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Wednesday, March 31, 2010
Daily News Roundup - March 31 2010
Bharti Airtel closes deal to acquire most of African assets of Kuwait’s Zain Telecom. (ET)
Government intends to review the allocation of gas produced from Reliance Industries’ KG-D6 field. (BL)
NMDC plans to increase iron ore prices by 70% for both domestic and export markets. (BS)
Hero Honda declared an interim dividend of Rs80 per share. (ET)
Hero Honda is looking to set up a Rs20bn manufacturing plant in Himachal Pradesh. (BS)
ITC has tied up with La Aurora to sell a mint based cigar in India. (ET)
Tata Motors sells 20% stake in Telcon to its JV partner Hitachi for a sum of Rs11.6bn. (ET)
Tata Motors reduced its debt by Rs15bn as a large section of its bond holders opted for conversion of bonds into share before maturity. (ET)
M&M is merging its two tractor JVs in China into a single entity. (BL)
GAIL has commenced supply of 0.33mmscmd of gas to Maruti’s Manesar plant. (BL)
Bank of Baroda raised US$350mn by way of 5.5 years senior unsecured bonds. (ET)
Crompton Greaves acquired a UK based company Power Technology Solutions for Rs2.04bn. (BS)
Jet Airways deposited Rs1.37bn in the Bombay High Court in relation with Sahara case. (ET)
Omaxe Ltd to raise Rs8bn through QIP. (BS)
JSL raised Rs2.5bn via sale of shares to qualified institutional buyers. (ET)
Pyramids Saimira to sell all businesses and investments to pay up Rs5.8bn high cost debt. (FE)
Bridgestone a Japanese Tyre major to invest Rs26bn at Chakan in Maharashtra. (BS)
Retail investors could be offer up to 10% discount on the issue price for future government disinvestments. (BS)
Rupee touched a 19-month high to 44.97 against the dollar. (BS)
Service tax on railway freight deferred by 3 months to July 1, 2010. (BS)
The telecom ministry has cleared all nine telecom companies to participate in 3G auction scheduled to commence on April 9. (ET)
Implementation of number portability has been postponed by three months to June 30. (ET)
RBI has released guidelines on how banks must classify capital in their balance sheets to ensure uniformity in reporting. (ET)
Cement prices are likely to increase by Rs7 from tomorrow. (ET)
No Big Bang here!
For the majority, the past is a regret, the future an experiment – Mark Twain.
Looks like we could someday unravel the secret behind the way our planet earth was born following some success of the Large Hadron Collider. Some may have regrets for failing to perform in line with the indices, but, as far as markets are concerned, it’s not the time to experiment. In short, no ‘Big Bang’ movements are in the offing today going by the subdued mood in global markets.
We expect a flat to slightly positive opening. On the whole, the trend will remain lackluster till the first batch of earnings start kicking in. Though the small-cap and mid-cap counters may remain abuzz one should resist the temptation of buying into illiquid, fundamentally weak stocks. Thursday heralds a new fiscal year. Having completed “year-end” commitments, it will be time to do proper due diligence of your portfolio.
A cooling was due for some time now. Once the key indices touched new 52-week highs it was only a matter of time. Interestingly, the market breadth, which had been negative for a few sessions, turned in favour of the bulls.
Indian markets snapped a four-day winning streak on Tuesday after the NSE Nifty slipped 40 points to end below the 5300 mark. Profit booking was seen in IT heavyweights like Infosys, TCS and Wipro as the rupee continued to appreciate hitting its 52-week high of Rs44.88 against the US dollar. The Oil & Gas major Reliance Industries, a pillar in the recent rally, which took the main indices to 52-week highs, also witnessed some offloading towards the end. In addition, banking heavyweights HDFC Bank and SBI were among the other major laggards.
Till Monday, the situation appeared to be quite under control with the NSE Nifty and BSE Sensex closing at 52-week highs. Bulls succumbed to supply pressure as technically stocks looked to be in an overbought zone. What was surprising was that, market breadth for the first time ended in favour of the bulls, out of total 2883 stocks on the BSE, 1,690 advanced against 1,099 declines while 94 stocks remained unchanged.
Finally, the BSE Sensex slipped 121 points to end at 17,590 and NSE Nifty lost 40 points to close at 5,262.
In Asia, the Nikkei in Japan ended higher by 1%, Australia's S&P/ASX also ended higher by 0.4%. Shanghai SE Composite rose 0.2% and Hang Seng index in Hong Kong was up 0.7%.
In Europe, stocks were trading flat. The DAX in Germany was flat, the CAC 40 index in France was up 0.2% and the FTSE in the UK was flat.
Tata Motors, Hitachi Construction Machinery Co. Ltd. (Hitachi) and Telco Construction Equipment Company Limited (Telcon), a 60:40 joint venture company between Tata Motors and Hitachi, signed an agreement under which Tata Motors has sold a further 20% stake in Telcon in favour of Hitachi for a consideration of Rs11.59bn.
Consequently Telcon will be owned 60% by Hitachi and 40% by Tata Motors.
Standard Chartered Bank and AZB Partners acted as Financial and Legal Advisors respectively for the company to this transaction.
Shares of Tata Motors ended higher by 2.2% at Rs756. The scrip opened at Rs746 it touched an intra-day high of Rs760 and a low of Rs742 and recorded volumes of over 0.73mn shares on BSE.
Shares of LIC Housing Finance fell by 2.8% to Rs861 after the company clarified that it has not made any application to the Reserve Bank of India (RBI) for a banking licence. The appropriate decision in this regard will be taken only after the RBI notifies the guidelines for issuing banking licence, LIC Housing said. LIC Housing said that it does not know the source of a newspaper report stating that the company may get a banking licence from the RBI.
Shares of Hero Honda slipped by 2% to end at Rs1966. The company declared a Silver Jubilee Special Dividend @ 4000% i.e. Rs80/- per equity share of Rs2/- each.
Daiichi Sankyo is reportedly planning to delist Ranbaxy Labs from the Indian stock exchanges in 4 months. Shares of Ranbaxy shot up to an intra-day high of Rs490 post the news. However, it finally settled at Rs476 losing 1%.
According to reports, Daiichi Sankyo which owns 64% of Ranbaxy is finalizing the modalities for the delisting as it may help the Daiichi to fully integrate the Indian drugmaker with itself.
However, Daiichi Sankyo has denied reports that it will delist Ranbaxy in the next 4 months. Ranbaxy will remain listed in India, said Michiko Igarashi, a spokeswoman for Daiichi Sankyo.
Shares of Supreme Infrastructure advanced by over 1.4% to end at Rs180 after it bagged new order worth Rs442.2mn from Executive Engineer, Construction Division No. 2, PWD B & R Br of Kapurthala for Construction of Judicial Court Complex at Kapurthala over a span of 24 months.
Shares of Pyramid Saimira were locked at 10% upper circuit to end at Rs15.45 after the company announced that the board of directors of the company has approved to sell its film exhibition operations and also Company’s investments in the subsidiaries.
Precious metals shed glaze
Prices slip as dollar firms up
Precious metal prices ended lower on Tuesday, 30 March 2010. Prices slipped as the dollar firmed up today.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.
On Tuesday, gold for April delivery ended at $1,105.7 an ounce, lower by $5.8 (0.5%) an ounce on the New York Mercantile Exchange. Last week, gold ended marginally lower by 0.2%. In FY 2010, gold touched a high of $1,154 in January.
On Tuesday, May Comex silver futures ended lower by 6 cents (0.3%) at $17.33 an ounce. Last week, silver ended lower by 0.7%.
In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by 0.2%. But the British pound continues to outperform the buck. Strength in the British pound comes amid news that Britain's fourth quarter GDP was upwardly revised to reflect a 0.4% increase.
In a report released yesterday, the World Gold Council said that demand for gold from China could double in the next decade due to higher investment demand. As per the report, demand for gold in China reached 423 metric tons, or 466 short tons, last year, but domestic mines contributed only 314 metric tons, or 346 short tons. This shortfall creates a "snowball" effect as China's gold industry has to rely on imports.
Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.
Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.
At the MCX, gold prices for June delivery closed lower by Rs 16 (0.09%) at Rs 16,379 per ten grams. Prices rose to a high of Rs 16,475 per 10 grams and fell to a low of Rs 16,342 per 10 grams during the day's trading.
At the MCX, silver prices for May delivery closed Rs 21 (0.07%) lower at Rs 26,830/Kg. Prices opened at Rs 26,847/kg and fell to a low of Rs 26,718/Kg during the day's trading.
Crude ends marginally higher
Prices crawl up due to positive consumer confidence data
Crude oil prices ended marginally higher, off their intra day highs, on Tuesday, 30 March 2010. Prices ended higher due to better than expected consumer confidence report.
On Tuesday, crude-oil futures for light sweet crude for May delivery closed at $82.37/barrel (higher by $0.2 or 0.2%). It stayed above the $82 mark for most part of the day. Prices lost 1.2% last week.
Crude prices rose 9.3% in February as supply-and-demand issues began to take hold in a market for months dominated by moves in the dollar. Prices have ranged between $69 and $84 a barrel since October. Crude has risen 72.7% in last one year.
The Conference Board in US reported on Tuesday, 30 March 2010 that U.S consumer confidence rebounded in March after falling sharply in the prior month. As per the report, the consumer confidence index rose to 52.5 in March from 46.4 in February. Confidence had dropped significantly in February from 56.5 in January.
The gain in confidence was above forecasts. Market had expected the index to rebound to 51. The February confidence index was revised up from the initial estimate of 46. The present situation index rose to 26 from 21.7, while the expectations index improved to 70.2 from 62.9.
In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by 0.2%. But the British pound continues to outperform the buck. Strength in the British pound comes amid news that Britain's fourth quarter GDP was upwardly revised to reflect a 0.4% increase.
This week's weekly inventory report for crude and crude products is scheduled for Wednesday. The report is expected to show another build up in crude inventories for last week. The EIA reported last Wednesday that crude-oil inventories rose by 7.245 million barrels against an expected buildup of 1.67 million barrels for week ending 19 March. Despite the surprising inventories number, traders had focused more on data declines in stockpiles of gasoline and distillates such as diesel and heating oil. The EIA had also showed a combined decline of 5.14 million barrels in stocks of gasoline and distillates.
Last week, Organization of Petroleum Exporting Countries decided to keep its production quota unchanged.
Elsewhere, natural gas for May delivery ended higher by 1.5% at $3.98 per British thermal units.
Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 45% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
At the MCX, crude oil for April delivery closed lower by Rs 3 (0.08%) at Rs 3,703/barrel. Natural gas for April delivery closed at Rs 178.9/mmbtu, lower by Rs 0.6 (0.33%).
Tuesday, March 30, 2010
Grey Market Premiums - March 30 2010
| Company Name | Offer Price (Rs.) | Premium (Rs.) |
| Pradip Overseas | 110 | 17 to 18 |
| Persistent Sys. | 310 | 152 to 155 |
| Shree Ganesh Jewellery | 260 | AT PAR |
| Infrasoft Technology | 137 to 145 | 30 to 32 |
| Goenka Diamond & Jewellery | 135 | Discount |
Nifty April 2010 futures at premium
Turnover rises
Nifty April 2010 futures were at 5,265.50, at a premium of 3.05 points over spot closing of 5,262.45. Turnover in NSE's futures & options (F&O) segment increased to Rs 60,233.04 crore from Rs 57,047.03 crore on Monday, 29 March 2010.
Reliance Industries April 2010 futures were at premium at 1092 compared to the spot closing of 1085.
Sesa Goa April 2010 futures were at discount at 450.90 compared to the spot closing of 457.55.
Tata Motors April 2010 futures were at discount at 739.95 compared to the spot closing of 757.15.
In the cash market, the S&P CNX Nifty fell 40.40 points or 0.76% at 5,262.45.
Stocks fly across Asia
Crude rises near $83 as risk appetite continues to pep sentiments up
Stocks were flying across Asia today bearing a late wave of sell off in India as the energy and resource linked counters drove the sentiments up following the continued spell of weakness in the US dollar. Oil prices rose to near $83 a barrel Tuesday in Asia, extending gains from the previous day and the other commodities also garnered impressive gains. The Dow Jones industrial average rose 0.4% to its highest level since September 2008 yesterday. The euro rose to $1.3538 on Tuesday from $1.3476 yesterday.
The stock market in Japan ended in positive territory after witnessing selling pressure in the last session. Strong buying interest drove the Nikkei 225 index above the psychological 11,000 mark for the first time since October 2008, amid increasing optimism about global economic recovery. The benchmark Nikkei 225 Index rose 110.67 points, or 1.0%, to 11,097, while the broader Topix index of all First Section issues rose 13.45 points, or 1.4%, to 980.
On the economic front, a report released by the Ministry of Internal Affairs and Communications revealed that unemployment rate in the country held steady in February at a seasonally adjusted 4.9%. The report noted that the number of employed persons in February was 61.85 million, a decrease of 800 thousand or 1.3% from the previous year. The number of unemployed persons in February was 3.24 million, an increase of 250 thousand or 8.4% from the previous year. The job-to-applicant ratio was 0.47, in line with expectations after showing 0.46 in January. Separately, the Ministry of Economy, Trade and Industry revealed that an index measuring industrial production in Japan was down a seasonally adjusted 0.9% in February compared to the previous month, posting a score of 91.3.
Australia's S&P/ASX 200 Index gained 0.4% to 4,916.80 at the close of trading in Sydney as rising commodity prices assisted mining majors. Copper surged to an 11-week high in New York yesterday though it witnessed some selling at the higher levels today. However, the New Zealand equities slipped a little today, despite a solid gain for top stock Telecom. The benchmark NZX-50 index ended down 1.5 points to 3249.65, after the index climbed yesterday to its highest close for 10 weeks.
Hong Kong stocks hit their highest close in nearly two weeks, led by financial, consumer and airline counters. The Hang Seng Index ended up 0.65% at 21,374.79. Hong Kong's economy is expected grow by 4.0 to 5.0 percent in 2010, the city's financial secretary John Tsang said in his annual budget speech today. China stocks also edged up to two-month high. The mainland's key stock index closed up 0.15% to 3,128.46 points, edging to a fresh two-month closing high after a rally on Monday on news of an imminent launch of stock index futures trade.
In Mumbai, the benchmark BSESENSEX failed to hold to initial gains and turned sharply lower after the European indices opined on a flat note. Bulk of the selling pressure was led due to profit selling after the Benchmarks hit fresh 52-week highs earlier in the day as investors eyed positive global cues. However, technology, select metal and power stocks along with Reliance Industries were under pressure. The 30-share BSE Sensex closed at 17590.17, down 121.18 points or 0.68%.
Benchmark crude for May delivery hit a high of $82.74 a barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $2.17 to settle at $82.17 on Tuesday. Crude prices have been buoyed by a yearlong rally of global stock markets. Oil traders often look to equity markets as a measure of overall investor sentiment. However, there has been a sell off from these levels and the prices were last seen hovering at $82.09, down 8 cents from the previous close.
IL&FS Transportation settles at 6% premium
At Rs Rs 273.75 on BSE
Shares of IL&FS Transportation Networks settled at Rs 273.75 on BSE, at a premium of 6.10% over the initial public offer price of Rs 258.
The stock debuted at Rs 287, a premium of 11.2% over the initial public offer (IPO) price. On BSE, 1.65 crore shares were traded on the counter. The stock hit a high of Rs 295 and a low of Rs 270.10.
The current price of Rs 273.75 discounts the year ended March 2009 standalone EPS of Rs 2.50 by a PE multiple of 109.5.
IL&FS Transportation Networks (ITNL) had priced the IPO at Rs 258, at the higher end of price band of Rs 242-258 per share price band. The public offer was subscribed 33.42 times. The IPO got bids for 79.26 crore shares as against 2.37 crore shares on offer. The issue remained open between 11 and 15 March 2010.
Category wise data showed that the qualified institutional buyers portion was subscribed 52.60 times, non institutional investors by 39.39 times, and retail individual investors by 4.56 times.
The offer consisted of a fresh issue of equity shares by the company and an offer for sale of 42.78 lakh shares by Trinity Capital.
On 11 March 2010, the company raised about Rs 126 crore by allotting shares to several anchor investors at Rs 258 per share. The anchor investors include Reliance Capital Trustee Company, Axis Mutual Fund, Sundaram BNP Paribas Mutual Fund, Royal Bank of Scotland, HDFC Trustee Company, JF India Fund, Nomura Mauritius, Ward Ferry Management and Jupiter South Asia Investment Company.
The company intends to use the IPO proceeds for repayment of loan and to support its growth plans. The company has debt totaling Rs 1000 crore.
IL&FS Transportation Networks is one of the leading private sector BOT (build, operate and transfer) road operators in India. The company is engaged in the development, operation and maintenance of national and state highways, roads, flyovers and bridges in various parts of India.
The company has a diverse project portfolio, consisting of 17 road projects comprising approximately 9,397 lane kilometers (km), which includes 4,086 lane km under operation and maintenance and 5,311 lane km under development.
IL&FS Transportation Networks reported a net profit of Rs 42.07 crore on sales of Rs 170.67 crore in the year ended March 2009. On a consolidated basis, the net profit was reported at Rs 27.88 crore on sales of Rs 1252.59 crore in the year ended March 2009.
Hardening rupee snaps 4-day straight gains
Today's major news
The Reserve Bank of India revives foreign currency convertible bond buyback scheme for three months
IL&FS Transportation lists at premium
The Securities and Exchange Board of India may get power to monitor the use of initial public offer funds
Click here for more stories
Global signals
As of writing the European markets were trading flat with London Stock Exchange’s FTSE 100 trading 0.07% lower.
All the major Asian indices—from Kospi to Nikkei to Hang Seng—closed higher except the Sensex that ended 0.68% down. SGX Nifty closed 62 points lower.
US stock futures point to a higher start for Wall Street, as Apple and Verizon stocks are in focus.
Indian indices
On speculation that the hardening of the rupee could hit the revenues of information technology (IT) companies, the IT stocks went down and along went the market breaching its four-day-long gains.
On mildly tepid global equities, the Sensex opened seven points down, but turned up, and barely half hour into the trade touched the day’s high—72 points higher than its previous closing. Though the index traded positive in the first half it kept inching down. In the second half, the appreciation in the Indian rupee began to play out pressuring IT stocks and pushed the market 153 points down. At finishing line the Sensex quoted at 17590, 121 points lower. The Nifty closed the session 40 points lower at 5262.
Market sentiment
Advancing shares outnumbered trailing ones. On the BSE, 1,691 stocks advanced against 1,098 trailed. Ninety four stocks closed unchanged.
Sectoral & stock screening
Stronger rupee continued to hit IT counter with BSE IT down by 2.19%. BSE Tech, down 1.62%, was second from the bottom. BSE Realty posted gains of 1.42% followed by BSE PSU that surged 0.80%.
On stocks’ front, Hindustan Copper was the star stock of the day posting gains of 8.25% followed by Corporation Bank that surged 7.88% and Bank of India that rose 5.28%. Among losers, Educomp Solutions slid the most by 3.27%, followed by Shriram Transport that fell 3.21% and Lupin that shed 3.10%.
Viewing volumes
Steel maker Ispat Industries was the most actively traded share with over 0.63 crore shares changing hands on the BSE followed by wind turbine maker Suzlon Energy (0.42 crore shares), public sector undertaking NMDC (0.42 crore shares), India’s second largest realty major Unitech (0.35 crore shares) and Industrial finance company IFCI (0.33 crore shares).
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