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Monday, April 12, 2010
Grey Market Premiums - Infrasoft Technologies
| Company Name | Offer Price (Rs.) | Premium (Rs.) |
| Infrasoft Technology | 145 | 7 to 10 |
| Goenka Diamond & Jewellery | 135 | Discount |
IntraSoft Technologies to debut on bourses
Shares of IntraSoft Technologies will debut on the stock exchanges today, 12 April 2010. The company had priced its initial public offer (IPO) at the higher end of the Rs 137 to Rs 145 per share price band.
Tata Motors is reportedly planning to sell part of its shareholding in Tata Cummins, a diesel engine joint venture, as it explores options to divest non-core assets to reduce debt.
Key shareholders of budget airline SpiceJet have reportedly rejected an offer by the Reliance Anil Dhirubhai Ambani Group to pick up a 51% stake in the airline for Rs 40 - 45 a share.
Reliance Infrastructure reportedly expects the governments in Gujarat and Andhra Pradesh to invite bids to develop regional airports it is interested in taking up.
A team from the US oil major, Exxon Mobil, is reortedly set to assess the eastern offshore asset of ONGC for a possible tie-up.
Newspaper publisher D B Corp will demerge its FM Radio business and merge Bhaskar Publication & Allied with itself. It has set up a committee of directors to examine the feasibility of restructuring the organisation.
The government has reportedly launched discussions between ministries about opening multi-brand retail to foreign direct investment.
The Comptroller and Auditor General (CAG) has reportedly found a series of violations on the part of telecom minister A Raja in awarding unified access service licenses to eight companies in January 2008.
Healthy gains at Wall Street
Dow manages to hit the psychological 11,000 mark
US stocks registered gains for sixth straight week that ended on Friday, 09 April, 2010. Economic reports and a few earning reports dominated the week. News about Greece and other geo political tensions made the main headlines. Medium and small cap stocks led the upward move. The Dow managed to hit the psychological 11,000 level just before the close on Friday.
For the week, that ended on Friday, 09 April, 2010, Dow ended higher by 70.28 points (0.6%) at 10,997.35. Nasdaq ended higher by 51.47 points (2.1%) at 2454.05. S&P 500 gained 16.27 points (1.4%) at 1194.37. Seven of ten economic sectors ended higher led by substantial gains in financial and consumer discretionary sectors.
The major averages began the week on a positive note on the heels of positive economic data. The only notable sell-off for the week occurred on Wednesday, 7 April, afternoon. It began following a speech by Fed Chairman Ben Bernanke. But the minutes had no surprises and long term impact on the market. Headlines about Greece circulated all week. They weighed on equities Thursday, 8 April but were not enough to keep the major averages lower.
The economic reports during the week had limited impact on trading. Latest report showed that consumer credit in February fell by $11.5 billion. It was expected to contract by just $0.7 billion. Consumer credit for the prior month was revised upward to a $10.6 billion increase from a $5.0 billion increase.
On Friday, 09 April, 2010, stocks spent the majority of the session broadly higher, but overall gains were held in check amid persistent wariness about the financial health of Greece. Fitch Ratings on Friday downgraded Greece's credit ratings to the lowest ring of investment-grade ratings, BBB minus. A downgrade for Greece heightened concerns about the euro-zone countries and the global economic recovery, thereby affecting commodity prices.
On that day, the Dow Jones Industrial Average ended higher by 70.28 points at 10,997.35. Nasdaq ended higher by 17.24 points at 2454.05. S&P 500 ended higher by 7.93 points at 1194.37. All ten economic sectors ended higher for the day led by energy, telecom and consumer discretionary sectors.
Despite pronounced weakness in the dollar, gains in the broader market remained contained until the close came within reach. However, a late surge in buying sent stocks to fresh 52-week highs in the face of suggestions that the stock market is near-term overbought. The Dow even kissed 11,000, but it settled just a few points below that psychological line.
Advancing issues outnumbered decliners in the Dow by 4-to-1. Chevron was the main Dow winner for the day after it issued an interim update. On the other hand, Alcoa was the main laggard after the company received a downgrade at JP Morgan Chase.
Crude oil prices dropped for the third straight day on Friday, 09 April 2010. Prices pared all its early gains due to demand concerns as concerns regarding global recovery resurfaced once again and as the dollar weakened.
On Friday, crude-oil futures for light sweet crude for May delivery closed at $84.92/barrel (lower by $0.55 or 0.5%). During intra day trading, prices rose to a high of $86.45. For the week, crude ended higher by just 0.6%. For the month of March, crude rose 5.1%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is higher by 6.8%.
In the currency market on Friday, the dollar index, which measures the strength of the dollar against basket of six other currencies fell by almost 0.4%. The dollar index gained about 0.7% in March and rallied 4% during the first quarter. The dollar index has gained 5% this year till date.
Elsewhere, natural gas for May delivery gained 16 cents, or 4.1%, to settle at $4.07 per million British thermal units. Prices have gained 0.8% for the week.
Indian ADRs ended mixed on Friday. HDFC Bank and ICICI Bank were main winners soaring 2.3% and 2.2% respectively. Tata Motors too gained 3.2%.
For the year, Dow, Nasdaq and S&P 500 are higher by 5.5%, 8.1% and 7.1% respectively.
Looking ahead to next week, the first quarter earnings season will kick off with a number of big names, including Alcoa, Intel, JPMorgan Chase, Google, Bank of America and General Electric. The economic calendar will be busy later in the week, with CPI, Retail Sales and the Fed's Beige Book on Wednesday and Industrial Production on Thursday.
Crude drops for third straight day
Prices manage to eke out little weekly gains
Crude oil prices dropped for the third straight day on Friday, 09 April 2010. Prices pared all its early gains due to demand concerns as concerns regarding global recovery resurfaced once again and as the dollar weakened.
On Friday, crude-oil futures for light sweet crude for May delivery closed at $84.92/barrel (lower by $0.55 or 0.5%). During intra day trading, prices rose to a high of $86.45. For the week, crude ended higher by just 0.6%. For the month of March, crude rose 5.1%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is higher by 6.8%.
Prices are still very much lower as compared to 3 July, 2008 settlement of $145.29 a barrel and an intraday high of $147.27 on 11 July, 2008, an all-time high. However, oil has also gained nearly 155% from a December, 2008 nadir. That day prices settled at $33.87 a barrel following an intraday low of $32.40.
In the currency market on Friday, the dollar index, which measures the strength of the dollar against basket of six other currencies fell by almost 0.4%. The dollar index gained about 0.7% in March and rallied 4% during the first quarter. The dollar index has gained 5% this year till date.
Fitch Ratings on Friday downgraded Greece's credit ratings to the lowest ring of investment-grade ratings, BBB minus. A downgrade for Greece heightened concerns about the euro-zone countries and the global economic recovery, thereby affecting commodity prices.
During the week, the EIA reported an increase in crude stockpiles of 2 million barrels in the week ended 2 April against an expected figure of 1.5 million barrels. It was the 10th consecutive increase in oil supplies. The EIA also reported a decrease in gasoline inventories of 2.5 million barrels. The agency reported an increase in distillates, which include heating oil and diesel, of 1.1 million barrels. The refinery use was also bearish for prices, coming in as 84.5% of capacity, or a nearly 2% increase.
Elsewhere, natural gas for May delivery gained 16 cents, or 4.1%, to settle at $4.07 per million British thermal units. Prices have gained 0.8% for the week.
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. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
Elecon Engineering Company
Investors with medium-term perspective can consider investing in the stock of Elecon Engineering Company (Rs 81.5).
The stock was on an intermediate-term uptrend from March 2009 low around Rs 25 till it encountered resistance at Rs 110 in October. Its decline from that peak was arrested in the significant support band between Rs 70 and Rs 73 in mid March.
Positive divergence displayed in the daily moving average convergence and divergence indicator triggered the stock's up move from the aforementioned band. For the past three weeks the stock has been on a nascent short-term uptrend. While trending higher, it breached its 21- and 50-day moving averages last week.
Moreover, the stock made a weekly gain of 9 per cent accompanied with high volume. With this gain the stock has breached its downtrend line in the weekly chart. The daily relative strength index is featuring in the bullish zone and weekly RSI heading towards this zone in the neutral region. After signalling a buy, the daily moving average convergence and divergence indicator is on the brink of entering into the positive territory, implying a positive outlook for this stock.
We are bullish on Elecon Engineering from a medium-term perspective. We believe that it has the potential to rally towards the price target of Rs 98 in the coming weeks. Investors with medium-term perspective can consider buying the stock with stop-loss at Rs 73. Short-term traders can buy with target of Rs 89 and the stop-loss is Rs 77.5
Follow up - Network 18 Media and Investments (Rs 139.3)
The stock gained 12.7 per cent last week and has achieved our short-term target. It is currently in the process of heading towards our medium-term target of Rs 150. We reiterate our medium-term bullish outlook on the stock. Investors with medium-term perspective can consider holding the stock while maintaining a revised stop-loss at Rs 120 level.
via BL
Daily News Roundup - Apr 12 2010
Reliance Industries has entered the US gas exploration market through a JV with Atlas Energy in a deal valued at US$1.7bn. (BL)
Reliance Industries finds more reserves in KG-D6 block, it may contain 1-2 trillion cubic feet of reserves. (ET)
A team from ExxonMobil is set to assess the eastern offshore asset of ONGC for a possible partnership. (BL)
Maruti Suzuki invests Rs2.9bn in upgrading its hatchback WagonR that will be rolled out from a new platform with a new engine by the end of this month. (BS)
GMR Infrastructure plans to raise up to Rs5bn through the issue of unsecured non-convertible debentures on private placement basis. (BS)
Tata Motors plans to sell part of its shareholding in Tata Cummins, a diesel engine joint venture company. (ET)
Reliance Industries is likely to tie-up with Japanese firm Mitsui as an investor in its Special Economic Zone project in Haryana. (ET)
Centum Learning, the training and education arm of the Bharti group, plans to invest Rs1bn in the next three years to diversify into training school children and expanding its presence by opening campuses across the country. (BS)
Bharti Airtel to work with Ericsson, Nokia Siemens on 3G. (BS)
SAIL and Posco may seal a deal by the end of next month to set up an estimated Rs150bn steel plant in Jharkhand. (BS)
Tata Tea and Pepsico are exploring joint venture opportunities in non-carbonated ready-to-drink beverages in the health and wellness category. (BS)
Nalco receives investment approvals from the Indonesian government for its proposed Rs165bn offshore aluminium smelter-cumpower project.
SEBI approves the IPO of Glenmark Generics, the wholly owned subsidiary of Glenmark Pharmaceuticals. (ET)
Reliance Capital has made a foray into the Dubai market by commencing financial advisory business in the Gulf nation. (ET)
Corporation Bank seeks overseas companies to partner with for its entry into the general insurance business. (BS)
BHEL unit plans to re-enter the defence business. (BS)
Videocon Industries is understood to be making moves to acquire consumer electronics business of Philips India. (BS)
Reliance Infrastructure expects governments in Andhra Pradesh and Gujarat to invite bids to develop regional airports, which it is interested in taking up. (BS)
GAIL (India) says it isn’t possible to streamline the price of natural gas sourced from different fields and sell it at a uniform price to all sectors. (Mint)
C&C Construction is in talks to Hilton and Golden Tulip for a management tie-up for the Rs600mn hotel it is developing near Mohali. (BS)
GMR Energy, the power generation arm of GMR Infrastructure, finalised plan to raise US$200mn from Singapore-based Temasek Holdings. (BS)
Jet Airways plans to hike fares by 10-15% this quarter. (BS)
Ramkrishna Forgings plans to establish a castings unit for automobile components at Bidadi in Karnataka for an investment of Rs1.5-2bn. (BS)
Tube Investments acquires 17.58mn shares in Cholamandalam DBS Finance from DBS Bank, Singapore increasing its sake to 57.41% from 30.93%. (ET)
SpiceJet shareholders reject an offer by the Reliance ADA Group to pick up a 51% stake in the airline for Rs40-45 per share. (BS)
Bhushan Steel’s cold rolling project at Sankrail in West Bengal has hit a roadblock as land prices have hit the roof. (BS)
MMTC plans to open 100 outlets, including company owned, through joint venture and through stockists in the near future. (BS)
ADF Foods is eyeing a couple of overseas acquisitions in the Rs500mn - Rs1bn range. (BS)
The Airports Authority of India is entitled to charge airport development fee (ADF) and user development fee (UDF) like the developers of private airports, according to the Airport Economic Regulatory Authority (AERA) chairman. (BS)
The cement industry hit double-digit growth in 2009-10, after a gap of three years, grows 10.5%. (BS)
Foreign institutional investors and their sub-accounts will have to disclose the exact structure they use to invest in India, according to the new guidelines from SEBI. (ET)
Foreign exchange reserves rose by US$2bn to US$279.0bn for the week ended April 2 against US$277.0bn in the previous week. (ET)
Employees Provident Fund Organization will now be able to invest its funds in corporate bonds of joint sector companies where the government has a minimum 26% stake. (BL)
IRDA asks insurance companies to go ahead and sell unit-linked insurance plans, notwithstanding order of SEBI banning 14 firms from selling ULIPs. (BL)
The Ministry of Defence plans to oppose a proposal from the Ministry of Commerce and Industry to allow foreign defence corporations to establish fully-owned defence units in India. (BS)
Wait and watch policy!
One who adapts his policy to the times prospers; one whose policy clashes with the demands of the times does not. - Niccolo Machiavelli.
The public spat between SEBI and IRDA about who should regulate ULIPs could cast its ugly shadow on the sentiment. Bulls and bears may prefer to adopt a wait and watch policy despite firm global cues. The role of the Government will now take center stage and voices will get louder for a financial sector super regulator. A protracted battle and a war of words may ensue, something the markets don’t need right now.
We may still see a higher opening as most global markets have advanced since we closed trading last Friday. IIP data (to be issued today) and monthly inflation (to be released on Thursday) will be closely followed in the run up to the RBI policy next week. The IT pack will in the spotlight ahead of tomorrow’s Infosys results.
The NSE Nifty is expected to top 5400 and levels of 5500 are being talked about widely. But, the ride won’t be all that smooth and some bumps are bound to make that task more difficult for the bulls.
The Dow briefly broke through 11000, though it failed to hold above that milestone at close on Friday. Fading worries over the debt-laden Greece coupled with encouraging reports on the US economy helped European stocks rise on Friday.
Asian markets are also mostly in the green amid media reports of an EU bailout for Greece. The euro gained today for a third day against the dollar and commodities jumped after European governments unveiled a plan to halt Greece’s fiscal crisis.
The yuan is likely to remain in the spotlight this week, with expectations that Beijing is ready to let the currency rise. But we are still a long way from a full yuan float, given uncertainty on how the currency would respond.
After reaching dizzying heights upwards of 18,000 levels in the previous trading session, the BSE Sensex stumbled largely due to weak global markets. Stocks across the globe came under pressure amid fresh worries over Greeks financial condition. Part of the selling at higher levels could also be attributed to jitters surrounding high valuations. In addition, a spate of headwinds like elevated inflation, impending rise in interest rates and a fragile global economy played spoilsport. "With Greece financial woes intensifying, market players preferred to book some profit ahead of the eventful results season kicking off next week", says Amar Ambani VP Research India Infoline. Offloading was seen across the board. The Oil & Gas, Metals and the Bank stocks were among the major losers which dragged the BSE Sensex and NSE Nifty index over 300 and 90 points fro their respective 52-week highs. In addition, advance-decline ratio turned in favor of the bears for the first time in three days. Out of total 2957 stocks on the BSE, 1678 stocks declined as against 1198 advancing stocks while, 81 remained unchanged. Finally, the BSE Sensex lost 256 points to end at 17,714 and NSE Nifty fell 70 points to close at 5,304. Among the 30 components of Sensex, 19 ended in the positive terrain and 11 were in the red. Asia markets ended in the red, the Nikkei in Japan slipped 1.1%, Australia's S&P/ASX edged lower by 0.6%. Shanghai SE Composite ended lower by 0.3% and Hang Seng index in Hong Kong was down 0.3%. European indices as well were under pressure, the DAX in Germany slipped 1%, the CAC 40 index in France was down 1% and the FTSE in the UK slipped 1.1%. Coming back to India, among the BSE sectoral indices, the BSE Oil & Gas index was top loser, the index fell 2%, followed by BSE Metal index down 1.9% and Bank index down 1.6%. Even the Mid-Cap and the Small-Cap index ended in the red. On the other hand, BSE Consumer Durables index gained 2.2% and BSE Realty index added 0.6%. Outside the frontline indices, the big losers in the broader market were Central Bank, Idea, IRB Infra and Bharat Forge. On the other hand, losers included Jain Irrigation, PNB, Ispat Ind and LITL. Kotak Mahindra Bank which replaced the Cement major Grasim Industries ended marginally lower by 0.2% at Rs783. On the other hand, shares of Grasim slipped 1.7% to end at Rs2846. Shares of Sun Pharma slipped by 1.4% to end at Rs1773. The company announced that USFDA has granted its subsidiary an approval for its Abbreviated New Drug Application (ANDA) to market a generic version of GlaxoSmithKline’s Wellbutrin SR® Extended Release tablets. Shares of Moser Baer edged higher by 0.5% to end at Rs75 after the company announced the commissioning of its largest Thin Film solar farm with an installed capacity of 1 MW at Chandrapur in Maharashtra. It has been set up using amorphous silicon Thin Film technology which is best suited for the Indian climatic conditions and is connected to the 33 KVA local grid. The project will give much better returns (Rs/kWh) to the investors as compared to other technologies available in the country. Shares of Aptech surged by over 3% to end at Rs175 after the company announced that it would offer 1.7mn shares at Rs216 each to Enam Securites Pvt and 18 other buyers. That’s a 27% premium from yesterday’s closing price. The scrip opened at Rs172 it touched an intra-day high of Rs185 and a low of Rs171.5 and recorded volumes of over 0.94mn shares on BSE. Aban Offshore announced that a contract has been signed with Brunel Shell Petroleum Sendirian Berhad for the deployment of the jack-up rig Deep Driller 8 offshore Brunei for firm period of 4 years plus four optional periods of 1 year each. The estimated revenues from the firm period of the deployment is about US$159mn (equivalent to Rs7.16bn). The deployment is likely to commence during the third quarter of calendar year 2010. Shares of Aban Offshore hit a high of Rs1269 post the announcement however ended flat at Rs1246. Shares of United Spirits ended flat at Rs1336. The company yesterday announced that it has crossed the milestone of clocking a sales volume of 100mn cases for the fiscal year ended March 31, 2010. This achievement makes United Spirits the world’s second-largest spirits company by volumes, dislodging Paris-headquartered Pernod Ricard.
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