal Vidyut Nigam (SJVNL), but postponed a decision on the overall disinvestment policy. (BS)
HCL Infosystems bags a contract worth over Rs5bn from the Rajasthan State Electricity Board. (ET)
RIL plans to own refining assets in the US and Europe. (BS)
The government approved Telenor’s proposal to raise stake in its Indian joint venture Unitech Wireless to 74%. (BS)
Supreme court to hear RIL-RNRL arguments from today (FE)
The Company Law Board allows Satyam Computer Services to adjust past irregularities and finalize its accounts for the year 2008-09. (ET)
Axis bank recasts business into strategic units. First Bank To Go In For SBU Structure; Retail & Corp Banking, SME And Agri Among The New Units. (ET)
Uco Bank is looking to raise upto Rs9.5bn through follow-on-public offer (ET).
The Edelweiss group receives approval from RBI to set up an asset reconstruction company. (ET)
Etisalat has pipped Bharti Airtel and BSNL, Russia’s Vimpelcom and Axiata to buy Luxembourg based Millicom’s Sri Lankan mobile network. (ET)
Rural Electrification Corporation board of directors has approved the proposed follow-on public offer. (ET)
ITC could make a killing from its 14.98% stake in EIH. (BS)
Ranbaxy Lab wins a decisive ruling from the District Court of New Jersey. (FE)
Hero Honda unveiled two new variants of Hunk and Splendor. (BS)
International Finance Corporation concludes a US$250mn loan agreement with Cairn India to support the company in developing oil resources in Rajasthan. (FE)
Wyeth becomes part of Pfizer Inc, following the merger of its parent company Wyeth with the global pharma major. (FE)
Tata Steel shareholders approve an enabling proposal for raising Rs50bn through issue of securities. (FE)
The disinvestment department to seek Cabinet approval for sale of government equity in MMTC Ltd in the next financial year. (BS)
CIL against use of Jamuria coal bed for Videocon plant. (BS)
TVS Motor to launch the country’s first motorcycle with automatic clutch by the end of 2009. (BL)
Gemini Communication has emerged as on of the lowest bidder for BSNL WiMax deal. (BL)
Foreign exchange reserves rose by US$1.5bn during the week ended October 9. (ET)
Cement companies to add 31mn tons capacity in H2 FY10. (BL)
The Reserve Bank of India plans to direct banks to stop levying penalty on pre-payment of retail loans. (ET)
In a bid to attract private developers for six-lining of the ambitious golden quadrilateral highways project through public-private partnership, the government has decided to double the grant given to the developer. (ET)
In its consultation paper on issues related to spectrum management, licensing and M&A, TRAI says it is not possible to entertain any new applicant for 2G telecom license under the current policy. (DNA)
Government approved a proposal to release wholesale prices-based inflation data on a monthly basis, instead of every week now, and changed the base. (DNA)
Centre is looking at the option of having dual tax rates on services as well. (FE)
The government to soon come out with a new series of data on factory output. (ET)
TRAI seeks shareholder’s view on broadcasting and FDI guidelines (FT)
The government orders audits of IT companies across the country on possible violations of the Software Technology Parks of India Act. (BS)
Comfort continues!
Too often we...enjoy the comfort of opinion without the discomfort of thought.
The market is being confronted with insurmountable opportunities. The story so far is that initial quarterly numbers are encouraging; earnings are beating forecasts and revenues are topping expectations. The question is whether this a reversal of corporate fortunes?
The indices may have ended flat on muhurat trading but the comfort in the market is set to continue with bulls set to take charge at start. While the government has postponed a decision on the overall disinvestment policy, the clearance to sell Center’s 5% stake in NTPC will augur well for the stock. Besides global cues are results, the market will pay some attention to the corporate battle between the Ambani brothers as the Supreme Court will begin the final hearing on the case. RNRL is suing RIL for not honouring its commitment of 2005 for supplying 28 mscmd of natural gas from the Krishna-Godavari Basin D6 block at $2.34/mBtu.
Earnings speculation is driving Asian stocks higher this morning. The Dow crossed 10,000 hitting its one-year peak.
Though there is more money to be made in the broader market Fresh buys should be undertaken with extreme caution. If not anything, the market has often subscribed to the theory of ‘Sell on News’ even if positive.
Results Today: Apollo Tyre, Chettinad Cement,Gati Limited, Jk Paper, K Sera Sera, Munoth Cap, Nectar Life, Neuland Lab, Polaris, Polychem, Prakash Ind, Ptl, Radico Khaitan, Rane Madras, Sesa Goa, Sterlite Tech, Subex, Sunteck Realty,Tech Mah and Tvs Electron.
Among other corporate news, Sterlite Industries raised US$500mn via convertible bonds.
HCL Infosystems raised Rs4.7bn through qualified institutional placement (QIP) of equity shares. HCL Infosystems has also bagged a contract worth over Rs5bn from the Rajasthan State Electricity Board.
Tata Steel shareholders have approved an enabling proposal for raising Rs50bn through issue of securities.
Reports say the government has ordered audits of IT companies across the country on possible violations of the Software Technology Parks of India Act
Indian markets resumed the upswing after an election break. It was another noteworthy day as the NSE Nifty re-conquered the 5100 mark for the first time since May 2008. The rally was led by the Metals, Auto and the Capital Goods stocks. However, the telecom stocks continued to be under the bear attack.
The Nifty has advanced nearly 175 points while the BSE Sensex has added ~600 points in the last two trading sessions.
Technically, The Nifty has yet again managed to close above all the near term moving averages indicating the strength in the current up move. However, one has to keep an eye for the 5160-5170 levels which could turn out to be stiff resistance. Once the crucial resistance is taken out the index could further extend gains upto 5300 mark.
The BSE Sensex surged 204 points at 17,231 after touching a high of 17,274 and a low of 17,117. The index opened at 17,117 against the previous close of 17,026. The NSE Nifty advanced 64 points to shut shop at 5,118.
In Asia, the Nikkei in Japan was flat at 10,060, while Australia's S&P/ASX ended higher by 1% at 4,831. Shanghai SE Composite in China gained 1.5% and Hang Seng index in Hong Kong was up 2%.
In Europe, stocks were in the green. The FTSE in the UK gained 1.8%, The DAX in Germany was up 2% and the CAC 40 index in France added 2%.
Coming back to India, among the BSE sectoral indices, the Metal index was the top gainer, adding 5.5%, followed by the Auto index that was up 2.5% and the BSE Capital Goods index was up 2.4%.
Even the BSE Mid-Cap index advanced 2% and the BSE Small-Cap index was up 1.5%.
Among the 30-components of Sensex, 25 stocks ended in the green and only 5 ended in the negative terrain. Among the major gainers were, M&M, Hindalco, JP Associates, SBI, Sterlite and Tata Steel.
On the other hand, RCom, Bharti, Reliance Infra, ACC and ACC were among the major losers
Outside the frontline indices, the big gainers in the broader market were PTC India, GVK Power, Cadila, Essar Oil and Bank of India. On the other hand, losers included Jet Airways, Chennai Petro and TTML.
HDFC Bank announced its Q2 results with net profit at Rs6.88bn up 30.3% as against Rs5.28bn in the same period last year. The bank’s total income was at Rs50bn registering 8% increase YoY as against Rs46.3bn.
Shares of HDFC Bank slightly ended flat at Rs1702. The stock opened at Rs1719 and made an intra-day high of Rs1727 and a low of Rs1685. Total traded volumes stood at 0.19mn shares.
Suzlon Energy announced about the completion and commissioning of a 19.5 MW wind farm project for the Gujarat Mineral Development Corporation (GMDC) at the Maliya - Mivana site in Rajkot District of Gujarat.
The project comprises of 13 units of Suzlon's SS82-1.5 MW wind turbines and has been commissioned in record time, almost two months ahead of the contractual commissioning period.
Shares of Suzlon erased gains and ended lower by 1.4% to Rs85.4. The stock opened at Rs87.50 and made an intra-day high of Rs88 and a low of Rs85. Total traded volumes stood at 8.63mn shares.
Shares of Unitech advanced by 4.5% to Rs105 after the company announced that it sold property worth Rs40bn in the March to September period.
The company sold ~10.11mn square feet of space in the period. Out of 10.11mn sq ft, ~8.16mn sq ft was booked in the residential segment. It said these figures did not cover PLC, parking and club charges.
Larsen & Toubro's Metallurgical, Material Handling & Water Operating Company - a part of its Construction Division has secured Orders aggregating Rs9.66bn from Customers like Sterlite Industries India Ltd, Uttar Pradesh Jal Nigam & Gujarat Water Infrastructure Ltd. This includes Rs2.25bn order from the Metallurgical Sector and Rs7.41bn orders from the Water Sector.
Shares of L&T gained by 2% to Rs1689. The stock opened at Rs1665 and made an intra-day high of Rs1698 and a low of Rs1660. Total traded volumes stood at 0.25mn shares.
Cairn India rose over 6.5% to end at Rs280 after crude prices surged to a year’s high. The stocks also were in demand after it had won two exploration areas in India’s auction earlier this week.
Crude oil for November delivery rose as much as US$1, or 1.4%, to US$75.15 per barrel in electronic trading on the New York Mercantile Exchange today, the highest since October 21, 2008.
On the other hand, ONGC gained by 1% to Rs1258, while, Oil Indian was marginally down by 0.3% to Rs1189.
Suven Life Sciences announced that their clinical candidate SUVN-502 for Alzheimer's Disease secured several product patents granted at all the key market countries; India (218438), Mexico (257091), South Africa (2005/4043), Singapore (113104), New Zealand (540840), Korea (10-2005-7009512), Eurasia (011320), Australia (2003237599) and Europe (1581492).
The granted Product Patent for SUVN-502 in all the countries is valid until June 2023.
Shares of Suven Life Science were locked at 5% upper circuit at Rs29. The stock opened at Rs26.95 and made an intra-day high of Rs29 and a low of Rs27.3. Total traded volumes stood at 92,000 shares.
Shares of Bajaj Auto Finance surged by over 14% to Rs324 after the company announced its Q2 results with net profit of Rs216.9mn as against Rs45.7mn in the same period last year.
The stock opened at Rs288 and made an intra-day high of Rs334 and a low of Rs285. Total traded volumes stood at 0.68mn shares.
Copper at five week high
Red metal registers gains following strike and China report
Strike at a mine at Peru and strong economic report from China pushed copper prices to five week high on Monday, 19 October, 2009 at Comex and LME. Prices also rose as the dollar declined.
At USA, copper futures for December delivery ended higher by 12.1 cents (4.3%) to 2.9665 a pound. Copper ended September, 2009, lower by 0.3%.
On the London Metal Exchange, copper for delivery in three months ended higher by $240 (3.9%) at $6,470 a metric ton. On 3 July, 2008, prices had touched an all time intra day high of $8,940.
Before September, it was the eight straight monthly gain for copper. On a year to date basis, prices are higher by 97%.
The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%.
Workers in Peru started a 48-hour strike today, demanding better pension benefits and a greater share of mining profits.
In the currency market on Monday, the dollar came under further pressure after the Federal Reserve Bank of New York clarified it has been testing reverse-repurchase agreements for technical reasons, and that the tests shouldn't be seen as hints of a tighter monetary policy, which might ordinarily be bullish for the U.S. currency. The dollar index, which measures the strength of the dollar against a basket of six other currencies, fell by 0.3%.
In a latest report, it was reported yesterday that China, the world's second biggest oil consumer, saw economic growth at an estimated rate of 9% in the third quarter. That's up sharply from 7.9% growth in the second quarter and 7.1% over the first half of the year.
In FY 2008, copper prices dropped by 54%. Prior to 2008, copper prices ended FY 2007 with a gain of mere 5.5% after a whopping 44% gain in FY 2006. The price of copper gained every year since 2002 as global economic growth boosted demand for the metal used in pipes and wires.
Among other metals traded in the LME on Monday, lead gained 1.2% to $2,230 a ton and zinc added 0.5% to end at $2,064 a ton. Nickel gained 1.1% to end at $18,900. Aluminium gained 0.4% to $1,913 a ton.
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